Item 8. Financial Statements and Supplementary Data
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(Formerly NANO-JET, CORP.)
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Table of Contents
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
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F-1
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Balance Sheets:
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December 31, 2013 and 2012
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F-2
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Statements of Operations:
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For the year ended December 31, 2013 and 2012
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F-3
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Statements of Cash Flows:
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For the year ended December 31, 2013 and 2012
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F-4
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Statement of Stockholders' Deficit:
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December 31, 2013
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F-5
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Notes to Financial Statements:
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December 31, 2013
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F-6 to F-11
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HARRIS & GILLESPIE CPA'S, PLLC
CERTIFIED PUBLIC ACCOUNTANT'S
3901 STONE WAY N., SUITE 202
SEATTLE, WA 98103
206.547.6050
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors
Hitor Group, Inc.
We have audited the accompanying balance sheets of Hitor Group, Inc. (A Development Stage Company) as of December 31, 2013 and December 31, 2012, and the related statements of operations, stockholders' deficit and cash flows for the periods then ended, and the period July 15, 2005 (inception) to December 31, 2013. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Hitor Group, Inc. (A Development Stage Company) as of December 31, 2013 and December 31, 2012 and the results of its operations and cash flows for the periods then ended and the period July 15, 2005 (inception) to December 31, 2012 in conformity with generally accepted accounting principles in the United States of America.
The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note #2 to the financial statements, although the Company has limited operations it has yet to attain profitability. This raises substantial doubt about its ability to continue as a going concern. Management's plan in regard to these matters is also described in Note #2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/S/ HARRIS & GILLESPIE CPA'S, PLLC
Seattle, Washington
April 14, 2013
F-1
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(Formerly NANO-JET, CORP.)
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(A development stage enterprise)
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Balance Sheets
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(audited)
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(audited)
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December 31,
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December 31,
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2013
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2012
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ASSETS
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Current assets:
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Cash
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$
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14,529
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$
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64,992
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Prepaid Expenses
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-
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57,617
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Inventory
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-
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-
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Total current assets
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14,529
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122,609
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Fixed Assets
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Furniture and Equipment
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8,936
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8,936
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Computer Equipment
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5,617
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5,617
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Leasehold Improvements
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-
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-
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Total Fixed Assets
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14,553
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14,553
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Less Accumulated Depreciation
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(14,553
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)
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(14,553
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)
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Net Fixed Assets
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-
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-
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Other Assets
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Investment in HITOR Poland LLC
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-
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23,100
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Goodwill
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-
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-
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Total Other Assets
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-
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23,100
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Total assets
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$
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14,529
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$
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145,709
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LIABILITIES
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Current liabilities:
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Accounts payable and accrued expenses
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$
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208,474
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$
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176,453
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Convertible Notes Payable
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524,500
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487,019
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Deposit
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150,000
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150,000
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Notes payable
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162,903
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168,662
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Advance from Lantz Financial, Inc.
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24,500
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24,500
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Total current liabilities
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1,070,377
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1,006,634
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Long-term liabilities:
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Total long-term liabilities
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-
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-
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Total liabilities
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1,070,377
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1,006,634
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STOCKHOLDERS' DEFICIT
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Common stock, $.001 par value, 100,000,000 authorized,
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81,505,862 and 69,230,968 shares issued and outstanding
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81,506
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69,231
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Capital in excess of par value
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1,855,126
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1,617,569
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Deficit accumulated during the development stage
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(2,992,480
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)
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(2,547,725
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Total stockholders' deficit
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(1,055,848
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)
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(860,925
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Total liabilities and stockholders' deficit
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$
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14,529
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$
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145,709
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The accompanying notes are an integral part of these statements.
F-2
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HITOR GROUP, INC.
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(Formerly NANO-JET, CORP.)
