SPECIFICITY,
INC
BALANCE
SHEETS
(UNAUDITED)
| | |
| | | |
| | |
| | |
As
of
March 31, 2023 | | |
As
of
December 31, 2022 | |
| Assets: | |
| | |
| |
| Current
assets | |
| | | |
| | |
| Cash
and cash equivalents | |
$ | 50,089 | | |
$ | 22,818 | |
| Accounts
receivable | |
| - | | |
| 8,182 | |
| Prepaid
expenses and other current assets | |
| 108,759 | | |
| 235,375 | |
| Total
current assets | |
| 158,848 | | |
| 266,375 | |
| | |
| | | |
| | |
| Property
and equipment, net | |
| 68,139 | | |
| 70,722 | |
| Right
of use asset | |
| 54,276 | | |
| 64,632 | |
| Total
assets | |
$ | 281,263 | | |
$ | 401,729 | |
| | |
| | | |
| | |
| Liabilities
and Stockholders’ Deficit: | |
| | | |
| | |
| Current
liabilities: | |
| | | |
| | |
| Account
payable | |
$ | 90,114 | | |
$ | 93,867 | |
| Accrued
liabilities | |
| 33,576 | | |
| 37,828 | |
| Accrued
interest, related party | |
| 12,500 | | |
| - | |
| Note
payable | |
| 104,770 | | |
| - | |
| Related
party advances | |
| 368,172 | | |
| 193,739 | |
| Right
of use liability | |
| 44,233 | | |
| 43,909 | |
| Total
current liabilities | |
| 653,365 | | |
| 369,343 | |
| | |
| | | |
| | |
| Long
term liabilities - | |
| | | |
| | |
| Related
party notes payable | |
| 1,000,000 | | |
| 1,000,000 | |
| Right
of use liability, net of current portion | |
| 10,043 | | |
| 20,723 | |
| Total
liabilities | |
| 1,663,408 | | |
| 1,390,066 | |
| | |
| | | |
| | |
| 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 March 31, 2023 and
December 31, 2022 | |
| 1,000 | | |
| 1,000 | |
| Preferred
stock, Series B; $0.001 par value; 560,000 and 560,000 shares authorized; 560,000 and 560,000 shares issued and outstanding as of
March 31, 2023 and December 31, 2022, respectively | |
| 1,400,000 | | |
| 1,400,000 | |
| Common
stock, $0.001 par value; 50,000,000 shares authorized, 10,682,584 and 10,652,584 shares issued and outstanding as of March 31, 2023
and December 31, 2022, respectively | |
| 10,682 | | |
| 10,652 | |
| Additional
paid-in capital | |
| 4,476,383 | | |
| 4,401,413 | |
| Accumulated
deficit | |
| (7,270,210 | ) | |
| (6,801,402 | ) |
| Total
stockholders’ deficit | |
| (1,382,145 | ) | |
| (988,337 | ) |
| Total
liabilities and stockholders’ deficit | |
$ | 281,263 | | |
$ | 401,729 | |
See
accompanying notes to the financial statements.
