The accompanying notes are an integral part of the condensed financial statements.
Notes to Condensed Financial Statements
NOTE 1 Organization, History and Business Activity
Eason Education Kingdom Holdings, Inc. (formerly known as Han Logistics, Inc.) (the "Company") was incorporated under the laws of the State of Nevada on July 1, 1999. The Company was organized to engage in the business of development, marketing and delivering of logistical analysis, problem solving and other logistics and general business services. The Company is currently seeking potential business opportunities.
On February 12, 2015, Michael Vardakis ("Then Majority Shareholder") entered into a Stock Purchase Agreement with Kin Hon Chu ("New Majority Shareholder") wherein Mr. Vardakis sold 8,813,225 shares of the Companys common stock, representing approximately 85% of all issued and outstanding shares to Mr. Chu. The aggregate purchase price paid was $400,000.
NOTE 2 Basis of Preparation and Significant Accounting Policies
Basis of Preparation
The condensed balance sheets of the Company as of September 30, 2015, the related condensed statements of operations and the condensed statements of cash flows for the nine months and three months ended September 30, 2015 and 2014 include all adjustments (consisting of normal recurring adjustments) necessary to summarize fairly the Company's financial position and results of operations. The results of operations for the nine months and three months ended September 30, 2015 are not necessarily indicative of the results of operations for the full year or any other interim period. The information included in this Form 10-Q should be read in conjunction with Management's Discussion and Analysis and Financial Statements and notes thereto for the fiscal year ended December 31, 2014 included in the Company's Annual Report on Form 10-K.
Significant Accounting Policies
This summary of significant accounting policies of the Company is presented to assist in understanding the Companys financial statements. The financial statements and notes are representations of the Companys management, which is responsible for their integrity and objectivity. These accounting policies conform to accounting principles generally accepted in the United States of America ("GAAP") and have been consistently applied in the preparation of the financial statements.
Cash and Cash Equivalents
The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. The Company currently has no cash and cash equivalents.
Fair Value of Financial Instruments
Effective January 1, 2008, the Company adopted Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 820, Fair Value Measurements, which provides a framework for measuring fair value under GAAP. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The standard also expands disclosures about instruments measured at fair value and establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value:
Level 1 Quoted prices for identical assets and liabilities in active markets;
Level 2 Quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets; and
Level 3 Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.
The Company designates cash equivalents as Level 1. The total amount of the Companys investment classified as Level 3 is de minimis.
The fair value of the Companys debt as of September 30, 2015 approximated fair value at those times.
Fair value of financial instruments: The carrying amounts of financial instruments, including accounts payable, and accrued expenses approximated fair value as of December 31, 2014 because of the relative short term nature of these instruments.
The Company currently has no significant source of revenue.
Use of Estimates
The preparation of condensed financial statements in conformity with generally accepted accounting principles in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed financial statements, and the reported amounts of revenues and expenses during the reporting periods. Management makes these estimates using the best information available at the time the estimates are made; however actual results could differ significantly from those estimates.
The Company accounts for income taxes under an asset and liability approach. This process involves calculating the temporary and permanent differences between the carrying amounts of the assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The temporary differences result in deferred tax assets and liabilities, which would be recorded on the Companys balance sheets in accordance with ASC 740, which established financial accounting and reporting standards for the effect of income taxes. The Company must assess the likelihood that its deferred tax assets will be recovered from future taxable income and, to the extent the Company believes that recovery is not likely, the Company must establish a valuation allowance. Changes in the Companys valuation allowance in a period are recorded through the income tax provision on the statements of operations.
The Company records interest and penalties arising from the underpayment of income taxes in the statement of income under general and administrative expenses. As of September 30, 2015, the Company had no accrued interest or penalties related to uncertain tax positions. The company also did not have any uncertain tax benefits during these periods. The tax years 2014, 2013 and 2012 remain open to examination.
Earnings (Loss) per Share
The Company is required to provide basic and dilutive earnings (loss) per common share information.
The basic net loss per common share is computed by dividing the net loss applicable to common stockholders by the weighted average number of common shares outstanding.
Diluted net loss per common share is computed by dividing the net loss applicable to common stockholders, adjusted on an "as if converted" basis, by the weighted average number of common shares outstanding plus potential dilutive securities.
For the nine months and three months ended September 30, 2015 and 2014, potential dilutive securities had an anti-dilutive effect and were not included in the calculation of diluted net loss per common share.