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(A development stage enterprise)
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Statements of Operations
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Unaudited
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Cumulative,
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Inception,
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July 15,
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2005 Through
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Year ended
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Year ended
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December 31,
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December 31,
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December 31,
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2013
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2013
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2012
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Sales
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$
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81,723
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$
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50,000
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$
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-
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Cost of Sales
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49,579
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-
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Gross Profit
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32,144
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50,000
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-
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General and administrative expenses:
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Salaries
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228,693
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-
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Depreciation
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22,837
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1,515
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Legal and professional
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1,118,872
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174,771
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270,110
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Marketing and Advertising
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456,061
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55,877
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124,627
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Insurance
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32,710
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420
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460
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Communications
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56,787
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6,351
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8,175
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Rent
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106,254
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5,000
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9,000
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Inventory impairment
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75,968
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|
|
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|
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75,968
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Other general and administrative
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|
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469,029
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|
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55,132
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|
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118,549
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Total operating expenses
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2,567,211
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297,551
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608,404
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(Loss) from operations
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(2,535,067
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)
|
|
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(247,551
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)
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(608,404
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)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense):
|
|
|
|
|
|
|
|
|
|
|
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Interest Income
|
|
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4,617
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|
|
|
-
|
|
|
|
-
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Loss on disposition of assets
|
|
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(35,720
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)
|
|
|
(23,100
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)
|
|
|
|
|
Interest (expense)
|
|
|
(426,310
|
)
|
|
|
(174,104
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)
|
|
|
(91,172
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)
|
(Loss) before taxes
|
|
|
(2,992,480
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)
|
|
|
(444,755
|
)
|
|
|
(699,576
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)
|
|
|
|
|
|
|
|
|
|
|
|
|
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Provision (credit) for taxes on income
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Net (loss)
|
|
$
|
(2,992,480
|
)
|
|
$
|
(444,755
|
)
|
|
$
|
(699,576
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Basic earnings (loss) per common share
