The accompanying footnotes are an integral part
of these unaudited condensed financial statements.
The accompanying footnotes are an integral part
of these unaudited condensed financial statements.
The accompanying footnotes are an integral part
of these unaudited condensed financial statements.
The accompanying footnotes are an integral part
of these unaudited condensed financial statements.
Notes to Unaudited Condensed Financial Statements
July 31, 2020
NOTE 1- Summary of History and Significant Accounting Policies
Nature of Operations
Quest Management, Inc. (“Quest”
or the “Company”) was incorporated in the State of Nevada on October 12, 2014. Quest originally intended to engage
in the business of development of marketing channels to distribute fitness equipment to the wholesale market in the United States.
The Company is currently looking for acquisition candidates that would bring operations, profitability and cash flows to the Company.
Basis of Presentation
The accompanying unaudited condensed financial
statements of the Company have been prepared in accordance with the rules and regulations
of the Securities and Exchange Commission, or the SEC, including the instructions to Form 10-Q and Regulation S-X. Certain information
and note disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles
in the United States of America have been condensed or omitted from these statements pursuant to such rules and regulations and,
accordingly, they do not include all the information and notes necessary for comprehensive financial statements and should be read
in conjunction with our audited financial statements for the year ended October 31, 2019, included in our Annual Report on Form
10-K for the year ended October 31, 2019. In the opinion of management, all adjustments, consisting of normal recurring
adjustments, necessary for a fair presentation of financial position and the results of operations for the periods presented have
been reflected herein.
Concentration of Risk
The Company places its cash and temporary cash
investments with established financial institutions. At times, such cash and investments may be in excess of the FDIC insurance
limit.
Cash and Cash Equivalents
The Company considers all highly liquid investments
purchased with original maturities of three months or less to be cash equivalents.
Stock-based Compensation
The Company records stock-based compensation
in accordance with ASC 718, Compensation - Stock Based Compensation which requires the measurement and recognition of compensation
expense based on grant date fair values for all share-based awards made to third parties, employees and directors, including stock
options. Effective January 1, 2019, the Company adopted ASU 2018-07, Compensation – Stock Compensation (Topic 718): Improvements
to Nonemployee Share-Based Payment Accounting.
ASC 718 requires companies to estimate the
fair value of share-based awards to employees and directors on the date of grant using an option-pricing model. The Company uses
the Black-Scholes option-pricing model as its method of determining fair value. This model is affected by the Company's stock price
as well as assumptions regarding a number of subjective variables. These subjective variables include, but are not limited to the
Company's expected stock price volatility over the term of the awards, and actual and projected employee stock option exercise
behaviors. The value of the portion of the award that is ultimately expected to vest is recognized as an expense in the statement
of operations over the requisite service period.
Upon the adoption of ASU 2018-07, the Company
measures the fair value of equity instruments for non-employee payment awards on the grant date.
8
QUEST MANAGEMENT, INC.
Notes to Unaudited Condensed Financial Statements
July 31, 2020
Long-lived Assets
Long-lived assets are stated at cost. Maintenance
and repairs are expensed as incurred. Depreciation is determined using the straight-line method over the estimated useful lives
of the assets, which is five years.
Where an impairment of a property’s value
is determined to be other than temporary, impairment for the estimated potential loss is recorded to adjust the property to its
net realizable value.
When items of building or equipment are sold
or retired, the related cost and accumulated depreciation are removed from the accounts and any gain or loss is included in the
results of operations. The Company does not have any long-lived tangible assets, which are considered to be impaired as of July
31, 2020 and October 31, 2019.
The Company applies the provisions of ASC 360-10,
Property, Plant and Equipment, where applicable to all long-lived assets. ASC 360-10 addresses accounting and reporting
for impairment and disposal of long-lived assets. The Company periodically evaluates the carrying value of long-lived assets to
be held and used in accordance with ASC 360-10. ASC 360-10 requires impairment losses to be recorded on long-lived assets used
in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets
are less than the assets’ carrying amounts. In that event, a loss is recognized based on the amount by which the carrying
amount exceeds the fair market value of the long-lived assets. Loss on long-lived assets to be disposed of is determined in a similar
manner, except that fair market values are reduced for the cost of disposal.