Recent Accounting Pronouncements
From time to time, new accounting pronouncements are issued by FASB that are adopted by the Company as of the specified effective date. If not discussed, management believes that the impact of recently issued standards, which are not yet effective, will not have a material impact on the Companys financial statements upon adoption.
Update No. 2014-09 Revenue from Contracts with Customers (Topic 606)
Section A Summary and Amendments That Create Revenue from Contracts with Customers (Topic 606) and Other Assets and Deferred Costs Contracts with Customers (Subtopic 340-40)
Section B Conforming Amendments to Other Topics and Subtopics in the Codification and Status Tables
Section C Background Information and Basis for Conclusion
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. To achieve that core principle, an entity should apply the following steps:
Step 1: Identify the contract(s) with a customer.
Step 2: Identify the performance obligations in the contract.
Step 3: Determine the transaction price.
Step 4: Allocate the transaction price to the performance obligations in the contract.
Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation.
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. Due to lack of revenues in the periods presented, the Company believes the amendment no financial effect to its financials upon adoption.
Update No. 2014-10 Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements to Variable Interest Entities Guidance in Topic 810, Consolidation
The amendments in this Update remove the definition of a development stage entity from the Master Glossary of the Accounting Standards Codification, thereby removing the financial reporting distinction between development stage entities and other reporting entities from U.S. GAAP. In addition, the amendments eliminate the requirements for development stage entities to (1) present inception-to-date information in the statements of income, cash flows, and shareholder equity, (2) label the financial statements as those of a development stage entity, (3) disclose a description of the development stage activities in which the entity is engaged, and (4) disclose in the first year in which the entity is no longer a development stage entity that in prior years it had been in the development stage.
The amendments also clarify that the guidance in Topic 275, Risks and Uncertainties, is applicable to entities that have not commenced planned principal operations.
Finally, the amendments remove paragraph 810-10-15-16. Paragraph 810-10-15-16 states that a development stage entity does not meet the condition in paragraph 810-10-15-14(a) to be a variable interest entity if (1) the entity can demonstrate that the equity invested in the legal entity is sufficient to permit it to finance the activities that it is currently engaged in and (2) the entitys governing documents and contractual arrangements allow additional equity investments. Under the amendments, all entities within the scope of the Variable Interest Entities Subsections of Subtopic 810-10 are required to evaluate whether the total equity investment at risk is sufficient using the guidance provided in paragraphs 810-10-25-45 through 25-47, which requires both qualitative and quantitative evaluations. Because the term development stage entity is used in paragraph 810-10-15-16, the definition of a development stage entity has been removed from the Master Glossary concurrent with the effective date of the amendment removing paragraph 810-10-15-16.
The amendments related to the elimination of inception-to-date information and the other remaining disclosure of Topic 915 should be applied retrospectively except for the clarification to Topic 275, which shall be applied prospectively. For public business entities, those amendments are effective for annual reporting periods beginning after December 15, 2014, and interim periods therein. The Company adopted this amendment to its financials in the current reporting period. The amendment is strictly presentation of the financial statements of development companies and has no financial effect on the statements presented herein.
NOTE 3 Going Concern
The accompanying condensed financial statements have been presented on the basis that it is a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company incurred a net loss of $37,000 (from operations) for the nine months ended September 30, 2015 and an accumulated deficit of $460,718 at September 30, 2015. These factors raise substantial doubt as to its ability to obtain debt and/or equity financing and achieve profitable operations.
Management intends to raise additional operating funds through equity and/or debt offerings. However, there can be no assurance management will be successful in its endeavors. Ultimately, the Company will need to achieve profitable operations in order to continue as a going concern.
There are no assurances that the Company will be able to either (1) achieve a level of revenues adequate to generate sufficient cash flow from operations; or (2) obtain additional financing through either private placement, public offerings and/or bank financing necessary to support its working capital requirements. To the extent that funds generated from operations and any private placements, public offerings and/or bank financing are insufficient, the Company will have to raise additional working capital. No assurance can be given that additional financing will be available, or if available, will be on terms acceptable to Eason Education Kingdom Holdings, Inc. If adequate working capital is not available Eason Education Kingdom Holdings, Inc. may be required to curtail its operations.
