NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2017
NOTE 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
Organization
Omphalos Corp. was incorporated as
Soyodo Group Holdings, Inc. (the Soyodo) under the laws of Delaware in March
2003. On February 5, 2008, Soyodo acquired the outstanding shares of Omphalos
Corp. Omphalos Corp. (the Omphalos BVI) was incorporated on October 30, 2001
under the laws of the British Virgin Islands. For accounting purposes, the
acquisition was treated as a recapitalization of Omphalos BVI. Omphalos BVI owns
100% of Omphalos Corp. (Taiwan), All Fine Technology Co., Ltd. (Taiwan), and All
Fine Technology Co., Ltd. (B.V.I.). Omphalos Corp. (Taiwan) and was incorporated
on February 13, 1991 under the laws of Republic of China. All Fine Technology
Co., Ltd. (Taiwan) was incorporated on March 23, 2004 under the laws of Republic
of China. All Fine Technology Co., Ltd. (B.V.I.) was incorporated on February 2,
2005 under the laws of the British Virgin Islands. Omphalos Corp. (B.V.I.) and
its subsidiaries supplies a wide range of equipments and parts including reflow
soldering ovens and automated optical inspection machines for printed circuit
board (PCB) manufacturers in Taiwan and China.
Effective April 18, 2008 Soyodo entered into an Agreement and
Plan of Merger (the Merger Agreement) with Omphalos, Corp., a Nevada
corporation. Pursuant to the Merger Agreement, Soyodo was merged with and into
the surviving corporation, Omphalos Corp. The certificate of incorporation and
bylaws of the surviving corporation became the certificate of incorporation and
bylaws of the Company, and the directors and officers of Soyodo became the
members of the board of directors and officers of the Company. Following the
execution of the Merger Agreement, the Company filed with the Secretary of State
of Delaware and Nevada, a Certificate of Merger. Omphalos, Corp is incorporated
on April 15, 2008 under the laws of the state of Nevada. The main purpose of the
merger is to change the companys name to Omphalos, Corp.
Basis of Consolidation
The consolidated
financial statements include the accounts of Omphalos Corp. and its wholly owned
subsidiaries. All significant intercompany accounts and transactions are
eliminated.
Going Concern-
The Company has incurred a net loss
of $262,183 and $283,527 during the years ended December 31, 2017 and 2016,
respectively. The accompanying consolidated financial statements have been
prepared assuming that the Company will continue as a going concern. This basis
of accounting contemplates the recovery of the Companys assets and the
satisfaction of liabilities in the normal course of business. This presentation
presumes funds will be available to finance ongoing research and
development, operations and capital expenditures and permit the realization of
assets and the payment of liabilities in the normal course of operations for the
foreseeable future.
There can be no assurances that there will be adequate
financing available to the Company and the consolidated financial statements do
not include any adjustments to reflect the possible future effects on the
recoverability and classification of assets or the amounts and classification of
liabilities that may result from the outcome of this uncertainty.
The Company has taken certain restructuring steps to provide
the necessary capital to continue its operations. These steps included: (1)
Tightly budgeting and controlling all expenses; (2) Expanding product lines and
recruiting a strong sales team to significantly increase sales revenue and
profit; (3) The Company plans to continue actively seeing additional funding
opportunities to improve and expand upon its product lines.
Accounting Estimates
The preparation of
financial statements in conformity with accounting principles generally accepted
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 revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Cash Equivalents, and Long-term Investments
Cash and cash equivalents include cash on hand and cash in time deposits,
certificates of deposit and all highly liquid debt instruments with original
maturities of three months or less.
Accounts Receivable
Accounts receivables are
carried at original invoice amount less estimates made for doubtful receivables.
Management determines the allowance for doubtful accounts on a quarterly basis
based on a review of the current status of existing receivables, account aging,
historical collection experience, subsequent collections, management's
evaluation of the effect of existing economic conditions, and other known
factors. The provision is provided for the above estimates made for all doubtful
receivables. Account balances are charged off against the allowance only when
the Company considers it is probable that a receivable will not be recovered.
