Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2017 | Nov. 21, 2017 | |
Document And Entity Information | ||
Entity Registrant Name | EMARINE GLOBAL INC. | |
Entity Central Index Key | 1,178,377 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2017 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 21,961,317 | |
Trading Symbol | EMRN | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2,017 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - KRW (₩) ₩ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
CURRENT ASSETS: | ||
Cash and cash equivalents | ₩ 294,449 | ₩ 157,971 |
Short-term financial instruments | 314,000 | 65,000 |
Accounts receivable, net of allowance for doubtful accounts of 22,264 and 5,830 as of September 30, 2017 and December 31, 2016, respectively | 1,016,661 | 307,116 |
Inventories | 51,800 | 231,290 |
Loans to related parties | 159,866 | 164,000 |
Other current assets | 61,559 | 68,972 |
Total Current Assets | 1,898,335 | 994,349 |
Property and equipment, net | 45,372 | 24,987 |
Goodwill | 1,930,625 | 1,930,625 |
Intangible assets, net | 3,278 | 7,239 |
Deposits | 150,448 | 87,798 |
Total Assets | 4,028,058 | 3,044,998 |
CURRENT LIABILITIES: | ||
Accounts payable | 822,168 | 956,395 |
Nontrade payables | 999,935 | 1,167,347 |
Other current liabilities | 625,618 | 287,615 |
Short-term borrowings | 3,069,468 | 2,632,725 |
Current portion of long-term debt | 203,000 | 120,000 |
Total Current Liabilities | 5,720,189 | 5,164,082 |
Long-term debt | 757,000 | 730,000 |
Loans from related parties | 91,340 | 221,505 |
Accrued benefit pension liability | 752,985 | 880,656 |
Total Liabilities | 7,321,514 | 6,996,243 |
Commitments and Contingencies (Note 10) | ||
Temporary Equity - Redeemable convertible preferred stock | 636,007 | |
STOCKHOLDERS’ DEFICIT: | ||
Stock subscriptions | 129,963 | |
Common stock, $0.001 par value, 300,000,000 shares authorized, 17,072 shares issued and outstanding as of December 31, 2016; $0.001 par value, 100,000,000 shares authorized, 21,731,317 shares issued and outstanding as of September 30, 2017 | 24,559 | 21 |
Additional paid-in capital | 6,362,925 | 3,327,413 |
Other comprehensive income (loss) | 86,006 | (73,138) |
Accumulated deficit | (9,896,909) | (7,841,548) |
Total Stockholders’ Deficit | (3,293,456) | (4,587,252) |
Total Liabilities and Stockholders’ Deficit | ₩ 4,028,058 | ₩ 3,044,998 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Parenthetical) ₩ in Thousands | Sep. 30, 2017KRW (₩)shares | Dec. 31, 2016KRW (₩)shares |
Statement of Financial Position [Abstract] | ||
Accounts receivable, net of allowance for doubtful accounts | ₩ | ₩ 22,264 | ₩ 5,830 |
Common stock, shares authorized | 100,000,000 | 300,000,000 |
Common stock, shares, issued | 21,731,317 | 17,072 |
Common stock, shares, outstanding | 21,731,317 | 17,072 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations and Comprehensive Income (Unaudited) - KRW (₩) ₩ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Revenue | ||||
Product | ₩ 316,430 | ₩ 507,323 | ₩ 1,215,231 | ₩ 1,679,552 |
Service | 609,998 | 208,957 | 1,681,319 | 1,289,647 |
Total revenue | 926,428 | 716,280 | 2,896,550 | 2,969,199 |
Cost of revenue | ||||
Product | 141,551 | 350,935 | 983,841 | 1,054,712 |
Service | 405,869 | 694,090 | 1,488,539 | 1,751,262 |
Total cost of revenue | 547,420 | 1,045,025 | 2,472,380 | 2,805,974 |
Gross margin | 379,008 | (328,745) | 424,170 | 163,225 |
Selling, general and administrative expenses | 1,337,646 | 742,292 | 2,324,769 | 2,174,784 |
Loss from operations | (958,638) | (1,071,037) | (1,900,599) | (2,011,559) |
Other expense: | ||||
Interest expense, net | (77,377) | (56,139) | (180,862) | (166,153) |
Other income (expense), net | (1,907) | 9,169 | (11,385) | (5,052) |
Total other expense | (79,284) | (46,970) | (192,247) | (171,205) |
Loss before provision for income tax benefit | (1,037,922) | (1,118,007) | (2,092,846) | (2,182,764) |
Income tax (benefit) | (9,605) | (37,485) | (16,205) | |
Net loss | ₩ (1,028,317) | ₩ (1,118,007) | ₩ (2,055,361) | ₩ (2,166,560) |
Net loss per common share, basic and diluted | ₩ (0.10) | ₩ (65.49) | ₩ (0.59) | ₩ (126.91) |
Weighted average common shares outstanding - basic and diluted | 10,094,682 | 17,072 | 3,468,071 | 17,072 |
Net loss | ₩ (1,028,317) | ₩ (1,118,007) | ₩ (2,055,361) | ₩ (2,166,560) |
Other comprehensive income, net of tax: | ||||
Foreign exchange translation income | 26,244 | 26,244 | ||
Remeasurement of pension liabilities | 34,055 | 132,900 | 57,453 | |
Other comprehensive income, net of tax: | 60,299 | 159,144 | 57,453 | |
Comprehensive loss | ₩ (968,018) | ₩ (1,118,007) | ₩ (1,896,217) | ₩ (2,109,107) |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Cash Flows (Unaudited) - KRW (₩) ₩ in Thousands | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | ₩ (2,055,361) | ₩ (2,166,560) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 19,671 | 13,667 |
Pension plan expenses | 165,654 | 200,250 |
Bad debt | 17,209 | 5,830 |
Deferred income taxes | (37,485) | (16,205) |
Warrants issued for professional service | 620,994 | |
Other | 6,429 | (5,805) |
Changes in operating assets and liabilities: | ||
Accounts receivable | (725,979) | 473,861 |
Inventories | 179,490 | 58,870 |
Other current assets | 6,638 | (14,622) |
Deposits | (62,650) | |
Accounts payable | (140,656) | 215,983 |
Nontrade payables | (167,412) | 220,636 |
Other current liabilities | 338,002 | 817,988 |
Pension benefits payments | (122,939) | (73,460) |
NET CASH USED IN OPERATING ACTIVITIES | (1,958,395) | (269,567) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Decrease in loans to related parties | 3,966 | 3,000 |
Purchase of short-term financial instruments | (249,000) | (70,996) |
Purchase of property and equipment | (33,699) | (11,178) |
Purchase of intangible assets | (2,395) | (21,867) |
NET CASH USED IN INVESTING ACTIVITIES | (281,128) | (101,041) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Proceeds from private placement, net | 1,864,683 | |
Stock subscriptions | 129,963 | |
Drawdown of short-term borrowings | 436,744 | |
Repayment of short-term borrowings | (563,277) | |
Repayment of current portion of long-term debt | (90,000) | (90,000) |
Borrowings of long-term debt | 200,000 | 507,101 |
Issuance of redeemable convertible preferred stock | 636,007 | |
Increase in loans from related parties | 131,922 | |
Repayment of loans from related parties | (262,087) | |
NET CASH PROVIDED BY FINANCING ACTIVITIES | 2,411,225 | 489,831 |
Effect of exchange rate on cash and cash equivalents | (35,224) | |
NET INCREASE IN CASH AND CASH EQUIVALENTS | 136,478 | 119,223 |
CASH AND CASH EQUIVALENTS- beginning of year | 157,971 | 153,595 |
CASH AND CASH EQUIVALENTS- end of year | 294,449 | 272,818 |
Cash paid for: | ||
Interest | 180,508 | 164,927 |
Income taxes | ||
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: | ||
Conversion of redeemable convertible preferred stock to common stock | 636,007 | |
Exchange of debt for common stock | ₩ 4,759,322 |
Condensed Consolidated Stateme6
Condensed Consolidated Statements of Changes in Stockholders' Deficit (Unaudited) - 9 months ended Sep. 30, 2017 - KRW (₩) ₩ in Thousands | Stock Subscriptions [Member] | Common Stock [Member] | Additional Paid-In Capital [Member] | Accumulated Other Comprehensive Loss [Member] | Accumulated Deficit [Member] | Total |
Balance at Dec. 31, 2016 | ₩ 21 | ₩ 3,327,413 | ₩ (73,138) | ₩ (7,841,548) | ₩ (4,587,252) | |
Balance, shares at Dec. 31, 2016 | 17,072 | |||||
Exchange of debt for common stock | ₩ 1,110 | 4,758,212 | 4,759,322 | |||
Exchange of debt for common stock, shares | 982,361 | |||||
Conversion of redeemable convertible preferred stock to common stock | ₩ 128,000 | 508,007 | 636,007 | |||
Conversion of redeemable convertible preferred stock to common stock, shares | 12,800 | |||||
Recapitalization on reverse merger - purging previous shares | ₩ (129,131) | (8,593,632) | (8,722,763) | |||
Recapitalization on reverse merger - purging previous shares, shares | (1,012,233) | |||||
Recapitalization on reverse merger - issuance of new shares | ₩ 18,084 | 3,883,724 | 4,031,771 | |||
Recapitalization on reverse merger - issuance of new shares, shares | 16,001,317 | |||||
Private placement | ₩ 129,963 | ₩ 3,989 | 1,990,656 | 1,994,645 | ||
Private placement, shares | 3,530,000 | |||||
Stock issuance cost | (129,963) | (129,963) | ||||
Warrants issued on professional service | 620,994 | 620,994 | ||||
Shares issued on professional service | ₩ 2,486 | (2,486) | ||||
