AF OCEAN INVESTMENT MANAGEMENT COMPANY
(Exact name of small business issuer as specified in its charter)
	FLORIDA		14-1877754
	(State or other jurisdiction of incorporation or organization)		(I.R.S. Tax. I.D. No.)
	501 Madison Ave. 14th Floor New York, New York		10022
	(Address of Principal Executive Offices)		(Zip Code)
Previous Address
(941) 685-6927
(Registrant's Telephone Number, Including Area Code)

Large accelerated filer.o	Accelerated filer.   o
Non-accelerated filer.  o (Do not check if a smaller reporting company)	Smaller reporting company.  þ

Class of Securities	Shares Outstanding
Common Stock, $0.01 par value	92,105,466

 

On December 23, 2013, AF Ocean Investment Management (Shanghai) Co., LTD., and ChinAmerica Andy Movie Entertainment Media Co. ("ChinAmerica") entered into a management agreement.  This agreement calls for AF Ocean to receive and maintain all money in an escrow like fashion on behalf of ChinAmerica. When the money is deposited into AF Ocean a ten percent (10%) management fee will be earned by for the collection and maintenance of the funds received.

As of March 31, 2014, payments totaling Eight Hundred Twenty Two Thousand Dollars Five Hundred ($822,500) (USD) have been received though AF Ocean Investment Management (Shanghai) Co., LTD on behalf of ChinAmerica.

As of period ended March 31, 2014 AF Ocean collected a total of $82,250 in management fees from ChinAmerica.

On February 3, 2014, the Company paid $107,788 to Island Capital Management as payment in full on the $100,000 ICM Note.

 

As of March 31, 2014 and December 31, 2013, the Company had 92,105,466 and 92,105,466 shares of common stock issued and outstanding, respectively.  As of March 31, 2014, the subscription receivable due from the majority shareholder is $74,093.  There are no terms determined and the receivable is expected to be settled before the end of the year.

 

No preferred or common stock was issued for the three months ended March 31, 2014

The Company has no options or warrants issued or outstanding and no preferred shares have been issued.

 

On December 23, 2013, the Company, through its wholly foreign owned entity, AF Ocean Investment Management (Shanghai) Co., LTD ("AF Ocean-Shanghai"), entered into a Management Agreement with ChinAmerica Andy Movie Entertainment Media Company ("ChinAmerica"), a Florida corporation.  ChinAmerica has operations' in China and will be receiving payment for such operations in China.  Because China employs strict currency regulations that are designed to prevent large amounts of currency moving out of the country, ChinAmerica retained AF Ocean-Shanghai to manage the money it receives from its Chinese operations.  As of January 28, 2014, the first payments totaling Two Hundred Fifty Thousand Dollars ($250,000) (USD) for ChinAmerica were received though AF Ocean-Shanghai.  The funds were deposited into the AF Ocean Shanghai bank account for the benefit of ChinAmerica. As of the quarter ended March 31, 2014, the current balance in the escrow account is $724,100. Pursuant to the Management Agreement, AF Ocean-Shanghai will receive a fee equal to 10% of each deposit or wire received on ChinAmerica's behalf.

From time to time the Company may be a party to litigation matters involving claims against the Company.  Management believes that there are no current matters that would have a material effect on the Company's financial position or results of operations.

The Company rents office space in New York, New York, Shanghai, China, and Sarasota, Florida.  The terms for the New York and the Shanghai, China locations are month to month and were started on March 1, 2012. The monthly rent is approximately $200, and $3,600. The terms for the Sarasota, Florida office are for 1 year, and commenced on April 1, 2014. The monthly rent is $535, respectively.

