Elvictor Group, Inc 10-K for FY2022
Elvictor Group, Inc. (ELVG)
About this 10-K
Elvictor Group, Inc filed this 10-K on March 31, 2023, covering the fiscal year ended December 31, 2022 (FY2022).
Headline figures
Fiscal year ended December 31, 2022, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $2.48M
- up 3.7% from $2.39M a year earlier
- Net loss
- $238.86K
- compared with a net loss of $43.16M a year earlier
- Diluted EPS
- $0.00
- compared with -$0.14 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
For
the fiscal year ended
For the transition period from to
Commission
file number
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of | (I.R.S. Employer | |
| incorporation or organization) | Identification No.) |
(Address of principal executive offices)
Registrant’s
telephone number, including area code:
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Exchange Act: None
Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act ☐ Yes ☒
Indicate
by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. ☒
Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 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. ☒
Indicate
by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data
File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding
12 months (or for such shorter period that the registrant was required to submit and post such files). ☐ Yes ☒
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “non-accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large Accelerated filer ☐ | 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 has filed a report on and attestation to its management’s assessment of the effectiveness
of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered
public accounting firm that prepared or issued its audit report.
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes
The aggregate market value of the Company’s common stock outstanding,
other than shares held by persons who may be deemed affiliates of the registrant, computed by reference to the closing price for the common
stock on June 30, 2022, as reported on the OTC Markets on that date, was $
The number of shares of the registrant’s common stock, $0.0001
par value per share, outstanding as of March 30, 2023 was
DOCUMENTS INCORPORATED BY REFERENCE: NONE.
TABLE OF CONTENTS
GENERAL INFORMATION
i
SPECIAL NOTE
Unless the context indicates otherwise, as used in this Annual Report on Form 10-K, the terms “we,” “us,” “our,” “the Company,” “Elvictor,” “ELVG” or “our business” refer to Elvictor Group, Inc.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-K contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements concerning management’s expectations, strategic objectives, business prospects, anticipated economic performance and financial condition and other similar matters involve significant known and unknown risks, uncertainties and other important factors that could cause the actual results, performance or achievements of results to differ materially from any such forward-looking statements that are not statements of current or historical facts. It is not possible to predict or identify all factors, future events or circumstances that may have an impact on the Company’s operations, financial results, financial condition, business, prospects, growth strategy and liquidity. Consequently, the following should not be considered to be a complete discussion of all potential factors, risks or uncertainties. The words “anticipate,” “estimate,” “expect,” “project,” “intend,” “believe,” “plan,” “target,” “forecast” and similar expressions are intended to identify forward-looking statements. Such forward-looking statements are based on management’s current expectations, but actual results may differ materially due to various factors, including, but not limited to:
| ● | the inability to attract or retain qualified seafarers due to the war in the Ukraine or civil unrests in our key operating markets, among other factors; | |
| ● | effect of rising inflation on our business due to increases in seafarer salaries and with respect to our customers; | |
| ● | our ability to compete effectively within our industry since our competitors may have significantly greater financial, operational, marketing and geographic presence resources than we do; | |
| ● | COVID-19 pandemic, which has impacted and continues to impact the Company and others in the industry, including amended crew member related regulations; | |
| ● | fluctuations in global economic conditions may significantly reduce the demand for our services and adversely impact our business and results of operations; | |
| ● | changing regulatory, economic, political and governmental conditions may impact industries and markets in which the Company currently operates; | |
| ● | the effect of fluctuations in the price of oil and natural gas on the businesses of our clients may negatively impact our business and results of operations; | |
| ● | impact of the war in the Ukraine on crewing and the global shipping industry, including our ability to continue effectively serving our clients due to a shortage of qualified seafarers; | |
| ● | our ability to effectively manage our business and deliver services to our customers depends on the reliability and capacity of our technology systems; | |
| ● | our reliance on our technology and cybersecurity procedures to effectively collect, protect and store sensitive and confidential information, including our proprietary business information, as well as information pertaining to our customers, employees, and business partners; and | |
| ● | the increased cost of compliance with regulatory obligations, including data privacy regulations enacted in various jurisdictions in the U.S. and throughout the world. |
ii
The forward-looking statements contained in this Report reflect our current expectations and beliefs concerning future developments and their potential impact on our operations and business. Future developments affecting us may not be those that we have anticipated. Should one or more of these factors, risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respect from those discussed in these forward-looking statements. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.
Emerging Growth Company Status
We are an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act enacted in April 2012, and, for as long as we continue to be an “emerging growth company,” we may choose to take advantage of exemptions from various reporting requirements applicable to other public companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. We will remain an “emerging growth company” until the earliest of (i) the last day of the fiscal year in which we have total annual gross revenues of $1 billion or more; (ii) the last day of the fiscal year following the fifth anniversary of the date of an initial public offering of our equity securities; (iii) the date on which we have issued more than $1 billion in non-convertible debt during the prior three year period; and (iv) the date on which we are deemed to be a “large accelerated filer.” Pursuant to (ii) above, we will cease to be an emerging growth company effective December 31, 2023.
iii
PART I
Item 1. Business
Overview
Elvictor Group, Inc., a Nevada corporation, was incorporated on November 3, 2017 under the name of Thenablers, Inc. (“Thenablers”) and initially operated as an international business development organization with a focus on design and execution of market strategies for its clients. In October 2019, Konstantinos Galanakis, our Chief Executive Officer, Stavros Galanakis, our Vice President/Chairman of the Board), Christodoulos Tzoutzakis, our Chief Operating/ Technology Officer) and Theodoros Chouliaras, our then Chief Financial Officer were appointed as our directors, and all of the directors then serving in connection with the business of Thenablers resigned (Panagiotis Lazaretos, Sotirios Foutsis and Theofylaktos Petros Oikonomou). Those changes in management occurred to promote, operate and expand our new business with management specific knowledge. At the time of appointment of the new directors, Thenablers issued to Konstantinos Galanakis, Stavros Galanakis, Aikaterini Galanaki and Theodoros Chouliaras an aggregate of 80,000,000 shares of newly designated “Series A Convertible Preferred Stock in exchange for an aggregate purchase price of $30,000 and the transfer of all of the business of Elvictor Crew Management Ltd to the Company, including all existing crew management contracts, the transfer of which began in the fourth quarter of 2020 and concluded at the end of 2021. The 80,000,000 shares of Series A Convertible Preferred Stock, which voted with the Company’s common stock, on an as-converted basis, were converted into 395,220,000 shares of common stock issued to Mr. Konstantinos Galanakis and Mr. Stavros Galanakis on April 8, 2021, pursuant to the terms of a Settlement Agreement and resulted in a change in our control of the Company.
On November 5, 2019, Mr. Konstantinos Galanakis was appointed as our Chief Executive Officer and Stavros Galanakis as our Chairman. On December 13, 2019, via shareholder consent, our name was changed from “Thenablers, Inc.” to “Elvictor Group, Inc.” with the Nevada Secretary of State. On February 27, 2020, upon receipt of FINRA’s approval, our trading symbol in the OTC Pink Open Market was changed to “ELVG.”
On August 8, 2020, we formed a wholly owned subsidiary in Vari, Greece, Elvictor Group Hellas Single Member SA. This subsidiary provides us with back-office services and its crew management subsidiaries pertaining to human resources issues, agreements, tax and other accounting advice, and administrative support.
In September 2020, we began focusing our s business operations on providing crew management services to vessels around the world. In October 2021, we acquired 100% of the outstanding equity interests of Ultra Shipmanagement, Inc., a Marshall Islands company (“Ultra Shipmanagement”) owned by Konstantinos Galanakis and Stavros Galanakis in return for our payment of $2,500 upon which Ultra Shipmanagement, Inc. became our wholly owned subsidiary, and we began offering ship management services. On January 10, 2022, we formed a wholly owned subsidiary in Cyprus, ELVG Crew Management Limited, which provides crew management services.
On January 2022, we established the fully owned subsidiary, ELVG Crew Management Ltd, incorporated in Cyprus, to facilitate its crew management operations.