Shares issued on professional service, shares | 2,200,000 | |||||
Foreign exchange translation loss | 26,244 | 26,244 | ||||
Remeasurement of pension liabilities | 132,900 | 132,900 | ||||
Net loss | (2,055,361) | (2,055,361) | ||||
Balance at Sep. 30, 2017 | ₩ 129,963 | ₩ 24,559 | ₩ 6,362,925 | ₩ 86,006 | ₩ (9,896,909) | ₩ (3,293,456) |
Balance, shares at Sep. 30, 2017 | 21,731,317 |
Description of Business and Org
Description of Business and Organization | 9 Months Ended |
Sep. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Description of Business and Organization | 1. Description of Business and Organization eMarine Global Inc. is a Nevada corporation (the “Company”) formed under the name “Web Views Corporation” on November 2, 2001. On October 20, 2008, we changed our name to “Pollex, Inc.” On July 25, 2017, we entered into a share exchange agreement (the “Exchange Agreement”) with e-Marine Co., Ltd., a corporation organized under the laws of the Republic of Korea (“e-Marine”), and the shareholders of e-Marine (the “e-Marine Shareholders”), pursuant to which the e-Marine Shareholders assigned, transferred and delivered, free and clear of all liens, 100% of the issued and outstanding shares of common stock of e-Marine, representing 100% of the equity interest in e-Marine (the “e-Marine Shares”) to us in exchange for 14,975,000 restricted shares of our Common Stock (the “Share Exchange”). As a result of the Share Exchange, e-Marine became our wholly-owned subsidiary, and the e-Marine Shareholders acquired a controlling interest in the Company. At the time of the Share Exchange, the Company was engaged in the online games business by acquiring gaming licenses in order to make them commercially available abroad. As a result of the Share Exchange, we have now assumed e-Marine’s business operations as our own. The acquisition of e-Marine is treated as a reverse acquisition, and the business of e-Marine became the business of the Company. e-Marine Co., Ltd. was organized under the laws of the Republic of Korea on January 2, 2001, and is a maritime information and communications technology provider based in South Korea. e-Marine seeks to achieve safety of life at sea through the use of various technologies, such as e-Navigation, Maritime Internet-of-Things (otherwise known as “I.o.T.”) and marine big data technology (collectively, “Maritime ICT Convergence”). e-Marine’s main products and services are divided into four categories: (1) Electronic Chart Display & Information System (“ECDIS”); (2) Smart Ship; (3) Overseas Solutions Distributions; and (4) Aids to Navigation. On August 15, 2017, we entered into an agreement and plan of (the “Merger Agreement”), pursuant to which we merged with and into our newly formed wholly-owned subsidiary (the “Merger Sub” and, the transaction, the “Merger”). As permitted by Chapter 92A.180 of Nevada Revised Statutes, the purpose of the Merger was to effect a change of the Company’s name from “Pollex, Inc.” to “eMARINE Global Inc.” Upon the filing of articles of merger with the Secretary of State of Nevada on August 15, 2017 in order to effect the Merger, the Company’s articles of incorporation were deemed amended to reflect the change in the Company’s corporate name. Upon consummation of the Merger, the separate existence of Merger Sub ceased. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2017 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and pursuant to the instructions to Form 10-Q and Article 8 of Regulation S-X of the Securities and Exchange Commission (“SEC”) and on the same basis as the Company prepares its annual audited financial statements. In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments, consisting of normal recurring adjustments, unless otherwise indicated, considered necessary for a fair presentation of such interim results. The results for the condensed consolidated statements of operations are not necessarily indicative of results to be expected for the year ending December 31, 2017 or for any future interim period. The condensed consolidated balance sheet at September 30, 2017 has been derived from unaudited financial statements; however, it does not include all of the information and notes required by GAAP for complete financial statements. The accompanying condensed consolidated financial statements should be read in conjunction with the financial statements for the year ended December 31, 2016, and notes thereto included in the Company’s current report on Form 8-K/A filed on October 6, 2017. Use of Estimates and Assumptions The preparation of financial statements in accordance with GAAP 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. Estimates are used in determining, among other items, allowance for doubtful accounts, inventory reserve, impairment testing for goodwill and other intangible assets, pension liabilities, income taxes and contingencies. Actual results could differ from those estimates. These financial statements have been prepared on the basis of a going concern which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. Fair Value of Financial Instruments The Company adopted Accounting Standards Codification (“ASC”) 820, “Fair Value Measurements and Disclosures”, for assets and liabilities measured at fair value on a recurring basis. ASC 820 establishes a common definition for fair value to be applied to existing GAAP that requires the use of fair value measurements, establishes a framework for measuring fair value and expands disclosure about such fair value measurements. The adoption of ASC 820 did not have an impact on the Company’s financial position or operating results, but did expand certain disclosures. ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Additionally, ASC 820 requires the use of valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. These inputs are prioritized below: Level 1: Observable inputs such as quoted market prices in active markets for identical assets or liabilities Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data Level 3: Unobservable inputs for which there is little or no market data, which require the use of the reporting entity’s own assumptions. Under the standard, financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The carrying values reported in balance sheets for current financial assets and current financial liabilities approximate their estimated fair market values based on the short-term maturity of these instruments. Goodwill and Other Intangible Assets The Company accounts for goodwill and intangible assets in accordance with ASC 350 “Intangibles - Goodwill and Other”. ASC 350 requires that goodwill and other intangible assets with indefinite lives be tested for impairment annually or on an interim basis if events or circumstances indicate that the fair value of an asset has decreased below its carrying value. Goodwill represents the excess of the purchase price over the fair value of net assets acquired in business combinations. ASC 350 requires that goodwill be tested for impairment at the reporting unit level (operating segment or one level below an operating segment) on an annual basis and between annual tests when circumstances indicate that the recoverability of the carrying amount of goodwill may be in doubt. Application of the goodwill impairment test requires judgment, including the identification of reporting units, assigning assets and liabilities to reporting units, assigning goodwill to reporting units, and determining the fair value. Significant judgment is required to estimate the fair value of reporting units including estimating future cash flows, determining appropriate discount rates and other assumptions. Changes in these estimates and assumptions could materially affect the determination of fair value and/or goodwill impairment. The Company’s business includes one goodwill reporting unit. The Company annually reviews goodwill for possible impairment by comparing the fair value of the reporting unit to reporting unit’s carrying amount. If the fair value exceeds the carrying amount, no goodwill impairment is deemed to exist. If the fair value does not exceed the carrying amount, goodwill is tested for impairment and written down to its implied fair value if it is determined to be impaired. The Company performs its annual goodwill impairment test at December 31 on an annual basis. Amortization is computed utilizing the straight-line method over the estimated useful life of 5 years for industrial property rights, software and others. Amortizable intangible assets