 

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In the third quarter of 2012, we acquired one operating segment, AF Ocean Investment Management (Shanghai) Co., Ltd., in Shanghai, China, a provider of stock transfer agent and other business services to Chinese individuals who have investments in U.S. companies.  The following are the expenses attributed to AF Ocean (Shanghai) for the quarter ended March 31, 2014 as compared to the year ended December 31, 2013. At this time, the operating segment does not meet any of the quantitative thresholds which would require separate reporting of its operations, however, management believes that the following information about the segment would be useful to readers of the financial statements.

Schedule of Segment Reporting Information by Segment

		March 31, 2014 (Unaudited)				December 31, 2013
AF Ocean Investment Management (Shanghai) Co., Ltd. Segment:
Net (loss)		$	(15,330	)		$	(30,937	)
Total Assets		$	8,459			$	8,256

 

		March 31, 2014 (unaudited)				December 31, 2013
Property and equipment		$	25,721			$	25,021
Less accumulated depreciation		$	(9,005	)		$	(7,403	)
Property and equipment, net		$	16,716			$	17,618

 

Assets were depreciated over their useful lives when placed in service.  Depreciation expense was $1,602 and $853 for the months ended March 31, 2014 and 2013, respectively.

 

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The following discussion should be read in conjunction with our financial statements and the notes thereto.

Forward-Looking Statements

This quarterly report contains forward-looking statements relating to us that are based on the beliefs of our management as well as assumptions made by, and information currently available to, our management. When used in this Report, the words "anticipate", "believe", "estimate", "expect", "intend", "plan" and similar expressions, as they relate to us or our management, are intended to identify forward-looking statements. These statements reflect management's current view of us concerning future events and are subject to certain risks, uncertainties and assumptions, including among many others: our potential inability to raise additional capital, the possibility that third parties hold proprietary rights that preclude us from marketing our products, the emergence of additional competing technologies, changes in domestic and foreign laws, regulations and taxes, changes in economic conditions, a general economic downturn, a downturn in the securities markets, Securities and Exchange Commission regulations which affect trading in the securities of "penny stocks," and other risks and uncertainties. Should any of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described in this Report as anticipated, estimated or expected.

Use of Certain Defined Terms

Except as otherwise indicated by the context, references in this report to "AF Ocean" "we," "us," or "our" and the "Company" are references to the business of AF Ocean Investment Management Company.

Use of GAAP Financial Measures

We use GAAP financial measures in the section of this quarterly report captioned "Management's Discussion and Analysis and Results of Operation." All of the GAAP financial measures used by us in this report relate to the inclusion of financial information.

Overview

This subsection of MD&A is an overview of the important factors that management focuses on in evaluating our businesses, financial condition and operating performance, our overall business strategy and our earnings for the periods covered.

General

Our Board of Directors believes that we can operate as a business consulting firm during the next twelve months.  A change in the strategic business direction of the company may take years to complete and future cash flows, if any, are impossible to predict at this time. The realization value from any strategic change in operations is largely dependent on factors beyond our control such as the market for our services.   We may raise cash from sources other than our operations. Our only other source for cash at this time is investment by others in the Company.

Employees

As of March 31, 2014, there were five (5) full time employees (two (2) in Shanghai, China, and three (3) in Florida.  This does not include the one (1) officer and director who manages the corporation.

Critical Accounting Policies

The preparation of our financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period.  Our actual results could differ from those estimates.  To be as accurate with our estimates as possible, we use our historical data to forecast our future results.  Deviations from our projections are addressed when our financials are reviewed on a monthly basis.  This allows us to be proactive in our approach to managing our business.  It also allows us to rely on proven data rather than having to make assumptions regarding our estimates.

Management does not believe that our actual results are related to any sensitivity in estimates made by management.  The year-end consistency of our results has shown that our prior year's historical data is the best projector of our future results.

Income Taxes

We account for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial statements and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date.

We record net deferred tax assets to the extent we believe these assets will more likely than not be realized. In making such determination, we consider all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies and recent financial operations. In the event we were to determine that we would be able to realize our deferred income tax assets in the future in excess of their net recorded amount, we would make an adjustment to the valuation allowance, which would reduce the provision for income taxes.