Together with our wholly owned crew management subsidiaries, we are a crewing and crew management company that sources, recruits, selects, deploys, schedules, trains, the on-going management of seafarers. Our services also include administrative functions related to crew management services, including payroll services, travel arrangements, and verifying the insurance coverage information of all onboarded seafarers. We have the benefit of over 65 years of combined experience in various value-adding activities of the shipping sector such as ship management, technical management, ship agency, crewing and crew management of Stavros Galanakis and Konstantinos Galanakis.
We currently manage over 1,800 seafarers of seven different nationalities who are aboard seven different ship types.
1
Recent Developments
On November 15, 2021 and effective as of January 1, 2022, we entered into a Software License Agreement with Seatrix Software Production Single Member S.A., the Licensor. The license grants us an exclusive and non-transferable license to use the Licensor’s artificial intelligence software in connection with managing shipping crews. On January 19, 2022, we issued the Licensor 7,000,000 Common Stock Restricted shares (the “License Shares”) to the Licensor as consideration for the license. Seatrix Software Production Single Member S.A. is a related party company fully owned and controlled by the Company’s CEO, Konstantinos Galanakis.
On January 19, 2022, we issued an aggregate of 900,000 shares of our Common Stock to certain directors and former directors for services previously provided to us.
On September 28, 2022, the Company notified its independent registered public accounting firm, BF Borgers CPA PC (“Borgers”), that we were dismissing Borgers as our independent auditors effective immediately, which decision was approved by our s board of directors, acting in lieu of an audit committee. Concurrently with Borgers dismissal, our board of directors appointed RBSM LLP as our new independent registered public accounting firm effective September 28, 2022. Borgers’ s audit reports on our financial statements for the fiscal years ended December 31, 2020 and 2021 did not contain an adverse opinion or a disclaimer of opinion, and were not qualified or modified as to uncertainty, audit scope or accounting principles. During the fiscal years ended December 31, 2020 and 2021 and through the September 28, 2022, there were (i) no disagreements between us and Borgers (as defined in Item 304(a)(1)(iv) of Regulation S-K and the related instructions to Item 304 of Regulation S-K) on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of Borgers, would have caused Borgers to make reference to the subject matter of such disagreements in connection with its audit reports on our Company’s financial statements for such years, and (ii) no reportable events as that term is defined in Item 304(a)(1)(v) of Regulation S-K.
On October 26, 2022, we determined that it would be in our bests interests to pay on behalf of certain Board members and executive officers the applicable income taxes payable, related to the payment of their compensation for the year ended December 31, 2021. The Board approved the income tax payment of $29,676 on behalf of Konstantinos Galanakis, the CEO and board member, $15,614 on behalf of Christodoulos Tzoutzakis, the COO and $7,783 on behalf of Stavros Galanakis, Vice President and Chairman of the Board. The Company has accrued for these expenses in its Consolidated Statement of Operations under Salaries as of December 31, 2022.
On January 3, 2023, a majority of our outstanding shares of capital stock entitled to vote voted to remove Lampros Theodorou as our Director. Lampros Theodorou’s removal as our Director was not for cause and not the result of any disagreement with the Board of Directors or the management or otherwise in connection with our operations, policies or practices. The effective date of the removal was December 31, 2022.
On January 3, 2023, the Board removed Aikaterini (“Katerina”) Bokou as our Chief Financial Officer (“CFO”) and simultaneously appointed Kostantinos Galanakis as our CFO. Aikaterini Bokou’s removal as our CFO was not for cause and not the result of any disagreement with the Board or the management or otherwise in connection with our operations, policies or practices. Konstantinos Galanakis has been our Chief Executive Officer since November 5, 2019.
On January 12, 2023, the Board approved our Code of Ethics and Insider Trading Policies, which are posted s on our website at www.elvictorgroup.com.
2
Our Services
Crewing and Crew Management Services
Crewing is a key ship management service and is defined as the selection, recruitment and training of the essential on-board crews. Crew managers source crew members for particular periods considering the specific needs on-board our clients’ vessels, the availability of crew members at the location of the vessels, and the vessels’ schedules.
We provide services that cover various types of crew management activities, including sourcing and preliminary screening of seafarers, the matching of crew members with ship owning companies, and submission of employment proposals. We also direct seafarers to health clinics, record in our databases the results of their medical examinations thereby helping verify that the seafarers are fit and ready to perform their assignments. We also maintain records of the travel and Standards of Training, Certification and Watchkeeping (“STCW”) documents which are required for the seafarers to board our clients’ vessels and perform services thereon. This is a highly complex procedure, given the number of seafarers handled on a daily basis, and requires us to process and store sensitive information (such as, but not limited to, the health records of the seafarers). Because of this, we are obligated to comply with data privacy regulations in the United States, as well as the General Data Protection Regulation (“GDPR”) of the EU.
We brief the seafarers on the details of their new assignment to ensure their familiarization with their respective tasks, after which we make the necessary travel arrangements, including booking of tickets, to ensure that the seafarers reach their destination port and embark the vessel safely and in a timely manner. Upon completion of the assigned trip, each seafarer undergoes a disembarkation and briefing procedure, during which seafarers may submit complaints related to previous assignments, state whether they would like to rejoin the specific ship company for further assignments, request to be promoted and/or effectively communicate any other issues.
For each of the aforementioned services, we charge our clients a fee based on the salary of each seafarer, the seafarer’s rank, and the type of the vessel in which the seafarer is employed (i.e. bulker, tanker, liquefied petroleum gas tanker or container ship). Most of our revenues are recognized 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. Revenue from crew manning and management services where we act as a principle is recognized as gross revenue and when acting as an agent, revenue is recognized as net revenue in the accounting period in which the services are rendered.
Until the first quarter of 2022, we outsourced the provision of crewing and crew management services to Elvictor Crew Management Ltd, our related party based in Cyprus. In April 2022, we reduced the amount of crewing and crew management services that we outsource by providing such services directly through our subsidiaries. Our wholly owned subsidiary ELVG Crew Management Ltd, was formed in January of 2022 with the intent of providing such services through this subsidiary.
3
Ship Management Services
Ship management services include the technical and financial fleet management, the crew management and procurement process, as well as compliance with quality and safety standards:
| ● | The technical management includes the maintenance of the machinery and repair work of the ship to ensure the technical availability of the vessel. | |
| ● | Crew management is also a key ship management service and refers to the recruitment, composition and employment of the essential on-board crews. Ship managers hire crew members for particular periods considering the specific needs on-board, the availability of crew members at the location of the vessel and the vessel schedules. | |
| ● | Financial management includes finance and accounting, provision of data and performance measurement of the vessel. | |
| ● | Finally, ship managers provide spare parts, supplies and services to keep the vessel ready to sail, and also arrange compliance with regulations and quality standards, health, safety and environment standards, insurance and claims handling services. |
We intend to expand our services by also providing ship management services and in furtherance of this plan, we acquired Ultra Shipmanagement from Stavros Galanakis and Konstantinos Galanakis, which has received its Det Norske Veritas AS approved Interim Document of Compliance provided under the authority granted by the Government of the Republic of the Marshall Islands, and we have also employed specialized personnel. The Interim Document of Compliance is the license required for a ship management company to start providing its services.
Competition
Many of our competitors have significantly greater financial and operational resources, longer operating histories, greater marketing and advertising capabilities, and broader geographic presence than we and our subsidiaries do. Our competitors may be better positioned to outmaneuver us in the market by offering more competitive pricing and by spending significantly greater resources on advertising. Our current and potential competitors may be able to expand into markets in which we and our subsidiaries currently operate, and we and our subsidiaries are vulnerable to the marketing power and potentially significantly higher level of customer brand recognition of our larger competitors. Many of our competitors offer services that are more extensive than the services we together with our subsidiaries currently offer and may offer such services at a price point that we may be unable to compete with.