|
|
|
|
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$
|
(0.01
|
)
|
|
$
|
(0.01
|
)
|
|
|
|
|
|
|
|
|
|
|
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|
Weighted average number of shares outstanding
|
|
|
|
|
|
|
72,368,415
|
|
|
|
69,230,688
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The accompanying notes are an integral part of these statements.
F-3
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HITOR GROUP, INC.
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(Formerly NANO-JET, CORP.)
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(A development stage enterprise)
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Statements of Stockholders' Deficit
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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|
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|
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|
|
|
|
|
|
|
|
|
|
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Deficit
|
|
|
|
|
|
|
|
|
|
|
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Accumulated
|
|
|
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|
|
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|
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Capital in
|
|
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During the
|
|
|
|
|
|
|
Common Stock
|
|
|
Excess of
|
|
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Development
|
|
|
|
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Shares
|
|
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Amount
|
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Par Value
|
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Stage
|
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Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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Inception, July 15, 2005 through December 31, 2005:
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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Balances, December 31, 2005
|
|
|
81,005,000
|
|
|
$
|
81,005
|
|
|
$
|
-
|
|
|
$
|
(135,692
|
)
|
|
$
|
(54,687
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Effects of Reverse Merger with LFG
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2006
|
|
|
(40,435,500
|
)
|
|
|
(40,435
|
)
|
|
|
31,799
|
|
|
|
|
|
|
|
(8,636
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(84,628
|
)
|
|
|
(84,628
|
)
|
Balances, December 31, 2006
|
|
|
40,569,500
|
|
|
|
40,570
|
|
|
|
31,799
|
|
|
|
(220,320
|
)
|
|
|
(147,951
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Conversion of subordinated debt
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 19, 2007
|
|
|
1,000,000
|
|
|
|
1,000
|
|
|
|
699,000
|
|
|
|
|
|
|
|
700,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance for services rendered
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
July 14, 2007
|
|
|
100,000
|
|
|
|
100
|
|
|
|
99,900
|
|
|
|
|
|
|
|
100,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(736,061
|
)
|
|
|
(736,061
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balances, December 31, 2007
|
|
|
41,669,500
|
|
|
|
41,670
|
|
|
|
830,699
|
|
|
|
(956,381
|
)
|
|
|
(84,012
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock Issued cash
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2008
|
|
|
15,000
|
|
|
|
15
|
|
|
|
14,985
|
|
|
|
|
|
|
|
15,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(343,341
|
)
|
|
|
(343,341
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balances, December 31, 2008
|
|
|
41,684,500
|
|
|
|
41,685
|
|
|
|
845,684
|
|
|
|
(1,299,722
|
)
|
|
|
(412,353
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(145,430
|
)
|
|
|
(145,430
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balances, December 31, 2009
|
|
|
41,684,500
|
|
|
|
41,685
|
|
|
|
845,684
|
|
|
|
(1,445,152
|
)
|
|
|
(557,783
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock Issued for Cash
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
February 26, 2010
|
|
|
20,000
|
|
|
|
20
|
|
|
|
19,980
|
|
|
|
|
|
|
|
20,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
April 2010 1:1.5 Stock Split
|
|
|
20,875,500
|
|
|
|
20,875
|
|
|
|
(20,875
|
)
|
|
|
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 22, 2010
|
|
|
275,000
|
|
|
|
275
|
|
|
|
54,725
|
|
|
|
|
|
|
|
55,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(131,857
|
)
|
|
|
(131,857
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balances, December 31, 2010
|
|
|
62,855,000
|
|
|
|
62,855
|
|
|
|
899,514
|
|
|
|
(1,577,009
|
)
|
|
|
(614,640
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock Issued
|
|
|
2,833,218
|
|
|
|
2,833
|
|
|
|
263,849
|
|
|
|
|
|
|
|
266,682
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(271,140
|
)
|
|
|
(271,140
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balances, December 31, 2011
|
|
|
65,688,218
|
|
|
|
65,688
|
|
|
|
1,163,363
|
|
|
|
(1,848,149
|
)
|
|
|
(619,098
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock Issued
|
|
|
3,542,750
|
|
|
|
3,543
|
|
|
|
382,160
|
|
|
|
|
|
|
|
385,703
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Intrisic Bond Discount
|
|
|
|
|
|
|
|
|
|
|
72,046
|
|
|
|
|
|
|
|
72,046
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(699,576
|
)
|
|
|
(699,576
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balances, December 31, 2012
|
|
|
69,230,968
|
|
|
|
69,231
|
|
|
|
1,617,569
|
|
|
|
(2,547,725
|
)
|
|
|
(860,925
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock Issued
|
|
|
12,274,894
|
|
|
|
12,275
|
|
|
|
135,693
|
|
|
|
|
|
|
|
147,968
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Intrisic Bond Discount
|
|
|
|
|
|
|
|
|
|
|
101,864
|
|
|
|
|
|
|
|
101,864
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(444,755
|
)
|
|
|
(444,755
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balances, December 31, 2013
|
|
|
81,505,862
|
|
|
$
|
81,506
|
|
|
$
|
1,855,126
|
|
|
$
|
(2,992,480
|
)
|
|
$
|
(1,055,848
|
)
|
The accompanying notes are an integral part of these statements.
F-4
|
|
|
|
|
|
|
|
|
|
HITOR GROUP, INC.
|
|
(Formerly NANO-JET, CORP.)
