Our Company utilizes ASC Topic 740 “Income Taxes”, which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that were included in the financial statements or tax returns. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each period end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.
As a distributor of insurance products, we derive our revenue primarily from commissions and fees paid by insurance companies, typically calculated as a percentage of premiums paid by our customers to the insurance companies in among Taiwan, PRC and Hong Kong. We generate revenue primarily through our sales force, which consists of individual sales agents in our distribution and service network. For the years ended December 31, 2016 and 2015, the revenue generated respectively from Taiwan, PRC and Hong Kong was as follows:
b) The sales of the products of Taiwan Life Insurance Co., Ltd. (“Taiwan Life”) increased in 2015 because Taiwan Life has its long-lasting soundly reputation in the local Taiwan market. Many of its insurance products were among the best seller of the company’s items. In fourth quarter of 2014, Taiwan Life launched a newly designed insurance product focuses on the coverage of the handicap medical care that provides the solution for the absence of the coverage from the government funded health insurance; in April, 2015, Taiwan Life launched a newly designed life-time life insurance product, which bears variable interest rate and coverages, and the subject product, given its flexibility to address diverse needs, gains the popularity among the customers, leading to the higher sales compared with that for the year ended December 31, 2014.
On October 12, 2015, our Company entered into a loan agreement (“Loan A”) with Zhengxiong Huang. The Short-term Loan Agreement provided for a $70,000 loan to our Company. The Short-term Loan bore an interest rate of 1.5% per annum and the principal and interest were due on December 31, 2015. On December 31, 2015, our Company extended this loan agreement to December 31, 2016 with the same conditions. The entire amount of this Loan A and interest expense were paid off in May 2016.
On December 3, 2015, our Company entered into a loan agreement (“Loan B”) with Yuzhen Chen. The Short-term Loan Agreement provided for a $152,235 (NTD 5,000,000) loan to our Company. The Short-term Loan bore an interest rate of 1.5% per annum and the principal and interest were due on December 31, 2015. On December 31, 2015, our Company extended this loan agreement to December 31, 2016 with the same conditions. On January 13, 2016, our Company paid an amount of $46,582 (NTD 1,500,000) back. The remaining amount of this Loan B and interest expense were paid off in May 2016.
Our Company has operating leases for its offices. Rental expenses for the years ended December 31, 2016, 2015 and 2014 were $2,132,950, $1,735,521and $1,668,571, respectively. At December 31, 2016, total future minimum annual lease payments under operating leases were as follows, by years:
Law Enterprise is a holding company for its operating subsidiaries in Taiwan. Law Broker primarily engages in insurance brokerage and insurance agency service business across Taiwan, while Risk Management and Law Agent are not in operation. The Company operates its Taiwan business primarily through Law Broker.
On January 17 2014, the Company’s Board of Directors approved a change in its fiscal year end to December 31 from June 30.
In the fourth quarter of 2014, the shareholders of the Risk Management and Law Agent made the resolution to dissolve Risk Management and Law Agent, respectively, because those companies have not been in operation. The dissolution of Risk Management and Law Agent was approved by the Taiwan (R.O.C) Government on November 26, 2014 and on January 13, 2015, respectively. Abide by the law in Taiwan, the liquidator was appointed by the shareholders of the Risk Management and Law Agent and the liquidator shall complete the liquidation process no later than six months from the appointment date. Both Risk Management and Law Agent have completed the liquidation in April 2016.
As of December 31, 2016, 2015 and 2014, the Company’s accounts receivable from these companies were:
On October 24, 2016, the Company entered into a loan agreement (“Loan E”) with third party, Rich Fountain Limited (“RFL”), which was incorporated under the laws of Samoa. The Company provided a short-term loan amount of NTD 48,000,000 ($1,486,846) to RFL. The short-term loan bears an interest rate of 4.5% per annum and the principal and interest are due on April 23, 2017.
As of December 31, 2016 and 2015, the Company’s intangible assets consisted the following:
On February 13, 2015, CUIS and AHFL entered into an acquisition agreement with Mr. ChwanHau Li (the director of the Company), the selling shareholder of Genius Holdings Financial Limited. (Please see detail in Note 8).
On March 13, 2017, Law Broker and Ms. Chao entered into an Engagement Agreement, which is the amendment to Engagement Agreement dated May 10, 2016, disclosed in Note 16, to specify 1) Ms. Chao's pension calculation assumption and start date, and 2) the non-competition provision start date.