SPECIFICITY,
INC
STATEMENTS
OF OPERATIONS
(UNAUDITED)
| | |
| | |
| |
| | |
For
the Three Months Ended March 31, 2023 | | |
For
the Three Months Ended March 31, 2022 | |
| | |
| | |
| |
| Revenue,
net | |
$ | 231,118 | | |
$ | 270,850 | |
| Cost
of revenues | |
| 94,205 | | |
| 150,890 | |
| Gross
profit | |
| 136,913 | | |
| 119,960 | |
| | |
| | | |
| | |
| Operating
expenses: | |
| | | |
| | |
| Sales
and marketing | |
| 10,080 | | |
| 12,880 | |
| General
and administrative expenses, including stock based compensation of $137,356 and $600,000, respectively | |
| 561,041 | | |
| 1,335,129 | |
| Officer
compensation | |
| 16,500 | | |
| 95,530 | |
| Total
operating expenses | |
| 587,621 | | |
| 1,443,539 | |
| | |
| | | |
| | |
| Loss
from operations | |
| (450,708 | ) | |
| (1,323,579 | ) |
| | |
| | | |
| | |
| Other
income (expense): | |
| | | |
| | |
| Interest
expense | |
| (18,100 | ) | |
| (10,548 | ) |
| Total
other income (expense) | |
| (18,100 | ) | |
| (10,548 | ) |
| | |
| | | |
| | |
| Net
loss | |
$ | (468,808 | ) | |
$ | (1,334,127 | ) |
| | |
| | | |
| | |
| Basic
and diluted net loss per common share attributable to common stockholders | |
$ | (0.04 | ) | |
$ | (0.15 | ) |
| Weighted-average
number of shares used in computing basic and diluted per share amounts | |
| 10,652,584 | | |
| 8,875,895 | |
See
accompanying notes to the financial statements.
SPECIFICITY,
INC
STATEMENTS
OF STOCKHOLDERS’ EQUITY (DEFICIT)
FOR
THE THREE MONTHS ENDED MARCH 31, 2023 AND 2022
(UNAUDITED)
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
Total | |
| | |
Preferred
Stock, Series A | | |
Preferred
Stock, Series B | | |
Common
Stock | | |
Additional | | |
Accumulated | | |
Stockholders’ | |
| | |
Shares | | |
Amount | | |
Shares | | |
Amount | | |
Shares | | |
Amount | | |
Paid-in
Capital | | |
Deficit | | |
Deficit | |
| Balance,
December 31, 2022 | |
| 1,000,000.00 | | |
$ | 1,000 | | |
| 560,000 | | |
$ | 1,400,000 | | |
| 10,652,584 | | |
$ | 10,652 | | |
$ | 4,401,413 | | |
$ | (6,801,402 | ) | |
| (988,337 | ) |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Common
shares issued for services | |
| - | | |
| - | | |
| - | | |
| - | | |
| 30,000 | | |
| 30 | | |
| 74,970 | | |
| - | | |
| 75,000 | |
| Net
loss | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| (468,808 | ) | |
| (468,808 | ) |
| Balance,
March 31, 2023 | |
| 1,000,000.00 | | |
$ | 1,000 | | |
| 560,000 | | |
$ | 1,400,000 | | |
| 10,682,584 | | |
$ | 10,682 | | |
$ | 4,476,383 | | |
$ | (7,270,210 | ) | |
$ | (1,382,145 | ) |
See
accompanying notes to the financial statements.
SPECIFICITY,
INC
STATEMENTS
OF CASH FLOWS
(UNAUDITED)
| | |
| | |
| |
| | |
For
the Three Months Ended March 31, 2023 | | |
For
the Three Months Ended March 31, 2022 | |
| | |
| | |
| |
| CASH
FLOWS FROM OPERATING ACTIVITIES: | |
| | | |
| | |
| Net
loss | |
$ | (468,808 | ) | |
$ | (1,334,127 | ) |
| Adjustments
to reconcile net loss to net cash used in operating activities: | |
| | | |
| | |
| Stock-based
compensation | |
| 137,356 | | |
| 600,000 | |
| Depreciation | |
| 2,583 | | |
| 2,246 | |
| Changes
in operating assets and liabilities: | |
| | | |
| | |
| Accounts
receivable | |
| 8,182 | | |
| - | |
| Related
party receivables | |
| - | | |
| - | |
| Prepaids
and other current assets | |
| (10,740 | ) | |
| (11,349 | ) |
| Accounts
payable | |
| (3,753 | ) | |
| 42,646 | |
| Accrued
liabilities | |
| (4,252 | ) | |
| (36,079 | ) |
| Net
cash used in operating activities | |
| (326,932 | ) | |
| (736,663 | ) |
| | |
| | | |
| | |
| CASH
FLOWS FROM INVESTING ACTIVITIES: | |
| | | |
| | |
| Purchase
of property and equipment | |
| - | | |
| (9,207 | ) |
| Net
cash used in investing activities | |
| - | | |
| (9,207 | ) |
| | |
| | | |
| | |
| CASH
FLOWS FROM FINANCING ACTIVITIES: | |
| | | |
| | |
| Net
borrowings on notes payable | |
| 104,770 | | |
| - | |
| Advances