|
|
(A development stage enterprise)
|
|
Statements of Cash Flows
|
|
Unaudited
|
|
|
|
Cumulative,
|
|
|
|
|
|
|
|
|
|
Inception,
|
|
|
|
|
|
|
|
|
|
July 15,
|
|
|
|
|
|
|
|
|
|
2005 Through
|
|
|
Year ended
|
|
|
Year ended
|
|
|
|
December 31,
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
2013
|
|
|
2013
|
|
|
2012
|
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
|
|
Net (loss)
|
|
$
|
(2,992,480
|
)
|
|
$
|
(444,755
|
)
|
|
$
|
(699,576
|
)
|
Adjustments to reconcile net (loss) to cash
|
|
|
|
|
|
|
|
|
|
|
|
|
provided (used) by developmental stage activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issued for services
|
|
|
522,724
|
|
|
|
|
|
|
|
345,702
|
|
Effects of reverse merger with LFG
|
|
|
(8,636
|
)
|
|
|
|
|
|
|
|
|
Depreciation and Amortization
|
|
|
14,553
|
|
|
|
-
|
|
|
|
-
|
|
Amortization of bond discount
|
|
|
202,616
|
|
|
|
144,535
|
|
|
|
58,081
|
|
Loss on sale of assets
|
|
|
12,620
|
|
|
|
|
|
|
|
|
|
Change in current assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Funds held in trust, Attorney
|
|
|
|
|
|
|
-
|
|
|
|
-
|
|
Inventory
|
|
|
-
|
|
|
|
-
|
|
|
|
75,968
|
|
Prepaid expenses
|
|
|
-
|
|
|
|
57,617
|
|
|
|
(57,617
|
)
|
Deposits
|
|
|
150,000
|
|
|
|
-
|
|
|
|
|
|
Accounts payable and accrued expenses
|
|
|
208,474
|
|
|
|
32,021
|
|
|
|
26,240
|
|
Net cash flows from operating activities
|
|
|
(1,890,129
|
)
|
|
|
(210,582
|
)
|
|
|
(251,202
|
)
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase of fixed assets
|
|
|
(14,553
|
)
|
|
|
-
|
|
|
|
-
|
|
Website development costs incurred
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash flows from investing activities
|
|
|
(14,553
|
)
|
|
|
-
|
|
|
|
-
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from sale of common stock
|
|
|
1,169,827
|
|
|
|
67,816
|
|
|
|
40,000
|
|
Proceeds/(payments) from notes payable
|
|
|
200,384
|
|
|
|
31,722
|
|
|
|
87,392
|
|
Convertible Note Payable
|
|
|
524,500
|
|
|
|
37,481
|
|
|
|
102,500
|
|
Investment in subsidiary
|
|
|
-
|
|
|
|
23,100
|
|
|
|
(23,100
|
)
|
Advance from Lantz Financial, Inc.
|
|
|
24,500
|
|
|
|
|
|
|
|
|
|
Net cash flows from financing activities
|
|
|
1,919,211
|
|
|
|
160,119
|
|
|
|
206,792
|
|
Net cash flows
|
|
|
14,529
|
|
|
|
(50,463
|
)
|
|
|
(44,410
|
)
|
Cash and equivalents, beginning of period
|
|
|
-
|
|
|
|
64,992
|
|
|
|
109,402
|
|
Cash and equivalents, end of period
|
|
$
|
14,529
|
|
|
$
|
14,529
|
|
|
$
|
64,992
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental cash flow disclosures:
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash paid for interest
|
|
$
|
(295,784
|
)
|
|
$
|
-
|
|
|
$
|
-
|
|
Cash paid for income taxes
|
|
|
-
|
|
|
|
|
|
|
|
|
|
Shares issued to settle convertible debenture
|
|
$
|
123,271
|
|
|
$
|
80,152
|
|
|
|
|
|
The accompanying notes are an integral part of these statements.
F-5
Hitor Group, Inc.
Formerly
Nano-Jet Corp.
(A development stage enterprise)
Notes to Financial Statements
December 31, 2013
Note 1 - Organization and summary of significant accounting policies:
Following is a summary of the Company's organization and significant accounting policies:
Organization and nature of business –Hitor Group Inc.
, formerly Nano-Jet Corp. ("We," or "the Company") is a Nevada corporation incorporated on July 15, 2005. Effective December 6, 2007, the Company changed its name to Hitor Group Inc.
The Company's product is anticipated to allow owners and operators of both gasoline and diesel powered vehicles to potentially increase fuel efficiency while reducing fuel emissions into the environment. In addition, the Company intends to operate three other subsidiaries. One will focus on oil extraction, transport and storage solutions. The other will focus on alternative powered private and commercial vehicles. The Company owns a proprietary technology and currently is applying for patents and has hired patent attorneys for this technology worldwide.
The Company is also in the process of substantially changing their business plan. The company will operate two distinct sections, the one that allows fuel and energy efficiency and a new telecom division which will allow the company to offer voice over internet protocol (VoIP). See note 9 for more.
Basis of presentation
– The accompanying financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America, and pursuant to the rules and regulations of the Securities and Exchange Commission (the "SEC") and reflect all adjustments, consisting of normal recurring adjustments, which management believes are necessary to fairly present the financial position, results of operations, and cash flows of the Company for the period ending December 31, 2013 and 2012.