Recoveries of trade receivables previously written off are recorded when
received. Allowance for doubtful debts amounted to $0 and $23,148 as of December
31, 2017 and 2016, respectively.
Inventory
Inventory is carried at the lower of
cost or market. Cost is determined by using the specific identification method.
The Company periodically reviews the age and turnover of its inventory to
determine whether any inventory has become obsolete or has declined in value,
and charges to operations for known and anticipated inventory obsolescence.
Inventory consists substantially of finished goods and is net of an allowance
for slow-moving inventory of $450,691 and $416,428 at December 31, 2017 and
2016, respectively.
Property and Equipment
Property and equipment
are recorded at cost, less accumulated depreciation. Depreciation is computed on
the straight-line method over the estimated useful lives of the related assets
as follows:
Automobile
|
|
5 years
|
|
Furniture and fixtures
|
|
3 years
|
|
Machinery and equipment
|
|
3 to 5 years
|
|
Leasehold improvements
|
|
55 years
|
|
Expenditures for major renewals and betterment that extend the
useful lives of property and equipment are capitalized. Expenditures for repairs
and maintenance are charged to expense as incurred. When property and equipment
are retired or otherwise disposed of, the asset and accumulated depreciation are
removed from the accounts and the resulting profit or loss is reflected in the
statement of income for the period.
Revenue Recognition
The Company derives
revenues from the sale of equipments and parts to customers. The Companys
standard shipping term is Free on Board (FOB) shipping point. The Company
recognizes revenue upon shipment for the sales under the term FOB shipping
point. For the sales under other shipping term arrangements, such as FOB
destination, the Company recognizes revenue when title passes to and the risks
and rewards of ownership have transferred to the customer based on the terms of
the sales. Usually no returns, discounts or other allowances are provided to
customers. Shipping and handling charges to
customers are included in net
sales. Shipping and handling charges incurred by the Company are included in
cost of goods sold.
Research and Development Expenses
Research and
development costs are generally expensed as incurred. The Company did not incur
any significant research and development expenses during the years ended
December 31, 2017 and 2016.
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.
Stock Based Compensation
The Company applies
the fair value provisions of ASC 718,
Compensation-Stock Compensation
(ASC 718). ASC 718 requires the recognition of compensation expense, using
a fair-value based method, for costs related to all share-based payments
including stock options. ASC 718 requires companies to estimate the fair value
of share-based payment awards on the grant date using an option pricing model.
The Company does not have any awards of stock-based compensation issued and
outstanding at December 31, 2017 and 2016.
Loss Per Share
The Company has adopted
Accounting Standards Codification subtopic 260-10, Earnings Per Share (ASC
260-10) which specifies the computation, presentation and disclosure
requirements of earnings per share information. Basic earnings per share have
been calculated based upon the weighted average number of common shares
outstanding. Common equivalent shares are excluded from the computation of the
diluted loss per share if their effect would be anti-dilutive. For the years
ended December 31, 2017 and 2016, the Company did not have any common equivalent
shares.
Impairment of Long-Lived Assets
The Company has
adopted Accounting Standards Codification subtopic 360-10, Property, Plant and
Equipment (ASC 360-10). ASC 360-10 requires that long-lived assets and certain
identifiable intangibles held and used by the Company be reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amount of
an asset may not be recoverable. The Company evaluates its long lived assets for
impairment annually or more often if events and circumstances warrant. Events
relating to recoverability may include significant unfavorable changes in
business conditions, recurring losses, or a forecasted inability to achieve
break-even operating results over an extended period. The Company evaluates the
recoverability of long-lived assets based upon forecasted undiscounted cash
flows. Should impairment in value be indicated, the carrying value of intangible
assets will be adjusted, based on estimates of future discounted cash flows
resulting from the use and ultimate disposition of the asset. ASC 360-10 also
requires assets to be disposed of be reported at the lower of the carrying
amount or the fair value less costs to sell. Management has determined that no
impairments of long-lived assets currently exist.
