NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE THREE-MONTH PERIODS ENDED APRIL 30, 2020 AND 2019
(Unaudited)
NOTE
1 – ORGANIZATION AND DESCRIPTION OF BUSINESS
The
Finotec Group Inc. (“Finotec”, “the Company”, “we”, “us”) has been dormant since
November 2011. On March 16, 2020, as a result of a custodianship in Clark County, Nevada, Case Number: A-20-809716-B, Custodian
Ventures LLC (“Custodian”) was appointed custodian of the Company.
On
17st of March 2020, Custodian appointed David Lazar as the Company’s Chief Executive Officer, President,
Secretary, Chief Financial Officer, Chief Executive Officer and Chairman of the Board of Directors.
David
Lazar, 30, has been CEO and Chairman of the Company since May 16, 2018. David Lazar is a private investor. Mr. Lazar has been
a partner at Zenith Partners International since 2013, where he specializes in research and development, sales and marketing.
From 2014 through 2015, David was the Chief Executive Officer of Dico, Inc., which was then sold to Peekay Boutiques. Since February
of 2018, Mr. Lazar has been the managing member of Custodian Ventures LLC, where he specializes in assisting distressed public
companies. Since March 2018, David has acted as the managing member of Activist Investing LLC, which specializes in active investing
in distressed public companies. David has a diverse knowledge of financial, legal and operations management; public company management,
accounting, audit preparation, due diligence reviews and SEC regulations.
COVID-19
On
March 11, 2020, the World Health Organization (“WHO”) declared the Covid-19 outbreak to be a global pandemic. In addition
to the devastating effects on human life, the pandemic is having a negative ripple effect on the global economy, leading to disruptions
and volatility in the global financial markets. Most US states and many countries have issued policies intended to stop or slow
the further spread of the disease.
Covid-19
and the U.S’s response to the pandemic are significantly affecting the economy. There are no comparable events that provide
guidance as to the effect the Covid-19 pandemic may have, and, as a result, the ultimate effect of the pandemic is highly uncertain
and subject to change. We do not yet know the full extent of the effects on the economy, the markets we serve, our business, or
our operations.
NOTE
2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis
of Presentation
The
accompanying financial statements have been prepared in accordance with the Financial Accounting Standards Board (“FASB”)
“FASB Accounting Standard Codification™” (the “Codification”) which is the source of authoritative
accounting principles recognized by the FASB to be applied by nongovernmental entities in the preparation of financial statements
in conformity with generally accepted accounting principles (“GAAP”) in the United States.
Management’s
Representation of Interim Financial Statements
The
accompanying unaudited consolidated financial statements have been prepared by the Company without audit pursuant to the rules
and regulations of the Securities and Exchange Commission (“SEC”). Certain information and disclosures normally included
in financial statements prepared in accordance with accounting principles generally accepted in the United States (“GAAP”)
have been condensed or omitted as allowed by such rules and regulations, and management believes that the disclosures are adequate
to make the information presented not misleading. These consolidated financial statements include all of the adjustments, which
in the opinion of management are necessary to a fair presentation of financial position and results of operations. All such adjustments
are of a normal and recurring nature. Interim results are not necessarily indicative of results for a full year.
Going
Concern
The
accompanying financial statements have been prepared assuming the Company will continue as a going concern, which contemplates
the realization of assets and the satisfaction of liabilities in the normal course of business for the twelve-month period following
the date of these financial statements. The Company has incurred operating losses since inception. As of April 30, 2020 the Company
had a working capital deficit of $10,645 and negative retained earnings of $14,172,013.
Because
the Company does not expect that existing operational cash flow will be sufficient to fund presently anticipated operations, this
raises substantial doubt about the Company’s ability to continue as a going concern. Therefore, the Company will need to
raise additional funds and is currently exploring alternative sources of financing. The Company is currently being funded by David
Lazar who is extending interest free demand loans to the Company. Historically, the Company has raised capital through private
placements, as an interim measure to finance working capital needs and may continue to raise additional capital through the sale
of common stock or other securities and obtaining some short-term loans. The Company will be required to continue to so until
its operations become profitable. Also, the Company has, in the past, paid for consulting services with its common stock to maximize
working capital, and intends to continue this practice where feasible.
Use
of Estimates
The
preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect
the reported amounts of liabilities, the liability for the excess share issuance, and disclosure of contingent assets and liabilities
at the date of the financial statements. The most significant estimates relate to income taxes and contingencies. The Company
bases its estimates on historical experience, known or expected trends and various other assumptions that are believed to be reasonable
given the quality of information available as of the date of these financial statements. The results of these assumptions provide
the basis for making estimates about the carrying amounts of assets and liabilities that are not readily apparent from other sources.
Actual results could differ from these estimates.
