The accompanying notes are an integral part of these financial statements.
Notes to the Financial Statements
NOTE 1 – DESCRIPTION OF BUSINESS
Elvictor Group, Inc. formerly known
as Thenablers, Inc. (“Elvictor Group, Inc.” or the “Company”) was incorporated in the State of Nevada on November
3, 2017. With the change to the Elvictor name came the addition of the brand and new team in crew
management in the shipping industry. The new management team comes from Elvictor (the Greece-based private entity founded in 1977, which
is the predecessor to the company whose business became a part of the business of Thenablers in 2019, the “Elvictor Greece”)
that has been active across various value-adding activities of the shipping sector, such as ship management, technical management, crewing
& crew management. Its professional core of activities includes crew management, training and the creation of in-house software related
to crew and ship matters, for the amelioration of all its operations, facilitating both its employees and those that depend on them. The
Company aims to broaden its scope of activities, expanding on to new areas, while refining the existing ones. Placing prime importance
on digitalization, the Company plans on the extensive use of Artificial Intelligence, through the application of Machine and Deep Learning,
in concert with the integration of a wide array of cloud systems. The strategic growth of the Group on a horizontal and vertical manner
throughout the shipping industry will be reinforced with technologically adept tools, containing know-how and experience. Working on a
technologically oriented path, the Company is ideologically flexible and open to other avenues of international business for the successful
and profitable diversification of its portfolio.
On December
13, 2019, pursuant to the approval of a majority of the voting interests for Thenablers, Inc., the Company filed a Certificate of
Amendment with the Secretary of State for Nevada to change its name from “Thenablers, Inc.” to “Elvictor Group, Inc.”,
to better reflect new business interests and to further apply for a corporate action with FINRA to have the name change approved and to
change the symbol of the Company to “ELVG”.
Pursuant to the approval of that application to
FINRA, and on February 27, 2020, the name of the Company was changed to Elvictor Group, Inc. on the OTC Markets, and the symbol for trading
was changed to “ELVG”.
As of July 10, 2020, the Company founded a subsidiary
in Vari, Greece to assist the management in facilitating the operations of the Company. Additionally, the Company has purchased Ultra
Ship Management, a company incorporated in the Marshall Islands that is licensed to provide ship management services, who in turn established
a subsidiary in Vari, Greece.
On January 17, 2022, the Company established the
fully owned subsidiary ELVG Crew Management Ltd., incorporated in Cyprus, to facilitate its crew management operations.
NOTE 2 – SUMMARY OF SIGNIFICANT
ACCOUNTING AND BENEFICIAL CONVERSION FEATURES POLICIES
Basis of Presentation
The financial statements have been prepared in
accordance with generally accepted accounting principles in the United States of America and are presented in US dollars, unless indicated
otherwise. The Company believes that the disclosures in these financial statements are adequate and not misleading. In the opinion of
management, the financial statements and notes contain all adjustments necessary for a fair presentation of the Company’s financial
position as of March 31, 2022, and December 31, 2021, and statements of operations and cash flows for the three months ended March 31,
2022, and 2021.
The accompanying financial statements reflect
the application of certain significant accounting policies as described below and elsewhere in these notes to the financial statements.
Principles of Consolidation
The
consolidated financial statements incorporate the assets and liabilities of all entities controlled by Elvictor Group, Inc. as of March
31, 2022, and the results of the controlled subsidiaries in Vari Greece, the Marshall Islands and Cyprus for the three months then ended.
Elvictor Group, Inc. and its subsidiaries together are referred to in this financial report as the consolidated entity. The effects of
all transactions between entities in the consolidated entity are eliminated in full. The financial statements of subsidiaries are prepared
for the same reporting period as the parent entity, using consistent accounting policies.
Accounting Basis
The Company uses the accrual basis of
accounting and accounting principles generally accepted in the United States of America (“GAAP”). The Company has adopted
a December 31 fiscal year end.
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, revenue and expenses and disclosure of contingent assets and liabilities at the date 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
Company considers all cash on hand
and in banks, certificates of deposit and other highly liquid investments with maturities of three months or less, when purchased, to
be cash and cash equivalents.
Accounts Receivable and Allowance
for Doubtful Accounts
For the three months ended March 31,
2022, the Company has operations of crew manning and management and has accounts receivable due from its customers in the shipping industry.
Contracts receivable from crew manning in the shipping industry are based on contracted prices. The Company provides an allowance for
doubtful collections, which is based upon a review of outstanding receivables, historical collection information, individual credit evaluation
and specific circumstances of the customer, and existing economic conditions. The Company does not have an allowance for doubtful accounts
as of March 31, 2022. Normal contracts receivable is due 30 days after the issuance of the invoice, normally at the month’s
end. Receivables past due more than 120 days are considered delinquent and they are included in the provision for doubtful account. There
is no interest charged on past due accounts.
