NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE THREE MONTHS ENDED APRIL 30, 2021
(Currency
expressed in United States Dollars (“US$”), except for number of shares)
(Unaudited)
NOTE
1 – BASIS OF PREPARATION
The
accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally
accepted in the United States (“GAAP”) for interim financial reporting and the rules and regulations of the Securities and
Exchange Commission that permit reduced disclosure for interim periods. Therefore, certain information and footnote disclosures normally
included in financial statements prepared in accordance with GAAP have been condensed or omitted.
In
the opinion of management, the consolidated balance sheet as of April 30, 2021 which has been derived from unaudited financial statements
and these unaudited condensed consolidated financial statements reflect all normal and recurring adjustments considered necessary to
state fairly the results for the periods presented. The results for the three months ended April 30, 2021 are not necessarily indicative
of the results to be expected for the entire fiscal year ending January 31, 2021 or for any future period.
These
unaudited condensed consolidated financial statements and notes thereto should be read in conjunction with the Management’s Discussion
and the audited financial statements and notes thereto included in the Annual Report on Form 10-K for the fiscal year ended January 31,
2021.
NOTE
2 - ORGANIZATION AND BUSINESS BACKGROUND
Lvpai
Group Limited (former name as Finotec Group, Inc.), a Nevada corporation (“LVPA”, “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
March 17, 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.
On
January 25, 2021, as a result of a private transactions, 10,000,000 shares of Series A Preferred Stock, $0.001 par value per share (the
“Shares”) of the Company were transferred from Custodian Ventures, LLC to Yang Fuzhu (the “Purchaser”). Each
share of Series A Preferred Stock is convertible to 200 shares of common stock As a result, the Purchaser became an approximately 86.95%
holder of the voting rights of the issued and outstanding share capital of the Company on a fully-diluted basis of the Company, and became
the controlling shareholder. The consideration paid for the Shares was $250,000. The source of the cash consideration for the Shares
was personal funds of the Purchaser. In connection with the transaction, David Lazar released the Company from $65,503 in debt owed to
him.
On
January 25, 2021, David Lazar, serving as a director and an officer, ceased to be the Company’s Chief Executive Officer, Chief
Financial Officer, President, Treasurer, Secretary, and a Director. At the effective date of the transfer, Yang Fuzhu consented to act
as the new President, CEO, CFO, Treasurer, Secretary and Chairman of the Board of Directors of the Company.
Effective
March 8, 2021 we changed our name from Finotec Group, Inc. to Lvpai Group Limited. On March 8, 2021, the Company effectuated a 1 for
3,000 reverse stock splits. As a result of the foregoing we changed our trading symbol from FTGI and began trading as LVPA on April 5,
2021.
NOTE
3 - GOING CONCERN UNCERTAINTIES
The
accompanying financial statements have been prepared using the going concern basis of accounting, which contemplates the realization
of assets and the satisfaction of liabilities in the normal course of business.
As
of April 30, 2021, the Company suffered an accumulated deficit of $19,627,051 and continuously incurred a net operating profit of $0
for the three months ended April 30, 2021. The continuation of the Company as a going concern through January 31, 2021 is dependent upon
improving the profitability and the continuing financial support from its stockholders. Management believes the existing shareholders
or external financing will provide the additional cash to meet the Company’s obligations as they become due. These consolidated
financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification
of liabilities that might be necessary should the Company be unable to continue as a going concern.
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. Prior to January 25, 2021 when a change of control in the Company
occurred, the Company had been being funded by David Lazar who extended 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.
No
assurance can be given that any future financing, if needed, will be available or, if available, that it will be on terms that are satisfactory
to the Company. Even if the Company is able to obtain additional financing, if needed, it may contain undue restrictions on its operations,
in the case of debt financing, or cause substantial dilution for its stock holders, in the case of equity financing.
These
and other factors raise substantial doubt about the Company’s ability to continue as a going concern. These financial statements
do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts
and classification of liabilities that may result in the Company not being able to continue as a going concern.
LVPAI
GROUP LIMITED
(FORMER
NAME AS FINOTEC GROUP, INC.)