Our competitors in ship and crew management can be separated into three broad categories:
| (a) | Local manning companies focused on specific geographical markets situated in their countries of domicile (Ukraine, Sri Lanka, Philippines, etc.), which provide isolated services encompassing ship personnel. | |
| (b) | In-house ship and crew management departments of ship owning companies that usually own a substantial number of vessels. | |
| (c) | Crew & Ship management companies providing crew management services to third parties. |
We believe that we can compete effectively with our competitors through:
| (i) | Our access to seafarer-supplying countries, through established relations with related or third-party companies; |
| (ii) | Our smaller size and simpler internal structure can be more flexible to the specific requirements of each client and can offer a tailor-made approach both in the services and pricing allowing to present an attractive alternative solution to many larger ship owning companies; |
| (iii) | Our crew management platform designed to allow our personnel to collaborate with different cultures in different time zones with ever rising complexities, presenting a uniform service level to our clients regardless of the point of origin of the crew; and |
| (iv) | Our public status that provides transparency to our operations and financial performance covering our clients ESG requirements. |
As we grow our operations and venture into new products and solutions, we anticipate competitive pressures to increase, particularly from established firms that find our solutions disruptive.
4
Government Regulation
We are subject to numerous laws and regulations in the United States and other jurisdictions in which we operate. The laws and regulations govern many issues related to our business practices, including, but not limited to those regarding privacy, data security, intellectual property, taxation, wage and hour, sick pay and leaves of absence, anti-discrimination and harassment, whistleblower protections. We are obligated to have compliance procedures in place and to remain diligent in keeping abreast of changes in labor regulations, maritime regulations, and other trade regulations that affect our customers in order to amend our procedures. Because we are performing cash transfers to and on behalf of the crew members, we need to comply with banking regulations that applies for EU, UN and OFAC sanctions as provided to us by the banks.
The General Data Protection Regulation (“GDPR”) that has been adopted by the European Union is considered in our operations and all the required consents from the crew members are provided at the local offices on behalf of the Company for processing personal data.
As we begin to roll out additional services and solutions, we may find certain aspects of our operations fall under regulatory regimes governing the specific products or us, as a whole. For example, if we begin to provide ship management services, we may fall under certain shipping regulations.
Employees and Consultants
As of December 31, 2022, we had 23 full time employees, not including our Chief Executive Officer and our Chairman of the Board of Directors.
Item 1A. Risk Factors
As a “smaller reporting company” as defined by Item 10(f)(1) of Regulation S-K, the Company is not required to include the disclosure required under this Item 1A.
Item 1B. Unresolved Staff Comments
None.
Item 2. Properties
Our principal business and corporate address is Vassileos Constantinou 79, Vari, 16672, Attiki, Greece. The space is being provided to the Company through a lease agreement with Mrs. Aikaterini Galanaki, our Chairman’s, Stavros Galanakis’ wife, at a monthly cost of €3,500). The specific lease has been renewed for a period starting from 01/01/2023 until 12/31/2030. We consider our office space adequate for our current operations.
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 December 31, 2024, with a fixed monthly rental of 1,000€.
Item 3. Legal Proceedings
Currently, we are not involved in any pending or threatened material litigation or other material legal proceedings, nor have we been made aware of any pending or threatened regulatory audits.
Item 4. Mine Safety Disclosures
Not applicable.
5
PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Market Information
Our Common Stock is quoted on the Pink Open Market under the symbol “ELVG.” The following table sets forth the quarterly high and low daily close for our Common Stock for the two years ended December 31, 2022. The bids reflect interdealer prices without adjustments for retail mark-ups, mark-downs or commissions and may not represent actual transactions. There is a limited market for our Common Stock.
| Price Range | ||||||||
| High | Low | |||||||
| Year ended December 31, 2021 | ||||||||
| First Quarter | $ | 0.1800 | $ | 0.0710 | ||||
| Second Quarter | $ | 0.2870 | $ | 0.0710 | ||||
| Third Quarter | $ | 0.2669 | $ | 0.0501 | ||||
| Fourth Quarter | $ | 0.0790 | $ | 0.0250 | ||||
| Year ended December 31, 2022 | ||||||||
| First Quarter | $ | 0.0780 | $ | 0.0250 | ||||
| Second Quarter | $ | 0.0700 | $ | 0.0200 | ||||
| Third Quarter | $ | 0.0379 | $ | 0.0180 | ||||
| Fourth Quarter | $ | 0.0500 | $ | 0.0130 | ||||
The over-the-counter market does not impose listing standards or requirements, does not provide automatic trade executions and does not maintain relationships with quoted issuers. A company traded on the over-the-counter market may face loss of market makers and lack of readily available bid and ask prices for its stock and may experience a greater spread between the bid and ask price of its stock and a general loss of liquidity with its stock. In addition, certain investors have policies against purchasing or holding over the counter market. Both trading volume and the market value of our securities have been, and will continue to be, materially affected by the trading on the over-the-counter market.
Holders
As of December 31, 2022, we had 414,448,757 outstanding shares of Common Stock and 87 shareholders of record.
Dividend Policy
Holders of Common Stock are entitled to receive dividends as may be declared by the Company’s Board of Directors. Our Board of Directors is not restricted from paying any dividends but is not obligated to declare a dividend. We have never declared or paid any cash dividends, and we do not anticipate paying cash dividends on the Common Stock at any time in the foreseeable future. Our Board of Directors currently plans to retain earnings for the development and expansion of our business. Any future determination as to the payment of dividends will be at the discretion of our Board of Directors and will depend on a number of factors including future earnings, capital requirements, financial conditions and such other factors as the Board of Directors may deems relevant.
Securities Authorized for Issuance under Equity Compensation Plans
The Company has not adopted an equity compensation plan.
6
Recent Sales of Unregistered Securities
We did not issue any securities in unregistered transactions during the fiscal year covered by this report that have not been previously reported in a Form 10-Q or Form 8-K.
Repurchases of Equity Securities
We did not repurchase any equity securities during the year ended December 31, 2022.
Item 6. [Reserved].
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with our audited consolidated financial statements and the notes thereto, which are included in “Item 8. Consolidated Financial Statements and Supplementary Data” of this Report. Certain information contained in the discussion and analysis set forth below includes forward-looking statements. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors, including those set forth under “Forward-Looking Statements,” above.
Organizational Overview
Together with our wholly owned crew management subsidiaries, we are a crewing and crew management company responsible for sourcing, recruitment, selection, deployment, scheduling, training, and on-going management of seafarers. Our services also include administrative functions related to crew management services, including payroll services, travel arrangements, and verifying the insurance coverage information of all onboarded seafarers. Our Company benefits from over 65 years of combined experience in various value adding activities of the shipping sector such as ship management, technical management, ship agency, crewing and crew management of Stavros Galanakis and. Konstantinos Galanakis.
Through the crew management platform developed by our affiliate, Seatrix, our personnel can collaborate with many different cultures in many different time zones with ever rising complexities, presenting a uniform service level to our principals, regardless of the point of origin of the crew. This innovation allows us to hire junior operators, who after a short training procedure are able to serve our principals with high quality standards, helping Elvictor be cost effective while maintaining the highest possible service level.
We currently manage over 1,800 seafarers of seven different nationalities who are aboard seven different ship types.
We o expanded our services by providing ship management services and, we acquired Ultra Shipmanagement from Stavros Galanakis and Konstantinos Galanakis for that purpose, which has received its Det Norske Veritas AS approved Interim Document of Compliance provided under the authority granted by the Government of the Republic of the Marshall Islands, and we have also employed specialized personnel. The Interim Document of Compliance is the license required for a ship management company to start providing its services.
Results of Operations
Critical Accounting Policies and Estimates
Our significant accounting policies are more fully described in the notes to our consolidated financial statements. Those material accounting estimates that we believe are the most critical to an investor’s understanding of our financial results and condition are discussed immediately below and are particularly important to the portrayal of our financial position and results of operations and require the application of significant judgment by our management to determine the appropriate assumptions to be used in the determination of certain estimates.
7
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 U.S. 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 December 31, 2022 and 2021 and statements of operations and cash flows for the year ended December 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 December 31, 2022, and 2021 and the results of controlled subsidiaries for the year 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
The 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 years ended December 31, 2022 and 2021, 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 valuation and specific circumstances of the customer and existing economic conditions. Normal contracts receivable are 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 accounts. There is no interest charged on past due accounts.