from related party | |
| 174,433 | | |
| - | |
| Payment
of deferred offering costs | |
| - | | |
| (19,246 | ) |
| Proceeds
from sale of common stock | |
| 75,000 | | |
| 471,967 | |
| Net
cash provided by financing activities | |
| 354,203 | | |
| 452,721 | |
| | |
| | | |
| | |
| Change
in cash and cash equivalents | |
| 27,271 | | |
| (293,149 | ) |
| Cash
and cash equivalents, beginning of period | |
| 22,818 | | |
| 637,841 | |
| Cash
and cash equivalents, end of period | |
$ | 50,089 | | |
$ | 344,692 | |
| | |
| | | |
| | |
| Supplemental
disclosures of cash flow information: | |
| | | |
| | |
| Cash
paid for interest | |
$ | 3,100 | | |
$ | 10,548 | |
| Cash
paid for income taxes | |
$ | - | | |
$ | - | |
| | |
| | | |
| | |
| Non-cash
investing and financing activities: | |
| | | |
| | |
| 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, 2022. The results of operations for the three months ended March 31, 2023 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.
SPECIFICITY,
INC.
NOTES
TO THE FINANCIAL STATEMENTS
(UNAUDITED)
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 March 31, 2023 and 2022, the Company does not have any dilutive shares.
New
Accounting Pronouncements
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 three months ended March 31, 2023, the Company incurred a net loss of
$468,808 and used cash of $326,932 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.
SPECIFICITY,
INC.
NOTES
TO THE FINANCIAL STATEMENTS
(UNAUDITED)
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 as well as monies advanced from related parties. 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. 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
In
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-2023 and thus no amortization was recorded at March 31, 2023.
NOTE
5 – ADVANCES AND NOTES PAYABLE
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 three months ended March 31,
2023 and 2022, the Company either accrued or paid interest of $12,500. As of March 31, 2023, the Company has accrued interest of $12,500
included within accrued interest, related party on the accompanying balance sheet.
The
Company’s chief executive officer and a member of management have advanced the Company funds for operations. The advances do not
incur interest and are due on demand. As of March 31, 2023, the balance due on the advances was $368,172. Subsequent to March 31, 2023,
additional advances were $10,000_.
On
March 2, 2023, the Company entered into a revenue purchase agreement with a third party. Under the terms of the agreement, the Company
received proceeds of $120,000 for which $169,200 will be repaid in 36 weekly installments of $4,700. The amounts loaned are secured by
substantially all of the Company’s assets and are guaranteed by the Company’s Chief Executive Officer and a member of management.
Subsequent to March 31, 2022, the Company entered into an additional agreement for $200,000 in proceeds.
NOTE
6 - COMMITMENTS AND CONTIGENCIES
Lease
The
Company leases offices used for operations under a non-cancelable agreement. Rent expense for the three months ended March 31, 2023 and
2022 was $26,280 and $35,058, 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 three months ended March 31, 2023, and 2022 the Company accrued or paid either the Chief Executive
Officer and/or entities affiliated with the Chief Executive Officer $16,500, and 95,530, respectively which has been classified as officer
compensation on the accompanying statements of operations. As of March 31, 2023, amounts due to the Chief Executive Officer were $15,000
and included within accrued liabilities on the accompanying balance sheet.
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”). During September
2022, the Company increased the Series B preferred stock authorized shares to 560,000. 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.