are only evaluated for impairment upon a significant change in the operating or macroeconomic environment. If an evaluation of the undiscounted future cash flows indicates impairment, the asset is written down to its estimated fair value, which is based on its discounted future cash flows. Based upon its qualitative assessment, the Company determined that intangible assets were not impaired on September 30, 2017 and December 31, 2016, respectively. Revenue Recognition Revenue recognition for multiple-element arrangements requires judgment to determine if multiple elements exist, whether elements can be accounted for as separate units of accounting and, if so, the fair value of each element. The Company will recognize revenue for the sale of goods when: ● Persuasive evidence of an arrangement exists: ● Delivery has occurred; ● Price is fixed or determinable; and ● Collectability is reasonably assured. Revenue from services is recognized by reference to the stage of performance of the services when the Company can reliably measure the amount of revenue and the recovery of the consideration is considered probable. The Company follows the provisions of the Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic (“ASC”) 605, “Revenue Recognition”, which includes the guidelines of Staff Accounting Bulletin No. 104 as described above. Income Taxes The Company accounts for income taxes pursuant to the provision of ASC 740-10, “Accounting for Income Taxes” (“ASC 740-10”), which requires, among other things, an asset and liability approach to calculating deferred income taxes. The asset and liability approach requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of assets and liabilities. A valuation allowance is provided to offset any net deferred tax assets for which management believes it is more likely than not that the net deferred tax asset will not be realized. Tax positions that meet the more likely than not recognition threshold are measured at the largest amount of tax benefit that is more than 50 percent likely of being realized upon settlement with the applicable taxing authority. The Company follows the provision of ASC 740-10 related to Accounting for Uncertain Income Tax Positions. When tax returns are filed, there may be uncertainty about the merits of positions taken or the amount of the position that would be ultimately sustained. In accordance with the guidance of ASC 740-10, the benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. The portion of the benefit associated with tax positions taken that exceed the amount measured as described above should be reflected as a liability for uncertain tax benefits in the accompanying balance sheet along with any associated interest and penalties that would be payable to the taxing authorities upon examination. The Company believes its tax positions are all more likely than not to be upheld upon examination. As such, the Company has not recorded a liability for uncertain tax benefits. Functional and Reporting Currency The Company uses Korean Won as its functional currency since the majority of the Company’s revenues, expenses, assets and liabilities are recognized in the Republic of Korea and the reporting currency is the same as the functional currency. Earnings (Loss) per Share Earnings (loss) per share are calculated in accordance with ASC 260 “Earnings Per Share,” which provides for the calculation of “basic” and “diluted” earnings (loss) per share. Basic earnings (loss) per share includes no dilution and is computed by dividing net earnings by the weighted average number of common shares outstanding for the period. Diluted earnings (loss) per share reflect, in periods in which they have a dilutive effect, the effect of common shares issuable upon exercise of stock options. The following securities were not included in the diluted net loss per share calculation because their effect was anti-dilutive for the periods presented. September 30, 2017 September 30, 2016 Redeemable convertible preferred stock - 12,800 Common stock warrants 8,825,000 - Potential dilutive shares 8,825,000 12,800 These shares were excluded due to their antidilutive effect. Recent Accounting Pronouncements In February 2016, Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842). FASB issued ASU 2016-02 to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. Certain qualitative and quantitative disclosures are required, as well as a retrospective recognition and measurement of impacted leases. The new ASU is effective for fiscal years and interim periods within those years beginning after December 15, 2018, with early adoption permitted. The Company is currently evaluating this ASU to determine its impact on the Company’s operations, financial position, cash flows and disclosures. In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606). This ASU is a comprehensive new revenue recognition model that requires a company to recognize revenue to depict the transfer of goods or services to a customer at an amount that reflects the consideration it expects to receive in exchange for those goods or services. In August 2015, FASB issued ASU 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, which deferred the effective date of ASU 2014-09 to reporting periods beginning after December 15, 2017, with early adoption permitted for reporting periods beginning after December 15, 2016. Subsequently, FASB issued ASUs in 2016 containing implementation guidance related to ASU 2014-09, including: ASU 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net) , which is intended to improve the operability and understandability of the implementation guidance on principal versus agent considerations; ASU 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing , which is intended to clarify two aspects of Topic 606: identifying performance obligations and the licensing implementation guidance; and ASU 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients , which contains certain provision and practical expedients in response to identified implementation issues. The Company is planning to adopt ASU 2014-09 and related ASUs on February 1, 2018. Companies may use either a full retrospective or a modified retrospective approach to adopt these ASUs. The Company is currently evaluating these ASUs, including which transition approach to use, but does not expect these ASUs to materially impact the Company’s net income, financial position or cash flows. In January 2017, the FASB issued ASU 2017-04, “Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment” (“ASU 2017-04”). ASU 2017-04 eliminates Step 2 along with amending other parts of the goodwill impairment test. Under ASU 2017-04, an entity should perform its annual or interim goodwill impairment test by comparing the fair value of the reporting unit with its carrying amount, and should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value with the loss not exceeding the total amount of goodwill allocated to that reporting unit. ASU 2017-04 is effective for annual periods beginning after December 15, 2019, and interim periods therein with early adoption permitted for interim or annual goodwill impairment tests performed after January 1, 2017. At adoption, this update will require a prospective approach. The Company is currently evaluating this ASU to determine its impact on the Company’s operations, financial position, cash flows and disclosures. Other accounting standards that have been issued or proposed by FASB that do not require adoption until a future date are not expected to have a material impact on the financial statements upon adoption. The Company does not discuss recent pronouncements that are not anticipated to have an impact on or are unrelated to its financial condition, results of operations, cash flows or disclosures. |
Inventories
Inventories | 9 Months Ended |
Sep. 30, 2017 | |
Inventory Disclosure [Abstract] | |
Inventories | 3. Inventories The components of inventories are as follows (in thousands of Korean Won): September 30, 2017 December 31, 2016 Finished goods ₩ - ₩ 98,100 Raw materials 51,800 133,190 51,800 231,290 Less: Inventory reserve - - Total, net ₩ 51,800 ₩ 231,290 Inventories are stated at the lower of cost, determined by the first-in, first-out (“FIFO”) method, or net realizable value. If the cost of the inventories exceeds their net realizable value, provisions are recorded to write down excess inventory to its net realizable value. |
Debt
Debt | 9 Months Ended |
Sep. 30, 2017 | |
Debt Disclosure [Abstract] | |