The Company does not have an allowance for doubtful accounts as of December 31, 2022 or 2021.
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 three years.
Intangible Assets
Intangible assets acquired are initially recognized at their fair value at the acquisition date. 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 of five years.
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.
8
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 common shares 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 December 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 consolidated financial statements upon adoption.
9
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 December 31, 2022, to the date these consolidated financial statements were issued for subsequent event disclosure purposes.
Plan of Operations
In order to meet business goals, we must (a) execute effectively our current business of crew management; and (b) continue to focus on new business development in order to acquire new agreements.
In order to raise sufficient funds to proceed with the implementation of our business plan, we may have to find alternative sources of funds, like a second public offering, a private placement of securities, or loans from third parties (such as banks or other institutional lenders). Equity financing could result in additional dilution of the existing shareholders. If we are unable to meet our needs for cash from either the money that we raise from private placements, or possible alternative sources, then we may be unable to continue to maintain, develop or expand our operations.
Results of Operations
Revenues
For the years ended December 31, 2022, and December 31, 2021, we generated $2,475,660 and $2,387,020 in revenues, respectively, representing an increase in revenue of $88,640, or 3.7%.
Operating Expenses
For the years ended December 31, 2022 and December 31, 2021, we incurred $2,300,442 and $1,420,841 in operating expenses, respectively, representing an increase in operating expenses between the two periods of $879,601, or 61.9%. The increase in operating expenses in 2022 is due to the increased number of our employees, some of which are performing functions previously performed by third parties and the increased professional fees. For the year ended December 31, 2022, salaries totaled $1,316,906, as compared to $720,192 for the year ended December 31, 2021, an increase of $596,714, or 82.9%.
Net Loss and Gross Profit
For the years ended December 31, 2022 and December 31, 2021, we incurred a net loss of $238,858 and $43,164,740, respectively, representing a decrease in the net loss of $42,925,882 between the two periods, or 99.5%. This decrease is mainly due to the $43,147,786 loss recognition resulting from the non-cash conversion of the preferred shares outstanding to common shares for the year ended December 31, 2021.
10
Liquidity, Capital Resources, and Off-Balance Sheet Arrangements
Liquidity is the ability of an enterprise to generate adequate amounts of cash to meet its needs for cash requirements. We had a working capital surplus during the year ended December 31, 2022 of $253,118 compared to a surplus of $371,736 for the year ended December 31, 2021, which is calculated as current assets minus current liabilities.
Cash flows for the year ended December 31, 2022
Net cash flow provided by operating activities was $210,365 for the year ended December 31, 2022, compared to cash flow of $134,234 used in operating activities during the year ended December 31, 2021. This increase was directly attributable to the increase in the net loss, adjusted for non-cash items, year over year.
Net cash flow used in investing activities was $14,911, for the purchase of office equipment, and $12,877 for the years ended December 31, 2022, and December 31, 2021, respectively.
Net cash provided by financing activities was Nil for the year ended December 31, 2022, and $111,833 for the year ended December 31, 2021, deriving mainly from the sale of common stock.
Cash Requirements
We require additional capital to implement our business development and fund our operations.
Since the crew management business started running, we have funded our operations primarily through equity financings and we expect that we will continue to fund our business through the equity and debt financing, either alone or through strategic alliances. Additional funding may not be available on favorable terms, if at all, which could harm our business plans, financial condition and operating results. We intend to continue to fund our business by way of equity or debt financing along with the revenues that can support the Company. If we raise additional capital through the issuance of equity or convertible debt securities, the percentage ownership of our company held by existing shareholders will be reduced and those shareholders may experience significant dilution. In addition, new securities may contain certain rights, preferences or privileges that are senior to those of our common stock.
Off-Balance Sheet Arrangements
We have no 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 our stockholders.
Contractual Obligations
As of January 1, 2023, our obligations and commitments to make future payments under a lease agreement that the Company pays on behalf of its subsidiaries, Ultra Shipmanagement, is $13,644 for the year of 2023, and $10,233 will be due by the year 2024.
In January 2023, the Company renewed the office lease for its subsidiary in Vari, Greece. The Company accounted for its new lease as an operating lease under the guidance of Topic 872. The new lease is 3,500€ per month, with no annual increase during the 8-year term. The Company used an incremental borrowing rate of 4.92% based on the average interest rate of corporate loans in Greece from the Bank of Greece. At the lease inception the company recorded a Right of Use Asset of $291,467 and a corresponding Lese Liability of $291,467.
Outlook
The shipping industry and especially the crew management segments will likely continue to face increasing pressures, further due to the ongoing COVID-19 crisis, as well as due to the conflict in Ukraine. According to the International Chamber of Shipping (the “ICS”), which represents approximately 80% of the worlds’ merchant fleet, Ukrainian and Russian seafarers make up 14.5% of the global shipping workforce, with 198,123 Russian seafarers and 76,442 Ukrainians.
11
As ICS secretary general Guy Platten said: “The conflict in Ukraine is having a significant impact upon the safety and security of seafarers and shipping in the area. … As with COVID, seafarers are being exposed to issues not of their making. Multiple ships have been hit by munitions, seafarers have been killed and injured and seafarers of all nationalities are trapped on ships berthed in ports. It is of the utmost urgency that their evacuation from these areas of threat should be ensured by those States with the power to do so. The impact upon innocent seafarers and their families cannot be underestimated.”
Our management team is assessing alternative plans to mitigate potential challenges arising from the ongoing war in the Ukraine, among other things.
The demand for our services depends on the demand for maritime shipping services which are subject to normal economic cycles affecting the general economy including the effect of increased inflation. Inflationary pressures may result to important increases to our operating costs that we may not be able to fully transfer to our clients thus affecting our profitability. Additionally, increase in operating costs of our clients may lead to delays in payments for our services and accumulation of bad debt, although we closely monitor their credit behavior to avoid such incidents. Additionally, significant deteriorations of economic conditions over a prolonged period could produce a material adverse effect on the demand for our services.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk
As a “smaller reporting company” as defined by Item 10(f)(1) of Regulation S-K, the Company is not required to provide the information required by this Item 7A.
12
Item 8. Financial Statements and Supplementary Data
Financial Statements
of
ELVICTOR GROUP, INC.
For the Year Ended December 31, 2022, and 2021
13
ELVICTOR GROUP, INC.
TABLE OF CONTENTS – FINANCIAL STATEMENTS
F-1
Report of Independent Registered Public Accounting Firm
To the shareholders and the board of directors of Elvictor Group, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheet of Elvictor Group, Inc. (the Company) as of December 31, 2022, and the related consolidated statement of operations, consolidated statement cash flows, and statement of the changes in stockholders’ equity, for the year then ended, and the related notes (collectively referred to as the financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022, and the result of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audit provides a reasonable basis for our opinion.
| /s/ RBSM LLP | |
| We have served as the Company’s auditor since 2022. | |
| New York, NY | |
| March 31, 2023 | |
| PCAOB ID: 587 | |
F-2
Report of Independent Registered Public Accounting Firm
To the shareholders and the board of directors of Elvictor Group, Inc.
Opinion on the Financial Statements
We have audited the accompanying balance sheet of Elvictor Group, Inc. (the "Company") as of December 31, 2021, the related statements of operations, stockholders' equity (deficit), and cash flows for the year then ended, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and the results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.
/s/
BF Borgers CPA PC (PCAOB ID
We have served as the Company's auditor from 2017 to 2022.