Intangible Assets
Goodwill and intangible assets are reviewed
for potential impairment in accordance with ASC 350, Intangibles - Goodwill and Other, whenever events or circumstances
indicate that their carrying amounts may not be recoverable. The Company had no such intangibles at July 31, 2020 or October 31,
2019, and recorded no impairment losses during the nine months ended July 31, 2020 or 2019.
Revenue Recognition
The Company applies ASC 606, Revenue from
Contracts with Customers. Under ASC 606, the Company will recognize revenue from the sale of our exercise equipment by applying
the following steps: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine
the transaction price; (4) allocate the transaction price to each performance obligation in the contract; and (5) recognize revenue
as each performance obligation is satisfied.
Advertising
Advertising costs are expensed as incurred. Advertising expenses
for the nine months ended July 31, 2020 and 2019 were $0.
9
QUEST MANAGEMENT, INC.
Notes to Unaudited Condensed Financial Statements
July 31, 2020
Fair Value of Financial Instruments
The Company adopted ASC 820, Fair Value
Measurements and Disclosures, which provides a framework for measuring fair value under GAAP. Fair value is defined as the
exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous
market for the asset or liability in an orderly transaction between market participants on the measurement date. The standard also
expands disclosures about instruments measured at fair value and establishes a fair value hierarchy, which requires an entity to
maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes
three levels of inputs that may be used to measure fair value:
Level 1 — Quoted prices for identical
assets and liabilities in active markets;
Level 2 — Quoted prices for similar assets
and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active;
and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets; and
Level 3 — Valuations derived from valuation
techniques in which one or more significant inputs or significant value drivers are unobservable.
Use of Estimates
The preparation of financial statements in
conformity with generally accepted accounting principles in the United States of America 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 periods. Management
makes these estimates using the best information available at the time the estimates are made; however actual results could differ
materially from those estimates.
Emerging Growth Company Critical Accounting Policy Disclosure
The Company
qualifies as an “emerging growth company” under the 2012 JOBS Act. Section 107 of the JOBS Act provides that an emerging
growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying
with new or revised accounting standards. As an emerging grown company, the Company can delay the adoption of certain
accounting standards until those standards would otherwise apply to private companies. The Company has chosen to “opt
out” of such extended transition period, and as a result, the Company will comply with new or revised accounting standards
on the relevant dates on which adoption of such standards is required for non-emerging growth companies.
10
QUEST MANAGMENT, INC.
Notes to Unaudited Condensed Financial Statements
July 31, 2020
Income Taxes
The Company accounts for income taxes under
ASC 740-10-30, Income Taxes. Deferred income tax assets and liabilities are determined based upon differences between the
financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be
in effect when the differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance to the extent
management concludes it is more likely than not that the assets will not be realized. 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. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in
the statements of operations in the period that includes the enactment date.
The Company adopted ASC 740-10-25, which addresses
the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial
statements. Under ASC 740-10-25, the Company may recognize the tax benefit from an uncertain tax position only if it is more
likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits
of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest
benefit that has a greater than fifty percent (50%) likelihood of being realized upon ultimate settlement. ASC 740-10-25
also provides guidance on de-recognition, classification, interest and penalties on income taxes, accounting in interim periods
and requires increased disclosures. The Company had no material adjustments to its liabilities for unrecognized income tax
benefits according to the provisions of ASC 740-10-25.
