UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[X] Annual report under Section 13 or 15(d) of the
Securities Exchange Act of 1934.
For the fiscal year ended December 31,
2014.
OR
[ ] Transition report under Section 13 or
15(d) of the Securities Exchange Act of 1934
for the transition period from
__________ to __________.
Commission File Number: 000-32341
OMPHALOS, CORP.
(Exact name of registrant as specified in its charter)
Nevada |
84-1482082 |
(State or other jurisdiction of incorporation or
organization) |
(I.R.S. Employer Identification No.) |
Unit 2, 15 Fl., 83, Nankan Rd. Sec. 1,
Luchu
Taoyuan County
Taiwan
(Address of principal
executive offices, Zip Code)
011-8863-322-9658
(Registrants
telephone number, including area code)
Copies of all communications to:
Thomas E. Stepp, Jr.
Stepp Law Corporation
15707 Rockfield Boulevard, Suite 101
Irvine, California 92618
Phone: (949) 660-9700 ext. 124
Fax: (949) 660-9010
Securities Registered Pursuant to Section 12(b) of the Act:
None
Securities Registered Pursuant to Section 12(g) of the Act:
Common Stock, par value $0.0001 per share.
Indicate by check mark if the registrant is a well-known
seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes
[_] No [X]
Indicate by check mark whether the registrant (1) filed all
reports required to be filed by Section 13 or 15(d) of the Exchange Act 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.
Yes [X] No
[ ]
Indicate by check mark if the registrant is not required to
file reports pursuant to Section 13 or 15(d) of the Exchange Act.
[
] Yes [X] No
Indicate by check mark whether 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 (Sec. 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.)
[X]
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K (229.405 of this chapter) is not
contained herein, and will not be contained, to the best of registrants
knowledge, in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this Form 10-K.[X]
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller
reporting company. See definitions of large accelerated filer, accelerated
filer and smaller reporting company in Rule 12b-2 of the Exchange Act.
Large accelerated filer [ ] |
Accelerated
filer [ ] |
Non-accelerated filer [ ] |
Smaller reporting company [X]
|
Indicate by check mark whether the registrant is a shell
company (as defined in Rule 12b-2 of the Exchange Act).
Yes [
] No [X]
At June 30, 2014, the aggregate market value of the voting and
non-voting common equity held by non-affiliates of the registrant: approximately
$1,202,550.
The number of shares of registrants common stock outstanding,
as of March 15, 2015 was 30,063,759.
TABLE OF CONTENTS
PART I
Item 1. Business.
Soyodo Group Holdings, Inc. (Soyodo) was incorporated on May
15, 1997 as Quixit, Inc. under the laws of the state of Colorado. On January 16,
2003, TOP Group Corp., a New York corporation, purchased 4,400,000 shares of the
company's common stock, which represented 88% of the company's outstanding
capital stock at that time. Prior to the change in control, the company's
purpose was to investigate opportunities to be acquired by a company that
desired to be registered under the Securities Exchange Act of 1934, as amended.
In March 2003, the company changed its state of incorporation from Colorado to
Delaware, and changed its name from Quixit, Inc. to TOP Group Holdings, Inc. In
August of 2005, the company changed its name from TOP Group Holdings, Inc. to
Soyodo Group Holdings, Inc.
In the second quarter of 2005, the company decided to commence
a chain of member-only stores in locations with large Chinese immigrant
populations, offering Chinese culture-related merchandise such as books,
pre-recorded CDs, stationery, gifts, and sports goods. Subsequently, six retail
stores had been opened. On June 30, 2006, however, the Company started to
concentrate on its wholesale operation and sold to its majority shareholder
& principal executive officer, all the six retail stores. Then on November
30, 2006, the company decided to go back to its original plan of investigate
opportunities to be acquired and sold to its majority shareholder the remaining
wholesale operation.
Omphalos Corp. was incorporated on February 13, 1991 under the
laws of Republic of China (TWN), initially serving as a sales agent for an
equipment and used machine dealer. Omphalos Corp. (B.V.I.) was incorporated on
October 30, 2001 under the laws of the British Virgin Islands. All Fine
Technology Co., Ltd. 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.
On July 4, 2007, Omphalos Corp. (BVI) acquired Omphalos (TWN)
and All Fine Technology Co. (TWN), through a share exchange with the
shareholders of these two entities. On October 19, 2007 Omphalos (BVI) purchased
All Fine Tech (BVI).
On February 5, 2008, Soyodo Group Holdings, Inc. entered into
and completed the transactions contemplated under a Share Exchange Agreement
(the Exchange Agreement) with each of the shareholders (the Shareholders) of
Omphalos Corp. (B.V.I.), a British Virgin Islands corporation, pursuant to which
Soyodo purchased from the Shareholders all issued and outstanding shares of
Omphalos Corp. (B.V.I.) common stock in consideration for the issuance of an
aggregate of 81,996,275 shares of Soyodo common stock (the "Share Exchange").
The Share Exchange resulted in a change in control of Soyodo with the
Shareholders owning 81,996,275 shares of common stock of the Company out of a
total of 90,191,275 issued and outstanding shares after giving effect to the
Share Exchange. Shen-Peir Yang beneficially owned 55,347,485 shares of common
stock and was elected a director and appointed as the Companys President. Chi
Pi Yun beneficially owned 2,049,907 shares of common stock and was appointed as
the Companys Chief Financial Officer. Li Shen-Ren beneficially owned 4,099,814
shares of common stock and was appointed as the Companys Chief Operating
Officer. As a result of the Exchange Agreement, (i) Omphalos Corp. (B.V.I.)
became a wholly-owned subsidiary of Soyodo and (ii) the Soyodo succeeded to the
business of Omphalos Corp. (B.V.I.) as its sole business.
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 articles of incorporation and
bylaws of the surviving corporation became the articles 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. was
incorporated on April 15, 2008, under the laws of the State of Nevada. The main
purpose of the merger is to change the Soyodos name to Omphalos, Corp..
Omphalos, Corp. and these four corporations are referred to
herein collectively as the "Company" or Omphalos.
Overview of Business
Omphalos, through its wholly-owned subsidiaries which serve as
third-party resellers, supplies a wide range of equipment and parts including
refurbished and modified reflow soldering ovens and automated optical inspection
machines for printed circuit board (PCB) manufacturers in
Taiwan and China. Omphalos also provides after sale services such as maintenance
and repairs to its customers and sells parts for the equipment.
A reflow oven is a machine used primarily for reflow soldering
of surface mount electronic components to printed circuit boards. Reflow
soldering represents the most common means to attach a component to a circuit
board, and typically consists of applying solder paste, positioning the
components, and reflowing the solder in a specialized oven. The goal of the
reflow process is to melt the powder particles in the solder paste, with the
surfaces being joined together, and solidify the solder to create a strong
metallurgical bond.
The Company serves as third-party reseller, and supplies a wide
range of equipment and parts including refurbished and modified reflow soldering
ovens and automated optical inspection machines for printed circuit board (PCB)
manufacturers in Taiwan and China. The Company also provides after sale services
such as maintenance and repairs to its customers and sells parts for the
equipment for that purpose.
Omphalos markets its products in both Taiwan and China.
Omphalos clients are mainly big name Taiwanese electronics manufacturing
giants, including Quanta Computer Inc., Universal Scientific Industrial Co., and
Advantech in Taiwan, and QSMC, in China.
Products
Omphalos offers a wide range of products, including the
following:
Tamura N2 Reflow Ovens. Omphalos offers the Tamura N2
Reflow Oven as its preferred choice for reflow soldering. The ovens have
multiple temperature controlled heat emitting infrared radiation compartments
that create a phase change in flux (Small Soldier Particles) turning the solid
into a liquid. When cooled in the final compartment, the flux undergoes another
phase change turning from a liquid back into a solid forming a bond between the
surface mount component and etched circuit board. The Tamura Line takes the
additional step of being an oxygen-free environment, instead it utilizes
nitrogen gas to minimize oxidation.
Gryphon Laser Marking System. This system is placed at
the beginning of the SMT production line where it Laser Etches a Uniquely
Identifiable 2-Dimensional Barcode onto the surface of a printed circuit board.
2D barcodes allow for more data to be physically written to the circuit board,
usually the threshold is when more than 20 characters need to be written, 2D
barcoding is required. The 2D barcode helps to simplify Management
Information System (MIS) by making more information available offline, such
as an identification number, time of fabrication, plant of fabrication, etc
making it easier to track defects and finished products to their final
destination. This barcode works best when combined with the Argus Management
Information System throughout the fabrication process as its life will be
tracked and analyzed. To date, the Company has not derived any significant
revenues from this system.
During the year ended December 31, 2014, the Company obtained
16%, 11%, and 9% of the equipment and parts that it sells to its customers from
a local supplier; Hongxing Optics Co., Ltd.; and Hanteng Machinery Co. Ltd,
respectively. These three vendors are all Taiwanese companies.
Marketing
Most of the Omphalos business is generated through personal
relationships with its major customers. In addition, it may participate in trade
shows and occasionally run advertisements in trade journals and newspapers.
Markets and Customers
Omphalos customers include a number of major electronic
manufacturing companies, including the following:
|
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|
Percentage Revenues |
|
|
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|
for |
|
|
|
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the Year ended |
Name |
|
Location |
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December 31, 2014 |
|
|
|
|
|
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|
|
|
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Eastwind Tsusho, Inc. |
|
Eastwind Tsusho, Inc. was founded in 2003. The
company is in the business of distribution of appliances, electronics,
devices, and motors. |
|
24% |
|
|
|
|
|
Chintek Technology Co., Ltd. |
|
Chintek Technology Co., Ltd. was founded in
1992. The company is in the business of manufacturing various aspects of
PCB assembly, including SMT, thru hole, soldering, testing, burn in,
assembly, packaging and etc., known as EMS - Electronic Manufacturing
Services. |
|
21 % |
|
|
|
|
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Wistron NeWeb Corporation (WNC) |
|
Wistron NeWeb Corporation (WNC) was established
in 1996, which is a product design and manufacturing company that provides
high- quality ODM/JDM services for communications products. |
|
18% |
|
|
|
|
|
Zinwell Corporation |
|
Zinwell Corporation was founded since 1981 and
went public in 1999 in Taiwan. The company is a main provider of Digital
Cable / Satellite / Terrestrial receiving equipment, Broadcast and
Broadband Communication equipment, |
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17% |
|
|
|
|
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MitraStar Technology Corp. |
|
MitraStar Technology Corp was incorporated in
2011. The core business of the company is to provide DMS, Design,
Manufacturing and Service, on various broadband CPE products. |
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15% |
Regulations
Omphalos is not subject to any significant government
regulation that is particular to its business.
Competition
Omphaloss industry is highly competitive. Omphalos believes
that its principal direct competitors are the manufacturers of the equipment
themselves. These include Japanese companies such as Sayaka, Tamura Furukawa and
Ishikawa.
There are also a number of companies in Asia that resell
refurbished equipment. They include Daichi International, Panasonic, Hitachi and
Sony Corporation.
Some of these companies have significantly greater financial,
technical and human resources than we do, as well as a wider range of products
than we have. In addition, many of our competitors have much greater experience
in marketing their products, as well as more established relationships with our
target customers. Our competitors may also have greater name recognition and
more extensive customer bases that they can use to their benefit. As a result,
we may have difficulty maintaining our market share.