Revenue
Recognition
On
July 1, 2018, the Company adopted Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with
Customers (“ASC 606”). Results for reporting periods beginning after April 1, 2018, are presented under ASC 606. As
of and for the year ended April 30, 2020 the financial statements were not impacted due to the application of Topic 606 because
the Company had no revenues.
Cash
and cash equivalents
The
Company considers all highly liquid temporary cash investments with an original maturity of three months or less to be cash equivalents.
On April 30, 2020, and January 31, 2020, the Company’s cash equivalents totaled $-0- and $-0- respectively.
Income
taxes
The
Company accounts for income taxes under FASB ASC 740, “Accounting for Income Taxes”. Under FASB ASC 740,
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 bases. 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. Under FASB ASC 740, the effect on deferred tax assets and liabilities of a change in tax
rates is recognized in income in the period that includes the enactment date. FASB ASC 740-10-05, “Accounting for
Uncertainty in Income Taxes” prescribes a recognition threshold and a measurement attribute for the financial statement
recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized,
a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities.
The
amount recognized is measured as the largest amount of benefit that is greater than 50 percent likely of being realized upon ultimate
settlement. The Company assesses the validity of its conclusions regarding uncertain tax positions quarterly to determine if facts
or circumstances have arisen that might cause it to change its judgment regarding the likelihood of a tax position’s sustainability
under audit.
Stock-based
Compensation
The
Company accounts for stock-based compensation using the fair value method following the guidance outlined in Section 718-10 of
the FASB Accounting Standards Codification for disclosure about Stock-Based Compensation. This section requires a public entity
to measure the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair
value of the award (with limited exceptions). That cost will be recognized over the period during which an employee is required
to provide service in exchange for the award- the requisite service period (usually the vesting period). No compensation cost
is recognized for equity instruments for which employees do not render the requisite service.
Net
Loss per Share
Net
loss per common share is computed by dividing net loss by the weighted average common shares outstanding during the period as
defined by Financial Accounting Standards, ASC Topic 260, “Earnings per Share.” Basic earnings per common share (“EPS”)
calculations are determined by dividing net income by the weighted average number of shares of common stock outstanding during
the year. Diluted earnings per common share calculations are determined by dividing net income by the weighted average number
of common shares and dilutive common share equivalents outstanding.
Recent
Accounting Pronouncements
In
February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), which establishes a new lease accounting model
for lessees. The updated guidance requires an entity to recognize assets and liabilities arising from financing and operating
leases, along with additional qualitative and quantitative disclosures. The amended guidance is effective for fiscal years, and
interim periods within those years, beginning after December 15, 2018, with early adoption permitted. In March 2019, the FASB
issued ASU 2019-01, Codification Improvements, which clarifies certain aspects of the new lease standard. The FASB
issued ASU 2018-10, Codification Improvements to Topic 842, Leases in July 2018. Also in 2018, the FASB issued
ASU 2018-11, Leases (Topic 842) Targeted Improvements, which provides an optional transition method whereby the
new lease standard is applied at the adoption date and recognized as an adjustment to retained earnings. The amendments have the
same effective date and transition requirements as the new lease standard.
We
intend to adopt ASC 842 on July 1, 2020. The adoption of this guidance is not expected to have any impact on our financial statements.
Stockholders’
Equity and Accrued Liability Excess stock Issuance
The
Company has authorized 300,000,000 shares of Common Stock with a par value of $0.001. As of April 30, 2020, and January 31, 2020,
respectively, there were 300,000,000 shares of Common Stock issued and outstanding, respectively. On April 27, 2020 the Company
filed a Certificate of Designation with the State of Nevada to authorize 10,000,000 shares of Series A Preferred Stock (“Series
A”). Each share of Series A is convertible into 20 shares of Common Stock. April 28, 2020 the Company awarded 10,000,000
shares of Series A to Custodian Ventures, LLC. managed by David Lazar in return for services provided. As a result, the Company
recorded a stock based compensation expense of $600,000.
NOTE
4 – COMMITMENTS AND CONTINGENCIES
The
Company did not have any contractual commitments as of April 30, 2020, and January 30, 2020.
NOTE
5 –NOTES PAYABLE-RELATED PARY
Mr.
Lazar, the principal member of the Company’s Court-appointed custodian is considered a related party. During the year ended
April 30, 2020, he extended $7,605 in interest free demand loans to the Company. These management services provided by Mr. Lazar,
the Company’s only employee, are to manage the day to day operations of the Company; and take the necessary actions to enable
the Company to become a viable operating entity.
NOTE
6 – SUBSEQUENT EVENTS
In
accordance with FASB ASC 855-10, Subsequent Events, the Company has analyzed its operations subsequent to April 30,
2020 to the date these consolidated financial statements were issued, and has determined that it does not have any material subsequent
events to disclose in these consolidated financial statements.