U.S. SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q/A

 

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended: April 30, 2020

 

OR

 

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from _______to _______

 

Commission File Number 033-20966

 

Finotec Group, Inc.

(Exact name of registrant as specified in its charter)

 

Nevada   76-0251547 
(State or other jurisdiction of
Incorporation or organization)
  (IRS Employer
Identification No.)

 

3445 Lawrence Ave
Oceanside, New York, 11572

(646) 768-8417

(Issuer’s telephone number including area code)

 

 

(Former name, former address, and former fiscal year, if changed since last report)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class   Trading Symbol(s)   Name of each exchange on which registered
None   N/A   N/A

 

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

 

Large accelerated filer ☐ Accelerated filer ☐
Non-accelerated filer ☐ Smaller reporting company ☒
  Emerging growth company ☐

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☒ No ☐

 

State the number of shares outstanding of each of the issuer’s classes of common equity as of the latest practicable date. As of November 10, 2020, there were 300,000,000 common shares were outstanding.

 

 

 

 

 

 

Finotec Group, Inc.

 

CONTENTS

 

PART 1 – FINANCIAL INFORMATION  
   
Item 1. – Financial Statements  
   
Consolidated Balance Sheets 1
   
Consolidated Statements of Operations (unaudited) 2
   
Consolidated Statements of Cash Flows (unaudited) 3
   
Consolidated Statements of Stockholders’ Deficit (unaudited) 4
   
Notes to Consolidated Financial Statements (unaudited) 5
   
Item 2. – Management’s Discussion and Analysis of Financial Condition And Results of Operations 11
   
Item 3. – Quantitative and Qualitative Disclosures about Market Risk 11
   
Item 4. – Controls and Procedures 11
   
PART II – OTHER INFORMATION 13
   
Item 1A. – Risk Factors 13
   
Item 3. – Defaults Upon Senior Securities 13
   
Item 6. – Exhibits 13
   
SIGNATURES 14

  

i

 

 

EXPLANATORY NOTE

 

On April 28, 2020 the Company’s Board of Director’s awarded 10,000,000 shares of the Company’s Series A Preferred Stock to Custodian Ventures LLC, managed by David Lazar. Based upon the original Certificate of Designation these shares were convertible to common stock at a ratio of 20 to 1. The Company’s Form 10-Q’s for the periods ended April 30, 2020, July 31, 2020 and October 31, 2020 each contained financial statements that included stock-based compensation based upon a 20 to 1 conversion rate. Each of these 10-Q’s was filed on November 18, 2020. On November 19, 2020 it was discovered that due to a scrivener’s error, the conversion rate was intended to be 200 to 1 instead of 20 to 1. The impact of the increase in the conversion rate from 20 to 1 to 200 to 1, was an additional $5,400,000 in stock-based compensation expense included in “general and administrative expense -related party”, on the Company’s Restated Statement of Operations. This Amendment No. 1 on Form 10-Q/A (this Amendment) amends the financial statements and the related footnotes on the Company’s Report on Form 10-Q for the quarter ended April 30, 2020, as amended. Also see Note 6. “Restatement”. Except for the foregoing, no other information in the Original Filing is revised by this Amendment.

 

ii

 

 

FINOTEC GROUP, INC.

BALANCE SHEETS

(Unaudited)

 

    April 30,     January 31,  
    2020     2020  
    (restated)        
ASSETS            
Total Assets   $ -     $ -  
                 
LIABILITIES & STOCKHOLDERS’ DEFICIT                
                 
Accounts payable   $ 185     $ -  
Note payable related parties     10,280       2,675  
Total liabilities     10,465       2,675  
                 
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       -  
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     19,251,548       13,261,548  
Retained earnings (deficit)     (19,572,013 )     (13,564,223 )
Total Stockholders’ (Deficit)     (10,465 )     (2,675 )
Total Liabilities and Stockholders’ (Equity)   $ -     $ -  

 

The accompanying notes are an integral part of these financial statements.

 

  1  

 

 

FINOTEC GROUP, INC.