We believe that our competitive edge is our responsiveness to
our customers needs, both in terms of speed as well as in our ability to modify
the equipment in accordance with the customers instructions.
Intellectual Property
Omphalos has been granted the following patents:
Name |
|
Patent No |
|
Country |
|
Patent Term |
Automatically Labeling and Inspecting
Apparatus and Method of Use |
|
M277230 |
|
Taiwan |
|
expires 1.20.2015 |
|
|
|
|
|
|
|
Automatically Marking and
Reading/Distinguishing Apparatus and Method of Use |
|
M277229 |
|
Taiwan |
|
expires 1.30.2015 |
|
|
|
|
|
|
|
Vehicle Camera Apparatus |
|
M345732 |
|
Taiwan |
|
expires 3.19.2018 |
|
|
|
|
|
|
|
Automatically Marking and
Reading/Distinguishing |
|
I287752 |
|
Taiwan |
|
expires 1.30.2050 |
|
|
|
|
|
|
|
Servo Motor Control Method and Apparatus
Using the Same |
|
I325031 |
|
Taiwan |
|
expires 4.19.2027 |
|
|
|
|
|
|
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Laser Machining Module And Laser Machining
Table |
|
M411305 |
|
Taiwan |
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expires 2.3.2021 |
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|
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|
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Automatic Board-Flipping Mechanism |
|
M411758 |
|
Taiwan |
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expires 6.7.2026 |
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Automatically Marking and
Reading/Distinguishing |
|
11/248,212 |
|
U.S.A |
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expires 6.7. 2026 |
|
|
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|
|
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Laser Machining Module And Laser Machining
Table
|
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ZL20112 0073538.7 |
|
China
|
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expires 3.18. 2021
|
|
|
|
|
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Automatic Board-Flipping Mechanism
|
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ZL20112 0073727.4 |
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China
|
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expires 3.18. 2021
|
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|
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Laser Machining Module And Laser Machining
Table |
|
3175212 |
|
Japan |
|
expires 4.4. 2022 |
|
|
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|
|
|
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Automatic Board-Flipping Mechanism |
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3175211 |
|
Japan |
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expires 4.4. 2022 |
|
|
|
|
|
|
|
Laser Machining Module And Laser Machining
Table |
|
201120392907.9 |
|
China |
|
expires 3.05.2021
|
In the future, we expect to expand the number and type of
products we are able to provide to our customers. We intend to use our patents
and improve or add functions to current products, and plan to use these patents
in future products. The issued patents and applications relate to techniques
developed by us for automatically labeling and inspecting, automatically marking
and reading apparatus.
There can be no guarantee that the patents held by us will not
be challenged or invalidated, that patents will be issued for any of our pending
applications or that any claims allowed from existing or pending patents will be
of sufficient scope or strength (or issue in the countries where products
incorporating our technology may be sold) to provide meaningful protection or
any commercial advantage to us. In any event, effective protection of
intellectual property rights may be unavailable or be limited in certain
countries.
Employees
As of March 15, 2015, Omphalos had 15 full-time employees. None
of its employees is represented by a labor union, and Omphalos considers its
employee relations to be excellent. Omphalos seeks to use contract workers and
anticipates maintaining a small full-time employee base.
Available Information
We file or furnish annual reports on Form 10-K, quarterly
reports on Form 10-Q, current reports on Form 8-K and any amendments to those
reports filed or furnished pursuant to Section 13(a) and 15(d) of the Securities
Exchange Act of 1934, as amended (the Exchange Act), with the SEC. These
reports will be available as soon as reasonably practical after such reports are
electronically filed with, or furnished to, the SEC. All of these documents are
available in print without charge to stockholders upon request. Our SEC filings
are available to the public over the Internet at the SECs web site at
http://www.sec.gov. You may also read and copy any document we file at the SECs
public reference rooms in Washington, D.C.
Item 1A. Risk Factors.
The following risk factors and other information included in
this Annual Report on Form 10-K should be carefully considered. The risks and
uncertainties described below are not the only ones we face. Additional risks
and uncertainties not presently known to us or which we currently deem
immaterial also may impair our business operations. If any of the following
risks occur, our business, financial condition, operating results, and cash
flows could be materially adversely affected.
Risk Factors Related to Our Business.
We may need to raise capital to fund our operations, and our
failure to obtain funding when needed may force us to delay, reduce or eliminate
our expansion efforts.
If in the future, we are not capable of generating sufficient
revenues from operations and our capital resources are insufficient to meet
future requirements, we may have to raise funds to continue the development,
commercialization, marketing and sale of our products.
We cannot be certain that funding will be available on
acceptable terms, or at all. To the extent that we raise additional funds by
issuing equity securities, our stockholders may experience significant dilution.
Any debt financing, if available, may involve restrictive covenants that impact
our ability to conduct our business. If we are unable to raise additional
capital if required or on acceptable terms, we may have to significantly delay,
scale back or discontinue the development and/or commercialization of one or
more of our products, obtain funds by entering into agreements on unattractive
terms or restrict or cease our operations and go out of business.
Our declining operating revenues may cause substantial
doubt about our ability to continue as a going concern.
Our audited financial statements for the year ended December
31, 2014 were prepared based on the assumption that we will continue our
operations as a going concern. We has net losses of $522,375 and $948,927 during
the years ended December 31, 2014 and 2013, respectively As a result, there may
be substantial doubt about our ability to continue as a going concern. Our
future is dependent upon our ability to implement our business plans and upon
our future profitable operations.
The success of our business depends on our ability to
successfully obtain a supply of merchandise for our buyers and to attract and
retain active professional buyers to create sufficient demand for our
sellers.
Our ability to increase our revenue and maintain profitability
depends on whether we can successfully expand the supply of merchandise
available for sale and attract and retain active professional buyers to purchase
the merchandise. Our ability to attract sufficient quantities of suitable
merchandise and new buyers will depend on various factors, some of which are out
of our control. These factors include our ability to:
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offer buyers a sufficient supply
of merchandise; |
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develop and implement effective
sales and marketing strategies; |
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comply with corporate seller requirements affecting
marketing and disposition of certain categories of merchandise; |
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efficiently catalogue, handle,
store, ship and track merchandise; and |
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achieve high levels of seller and
buyer satisfaction with the trading experience. |
Omphalos is exposed to risks as a result of ongoing changes
in the semiconductor and semiconductor-related industries.
The global industries in which we operate are characterized by
ongoing changes, including: (1) higher capital requirements for building and
operating new semiconductor and LCD fabrication plants and the resulting effect
on customers ability to raise the necessary capital; (2) differing rates of
market growth for, and capital investments by, various semiconductor device
makers, such as memory (including NAND Flash and DRAM), logic and foundry, as
well as LCD and solar manufacturers; (3) industry growth rates; (4) the
increasing cost and decreasing affordability of research and development due to
many factors, including decreasing line widths, the increasing number of
materials, applications and process steps, and the greater complexity of process
development and chip design; (5) the increasing difficulty for customers to move
from product design to volume manufacturing; (6) the importance of reducing the
cost of system ownership, due in part to the increasing significance of consumer
electronics as a driver for semiconductor and LCD demand and the related focus
on lower prices; (7) varying levels of business information technology spending;
(8) the heightened importance to customers of system reliability and
productivity, and the effect on demand for systems as a result of their
increasing productivity, device yield and reliability; (9) the growing types and
varieties of semiconductors and expanding number of applications across multiple
substrate sizes, resulting in customers divergent technical demands; (10)
demand for shorter cycle times for the development, manufacture and installation
of manufacturing equipment; (11) the challenge to semiconductor manufacturers of
moving volume manufacturing from one technology node to the next smaller
technology node, and the resulting impact on the technology transition rate and
the rate of investment in capital equipment; (12) price trends for certain
semiconductor devices and LCDs; (13) difficulties associated with transitioning
to larger substrate sizes; and (14) the increasing importance of the
availability of spare parts to assure maximum system uptime. If we do not
successfully manage the risks resulting from the ongoing changes occurring in
the semiconductor and semiconductor-related industries, its business, financial
condition and results of operations could be materially and adversely affected.
The industries that Omphalos serves are volatile and
unpredictable.
As a supplier to the global semiconductor, computer and related
industries, we are subject to business cycles, the timing, length and volatility
of which can be difficult to predict and which may vary by reportable segment.
The industries have historically been cyclical due to sudden changes in
customers manufacturing capacity requirements and spending, which depend in
part on capacity utilization, demand for customers products, and inventory
levels relative to demand. The effects on Omphalos of these changes in demand,
including end-customer demand, are occurring more rapidly. These changes have
affected the timing and amounts of customers purchases and investments in
technology, and continue to affect our orders, net sales, gross margin,
contributed profit and results of operations.
We must effectively manage our resources to meet rapidly
changing demand. During periods of decreasing demand for our products, we must
be able to appropriately align our cost structure with prevailing market
conditions, motivate and retain key employees, and effectively manage our supply
chain. During periods of increasing demand, we must have sufficient inventory to
meet customer demand; attract, retain and motivate a sufficient number of
qualified individuals; and effectively manage our supply chain. If we are not
able to timely and appropriately adapt to changes in industry cycles, our
business, financial condition or results of operations may be materially and
adversely affected.
Omphalos is exposed to risks associated with a highly
concentrated customer base in the semiconductor and flat panel display
industries.
Our semiconductor and other customer base historically has
been, and is becoming even more, highly concentrated. For the year ended
December 31, 2014, five customers, each of who accounted for more than 10% of
Omphalos total revenues, represented approximately 94% of its total revenues.
Orders from a relatively limited number of manufacturers have accounted for, and
are expected to continue to account for, a substantial portion of our net sales.
In addition, the mix and type of customers, and sales to any single customer,
may vary significantly from quarter to quarter and from year to year. If
customers do not place orders, or they delay or cancel orders, we may not be
able to replace the business. As our products are configured to customer
specifications, changing, rescheduling or canceling orders may result in
significant, non-recoverable costs. Major customers may also seek, and on
occasion receive, pricing, payment, intellectual property-related, or other
commercial terms that are less favorable to us. In addition, certain customers
have undergone significant ownership changes, have outsourced manufacturing
activities, and/or have entered into strategic alliances or industry consortia
that have increased the influence of key semiconductor manufacturers in
technology decisions made by their partners, which may result in additional
complexities in managing customer relationships and transactions. These factors could have a material, adverse
effect on our business, financial condition and results of operations.
Omphalos is highly dependent on two suppliers.
For the year ended December 31, 2014, Omphalos obtained 27% of
the equipment and parts that it sells to its customers from two vendors. If
either of these vendors was to cease supplying us with products for any reason,
this would force us to find alternative sources for our products. A change in
suppliers could cause a delay in availability of products and a possible loss of
sales, which could adversely affect our operating results.
Manufacturing interruptions or delays could affect our
ability to meet customer demand, while the failure to estimate customer demand
accurately could result in excess or obsolete inventory.
Our business depends on our ability to supply equipment,
services and related products that meet the rapidly changing technical and
volume requirements of our customers, which depends in part on the timely
delivery of parts, components and subassemblies (collectively, parts) from
suppliers. Some key parts may be subject to long lead-times and/or obtainable
only from a single supplier or limited group of suppliers, and some sourcing or
subassembly is provided by suppliers in developing regions, including China.