Loss Per Share
Net loss per common share is computed pursuant
to ASC 260-10-45, Earnings Per Share. Basic net loss per share is computed by dividing net loss by the weighted average number
of shares of common stock outstanding during the period. Diluted net loss per share is computed by dividing net loss by the weighted
average number of shares of common stock and potentially outstanding shares of common stock during each period, unless their effect
is anti-dilutive due to continuing losses. There were no potentially dilutive shares outstanding as of July 31, 2020 and
October 31, 2019.
Recent Accounting Pronouncements
We do not expect the adoption of recently issued
accounting pronouncements to have a significant impact on our results of operations or financial position.
11
QUEST MANAGEMENT, INC.
Notes to Unaudited Condensed Financial Statements
July 31, 2020
NOTE 2 – Financial Condition and Going Concern
The Company’s financial statements have
been presented on the basis that it is a going concern, which contemplates the realization of assets and the satisfaction of liabilities
in the normal course of business. The Company has sustained operating losses during the current year-to-date and may not
achieve the level of profitable operations to sustain its activities. These factors raise substantial doubt as to its ability
to obtain debt and/or equity financing and achieve profitable operations.
Management intends to raise additional operating
funds through equity and/or debt offerings. However, there can be no assurance management will be successful in its endeavors.
Ultimately, the Company will need to achieve profitable operations in order to continue as a going concern.
There are no assurances that the Company will
be able to either (1) achieve a level of revenues adequate to generate sufficient cash flow from operations; or (2) obtain additional
financing through either private placement, public offerings and/or bank financing necessary to support its working capital requirements.
To the extent that funds generated from operations and any private placements, public offerings and/or bank financing are
insufficient, the Company will have to raise additional working capital. No assurance can be given that additional financing
will be available, or if available, will be on terms acceptable to the Company. If adequate working capital is not available
to the Company, it may be required to curtail its operations.
NOTE 3 – Property and Equipment
We purchased our principal executive offices
at 1 Kalnu iela, Malta, LV-4630 Latvia, on October 30, 2014 for $7,915.
The Company depreciates its property using
straight-line depreciation over the estimated useful life of 40 years.
This property now has a $0 value after impairment
on October 31, 2018.
The current executive offices are provided
without cost, located at: 797 South First Street Fulton, NY 13069.
NOTE 4 – Notes Payable
On May 31, 2016, the Company issued a Convertible
Promissory Note in the principal amount of $16,605 to Peak Marine Holdings LLC, a Florida limited liability company (“Peak”).
This Convertible Promissory Note (the “Note”) was issued in consideration of advances and loans made by Peak to the
Company.
Pursuant to the terms of the Note, the holder
has the right to convert any portion of the principal amount thereof at the par value of the Company’s common stock. The
holder also has the right to assign any portion of the Note, or assign the shares to be issued upon any conversion of the Notes,
to other parties. During the month of December 2016, Peak sold all its interest in the Note to five (5) independent third parties
(the “Holders”).
During the month of January 2017, the Holders
provided notices of election to convert a total of $15,000 of the Note into shares, which totaled 15,000,000 shares of common stock.
The remaining balance on the Note is $1,605.
At July 31, 2020, the Company has recorded
$502 in accrued interest payable on the Note. The interest expense for the nine months ended July 31, 2020 and 2019 was $49 and
$48
12
QUEST MANAGEMENT, INC.
Notes to Unaudited Condensed Financial Statements
July 31, 2020
NOTE 5 – Note Payable-Related Party
Directors and President of the Company had
loaned the company for operations from time to time on need basis. The Company’s former director and president loaned the
company of $ 4,066 which was non-interest bearing, unsecured and payable upon demand. As of the year ended, October 31, 2018, the
Company had taken a gain on impairment of this loan, with $4,066 recognized in other income and adjusted loan payable balance to
$0. The balance to this loan as of April 30, 2020 is $0.
As of July 31, 2020, loan amount of $11,105
is due to Custodian of the company. The note is non-interest bearing, unsecured and is payable on demand.
These loans resulted in a beneficial payment
feature of $11,790 which was recorded to interest expense upon issuance. These loans were for operating expenses of the Company,
due upon demand and have no interest rate.