Debt | 4. Debt Short-term Borrowings As of September 30, 2017, the Company had ₩ 3,069,468 thousand of short-term borrowings from 4 financial institutions, with a weighted-average interest rate of 4.37% and maturities ranging from 34 days to 365 days. As of December 31, 2016, the Company had ₩ 2,632,725 thousand of short-term borrowings from 4 financial institutions, with a weighted-average interest rate of 5.31% and maturities ranging from 9 days to 307 days. The estimated fair values of the short-term borrowings approximate their carrying values. Long-term Debt The components of the long-term debt, including the current portion, and the associated interest rates are as follows (in thousands of Korean Won): Interest Rate September 31, 2017 December 31, 2016 Loans from financial institutions 4.39 - 5.90 % ₩ 960,000 ₩ 850,000 Less: current portion (203,000 ) (120,000 ) Total long-term debt ₩ 757,000 ₩ 730,000 As of September 30, 2017 and for the year-ended December 31, 2016, the estimated fair value of the long-term debt, including the current portion, were ₩ 960,000 thousand and ₩ 850,000 thousand, respectively. These estimated fair values are based on Level 2 inputs. Future principal payments of the Company’s long-term debt for each of the next five years and thereafter are summarized in the following table (in thousands of Korean Won): Year Ending December 31, 2017 ₩ 30,000 2018 245,240 2019 332,260 2020 233,160 2021 119,340 Total ₩ 960,000 As of September 30, 2017, and for the year-ended December 31, 2016, the Company was in compliance with the financial covenant in credit agreements as defined in the credit agreements. |
Redeemable Convertible Preferre
Redeemable Convertible Preferred Stock | 9 Months Ended |
Sep. 30, 2017 | |
Temporary Equity Disclosure [Abstract] | |
Redeemable Convertible Preferred Stock | 6. Redeemable Convertible Preferred Stock On May 17, 2016, the Company’s subsidiary, e-Marine Co., Ltd. entered into a securities purchase agreement with an accredited investor to place 12,800 redeemable convertible preferred shares (the “Preferred Stock”), par value ₩ 10,000 per share, in the aggregate principal amount of ₩ 640,000 thousand (the “Transaction”). The proceeds from sales of the Preferred Stock, net of issuance cost of ₩ 3,993 thousand, were received in full on June 8, 2016. Once issued, the Preferred Stock had the following rights, privileges and preferences: ● Dividends. Holders of the Preferred Stock were entitled to receive dividends of 1% of par value of the common stock, as declared by the board of directors and had participation rights. ● Liquidation. In the event of a liquidation of the Company, including a change of control transaction, holders of the Preferred Stock were entitled to be paid an amount equal to their investment amount before any payment would have been made to any other holder of the Company’s common stock. ● Voting. Holders of the Preferred Stock held the same voting rights as those of the common stock. ● Conversion. The Preferred Stock was convertible into shares of common stock at any time at the holder’s election. Shares of the Preferred Stock automatically converted into common stock one year after the date of issuance unless, at the option of the holder, the Preferred Stock was redeemed before such date. The Preferred Stock is convertible on a one-to-one basis into common stock. ● Redemption. The Preferred Stock was redeemable at its issuance cost plus a redemption premium of 8% of interest on such cost if the Company failed to list its shares on a securities exchange within 11-months after the date of issuance at the holder’s election. On May 30, 2017, all redeemable convertible preferred shares were converted into 12,800 shares of common stock of e-Marine Co. Ltd. On July 25, 2017, as a result of the Share Exchange, the Company acquired all of the issued and outstanding equity interests of e-Marine Co. Ltd., and e-Marine Co., Ltd. became the Company’s wholly-owned subsidiary. |
Stockholders' Equity
Stockholders' Equity | 9 Months Ended |
Sep. 30, 2017 | |
Equity [Abstract] | |
Stockholders' Equity | 7. Stockholders’ Equity (Deficit) Authorized and Outstanding Capital Stock We have authorized 300,000,000 shares of common stock, par value $0.001, of which 21,961,317 are currently issued and outstanding. We currently have 10,000,000 shares of “blank check” preferred stock, par value $0.001 per share. There are currently no shares of preferred stock outstanding. Common Stock The holders of our common stock have equal ratable rights to dividends from funds legally available therefore, when, as and if declared by the Board of Directors and are entitled to share ratably in all of our assets available for distribution to holders of common stock upon the liquidation, dissolution or winding up of our affairs. Holders of shares of common stock do not have preemptive, subscription or conversion rights. Holders of shares of common stock are entitled to one vote per share on all matters which stockholders are entitled to vote upon at all meetings of stockholders. The holders of shares of common stock do not have cumulative voting rights, which would allow the holders of more than 50% of our outstanding voting securities to elect all of our directors. The payment of dividends, if any, in the future rests within the sole discretion of our Board of Directors and will depend, among other things, upon our earnings, capital requirements and financial condition, as well as other relevant factors. We have not paid any dividends since our inception and do not intend to pay any cash dividends in the foreseeable future, but intend to retain all earnings, if any, for use in our business. Blank Check Preferred Stock Our Board of Directors will be authorized, subject to any limitations prescribed by law, without further vote or action by our stockholders, to issue from time to time shares of preferred stock in one or more series. Each series of preferred stock will have the number of shares, designations, preferences, voting powers, qualifications and special or relative rights or privileges as shall be determined by our Board of Directors, which may include, among other things, dividend rights, voting rights, liquidation preferences, conversion rights and preemptive rights. Warrants As of September 30, 2017, we have outstanding warrants to purchase up to an aggregate of 9,400,000 shares of common stock, par value $0.001 per share, for a period of three (3) years from the date of issuance, July 25, 2017, at an exercise price of $0.60 per share, subject to adjustments as set forth in the warrant. We also have outstanding warrants to purchase up to an aggregate of 1,100,000 shares of common stock, par value $0.001 per share, for a period of three (3) years from the date of issuance, July 25, 2017, at an exercise price of $0.08 per share, subject to adjustments as set forth in the warrant. The Company may issue warrants to non-employees in capital raising transactions or for services. In accordance with guidance in ASC Topic 718, the cost of warrants issued to non-employees is measured on the grant date based on the fair value. The fair value is determined using the Black-Scholes option pricing model. The resulting amount is charged to expense on the straight-line basis over the period in which the Company expects to receive the benefit, which is generally the vesting period. During the nine months ended September 30, 2017, ₩ 620,994 was charged to expense. Private Placement Offering On July 25, 2017, Pollex entered into a subscription agreement (the “Subscription Agreement”) with selected accredited investors (each, an “Investor” and, collectively, the “Investors”). Pursuant to the terms of the Subscription Agreement, Pollex offered in a private placement (the “Offering”) $2,250,000 of units (each, a “Unit” and, collectively, the “Units”). Each Unit has a purchase price of $0.50 and consisted of (i) one (1) share of Pollex’s common stock, par value $0.001 per share (the “Shares”); and (ii) warrants to purchase two and one-half (2.5) shares of Pollex’s common stock (each, a “Warrant” and, collectively, the “Warrants”). The Warrants are exercisable for a period of three (3) years from the date of issuance at an exercise price of $0.60 per share, subject to adjustment as provided in the agreement evidencing the Warrants. The Shares underlying the Warrants may hereinafter be referred to as the “Warrant Shares”. The Offering closed on July 25, 2017 (the “Closing”). At the Closing, Pollex received subscriptions for the full