Significant interruptions of manufacturing operations or the delivery of
services as a result of: (1) the failure or inability of suppliers to timely
deliver quality parts; (2) volatility in the availability and cost of materials;
(3) difficulties or delays in obtaining required export approvals; (4)
information technology or infrastructure failures; (5) natural disasters (such
as earthquakes, floods or storms); or (6) other causes (such as regional
economic downturns, pandemics, political instability, terrorism, or acts of
war), could result in delayed deliveries, manufacturing inefficiencies,
increased costs or order cancellations. Moreover, if actual demand for our
products is different than expected, we may purchase more/fewer parts than
necessary or incur costs for canceling, postponing or expediting delivery of
parts. Any or all of these factors could materially and adversely affect our
business, financial condition and results of operations.
We may not be able to effectively manage our growth, which
may harm our profitability.
Our strategy envisions expanding our business. If we fail to
effectively manage our growth, our financial results could be adversely
affected. Growth may place a strain on our management systems and resources. We
must continue to refine and expand our business development capabilities, our
systems and processes and our access to financing sources. As we grow, we must
continue to hire, train, supervise and manage new employees. We cannot assure
you that we will be able to:
|
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meet our capital needs; |
|
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expand our systems effectively or
efficiently or in a timely manner; |
|
|
allocate our human resources
optimally; |
|
|
identify and hire qualified
employees or retain valued employees; or |
|
|
incorporate effectively the components of any business
that we may acquire in our effort to achieve growth.
|
If we are unable to manage our growth, our operations and our
financial results could be adversely affected by inefficiency, which could
diminish our profitability.
Loss of Sheng-Peir Yang, our Chief Executive Officer, could
impair our ability to operate.
If we lose our key employee, Sheng-Peir Yang, our Chief
Executive Officer, our business could suffer. Our success is highly dependent on
our ability to attract and retain qualified technical and management personnel.
We are highly dependent on our management. Mr. Yang has an employment agreement
with the Company. However, the loss of Mr. Yangs services could have a material
adverse effect on our operations. If we were to lose this individual, we may
experience difficulties in competing effectively, developing our technology and
implementing our business strategies. We do not have key-man life insurance in
place for any person working for us.
Our management team does not have extensive experience in
public company matters, which could impair our ability to comply with legal and
regulatory requirements.
Our management team has had limited public company management
experience or responsibilities. This could impair our ability to comply with
legal and regulatory requirements such as the Sarbanes-Oxley Act of 2002 and
applicable federal securities laws including filing required reports and other
information required on a timely basis. There can be no assurance that our
management will be able to implement and effect programs and policies in an
effective and timely manner that adequately respond to increased legal,
regulatory compliance and reporting requirements imposed by such laws and
regulations. Our failure to comply with such laws and regulations could lead to
the imposition of fines and penalties and further result in the deterioration of
our business.
RISKS RELATED TO OUR COMMON STOCK
There has been a limited trading market for our common
stock. There is no assurance of an established public trading market, which
would adversely affect the ability of our investors to sell their securities in
the public markets.
It is anticipated that there will continue to be a limited
trading market for the Company's common stock, quoted on the OTCQB. The lack of
an active public market may impair your ability to sell your shares at the time
you wish to sell them or at a price that you consider reasonable. The lack of an
active public market may also reduce the fair market value of your shares. An
inactive market may also impair our ability to raise capital by selling shares
of capital stock and may impair our ability to acquire other companies or
technologies by using common stock as consideration.
You may have difficulty trading and obtaining quotations for
our common stock.
The common stock may not be actively traded, and the bid and
asked prices for our common stock quoted on the OTCQB may fluctuate widely. As a
result, investors may find it difficult to dispose of, or to obtain accurate
quotations of the price of, our securities. This severely limits the liquidity
of the common stock, and would likely reduce the market price of our common
stock and hamper our ability to raise additional capital.
The market price of our common stock may, and is likely to
continue to be, highly volatile and subject to wide fluctuations.
The market price of our common stock is likely to be highly
volatile and could be subject to wide fluctuations in response to a number of
factors that are beyond our control, including:
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dilution caused by our issuance of additional shares of
common stock and other forms of equity securities, which we may make in
connection with future capital financings to fund our operations and
growth, to attract and retain valuable personnel and in connection with
future strategic partnerships with other companies; |
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announcements of new acquisitions, discoveries or other
business initiatives by our competitors; |
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our ability to take advantage of new acquisitions,
discoveries or other business initiatives; |
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quarterly variations in our revenues and operating
expenses; |
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changes in the valuation of similarly situated companies,
both in our industry and in other industries; |
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changes in analysts estimates affecting the Company, our
competitors and/or our industry; |
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changes in the accounting methods used in or otherwise
affecting our industry; |
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additions and departures of key personnel; |
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fluctuations in interest rates and the availability of
capital in the capital markets; and |
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significant sales of our common stock, including sales by
the investors and/or future investors in future offerings we expect to
make to raise additional capital. |
These and other factors are largely beyond our control, and the
impact of these risks, singly or in the aggregate, may result in material
adverse changes to the market price of our common stock and/or our results of
operations and financial condition.
We do not expect to pay dividends in the foreseeable
future.
We do not intend to declare dividends for the foreseeable
future, as we anticipate that we will reinvest any future earnings in the
development and growth of our business. Therefore, investors will not receive
any funds unless they sell their common stock, and stockholders may be unable to
sell their shares on favorable terms or at all. Investors cannot be assured of a positive return on investment or that they will
not lose the entire amount of their investment in the common stock.
If we fail to maintain effective internal controls over
financial reporting, the price of our common stock may be adversely affected.
Our internal controls over financial reporting, while they
appear to be sufficient for our needs, may have weaknesses and conditions that
will need to be addressed, the disclosure of which may have an adverse impact on
the price of our common stock. We are required to establish and maintain
appropriate internal controls over financial reporting. Failure to establish
those controls, or any failure of those controls once established, could
adversely impact our public disclosures regarding our business, financial
condition or operating results. In addition, management's assessment of our
internal controls over financial reporting may identify weaknesses and
conditions that need to be addressed in our internal controls over financial
reporting or other matters that may raise concerns for investors. Any actual or
perceived weaknesses and conditions that need to be addressed in our internal
controls over financial reporting or disclosure of management's assessment of
our internal controls over financial reporting may have an adverse impact on the
price of our common stock.
We are controlled by current officers, directors and
principal stockholders.
Our directors, executive officers and principal stockholders
and their affiliates beneficially own approximately 64% of the outstanding
shares of our common stock. So long as our directors, executive officers and
principal stockholders and their affiliates control a majority of our fully
diluted equity, they will continue to have the ability to elect our directors
and determine the outcome of votes by our stockholders on corporate matters,
including mergers, sales of all or substantially all of our assets, charter
amendments and other matters requiring stockholder approval. This controlling
interest may have a negative impact on the market price of our common stock by
discouraging third-party investors.
Applicable SEC rules governing the trading of penny stocks
limit the trading and liquidity of our common stock, which may affect the
trading price of our common stock.
Shares of common stock may be considered a penny stock and be
subject to SEC rules and regulations which impose limitations upon the manner in
which such shares may be publicly traded and regulate broker-dealer practices in
connection with transactions in penny stocks. Penny stocks generally are
equity securities with a price of less than $5.00 (other than securities
registered on certain national securities exchanges). The penny stock rules
require a broker-dealer, prior to a transaction in a penny stock not otherwise
exempt from the rules, to deliver a standardized risk disclosure document that
provides information about penny stocks and the risks in the penny stock market.
The broker-dealer must also provide the customer with current bid and offer
quotations for the penny stock, the compensation of the broker-dealer and its
salesperson in the transaction, and monthly account statements showing the
market value of each penny stock held in the customers account. In addition,
the penny stock rules generally require that prior to a transaction in a penny
stock, the broker-dealer make a special written determination that the penny
stock is a suitable investment for the purchaser and receive the purchasers
written agreement to the transaction. These disclosure requirements may have the
effect of reducing the level of trading activity in the secondary market for a
stock that becomes subject to the penny stock rules which may increase the
difficulty investors may experience in attempting to liquidate such stock.
Item 1B. Unresolved Staff Comments.
None.
Item 2. Properties.
Our principal executive offices are located at Unit 2, 15 Fl.,
83, Nankan Rd. Sec. 1, Luchu, Taoyuan County, Taiwan and No.1371-1, Sec. 3,
Fuguo Rd., Lujhu Township, Taoyuan County 338, Taiwan.
Omphalos does not own any real property. The Company leases an
office and a warehouse from the wife of our sole director, Mr. Yang. The office
maintains administration and sales facilities and the warehouse maintains
inventory. The location of the office and warehouse are Unit 2, 15 Fl., 83,
Nankan Rd. Sec. 1, Luchu, Taoyuan County, Taiwan and No.92, Bagu Rd., Lujhu
Township, Taoyuan County 338, Taiwan. The office space is approximately 3,700
square feet and the warehouse space is approximately 3,334 square feet.
Generally, Omphalos maintains short-term leases for its office
and warehouse, with options to renew, where possible. The terms of the lease for
office and warehouse have been extended to January 31, 2016. The Company paid a
monthly rent of approximately $1,900 for the periods ended December 31,
2014 and 2013. Accordingly, rent expense under the office and warehouse lease
agreements amounted to approximately $22,176 and $22,640 for the periods ended
December 31, 2014 and 2013, respectively.
Item 3. Legal Proceedings.
On January 24, 2013, Artic Automation Co., Ltd. (the
Plaintiff) filed a complaint against All Fine Technology Co. (TWN), (the
Company), at Taiwan Taoyuan District Court in Taiwan, for not paying accounts
payable of NT$ 990,875, equivalent to approximately $ 32,540. The Plaintiff
claimed that the Company has the obligation to pay off the dues after receiving
the products. However, the Company disputed Plaintiffs claim that the received
products were defective and not suitable for re-sell. The case went to trial on
March 20, 2013, and the court pronounced its judgment that the Company had to
pay that amount for those products. An appeal was filed on December 27, 2013 by
the Company. The hearing for the appeal was held on January 2, 2014, at Taiwan
High Court in Taipei City, Taiwan. On April 23, 2014, the Company and the
Plaintiff reached a settlement that the Company will repay NT$820,000,
equivalent to approximately $26,930, to the Plaintiff on May 7, 2014. As such,
the case was closed. The liability has been paid as of December 31, 2014.
Item 4. [Removed and Reserved.]
PART II
Item 5. Market for Common Equity, Related Stockholder
Matters and Issuer Purchases of Equity Securities.
Our common stock is quoted on the OTCQB under the trading
symbol "OMPS".
The following table sets forth, for the period indicated, the
range of the high and low sales prices of our common stock, as reported by the
OTCQB. The quotations reflect inter-dealer prices, without retail mark-up,
mark-down or commission, and may not necessarily represent actual transactions.
Year Ended December 31, |
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2014 |
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0.20 |
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* |
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$ |
* |
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$ |
* |
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Low |
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$ |
0.19 |
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$ |
* |
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$ |
* |
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$ |
* |
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2013 |
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High |
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$ |
0.10 |
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$ |
* |
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$ |
* |
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$ |
0.10 |
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Low |
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$ |
0.10 |
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$ |
* |
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$ |
* |
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$ |
0.10 |
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2012 |
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High |
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$ |
* |
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$ |
* |
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$ |
* |
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$ |
* |
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Low |
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* |
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*no public trading volume
There were approximately 72 holders of record of our common
stock as of March 15, 2015.