Use of estimates -
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Cash and cash equivalents
- The Company maintains a cash balance in a non-interest-bearing account that currently does not exceed federally insured limits. For the purpose of the statements of cash flows, all highly liquid investments with an original maturity of three months or less are considered to be cash equivalents. There were no cash equivalents as of December 31, 2013 and 2012.
Inventory
–
Inventory is recorded at lower of cost or market, cost is computed on a first-in first-out basis. The inventory consists of imported parts.
Property and Equipment
– The Company values its investment in property and equipment at cost less accumulated depreciation. Depreciation is computed primarily by the straight line method over the estimated useful lives of the assets ranging from five to thirty-nine years.
Fair value of financial instruments and derivative financial instruments
– We have adopted Accounting Standards Codification regarding
Disclosure About Derivative Financial Instruments and Fair Value of Financial Instruments
. The carrying amounts of cash, accounts payable, accrued expenses, and other current liabilities approximate fair value because of the short maturity of these items. These fair value estimates are subjective in nature and involve uncertainties and matters of significant judgment, and, therefore, cannot be determined with precision. Changes in assumptions could significantly affect these estimates. We do not hold or
F-6
Hitor Group, Inc.
Formerly
Nano-Jet Corp.
(A development stage enterprise)
Notes to Financial Statements
December 31, 2013
issue financial instruments for trading purposes, nor do we utilize derivative instruments in the management of foreign exchange, commodity price or interest rate market risks.
Federal income taxes
- Deferred income taxes are reported for timing differences between items of income or expense reported in the financial statements and those reported for income tax purposes in accordance with Accounting Standards Codification regarding
Accounting for Income Taxes
, which requires the use of the asset/liability method of accounting for income taxes. Deferred income taxes and tax benefits 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 bases, and for tax loss and credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Deferred taxes are provided for the estimated future tax effects attributable to temporary differences and carryforwards when realization is more likely than not.
Net loss per share calculation
- Net loss per share is provided in accordance with FASB ASC 260-10, "Earnings per Share". Basic net loss per common share ("EPS") is computed by dividing income available to common stockholders by the weighted-average number of common shares outstanding for the period. Diluted earnings per share is computed by dividing net income by the weighted average shares outstanding, assuming all dilutive potential common shares were issued, unless doing so is anti-dilutive.
Recently Issued Accounting Pronouncements -
For the periods ended December 31, 2013 and 2012, the Company does not expect any of the recently issued accounting pronouncements to have a material impact on its financial condition or results of operations.
Note 2 - Uncertainty, going concern:
At December 31, 2013, we were engaged in a business and had suffered losses from development stage activities to date. In addition, current liabilities exceed current assets, and we have minimal operating funds. Although management is currently attempting to identify business opportunities and is seeking additional sources of equity or debt financing, there is no assurance these activities will be successful. Accordingly, we must rely on our officers to perform essential functions without compensation until a business operation can be commenced. No amounts have been recorded in the accompanying financial statements for the value of officers' services, as it is not considered material.
These factors raise substantial doubt about the ability of the Company to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Note 3 – Advance from Lantz Financial, Inc.:
On March 6, 2006, April 20, 2005 and November 28, 2005, we obtained loans of $10,000, $8,500 and $6,000 respectively from Lantz Financial, Inc., a Panamanian company. Lantz is a non-affiliate of the Company (not associated with any officer, director, or 5% shareholder). The loans are not evidenced by a note, do not bear interest, and are unsecured. They are due on demand. The lender has indicated that it may want to convert the debt into shares in the future, but there is no agreement to that effect and no understanding as to any other terms.
Note 4 - Federal income tax:
We follow Accounting Standards Codification regarding
Accounting for Income Taxes
. Deferred income taxes reflect the net effect of (a) temporary difference between carrying amounts of assets and liabilities for financial purposes and the amounts used for income tax reporting purposes, and (b) net operating loss carryforwards. No net provision for refundable Federal income tax has been made in the accompanying statement of loss because no recoverable taxes were paid previously. Similarly, no deferred tax asset attributable to the net operating loss carryforward has been recognized, as it is not deemed likely to be realized.
