The accompanying notes are an integral part of these consolidated financial statements.
The accompanying notes are an integral part of these consolidated financial statements.
The accompanying notes are an integral part of these consolidated financial statements.
NOTES TO CONSOLIDAED FINANCIAL STATEMENTS
MARCH 31, 2017
(UNAUDITED)
Note 1. NATURE OF OPERATIONS AND SUMMARY OF ACCOUNTING POLICIES
Basis of Presentation
The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) for interim financial reporting and in accordance with instructions for Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, the unaudited consolidated financial statements contained in this report reflect all adjustments that are normal and recurring in nature and considered necessary for a fair presentation of the financial position and the results of operations for the interim periods presented. The year-end balance sheet data were derived from audited consolidated financial statements, but do not include all disclosures required by GAAP. The results of operations for the interim period are not necessarily indicative of the results expected for the full year. These unaudited consolidated financial statements, footnote disclosures, and other information should be read in conjunction with the consolidated financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016.
Organization
EOS Inc., a company in the developmental stage, was incorporated on April 3, 2015 in the State of Nevada. The Company has conducted limited business operations and had no revenues from operations since its inception. The Company’s business plan is to market and distribute skin care products, including masks and serums.
On November 18, 2016, the Company has set up a wholly-owned subsidiary in Taiwan to assist the Company to promote the business in Taiwan.
Principles of Consolidation
The consolidated unaudited financial statements include the accounts of EOS Inc. and its wholly owned subsidiary in Taiwan. All material intercompany accounts, transactions, and profits have been eliminated in consolidation.
The functional currency of the subsidiary in Taiwan is the New Taiwan dollars, however the accompanying unaudited consolidated financial statements have been translated and presented in United States Dollars ($). In the accompanying unaudited consolidated financial statements and notes, “$”, “US$” and “U.S. dollars” mean United States dollars, and “NT$” and “NT dollars” mean New Taiwan dollars.
Going Concern
These unaudited consolidated financial statements were prepared on the basis of accounting principles applicable to going concern, which assumes the realization of assets and discharge of liabilities in the normal course of business. As shown in the accompanying unaudited consolidated financial statements, the Company had accumulated deficit of $332,709 and $307,654 as of March 31, 2017 and December 31, 2016, respectively, and it had no revenue from operations since its incorporation.
The Company faces all the risks common to companies at development stage, including capitalization and uncertainty of funding sources, high initial expenditure levels, uncertain revenue streams, and difficulties in managing growth. The Company's losses raise substantial doubt about its ability to continue as a going concern. The Company's financial statements do not reflect any adjustments that might result from the outcome of this uncertainty.
The Company is currently addressing its liquidity issue by continually seeking investment capital through private placements of common stock and debt. The Company believes its current and future plans enable it to continue as a going concern. The Company's ability to achieve these objectives cannot be determined at this time. These financial statements do not give effect to any adjustments which would be necessary should the Company be unable to continue as a going concern and therefore be required to realize its assets and discharge its liabilities in other than the normal course of business and at amounts which may differ from those in the accompanying consolidated financial statements.
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles in the United States of America, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
Classification
Certain classifications have been made to the prior year financial statements to conform to the current year presentation. The reclassification had no impact on previously reported net loss nor accumulated deficit.
Cash and Cash Equivalents
Cash and cash equivalents include cash and all highly liquid instruments with original maturities of three months or less.
Net Income (loss) per Share
Basic income (loss) per share is computed by dividing net income by weighted average number of shares of common stock outstanding during each period. Diluted income per share is computed by dividing net loss by the weighted average number of shares of common stock, common stock equivalents, and potentially dilutive securities outstanding during each period. At March 31, 2017 and December 31, 2016, the Company does not have any outstanding common stock equivalents; therefore, a separate computation of diluted loss per share is not presented.
Income Taxes
The Company accounts for income taxes in accordance with ASC 740, Income Taxes, which requires that the Company recognize deferred tax liabilities and assets based on the differences between the financial statement carrying amounts and the tax basis of assets and liabilities, using enacted tax rates in effect in the years the differences are expected to reverse. Deferred income tax benefit (expense) results from the change in net deferred tax assets or deferred tax liabilities. A valuation allowance is recorded when, in the opinion of management, it is more likely than not that some or all of any deferred tax assets will not be realized.