Concentrations
Credit Risk
:
Financial instruments that subject the
Company to credit risk consist primarily of trade accounts receivable and
investments. The Company performs ongoing credit evaluations of its customers
and maintains an allowance for potential credit losses. The Company regularly
evaluates securities to determine whether there has been any diminution in value
that is deemed to be other than temporary.
Customers: The Company sells equipment and parts to printed
circuit board (PCB) manufacturers in Taiwan, China, and Malaysia. The Company
performs ongoing credit evaluations of its customers financial condition and
generally, requires no collateral. For the year ended December 31, 2016, four
customers accounted for more than 10% of the Companys total revenues,
represented approximately 96.9% of its total revenues, and 89.4% of accounts
receivable in aggregate at December 31, 2016. For the year ended December 31,
2017, five customers accounted for more than 10% of the Companys total
revenues, represented approximately 97.8% of its total revenues, and 97.0% of
accounts receivable in aggregate at December 31, 2017.
|
|
|
Sales for the year
|
|
|
A/R balance as of December
31,
|
|
Customer
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
A
|
|
$
|
192,210
|
|
$
|
438,210
|
|
$
|
35,450
|
|
$
|
-
|
|
B
|
|
|
159,310
|
|
|
144,159
|
|
|
7,410
|
|
|
70,454
|
|
C
|
|
|
-
|
|
|
108,607
|
|
|
-
|
|
|
23,148
|
|
D
|
|
|
-
|
|
|
85,906
|
|
|
-
|
|
|
-
|
|
E
|
|
|
82,886
|
|
|
-
|
|
|
-
|
|
|
-
|
|
F
|
|
|
74,355
|
|
|
-
|
|
|
-
|
|
|
-
|
|
G
|
|
|
65,226
|
|
|
-
|
|
|
-
|
|
|
-
|
|
Suppliers: For the year ended December 31, 2016, 68.9% of the
Companys inventory was purchased from four vendors. For the year ended December
31, 2017, 40.0% of the Companys inventory was purchased from two vendors.
Fair Value Measurements
FASB ASC
820, Fair Value Measurements defines fair value for certain financial and
nonfinancial assets and liabilities that are recorded at fair value, establishes
a framework for measuring fair value and expands disclosures about fair value
measurements. It requires that an entity measure its financial instruments to
base fair value on exit price, maximize the use of observable units and minimize
the use of unobservable inputs to determine the exit price. It establishes a
hierarchy which prioritizes the inputs to valuation techniques used to measure
fair value. This hierarchy increases the consistency and comparability of fair
value measurements and related disclosures by maximizing the use of observable
inputs and minimizing the use of unobservable inputs by requiring that
observable inputs be used when available. Observable inputs are inputs that
reflect the assumptions market participants would use in pricing the assets or
liabilities based on market data obtained from sources independent of the
Company. Unobservable inputs are inputs that reflect the Companys own
assumptions about the assumptions market participants would use in pricing the
asset or liability developed based on the best information available in the
circumstances. The hierarchy prioritizes the inputs into three broad levels
based on the reliability of the inputs as follows:
|
|
Level 1 Inputs are quoted prices in active markets for
identical assets or liabilities that the Company has the ability to access
at the measurement date. Valuation of these instruments does not require a
high degree of judgment as the valuations are based on quoted prices in
active markets that are readily and regularly available.
|
|
|
|
|
|
Level 2 Inputs other than quoted prices in active
markets that are either directly or indirectly observable as of the
measurement date, such as quoted prices for similar assets or liabilities;
quoted prices in markets that are not active; or other inputs that are
observable or can be corroborated by observable market data for
substantially the full term of the assets or liabilities.
|
|
|
|
|
|
Level 3 Valuations based on inputs that are
unobservable and not corroborated by market data. The fair value for such
assets and liabilities is generally determined using pricing models,
discounted cash flow methodologies, or similar techniques that incorporate
the assumptions a market participant would use in pricing the asset or
liability.
|
The carrying values of certain assets and liabilities of the
Company, such as cash and cash equivalents, accounts receivable, inventory,
prepaid expenses, accounts payable, accrued liabilities, and due to related
parties, approximate to fair value due to their relatively short maturities. The
carrying amounts of the Company's long-term debt approximate to their fair value because of the short maturity
and/or interest rates which are comparable to those currently available to the
Company on obligations with similar terms.