During
the three months ended March 31, 2022 the Company sold 314,644 shares of common stock to various investors at prices ranging from $0.50
to $1.50 per share resulting in gross proceeds of $471,967. As of the three months ended March 31, 2022 there were no subscriptions receivable
related to these sales. Offering costs related to the sale of these shares amounted to $19,246 as of March 31, 2022 During the three
months ended March 31, 2023 the Company sold 30,000 shares of common stock at $2.50 per share resulting in proceeds of $75,000. In
connection with the sale, the Company issued warrants to purchase 75,000 shares of common stock at an exercise price of $5.00. The warrants
vested upon issuance and expire in 2 years.
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.
SPECIFICITY,
INC.
NOTES
TO THE FINANCIAL STATEMENTS
(UNAUDITED)
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 for the year ended December 31, 2022, as filed with the Commission on March 30, 2023, 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.
SPECIFICITY,
INC.
NOTES
TO THE FINANCIAL STATEMENTS
(UNAUDITED)
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. |
SPECIFICITY,
INC.
NOTES
TO THE FINANCIAL STATEMENTS
(UNAUDITED)
We
are currently a development stage company with minimal revenues, though we had a significant increase in revenues for the year ended
December 31, 2022. 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 March 31, 2023, 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 March 31, 2023, vs 2022
Revenues
For
the quarter ended March 31, 2023, and the quarter ended March 31, 2022, we generated $231,118 and $270,850 in revenues, respectively.
The decrease in revenues was due to a significant number of nonperforming salespeople which were subsequently released from employment
as the Company shifted to engage larger clients. Additionally, several client launches which were anticipated to be completed during
the first quarter of 2023 were delayed from completion by the quarter ended March 31, 2023, and are anticipated to be consummated during
the second quarter of 2023.
Operating
Expenses
For
the quarter ended March 31, 2023, and the quarter ended March 31, 2022, we incurred $587,621 and $1,443,539 in operating expenses, respectively.
The decrease in Operating Expenses was due primarily to a decrease in general and administrative expenses and a decrease in officer compensation
due to the continued expansion of our operations.
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 $50,089 as of March 31, 2023, as compared to $344,692 as of March 31, 2022. The decrease in capital was directly related to a
decrease in proceeds from the sale of common stock.
Cash
flows for the three months ended March 31, 2023.
Net
cash flow derived from operating activities was $(326,932) for the three months ended March 31, 2023. This is due primarily to a net
loss of $468,808, account payable of $(3,753), prepaids and other current assets of $(10,740), offset primarily by $137,356 in the stock-based
compensation and $8,182 in accounts receivable. The increase from net cash flow derived from operating activities for the three months
ended March 31, 2022, of $(736,663) is primarily due to the expansion of our operations.
SPECIFICITY,
INC.
NOTES
TO THE FINANCIAL STATEMENTS
(UNAUDITED)
Net
cash flow used in investing activities was $0 for the three months ended March 31, 2023, and $(9,207) for the three months ended March
31, 2022, due primarily to the purchase of property or equipment totaling $(9,207) during the three months ended March 31, 2022.
Net
cash provided by financing activities was $354,203 for the three months ended March 31, 2023, and consisted of $75,000 from the proceeds
from the sale of common stock, $174,433 from advances from related parties and $104,770 from payments on notes payable. Net cash provided
by financing activities was $452,721 for the three months ended March 31, 2022, and consisted of $471,967 from the proceeds from the
sale of common stock. 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 financing 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
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.
SPECIFICITY,
INC.
NOTES
TO THE FINANCIAL STATEMENTS
(UNAUDITED)
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 March 31, 2023,
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 three months ended
March 31, 2023. 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 March 31, 2023, that have materially affected,
or are reasonably likely to materially affect, our internal control over financial reporting.
SPECIFICITY,
INC.
NOTES
TO THE FINANCIAL STATEMENTS
(UNAUDITED)