F-7
Hitor Group, Inc.
Formerly
Nano-Jet Corp.
(A development stage enterprise)
Notes to Financial Statements
December 31, 2013
The provision for refundable Federal income tax consists of the following:
|
|
12/31/2013
|
|
|
12/31/2012
|
|
Refundable Federal income tax attributable to:
|
|
|
|
|
|
|
Current operations
|
|
$
|
(151,217
|
)
|
|
$
|
( 227,656
|
)
|
Less, Nondeductible expenses
|
|
|
-0-
|
|
|
|
-0-
|
|
-Less, Change in valuation allowance
|
|
|
151,217
|
|
|
|
227,656
|
|
Net refundable amount
|
|
|
-0-
|
|
|
|
-0-
|
|
The cumulative tax effect at the expected rate of 34% of significant items comprising our net deferred tax amount is as follows:
|
|
12/31/2013
|
|
|
12/31/12
|
|
Deferred tax asset attributable to:
|
|
|
|
|
|
|
Net operating loss carryover
|
|
$
|
1,007,243
|
|
|
$
|
856,027
|
|
Less, Valuation allowance
|
|
|
( 1,007,243
|
)
|
|
|
( 856,027
|
)
|
Net deferred tax asset
|
|
|
-0-
|
|
|
|
-0-
|
|
At December 31, 2013, an unused net operating loss carryover approximating $2,992,480 is available to offset future taxable income; it expires beginning in 2018. Due to the change of control of the Company, the use of the net operating loss may be limited in the future.
Note 5 – Investment in HITOR Poland LLC
On May 16, 2012, The Company invested $3,000 in HITOR Poland LLC. The Company owns a 49% interest in the LLC. The joint venture is a manufacturing plant that will manufacture the HITOR product line and operates in Sanouk, Poland. On September 13, 2012, the Company invested an additional $20,100 for a total of $23,100 at December 31, 2012. As a result of the significant influence and control exercised over the investee, HITOR Poland LLC, the accounting policy has been determined to be the equity method. Accordingly, the investment is recorded at cost and there have been no earnings or expenses from Hitor Poland to recognize. During the fourth quarter of 2013, the Company decided to terminate all operations in Poland. The Company recognized a loss on abandonment of $23,100.
Note 6 – Cumulative sales of stock:
Since its inception, we have issued shares of common stock as follows:
On July 15, 2005, the Company issued 81,005,000 founder shares for services rendered in the amount of $81,005.
On September 30, 2006 the Company completed a reverse merger with LFG International, Inc. The Company issued 67,133 shares for the outstanding shares of LFG International, Inc. As part of the recapitalization of the reverse merger the Company rolled forward a reverse 2:1 stock split. The effect of this reverse split was a reduction of the outstanding shares of 40,435,367.
On June 19, 2007, the Company's convertible notes payable were called. The company issued 1,000,000 shares in exchange for $700,000 of the convertible notes.
On July 12, 2007 the Company issued 100,000 shares of common stock in exchange for consulting services rendered.
F-8
Hitor Group, Inc.
Formerly
Nano-Jet Corp.
(A development stage enterprise)
Notes to Financial Statements
December 31, 2013
On March 31, 2008 the Company issued 15,000 shares of common stock for $15,000.
On February 26, 2010 the Company issued 20,000 shares of common stock for $20,000.
On December 22, 2010 the Company issued 275,000 shares of common stock for $55,000.
In September and October of 2011, The Company issued 2,150,000 shares of stock for $244,400.
In December 2011, The Company issued 107,673 as part of a convertible debenture.
During the first quarter of 2012, the Company issued 400,000 shares of stock for $40,000 to two individuals and 3,142,750 shares to Turon Capital Partners, Inc. for marketing services to be provided.
During the first quarter of 2013, the Company issued 6,283,559 share of stock for $0.009 to pay down the convertible debentures in the amount of $58,333.
On April 22, 2013, the Company issued 291,845 to pay down the Asher notes by $7,286.
On August 12, 2013, the Company issued 311,509 to pay down the Asher notes by $14,533.
During the fourth quarter of 2013, the Company issued 5,387,981 shares of stock for $39,200 cash.