Although we paid dividends on our common stock in 2008 totaling
$175,260, or approximately $0.00583 per share, we paid no dividends on our
common stock in 2009, 2010, 2011, 2012, 2013 or 2014. We do not have a policy of
paying regular dividends and do not expect to pay any dividends on our common
stock in the foreseeable future. We currently intend to retain any future
earnings for our business. The payment of any future dividends on our common
stock will be determined by our Board of Directors and will depend on business
conditions, our financial earnings and other factors.
Recent Transactions Involving Unregistered Securities
None
Item 6. Selected Financial Data.
Not applicable.
Item 7. Managements Discussion and Analysis of Financial
Condition and Results of Operations.
Forward Looking Statements
Some of the statements contained in this Form 10-K that are not
historical facts are "forward-looking statements" which can be identified by the
use of terminology such as "estimates," "projects," "plans," "believes,"
"expects," "anticipates," "intends," or the negative or other variations, or by
discussions of strategy that involve risks and uncertainties. We urge you to be
cautious of the forward-looking statements, that such statements, which are
contained in this Form 10-K, reflect our current beliefs with respect to future
events and involve known and unknown risks, uncertainties, and other factors
affecting our operations, market growth, services, products, and licenses. No
assurances can be given regarding the achievement of future results, as actual
results may differ materially as a result of the risks we face, and actual
events may differ from the assumptions underlying the statements that have been
made regarding anticipated events. Factors that may cause actual results, our
performance or achievements, or industry results, to differ materially from
those contemplated by such forward-looking statements include without
limitation:
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Our ability to attract and retain management, and to
integrate and maintain technical information and management information
systems; |
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Our ability to generate customer demand for our
services; |
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3. |
The intensity of competition; and |
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General economic conditions. |
All written and oral forward-looking statements made in
connection with this Form 10-K that are attributable to us or persons acting on
our behalf are expressly qualified in their entirety by these cautionary
statements. Given the uncertainties that surround such statements, you are
cautioned not to place undue reliance on such forward-looking statements. This
MD&A should also be read in conjunction with the Item 1.A. Risk Factors.
Overview
The Company, through Omphalos Corp. - Taiwan, is in the
business of supplying a wide range of equipment and parts including reflow
soldering ovens and Automated Optical Inspection (AOI) machines to printed
circuit board (PCB) manufacturers in Taiwan and China. The clients are mainly
Taiwanese electronics manufacturing companies, including Quanta Computer Inc.,
Universal Scientific Industrial Co., and Advantech in Taiwan, and QSMC, in
China.
The major equipment manufacturer Omphalos represents is TAMURA,
which has complete technical supports licensed from the original manufacturers.
The Company operates in an industry characterized by rapid
technological changes. It will need additional investments to complete the
development and improvement necessary for the development and production of the
testing equipment and parts for PCB assembly processes.
The Company's business strategy is to increase its market share
by expanding into other industries. Since PCB has a vast application range, the
Company is currently researching and developing many additional uses for testing
equipment and parts.
Critical Accounting Policies and Estimates
This discussion and analysis of our financial condition and
results of operations are based on our financial statements that have been
prepared under accounting principle generally accepted in the United States of
America. 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 the 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, Investments, 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 receivable 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.
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 $499,964 and $612,216
at December 31, 2014 and 2013, respectively.
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 currency denominated investments in shares of stock where such
differences are accounted for as translation adjustments under stockholders' equity.
Recently Issued Accounting Pronouncements — In February 2013, the FASB issued ASU 2013-02, “Comprehensive Income (Topic 220): Reporting of Amounts Reclassified out of Accumulated Other Comprehensive Income.” This ASU
does not change the current requirements for reporting net income or other comprehensive income in financial statements. However, this guidance requires an entity to provide information about the amounts reclassified out of accumulated other
comprehensive income by component. In addition, an entity is required to present, either on the face of the statement where net income is presented or in the notes, significant amounts reclassified out of accumulated other comprehensive income by
the respective line items of net income but only if the amount reclassified is required under U.S. GAAP to be reclassified to net income in its entirety in the same reporting period. For other amounts that are not required under U.S. GAAP to be
reclassified in their entirety to net income, an entity is required to cross-reference to other disclosures required under U.S. GAAP that provide additional detail about those amounts. For public entities, the guidance is effective prospectively for
reporting periods beginning after December 15, 2012. For nonpublic entities, the guidance is effective prospectively for reporting periods beginning after December 15, 2013. Early adoption is permitted. The adoption of this standard is not expected
to have a material impact on the Company’s consolidated financial position and results of operations.
In July 2013, the FASB issued ASU 2013-11, “Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists.” An unrecognized tax
benefit, or a portion of an unrecognized tax benefit, should be presented in the financial statements as a reduction to a deferred tax asset. To the extent a net operating loss carryforward, a similar tax loss, or a tax credit carryforward is not
available at the reporting date under the tax law of the applicable jurisdiction to settle any additional income taxes that would result from the disallowance of a tax position or the tax law of the applicable jurisdiction does not require the
entity to use, and the entity does not intend to use, the deferred tax asset for such purpose, the unrecognized tax benefit should be presented in the financial statements as a liability and should not be combined with deferred tax assets. The
assessment of whether a deferred tax asset is available is based on the unrecognized tax benefit and deferred tax asset that exist at the reporting date and should be made presuming disallowance of the tax position at the reporting date. For public
entities, the guidance is effective prospectively for reporting periods beginning after December 15, 2013. For nonpublic entities, the guidance is effective prospectively for reporting periods beginning after December 15, 2014. Early adoption is
permitted. The adoption of this standard is not expected to have a material impact on the Company’s consolidated financial position and results of operations.
In May 2014, the FASB issued ASU 2014-9, “Revenue from Contracts with Customers”. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised 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. An entity should disclose sufficient information to enable users of financial statements to understand the nature, amount,
timing, and uncertainty of revenue and cash flows arising from contracts with customers. For a public entity, the amendments in this Update are effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. Early application is not permitted. The adoption of this standard is not expected to have a material impact on the Company’s consolidated financial position and results of operations.
In August 2014, FASB issued ASU No. 2014-15, “Preparation of Financial Statements – Going Concern (Subtopic 205-40), Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern”. Under U.S. GAAP,
continuation of a reporting entity as a going concern is presumed as the basis for preparing financial statements unless and until the entity's liquidation becomes imminent. Preparation of financial statements under this presumption is commonly
referred to as the going concern basis of accounting. If and when an entity's liquidation becomes imminent, financial statements should be prepared under the liquidation basis of accounting in accordance with Subtopic 205-30, Presentation of
Financial Statements—Liquidation Basis of Accounting. Even when an entity's liquidation is not imminent, there may be conditions or events that raise substantial doubt about the entity's ability to continue as a going concern. In those
situations, financial statements should continue to be prepared under the going concern basis of accounting, but the amendments in this Update should be followed to determine whether to disclose information about the relevant conditions and events.
The amendments in this Accounting Standards Update are effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. Early application is permitted. The Company will evaluate the going concern
considerations in this ASU, however, at the current period, management does not believe that it has met conditions which would subject these condensed consolidated financial statements for additional disclosure.
Results of Operations
The following table presents the consolidated results of the Company for the years ended December 31, 2014 and 2013.
Net Sales. Net sales for the year ended December 31, 2014 were $536,517, compared to $790,404 for the year ended December 31, 2013, a decrease of $252,887. The sales decrease was primarily a result of a decrease in laser marking system
unit shipments. Sales of reflow soldering ovens sales to printed circuit board (PCB) manufacturers remained unchanged in 2014 compared to 2013. Our average selling price for reflow soldering ovens and laser marking system remain unchanged in 2014
compared to 2013. Net sales from our service and parts sales were $24,890 in 2014 and $24,772 in 2013.
Cost of Sales; Gross Margin. Cost of sales for the year ended December 31, 2014 was $361,104 or 67.3% of net sales, as compared to $1,021,173 or 129.2% of net sales for the year ended December 31, 2013. Gross income for 2014 was $175,413
compared to $(230,769) for 2013, an increase of $406,182. Gross profit (loss) as a percent of net sales was 32.7% in 2014, compared to (29.2) % in 2013. The change in gross profit percentage was due to that we sold a several slow moving
items for a price less than our cost and an increase in reserve for slow moving items in 2013.
Selling, General and Administrative Expenses. Selling, general and administrative expenses for the one year ended December 31, 2014 were $694,453 or 129.44 % of net sales, as compared to $721,647 or 91.3% of net sales, for the year ended
December 31, 2013. The decrease in selling, general and administrative expenses was primarily due to decreases in payroll, and traveling cost.
Loss from Operations. Loss from operations for the year ended December 31, 2014 was $(519,040), as compared to $(952,416) for the year ended December 31, 2013. The decrease in loss from operations for the year ended December 31, 2014
compared with loss from operations for 2013 resulted primarily from an increase in gross profit and a decrease in operating expenses.
Other Income (expenses). Other income (expenses) for the year ended December 31, 2014 was $(3,335) as compared to $3,489 for the year ended December 31, 2013. This change was primarily attributable to an increase in interest expense, which
was partially offset by the increase in interest income and foreign currency exchange gain.
Net Loss. Net loss for the year ended December 31, 2014 was $(522,375) as compared to $(948,927) for the year ended December 31, 2013. The increase in net loss was due to the reasons described above.
Liquidity and Capital Resources
Our principal sources of liquidity are cash and cash equivalents, and cash flow from operations. Our cash and cash equivalent decreased from $91,801 at December 31, 2013 to $107,028 at December 31, 2014.
Net cash flow used in operating activities was $176,349 in
fiscal 2014 as compared to net cash flow used in operating activities of
$526,227 in fiscal 2013, a decrease of $349,878. Net cash flow used in operating
activities in fiscal 2014 was mainly due to our net loss of $(522,375), a
decrease in accounts receivable of $208,407, a decrease in inventory of
$288,179, a decrease in prepaid expenses and other assets of $27,667, a decrease
in accounts payable and accrued expenses of $222,868, and an increase in due to
related parties of $38,389. Net cash flow used in operating activities was
$526,227 in fiscal 2013 as compared to net cash flow used in operating
activities of $461,812 in fiscal 2012, an increase of $64,415. Net cash flow
used in operating activities in fiscal 2013 was mainly due to our net loss of
$(948,927), an increase in accounts receivable of $246,216, a decrease in
inventory of $486,013, an increase in prepaid expenses and other assets of
$1,647, an increase in accounts payable and accrued expenses of $94,046, and an
increase in due to related parties of $64,472.
Net cash flow provided by financing activities was $190,785 for
2014 and $276,905 for 2013. For 2013, the cash flow provided by financing
activity was from loan from shareholders. For 2014, the cash flow provided by
financing activity was from loan from shareholders, and short-term bank loans.
In light of the significant decreases in our net sales over the
past fiscal year and current uncertain market and economic conditions, we are
aggressively managing our cost structure and cash position to ensure that we
will meet our financial obligations while preserving the ability to make
investments that will enable us to respond to customer requirements and achieve
long-term profitable growth. We currently believe that our cash and cash
equivalents, working capital, and cash generated from operations, will be
sufficient to meet our forecasted operating expenses and capital expenditures
through 2015.