STATEMENTS OF OPERATIONS

(Unaudited)

 

    Three months     Three months  
    ended     ended  
    April 30,     April 30,  
    2020     2019  
    (restated)        
Revenue   $ -     $ -  
                 
Operating Expenses:                
Administrative expenses -related party     6,007,790       -  
Total operating expenses     6,007,790       -  
(Loss) from operations     (6,007,790 )     -  
Other expense                
Other (expense) net     -       -  
Income (loss) before provision for income taxes     (6,007,790 )     -  
Provision for income taxes     -       -  
Net (Loss)   $ (6,007,790 )   $ -  
                 
Basic and diluted earnings(loss) per common share   $ (0.02 )   $ -  
                 
Weighted average number of shares outstanding     300,000,000       300,000,000  

 

The accompanying notes are an integral part of these financial statements.

                             

  2  

 

 

FINOTEC GROUP, INC.

STATEMENTS OF CASH FLOWS

(Unaudited)

 

    Three months     Three months  
    ended     ended  
    April 30,     April 30,  
    2020     2019  
    (restated)        
Cash Flows From Operating Activities:            
Net loss   $ (6,007,790 )   $        -  
Adjustments to reconcile net income to net cash provided by (used for) operating activities                
Stock- based compensation     6,000,000          
Changes in operating assets and liabilities:                
Accounts payable     185          
Net cash provided by (used for) operating activities     (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          
Net cash provided by (used for) financing activities     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   $ -     $ -  

 

The accompanying notes are an integral part of these financial statements.

 

  3  

 

 

FINOTEC GROUP, INC

STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(Unaudited)

 

                            Additional           Total  
    Preferred Stock     Common Stock     Paid-in     Accumulated     Stockholders’  
    Shares     Value     Shares     Value     Capital     Deficit     Equity  
Balance, January 31, 2019                     300,000,000     $ 300,000     $ 13,261,548     $ (13,561,548 )   $ -  
                                                         
Net loss                                             -       -  
                                                         
Balance, April 30, 2019     -     $ -       300,000,000     $ 300,000     $ 13,261,548     $ (13,561,548 )   $ -  
                                                         
                            Additional           Total  
    Preferred Stock     Common Stock     Paid-in     Accumulated     Stockholders’  
    Shares     Value     Shares     Value     Capital     Deficit     Equity  
Balance, January 31, 2020     -     $ -       300,000,000     $ 300,000     $ 13,261,548     $ (13,564,223 )   $ (2,675 )
                                                         
Net loss                                             (6,007,790 )     (6,007,790 )
                                                         
Issuance of preferred stock     10,000,000       10,000                       5,990,000               6,000,000  
                                                         
Balance, April 30, 2020(restated)     10,000,000     $ 10,000       300,000,000     $ 300,000     $ 19,251,548     $ (19,572,013 )   $ (10,465 )

 

The accompanying notes are an integral part of the financial statements.

 

  4  

 

 

FINOTEC GROUP, INC.

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.

 

  5  

 

 

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.

 

  6  

 

 

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.

 

  7  

 

 

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)   $ -     $ -     $ -  

 

  8  

 

 

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  

 

  9  

 

 

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.

 

  10  

 

 

Item 2 Management’s Discussion and Analysis of Financial Condition and Results of Operations.

 

Overview

 

Our financial statements accompanying this Report have been prepared assuming that we will continue as a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. We have a minimal operating history and minimal revenues or earnings from operations. We have no significant assets or financial resources. We will, in all likelihood, sustain operating expenses without corresponding revenues for the immediate future.

 

Plan of Operation

 

We have been dormant since May 2005. As of the date of this Report, we intend to engage in what we believe to be synergistic acquisitions or joint ventures with a company or companies that we believe will enhance our business plan. There are no assurances we will be able to consummate any acquisitions using our securities as consideration, or at all. Numerous things will need to occur to allow us to implement this aspect of our business plan and there are no assurances that any of these developments will occur, or if they do occur, that we will be successful in fully implementing our plan.

   

Limited Operating History; Need for Additional Capital

 

We cannot guarantee we will be successful in our business operations. We have not generated any revenue since inception. Our business is subject to risks inherent in the establishment of a new business enterprise, including limited capital resources and possible cost overruns due to the price and cost increases in supplies and services.

 

If we are unable to meet our needs for cash from either our operations, or possible alternative sources, then we may be unable to continue, develop, or expand our operations.

 

Off-Balance Sheet Arrangements

 

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources that is material to investors.

 

Critical Accounting Principles

 

The preparation of consolidated financial statements in accordance with US GAAP requires the Company’s 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 consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results can, and in many cases will, differ from those estimates. We have not identified any critical accounting policies.