Offering of $2,250,000, with gross proceeds of $1,765,000 (approximately ₩ 2,009,844 thousand) being received by Pollex as of such date. Pollex issued a total of 3,530,000 Shares and 8,825,000 Warrants to purchase up to 8,825,000 shares of Pollex’s common stock. It is anticipated that proceeds for the remaining $485,000 of Units subscribed for will be funded, in two tranches, on or before November 30, 2017, at which time Pollex will issue to the relevant Investor an aggregate of 970,000 Shares and Warrants to purchase 2,425,000 Shares. Since the Closing until September 30, 2017, the Company received gross proceeds in the amount of $115,000 (approximately ₩ 129,963 thousand), representing a portion of the remaining subscription of gross proceeds were received additionally and are reported as Stock subscriptions within stockholders’ deficit. Consulting Agreement On July 25, 2017, the Company entered into a consulting agreement (the “Consulting Agreement”) with Peach Management LLC, a limited liability company organized under the laws of the Commonwealth of Puerto Rico (“Consultant”), for a term of twenty four months, effective as of July 25, 2017 (the “Term”). Pursuant to the terms of the Consulting Agreement, Consultant will assist the Company with introductions to investor relation firms located within and outside the United States to develop and implement capital markets messaging reflected in press releases, shareholder letters, PowerPoint presentations, social media and traditional media (the “Services”) during the Term. In consideration of the Services to be rendered by Consultant, the Company shall issue to Consultant warrants to purchase up to 1,100,000 shares of the Company’s common stock, par value $0.001 per share (the “Consultant Warrants”). The Consultant Warrants shall have a term of three years and have an exercise price equal to $0.08 per share. In connection with the issuance of these warrants, the Company charged approximately ₩ 620,994 thousand of professional fees to expense. The fair value of stock warrants was determined at the date of grant using the Black-Scholes option pricing model. The Black-Scholes option model requires management to make various estimates and assumptions, including expected term, expected volatility, risk-free rate, and dividend yield. The expected term represents the period of time that stock-based compensation awards granted are expected to be outstanding and is estimated based on considerations including the vesting period, contractual term and anticipated employee exercise patterns. Expected volatility is based on the historical volatility of the Company’s stock. The risk-free rate is based on the U.S. Treasury yield curve in relation to the contractual life of stock-based compensation instrument. The dividend yield assumption is based on historical patterns and future expectations for the Company dividends. The following table includes the estimates and assumptions used in the Black Scholes model: Stock price $ 0.57 Exercise price $ 0.08 Expected term 3 Expected volatility 70.22 % Annual risk-free rate 1.53 % Dividend yield 0.00 % Other Issuances In connection with the Exchange Agreement and Subscription Agreement, the Company issued to certain consultants an aggregate of 2,200,000 shares of the Company’s common stock, par value $0.001 per share. The fair value of such shares issued is approximately ₩ 1,417,159 thousand and is recorded as additional paid in capital. |
Grant Income
Grant Income | 9 Months Ended |
Sep. 30, 2017 | |
Grant Income | |
Grant Income | 8. Grant Income During the nine months ended September 30, 2017, the Company received ₩ 310,882 thousand of grants awarded from the Korean government. The grants compensated the Company for research and development of Smart RMS for maritime vessels. The value of unused grants is approximately ₩ 23,736 thousand and is recorded in the other current liabilities account on the consolidated balance sheet. |
Related Party Transaction
Related Party Transaction | 9 Months Ended |
Sep. 30, 2017 | |
Related Party Transactions [Abstract] | |
Related Party Transaction | 9. Related Party Transaction As of September 30, 2017 and December 31, 2016, the Company loaned ₩ 159,866 thousand and ₩ 164,000 thousand, respectively, to the Company’s officers and employees. The loans receivable bear interest of 6.9% and are redeemable on demand. As of September 30, 2017 and December 31, 2016, the Company’s officers and employees advanced the Company ₩ 91,340 thousand and ₩ 221,505 thousand, respectively, during the normal course of business. The loans payable bear interest of 4.6% to 6.9% and are payable in December 2018. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 10. Commitments and Contingencies Maintenance Bond In connection with service agreements with certain customers, the Company is required to provide a maintenance bond to guarantee the maintenance for a specified period of time following completion of service. The Company purchases maintenance bonds from third-party guarantors and is not exposed to contingent liabilities. Legal Proceedings From time to time the Company may be named in claims arising in the ordinary course of business. Currently, no legal proceedings, government actions, administrative actions, investigations or claims are pending against the Company or involve the Company that, in the opinion of management, could reasonably be expected to have a material adverse effect on its business and financial condition. Share Exchange Agreement On July 25, 2017, the Company entered into a share exchange agreement (the “Exchange Agreement”) with Pollex, Inc., a Nevada corporation (“Pollex”), and the shareholders of the Company (the “Shareholders”), pursuant to which the Shareholders assigned, transferred and delivered, free and clear of all liens, 100% of the issued and outstanding shares of common stock of the Company, representing 100% of the equity interest in the Company (the “Shares”) to Pollex in exchange for 14,975,000 restricted shares of common stock of Pollex (the “Exchange Shares”). The transaction closed on July 25, 2017 (the “Closing Date”). As a result, the Company became a wholly-owned subsidiary of Pollex, and the Shareholders acquired a controlling interest in Pollex (the “Share Exchange”). For accounting purposes, the Share Exchange was treated as an acquisition of Pollex and a recapitalization of the Company. The Company is the accounting acquirer, and the results of its operations carryover. Accordingly, the operations of Pollex are not carried over and have been adjusted to ₩ 0. The assets and liabilities of the Company have been brought forward at its book value and no goodwill has been recognized. |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2017 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 11. Income Taxes The Company accounts for income taxes pursuant to the provision of ASC 740-10, “Accounting for Income Taxes” (“ASC 740-10”), which requires, among other things, an asset and liability approach to calculating deferred income taxes. The asset and liability approach requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of assets and liabilities. A valuation allowance is provided to offset any net deferred tax assets for which management believes it is more likely than not that the net deferred tax asset will not be realized. Tax positions that meet the more likely than not recognition threshold are measured at the largest amount of tax benefit that is more than 50 percent likely of being realized upon settlement with the applicable taxing authority. The Company follows the provision of ASC 740-10 related to Accounting for Uncertain Income Tax Positions. When tax returns are filed, there may be uncertainty about the merits of positions taken or the amount of the position that would be ultimately sustained. In accordance with the guidance of ASC 740-10, the benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. The portion of the benefit associated with tax positions taken that exceed the amount measured as described above should be reflected as a liability for uncertain tax benefits in the accompanying balance sheet along with any associated interest and penalties that would be payable to the taxing authorities upon examination. The Company believes its tax positions are all more likely than not to be upheld upon examination. As such, the Company has not recorded a liability for uncertain tax benefits. |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2017 | |
Subsequent Events [Abstract] | |