Note 7 – Convertible Notes Payable:
On December 12, 2006 the Company issued a convertible notes payable in the amount of $300,000. $200,000 of the loan was advanced in December, 2006. In March 2007, the additional $100,000 was received. The note is due one year from the date of issue and bears interest at the rate of 5% per annum compounded annually. The terms of the note allow the holder to convert the note into shares of the company's stock at the rate of one share per $1 of debt including unpaid interest.
The Company issued additional convertible notes payable in July of 2009 in the amount of $100,000. The note is due one year from the date of issue and bears interest at a rate of 5% per annum compounded annually. The terms of the note allow the holder to convert the note into shares of the Company's stock at a rate of one share per $1 of debt including unpaid interest.
On January 24, 2012, The Company entered into a Note Purchase Agreement with Asher Enterprises, Inc. in which the Company issued to Asher Enterprises a convertible promissory note in the amount of $42,500. These notes are convertible into shares of the Company's common stock based on 55% of the lowest trade price in the 10 days pervious to the conversion. The Notes have a maturity of 10 months and each bear an 8% interest rate. As of June 30, 2012, the Company has issued and received $42,500. Additionally, the company recorded the intrinsic value of the 45% discount on conversion factor. The Company recorded bond discount of $34,773.
On May 16, 2012, The Company entered into a Note Purchase Agreement with Asher Enterprises, Inc. in which the Company issued to Asher Enterprises a convertible promissory note in the amount of $27,500. These notes are convertible into shares of the Company's common stock based on 55% of the lowest trade price in the 10 days pervious to the conversion. The Notes have a maturity of 10 months and each bear an 8% interest rate. Additionally, the company recorded the intrinsic value of the 45% discount on conversion factor. The Company recorded bond discount of $22,500.
F-9
Hitor Group, Inc.
Formerly
Nano-Jet Corp.
(A development stage enterprise)
Notes to Financial Statements
December 31, 2013
On July 31, 2012, The Company entered into a Note Purchase Agreement with Asher Enterprises, Inc. in which the Company issued to Asher Enterprises a convertible promissory note in the amount of $32,500. These notes are convertible into shares of the Company's common stock based on 55% of the lowest trade price in the 10 days pervious to the conversion. The Notes have a maturity of 9 months and each bear an 8% interest rate. Additionally, the company recorded the intrinsic value of the 45% discount on conversion factor. The Company recorded bond discount of $14,773.
On March 7, 2013, The Company entered into a Note Purchase Agreement with Asher Enterprises, Inc. in which the Company issued to Asher Enterprises a convertible promissory note in the amount of $32,500. These notes are convertible into shares of the Company's common stock based on 55% of the lowest trade price in the 10 days pervious to the conversion. The Notes have a maturity of 9 months and each bear an 8% interest rate. Additionally, the company recorded the intrinsic value of the 45% discount on conversion factor. The Company recorded bond discount of $26,591.
On April 15, 2013, The Company entered into a Note Purchase Agreement with Asher Enterprises, Inc. in which the Company issued to Asher Enterprises a convertible promissory note in the amount of $32,500. These notes are convertible into shares of the Company's common stock based on 55% of the lowest trade price in the 10 days pervious to the conversion. The Notes have a maturity of 9 months and each bear an 8% interest rate. Additionally, the company recorded the intrinsic value of the 45% discount on conversion factor. The Company recorded bond discount of $26,591.
On May 31, 2013, The Company entered into a Note Purchase Agreement with Asher Enterprises, Inc. in which the Company issued to Asher Enterprises a convertible promissory note in the amount of $32,500. These notes are convertible into shares of the Company's common stock based on 55% of the lowest trade price in the 10 days pervious to the conversion. The Notes have a maturity of 9 months and each bear an 8% interest rate. Additionally, the company recorded the intrinsic value of the 45% discount on conversion factor. The Company recorded bond discount of $26,591.