Recent Accounting Pronouncements
The Company does not expect the adoption of recently issued accounting pronouncements to have a significant impact on its result of operations, financial position or cash flow.
Subsequent events
Management has evaluated subsequent events through the date which the financial statements are available to be issued. All subsequent events requiring recognition as of March 31, 2017 have been incorporated into these consolidated financial statements and there are no subsequent events that require disclosure in accordance with FASB ASC Topic 855, “Subsequent Events.”
Note 2. ACCRUED EXPENSES
Accrued expenses consist of the following:
|
|
March 31,
2017
|
|
|
December 31,
2016
|
|
Accrued professional fees
|
|
$
|
27,000
|
|
|
$
|
13,517
|
|
|
|
$
|
27,000
|
|
|
$
|
13,517
|
|
Note 3. DUE TO SHAREHOLDERS
The Company has advanced funds from its director and shareholder for working capital purposes. As of March 31, 2017 and December 31, 2016, there were $175,912 and $175,912 advances outstanding, respectively. The Company has agreed that the outstanding balances bear 0% interest rate and are due upon demand after 30 days written notice by the officer and shareholder.
Note 4. INCOME TAXES
United States
The Company is incorporated in the United States of America and is subject to United States federal taxation. No provisions for income taxes have been made as the Company has no taxable income for the period. The applicable income tax rate for the Company was 34% for the three months ended March 31, 2017 and 2016, respectively. As of March 31, 2017, the Company had net operating loss carry forwards of approximately $332,709 that may be available to reduce future years’ taxable income through 2037. Future tax benefits which may arise as a result of these losses have not been recognized in these financial statements, as their realization is determined not likely to occur and accordingly, the Company has recorded a valuation allowance for the deferred tax asset relating to these tax loss carry-forwards. No tax benefit has been realized since a 100 % valuation allowance has offset deferred tax asset resulting from the net operating losses.
Taiwan
The subsidiary of EOS Inc. is incorporated in Taiwan. The Taiwan Income Tax Law imposes a unified enterprise income tax rate of 17% on all enterprises with taxable income greater than approximately $3,660 (NT$120,000). No income tax liabilities existed as of March 31, 2017 and December 31, 2016 due to the Company’s continuing operating losses.
Provision for income tax consists of the following:
|
|
For the Three Months Ended
|
|
|
For the Three Months Ended
|
|
|
|
March 31,
|
|
|
March 31,
|
|
|
|
2017
|
|
|
2016
|
|
Current
|
|
|
|
|
|
|
U.S.
|
|
$
|
-
|
|
|
$
|
-
|
|
Taiwan
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Deferred
|
|
|
|
|
|
|
|
|
U.S.
|
|
|
|
|
|
|
|
|
Deferred tax assets for NOL carryforwards
|
|
|
(7,799
|
)
|
|
|
(43,574
|
)
|
Valuation allowance
|
|
|
7,799
|
|
|
|
43,574
|
|
Net changes in deferred income tax under non-current portion
|
|
|
-
|
|
|
|
-
|
|
The following is a reconciliation of the statutory tax rate to the effective tax rate:
|
|
For the Three Months Ended
|
|
|
For the Three Months Ended
|
|
|
|
March 31,
|
|
|
March 31,
|
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
|
|
U.S. statutory income tax rate
|
|
|
34
|
|
|
|
34
|
|
Foreign statutory income tax rate difference
|
|
|
(17
|
)
|
|
|
(17
|
)
|
Changes in valuation allowance
|
|
|
(17
|
)
|
|
|
(17
|
)
|
Effective income tax rate
|
|
|
0
|
|
|
|
0
|
|
Significant components of the Company’s deferred taxes as of March 31, 2017 and December 31 2016 were as follows:
|
|
March 31,
|
|
|
December 31,
|
|
|
|
2017
|
|
|
2016
|
|
Deferred tax assets:
|
|
|
|
|
|
|
Net operating loss carryforwards
|
|
$
|
111,766
|
|
|
$
|
103,967
|
|
Less: Valuation allowance
|
|
|
(111,766
|
)
|
|
|
(103,967
|
)
|
Deferred tax assets, net
|
|
$
|
-
|
|
|
$
|
-
|
|
******