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk

 

Market risk is the sensitivity of income or loss to changes in interest rates, foreign exchanges, commodity prices, equity prices, and other market-driven rates or prices. We are not presently engaged in any substantive commercial business. Accordingly, the risks associated with foreign exchange rates, commodity prices, and equity prices are not significant. Our debt obligations contain interest rates that are fixed and we do not enter into derivatives or other financial instruments for trading or speculative purposes.

 

Item 4. Controls and Procedures

 

Evaluation of Disclosure Controls and Procedures

 

Under the supervision and with the participation of our senior management, including our Chief Executive Officer and Chief Financial Officer, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded as of the Evaluation Date that our disclosure controls and procedures were not effective such that the information relating to us required to be disclosed in our Securities and Exchange Commission (“SEC”) reports (i) is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and (ii) is accumulated and communicated to our management, including our Chief Executive Officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure. The Company’s former management abandoned all operations for many years, and only recently did the Company appoint new management to make filings with the SEC on behalf of the Company.

 

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Management’s Annual Report on Internal Control Over Financial Reporting

 

Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance of achieving their control objectives. Our Company has been dormant since. As a result, our management did not evaluate the effectiveness of our internal control over financial reporting as of April 30, 2020, and April 30, 2020, based on the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control-Integrated Framework (2013). without such an evaluation, our management concluded that we did not maintain effective internal control over financial reporting as of April 30, 2020, based on the COSO framework criteria, as more fully described below. This was due to deficiencies that existed in the design or operation of our internal controls over financial reporting that adversely affected our internal controls and that may be considered to be material weaknesses.

 

The matters involving internal controls and procedures that our management considered to be material weaknesses under the standards of the PCAOB were: (1) lack of a functioning audit committee, (2) lack of a majority of outside directors on our Board of Directors, resulting in ineffective oversight in the establishment and monitoring of required internal controls and procedures; (3) inadequate segregation of duties consistent with control objectives; (4) complete lack of management of the company from May 2005 until April 30, 2020; and (5) lack of disclosure controls. The aforementioned material weaknesses were identified by our Chief Executive and Financial Officer in connection with the review of our financial statements as of April 30, 2020.

 

Management believes that the material weaknesses set forth above did not have an effect on our financial results because the activity during this period was nominal. However, management believes that the lack of a functioning audit committee and the lack of a majority of outside Directors on our Board of Directors results in ineffective oversight in the establishment and monitoring of required internal controls and procedures, which could result in a material misstatement in our financial statements in future periods.

 

Changes in Internal Control Over Financial Reporting

 

There have been no changes in our internal control over financial reporting that occurred during the periods ended July 3, 2020, and April 30, 2020, that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.

 

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PART II - OTHER INFORMATION

 

Item 1. Legal Proceedings

 

There are no pending legal proceedings to which the Company is a party or in which any director, officer or affiliate of the Company, any owner of record or beneficially of more than 5% of any class of voting securities of the Company, or security holder is a party adverse to the Company or has a material interest adverse to the Company. The Company’s property is not the subject of any pending legal proceedings.

 

Item 1a. Risk Factors

 

We are a smaller reporting company and are not required to provide the information under this item pursuant to Regulation S-K.

 

Item 2. Unregistered Sales Of Equity Securities And Use Of Proceeds

 

During the three months ended April 30, 2020, we did not issue any of our equity securities.

 

Item 3. Defaults Upon Senior Securities

 

None.

 

Item 4. Mine Safety Disclosures

 

Not Applicable.

 

Item 5. Other Information

 

None.

 

Item 6. Exhibits

 

31.1   Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
     
31.2   Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
     
32.1   Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
     
32.2   Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
     
101.INS   XBRL Instance Document
     
101.SCH   XBRL Taxonomy Extension Schema Document
     
101.CAL   XBRL Taxonomy Extension Calculation Linkbase Document
     
101.DEF   XBRL Taxonomy Extension Definition Linkbase Document
     
101.LAB   XBRL Taxonomy Extension Label Linkbase Document
     
101.PRE   XBRL Taxonomy Extension Presentation Linkbase Document

 

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SIGNATURES

 

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

  Finotec Group, Inc.
  (Registrant)
   
Date: March 3, 2021 By: /s/ David Lazar
    David Lazar, CEO and CFO

 

 

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