Foreign-currency Transactions
Foreign-currency
transactions are recorded in New Taiwan dollars (NTD) at the rates of exchange
in effect when the transactions occur. Gains or losses resulting from the
application of different foreign exchange rates when cash in foreign currency is
converted into New Taiwan dollars, or when foreign-currency receivables or
payables are settled, are credited or charged to income in the year of
conversion or settlement. On the balance sheet dates, the balances of
foreign-currency assets and liabilities are restated at the prevailing exchange
rates and the resulting differences are charged to current income except for
those foreign currencies denominated investments in shares of stock where such
differences are accounted for as translation adjustments under stockholders
equity.
Statement of Cash Flows
Cash flows from the
Company's operations are based upon the local currencies. As a result, amounts
related to assets and liabilities reported on the statement of cash flows will
not necessarily agree with changes in the corresponding balances on the balance
sheet.
Translation Adjustment
The accounts of the
Company was maintained, and its financial statements were expressed, in New
Taiwan Dollar (NTD). Such financial statements were translated into U.S.
Dollars ($ or USD) in accordance ASC 830, "Foreign Currency Matters", with
the NTD as the functional currency. According to the Statement, all assets and
liabilities are translated at the current exchange rate, stockholder's equity
are translated at the historical rates and income statement items are translated
at an average exchange rate for the period.
The resulting translation adjustments are reported under other
comprehensive income as a component of stockholders equity.
Comprehensive Income
Comprehensive income
includes accumulated foreign currency translation gains and losses. The Company
has reported the components of comprehensive income on its statements of
stockholders equity and statements of operations and comprehensive income
(loss).
Recently Issued Accounting Pronouncements
In
February 2016, the FASB issued ASU No. 2016-02, Leases. The core principle of
the ASU is that a lessee should recognize the assets and liabilities that arise
from its leases other than those that meet the definition of a short-term lease.
The ASU requires extensive qualitative and quantitative disclosures, including
with respect to significant judgments made by management. Subsequently, the FASB
issued ASU No. 2017-13, in September 2017 and ASU No. 2018-01, in January 2018,
which amends and clarifies ASU 2016-02. The ASU will be effective for the
Company beginning January 1, 2019, including interim periods in the fiscal year
2019. Early adoption is permitted. The Company is in the process of determining
the method of adoption and assessing the impact of this ASU on its consolidated
results of operations, cash flows, financial position and disclosures.
In March 2016, the FASB issued ASU 2016-08, Revenue from
Contracts with Customers (Topic 606): Principal versus Agent Considerations
(Reporting Revenue Gross versus Net) . In April 2016, the FASB issued ASU
2016-10, Revenue from Contracts with Customers (Topic 606): Identifying
Performance Obligations and Licensing . In May 2016, the FASB issued ASU
2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope
Improvements and Practical Expedients and ASU 2016-11, Revenue Recognition
(Topic 605) and Derivatives and Hedging (Topic 815): Rescission of SEC Guidance
Because of Accounting Standards Updates 2014-09 and 2014-16 Pursuant to Staff
Announcements at the March 3, 2016 EITF Meeting . In December 2016, the FASB
issued ASU 2016-20, Technical Corrections and Improvements to Topic 606, Revenue
from Contracts with Customers. In September 2017, the FASB issued ASU 2017-13,
Revenue Recognition (Topic 605), Revenue from Contracts with Customers (Topic
606), Leases (Topic 840), and Leases (Topic 842). These amendments provide
additional clarification and implementation guidance on the previously issued
ASU 2014-09, Revenue from Contracts with Customers (Topic 606). The amendments
in ASU 2016-08 clarify how an entity should identify the specified good or
service for the principal versus agent evaluation and how it should apply the