NOTE 6 – Income Taxes
The Company adopted the provisions of ASC 740-10
(formerly known as FIN No. 48, Accounting for Uncertainty in Income Taxes). ASC 740-10 clarifies the accounting for uncertainty
in income taxes recognized in a company’s financial statements. ASC 740-10 requires a company to determine whether it is
more likely than not that a tax position will be sustained upon examination based upon the technical merits of the position. If
the more-likely-than-not threshold is met, a company must measure the tax position to determine the amount to recognize in the
financial statements. The application of income tax law is inherently complex. Laws and regulation in this area are voluminous
and are often ambiguous. As such, we are required to make many subjective assumptions and judgments regarding the income tax exposures.
Interpretations and guidance surrounding income tax laws and regulations change over time. As such, changes in the subjective assumptions
and judgments can materially affect amounts recognized in the balance sheets and statements of income.
The Company has no unrecognized tax benefit,
which would affect the effective tax rate if recognized. There has been no significant change in the unrecognized tax benefit during
the period ended July 31, 2020.
We classify interest and penalties arising
from the underpayment of income taxes in the statement of income under general and administrative expenses. As of July 31, 2020,
we had no accrued interest or penalties related to uncertain tax positions.
Deferred taxes are provided on a liability
method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carry
forwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences
between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance
when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be
realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.
13
QUEST MANAGEMENT, INC.
Notes to Unaudited Condensed Financial Statements
July 31, 2020
The components of deferred income tax assets (liabilities) at July
31, 2020, were as follows:
|
|
|
Balance
|
|
Rate
|
|
Tax
|
|
Federal loss carryforward
|
|
$
|
2,578,493
|
|
|
|
21
|
%
|
|
$
|
541,484
|
|
|
Valuation allowance
|
|
|
|
|
|
|
|
|
|
|
(541,484
|
)
|
|
Deferred tax asset
|
|
|
|
|
|
|
|
|
|
$
|
—
|
|
Due to the passage of the “Tax Cuts and
Jobs Act” on December 20, 2017 the rate of the U.S. Federal Income Tax dropped from 34% to 21%, which is a flat percentage
tax rate used for the calculation of the deferred income tax assets.
The new law also changes the rules on NOL carry
forward. The 20-year limitation was eliminated, giving the taxpayer the ability to carry forward losses indefinitely. However,
NOL carry forward arising after January 1, 2018, will now be limited to 80 percent of taxable income.
NOTE 7 – Capital Changes
On February 6, 2020, $4,145 of debt was purchased
in the Company in exchange for 200,000,000 shares of common stock issued to a Related Party. The Company recorded a loss on the
conversion of this debt in the amount of $615,855. The fair market value of the common stock was $.0031 on the date of the conversion.
NOTE 8 – Contingencies and Commitments
The Company follows ASC 440 & ASC 450,
subtopic 450-20 of the FASB Accounting Standards Codification to report accounting for contingencies and commitments, respectively.
Certain conditions may exist as of the date the financial statements are issued, which may result in a loss to the Company, but
which will only be resolved when one or more future events occur or fail to occur.
The Company assesses such contingent liabilities,
and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that
are pending against the Company or un-asserted claims that may result in such proceedings, the Company evaluates the perceived
merits of any legal proceedings or un-asserted claims as well as the perceived merits of the amount of relief sought or expected
to be sought therein.
If the assessment of a contingency indicates
that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated
liability would be accrued in the Company’s financial statements. If the assessment indicates that a potentially material
loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent
liability, and an estimate of the range of possible losses, if determinable and material, would be disclosed.
Loss contingencies considered remote are generally
not disclosed unless they involve guarantees, in which case the guarantees would be disclosed. Management does not believe, based
upon information available at this time, that these matters will have a material adverse effect on the Company’s consolidated
financial position, results of operations or cash flows. However, there is no assurance that such matters will not materially and
adversely affect the Company’s business, financial position, and results of operations or cash flows.