Property and Equipment
Property and equipment are stated at
cost. Depreciation is computed using the straight-line method over the estimated useful lives of the assets. The office equipment is depreciated
over 3 years.
Intangible Assets
Intangible assets acquired are initially
recognized at their fair value on the date of acquisition. Subsequent to initial recognition, intangible assets are reported at cost less
accumulated amortization and accumulated impairment losses, if any. These assets are being amortized over their useful life.
Fair Value of Financial Instruments
The Company’s financial
instruments consist of cash and cash equivalents. The carrying amount of these financial instruments approximates fair value due either
to length of maturity or interest rates that approximate prevailing market rates unless otherwise disclosed in these financial statements.
Income Taxes
Income taxes are computed using the
asset and liability method. Under the asset and liability method, deferred income tax assets and liabilities are determined based on the
differences between the financial reporting and tax bases of assets and liabilities and are measured using the currently enacted tax rates
and laws. A valuation allowance is provided for the amount of deferred tax assets that, based on available evidence, are not expected
to be realized.
Revenue Recognition
The Company recognizes revenue in accordance
with FASB ASC 606 upon the transfer of goods or services to customers in an amount that reflects the consideration to which the entity
expects to be entitled in exchange for those goods or services. Revenue recognized from contracts with customers is disclosed separately
from other sources of revenue. ASC 606 includes guidance on when revenue should be recognized on a Gross (Principal) or Net (Agent) basis.
Most
of the Company’s revenues are recognized primarily under long-term contracts,
including those for which revenues are based on either a fixed price, or cost-plus-fee basis, and primarily as performance obligations
are satisfied. Professional services and other ancillary services are delivered, generally on a monthly basis and are separate and distinct
deliverables. The Company’s performance obligation is generally satisfied on
a monthly basis when its agency and related services are delivered.
The Company has the performance obligation
to provide a crew for its customers, the shipping companies, and their ship managers. The Company utilizes its proprietary crew management
platform to deliver crew management services to the ship owners. This crew management service is a monthly obligation that starts with
the first stage of recruitment, to their transfer of crew to the vessel and continues to monitor the crew during the course of the contract
until they disembark.
Revenue from crew manning services,
agency fees and recruiting fees where Elvictor acts as a principal is recognized as gross revenue. When the company is acting as an agent,
revenue is recognized as net revenue in the accounting period in which the services are rendered. Such revenues are from Allotment fees,
communication, training fees, covid-19 fees, and other sundry fees. For all fixed-price contracts, revenue is recognized based on the
actual service provided to the end of the reporting period. The accounting treatment for the reporting of revenues may vary materially
between whether the revenue is reported on a Principal (Gross) or an Agent (Net) basis.
Stock-Based Compensation
The measurement and recognition of
stock - based compensation expense is based on estimated fair values for all share-based awards made to employees and directors, including
stock options and for non-employee equity transactions as per ASC 718 rules.
For transactions in which we obtain
certain services of employees, directors, and consultants in exchange for an award of equity instruments, we measure the cost of the services
based on the grant date fair value of the award. We recognize the cost over the vesting period.
Basic Income/ (Loss) Per Share
Basic income per share is calculated
by dividing the Company’s net income/ (loss) applicable to common shareholders by the weighted average number of shares of common
stock during the period. Diluted earnings per share is calculated by dividing the Company’s net income available to common shareholders
by the diluted weighted average number of shares outstanding during the year. The diluted weighted average number of shares outstanding
is the basic weighted number of shares adjusted for any potentially dilutive debt or equity. There are no such common stock equivalents
outstanding as of March 31, 2022.
Recent Accounting Pronouncements
From time to time, the Financial Accounting
Standards Board (the “FASB”) or other standards setting bodies issue new accounting pronouncements. The FASB issues updates
to new accounting pronouncements through the issuance of an Accounting Standards Update (“ASU”). Unless otherwise discussed,
the Company believes that the impact of recently issued guidance, whether adopted or to be adopted in the future, is not expected to have
a material impact on the Company’s financial statements upon adoption.
Foreign Currency Translation
The Company considers the U.S. dollar to be its
functional currency as it is the currency of the primary economic environment in which the Company operates. Accordingly, monetary assets
and liabilities denominated in foreign currencies are translated into U.S. dollars at the exchange rate in effect at the balance sheet
date and non-monetary assets and liabilities are translated at the exchange rates in effect at the time of acquisition or issue. Revenues
and expenses are translated at rates approximating the exchange rates in effect at the time of the transactions. All exchange gains and
losses are included in operations.
Subsequent Events
The Company has analyzed the transactions
from March 31, 2022, to the date these financial statements were issued for subsequent event disclosure purposes.