Capital Expenditures
Total capital expenditures during the years ended December 31,
2014 and 2013 was $0 and $0, respectively.
Currency Exchange Fluctuations
Translation Adjustment The accounts of the
Company was maintained, and its financial statements were expressed, in New
Taiwan Dollar (NTD). Such financial statements were translated into U.S.
Dollars ($ 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 the weighted average exchange rate for the period. The resulting translation
adjustments are reported under other comprehensive income as a component of
stockholders equity.
As of December 31, 2014 and December 31, 2013 the exchange
rates between the NTD and the USD ($) were NTD1=$0.03165 and NTD1=$0.03350,
respectively. The weighted-average rates of exchange between NTD and USD were
NTD1=$0.03300 and NTD1=$0.03369 for the years ended December 31, 2014 and
December 31, 2013, respectively. Total translation adjustment recognized as of
December 31, 2014 and December 31, 2013 is $557,884 and $549,426,
respectively.
Inflation
Our opinion is that inflation has not had, and is not expected
to have, a material effect on our operations.
Climate Change
Our opinion is that neither climate change, nor governmental
regulations related to climate change, have had, or are expected to have, any
material effect on our operations.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements as of
December 31, 2014 and December 31, 2013.
Item 7A. Quantitative and Qualitative Disclosures about
Market Risk.
Not Applicable.
Item 8. Financial Statements and Supplementary Data.
The consolidated financial statements of Omphalos, Corp,
including the notes thereto, together with the report thereon of KCCW
Accountancy Corp. is presented beginning at page F-1.
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure.
None.
Item 9A. Controls and Procedures.
Managements Report of Internal Control over Financial
Reporting
We are responsible for establishing and maintaining adequate
internal control over financial reporting in accordance with Exchange Act Rule
13a-15. With the participation of our Chief Executive Officer and Chief
Financial Officer, our management conducted an evaluation of the effectiveness
of our internal control over financial reporting as of December 31, 2014 based
on the criteria established in Internal Control-Integrated Framework
issued by the Committee of Sponsoring Organizations of the Treadway
Commission. Based on this evaluation, management concluded that our internal
control over financial reporting was effective as of December 31, 2014, based on
those criteria. A control system, no matter how well conceived and operated, can
provide only reasonable, not absolute, assurance that the objectives of the
control system are met. Because of the inherent limitations in all control
systems, no evaluation of controls can provide absolute assurance that all
control issues and instances of fraud, if any, within the Company have been
detected.
This Annual Report does not include an attestation report of
the Companys registered accounting firm regarding internal control over
financial reporting. Managements report was not subject to attestation by the
Companys registered public accounting firm pursuant to temporary rules of the
SEC.
Evaluation of Disclosure Controls and Procedures
Disclosure controls and procedures and other procedures that
are designed to ensure that information required to be disclosed in our reports
or submitted under the Exchange Act is recorded, processed, summarized and
reported within the time period specified in the SECs rules and forms.
Disclosure controls and procedures include, without limitation, controls and
procedures designed to ensure that information required to be disclosed in our
reports filed under the Exchange Act is accumulated and communicated to
management including our Chief Executive Officer and Chief Financial Officer as
appropriate, to allow timely decisions regarding required disclosure.
As of the end of the period covered by this report, we carried
out an evaluation, under the supervision and with the participation of our Chief
Executive Officer and our Chief Financial Officer, of the effectiveness of the
design and operation of our disclosure controls and procedures (as defined in
Rules 13a-15(e) and 15d-15(e) of the Exchange Act). Based on this evaluation,
our Chief Executive Officer and Chief Financial Officer concluded that our
disclosure controls and procedures were effective as of the end of the period
covered by this report.
Changes in Internal Control Over Financial Reporting
There was no change in our internal control over financial
reporting during the most recent fiscal quarter that has materially affected, or
is reasonably likely to materially affect, our internal control over financial
reporting.
Item 9B. Other Information.
None.
PART III
Item 10. Directors, Executive Offices and Corporate
Governance.
Directors and Executive Officers
Name |
|
Age |
|
Position |
Sheng-Peir Yang |
|
58 |
|
President, CEO and Director
|
Chu Pi Yun |
|
44 |
|
Chief Financial Officer
|
Shen-Peir Yang, President, Chief Executive Officer and
Director
Mr. Yang is the Companys sole director. He has been President
and Chief Executive Officer of Omphalos since 1991. He holds a degree in
Mechanical Engineering from National Taipei University of Technology. Having run
the Companys business for almost 20 years, he is very well-qualified, having
extensive knowledge of the performance of our business in a variety of economic
cycles, to effectively manage our operations during these challenging economic
times.
Chu Pi Yun, Chief Financial Officer
Ms. Yun has been with Omphalos since 2000. During that time she
functioned in various accounting related positions. She was appointed our Chief
Financial Officer in October 2007. Ms. Yun has done extensive accounting
coursework.
Our directors and officers hold office until the earlier of their
resignation, or removal or until their successors have been duly elected and
qualified.
There are no family relationships among our directors or
executive officers.
To our knowledge, during the last ten years, none of our
directors and executive officers (including those of our subsidiaries) 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.
Section 16 Compliance
The Company is not aware of any securities transaction during
the fiscal year ended December 31, 2014, or subsequent thereto what would
require a filing pursuant to Section 16 of the Exchange Act of 1934, as
amended.
Audit Committee Financial Expert
Our current director acts as our audit committee. The current
director was elected President in connection with the merger and is not
independent. By virtue of his education, business experience and specific
experience with the financial reports for the Company, Mr. Sheng-Peir Yang
satisfies the requirements for service as an audit committee financial expert,
except for his position as the Companys President, which disqualifies him as an
independent director, as the term is used in Item 407 of Regulation S-K. An
informal search is under way to identify a suitable candidate for service on the
Board of Directors as an independent director who would be qualified as an audit
committee financial expert.
Audit Committee
We have not yet appointed an audit committee, and our director
currently acts as our audit committee. At the present time, we believe that our
director is capable of analyzing and evaluating our financial statements and
understanding internal controls and procedures for financial reporting. The
Company, however, recognizes the importance of good corporate governance and
intends to add additional directors to the Board of Directors and appoint an
audit committee comprised entirely of independent directors, including at least
one financial expert.
Limitation on Liability and Indemnification of Directors and
Officers
Our articles of incorporation provide that no director or
officer shall have any liability to the Company if that person acted in good
faith and with the same degree of care and skill as a prudent person in similar
circumstances.
Our articles of incorporation and bylaws provide that we will
indemnify our directors and officers and may indemnify our employees or agents
to the fullest extent permitted by law against liabilities and expenses incurred
in connection with litigation in which they may be involved because of their
offices or positions with us. However, nothing in our articles of incorporation
or bylaws protects or indemnifies a director, officer, employee or agent against
any liability to which that person would otherwise be subject by reason of
willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of that persons office or position. To the
extent that a director has been successful in defense of any proceeding, the
Nevada Revised Statutes provide that the director shall be indemnified against
reasonable expenses incurred in connection with the proceeding.
Code of Ethics
We have not as yet adopted a code of ethics that applies to our
principal executive officer, principal financial officer, principal accounting
officer or controller, or persons performing similar functions, as we have had
only to executive officers and we have not been able to establish a process for
auditing compliance or reporting noncompliance. We plan to adopt a code of
ethics as independent directors are added to the Board of Directors and
additional executive officers are engaged by the Company, when it will be in a
better position to implement a process for assuring continued compliance with
such code of ethics, at which time, it will be available in print to any person
who requests it and on our website, when our website is completed. Any
amendments and waivers to the code will also be available in print and on our
website.
Item 11. Executive Compensation.
SUMMARY COMPENSATION TABLE
|
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Non- |
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|
|
|
|
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qualified |
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Deferred |
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|
|
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|
|
Non-Equity |
|
|
Compen- |
|
|
All other |
|
|
|
|
Name and |
|
|
|
|
|
|
|
|
|
|
Stock |
|
|
Option |
|
|
Incentive |
|
|
sation |
|
|
compen- |
|
|
|
|
principal |
|
|
|
|
Salary |
|
|
Bonus |
|
|
Awards |
|
|
Awards |
|
|
Plan |
|
|
Earnings |
|
|
sation |
|
|
Total |
|
position |
|
Year |
|
|
($) |
|
|
($) |
|
|
($) |
|
|
($) |
|
|
($) |
|
|
($) |
|
|
($) |
|
|
($) |
|
|
|
2014 |
|
$ |
73,260 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
73,260 |
|
Sheng-Peir |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Yang |
|
2013 |
|
$ |
74,792 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
74,792 |
|
CEO and |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
President |
|
2012 |
|
$ |
80,038 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
80,038 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pi-Yun |
|
2014 |
|
$ |
21,860 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
21,860 |
|
Chu |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CFO |
|
2013 |
|
$ |
22,316 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
22,316 |
|
|
|
2012 |
|
|
27,775 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27,775 |
|
|
|
|
|
|
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|
We have entered into the follow employment agreements:
-
Sheng-Peir Yang entered into an employment agreement with Omphalos on
November 30, 2007, to serve as its Chief Executive Officer for a term of two
(2) years at an monthly salary of New Taiwan Dollars (NTD)
185,000(approximately $6,105). Mr. Yang is required to comply with the
non-competition provision contained within the employment agreement. Either
party, with proper notice, may terminate the employment agreement, and the
employment agreement will be governed and construed by the laws of the
Republic of China. The agreement has renewed annually and remains in effect.
-
Pi-Yun Chu entered into an employment agreement with Omphalos on November
30, 2007, to serve as its Chief Financial Officer for a term of two (2) years
at an monthly salary of NTD55,200 (approximately $1,822). Ms. Chu is required
to comply with the non-competition provision contained within the employment
agreement. Either party, with proper notice, may terminate the employment
agreement, and the employment agreement will be governed and construed by the
laws of the Republic of China. The agreement has renewed annually and remains
in effect.
Outstanding Equity Awards at Fiscal Year-End
As of our fiscal years ended December 31, 2014 and 2013, we did
not have any stock option plan or stock incentive plan and there were no
outstanding equity awards as of our fiscal years ended December 31, 2014 and
2013. No equity awards were granted during the year ended December 31, 2014.
COMPENSATION OF DIRECTORS
Our Director did not receive compensation for services as a
director. Our director did not receive any reimbursement for travel or other
expenses incurred in connection with attending meetings of the board and its
committees, if any.