Management of the Company has conducted a diligent
search and concluded that there were no commitments, contingencies, or legal matters pending at the balance sheet dates.
14
QUEST MANAGEMENT, INC.
Notes to Unaudited Condensed Financial Statements
July 31, 2020
The effects of Covid -19 could impact our ability
to operate under the going concern and maintain sufficient liquidity to continue operations. The impact of Covid-19 on companies
is evolving rapidly and its future effects are uncertain. There are material uncertainties from Covid-19 that cast significant
doubt on the company’s ability to operate under the going concern. It is highly likely that our company will have issues
relating to the current situation that need to be considered by management. There will be a wide range of factors to take into
account in going concern judgments and financial projections including travel bans, restrictions, government assistance and potential
sources of replacement financing, financial health of suppliers and customers and their effect on expected profitability and other
key financial performance ratios including information that shows whether there will be sufficient liquidity to continue to meet obligations
when they are due.
NOTE 9 – Related Party Transactions
On February 3, 2020, the Custodian as an interim
officer acting on behalf of the Company, appointed Yamilka Veras as President, Director and Sole officer of the Company.
On February 6, 2020, $4,145 of debt was purchased
in the Company in exchange for 200,000,000 shares of common stock issued to a Related Party. The Company incurred a loss of $615,855
from the debt conversion.
As of July 31, 2020 a loan amount of $11,105
is due to Custodian of the company on a note payable. The note payable is non-interest bearing, unsecured and is payable on demand.
NOTE 10 – Legal Matters
On December 2, 2019, one of the Company’s
shareholders made a motion and application to be appointed as custodian of the Company based on prior management abandoning its
responsibilities to continue making filings at the Nevada Secretary of State’s office and for failing to hold a shareholders’
meeting in over 2 years and otherwise failing to keep current in its obligations to the Company. Upon motion and application
to the District Court, Clark County Nevada, the Court granted the shareholder’s request and the shareholder was appointed
as custodian for the Company (“Custodian”).
As Custodian of the Company, the shareholder
was ordered to file an amendment to the Company’s articles of incorporation which was filed in conformity with N.R.S. 78.347(4)
and the shareholder was ordered to have the Company’s charter reinstated in Nevada, to notice and hold a shareholder meeting;
to provide a report to the Court of the actions taken at the shareholder meeting; to identify and name a new registered agent in
the State of Nevada; to reinstate the Company in the State of Nevada; and the Custodian. In addition to the aforementioned items
set forth in the Order Appointing the Custodian, the Custodian was given the power and authority to take any action it deemed reasonable
and for the benefit of the Company and its shareholders. The Custodian is now in the process of meeting all of the requirements
set forth in the Court Order and filing a motion to terminate its services. Upon granting the motion, the Court will issue
an Order acknowledging that the Custodian has performed all of the duties that had been required of it and the management of the
Company will revert exclusively to the officers and directors appointed by the Custodian.
NOTE 11 – Subsequent Events
In accordance with ASC 855-10, the Company
has analyzed its operations subsequent to July 31, 2020 through the date these financial statements were issued and has determined
that it does not have any material subsequent events to disclose in these financial statements.
15
QUEST MANAGEMENT, INC.
Notes to Unaudited Condensed Financial Statements
July 31, 2020
On June 3, 2020, Andrew Birnbaum, Friction
& Heat, LLC, a Utah limited liability company (“F&H”), the Company entered into a certain Stock Purchase Agreement
(the “SPA”) whereby Andrew Birnbaum acquired 200,000,000 restricted shares of the Company’s common stock from
F&H in exchange for payment of a $400,000 promissory note to F&H. Following the execution of the SPA, a change of control
of the Company occurred. Andrew Birnbaum is now the majority shareholder of the Company, owning 76.6% of the issued and outstanding
shares of common stock.