On August 7, 2013, The Company entered into a Note Purchase Agreement with Asher Enterprises, Inc. in which the Company issued to Asher Enterprises a convertible promissory note in the amount of $14,500. These notes are convertible into shares of the Company's common stock based on 55% of the lowest trade price in the 10 days pervious to the conversion. The Notes have a maturity of 9 months and each bear an 8% interest rate. Additionally, the company recorded the intrinsic value of the 45% discount on conversion factor. The Company recorded bond discount of $11,864.
On November 11, 2013, The Company entered into a Note Purchase Agreement with Asher Enterprises, Inc. in which the Company issued to Asher Enterprises a convertible promissory note in the amount of $12,500. These notes are convertible into shares of the Company's common stock based on 55% of the lowest trade price in the 10 days pervious to the conversion. The Notes have a maturity of 9 months and each bear an 8% interest rate. Additionally, the company recorded the intrinsic value of the 45% discount on conversion factor. The Company recorded bond discount of $10,227.
The balance of these convertible debentures at December 31, 2013 was $140,682 and the bond discount amount was $16,182.
Note 8 – Notes Payable
The Company has a non-interest bearing note payable with one of its officers and shareholders. The balance of this note at December 31, 2013 was $33,903 and $151,279 at December 31, 2012.
F-10
Hitor Group, Inc.
Formerly
Nano-Jet Corp.
(A development stage enterprise)
Notes to Financial Statements
December 31, 2013
The Company also has notes payable $129,000. These notes carry an interest rate of 8% and a one year maturity rate. The balance of these notes at December 31, 2013 was $129,000.
Note 9 – Stock Subscriptions
On March 22, 2007 the Company issued a stock subscription in the amount of $700,000. The subscription is for 1,000,000 shares at a rate of $0.70 per share. Among other provisions the subscription holder has exclusive selling rights to the Company's product in Poland and responsibilities to sell preset amounts of product.
In January 2012, the Company issued a stock option to Makirys Management Group Inc. in the amount of $300,000 or 3,000,000 shares at $0.10 per share. The incentive is to entice the Company to expand the product lines into different countries and increase the market share in Canada.
Note 10 – Resignation of Director
On February 1, 2012, Mr. Xiao Lin resigned as a director of the Company.
Note 11 – Marketing Contract and Restatement:
Prior to the issuance of the financial statements
management determined that it had not recorded a consulting agreement between Turon Capital Partners, Inc. and the Company. The agreement was effective on March 2, 2012 and will result in a restatement for both the March 31, 2012 and June 30, 2012 financial statements. The agreement between the parties was for ongoing consulting and support assistance for the marketing of all the Company's products. The term of the agreement is for a period of twelve months but can be canceled by either party with a sixty day written notice by certified/registered mail. Compensation provided to Turon Capital Partners, Inc. was in the form of an issuance of 3,142,750 common shares. Furthermore, the Company has agreed to advance $50,000 upon the approval of a ninety day marketing plan that has yet to be finalized.
The following table represents the effects of the restated statements as of March 31, 2012 and June 30, 2012:
|
|
|
|
|
|
|
|
|
Restated
|
|
Original
|
|
Restated
|
|
Original
|
|
03/31/12
|
|
03/31/12
|
|
06/30/12
|
|
06/30/12
|
Prepaid Expenses
|
316,894
|
|
0
|
|
230,468
|
|
0
|
|
|
|
|
|
|
|
|
Common Stock
|
69,231
|
|
66,088
|
|
69,231
|
|
91,088
|
|
|
|
|
|
|
|
|
Capital In Excess of Par Value
|
1,580,296
|
|
1,237,736
|
|
1,602,796
|
|
1,237,736
|
|
|
|
|
|
|
|
|
Retained Deficit
|
(1,848,149
|
|
(1,941,562)
|
|
(1,848,149)
|
|
(1,998,588)
|
|
|
|
|
|
|
|
|
(Loss)/Income
|
(122,201)
|
|
(93,413)
|
|
(277,468)
|
|
(150,439)
|
Note 12 – Subsequent Events:
Management has reviewed events between December 31, 2013 and the date the financials were issued, April 14, 2014, and aside from the event disclosed below there were no significant events identified for disclosure.
On February 20, 2014, the Company issued 2,360,000 shares to reduce their convertible note payable by $10,500.
F-11