Item 12. Security Ownership of Certain Beneficial Owners and
Management and Related Stockholder Matters.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The following table sets forth
the number of shares of common stock beneficially owned as of March 15, 2015 by
(i) those persons or groups known to us to beneficially own more than 5% of our
common stock; (ii) each director; (iii) each executive officer; and (iv) all
directors and executive officers as a group. The information is determined in
accordance with Rule 13d-3 promulgated under the Exchange Act based upon
information furnished by persons listed or contained in filings made by them
with the SEC or by information provided by such persons directly to us. Except
as indicated below, each of the stockholders listed below possesses sole voting
and investment power with respect to their shares and the address of each person
is c/o Omphalos, Corp.
|
|
|
|
|
Percentage of |
|
|
|
Common Stock |
|
|
Common Stock |
|
|
|
Beneficially |
|
|
Beneficially |
|
Name
of Beneficial Owner |
|
Owned |
|
|
Owned (1) |
|
Sheng-Peir Yang |
|
18,449,162 |
|
|
61.3% |
|
|
|
|
|
|
|
|
Chu Pi Yun |
|
683,302 |
|
|
2.3% |
|
|
|
|
|
|
|
|
All officers and directors as
a group (2 persons) |
|
19,132,464 |
|
|
63.6% |
|
* Denotes less than 1%
Beneficial ownership percentages gives effect to the completion
of the Share Exchange, and are calculated based on shares of common stock issued
and outstanding and is based on a total of 30,063,759 shares of common stock
that were issued and outstanding as of March 15, 2015. Beneficial ownership is
determined in accordance with Rule 13d-3 of the Exchange Act. The number of
shares beneficially owned by a person includes shares of common stock underlying
options or warrants held by that person that are currently exercisable or
exercisable within 60 days of March 15, 2015. The shares issuable pursuant to
the exercise of those options or warrants are deemed outstanding for computing
the percentage ownership of the person holding those options and warrants but
are not deemed outstanding for the purposes of computing the percentage
ownership of any other person. The persons and entities named in the table have
sole voting and sole investment power with respect to the shares set forth
opposite that persons name, subject to community property laws, where
applicable, unless otherwise noted in the applicable footnote.
Item 13. Certain Relationships and Related Transactions, and
Director Independence.
Our sole director, Mr. Yang, is a named executive officer of
the Company and, accordingly, is not independent for purposes of any
securities market requirements.
Omphalos does not own any real property. The Company leases an
office and a warehouse from the wife of our sole director, Mr. Yang. The annual
rent of NT672,000 (NT$56,000 monthly), is approximately US$22,000.
Item 14. Principal Accounting Fees and Services.
Summary of Principal Accounting Fees for Professional
Services Rendered
The following table presents the aggregate fees for
professional audit services and other services rendered by KCCW Accountancy
Corp.
|
|
Year |
|
|
Year |
|
|
|
Ended |
|
|
Ended |
|
|
|
December |
|
|
December |
|
|
|
31, 2014 |
|
|
31, 2013 |
|
|
|
|
|
|
|
|
Audit Fees |
$ |
31,000 |
|
$ |
31,000 |
|
Audit-Related Fees |
|
|
|
|
|
|
Tax Fees |
|
|
|
|
|
|
All Other Fees |
|
- |
|
|
- |
|
|
$ |
31,000 |
|
$ |
31,000 |
|
Audit Fees consist of fees billed for the annual audit
of our financial statements and other audit services including the provision of
consents and the review of documents filed with the SEC.
We do not have an independent audit committee and the full
Board of Directors, therefore, serves as the audit committee for all purposes
relating to communication with our auditors and responsibility for our audit.
All engagements for audit services, audit- related services and tax services are
approved in advance by our full Board of Directors. Our Board of Directors has
considered whether the provision of the services described above for the fiscal
year ended December 31, 2014, is compatible with maintaining the auditors
independence.
All audit and non-audit services that may be provided by our
principal accountant to us shall require pre-approval by the Board of Directors.
Further, our auditor shall not provide those services to us specifically
prohibited by the SEC, including bookkeeping or other services related to the
accounting records or financial statements of the audit client; financial
information systems design and implementation; appraisal or valuation services,
fairness opinion, or contribution-in-kind reports; actuarial services; internal
audit outsourcing services; management functions; human resources;
broker-dealer, investment adviser, or investment banking services; legal
services and expert services unrelated to the audit; and any other service that
the Public Company Oversight Board determines, by regulation, is impermissible.
Item 15. Exhibits, Financial Statement Schedules.
1. |
Financial Statements: See Index to Consolidated
Financial Statements in Part II, Item 8 of the Form 10-K. |
2. |
Financial Statement Schedule: Schedules are included in
the Consolidated Financial Statements or notes of this Form 10-K or are
not required. |
3. |
Exhibits: The exhibits listed in the accompanying index
to exhibits are filed or incorporated by reference as part of this Form
10-K. |
Exhibit Number |
|
Description |
2.1 |
|
Share Exchange Agreement dated February 5, 2008, between
the Company and the parties set forth on the signature page thereof,
incorporated by reference to Exhibit 2.1 to the Companys current report
on Form 8-K, filed with the Securities and Exchange Commission (the SEC)
on February 11, 2008. |
3.1 |
|
Certificate of Incorporation of the Company (incorporated
by reference to the Company's proxy statement on Schedule 14A filed with
the Commission on March 5, 2003 (the "Proxy Statement"). |
3.2 |
|
Articles of Amendment to the Articles of Incorporation of
the Company (incorporated by reference to the Proxy Statement). |
3.3 |
|
Agreement and Plan of Merger between Quixit, Inc., a
Colorado corporation, and TOP Group Corporation (now known as SOYODO Group
Holdings, Inc.), a Delaware corporation (incorporated by reference to the
Proxy Statement). |
3.4 |
|
By-Laws of the Company (incorporated by reference to the
ProxyStatement). |
3.5 |
|
Amended and Restated Certificate of Incorporation of the
Company Incorporated by reference to the information statement on Schedule
14c filed with the SEC on March 15, 2005). |
3.6 |
|
Articles of Amendment to the Articles of Incorporation of
the Company (incorporated by reference to the information statement on
Schedule 14C filed with SEC on August 26, 2005). |
3.7 |
|
Amended and Restated By-Laws of Omphalos, Corp.,
incorporated by reference to Exhibit 3.7 of the Companys Annual Report on
Form 10-K filed with the SEC on March 31, 2009. |
10.1 |
|
Employment Agreement with Pi-Yun Chu, incorporated by
reference to Exhibit 10.1 to the Companys current report on Form 8-K/A,
filed with the SEC on February 20, 2008. |
10.2 |
|
Employment Agreement with Shen-Ren Li, incorporated by
reference to Exhibit 10.2 to the Companys current report on Form 8-K/A,
filed with the SEC on February 20, 2008. |
10.3 |
|
Employment Agreement with Sheng-Peir Yang, incorporated
by reference to Exhibit 10.3 to the Companys current report on Form
8-K/A, filed with the SEC on February 20, 2008. |
10.4 |
|
Purchase and Sale Agreement with Tamura Corporation,
incorporated by reference to Exhibit 10.4 to the Companys Annual Report
on Form 10-K, filed with the SEC on March 29, 2011. |
10.5 |
|
Lease Agreement for property, incorporated by reference
to Exhibit 10.5 to the Companys Annual Report on Form 10-K, filed with
the SEC on March 29, 2011. |
21 |
|
List of Subsidiaries, incorporated by reference to
Exhibit 21 to the Companys Annual Report on Form 10-K, filed with the SEC
on March 29, 2011. |
31.1 |
|
Certification of principal executive officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002++ |
31.2 |
|
Certification of principal financial officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002++ |
32.1 |
|
Certification of Chief Executive Officer pursuant to
Section 906 of the Sarbanes-Oxley Act++ |
32.2 |
|
Certification of Chief Financial Officer pursuant to
Section 906 of the Sarbanes-Oxley Act++ |
++filed herewith
SIGNATURES
Pursuant to the requirements of Section 13 or
15(d) 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.
|
|
Omphalos, Corp. |
|
|
|
Dated: March 16, 2015 |
By: |
/s/ Sheng-Peir
Yang |
|
|
Sheng-Peir Yang |
|
|
Chief Executive Officer
|
In accordance with the 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 |
|
Title |
|
Date
|
|
|
|
|
|
/s/Sheng-Peir Yang |
|
|
|
|
|
|
Chief Executive Officer and Director |
|
March 16, 2015 |
Sheng-Peir Yang |
|
|
|
|
|
|
|
|
|
/s/ Chu Pi Yun |
|
Chief Financial Officer (principal |
|
|
|
|
financial and accounting officer) |
|
March 16, 2015 |
Chu Pi Yun |
|
|
|
|
OMPHALOS, CORP.
CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED
DECEMBER 31, 2014 AND 2013 AND
REPORT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM
CONTENTS
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board of Directors
Omphalos Corp.
We have audited the accompanying consolidated balance sheets of
Omphalos Corp. and subsidiaries (the Company) as of December 31, 2014 and
2013, and the related consolidated statements of operations and comprehensive
income (loss), changes in stockholders equity, and cash flows for the years
then ended. These financial statements are the responsibility of the Companys
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Those standards
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audit provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present
fairly, in all material respects, the financial positions of Omphalos Corp. as
of December 31, 2014 and 2013, and the consolidated results of their operations
and their consolidated cash flows for the years then ended, in conformity with
accounting principles generally accepted in the United States of America.
The accompanying financial statements have been prepared
assuming that the Company will continue as a going concern. As discussed in Note
1 to the consolidated financial statements, the Company has net losses of
$522,375 and $948,927 during the years ended December 31, 2014 and 2013,
respectively. Management's plans in regard to these matters are also described
in Note 1. The consolidated financial statements do not include any adjustments
that might result from the outcome of this uncertainty.
/s/KCCW Accountancy Corp.
Diamond Bar, California
March 16, 2015
1
OMPHALOS, CORP.
CONSOLIDATED BALANCE SHEETS
|
|
December 31, |
|
|
December 31, |
|
|
|
2014 |
|
|
2013 |
|
Assets |
|
|
|
|
|
|
Current Assets |
|
|
|
|
|
|
Cash and cash equivalents |
$ |
107,028
|
|
$ |
91,801 |
|
Accounts
receivable, net |
|
101,996 |
|
|
319,692 |
|
Inventory, net |
|
33,488 |
|
|
328,157 |
|
Prepaid and
other current assets |
|
34,788 |
|
|
64,943 |
|
Total current assets |
|
277,300 |
|
|
804,593 |
|
|
|
|
|
|
|
|
Leasehold Improvements and
Equipment, net |
|
12,153 |
|
|
22,260 |
|
|
|
|
|
|
|
|
Intangible assets, net |
|
25,297 |
|
|
30,663 |
|
Deposits |
|
3,592 |
|
|
3,804 |
|
Total Assets |
$ |
318,342 |
|
$ |
861,320 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders' Equity
|
|
|
|
|
|
|
Current Liabilities |
|
|
|
|
|
|
Short-term
bank loans |
$ |
126,600 |
|
$ |
- |
|
Accounts payable |
|
9,377 |
|
|
243,527 |
|
Accrued
salaries and bonus |
|
30,434 |
|
|
33,844 |
|
Accrued expenses |
|
19,968 |
|
|
12,297 |
|
Due to
related parties |
|
97,383 |
|
|
64,147 |
|
Loan from shareholders, current portion |
|
316,500 |
|
|
- |
|
Total current liabilities |
|
600,262 |
|
|
353,815 |
|
|
|
|
|
|
|
|
Non-current Liabilities |
|
|
|
|
|
|
Loan from shareholders |
|
- |
|
|
275,508 |
|
Total liabilities |
|
600,262 |
|
|
629,323 |
|
|
|
|
|
|
|
|
Stockholders' Equity |
|
|
|
|
|
|
Common
stock, $0.0001 par value, 120,000,000
shares
authorized, 30,063,759 shares issued and
outstanding
as of December 31, 2014 and 2013 |
|
3,007 |
|
|
3,007 |
|
Additional
paid-in capital |
|
47,523 |
|
|
47,523 |
|
Other comprehensive income |
|
557,884 |
|
|
549,426 |
|
Accumulated
deficit |
|
(890,334 |
) |
|
(367,959 |
) |
Total Stockholders' equity |
|
(281,920 |
)
|
|
231,997 |
|
|
|
|
|
|
|
|
Total Liabilities and Shareholders' Equity |
$ |
318,342 |
|
$ |
861,320 |
|
The Accompanying Notes Are an Integral Part of the Financial
Statements.