Impairment of Long-Lived Assets

FASB ASC 360 requires that long-lived assets and certain identifiable intangibles held and used by an entity be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.  We assess the potential impairment of long-lived assets, principally property and equipment, whenever events or changes in circumstances indicate that the carrying value may not be recoverable. We determine if there is impairment by comparing undiscounted future cash flows from the related long-lived assets with their respective carrying values. In determining future cash flows, significant estimates are made by us with respect to future operating results of the restaurant over its remaining lease term. If assets are determined to be impaired, the impairment charge is measured by calculating the amount by which the asset carrying amount exceeds its fair value. This process of assessing fair values requires the use of estimates and assumptions, which are subject to a high degree of judgment. The adoption of FASB ASC 360 has not materially affected the Company's reported earnings, financial condition or cash flows.

 

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Results of Operations

The following table provides a summary of the results of operations for the periods ended March 31, 2014 and 2013 and for the last two full fiscal years.

 

Summary of Results of Operations

PERIOD		INCOME (LOSS) FROM OPERATIONS				TOTAL OTHER (INCOME) EXPENSE				NET INCOME (LOSS)
Three months ended March 31, 2014		$	(76,928	)		$	(269	)		$	(77,197	)
Three months ended March 31, 2013		$	34,529			$	(14,146	)		$	20,383
December 31, 2013		$	(62,857	)		$	(18,624	)		$	(81,482	)
December 31, 2012		$	(625,522	)		$	(19,225	)		$	(644,747	)

Liquidity and Capital Resources

In the event we are unable to generate sufficient funds to continue our business efforts or if the company is pursued by a larger company for a business combination we will analyze all strategies to continue the company and maintain or increase shareholder value.  Under these circumstances we would consider a merger, acquisition, joint venture, strategic alliance, a roll-up, or other business combination for the purposes of continuing the business and maintaining or increasing shareholder value.  Management believes its responsibility to maintain shareholder value is of paramount importance, which means the Company should consider the aforementioned alternatives in the event funding is not available on favorable terms to the Company when needed.

Results of Operations for the three months ended March 31, 2014 and 2013.

The following tables set forth key components of our results of operations and revenue for the periods indicated in dollars.

Table 3.0 Comparison of our Consolidated Statement of Operations for the Three Months Ended March 31, 2014 and 2013

 

Three months ended March 31, 2014 and 2013 (Unaudited)		2014				2013				Change				%Change
Revenues:		$	82,250			$	180,000				97,750				55	%
Expenses:			159,178				145,471				(13,707	)			10	%
Income (loss) from operations			(76,928	)			34,529				111,457				(123	%)
Other income (expense)			-				(14,238	)			(14,238	)			100	%
Interest income (expense)			(269	)			92				361				(393	%)
Net income (loss)		$	(77,197	)		$	20,383				97,580				(479	%)
Income (loss) per share: basic and diluted		$	(0.00	)		$	(0.00	)

 

 

Income (Loss). For the three months ended March 31, 2014, total income (loss) from operations was ($76,928), respectively, compared to ($34,529) for the three months ended March 31, 2013, respectively. The income generated in the current period was directly attributable to the $82,250 collected in management fee income from ChinAmerica.

Operating Expenses. The increase in expenses for the three months ended March 31, 2014 compared to the three months ended March 31, 2013 is due primarily to the increased expenses in professional fees necessary for the operations, and the payroll. In addition the majority shareholder is now taking a small salary that commenced in December, 2013.

Net Income (Loss).  As a result of the factors described above, we suffered a loss of ($77,197) for the three months ended March 31, 2014 compared to the net income of $20,383 for the three months ended March 31, 2013.