March 31, 2022
F-3
ELVICTOR GROUP, INC
Consolidated Balance Sheets
December 31, Audited | December 31, Audited | |||||||
| ASSETS | ||||||||
| Current Assets | ||||||||
| Cash | $ | $ | ||||||
| Accounts Receivable | ||||||||
| Other Receivables | ||||||||
| Other Receivables - Related Party | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Total Current Assets | ||||||||
| Non-current Assets | ||||||||
| ROU Asset - Related Party | ||||||||
| Intangible Assets, Net | ||||||||
| Office Equipment, net | ||||||||
| Total Non-current Assets | ||||||||
| Total Assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current Liabilities | ||||||||
| Accounts Payable | $ | $ | ||||||
| Trade Accounts Payable | ||||||||
| Trade Accounts Payable - Related Party | ||||||||
| Other Payables | ||||||||
| Lease Liability - Related Party | ||||||||
| Accrued and Other Liabilities | ||||||||
| Due to related party | ||||||||
| Total Current Liabilities | ||||||||
| Non-current Liabilities | ||||||||
| Lease Liability - Related Party | ||||||||
| Total Non-current Liabilities | ||||||||
| Total Liabilities | ||||||||
| Stockholders’ Equity | ||||||||
| Common stock, par value $ | ||||||||
| Additional paid in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total Stockholders’ Equity | ||||||||
| Total Liabilities and Stockholders’ Equity | $ | $ | ||||||
The accompanying notes are an integral part of these consolidated financial statements.
F-4
ELVICTOR GROUP, INC
Consolidated Statements of Operations
For the Year Ended December 31, Audited | For the Year Ended December 31, Audited | |||||||
| Gross Revenue | $ | $ | ||||||
| Net Revenue | ||||||||
| Total Revenue | ||||||||
| Less: Cost of Revenue | ||||||||
| Cost of Revenue - Related Party | ||||||||
| Gross Profit | ||||||||
| Operating expenses | ||||||||
| Professional fees | ||||||||
| Professional fees - Related Party | ||||||||
| Salaries | ||||||||
| Rent -Related Party | ||||||||
| Bad Debt Expense | ||||||||
| Depreciation and Amortization | ||||||||
| Other general and administrative costs | ||||||||
| Total operating expenses | ||||||||
| Loss from operations | ( | ) | ( | ) | ||||
| Foreign Currency Translation Adjustment | ||||||||
| Other Income (Expense) | ||||||||
| Gov’t Subsidy | ||||||||
| Loss from Conversion of Preferred Stock to Commons Stock | ( | ) | ||||||
| Other Income | ||||||||
| Total other income (expense) | ( | ) | ||||||
| Net loss before income tax | $ | ( | ) | $ | ( | ) | ||
| Provision for income taxes (benefit) | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Net Loss Per Common Stock | ||||||||
| $ | ( | ) | $ | ( | ) | |||
| Weighted-average number of shares of common stock outstanding | ||||||||
The accompanying notes are an integral part of these consolidated financial statements.
F-5
ELVICTOR GROUP, INC
Consolidated Statement of Cash Flows
For the Year Ended December 31, Audited | For the Year Ended December 31, Audited | |||||||
| Cash Flows from Operating Activities | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash provided by (used in) operating activities | ||||||||
| Depreciation | ||||||||
| Amortization | ||||||||
| Shares Issued for Services | ||||||||
| Loss on conversion of preferred stock to common stock | ||||||||
| Changes in assets and liabilities | ||||||||
| Accounts Receivable | ( | ) | ||||||
| Other Receivables | ( | ) | ||||||
| Other Receivables - Related Party | ( | ) | ( | ) | ||||
| Prepaid expenses and other current assets | ( | ) | ( | ) | ||||
| Accounts Payable | ( | ) | ||||||
| Trade Accounts Payable | ||||||||
| Trade Accounts Payable - Related Party | ( | ) | ||||||
| Other Payables | ||||||||
| Accrued and Other Liabilities | ||||||||
| Due to related party | ||||||||
| Net cash provided by (used in) operating activities | $ | $ | ( | ) | ||||
| Cash Flows from Investing Activities | ||||||||
| Office Equipment | ( | ) | ( | ) | ||||
| Net cash used for investing activities | $ | ( | ) | $ | ( | ) | ||
| Cash Flows from Financing Activities | ||||||||
| Sale of common stock | ||||||||
| Net cash provided by financing activities | $ | - | $ | |||||
| Net increase (decrease) in Cash | ( | ) | ||||||
| Cash at beginning of year | ||||||||
| Cash at end of year | $ | $ | ||||||
| Supplemental Cash Flow Information: | ||||||||
| Cash paid for: | ||||||||
| Income Taxes | $ | $ | ||||||
| Supplemental Non-Cash Investing and Financing | ||||||||
| Transactions | ||||||||
| Common Stock issued to reduce convertible notes payable | $ | $ | ||||||
| Shares exchanged for Intangible Asset | ||||||||
| Right-of-use assets obtained in exchange for operating lease obligations | ||||||||
The accompanying notes are an integral part of these consolidated financial statements.
F-6
ELVICTOR GROUP, INC
Statement of the Changes in Stockholder’s Equity
| Year Ended December 31, 2022 | ||||||||||||||||||||||||||||||||
| Common Stock | Preferred Stock | Additional Paid-in | Accumulated | Subscription | Total Stockholders’ | |||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | Receivable | Equity | |||||||||||||||||||||||||
| Balance, January 1, 2022 | $ | - | $ | $ | $ | ( | ) | $ | ||||||||||||||||||||||||
| Shares issued for services | - | |||||||||||||||||||||||||||||||
| Shares exchanged for Intangible Asset | - | |||||||||||||||||||||||||||||||
| Net Loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Balance, December 31, 2022 | $ | - | $ | $ | $ | ( | ) | $ | ||||||||||||||||||||||||
| Year Ended December 31, 2021 | ||||||||||||||||||||||||||||||||
| Balance, January 1, 2021 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||
| Shares issued for cash | - | - | ||||||||||||||||||||||||||||||
| Shares issued for Convertible Bonds | - | - | ||||||||||||||||||||||||||||||
| Preferred Shares converted to Common | ( | ) | ( | ) | - | |||||||||||||||||||||||||||
| Net Loss | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Balance, December 31, 2021 | $ | - | $ | $ | $ | ( | ) | $ | ||||||||||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
F-7
ELVICTOR GROUP, INC.
Notes to the Consolidated 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 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 consolidated 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 accompanying consolidated reflect the application of certain significant accounting policies as described below and elsewhere in these notes to the consolidated financial statements.
Principles of Consolidation
The consolidated financial statements incorporate the assets and liabilities of all entities controlled by Elvictor Group, Inc as of December 31, 2022, and the results of the controlled subsidiaries in Vari Greece, the Marshall Islands and Cyprus for the year 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 consolidated 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 consolidated 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 consolidated financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates.
F-8
Cash and Cash Equivalents
The 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 year ended December 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 December 31, 2022. Normal contracts receivables are 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
Intangible Assets
Intangible
assets acquired are initially recognized at their fair value at the acquisition date. 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 of
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 consolidated 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.
F-9
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 common shares 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 December 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 consolidated 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 December 31, 2022, to the date these consolidated 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 December 31, 2022, the Company has trade accounts receivable of $
NOTE 4 – INTANGIBLE ASSETS
As of December 31, 2022, and 2021, Intangible assets consisted of the following:
| Useful life | December 31, 2022 | December 31, 2021 | ||||||||
| At cost: | ||||||||||
| Software platform | $ | $ | ||||||||
| Less: accumulated amortization | ( | ) | ||||||||
| $ | $ | |||||||||
F-10
On November 15, 2021, the company entered into a subscription
agreement with Seatrix Software Production Single Member S.A, a related party company, to issue
Under this agreement Seatrix grants the company an exclusive and non-transferable license to use their artificial intelligence software managing shipping crews. The term of this agreement began on January 1, 2022.
The
value of each common share was stated at $
Amortization of intangible assets attributable to future periods is as follows:
Schedule of Amortization of intangible assets
| Year ending December 31: | Amount | |||
| 2023 | $ | |||
| 2024 | ||||
| 2025 | ||||
| 2026 | ||||
| $ | ||||
The amortization of Intangible assets was $
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 $
On
September 11, 2020, the Company entered into a Manning Agency Agreement with Elvictor Crew Management Service Ltd in Georgia. During
the year ended December 31, 2022, the latter provided manning services to the Company of $
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 year ended December 31, 2022, we incurred
$
On September 11, 2020, the Company entered into
a Manning Agency Agreement with Elvictor Odessa. During the year ended December 31, 2022, the latter provided manning services to the
Company of $
As disclosed in Note 4 above, the Company entered
into an agreement with Seatrix Software Production Single Member S.A. to provided software development services. For the year ended December
31, 2022, the Company has a balance of $
F-11
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.