2
OMPHALOS, CORP.
CONSOLIDATED STATEMENTS OF
OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 2014 AND 2013
|
|
2014 |
|
|
2013 |
|
|
|
|
|
|
|
|
Sales, net |
$ |
536,517 |
|
$ |
790,404 |
|
|
|
|
|
|
|
|
Cost of sales |
|
361,104 |
|
|
1,021,173 |
|
|
|
|
|
|
|
|
Gross profit (loss) |
|
175,413 |
|
|
(230,769 |
) |
|
|
|
|
|
|
|
Selling, general and
administrative expenses |
|
694,453 |
|
|
721,647 |
|
|
|
|
|
|
|
|
Loss from operations |
|
(519,040 |
) |
|
(952,416 |
) |
|
|
|
|
|
|
|
Other income (expenses) |
|
|
|
|
|
|
Interest
income |
|
3,375 |
|
|
41 |
|
Interest expense |
|
(13,513 |
) |
|
(2,295 |
) |
Gain (loss)
on foreign currency exchange |
|
6,803
|
|
|
5,743
|
|
Total other income (expenses) |
|
(3,335 |
) |
|
3,489 |
|
|
|
|
|
|
|
|
Loss before provision for
income taxes |
|
(522,375 |
) |
|
(948,927 |
) |
|
|
|
|
|
|
|
Provision for income taxes
|
|
- |
|
|
- |
|
|
|
|
|
|
|
|
Net loss |
$ |
(522,375 |
) |
$ |
(948,927 |
) |
|
|
|
|
|
|
|
Weighted average number of
common shares: |
|
|
|
|
|
|
Basic and
diluted |
|
30,063,759 |
|
|
30,063,759 |
|
|
|
|
|
|
|
|
Net loss per share: |
|
|
|
|
|
|
Basic and diluted |
$ |
(0.02 |
) |
$ |
(0.03 |
) |
|
|
|
|
|
|
|
Other Comprehensive (Loss)
Income: |
|
|
|
|
|
|
Net loss |
$ |
(522,375 |
) |
$ |
(948,927 |
) |
Foreign currency translation
adjustment, net of tax |
|
8,458 |
|
|
(26,146 |
) |
Comprehensive (Loss) Income |
$ |
513,917 |
|
$ |
(975,073 |
) |
The Accompanying Notes Are an Integral Part of the Financial
Statements.
3
OMPHALOS, CORP.
CONSOLIDATED STATEMENTS OF CHANGE
IN STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2014 AND 2013
|
|
Common Stock |
|
|
Additional |
|
|
Retained |
|
|
Comprehensive |
|
|
|
|
|
|
Shares |
|
|
Amount |
|
|
Paid-in Capital |
|
|
Earning |
|
|
Income |
|
|
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2012 |
|
30,063,759 |
|
|
3,007 |
|
|
47,523 |
|
|
580,968 |
|
|
575,572 |
|
|
1,207,070 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Translation adjustment |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
(26,146 |
) |
|
(26,146 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
- |
|
|
- |
|
|
- |
|
|
(948,927 |
) |
|
- |
|
|
(948,927 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2013 |
|
30,063,759 |
|
$ |
3,007 |
|
$ |
47,523 |
|
$ |
(367,959 |
) |
$ |
549,426 |
|
$ |
231,997 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Translation adjustment |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
8,458 |
|
|
8,458 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
- |
|
|
- |
|
|
- |
|
|
(522,375 |
) |
|
- |
|
|
(522,375 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2014 |
|
30,063,759 |
|
$ |
3,007 |
|
$ |
47,523 |
|
$ |
(890,334 |
) |
$ |
557,884 |
|
$ |
(281,920 |
) |
The Accompanying Notes Are an Integral Part of the Financial
Statements.
4
OMPHALOS, CORP. |
CONSOLIDATED STATEMENTS OF CASH FLOWS |
FOR THE YEARS ENDED DECEMBER 31, 2014 AND 2013
|
|
|
2014 |
|
|
2013 |
|
Cash flows from operating
activities |
|
|
|
|
|
|
Net loss
|
$ |
(522,375 |
) |
$ |
(948,927 |
) |
Adjustments
to reconcile net income to net cash used in operating activities: |
|
|
|
|
|
|
Amortization and depreciation |
|
13,055 |
|
|
31,775 |
|
Foreign currency exchange (gain) loss |
|
(6,803 |
) |
|
(5,743 |
) |
Changes in
assets and liabilities: |
|
|
|
|
|
|
Decrease
(increase) in accounts receivable |
|
208,407 |
|
|
(246,216 |
) |
Decrease in inventory |
|
288,179 |
|
|
486,013 |
|
Decrease
(increase) in prepaid and other assets |
|
27,667 |
|
|
(1,647 |
) |
Increase (decrease) in
accounts payable |
|
(229,995 |
) |
|
137,130 |
|
Increase
(decrease) in accrued expenses |
|
7,127 |
|
|
(43,084 |
) |
Increase in due to related
parties |
|
38,389 |
|
|
64,472 |
|
Net cash used in operating
activities |
|
(176,349 |
) |
|
(526,227 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities |
|
|
|
|
|
|
Proceeds from short-term bank loans |
|
264,026 |
|
|
- |
|
Repayment
of short-term bank loans |
|
(132,013 |
) |
|
- |
|
Proceeds from loan from shareholders |
|
58,772 |
|
|
276,905 |
|
Net cash provided by financing activities |
|
190,785 |
|
|
276,905 |
|
|
|
|
|
|
|
|
Effect of exchange rate changes on cash and
cash equivalents |
|
791
|
|
|
(1,855 |
) |
|
|
|
|
|
|
|
Net increase (decrease) in cash and cash
equivalents |
|
15,227 |
|
|
(251,177 |
) |
|
|
|
|
|
|
|
Cash and cash equivalents |
|
|
|
|
|
|
Beginning |
|
91,801 |
|
|
342,978 |
|
Ending |
$ |
107,028 |
|
$ |
91,801 |
|
|
|
|
|
|
|
|
Supplemental disclosure of cash flows |
|
|
|
|
|
|
Cash paid during the year for: |
|
|
|
|
|
|
Interest
expense |
$ |
13,101 |
|
$ |
1,685 |
|
Income tax |
$ |
- |
|
$ |
- |
|
The Accompanying Notes Are an Integral Part of the Financial
Statements.
5
OMPHALOS, CORP.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2014
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 $522,375 and $948,927 during the years ended December
31, 2014 and 2013, 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 in 2015; (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.
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 $499,964 and $612,216 at December 31,
2014 and 2013, 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.
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, 2014
and 2013.
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, 2014 and 2013, 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 and China. The
Company performs ongoing credit evaluations of its customers financial
condition and generally, requires no collateral. For the year ended December 31,
2013, only one customer accounted for more than 10% of the Companys total
revenues, represented approximately 76% of its total revenues, and 98% of
accounts receivable in aggregate at December 31, 2013. For the year ended
December 31, 2014, five customers, each of who accounted for more than 10% of
the Companys total revenues, represented approximately 94% of its total
revenues, and 90% of accounts receivable in aggregate at December 31, 2014.
|
|
Sales for the year |
|
A/R balance as of |
Customer |
|
2014 |
|
2013 |
|
12/31/2014 |
|
12/31/2013 |
A |
|
$ 127,462 |
|
$ 603,441 |
|
$ 36,817 |
|
$ 311,866 |
B |
|
112,200 |
|
- |
|
- |
|
- |
C |
|
93,925 |
|
- |
|
- |
|
- |
D |
|
93,050 |
|
- |
|
17,849 |
|
- |
E |
|
78,054 |
|
- |
|
37,405 |
|
- |
Suppliers: For the year ended December
31, 2013, 71% of the Companys inventory was purchased from two vendors. For the
year ended December 31, 2014, 27% of the Companys inventory was purchased from
two vendors
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 comprehensive income (loss).
Fair Value of Financial
Instruments The carrying amounts of cash and cash equivalents,
accounts receivable, deposits and accounts payable approximate their fair value
because of the short maturity of those instruments.
The carrying amounts of the Company's
long-term debt approximate 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.
Recently Issued Accounting
Pronouncements In February 2013, the FASB issued ASU 2013-02,
Comprehensive Income (Topic 220): Reporting of Amounts Reclassified out of
Accumulated Other Comprehensive Income. This ASU does not change the current
requirements for reporting net income or other comprehensive income in financial
statements. However, this guidance requires an entity to provide information
about the amounts reclassified out of accumulated other comprehensive income by
component. In addition, an entity is required to present, either on the face of
the statement where net income is presented or in the notes, significant amounts
reclassified out of accumulated other comprehensive income by the respective
line items of net income but only if the amount reclassified is required under
U.S. GAAP to be reclassified to net income in its entirety in the same reporting
period. For other amounts that are not required under U.S. GAAP to be
reclassified in their entirety to net income, an entity is required to
cross-reference to other disclosures required under U.S. GAAP that provide
additional detail about those amounts. For public entities, the guidance is
effective prospectively for reporting periods beginning after December 15, 2012.
For nonpublic entities, the guidance is effective prospectively for reporting
periods beginning after December 15, 2013. Early adoption is permitted. The
adoption of this standard is not expected to have a material impact on the
Companys consolidated financial position and results of operations.
In July 2013, the FASB issued ASU
2013-11, Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit
When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit
Carryforward Exists. An unrecognized tax benefit, or a portion of an
unrecognized tax benefit, should be presented in the financial statements as a
reduction to a deferred tax asset. To the extent a net operating loss
carryforward, a similar tax loss, or a tax credit carryforward is not available
at the reporting date under the tax law of the applicable jurisdiction to settle
any additional income taxes that would result from the disallowance of a tax
position or the tax law of the applicable jurisdiction does not require the
entity to use, and the entity does not intend to use, the deferred tax asset for
such purpose, the unrecognized tax benefit should be presented in the financial
statements as a liability and should not be combined with deferred tax assets.
The assessment of whether a deferred tax asset is available is based on the
unrecognized tax benefit and deferred tax asset that exist at the reporting date
and should be made presuming disallowance of the tax position at the reporting
date. For public entities, the guidance is effective prospectively for reporting
periods beginning after December 15, 2013. For nonpublic entities, the guidance
is effective prospectively for reporting periods beginning after December 15,
2014. Early adoption is permitted. The adoption of this standard is not expected
to have a material impact on the Companys consolidated financial position and
results of operations.
In May 2014, the FASB issued ASU
2014-9, Revenue from Contracts with Customers. The core principle of the
guidance is that an entity should recognize revenue to depict the transfer of
promised 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. An entity should disclose sufficient information to enable
users of financial statements to understand the nature, amount, timing, and
uncertainty of revenue and cash flows arising from contracts with customers. For
a public entity, the amendments in this Update are effective for annual
reporting periods beginning after December 15, 2016, including interim periods
within that reporting period. Early application is not permitted. The adoption
of this standard is not expected to have a material impact on the Companys
consolidated financial position and results of operations.