NOTE 4 Stockholders' Equity
As of September 30, 2015 and December 31, 2014, the Company authorized two classes of stocks, 500,000,000 shares of common stock at par value of $0.001, and 175,000,000 Class A preferred stock at par value of $0.001. There are 10,368,500 common shares issued and outstanding. None of the Class A preferred stock is issued.
NOTE 5 Related Parties Transactions
The Company currently utilizes office space on a rent-free basis from a director and shareholder, and shall do so until substantial revenue-producing operations commence. Management deemed the rent-free space to be of no nominal value.
A related party had loaned $13,387 to the Company as of December 31, 2004, which is convertible to common stock at a rate of $0.10 per share. The effect of conversion on the loss per share calculation would be anti-dilutive, as the Company incurred losses in each of the periods presented in the financial statements.
A related party loaned $23,800 to the Company during 2005, which is convertible to common stock at a rate of $0.10 per share. The effect of conversion on the loss per share calculation would be anti-dilutive, as the Company incurred losses in each of the periods presented in the financial statements.
A related party loaned $17,100 to the Company during 2007, which is convertible to common stock at a rate of $0.10 per share. The effect of conversion on the loss per share calculation would be anti-dilutive, as the Company incurred losses in each of the periods presented in the financial statements.
As of December 31, 2014, the outstanding note payable to a director of $8,700 and $2,500 that available to the Company during 2008 and 2007, respectively, are demand notes and carry an interest rate of 24% per annum.
As of December 31, 2014, the outstanding note payable to a director and other related parties of $8,917 that available to the Company during 2009 are demand notes and carry an interest rate of 9% -18% per annum.
As of December 31, 2014, the outstanding note payable to a director of $5,000 that available to the Company during 2010 are demand notes and carry an interest rate of 9% - 10% per annum.
As of December 31, 2014, the outstanding note payable to a director and other related parties loaned $15,850 that available to the Company during 2011 are demand notes and carry an interest rate of 9% per annum.
As of December 31, 2014, the outstanding note payable to a director of $14,500 that available to the Company during 2012 are demand notes and carry an interest rate of 9% per annum.
As of December 31, 2014, the outstanding note payable to a director of $17,950 that available to the Company during 2013 are demand notes and carry an interest rate of 9% per annum.
During 2014, a director loaned $42,425 to the Company. These loans are demand notes and carry an interest rate of 9% per annum.
The Company recorded an interest expense of $0 and $10,956 for the related party notes listed above for the nine months ended September 30, 2015 and 2014 respectively.
As of December 31, 2014, total notes payable to the related parties and accrued interests amounted to $260,035 in the aggregate. During the period, the New Majority Shareholder settled $158,075 to the related parties. The remaining outstanding balance of $101,960 was released by the related parties and the amount was credited to condensed statement of operations during the period.
NOTE 6 Notes Payable
An independent party loaned $9,700 to the Company on March 12, 2008. The note is unsecured, due upon demand and has an interest rate of 9%.
During 2010, an individual loaned $7,300 to the Company. The note is a demand note and carries an interest rate of 9%. The note is unsecured.
During 2011, an individual loaned $6,000 to the Company. The note is a demand note and carries an interest rate of 9%. The note is unsecured.
The Company recorded an interest expense of $0 and $1,548 for the nine months ended September 30, 2015 and 2014 respectively.
As of December 31, 2014, the above notes payable together with accrued interests amounted to $33,783 in aggregate. In February 2015, the New Majority Shareholder settled $23,000.The remaining outstanding balance of $10,783 was released by the creditors and the amount was credited to condensed statement of operations.
NOTE 7 - Accounts Payable
The Company recorded an accrued liability for professional service fees of $9,000 on September 30, 2015. This represents a duplicate payment for first and second quarter review service fees. Due to it is less-than-likely the original payments are to be recovered, the information is available before the financial statements issued, and the amount is reasonably estimated, provision is recorded in third quarter of 2015.
NOTE 8 Release of liabilities
On February 12, 2015, Michael Vardakis ("Then Majority Shareholder") entered into a Stock Purchase Agreement with Kin Hon Chu ("New Majority Shareholder") wherein Mr. Vardakis sold 8,813,225 shares of the Companys common stock, representing approximately 85% of all issued and outstanding shares to Mr. Chu. Mr. Chu paid $4,406.61 for this control block of shares and also paid off all of the existing liabilities of the Company. Accordingly, certain liabilities of $236,959 in the aggregate, including those notes payable as disclosed in note 5 and
note 6, were released by the creditors as a result of the change in ownership. The amount was credited to condensed statement of operations.