NOTE 3 – RECEIVABLES
Trade receivables are amounts due from
customers for services performed in the ordinary course of business.
Other receivables are mainly for the
payments of items such as Home Allotments and Cash Advances to the crews where the Company collects funds from the shipping companies
and then facilitates the payments to the crew on their behalf.
As of March 31, 2022, the Company has
trade accounts receivable of $518,308 and other receivables of $116,132.
NOTE 4 – INTANGIBLE ASSETS
On November 15, 2021, the company entered
into an agreement to purchase the license software from Seatrix Software Production Single Member S.A. (“Seatrix”), a related
party company, for 7,000,000 restricted shares of common stock. Under this agreement Seatrix has granted to the Company an exclusive and
non-transferable license to use Seatrix’s artificial intelligence software managing shipping crews. The term of this agreement commenced
on January 1, 2022.
The value of each share of common stock
was stated at $0.0430, the fair market value of the shares of common stock based on the price quoted on the OTC Markets, Pink Open Market
on January 1, 2021. The total value of $301,000 will be amortized over 15 years. Intangible assets
are measured initially at cost. After initial recognition, an entity usually measures an intangible asset at cost less accumulated amortization.
NOTE 5 – RELATED PARTY TRANSACTIONS
The Company has related party transactions
with companies that are owned or controlled by either Mr. Stavros Galanakis, the Vice-President and Chairman of the Board of Directors,
and Mr. Konstantinos Galanakis, the CEO and Director.
The Company has entered into an agreement
in October 2020 with related party Elvictor Crew Management Services Ltd in Cyprus to provide human resources services as well as to perform
the running and management of the Company’s contracts with third parties and provide key personnel for these services. However,
this agreement has been terminated in the first quarter of 2022 since the formation of the new wholly owned Cypriot subsidiary. A total
amount of $20,000 has been accrued for the related party Elvictor Crew Management Services Ltd as of March 31, 2022, for cost of services
sold, included in the Cost of Revenue- Related Party. As of March 31, 2022, the Company has other receivables - related party of
$62,800 from Elvictor Crew Management Ltd Cyprus.
On September 11, 2020, the Company
entered into a Manning Agency Agreement with Elvictor Crew Management Service Ltd in Georgia. During the three months ended March 31,
2022, the latter provided manning services to the Company of $56,152, included in the Cost of Revenue – Related Party and Net Revenue,
while as of March 31, 2022, the Company had a liability of $17,674.
On September 1, 2020, the Company signed
an agreement with Qualship Georgia Ltd for the latter to provide training of the qualified personnel. For the three months ended March
31, 2022, we incurred $58,509 in Cost of Goods Sold that offset Net Revenue, and the amount due to Qualship Georgia Ltd as of March 31,
2022, was $45,558 included under Trade Accounts Payable – Related Party.
On September 11, 2020, the Company
entered into a Manning Agency Agreement with Elvictor Odessa. During the year ended March 31, 2022, the latter provided manning services
to the Company of $7,777, included in the Cost of Revenue – Related Party and Net Revenue, while as of March 31, 2022, the Company
had a liability of $2,205.
NOTE 6 – LEASES
On July 10, 2020, the Company entered
into a rental lease agreement with the wife of Mr. Stavros Galanakis for its subsidiary in Vari, Greece. The term of the lease is from
July 10, 2020, to December 31, 2021, with a fixed monthly rental payment of 5,000€. Then on April 1, 2021, the rental lease agreement
was modified with the new term beginning as of April 1, 2021, and ending on December 31, 2022, with a fixed monthly rental payment of
3,500€.
Then on October 1, 2021, the Company
entered into a second lease agreement with the wife of Mr. Stavros Galanakis for its new subsidiary in Vari, Greece for Ultra Ship Management.
The term of the lease is from October 1, 2021, to September 30, 2024, with a fixed monthly rental of 1,000€.
Because
we generally do not have access to the rate implicit in the lease, we utilize our incremental borrowing rate as the discount rate. As
of March 31, 2022, the discount rate was 2.85%.
The
Operating Lease Expense is as follows:
| | |
For the three months
ended | |
| | |
March 31,
2022 | |
| Operating Lease expense | |
$ | 14,979 | |
The following table summarizes information
related to the lease:
| | |
For the three months
ended
| |
| | |
March 31,
2022 | |
| Cash paid for amounts included in the measurement of lease liabilities: | |
| |
| Cash payments | |
$ | 14,979 | |
NOTE 7 - OTHER PAYABLES
As part of one of the services in the
manning of a crew provided by the Company to the shipping companies is that the Company makes the bank transfers of the wages to the crew,
on the customer’s behalf. The shipping companies transfer the funds to the Company’s bank account and then the Company makes
each payment to indicated crew. In its capacity, the Company will show the balance of the funds received and not yet transferred to the
crew as Other Payables on the Balance Sheet. The amount of Other Accounts Payables for crew wages is $152,562 as of March 31, 2022.