Subsequent Events | 12. Subsequent Events Management has evaluated subsequent events occurring after year end and through the date the financial statements were available to be issued between September 30, 2017 and November 21, 2017. No significant matters were identified impacting the Company’s financial position or requiring further disclosure. |
Summary of Significant Accoun18
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2017 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and pursuant to the instructions to Form 10-Q and Article 8 of Regulation S-X of the Securities and Exchange Commission (“SEC”) and on the same basis as the Company prepares its annual audited financial statements. In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments, consisting of normal recurring adjustments, unless otherwise indicated, considered necessary for a fair presentation of such interim results. The results for the condensed consolidated statements of operations are not necessarily indicative of results to be expected for the year ending December 31, 2017 or for any future interim period. The condensed consolidated balance sheet at September 30, 2017 has been derived from unaudited financial statements; however, it does not include all of the information and notes required by GAAP for complete financial statements. The accompanying condensed consolidated financial statements should be read in conjunction with the financial statements for the year ended December 31, 2016, and notes thereto included in the Company’s current report on Form 8-K/A filed on October 6, 2017. |
Use of Estimates and Assumptions | Use of Estimates and Assumptions The preparation of financial statements in accordance with GAAP 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. Estimates are used in determining, among other items, allowance for doubtful accounts, inventory reserve, impairment testing for goodwill and other intangible assets, pension liabilities, income taxes and contingencies. Actual results could differ from those estimates. These financial statements have been prepared on the basis of a going concern which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The Company adopted Accounting Standards Codification (“ASC”) 820, “Fair Value Measurements and Disclosures”, for assets and liabilities measured at fair value on a recurring basis. ASC 820 establishes a common definition for fair value to be applied to existing GAAP that requires the use of fair value measurements, establishes a framework for measuring fair value and expands disclosure about such fair value measurements. The adoption of ASC 820 did not have an impact on the Company’s financial position or operating results, but did expand certain disclosures. ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Additionally, ASC 820 requires the use of valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. These inputs are prioritized below: Level 1: Observable inputs such as quoted market prices in active markets for identical assets or liabilities Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data Level 3: Unobservable inputs for which there is little or no market data, which require the use of the reporting entity’s own assumptions. Under the standard, financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The carrying values reported in balance sheets for current financial assets and current financial liabilities approximate their estimated fair market values based on the short-term maturity of these instruments. |
Goodwill and Other Intangible Assets | Goodwill and Other Intangible Assets The Company accounts for goodwill and intangible assets in accordance with ASC 350 “Intangibles - Goodwill and Other”. ASC 350 requires that goodwill and other intangible assets with indefinite lives be tested for impairment annually or on an interim basis if events or circumstances indicate that the fair value of an asset has decreased below its carrying value. Goodwill represents the excess of the purchase price over the fair value of net assets acquired in business combinations. ASC 350 requires that goodwill be tested for impairment at the reporting unit level (operating segment or one level below an operating segment) on an annual basis and between annual tests when circumstances indicate that the recoverability of the carrying amount of goodwill may be in doubt. Application of the goodwill impairment test requires judgment, including the identification of reporting units, assigning assets and liabilities to reporting units, assigning goodwill to reporting units, and determining the fair value. Significant judgment is required to estimate the fair value of reporting units including estimating future cash flows, determining appropriate discount rates and other assumptions. Changes in these estimates and assumptions could materially affect the determination of fair value and/or goodwill impairment. The Company’s business includes one goodwill reporting unit. The Company annually reviews goodwill for possible impairment by comparing the fair value of the reporting unit to reporting unit’s carrying amount. If the fair value exceeds the carrying amount, no goodwill impairment is deemed to exist. If the fair value does not exceed the carrying amount, goodwill is tested for impairment and written down to its implied fair value if it is determined to be impaired. The Company performs its annual goodwill impairment test at December 31 on an annual basis. Amortization is computed utilizing the straight-line method over the estimated useful life of 5 years for industrial property rights, software and others. Amortizable intangible assets are only evaluated for impairment upon a significant change in the operating or macroeconomic environment. If an evaluation of the undiscounted future cash flows indicates impairment, the asset is written down to its estimated fair value, which is based on its discounted future cash flows. Based upon its qualitative assessment, the Company determined that intangible assets were not impaired on September 30, 2017 and December 31, 2016, respectively. |
Revenue Recognition | Revenue Recognition Revenue recognition for multiple-element arrangements requires judgment to determine if multiple elements exist, whether elements can be accounted for as separate units of accounting and, if so, the fair value of each element. The Company will recognize revenue for the sale of goods when: ● Persuasive evidence of an arrangement exists: ● Delivery has occurred; ● Price is fixed or determinable; and ● Collectability is reasonably assured. Revenue from services is recognized by reference to the stage of performance of the services when the Company can reliably measure the amount of revenue and the recovery of the consideration is considered probable. The Company follows the provisions of the Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic (“ASC”) 605, “Revenue Recognition”, which includes the guidelines of Staff Accounting Bulletin No. 104 as described above. |
Income Taxes | Income Taxes The Company accounts for income taxes pursuant to the provision of ASC 740-10, “Accounting for Income Taxes” (“ASC 740-10”), which requires, among other things, an asset and liability approach to calculating deferred income taxes. The asset and liability approach requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of assets and liabilities. A valuation allowance is provided to offset any net deferred tax assets for which management believes it is more likely than not that the net deferred tax asset will not be realized. Tax positions that meet the more likely than not recognition threshold are measured at the largest amount of tax benefit that is more than 50 percent likely of being realized upon settlement with the applicable taxing authority. The Company follows the provision of ASC 740-10 related to Accounting for Uncertain Income Tax Positions. When tax returns are filed, there may be uncertainty about the merits of positions taken or the amount of the position that would be ultimately sustained. In accordance with the guidance of ASC 740-10, the benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. The portion of the benefit associated with tax positions taken that exceed the amount measured as described above should be reflected as a liability for uncertain tax benefits in the accompanying balance sheet along with any associated interest and penalties that would be payable to the taxing authorities upon examination. The Company believes its tax positions are all more likely than not to be upheld upon examination. As such, the Company has not recorded a liability for uncertain tax benefits. |