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE THREE MONTHS ENDED APRIL 30, 2021
(Currency
expressed in United States Dollars (“US$”), except for number of shares)
(Unaudited)
NOTE
4 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The
accompanying unaudited condensed consolidated financial statements reflect the application of certain significant accounting policies
as described in this note and elsewhere in the accompanying consolidated financial statements and notes.
The
accompanying condensed consolidated financial statements are prepared in accordance with Financial Accounting Standards Board (“FASB”)
“FASB Accounting Standards CodificationTM” (the “Codification”) which is the source of authoritative
accounting principles recognized by the FASB to be applied by nongovernmental entities in preparation of financial statements in conformity
with generally accepted accounting principles (“GAAP”) in the United States.
The
condensed consolidated financial statements include the accounts of Lvpai Group Limited (former name as Finotec Group, Inc.) and its
subsidiaries. All significant inter-company balances and transactions within the Company have been eliminated upon consolidation.
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.
●
|
Cash
and cash equivalents
|
The
company considers all highly liquid temporary cash equivalents with an original maturity of three months or less to be cash equivalents.
On April 30, 2021, and January 31, 2021, the Company’s cash equivalents totaled $0 and $0, respectively.
Effective
January 1, 2018, the Company adopted the guidance of Accounting Standards Codification (ASC) 606, Revenue from Contracts. The implementation
of ASC 606 did not have a material impact on the Company’s consolidated financial statements. ASC 606 creates a five-step model
that requires entities to exercise judgment when considering the terms of contracts, which includes (1) identifying the contracts or
agreements with a customer, (2) identifying our performance obligations in the contract or agreement, (3) determining the transaction
price, (4) allocating the transaction price to the separate performance obligations, and (5) recognizing revenue as each performance
obligation is satisfied. The Company only applies the five-step model to contracts when it is probable that the Company will collect
the consideration it is entitled to in exchange for the services it transfers to its clients.
As
of and for the year ended April 31, 2021 the financial statements were not impacted due to the application of Topic 606 because the Company
had no revenues.
LVPAI
GROUP LIMITED
(FORMER
NAME AS FINOTEC GROUP, INC.)
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE THREE MONTHS ENDED APRIL 30, 2021
(Currency
expressed in United States Dollars (“US$”), except for number of shares)
(Unaudited)
The
provision of income taxes is determined in accordance with the provisions of ASC Topic 740, “Income Taxes” (“ASC
Topic 740”). Under this method, 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 basis. Deferred
tax assets and liabilities are measured using enacted income tax rates expected to apply to taxable income in the periods in which those
temporary differences are expected to be recovered or settled. Any 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.
ASC
Topic 740 prescribes a comprehensive model for how companies should recognize, measure, present, and disclose in their financial statements
uncertain tax positions taken or expected to be taken on a tax return. Under ASC Topic 740, tax positions must initially be recognized
in the financial statements when it is more likely than not the position will be sustained upon examination by the tax authorities. Such
tax positions must initially and subsequently be measured as the largest amount of tax benefit that has a greater than 50% likelihood
of being realized upon ultimate settlement with the tax authority assuming full knowledge of the position and relevant facts.
The
Company did not have any unrecognized tax positions or benefits and there was no effect on the financial conditions or results of operations
for the three months ended April 30, 2021. As a result of its business activities, the Company will file tax returns that are subject
to examination by the foreign tax authority.
●
|
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.
The
Company calculates net loss per share in accordance with ASC Topic 260 “Earnings per share”. Basic loss per share
is computed by dividing the net loss by the weighted average number of common shares outstanding during the period. Diluted loss per
share is computed similar to basic loss per share except that the denominator is increased to include the number of additional common
shares that would have been outstanding if the potential common stock equivalents had been issued and if the additional common shares
were dilutive.
Parties,
which can be a corporation or individual, are considered to be related if the Company has the ability, directly or indirectly, to control
the other party or exercise significant influence over the other party in making financial and operating decisions. Companies are also
considered to be related if they are subject to common control or common significant influence.
●
|
Fair
value of financial instruments
|
The
carrying value of the Company’s financial instruments: cash and cash equivalents, accounts receivable, deposits and other receivables,
accounts payable, other payables and accrued liabilities approximate at their fair values because of the short-term nature of these financial
instruments.