control principle to certain types of arrangements. ASU 2016-10 clarifies the following two aspects
of ASU 2014-09: identifying performance obligations and licensing implementation
guidance. ASU 2016-11 rescinds several SEC Staff Announcements that are codified
in Topic 605, including, among other items, guidance relating to accounting for
consideration given by a vendor to a customer, as well as accounting for
shipping and handling fees and freight services. ASU 2016-12 provides
clarification to Topic 606 on how to assess collectability, present sales tax,
treat noncash consideration, and account for completed and modified contracts at
the time of transition. ASU 2016-12 clarifies that an entity retrospectively
applying the guidance in Topic 606 is not required to disclose the effect of the
accounting change in the period of adoption. Additionally, ASU 2016-20 clarifies
certain narrow aspects within Topic 606 including its scope, contract cost
accounting, and disclosures. The new guidance requires enhanced disclosures,
including revenue recognition policies to identify performance obligations to
customers and significant judgments in measurement and recognition. The
effective date and transition requirements for these amendments are the same as
the effective date and transition requirements of ASU 2014-09, which is
effective for fiscal years, and for interim periods within those years,
beginning after December 15, 2017. The Company is currently evaluating the
overall impact that ASU 2014-09 and its related amendments will have on the
Companys financial statements.
On December 22, 2017, the SEC issued Staff Accounting Bulletin
(SAB 118), which provides guidance on accounting for tax effects of the Tax
Act. SAB 118 provides a measurement period that should not extend beyond one
year from the Tax Act enactment date for companies to complete the accounting
under ASC 740. In accordance with SAB 118, a company must reflect the income tax
effects of those aspects of the Act for which the accounting under ASC 740 is
complete. To the extent that a companys accounting for certain income tax
effects of the Tax Act is incomplete but it is able to determine a reasonable
estimate, it must record a provisional estimate to be included in the financial
statements. If a company cannot determine a provisional estimate to be included
in the financial statements, it should continue to apply ASC 740 on the basis of
the provision of the tax laws that were in effect immediately before the
enactment of the Tax Act. While the Company is able to make reasonable estimates
of the impact of the reduction in corporate rate and the deemed repatriation
transition tax, the final impact of the Tax Act may differ from these estimates,
due to, among other things, changes in our interpretations and assumptions,
additional guidance that may be issued by the I.R.S., and actions we may take.
The Company is continuing to gather additional information to determine the
final impact.
NOTE 2. PROPERTY AND EQUIPMENT
The following is a summary of the Companys property and
equipment for the years ended December 31:
|
|
2017
|
|
|
2016
|
|
Machinery and equipment
|
$
|
70,303
|
|
$
|
64,314
|
|
Vehicle
|
|
47,789
|
|
|
37,016
|
|
Leasehold improvements
|
|
12,049
|
|
|
11,023
|
|
|
|
130,141
|
|
|
112,353
|
|
Less: accumulated depreciation
|
|
(123,122
|
)
|
|
(108,058
|
)
|
Property and equipment, net
|
$
|
7,019
|
|
$
|
4,295
|
|
Depreciation expense for the years ended December 31, 2017 and
2016 were $4,876 and $4,332 respectively.
NOTE 3. OTHER INTANGIBLE ASSETS
The following reconciliation of other intangible assets is as
follows:
|
|
Gross Carrying
|
|
|
Accumulated
|
|
|
|
Value
|
|
|
Amortization
|
|
Amortized intangible assets:
|
|
|
|
|
|
|
Patents
|
$
|
51,466
|
|
$
|
34,612
|
|
Amortization of intangible assets was $3,286 and $3,100 for the
years ended December 31, 2017 and 2016, respectively.
Estimated amortization for the next five years and thereafter
is as follows:
2018
|
|
3,368
|
|
2019
|
|
3,368
|
|
2020
|
|
3,368
|
|
2021
|
|
3,368
|
|
2022
|
|
3,382
|
|
|
$
|
16,854
|
|
NOTE 4. INCOME TAXES
The Company is incorporated in the State of Nevada in the
United States of America and is subject to the U.S. federal and state taxation.