NOTE 9 - Subsequent Events
The Company evaluated subsequent events, which are events or transactions that occurred after September 30, 2015 through the date of the issuance of the accompanying unaudited condensed financial statements. On October 8, 2015, the Company had accepted ten subscription agreements from private placements for an aggregate of 300,500,000 shares of common stock at $0.001 par value, for an aggregate proceed of up to $300,500. This event was filed with the SEC on October 13, 2015.
ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
The following information should be read in conjunction with (i) the financial statements of Eason Education Kingdom Holdings, Inc., a Nevada corporation (the Company), and development-stage company, and the notes thereto appearing elsewhere in this Form 10-Q together with (ii) the more detailed business information and the December 31, 2014 audited financial statements and related notes included in the Companys Form 10-K (File No. 000-52273; the Form 10-K), as filed with the Securities and Exchange Commission on April 17, 2015. Statements in this section and elsewhere in this Form 10-Q that are not statements of historical or current fact constitute forward-looking statements
The Company was incorporated in the State of Nevada on July 1, 1999 and established a fiscal year end of December 31.
To date the Company has little operations or revenues and consequently has incurred recurring losses from operations. No revenues are anticipated until we complete the financing we endeavor to obtain, as described in the Form 10-K, and implement our initial business plan. The ability of the Company to continue as a going concern is dependent on raising capital to fund our business plan and ultimately to attain profitable operations. Accordingly, these factors raise substantial doubt as to the Companys ability to continue as a going concern.
The Company plans to raise additional funds through debt or equity offerings. There is no guarantee that the Company will be able to raise any capital through any offerings.
PLAN OF OPERATION
Our plan of operation for the twelve months following the date of this filing is to: (i) consider guidelines of industries in which the Company may have an interest; (ii) adopt a business plan regarding engaging in the business of any selected industry; and (iii) to commence such operations through funding and/or the acquisition of a going concern engaged in any industry selected.
During the next 12 months, the Companys only foreseeable cash requirements will relate to maintaining the Company in good standing or the payment of expenses associated with legal fees, accounting fees and reviewing or investigating any potential business venture, which may be advanced by management or principal stockholders as loans to the Company. Because we have not determined any business or industry in which our operations will be commenced, and we have not identified any prospective venture as of the date of this Quarterly Report, it is impossible to predict the amount of any such loan. Any such loan will be on terms no less favorable to the Company
than would be available from a commercial lender in an arms length transaction. No advance or loan from any affiliate will be required to be repaid as a condition to any agreement with future acquisition partners.
When and if a business will commence or an acquisition be made is presently unknown and will depend upon various factors, including but not limited to the availability of funding and if and when any potential acquisition may become available to the Company on terms acceptable to the Company. The estimated costs associated with reviewing and verifying information about a potential business venture would be mainly for due diligence and could cost between $5,000 and $25,000. These funds will either be required to be loaned by management or raised in private offerings; the Company cannot assure you that it can raise funds if needed.
RESULTS OF OPERATIONS
Three- and Nine-Month Periods Ended September 30, 2015 and 2014
We recorded no revenues for the three months and nine months ended September 30, 2015.
For the three months ended September 30, 2015, total operating costs were $21,000, consisting solely of general and administrative expenses. By comparison, for the three months ended September 30, 2014, total operating costs were $10,963, also consisting solely of general and administrative expenses. The loss from operations was $21,000 and $10,963, respectively, during these periods.
Our net loss for the three months ended September 30, 2015 was $21,000 and $15,357 for the three months ended September 30, 2014. The increase is mainly due to a $10,037 increase in general and administrative expenses (which included the $9,000 provision stated in Note 7) and a $4,394 decrease in interest expense for the three months ended September 30, 2015.
For the nine months ended September 30, 2015, total operating costs were $37,000, consisting solely of general and administrative expenses. By comparison, for the nine months ended September 30, 2014, total operating costs were $39,248, also consisting solely of general and administrative expenses. The losses from operations during these periods were $37,000 and $39,248, respectively.
Net income for the nine months ended September 30, 2015 was $199,959, as compared to net loss of $51,752 for the nine months ended September 30, 2014. The increase is mainly due to the one-time gain on release of liabilities of $236,959 that recognized in the first quarter of 2015.