Functional and Reporting Currency | Functional and Reporting Currency The Company uses Korean Won as its functional currency since the majority of the Company’s revenues, expenses, assets and liabilities are recognized in the Republic of Korea and the reporting currency is the same as the functional currency. |
Earnings (Loss) Per Share | Earnings (Loss) per Share Earnings (loss) per share are calculated in accordance with ASC 260 “Earnings Per Share,” which provides for the calculation of “basic” and “diluted” earnings (loss) per share. Basic earnings (loss) per share includes no dilution and is computed by dividing net earnings by the weighted average number of common shares outstanding for the period. Diluted earnings (loss) per share reflect, in periods in which they have a dilutive effect, the effect of common shares issuable upon exercise of stock options. The following securities were not included in the diluted net loss per share calculation because their effect was anti-dilutive for the periods presented. September 30, 2017 September 30, 2016 Redeemable convertible preferred stock - 12,800 Common stock warrants 8,825,000 - Potential dilutive shares 8,825,000 12,800 These shares were excluded due to their antidilutive effect. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In February 2016, Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842). FASB issued ASU 2016-02 to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. Certain qualitative and quantitative disclosures are required, as well as a retrospective recognition and measurement of impacted leases. The new ASU is effective for fiscal years and interim periods within those years beginning after December 15, 2018, with early adoption permitted. The Company is currently evaluating this ASU to determine its impact on the Company’s operations, financial position, cash flows and disclosures. In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606). This ASU is a comprehensive new revenue recognition model that requires a company to recognize revenue to depict the transfer of goods or services to a customer at an amount that reflects the consideration it expects to receive in exchange for those goods or services. In August 2015, FASB issued ASU 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, which deferred the effective date of ASU 2014-09 to reporting periods beginning after December 15, 2017, with early adoption permitted for reporting periods beginning after December 15, 2016. Subsequently, FASB issued ASUs in 2016 containing implementation guidance related to ASU 2014-09, including: ASU 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net) , which is intended to improve the operability and understandability of the implementation guidance on principal versus agent considerations; ASU 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing , which is intended to clarify two aspects of Topic 606: identifying performance obligations and the licensing implementation guidance; and ASU 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients , which contains certain provision and practical expedients in response to identified implementation issues. The Company is planning to adopt ASU 2014-09 and related ASUs on February 1, 2018. Companies may use either a full retrospective or a modified retrospective approach to adopt these ASUs. The Company is currently evaluating these ASUs, including which transition approach to use, but does not expect these ASUs to materially impact the Company’s net income, financial position or cash flows. In January 2017, the FASB issued ASU 2017-04, “Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment” (“ASU 2017-04”). ASU 2017-04 eliminates Step 2 along with amending other parts of the goodwill impairment test. Under ASU 2017-04, an entity should perform its annual or interim goodwill impairment test by comparing the fair value of the reporting unit with its carrying amount, and should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value with the loss not exceeding the total amount of goodwill allocated to that reporting unit. ASU 2017-04 is effective for annual periods beginning after December 15, 2019, and interim periods therein with early adoption permitted for interim or annual goodwill impairment tests performed after January 1, 2017. At adoption, this update will require a prospective approach. The Company is currently evaluating this ASU to determine its impact on the Company’s operations, financial position, cash flows and disclosures. Other accounting standards that have been issued or proposed by FASB that do not require adoption until a future date are not expected to have a material impact on the financial statements upon adoption. The Company does not discuss recent pronouncements that are not anticipated to have an impact on or are unrelated to its financial condition, results of operations, cash flows or disclosures. |
Summary of Significant Accoun19
Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Accounting Policies [Abstract] | |
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share | The following securities were not included in the diluted net loss per share calculation because their effect was anti-dilutive for the periods presented. September 30, 2017 September 30, 2016 Redeemable convertible preferred stock - 12,800 Common stock warrants 8,825,000 - Potential dilutive shares 8,825,000 12,800 |
Inventories (Tables)
Inventories (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventories | The components of inventories are as follows (in thousands of Korean Won): September 30, 2017 December 31, 2016 Finished goods ₩ - ₩ 98,100 Raw materials 51,800 133,190 51,800 231,290 Less: Inventory reserve - - Total, net ₩ 51,800 ₩ 231,290 |
Debt (Tables)
Debt (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Debt Disclosure [Abstract] | |
Schedule of Long-term Debt | The components of the long-term debt, including the current portion, and the associated interest rates are as follows (in thousands of Korean Won): Interest Rate September 31, 2017 December 31, 2016 Loans from financial institutions 4.39 - 5.90 % ₩ 960,000 ₩ 850,000 Less: current portion (203,000 ) (120,000 ) Total long-term debt ₩ 757,000 ₩ 730,000 |
Schedule of Future Principal Payments of Long Term Debt | Future principal payments of the Company’s long-term debt for each of the next five years and thereafter are summarized in the following table (in thousands of Korean Won): Year Ending December 31, 2017 ₩ 30,000 2018 245,240 2019 332,260 2020 233,160 2021 119,340 Total ₩ 960,000 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Equity [Abstract] | |
Schedule of Estimates and Assumptions Used | The following table includes the estimates and assumptions used in the Black Scholes model: Stock price $ 0.57 Exercise price $ 0.08 Expected term 3 Expected volatility 70.22 % Annual risk-free rate 1.53 % Dividend yield 0.00 % |
Description of Business and O23
Description of Business and Organization (Details Narrative) - Share Exchange Agreement [Member] - e-Marine Co., Ltd [Member] | Jul. 25, 2017shares |
Equity interest, percentage | 100.00% |
Restricted Stock [Member] | |
Equity interest shares exchange during the period | 14,975,000 |
Summary of Significant Accoun24
Summary of Significant Accounting Policies (Details Narrative) | 9 Months Ended |
Sep. 30, 2017 | |
Accounting Policies [Abstract] | |
Estimated useful life of industrial property rights, software and others | 5 years |
Summary of Significant Accoun25
Summary of Significant Accounting Policies - Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share (Details) - shares | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Potential dilutive shares | 8,825,000 | 12,800 |
Redeemable Convertible Preferred Stock [Member] | ||
Potential dilutive shares | 12,800 | |
Common Stock Warrants [Member] | ||
Potential dilutive shares | 8,825,000 |
Inventories - Schedule of Inven
Inventories - Schedule of Inventories (Details) - KRW (₩) ₩ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Inventory Disclosure [Abstract] | ||
Finished goods | ₩ 98,100 | |
Raw materials | 51,800 | 133,190 |
Inventory, gross | 51,800 | 231,290 |
Less: Inventory reserve | ||
Total, net | ₩ 51,800 | ₩ 231,290 |
Debt (Details Narrative)
Debt (Details Narrative) - KRW (₩) | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | |
Short-term borrowings | ₩ 436,744,000 | ||
4 Financial Institutions [Member] | |||
Short-term borrowings | ₩ 3,069,468 | ₩ 2,632,725 | |
Debt Weighted average interest rate | 4.37% | 5.31% | |
Long term debt estimated fair value | ₩ 960,000 | ₩ 850,000 | |
4 Financial Institutions [Member] | Start Date [Member] | |||
Debt maturity term | 34 days | 9 days | |
4 Financial Institutions [Member] | End Date [Member] | |||
Debt maturity term | 365 days | 307 days |
Debt - Schedule of Long Term De
Debt - Schedule of Long Term Debt (Details) - KRW (₩) ₩ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Loans from financial institutions | ₩ 960,000 | ₩ 850,000 |
Less: current portion | (203,000) | (120,000) |
Total long-term debt | ₩ 757,000 | ₩ 730,000 |
Minimum [Member] | ||
Debt, Interest Rate | 4.39% | |
Maximum [Member] | ||
Debt, Interest Rate | 5.90% |
Debt - Schedule of Future Princ
Debt - Schedule of Future Principal Payments of Long Term Debt (Details) - KRW (₩) ₩ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Debt Disclosure [Abstract] | ||
2,017 | ₩ 30,000 | |
2,018 | 245,240 | |
2,019 | 332,260 | |
2,020 | 233,160 | |
2,021 | 119,340 | |
Total | ₩ 960,000 | ₩ 850,000 |
Redeemable Convertible Prefer30
Redeemable Convertible Preferred Stock (Details Narrative) - KRW (₩) ₩ / shares in Units, ₩ in Thousands | May 17, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | May 30, 2017 | Dec. 31, 2016 |
Preferred stock principal amount | ₩ 636,007 | ||||
Proceeds from sale of preferred stock | ₩ 636,007 | ||||
Redeemable Convertible Preferred Stock [Member] | |||||
Number of preferred shares converted into common shares | 12,800 | ||||
Securities Purchase Agreement [Member] | Accredited Investor [Member] | Redeemable Convertible Preferred Stock [Member] | |||||
Number of preferred stock shares sold | 12,800 | ||||
Preferred stock par value per share | ₩ 10,000 | ||||
Preferred stock principal amount | ₩ 640,000 | ||||
Proceeds from sale of preferred stock | ₩ 3,993 | ||||
Preferred stock, dividend percentage | 1.00% | ||||
Preferred stock, redemption | The Preferred Stock was redeemable at its issuance cost plus a redemption premium of 8% of interest on such cost if the Company failed to list its shares on a securities exchange within 11-months after the date of issuance at the holders election. | ||||
Preferred stock voting rights | Holders of the Preferred Stock held the same voting rights as those of the common stock | ||||
Preferred stock conversion description | The Preferred Stock was convertible into shares of common stock at any time at the holders election. Shares of the Preferred Stock automatically converted into common stock one year after the date of issuance unless, at the option of the holder, the Preferred Stock was redeemed before such date. The Preferred Stock is convertible on a one-to-one basis into common stock. |
Stockholders' Equity (Details N
Stockholders' Equity (Details Narrative) | Jul. 25, 2017KRW (₩)shares | Jul. 25, 2017USD ($)$ / sharesshares | Sep. 30, 2017KRW (₩)shares | Sep. 30, 2017USD ($)$ / sharesshares | Sep. 30, 2016KRW (₩) | Dec. 31, 2016$ / sharesshares |
Common stock, shares authorized | 100,000,000 | 300,000,000 | ||||
Common stock, par value | $ / shares | $ 0.001 | $ 0.001 | ||||
Common stock, shares issued | 21,731,317 | 17,072 | ||||
Common stock, shares outstanding | 21,731,317 | 17,072 | ||||
Common stock voting rights | Holders of shares of common stock are entitled to one vote per share on all matters which stockholders are entitled to vote upon at all meetings of stockholders. The holders of shares of common stock do not have cumulative voting rights, which means that the holders of more than 50% of our outstanding voting securities can elect all of our directors. | Holders of shares of common stock are entitled to one vote per share on all matters which stockholders are entitled to vote upon at all meetings of stockholders. The holders of shares of common stock do not have cumulative voting rights, which means that the holders of more than 50% of our outstanding voting securities can elect all of our directors. | ||||
Number of outstanding warrants to purchase common stock | 8,825,000 | |||||
Warrants issued for professional service | ₩ | ₩ 620,994,000 | |||||
Proceeds from private placement | ₩ | 1,864,683,000 | |||||
Gross proceeds from subscriptions | ₩ | ₩ 2,009,844 | |||||
Number of common stock shares issued | 3,530,000 | 3,530,000 | ||||
Number of common stock shares issued for services | ₩ | ||||||
On or Before November 30, 2017 [Member] | Investor [Member] | ||||||
Number of outstanding warrants to purchase common stock | 2,425,000 | |||||
Number of common stock shares issued | 970,000 | 970,000 | ||||
Since the Closing until September 30, 2017 [Member] | ||||||
Gross proceeds from subscriptions | ₩ | ₩ 129,963 | |||||
USD [Member] | ||||||
Proceeds from subscriptions | $ | $ 2,250,000 | |||||
Gross proceeds from subscriptions | $ | $ 1,765,000 | |||||
USD [Member] | On or Before November 30, 2017 [Member] | Investor [Member] | ||||||
Proceeds from subscriptions | $ | $ 485,000 | |||||
USD [Member] | Since the Closing until September 30, 2017 [Member] | ||||||
Gross proceeds from subscriptions | $ | $ 115,000 | |||||
Consultants [Member] | ||||||
Common stock, par value | $ / shares | $ 0.001 | |||||
Number of common stock shares issued for services, shares | 2,200,000 | 2,200,000 | ||||
Number of common stock shares issued for services | ₩ | ₩ 1,417,159 | |||||
Subscription Agreement [Member] | Investor [Member] | ||||||
Common stock, par value | $ / shares | $ 0.001 | |||||
Number of outstanding warrants to purchase common stock | 2.5 | |||||
Warrant exercise price | $ / shares | $ 0.60 | |||||
Proceeds from private placement | $ | $ 2,250,000 | |||||
Purchase price of each unit | $ / shares | $ 0.50 | |||||
Warrants exercisable, term | 3 years | 3 years | ||||
Consulting Agreement [Member] | Peach Management LLC [Member] | ||||||
Common stock, par value | $ / shares | $ 0.001 | |||||
Number of outstanding warrants to purchase common stock | 1,100,000 | |||||
Warrants, term | 3 years | 3 years | ||||
Warrant exercise price | $ / shares | $ 0.08 | |||||
Warrants issued for professional service | ₩ | ₩ 620,994 | |||||
Capital Stock [Member] | ||||||
Common stock, shares authorized | 300,000,000 | |||||
Common stock, par value | $ / shares | $ 0.001 | |||||
Common stock, shares issued | 21,961,317 | |||||
Common stock, shares outstanding | 21,961,317 | |||||
Blank Check Preferred Stock [Member] | ||||||
Preferred stock, shares authorized | 10,000,000 | |||||
Preferred stock, par value | $ / shares | $ 0.001 | |||||
Preferred stock, shares outstanding | ||||||
Warrants [Member] | ||||||
Common stock, par value | $ / shares | $ .001 | |||||
Number of outstanding warrants to purchase common stock | 9,400,000 | |||||
Warrants, term | 3 years | 3 years | ||||
Warrant exercise price | $ / shares | $ 0.60 | |||||
Warrants One [Member] | ||||||
Common stock, par value | $ / shares | $ 0.001 | |||||
Number of outstanding warrants to purchase common stock | 1,100,000 | |||||
Warrants, term | 3 years | 3 years | ||||
Warrant exercise price | $ / shares | $ 0.08 |
Stockholders' Equity - Schedule
Stockholders' Equity - Schedule of Assumptions Used (Details) | 9 Months Ended |
Sep. 30, 2017$ / shares | |
Equity [Abstract] | |
Stock price | $ .57 |
Exercise price | $ .08 |
Expected term | 3 years |
Expected volatility | 70.22% |
Annual risk-free rate | 1.53% |
Dividend yield | 0.00% |
Grant Income (Details Narrative
Grant Income (Details Narrative) ₩ in Thousands | 9 Months Ended |
Sep. 30, 2017KRW (₩) | |
Grant Income | |
Proceeds from grants awarded | ₩ 310,882 |
Unused grants value | ₩ 23,736 |
Related Party Transaction (Deta
Related Party Transaction (Details Narrative) - KRW (₩) ₩ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Due from related parties | ₩ 159,866 | ₩ 164,000 |
Due to related party | ₩ 91,340 | ₩ 221,505 |
Officers and Employees [Member] | ||
Loans receivable interest rate | 6.90% | |
Officers and Employees [Member] | Minimum [Member] | ||
Loans payable interest rate | 4.60% | |
Officers and Employees [Member] | Maximum [Member] | ||
Loans payable interest rate | 6.90% |
Commitments and Contingencies (
Commitments and Contingencies (Details Narrative) - Share Exchange Agreement [Member] - e-Marine Co., Ltd [Member] | Jul. 25, 2017shares |
Equity interest, percentage | 100.00% |
Restricted Stock [Member] | |
Equity interest shares exchange during the period | 14,975,000 |