Notes to Financial Statements
June 30, 2017
(Unaudited)
NOTE 1 - GENERAL BACKGROUND INFORMATION
Ezy Cloud Holding Inc., which may also be referred to as Ezy Cloud, the Company, we, our and us, was organized on June 14, 2010 (Date of Inception) under the laws of the State of Nevada, as AcroBoo, Inc. We were incorporated as a subsidiary of Jagged Peak, Inc., a Nevada corporation.
Ezy Cloud (formerly AcroBoo, Inc.) is an e-commerce and supply chain solutions and services provider. Ezy Cloud is built on an OMS software platform that empowers multi-national corporations to successfully sell online and through other sales channels at multiple distribution points. Ezy Cloud will offer products through different websites that include, but is not limited to: sunglasses, camping equipment, coffee products, home tools and lighting products. While managing our own online stores, we were often approached by companies who needed help establishing an online presence. We plan to leverage our knowledge and infrastructure to offer services to assist other retailers expand their sales channel to the Web. Our services have evolved to include online retailing, e-channel development, e-marketing and brand protection solutions. Management views these as important abilities in running an on-line business and they are part of Ezy Clouds operation to sell products and protect its brands. Ezy Cloud on occasion plans to sell these services to clients desiring to run an on-line business but does not have their own in-house expertise. This is only expected to be a small portion of the business in the beginning years as Ezy Cloud builds up the number of products it sells on-line.
Beginning in the quarter ended March 31, 2013, Ezy Cloud ceased providing services to customers and other activities that generate revenue. Ezy Cloud also ended its employment agreement with its sole paid employee. Significant costs after this period consisted primarily of audit and legal costs.
Ezy Cloud plans to search for new solutions that harness the power of the Internet to help companies drive revenue and expand their business. The Company takes possession of inventory and generates most of its revenues based on product sales or a percentage of the customers sales. Management expects a small percent of its revenues will be generated from licensing its software products.
NOTE 2 GOING CONCERN
These financial statements have been prepared in accordance with generally accepted accounting principles applicable to a going concern which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. As of June 30, 2017, the Company had an accumulated deficit since inception of $815,311.
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The Company has not generated significant revenues to date, and its ability to continue as a going concern is contingent upon the successful completion of additional financing arrangements and its ability to achieve and maintain profitable operations.
Beginning in the quarter ended March 31, 2013, Ezy Cloud ceased providing services to customers and other activities that generate revenue.
Management plans to raise equity capital to finance the operating and capital requirements of the Company. Amounts raised will be used for further development of the Companys products, to provide financing for marketing and promotion and for other working capital purposes. While the Company is putting forth its best efforts to achieve the above plans, there is no assurance that any such activity will generate funds that will be available for operations.
These conditions raise substantial doubt about the Companys ability to continue as a going concern. These financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or amounts and classification of liabilities that might result from this uncertainty.
NOTE 3 SIGNIFICANT ACCOUNTING POLICIES
The relevant accounting policies are listed below.
Basis of Accounting
The basis is United States generally accepted accounting principles.
Cash and Cash Equivalents
The Company considers all short-term investments with a maturity of three months or less at the date of purchase to be cash and cash equivalents.
Use of Estimates
In preparing financial statements in conformity with generally accepted accounting principles, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the reported period. Actual results could differ from those estimates.
Accumulated Other Comprehensive Loss
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Accumulated other comprehensive loss is equal to net loss.
Advertising
Advertising costs are expensed when incurred. The Company incurred $0 of sales and marketing expenses, including advertising, for the six month ended June 30, 2017 and June 30, 2016.
Income Taxes
The Company maintains deferred tax assets that reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. These deferred tax assets consist of net operating loss carry forwards. The net deferred tax asset has been fully offset by a valuation allowance because of the Companys history of losses. Utilization of operating losses and credits may be subject to substantial annual limitation due to ownership change provisions of the Internal Revenue Code of 1986, as amended and similar state provisions. The annual limitation may result in the expiration of net operating losses and credits before utilization.