In August 2014, FASB issued ASU No.
2014-15, Preparation of Financial Statements Going Concern (Subtopic 205-40),
Disclosure of Uncertainties about an Entity's Ability to Continue as a Going
Concern. Under U.S. GAAP, continuation of a reporting entity as a going concern
is presumed as the basis for preparing financial statements unless and until the
entity's liquidation becomes imminent. Preparation of financial statements under
this presumption is commonly referred to as the going concern basis of
accounting. If and when an entity's liquidation becomes imminent, financial
statements should be prepared under the liquidation basis of accounting in
accordance with Subtopic 205-30, Presentation of Financial
StatementsLiquidation Basis of Accounting. Even when an entity's liquidation is
not imminent, there may be conditions or events that raise substantial doubt
about the entity's ability to continue as a going concern. In those situations,
financial statements should continue to be prepared under the going concern
basis of accounting, but the amendments in this Update should be followed to
determine whether to disclose information about the relevant conditions and
events. The amendments in this Accounting Standards Update are effective for the
annual period ending after December 15, 2016, and for annual periods and interim
periods thereafter. Early application is permitted. The Company will evaluate
the going concern considerations in this ASU, however, at the current period,
management does not believe that it has met conditions which would subject these
condensed consolidated financial statements for additional disclosure.
NOTE 2. PROPERTY AND EQUIPMENT
The following is a summary of the
Companys property and equipment for the years ended December 31:
|
|
2014
|
|
|
2013
|
|
Machinery and equipment |
$ |
64,595 |
|
$ |
68,412 |
|
Vehicle |
|
37,958 |
|
|
40,201 |
|
Leasehold improvements |
|
11,304 |
|
|
11,971 |
|
|
|
113,857 |
|
|
120,584 |
|
Less: accumulated
depreciation |
|
(101,704 |
) |
|
(98,324 |
) |
Property and equipment, net |
$ |
12,153 |
|
$ |
22,260 |
|
Depreciation expense for the years
ended December 31, 2014 and 2013 were $9,244 and $11,965 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 |
$ |
53,122 |
|
$ |
27,825 |
|
Amortization of intangible assets was
$3,811 and $19,810 for the years ended December 31, 2014 and 2013,
respectively.
Estimated amortization for the next
five years and thereafter is as follows:
2015 |
$ |
3,200 |
|
2016 |
|
3,160 |
|
2017 |
|
3,160 |
|
2018 |
|
3,160 |
|
2019 |
|
3,160 |
|
Thereafter |
|
9,457 |
|
|
$ |
25,297 |
|
NOTE 4. SHORT-TERM BANK LOANS
On February 25, 2014, the Company
entered a six-month line of credit agreement with Bank SinoPac (Taiwan). The
outstanding balance bearing interest at a floating rate of prime rate plus
1.05%, of which prime rate was based on four-to-six month time deposit interest
rate of Bank SinoPac(Taiwan). The actual interest rate as of December 31, 2014
was 1.99%. The Company borrowed NT$2,000,000, approximately equivalent to
$63,300, on February 27, 2014, March 4, 2014, March 17, 2014, and May 5, 2014,
totaling NT$8,000,000, or approximately equivalent to $253,200, and the
principals were due on August 26, 2014, September 3, 2014, September 16, 2014,
and November 4, 2014, respectively.
On October 7, 2014 and December 4,
2014, the Company repaid two of line of credits that were due on September 3,
2014 and November 4, 2014, respectively. On August 26, 2014, and September 16,
2014, two bank loans, totaling NT$4,000,000, or approximately equivalent to
$126,600, were extended for another six months, which are due on February 25,
2015, and March 15, 2015, respectively. The line of credit is collateralized by
a real property owned by one of the Company's shareholders, and also guaranteed
by the shareholder.
Interest expense of short-term bank
loans was approximately $3,657 for the year ended December 31, 2014.
NOTE 5. 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, 2014 and 2013 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%. Omphalos Corp. and All Fine Techonolgy Co., Ltd.
incurred losses for the years 2014 and 2013. 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, 2014 and 2013. 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:
|
2014 |
|
2013 |
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
Taiwan |
- |
|
- |
Total current provision |
- |
|
- |
Deferred provision: |
|
|
|
U.S |
- |
|
- |
BVI |
- |
|
- |
Taiwan- Net operating loss carryforward
|
37,159 |
|
37,936 |
Valuation allowance |
(37,159) |
|
(37,936) |
Total deferred provision |
-
|
|
-
|
Provision for income taxes
|
$ - |
|
$ - |
The following is a reconciliation of
the statutory tax rate to the effective tax rate for the years ended December
31, 2014 and 2013:
|
2014
|
|
2013
|
U.S. Federal tax at statutory
rate |
34% |
|
34% |
Valuation allowance |
(34%) |
|
(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, 2014
and 2013, respectively.
NOTE 6. RELATED-PARTY TRANSACTIONS
Operating Leases
The Company leases its facility from a
shareholder under an operating lease agreement which expires on January 31,
2016. The monthly base rent is approximately $1,900. Rent expense under this
lease agreement amounted to approximately $22,176 and $22,640 for the years
ended December 31, 2014 and 2013, respectively.
Loan from Shareholders
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 $158,250 for
working capital purpose. The term of the loan started from July 30, 2013 with
maturity date on July 29, 2015.
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 $158,250 for working capital purpose. The term of the loan started
from January 1, 2014 with maturity date on December 31, 2015.
As of December 31, 2014 and December
31, 2013, there were $316,500 and $275,508 advances outstanding, respectively.
Interest expense was $9,856 and $2,295 for the years ended December 31, 2014 and
2013, 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. As of
December 31, 2014 and December 31, 2013, there were $97,383 and $64,147 advances
outstanding, respectively.
NOTE 7. COMMITTMENT
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 $51,358 and $41,326 for the years ended
December 31, 2014 and 2013, respectively.
Future minimum lease payments under the
operating leases are summarized as follows:
Fiscal Year |
|
|
|
|
Amount |
|
2015 |
|
|
|
$ |
47,944 |
|
2016 |
|
|
|
|
15,154 |
|
2017 |
|
|
|
|
13,306 |
|
2018 |
|
|
|
|
12,118 |
|
2019 |
|
|
|
|
11,880 |
|
Thereafter |
|
|
|
|
8,910
|
|
Total |
|
|
|
$ |
109,312 |
|
NOTE 8. CONTINGENCIES AND LEGAL PROCEEDINGS
On January 24, 2013, Artic Automation
Co., Ltd. (the Plaintiff) filed a complaint against All Fine Technology Co.
(TWN), (the Company), at Taiwan Taoyuan District Court in Taiwan, for not paying
accounts payable of NT$ 990,875, equivalent to approximately $ 32,540. The
Plaintiff claimed that the Company has the obligation to pay off the dues after
receiving the products. However, the Company disputed Plaintiffs claim that the
received products were defective and not able to re-sell. The case went to trial
on March 20, 2013, and the court pronounced its judgment that the Company had to
repay the liability. An appeal was filed on December 27, 2013 by the Company.
The hearing for the appeal was held on January 2, 2014 at Taiwan High Court in
Taipei City, Taiwan. On April 23, 2014, the Company and the Plaintiff reached a
settlement that the Company will repay NT$820,000, equivalent to approximately
$26,930 to the plaintiff on May 7, 2014. As such, the case was closed. The
liability has been paid off as of December 31, 2014.
NOTE 9. SUBSEQUENT EVENTS
The Company evaluated all events or
transactions that occurred after December 31, 2014 up through the date the
Company issued these financial statements.
******
EXHIBIT 31.1 |
CERTIFICATION |
I, Sheng-Peir Yang, certify that: |
1. I have reviewed the Annual
Report on Form 10-K of Omphalos, Corp. (the registrant) for the period ended
December 31, 2014 (this report);
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. The registrant's other
certifying officer(s) and I are 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 our supervision, to ensure that material information relating to
the registrant, including its consolidated subsidiaries, is made known to us 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 our 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
our 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 registrants internal control over financial reporting that
occurred during the registrants most recent fiscal quarter (the registrants
fourth fiscal quarter in the case of an annual report) that has materially
affected, or is reasonably likely to materially affect, the registrants
internal control over financial reporting; and
5. The registrant's other
certifying officer(s) and I have disclosed, based on our most recent evaluation
of internal control over financial reporting, to the registrant's auditors and
the audit committee of the registrant's board of directors (or persons
performing the equivalent functions):
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.
March 16, 2015
s/ Sheng-Peir
Yang |
|
Sheng-Peir Yang |
|
Chief Executive Officer |
|
EXHIBIT 31.2 |
CERTIFICATION |
|
I, Chu Pi Yun, certify that:
1. I have reviewed this Annual
Report on Form 10-K of Omphalos, Corp. (the registrant) for the period ended
December 31, 2014 (this report);
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. The registrant's other
certifying officer(s) and I are 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 our supervision, to ensure that material information relating to
the registrant, including its consolidated subsidiaries, is made known to us 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 our 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
our 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 registrants internal control over financial reporting that
occurred during the registrants most recent fiscal quarter (the registrants
fourth fiscal quarter in the case of an annual report) that has materially
affected, or is reasonably likely to materially affect, the registrants
internal control over financial reporting; and
5. The registrant's other
certifying officer(s) and I have disclosed, based on our most recent evaluation
of internal control over financial reporting, to the registrant's auditors and
the audit committee of the registrant's board of directors (or persons
performing the equivalent functions):
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.
March 16, 2015
/s/ Chu Pi
Yun |
|
Chu Pi Yun |
|
Chief Financial Officer |
|
EXHIBIT 32.1
CERTIFICATION 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 Omphalos, Corp. (the "Company") on Form 10-K for the period ended
December 31, 2014 (the "Report"), the undersigned officer of the Company hereby
certifies, pursuant to 18 U.S.C. section 906 of the Sarbanes-Oxley Act of 2002,
to such officers knowledge that:
(i) the Report fully complies with the requirements of Section
13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934,
as amended; and
(ii) the information contained in the Report fairly presents,
in all material respects, the financial condition and results of operations of
the Company.
A signed original of this written
statement required by Section 906 has been provided to the Company and will be
retained by the Company and furnished to the Securities and Exchange Commission
or its staff upon request.
March 16, 2015 |
/s/ Sheng-Peir Yang |
|
Sheng-Peir Yang |
|
Chief Executive Officer |
EXHIBIT 32.2
CERTIFICATION 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 Omphalos, Corp. (the "Company") on Form 10-K for the period ended
December 31, 2014 (the "Report"), the undersigned officer of the Company hereby
certifies, pursuant to 18 U.S.C. section 906 of the Sarbanes-Oxley Act of 2002,
to such officers knowledge that:
(i) the Report fully complies with the requirements of Section
13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934,
as amended; and
(ii) the information contained in the Report fairly presents,
in all material respects, the financial condition and results of operations of
the Company.
A signed original of this written
statement required by Section 906 has been provided to the Company and will be
retained by the Company and furnished to the Securities and Exchange Commission
or its staff upon request.
March 16, 2015 |
/s/ Chu Pi Yun |
|
Chu Pi Yun |
|
Chief Financial Officer |
Omphalos (CE) (USOTC:OMPS)
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