No provision for income taxes have been made as the Company has no taxable
income. Income before income taxes for the years ended December 31, 2017 and
2016 includes the results of operations of Taiwan and British Virgin Islands.
Omphalos Corp. (B.V.I.) and All Fine Technology Co., Ltd. (B.V.I.) are
incorporated in British Virgin Islands and are not required to pay income tax.
Omphalos Corp. and All Fine Technology Co., Ltd. are incorporated in Taiwan and
are subject to Taiwan tax law. The statutory tax rate under Taiwan tax law is
17%. All Fine Technology Co., Ltd. incurred losses for the years 2017 and 2016.
As a result, no tax liability was incurred. Omphalos Corp.s losses were
qualified for net operating losses carryforward for ten years for income tax
purposes under Taiwan tax law. The Company believes that it is more likely than
not that the net operating loss will not be utilized in the future. Therefore,
the Company has provided full valuation allowance for the deferred tax assets
arising from the losses as of December 31, 2017 and 2016.
On December 22, 2017 H.R. 1, originally known as the Tax Cuts
and Jobs Act, (the Tax Act) was enacted. Among the significant changes to the
U.S. Internal Revenue Code, the Tax Act lowers the U.S. federal corporate income
tax rate (Federal Tax Rate) from 35% to 21% effective January 1, 2018. The 21%
Federal Tax Rate will apply to earnings reported for the full 2018 fiscal year.
In addition, the Company must re-measure its net deferred tax assets and
liabilities using the Federal Tax Rate that will apply when these amounts are
expected to reverse. As of December 31, 2017, the Company can determine a
reasonable estimate for certain effects of tax reform and is recording that
estimate as a provisional amount. The provisional remeasurement of the deferred
tax assets and allowance valuation of deferred tax assets at December 31, 2017
resulted in a net effect of $0 discrete tax expenses (benefit) which lowered the
effective tax rate by 13% for the year ended December 31, 2017. The provisional
remeasurement amount is anticipated to change as data becomes available allowing
more accurate scheduling of the deferred tax assets and liabilities primarily
related to net operating loss carryover.
The provision for income taxes calculated at the statutory
rates in the combined statements of income is as follows for the years ended
December 31:
|
|
2017
|
|
|
2016
|
|
Current provision:
|
|
|
|
|
|
|
Computed (provision for) income taxes at
statutory rates in U.S.
|
$
|
-
|
|
$
|
-
|
|
Computed (provision for) income taxes at statutory rates in
BVI
|
|
-
|
|
|
-
|
|
Computed (provision for)income taxes at
statutory rates in
|
|
-
|
|
|
1,232
|
|
Taiwan
|
|
|
|
|
|
|
Total current provision
|
|
-
|
|
|
1,232
|
|
|
|
|
|
|
|
|
Deferred provision:
|
|
|
|
|
|
|
U.S
|
|
-
|
|
|
-
|
|
BVI
|
|
-
|
|
|
-
|
|
Taiwan- Net operating loss carryforward
|
|
-
|
|
|
34,941
|
|
Valuation allowance
|
|
-
|
|
|
(34,941
|
)
|
Total deferred provision
|
|
-
|
|
|
-
|
|
Provision for income taxes
|
$
|
-
|
|
$
|
1,232
|
|
The following is a reconciliation of the statutory tax rate to
the effective tax rate for the years ended December 31, 2017 and 2016:
|
|
2017
|
|
|
2016
|
|
U.S. Federal tax at statutory rate
|
|
34%
|
|
|
34%
|
|
Provisional remeasurement of deferred taxes
|
|
(13%
|
)
|
|
|
|
Valuation allowance
|
|
(21%
|
)
|
|
(34%
|
)
|
Foreign income tax- Taiwan
|
|
17%
|
|
|
17%
|
|
Other (a)
|
|
(17%
|
)
|
|
(17%
|
)
|
Effective tax rate
|
|
0%
|
|
|
0%
|
|
(a)
|
Other represents expenses incurred by the Company that
are not deductible for Taiwan income taxes and changes in valuation
allowance for Taiwanese entities for the years ended December 31, 2017 and
2016, respectively.