The
Company follows the guidance of the ASC Topic 820-10, “Fair Value Measurements and Disclosures” (“ASC Topic
820-10”), with respect to financial assets and liabilities that are measured at fair value. ASC Topic 820-10 establishes a three-tier
fair value hierarchy that prioritizes the inputs used in measuring fair value as follows:
|
Level
1 : Observable inputs such as quoted prices in active markets;
|
|
|
|
Level
2 : Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and
|
|
|
|
Level
3 : Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions
|
Fair
value estimates are made at a specific point in time based on relevant market information about the financial instrument. These 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 the estimates.
LVPAI
GROUP LIMITED
(FORMER
NAME AS FINOTEC GROUP, INC.)
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE THREE MONTHS ENDED APRIL 30, 2021
(Currency
expressed in United States Dollars (“US$”), except for number of shares)
(Unaudited)
In
February 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2016-02, Leases, which was
subsequently amended in 2018 by ASU 2018-10, ASU 2018-11 and ASU 2018-20 (collectively, Topic 842). Topic 842 will require the recognition
of a right-of-use asset and a corresponding lease liability, initially measured at the present value of the lease payments, for all leases
with terms longer than 12 months. For operating leases, the asset and liability will be expensed over the lease term on a straight-line
basis, with all cash flows included in the operating section of the statement of cash flows. For finance leases, interest on the lease
liability will be recognized separately from the amortization of the right-of-use asset in the statement of comprehensive income and
the repayment of the principal portion of the lease liability will be classified as a financing activity while the interest component
will be included in the operating section of the statement of cash flows. Topic 842 is effective for annual and interim reporting periods
beginning after December 15, 2018. Early adoption is permitted. Upon adoption, leases will be recognized and measured at the beginning
of the earliest period presented using a modified retrospective approach. Topic 842 allows for a cumulative-effect adjustment in the
period the new lease standard is adopted and will not require restatement of prior periods.
Prior
to January 1, 2019, the Company accounted for leases under ASC 840, Accounting for Leases. Effective July 1, 2020, the Company adopted
the guidance of ASC 842, Leases, which requires an entity to recognize a right-of-use asset and a lease liability for virtually all leases.
The adoption of this guidance did not have any impact on our financial statements.
●
|
Recent
accounting pronouncements
|
In
January 2017, the FASB issued ASU 2017-04, “Intangibles — Goodwill and Other (Topic 350): Simplifying the Test for Goodwill
Impairment,” which simplifies how an entity is required to test goodwill for impairment by eliminating step two from the goodwill
impairment test. Step two of the goodwill impairment test measures a goodwill impairment loss by comparing the implied fair value of
a reporting unit’s goodwill with its carrying amount. The new guidance is effective prospectively for us for the year ending April
30, 2021 and interim reporting periods during the year ending April 30, 2021. Early adoption is permitted for interim or annual goodwill
impairment tests performed on testing dates after January 1, 2017. We are evaluating the effects, if any, of the adoption of this guidance
on our financial position, results of operations and cash flows.
In
August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement. The new guidance modifies disclosure requirements related to fair
value measurement. The amendments in this ASU are effective for fiscal years, and interim periods within those fiscal years, beginning
after December 15, 2019. Implementation on a prospective or retrospective basis varies by specific disclosure requirement. Early adoption
is permitted. The standard also allows for early adoption of any removed or modified disclosures upon issuance of this ASU while delaying
adoption of the additional disclosures until their effective date.
●
|
Stockholders’
Equity and Accrued Liability Excess Stock Issuance
|
The
Company has authorized 330,000,000 shares of Common Stock with a par value of $0.001. As of April 30, 2021 and January 31, 2021, there
were both 300,134,005 shares of Common Stock issued and outstanding. On December 16, 2020 the Company issued 134,005 shares to holders
of Preferred B Stock that was redeemed in 2001 for common shares but was not credited to the Preferred B shareholders.
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 for the year ended January 31, 2021.
On
January 25, 2021, as a result of a private transaction, 10,000,000 shares of Series A Preferred Stock, $0.001 par value per share (the
“Shares”) of the Company were transferred from Custodian Ventures, LLC to Yang Fuzhu (the “Purchaser”). Each
share of Series A Preferred Stock is convertible to 200 shares of common stock As a result, the Purchaser became an approximately 86.95%
holder of the voting rights of the issued and outstanding share capital of the Company on a fully-diluted basis of the Company, and became
the controlling shareholder.