In
January 2023, the Company renewed the office lease for its subsidiary in Vari, Greece. The Company accounted for its new lease as an
operating lease under the guidance of Topic 872. The new lease is
Total future minimum payments required under the lease agreements are as follows:
| Total | ||||
| Amount | ||||
| 2022 | ||||
| Thereafter | ||||
| Total undiscounted minimum future lease payments | ||||
| Less Imputed interest | ||||
| Present value of operating lease liabilities | ||||
| Disclosed as: | ||||
| Current portion | ||||
| Non-current portion | ||||
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 Payables for crew wages is $
The
balance in Other Accounts Payables also consists of $
NOTE 8 – STOCKHOLDERS’ EQUITY
Issuance of Common Stock
The
Company has
On
February 5, 2021, the Company issued
On
April 8, 2021, the Company issued exactly
Additionally,
for the year ended December 31, 2021, the Company issued
F-12
On
January 19, 2022, the Company issued
On
January 19, 2022, the Company issued an aggregate of
Issuance of Preferred Stock
On
October 7, 2019, Elvictor Group, Inc. entered into four separate “Series A Convertible Preferred Stock Purchase Agreements”
for
NOTE 9 – COMMITMENTS AND CONTINGENCIES
Then as of April 1, 2021, the Company terminated the lease and entered into a new lease for the period commencing from April 1, 2021, to December 31, 2022, with a monthly in the amount of 3,500€ per month. This specific lease has been renewed for an 8-year term commencing January 1, 2023 and terminating December 31, 2030.
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 December 31, 2024 with a fixed monthly rental of 1,000€.
NOTE 10 – INCOME TAXES
The Company’s 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 $
Net deferred tax assets consist of the following components as of December 31, 2022
| 2022 | 2021 | |||||||
| Deferred tax assets: | ||||||||
| NOL Carryover | $ | $ | ||||||
| Sub Total | $ | $ | ||||||
| Valuation Allowance | $ | ( | ) | $ | ( | ) | ||
| Net Deferred Tax Asset | $ | - | $ | - |
The provision for income taxes consists of the following for the subsidiaries in Greece and Cyprus:
| December 31, | December 31, | |||||||
| 2022 | 2021 | |||||||
| Current: | ||||||||
| Federal | $ | $ | ||||||
| State | ||||||||
| Foreign – Current | - | |||||||
| Foreign – Prior Year | ||||||||
| Total current tax provision | $ | $ | ||||||
| Deferred: | ||||||||
| Federal | ||||||||
| State | ||||||||
| Foreign | ||||||||
| Total deferred benefit | ||||||||
| Total provision (benefit) for income tax | $ | $ | ||||||
F-13
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
Item 9A. Controls and Procedures
Disclosure Controls and Procedure
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports, filed under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information 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. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable and not absolute assurance of achieving the desired control objectives. In reaching a reasonable level of assurance, management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. In addition, the design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, a control may become inadequate because of changes in conditions or the degree of compliance with policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.
Management’s Report on Internal Control over Financial Reporting
As required by the SEC Rules 13a-15(b) and 15d-15(b), we carried out an evaluation under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report. Based on the foregoing, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were not effective at the reasonable assurance level due to material weaknesses in internal controls over financial reporting (as described below).
To address these material weaknesses, management engaged financial consultants, performed additional analyses and other procedures to ensure that the financial statements included herein fairly present, in all material respects, our financial position, results of operations and cash flows for the periods presented.
14
A material weakness is a deficiency, or a combination of deficiencies, within the meaning of Public Company Accounting Oversight Board (“PCAOB”) Audit Standard No. 5, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis. Management has identified the following material weaknesses which have caused management to conclude that as of December 31, 2022 our internal controls over financial reporting were not effective at the reasonable assurance level:
| 1. | We do not have sufficient written documentation of our internal control policies and procedures. Written documentation of key internal controls over financial reporting is a requirement of the Sarbanes-Oxley Act which is applicable to us for the year ended December 31, 2022. Management evaluated the impact of our failure to have sufficient written documentation of our internal controls and procedures on our assessment of our disclosure controls and procedures and has concluded that the control deficiency that resulted represented a material weakness. |
| 2. | We do not have sufficient resources in our accounting function, which restricts the Company’s ability to gather, analyze and properly review information related to financial reporting in a timely manner. In addition, due to our size and nature, segregation of all conflicting duties may not always be possible and may not be economically feasible. However, to the extent possible, the initiation of transactions, the custody of assets and the recording of transactions should be performed by separate individuals. Management evaluated the impact of our failure to have segregation of duties on our assessment of our disclosure controls and procedures and has concluded that the control deficiency that resulted represented a material weakness. |
We have taken steps to remediate some of the weaknesses described above and we are in discussions with the risk advisory departments of reputable accounting firms to assist us in the COSO framework documentation and testing of the internal controls. We intend to continue to address these weaknesses as resources permit, including the employment of new qualified employees.
Changes in internal control over financial reporting
There were no changes in our internal control over financial reporting during the year ended December 31, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Item 9B. Other Information
None.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not applicable.
15
PART III
Item 10. Directors, Executive Officers, and Corporate Governance;
The current Directors and Officers of the Company are as follows:
| Name | Age | Position | ||
| Konstantinos Galanakis | 43 | Chief Executive Officer and Director | ||
| Stavros Galanakis | 71 | Chairman of the Board of Directors and Vice President | ||
| Christodoulos Tzoutzakis | 52 | Chief Operating Officer and Chief Technology Officer |
Stavros Galanakis – Chairman of the Board of Directors and Vice President
Stavros Galanakis founded Elvictor in 1977 as a Greece-based private entity (the predecessor to the company whose business becoming a part of the business of Thenablers in 2019, the “Elvictor Greece”), and has been a ship owner and ship manager for over 20 vessels, primarily bulk carriers and chemical tankers. Mr. Galanakis currently serves as our Chairman and Vice President. He is widely recognized as a pioneer in the field of crewing, having set up the oldest crew services company in Greece, and leading the exploration of new markets when it comes to the supply of labor onboard. During his time with Elvictor Greece and Elvictor Group, Inc., he has offered unparalleled solutions to the crewing needs of some of the most reputable ship owners in Greece and abroad, establishing himself as a highly respectable member in the global shipping value network. For such reasons, he was given the honor of the title of Consul General of the Republic of Maldives from 1995 through 2017. Mr. Galanakis has served as a director of Elvictor since October 2019 and as a Chairman of the Board of Directors since November 2019. In May 2021, the Board approved the appointment of Stavros Galanakis to the position of Vice President of the Company. His main role as Chairman and Vice President of Elvictor is to ensure that all activities of Elvictor are deployed in sustainable, professional, and strictly following ethical norms in relation to client-driven activities, as well as ensuring the well-being and fair treatment of the seafarers. Mr. Galanakis studied at the University of Athens. Mr. Galanakis has a familial relationship with the Chief Executive Officer and Director of Elvictor, Mr. Kostantinos Galanakis.
