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 $19,572,013.
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 200 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 $6,000,000.
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 – RESTATEMENT
Our interim financial statements for the
three months ended April 30, 2020, as previously filed with the SEC on November 18, 2020, have been restated. The previously filed
financial statements did not reflect the proper conversion rate from Series A Preferred Stock to common stock during the appropriate
quarterly interim period. The impact of this restatement on the Company’s Balance Sheet, Income Statement, and Cash Flow
are reflected in the tables below:
BALANCE SHEETS
(Unaudited)
|
|
Previously filed
|
|
|
|
|
|
Restated
|
|
|
|
April 30,
|
|
|
|
|
|
April 30,
|
|
|
|
2020
|
|
|
Adjustment
|
|
|
2020
|
|
|
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
Total Assets
|
|
$
|
-
|
|
|
|
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES & STOCKHOLDERS' DEFICIT
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
185
|
|
|
|
|
|
|
$
|
185
|
|
Note payable related parties
|
|
|
10,280
|
|
|
|
|
|
|
|
10,280
|
|
Total liabilities
|
|
|
10,465
|
|
|
|
|
|
|
|
10,465
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commitments and Contingencies
|
|
|
-
|
|
|
|
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders' Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred Series A stock, $0.001 par value, 10,000,000 shares authorized, 10,000,000 shares issued and outstanding, April
30, 2020 and January 31,2020
|
|
|
10,000
|
|
|
|
|
|
|
|
10,000
|
|
Common stock, $0.001 par value; 300,000,000 shares authorized, 300,000,000 shares issued and outstanding April 30, 2020
and January 31, 2020
|
|
|
300,000
|
|
|
|
|
|
|
|
300,000
|
|
Additional paid in capital
|
|
|
13,851,548
|
|
|
|
5,400,000
|
|
|
|
19,251,548
|
|
Retained earnings (deficit)
|
|
|
(14,172,013
|
)
|
|
|
(5,400,000
|
)
|
|
|
(19,572,013
|
)
|
Total Stockholders' (Deficit)
|
|
|
(10,465
|
)
|
|
|
-
|
|
|
|
(10,465
|
)
|
Total Liabilities and Stockholders' (Equity)
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
STATEMENTS OF OPERATIONS
(Unaudited)
|
|
Previously filed
|
|
|
|
|
|
Restated
|
|
|
|
Three months
|
|
|
|
|
|
Three months
|
|
|
|
ended
|
|
|
|
|
|
ended
|
|
|
|
April 30,
|
|
|
|
|
|
April 30,
|
|
|
|
2020
|
|
|
Adjustment
|
|
|
2020
|
|
Revenue
|
|
$
|
-
|
|
|
|
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Administrative expenses -related party
|
|
|
607,790
|
|
|
|
5,400,000
|
|
|
|
6,007,790
|
|
Total operating expenses
|
|
|
607,790
|
|
|
|
5,400,000
|
|
|
|
6,007,790
|
|
(Loss) from operations
|
|
|
(607,790
|
)
|
|
|
(5,400,000
|
)
|
|
|
(6,007,790
|
)
|
Other expense
|
|
|
|
|
|
|
-
|
|
|
|
|
|
Other (expense) net
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Income (loss) before provision for income taxes
|
|
|
(607,790
|
)
|
|
|
(5,400,000
|
)
|
|
|
(6,007,790
|
)
|
Provision for income taxes
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Net (Loss)
|
|
$
|
(607,790
|
)
|
|
|
(5,400,000
|
)
|
|
$
|
(6,007,790
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted earnings(loss) per common share
|
|
$
|
(0.00
|
)
|
|
$
|
(0.02
|
)
|
|
$
|
(0.02
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares outstanding
|
|
|
300,000,000
|
|
|
|
-
|
|
|
|
300,000,000
|
|
STATEMENTS OF CASH FLOWS
(Unaudited)
|
|
Previously filed
|
|
|
|
|
|
Restated
|
|
|
|
Three months
|
|
|
|
|
|
Three months
|
|
|
|
ended
|
|
|
|
|
|
ended
|
|
|
|
April 30,
|
|
|
|
|
|
April 30,
|
|
|
|
2020
|
|
|
Adjustment
|
|
|
2020
|
|
Cash Flows From Operating Activities:
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(607,790
|
)
|
|
$
|
(5,400,000
|
)
|
|
$
|
(6,007,790
|
)
|
Adjustments to reconcile net income to net cash provided by (used for) operating activities
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock- based compensation
|
|
|
600,000
|
|
|
|
5,400,000
|
|
|
|
6,000,000
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
|
185
|
|
|
|
|
|
|
|
185
|
|
Net cash provided by (used for) operating activities
|
|
|
(7,605
|
)
|
|
|
-
|
|
|
|
(7,605
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows From Investing Activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used for) investing activities
|
|
|
-
|
|
|
|
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows From Financing Activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from related party loans
|
|
|
7,605
|
|
|
|
|
|
|
|
7,605
|
|
Net cash provided by (used for) financing activities
|
|
|
7,605
|
|
|
|
|
|
|
|
7,605
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Increase (Decrease) In Cash
|
|
|
-
|
|
|
|
|
|
|
|
-
|
|
Cash At The Beginning Of The Period
|
|
|
-
|
|
|
|
|
|
|
|
-
|
|
Cash At The End Of The Period
|
|
$
|
-
|
|
|
|
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosure of cash flow information:
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash paid for interest
|
|
$
|
-
|
|
|
|
|
|
|
$
|
-
|
|
NOTE 7 – 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.