Liquidity and Capital Resources

General. As of March 31, 2014, we had cash and cash equivalents of $695,426. In the previous period we had generated enough revenue through our consulting services to cover our expenses, which are generally fees for professional services and general and administrative activities.  However, for the quarter ended March 31, 2014 our cash balance is not yet sufficient to finance our cash requirements for expected operational activities, capital improvements, and repayment of debt through the next 12 months.

 

Our operating activities provided cash of $797,448 for the three months ended March 31, 2014 versus ($40,828) for the three months ended March 31, 2013. With a net loss of ($77,197) for the three months ended March 31, 2014, our operations are still supported by loans from the majority shareholder or equity purchases.

Net cash of ($700) was used in investing activities for the three months ended March 31, 2014 compared to ($2,236) used in the three months ended March 31, 2013.  

Financing activities used ($100,000) in the three months ended March 31, 2014, compared to $0 during the comparable period in 2013.

As of March 31, 2014, assets exceed our liabilities by $839,346.

Going Concern

 

The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.  The Company had revenue from management fees of $82,250 and a net loss of ($77,197) for the three months ended March 31, 2014 compared to revenue of $180,000 and net income of $20,383 for the three months ended March 31, 2013. These factors indicate the Company is generating revenues; however, The Company's continuation as a going concern is dependent upon its ability to generate revenues through its new business direction.

Inflation

Inflation does not materially affect our business or the results of our operations.

Recent Accounting Pronouncements

The Company has carefully considered the new pronouncements that altered generally accepted accounting principles.  The Company does not believe that any new or modified principles will have a material impact on the Company's reported financial position or operations in the near term.

Off-Balance Sheet Arrangements

We do not have any off-balance arrangements.

 

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The following discussion about the Company's market rate risk involves forward-looking statements. Actual results could differ materially from those projected in the forward-looking statements.

In general, business enterprises can be exposed to market risks, including fluctuation in commodity and raw material prices, foreign currency exchange rates, and interest rates that can adversely affect the cost and results of operating, investing, and financing. In seeking to minimize the risks and/or costs associated with such activities, the Company manages exposure to changes in commodities and raw material prices, interest rates and foreign currency exchange rates through its regular operating and financing activities. The Company does not utilize financial instruments for trading or other speculative purposes, nor does the Company utilize leveraged financial instruments or other derivatives.

Our operations are conducted primarily in the United States and are not subject to foreign currency exchange rate risk. Some of our products are sourced internationally and may fluctuate in cost as a result of foreign currency swings; however, we believe these fluctuations have not been significant.

 

Disclosure Controls and Procedures.

 

The Company maintains disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended) that are designed to ensure that information required to be disclosed in the Company's Securities Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and that such information is accumulated and communicated to the Company's management, as appropriate, to allow timely decisions regarding required disclosure.

The Company's management, with the participation of our principal executive and principal financial officer evaluated the effectiveness of the Company's disclosure controls and procedures as of the end of the period covered by this report. Based upon that evaluation, our principal executive and principal financial officer concluded that, as of the end of the period covered by this report, the Company's disclosure controls and procedures were not effective.

Changes in Internal Controls over Financial Reporting

There was no change in the Company's internal control over financial reporting during the quarterly period covered by this report that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.

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PART II – OTHER INFORMATION

Exhibit No.	Description
31	Certification of Principal Executive Officer and Principal Financial Officer filed pursuant to Exchange Act Rules 13a-14(a) and 15d - 14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 Filed herewith
32	Certification of Chief Executive Officer and Chief Financial Officer furnished pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. Furnished herewith
101	Financial statements from the quarterly report on Form 10-Q of AF Ocean Investment Management Company for the quarter ended March 31, 2014, formatted in XBRL: (i) the Balance Sheet, (ii) the Statement of Income, (iii) the Statement of Cash Flows and (iv) the Notes to the Financial Statements. Filed herewith

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SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	AF OCEAN INVESTMENT MANAGEMENT COMPANY
Dated:  May 15, 2014	/s/ Andy Fan
	Andy Z. Fan
	Principal Executive Officer