Konstantinos Galanakis – Chief Executive Officer and Director
Konstantinos Galanakis has been the Chief Executive Officer and Director of Elvictor Group, Inc. since November 2019. Following a thorough training in various U.S. and British Universities and organizations with a dedicated focus and personal interest in Business Administration, Mergers and Acquisitions, Quality, and continuous innovation he joined Elvictor Greece in 2001. He is well known for being an early adopter of digitalization in the shipping industry. His focus is on proactiveness and developing new practices, always focusing on Best Practice compliance bringing disruption to his field. Mr. Galanakis started his training in the business by embarking onboard ships, visiting and living in countries where Elvictor had branch offices, going through every department, gaining knowledge, and blueprinting all operations of each unit separately. He had attended dry docks and special surveys of the ships owned by the family. He was eager to get the expertise of various vertical and horizontal shipping businesses to approach the service from a superior state. This detailed knowledge worked on orchestrating the smooth inter-functional coordination of Elvictor’s diverse value chain activities and building the robust cloud system that Elvictor possesses today. He took part in various shipping forums as a guest speaker and specialized speaker in crew management and manning, making him widely recognized as one of the pioneers and multitasking personalities in shipping. He is fully committed to promoting the agenda of quality, ethics, and onboard safety ships. He is a holder of Bachelors in Business Administration from Richmond University, the American University in London, and Masters in Shipping from London Metropolitan University.
16
Christodoulos Tzoutzakis – Chief Operating Officer and Chief Technology Officer
Christodoulos Tzoutzakis is the Chief Operating Officer (COO) and Chief Technical Officer (CTO) of Elvictor Group. He has 24 years of experience in the maritime sector. From 1996 to 2001, he worked as a Software Developer in Oceanmaris Management, who possessed a fleet of 18 multipurpose vessels. From 2001 to 2013, he worked as a Senior Software Developer and IT Manager for DND Management shipping company, who possessed a fleet of 12 dry cargo vessels. He joined Elvictor Greece in 2002, and in his current role he focuses on digital transformation of the procedures of a company, while refining procedures that aim to lower human error and provide customer satisfaction. His involvement with a variety of projects has given him a wide knowledge base of the maritime industry which makes him very versatile when coming up with solutions on how to deal with the challenges found at the intersection of the maritime sector and the human resources sector. Mr. Tzoutzakis has a Bachelor’s degree in Computer Science and a Master’s degree in Information Management and Analytics from Coventry University.
Committees
We do not currently have an audit, compensation, or nominating committee.
Legal Proceedings
There are currently no legal proceedings, as well as since the incorporation of the company on November 3, 2017, there have been no legal proceedings, that are material to the evaluation of the ability or integrity of any of our directors.
Involvement in Certain Legal Proceedings
To our knowledge, since the incorporation of the Company on November 3, 2017, none of our directors and executive officers has:
| ● | Had a bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time. |
| ● | Been convicted in a criminal proceeding or been subject to a pending criminal proceeding, excluding traffic violations and other minor offenses. |
| ● | Been subject to any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities. |
| ● | Been found by a court of competent jurisdiction (in a civil action), the SEC, or the Commodities Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended or vacated. |
| ● | Been the subject to, or a party to, any sanction or order, not subsequently reverse, suspended or vacated, of any self-regulatory organization, any registered entity, or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member. |
17
Code of Ethics
On January 12, 2023, the Board approved the Company’s Code of Ethics and Insider Trading Policies. We have posted those documents on our website at www.elvictorgroup.com.
Section 16(a) Beneficial Ownership Reporting Compliance
Since we do not have any securities registered under Section 12(b) or 12(g) of the Exchange, our executive officers, directors and holders of 10% or more of our shares of issued and outstanding Common Stock are not required to file reports pursuant to Section 16(a) of the Exchange Act.
Item 11. Executive Compensation
Summary Compensation Table for Fiscal Years 2022 and 2021
The following table sets forth all plan and non-plan compensation for the last two completed fiscal years paid to all individuals who served as the Company’s principal executive officer or acted in a similar capacity and the Company’s two other most highly compensated executive officers during the last completed fiscal year whose total compensation was in excess of $100,000, as required by Item 402(m)(2) of Regulation S-K of the Securities Act (“Named Executive Officers”). Based on the foregoing, our Chief Executive Officer was the only Named Executive Officer.
| Non-Equity | ||||||||||||||||||||||||||
| Name and Principal Position | Year | Salary ($) | Bonus ($) | Stock Awards ($)(1) | Incentive Plan Compensation ($) | All Other Compensation ($) | Total ($) | |||||||||||||||||||
| Konstantinos Galanakis | 2022 | $ | 162,522 | $ | - | $ | 6,450 | - | - | $ | 168,972 | |||||||||||||||
| Chief Executive Officer | 2021 | $ | 96,000 | (3) | $ | - | $ | - | (2) | - | - | $ | 96,000 | |||||||||||||
| (1) | Amounts reported in this column do not reflect the amounts actually received by our named executive officer. Instead, these amounts reflect the aggregate grant date fair value of each stock award granted to the named executive officer during the fiscal years ended December 31, 2022 and 2021, as computed in accordance with Financial Accounting Standards Board (“FASB”) ASC 718. The stock-based compensation is measured at the grant date, based on the fair value of the award which is determined by the closing price of the Company’s Common Stock traded on the OTC markets on the grant date. |
| (2) | Excludes common stock of $6,450 earned in 2021 but which was not paid to the reporting person until January 2022. |
| (3) | During the year ended December 31, 2021, the reporting person voluntary agreed not to receive compensation for the first four months of 2021. |
18
Executive Employment Agreements and Arrangements
The Company did not have an employment agreement with Konstantinos Galanakis during the years ended December 31, 2022 or 2021 and no employment agreement exists as of the date hereof.
Outstanding Equity Awards as of December 31, 2022
There are no outstanding equity awards as of December 31, 2022.
Director Compensation
The table below sets forth the compensation paid to our directors other than Konstantinos Galanakis during the fiscal year ended December 31, 2022.
| Fees Earned or | ||||||||||||||||
| Director | Paid in Cash | Stock Awards | All Other Compensation | Total | ||||||||||||
| Stavros Galanakis | $ | 61,980 | $ | 6,450 | $ | - | $ | 68,430 | (1) | |||||||
| Lampros Theodorou | $ | 30,000 | $ | 6,450 | $ | - | $ | 36,450 | (2)(3) | |||||||
Further to the above Directors Mr. Lampros Chachalis, Mr. Georgios Xiradakis and Mr. Theodoros Nikolopoulos served the Board of Directors from the beginning of July 2020 until the end of April 2021. Each of Messrs. Chachalis, Xiradakis and Niklolopulos resigned from the Board of Directors on April 27, 2021. Each received in January of 2022 common stock with a value of $6,450, for services provided in 2021, as computed in accordance with FASB ASC 718, which represents the fair value as of grant date.
| (1) | Mr. Stavros Galanakis also served as executive officer and fees paid to him also includes compensation paid as an executive officer. |
| (2) | Mr. Theodorou received in the first quarter of 2022 cash of $10,000 and common stock with a value of $6,450, for services provided in 2021, as computed in accordance with FASB ASC 718. |
| (3) | On January 3, 2023, a majority of our outstanding shares of capital stock entitled to vote voted to remove Lampros Theodorou as our Director. Lampros Theodorou’s removal as our Director was not for cause and not the result of any disagreement with the Board of Directors or the management or otherwise in connection with our operations, policies or practices. The effective date of the removal was December 31, 2022. |
19
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The following table sets forth, as of March 31, 2023, information regarding beneficial ownership of our Common Stock for:
| ● | each person, or group of affiliated persons, known by us to beneficially own more than 5% of our Common Stock; | |
| ● | each of our executive officers; | |
| ● | each of our directors; and | |
| ● | all of our current executive officers and directors as a group |
Beneficial ownership is determined according to the rules of the SEC and generally means that a person has beneficial ownership of a security if he, she or it possesses sole or shared voting or investment power of that security, including securities that are currently exercisable or exercisable within sixty (60) days of March 31, 2023. Except as indicated by the footnotes below, we believe, based on the information furnished to us, that the persons named in the table below have sole voting and investment power with respect to all shares of Common Stock shown that they beneficially own, subject to community property laws where applicable.
Common Stock subject to securities currently exercisable or exercisable within sixty (60) days of March 31, 2023 are deemed to be outstanding for computing the percentage ownership of the person holding such securities and the percentage ownership of any group of which the holder is a member but are not deemed outstanding for computing the percentage of any other person.