The balance in Other Payables also
consist of $107,562 liable to Other Creditors.
NOTE 8 – STOCKHOLDERS’
EQUITY
Issuance of Common Stock
The Company has 700,000,000, $0.0001
par value shares of common stock authorized. On March 31, 2022, and December 31, 2021, there were 414,448,757 and 406,548,757 shares of
common stock issued and outstanding, respectively.
On February 5, 2021, the Company issued
3,668,419 shares of common stock for convertible notes payable of $405,725.
On April 8, 2021, the Company issued
exactly 375,459,000 shares of common stock to the holders of the Series A Preferred Stock pursuant to the Settlement Agreement, dated
July 7, 2020. Specifically, exactly 217,310,305 shares of restricted common stock were issued to Mr. Konstantinos Galanakis, and 156,271,400
shares of restricted common stock were issued to Mr. Stavros Galanakis, and 1,877,295 shares of restricted common stock were issued to
Mr. Theofanis Anastasiadis. As a result, there are no shares of Series A Preferred Stock issued and outstanding.
Additionally, for the year ended December
31, 2021, the Company issued 1,016,665 shares of common stock for cash proceeds of $111,833.
On January 19, 2022, the Company issued 7,000,000
restricted shares of common stock to Seatrix Software Production Single Member S.A., a Company owned and controlled by Mr. Konstantinos
Galanakis, pursuant to the Software License Agreement signed on November 15, 2021, for the exclusive and non-transferable license to use
the Licensor’s artificial intelligence software in connection with the managing of shipping crews.
On January 19, 2022, the Company issued an aggregate
of 900,000 shares of common stock to certain directors and former directors for past services provided to the Company.
Issuance of Preferred Stock
On October 7, 2019, Elvictor Group, Inc. entered
into four separate Series A Convertible Preferred Stock Purchase Agreements (the “Series A Purchase Agreements”) pursuant
to which the Company issued 80,000,000 shares of a newly designated Series A Preferred Stock, in exchange for an aggregate purchase price
of $30,000.00 pursuant to Regulation S of the Securities Act of 1933, as amended. Per the terms of the Series A Purchase Agreements, these
shares were not convertible for one year after they were issued and were automatically convertible 18 months after issuance into a number
of shares of Common Stock to be determined based on the Company’s performance. The holders of Series A Preferred Stock were entitled
to vote with the shares of the Company’s common stock on any vote in which holders of the common stock were entitled to vote and
had voting rights equal to one vote per share of Series A Preferred Stock.
On April 8, 2021, the Company issued
375,459,000 shares of common stock to the holders of the Series A Preferred Stock pursuant to the Settlement Agreement, dated July 7,
2020. As a result, there were no shares of Series A Preferred Stock issued and outstanding as of March 31, 2022.
NOTE 9 – COMMITMENTS AND CONTINGENCIES
The Company entered in a long-term
rental lease agreement for offices of its subsidiary branch in Vari, Greece for the period commencing from July 10, 2020, through December
31, 2021, providing for rent in the amount of 5,000€ per month, with the first month adjusted for the shortened period. The lessor,
Mrs. Aikaterini Galanakis, is the wife of the Company’s president, Mr. Stavros Galanakis.
On April 1, 2021, the Company terminated
the lease and entered into a new the lease with the same related party for the period from April 1, 2021, to December 31, 2022, providing
for rent payments in the amount of 3,500€ per month.
On October 1, 2021, the Company entered
into a second lease agreement with the wife of Mr. Stavros Galanakis for its new subsidiary in Vari, Greece for Ultra Ship Management.
The term of the lease is from October 1, 2021 to September 30, 2024 with a fixed monthly rent of 1,000€.
NOTE 10 – INCOME TAXES
The Company has an overall net loss
and, as a result, there exists doubt as to the ultimate realization of the deferred tax assets. Accordingly, a valuation allowance equal
to the total deferred tax assets has been recorded.
The Company had federal net operating
loss carry forwards for tax purposes of approximately $670,000 on December 31, 2021, and approximately $650,000 on March 31, 2022, which
may be available to offset future taxable income. Utilization of the net operating loss carry forwards may be subject to substantial annual
limitations due to the ownership change limitations provided by Section 381 of the Internal Revenue Code of 1986, as amended. The annual
limitation may result in the expiration of net operating loss carry forwards before utilization.
NOTE 11 – SUBSEQUENT EVENT
In accordance with SFAS 165 (ASC 855-10)
the Company has analyzed its operations subsequent to March 31, 2022, through May 16, 2022, the date these financial statements were issued,
and has determined that there are no material subsequent events to these financial statements.