The income tax provision for the six months ended June 30, 2017 and June 30, 2016 are as follows:
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For the
Six Months
Ended
June 30,
2017
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For the
Six Months
Ended
June 30,
2016
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Current Tax Provision:
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Federal:
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Taxable income
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$
-
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$
-
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Total current tax provision
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$
-
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$
-
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Deferred Tax Provision:
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Federal:
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Loss carry forwards
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$
768,601
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$
643,619
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Loss for the period
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$
46,710
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$
45,680
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Net loss carry forward
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815,311
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689,299
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Less valuation allowance
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(815,311)
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(689,299)
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Total net deferred tax
Assets
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$
-
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$
-
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The Company had the following deferred income tax assets as of June 30, 2017 and December 31, 2016:
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June 30, 2017
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December 31, 2016
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Net deferred tax assets
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$
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815,311
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768,601
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Less: Valuation allowance
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(815,311)
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(768,601)
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Total net deferred tax assets
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$
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-
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-
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The Company provided a valuation allowance equal to the deferred income tax assets for the period ended June 30, 2017 and December 31, 2016 because it was not known whether future taxable income will be sufficient to utilize the loss carry forwards. The potential tax benefits arising from these loss carry forwards begin to expire in 2026.
The Company did not identify any material uncertain tax positions. The Company did not recognize any interest or penalties for unrecognized tax benefits.
The federal income tax returns of the Company are subject to examination by the IRS generally for three years after they file.
Year end
The Companys fiscal year-end is December 31.
Net Loss per Share
Basic loss per share includes no dilution and is computed by dividing loss available to common stockholders by the weighted average number of common shares outstanding for the period. Dilutive loss per share reflects the potential dilution of securities that could share in the losses of the Company. Because the Company does not have any potentially dilutive securities, the accompanying presentation is only of basic loss per share.
Fair Value of Financial Instruments
Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of June 30, 2017. The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values. These financial instruments include cash. Fair values were assumed to approximate carrying values for cash because they are short term in nature and their carrying amounts approximate fair values.
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Recent Accounting Pronouncements
The Companys management has evaluated all the recently issued accounting pronouncements through the filing date of these financial statements and does not believe that any of these pronouncements will have a material impact on the Companys financial position and results of operations.
Revenue Recognition
In May 2014, the FASB issued Accounting Standards Update No. 2014-09,
Revenue from Contracts with Customers: Topic
606 (ASU 2014-09), to supersede nearly all existing revenue recognition guidance under U.S. GAAP. The core principle of ASU 2014-09 is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration that is expected to be received for those goods or services. ASU 2014-09 defines a five-step process to achieve this core principle and, in doing so, it is possible more judgment and estimates may be required within the revenue recognition process than are required under existing U.S. GAAP, including identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. ASU 2014-09 is effective for us in our first quarter of fiscal 2018 using either of two methods: (i) retrospective to each prior reporting period presented with the option to elect certain practical expedients as defined within ASU 2014-09 (full retrospective method); or (ii) retrospective with the cumulative effect of initially applying ASU 2014-09 recognized at the date of initial application and providing certain additional disclosures as defined per ASU 2014-09(modified retrospective method). We are currently assessing the materiality of the impact to our consolidated financial statements, and have not yet selected a transition approach.
Disclosure of Going Concern Uncertainties
In August 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update No. 2014-15, Disclosure of Uncertainties about an Entitys Ability to Continue as a Going Concern (ASU 2014-15), to provide guidance on managements responsibility in evaluating whether there is substantial doubt about a companys ability to continue as a going concern and to provide related footnote disclosures. ASU 2014-15 is effective for us in our fourth quarter of fiscal 2017 with early adoption permitted. We do not believe the impact of our pending adoption of ASU 2014-15 on the Companys financial statements will be material.
Financial instrument
In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities (ASU 2016-01). The standard addresses certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. ASU 2016-01 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017, and early adoption is not permitted. Accordingly, the standard is effective for us on September 1, 2018. We are currently evaluating the impact that the standard will have on our consolidated financial statements.
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Statement of Cash Flows
In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): The amendments in this Update apply to all entities, including both business entities and not-for-profit entities that are required to present a statement of cash flows under Topic 230. The amendments in this Update provide guidance on the following eight specific cash flow issues. The amendments are an improvement to GAAP because they provide guidance for each of the eight issues, thereby reducing the current and potential future diversity in practice described above. ASU 2016-15 is effective for the Company for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. The Company is still evaluating the effect that this guidance will have on the Companys consolidated financial statements and related disclosures.