Unless otherwise indicated, the address of each beneficial owner listed in the table below is c/o Elvictor Group, Inc. Vassileos Constantinou 79, Vari, 16672, Attiki, Greece.
| Number of Shares of Common Stock Beneficially Owned (1) | % of Total Voting | |||||||||||
| Shares | % | Power | ||||||||||
| 5% or Greater Stockholders: | ||||||||||||
| Executive Officers and Directors: | ||||||||||||
| Konstantinos Galanakis | 217,838,487 | 52.56 | % | 52.56 | % | |||||||
| Stavros Galanakis | 156,421,400 | 37.74 | % | 37.74 | % | |||||||
| Christodoulos Tzoutzakis | 109,091 | * | * | |||||||||
| Lampros Theodorou | 150,000 | * | * | |||||||||
| All executive officers and directors as a group (five individuals) | 374,518,978 | 90.30 | % | 90.30 | % | |||||||
| * | Less than 1% |
20
Item 13. Certain Relationships and Related Transactions and Director Independence
The following is a description of transactions since January 1, 2022 to which we were a party in which (i) the amount involved exceeded or will exceed the lesser of (A) $120,000 or (B) one percent of our average total assets at year-end for the last two completed fiscal years and (ii) any of our directors, executive officers or holders of more than 5% of our capital stock, or any member of the immediate family of, or person sharing the household with, any of the foregoing persons, who had or will have a direct or indirect material interest, other than equity and other compensation, termination, change in control and other similar arrangements, which are described under “Executive Compensation.”
Manning Agency Agreement with Elvictor Crew Management Service Ltd
On September 11, 2020, the Company entered into a Manning Agency Agreement with Elvictor Crew Management Service Ltd (the “Agent”) whereby we appointed the Agent as manning agent for the territory of Georgia. The Company is affiliated through ownership and control with Elvictor Crew Management Service Ltd of Mr. Stavros Galanakis and his relatives.
We have agreed to pay the Agent a per-seaman agency fee and a per-seaman recruitment fee for new seaman hires. We also agreed to cover administrative expenses with documented evidence or vouchers. The Manning Agency Agreement had a term until September 10, 2022 at which point it had automatically been renewed for a successive period of one year since neither party provides written notice to terminate.
Subcontracting Agreement with Elvictor Crew Management Limited (Cyprus)
On October 1st, 2020, the Company entered into a human resources agreement with Elvictor Crew Management Limited (the “Subcontractor”), company owned and controlled by relatives of Mr. Stavros Galanakis under which the latter performs the running and management of the Company’s contracts and (or) provides certain key personnel of the Subcontractor to be at the disposal of the Company.
For the services provided the parties mutually agreed that the Subcontractor is entitled to fees that will be determined on ad hoc basis. The agreement has an indefinite term, provided that it may be cancelled by either party at any time with written notice provided sixty days prior to cancellation.
Training Services Agreement with Qualship Georgia Ltd
On September 1, 2020, the Company signed an agreement with Qualship Georgia Ltd, a company partially owned by Konstantinos Galanakis and his relatives. Under the agreement the contractor is responsible for successful training of the qualified personnel. The agreement remains in full force and effect for twelve months, with an automatic renewal thereafter, unless terminated before by the mutual agreement of both parties.
Software License Agreement with Seatrix Software Production Single Member S.A.
On April 1, 2021, we entered into a Software License Agreement with the Licensor in order to have the rights to use crew software that facilitates our operations. On November 15, 2021 we proceeded with the signing of another agreement that became effective on January 1, 2022. Pursuant to the terms of the License Agreement, the Licensor granted the Company the exclusive and non-transferable license to use the Licensor’s artificial intelligence software in connection with the managing of shipping crews. In consideration for this license, the Company agreed to issue to the Licensor 7,000,000 License shares of the Company’s common stock, par value $0.0001 per share. The License Shares were issued to the Licensor on January 19, 2022.Seatrix Software Production Single Member S.A. is a related party company fully owned and controlled by the Company’s CEO, Konstantinos Galanakis.
21
Manning Agency Agreement with Elvictor Shipping and Trading Odessa Ltd
On September 11, 2020, the Company entered into a Manning Agency Agreement with Elvictor Shipping and Trading Odessa Ltd (or the Elvictor Odessa), a company fully owned and controlled by Mr. Stavros Galanakis. Elvictor Odessa provides manning services to the Company for the territory of Ukraine. These operations have been reduced currently due to the war in the country of Ukraine and have been substituted by and agreement with Elvictor Crew Management Service Ltd.
Familial Relationships
Konstantinos Galanakis, our Chief Executive Officer, is the son of Stavros Galanakis, the Chairman of the Board of Directors.
Item 14. Principal Accounting Fees and Services.
The aggregate fees incurred for each of the last two years for professional services rendered by RBSM LLP the independent registered public accounting firm for the audit of the Company’s annual financial statements included in the Company’s Form 10-K and review of financial statements for its quarterly report (Form 10-QT) as well as for its predecessor, BF Borgers CPA, PC, are reported below.
Audit-Related Fees
The total fees charged by RBSM LLP in 2022 aggregated $12,000 for the review of the quarterly financial statements for the period ended September 30, 2022, plus an amount between $55,000 and $60,000 which includes fees for the 2022 audited financial statements.
The total fees charged by BF Borgers CPA, PC in 2022 and 2021 aggregated $70,500 and $96,800, respectively, which includes fees for the 2021 audited financial statements and review of the quarterly financial statements for the periods ended March 31, June 30, September 30, and December 31, 2021 as well as for the periods March 31, June 30, 2022.
All Other Fees
There were no other fees billed for products or services provided by our principal accountant for the fiscal years ended December 31, 2022 and 2021.
22
PART IV
Item 15. Exhibits, Financial Statement Schedules
Financial Statements
Our financial statements and the notes thereto, together with the report of our independent registered public accounting firm on those financial statements, are hereby filed as part of this report beginning on page 13.
Exhibits
| * | Filed herewith |
| ** | Furnished herewith |
Item 16. Form 10-K Summary
None.
23
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.
| Elvictor Group, Inc. | ||
| Date: March 31, 2023 | By: | /s/ Konstantinos Galanakis |
| Name: | Konstantinos Galanakis | |
| Title: | Chief
Executive Officer | |
Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
| Name | Position | Date | ||
| /s/ Konstantinos Galanakis | Chief Executive Officer, Chief Financial Officer and Director | March 31, 2023 | ||
| Konstantinos Galanakis | (Principal Executive and Financial Officer) | |||
| /s/ Stavros Galanakis | Vice President and Chairman | March 31, 2023 | ||
| Stavros Galanakis |
24
Exhibit 21.1
ELVICTOR GROUP, INC.
List of Subsidiaries
| Subsidiary | Place of Incorporation | |
| Elvictor Group Hellas Single Member S.A. | Greece | |
| Ultra Shipmanagement Inc. | Marshall Island | |
| ELVG Crew Management Ltd. | Cyprus |
Exhibit 31.1
CERTIFICATION OF THE PRINCIPAL EXECUTIVE AND FINANCIAL OFFICER
PURSUANT
TO RULE 13a-14(a) AND RULE 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934,
AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY
ACT OF 2002
I, Konstantinos Galanakis, Chief Executive and Financial Officer of Elvictor Group, Inc., certify that:
| 1. | I have reviewed this annual report on Form 10-K of Elvictor Group, Inc.; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the registrant, including its subsidiaries, is made known to me by others within those entities, particularly during the period in which this report is being prepared; |
| b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under my supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report my conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s fourth fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant’s auditors: |
| a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
| b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| Date: March 31, 2023 | /s/ Konstantinos Galanakis |
| Konstantinos Galanakis | |
| Chief Executive and Financial Officer |
Exhibit 32.1
CERTIFICATION OF THE PRINCIPAL EXECUTIVE AND FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the annual report of Elvictor Group, Inc. (the “Company”) on Form 10-K for the year ended December 31, 2022, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Konstantinos Galanakis, Chief Executive and Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:
| 1. | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
| 2. | The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company. |
| Date: March 31, 2023 | /s/ Konstantinos Galanakis |
| Konstantinos Galanakis | |
| Chief Executive and Financial Officer |