|
NOTE 5. RELATED-PARTY TRANSACTIONS
Operating Leases
The Company leases its facility from a shareholder under an
operating lease agreement which expires on January 31, 2019. The monthly base
rent is approximately $1,850. Rent expense under this lease agreement amounted
to approximately $22,104 and $20,852 for the years ended December 31, 2017 and
2016, respectively.
Loan from related party
On July 26, 2013, the Company entered a loan agreement bearing
interest at a fixed rate at 3% per annum with its shareholder to advance
NT$5,000,000, equivalent approximately $168,691 for working capital purpose. The
term of the loan started from July 30, 2013 with maturity date on July 29, 2015.
On July 31, 2015, the loan with the same amount of NT$5,000,000, equivalent
approximately $168,691, and the same fixed interest rate of 3% per annum was
extended for another two years starting from August 1, 2015 with maturity date
on July 31, 2017. On August 1, 2017, the loan with the same amount of
NT$5,000,000, equivalent approximately $168,691, and the same fixed interest
rate of 3% per annum was extended for another three years starting from August
1, 2017 with maturity date on July 31, 2020.
On December 31, 2013, the Company entered another loan
agreement bearing interest at a fixed rate at 3% per annum with its officer and
shareholder to advance NT$5,000,000, equivalent approximately $168,691 for
working capital purpose. The term of the loan started from January 1, 2014 with
maturity date on December 31, 2015. On December 31, 2015, the loan with the same
amount of NT$5,000,000, equivalent approximately $168,691, and the same fixed
interest rate of 3% per annum was extended for another two years starting from
January 1, 2016 with maturity date on December 31, 2018.
On July 5, 2015, the Company entered another loan agreement
bearing interest at a fixed rate at 3% per annum with its shareholder to advance
NT$10,000,000, equivalent approximately $337,382, for working capital purpose.
The term of the loan started from July 1, 2015 with maturity date on June 30,
2018.
On July 1, 2016, the Company entered another loan agreement
bearing interest at a fixed rate at 3% per annum with its shareholder to advance
NT$10,000,000, equivalent approximately $337,382, for working capital purpose.
The term of the loan started from July 1, 2016 with maturity date on June 30,
2019.
As of December 31, 2017 and December 31, 2016, there were
$1,012,146 and $925,928 advances outstanding, of which $506,073 and $154,321 was
presented under current liabilities, respectively.
Interest expense was $29,604 and $23,273 for the years ended
December 31, 2017 and 2016, respectively.
Advances from related party
The Company also has advanced funds from its officer and
shareholder for working capital purposes. The Company has not entered into any
agreement on the repayment terms for these advances. The advances bear no
interest rate and are due upon demand by shareholders. As of December31, 2017
and December 31, 2016, there were $654,910 and $335,322 advances outstanding,
respectively. The outstanding balance bears no interest and is due upon
request.
NOTE 6. COMMITMENT
Operating Leases
The Company leases its office from a related party (Note 5) and
warehouse facilities from outside parties under operating leases that expire on
various dates through 2020. Rental expense for these leases consisted of
approximately $46,972 and $48,736 for the years ended December 31, 2017 and
2016, respectively.
Future minimum lease payments under the operating leases are
summarized as follows:
Fiscal
Year
|
|
Amount
|
|
2018
|
$
|
34,182
|
|
2019
|
|
13,684
|
|
2020
|
|
9,868
|
|
2021
|
|
-
|
|
2022
|
|
-
|
|
Total
|
|
57,734
|
|
NOTE 7. SUBSEQUENT EVENTS
The Company evaluated all events or transactions that occurred
after December 31, 2017 up through the date the Company issued these financial
statements.
******