NOTE 4 STOCKHOLDERS EQUITY (DEFICIT)
The Company is authorized to issue 75,000,000 shares of its $0.001 par value common stock.
On January 17, 2014, the Company issued 2,500 shares of the Companys common stock to Island Capital Management, LLC.
On November 9, 2010, the Company filed a Registration Statement with the U.S. Securities and Exchange Commission (SEC) on Form S-1. The Registration became effective on April 7, 2011.
On May 10, 2011, Jagged Peak (the former parent corporation) spun off the Company. As part of the spin off agreement, Jagged Peak shareholders received one (1) share of Ezy Cloud common stock for every ten (10) shares of Jagged Peak owned on May 10, 2011, the record date, for a total of 1,624,732 shares of Common Stock issued and outstanding.
On June 30, 2014, the former parent company (Jagged Peak, Inc.) of Ezy Cloud agreed to release Ezy Cloud from its obligation to repay the non-interest bearing trade payable $349,098 balance due to Jagged Peak. Ezy Cloud recorded this transaction as Additional Paid in Capital.
On September 15, 2014, Ezy Clouds former parent company, Jagged Peak, Inc., contributed capital of $32,700 for audit, legal and other general and administrative costs. Such contribution is not expected to be repaid.
On June 6, 2015, the board approved and issued 750,000 shares of the Companys common stock. Daniel R. Furlong, Paul Demirdjian and Vincent Fabrizzi each received 250,000 shares or one-third of the shares issued. These shares were issued for consideration of a shareholder contribution of $7,500. Daniel R. Furlong, Paul Demirdjian and Vincent Fabrizzi each contributed $2,500, or one-third, of this shareholder contribution. The foregoing shares of common stock were issued pursuant to the exemption from registration contained in Section 4(a) (2) of the Securities Act of 1933, as amended.
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On April 22, 2015, the former parent company (Jagged Peak, Inc.) of Ezy Cloud paid $4,149 for certain expenses on behalf of Ezy Cloud. As of December 31, 2014, 1,627,232 shares of the Companys Common Stock are issued and outstanding.
On December 22, 2015, Mr. Lim Kor Kiat purchased an aggregate of 1,818,025 shares of our common stock (76.48% of the outstanding shares) from four former shareholders of the Company for an aggregate purchase price of $335,000. Of this purchase price, approximately $27,401 was contributed to Ezy Cloud to pay legal, accounting and general and administrative costs. This amount is not expected to be repaid and was recorded by Ezy Cloud as a capital contribution. Upon consummation of the change in control, there was a change in our Board of Directors and executive officers. Mr. Daniel R. Furlong, who served as our sole director and officer, resigned from all of his executive officer positions, and after expanding the number of members of the Board of Directors to two, Mr. Lim Kor Kiat was appointed to serve as a member of the board of directors, Mr. Lim Kor Kiat was appointed to serve as the Chairman of the Board of Directors, President, Chief Executive Officer, Principal Executive Officer, Principal Financial Officer, Principal Accounting Officer and Secretary/Treasurer of the Company, effective on December 22, 2015.
On March 11, 2016, Mr. Lim Kor Kiat contributed capital of $18,055 for operating expenses. This contribution is not expected to be repaid. Ezy Cloud recorded this as a capital contribution.
NOTE 5
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RELATED PARTY TRANSACTIONS
The Company does not lease or rent any property. Office services are provided without charge by a director. Such costs are immaterial to the financial statements and, accordingly, have not been reflected therein. The officers and directors of the Company are involved in other business activities and may, in the future, become involved in other business opportunities. If a specific business opportunity becomes available, such persons may face a conflict in selecting between the Company and their other business interests. The Company has not formulated a policy for the resolution of such conflicts.
During the six months ended June 30, 2017, Mr. Lim Kor Kiat contributed capital of $42,824 for operating expenses. This contribution is not expected to be repaid. Ezy Cloud recorded this as a capital contribution.
NOTE 6 SUBSEQUENT EVENT
None
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