UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-K

 

(Mark One)

 

☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the fiscal year ended December 31, 2015

 

or

 

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from ___________ to ___________

 

Commission file number: 000-50413

 

Safco Investment Holding Corp.

(Exact name of registrant as specified in its charter)

 

DELAWARE		98-0407797
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

 

923 E. Valley Blvd, Suite 103B, San Gabriel, CA		91776
(Address of principal executive offices)		(Zip Code)

 

(626) 307-2273

Registrant’s telephone number, including area code

 

Securities registered pursuant to Section 12(b) of the Exchange Act:
Title of each class:		Name of each exchange on which registered:
None		None
Securities registered pursuant to Section 12(g) of the Exchange Act:
Common Stock, par value $.001 (Title of class)

 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐   No ☒

 

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes  ☐   No ☒

 

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒   No ☐

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒   No ☐

 

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference Part III of this Form 10-K or any amendment to this Form 10-K.  ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☒
(Do not check if a smaller reporting company)

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).  Yes ☒ No ☐

 

State the aggregate market value of the voting and non-voting common equity held by non-affiliates: none.

 

As of March 31, 2016, the number of shares of common stock of the registrant outstanding is 32,574,360, par value $0.001 per share.

 

TABLE OF CONTENTS

 

Item Number and Caption		Page
PART I
Item 1.	Business	1
Item 1A.	Risk Factors	5
Item 1B.	Unresolved Staff Comments	5
Item 2.	Properties	5
Item 3.	Legal Proceedings	5
Item 4.	Mine Safety Disclosures	5
PART II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	6
Item 6.	Selected Financial Data	6
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	6
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	8
Item 8.	Financial Statements and Supplementary Data	9
Item 9.	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure	10
Item 9A.	Controls and Procedures	10
Item 9B.	Other Information	11
PART III
Item 10.	Directors, Executive Officers and Corporate Governance	12
Item 11.	Executive Compensation	13
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	14
Item 13.	Certain Relationships and Related Transactions, and Director Independence	14
Item 14.	Principal Accountant Fees and Services	15
PART IV
Item 15.	Exhibits, Financial Statement Schedules	16
SIGNATURES		17

 

 

CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS

 

This Annual Report on Form 10-K contains “forward-looking statements”. Forward-looking statements discuss matters that are not historical facts. Because they discuss future events or conditions, forward-looking statements may include words such as “anticipate,” “believe,” “estimate,” “intend,” “could,” “should,” “would,” “may,” “seek,” “plan,” “might,” “will,” “expect,” “anticipate,” “predict,” “project,” “forecast,” “potential,” “continue” negatives thereof or similar expressions. Forward-looking statements speak only as of the date they are made, are based on various underlying assumptions and current expectations about the future and are not guarantees. Such statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, level of activity, performance or achievement to be materially different from the results of operations or plans expressed or implied by such forward-looking statements.

 

We cannot predict all of the risks and uncertainties. Accordingly, such information should not be regarded as representations that the results or conditions described in such statements or that our objectives and plans will be achieved and we do not assume any responsibility for the accuracy or completeness of any of these forward-looking statements. These forward-looking statements are found at various places throughout this Annual Report on Form 10-K and include information concerning possible or assumed future results of our operations, including statements about potential acquisition or merger targets; business strategies; future cash flows; financing plans; plans and objectives of management; any other statements regarding future acquisitions, future cash needs, future operations, business plans and future financial results, and any other statements that are not historical facts.

 

These forward-looking statements represent our intentions, plans, expectations, assumptions and beliefs about future events and are subject to risks, uncertainties and other factors. Many of those factors are outside of our control and could cause actual results to differ materially from the results expressed or implied by those forward-looking statements. In light of these risks, uncertainties and assumptions, the events described in the forward-looking statements might not occur or might occur to a different extent or at a different time than we have described. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of the Annual Report on Form 10-K. All subsequent written and oral forward-looking statements concerning other matters addressed in this Annual Report on Form 10-K and attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this Annual Report on Form 10-K.

 

Except to the extent required by law, we undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, a change in events, conditions, circumstances or assumptions underlying such statements, or otherwise.

 

 

PART I

 

ITEM 1.      BUSINESS.

 

Overview

 

We were incorporated in the State of Delaware in September 2003 as 355, Inc. as a blank check company. In January 2010 we changed our name to Ace Consulting Management, Inc. to reflect our new business operations and commence operations as a developmental stage company. Our business is in a very early stage of development. To date, we have not generated meaningful revenues and our limited assets consist solely of cash. We have one part-time employee. Historically we have not complied with our current reporting requirements under the Securities Exchange Act of 1934 and our auditor has expressed substantial doubt about our ability to continue as a going concern.

 

In January 2010 we commenced providing small to medium sized business-consulting services. We currently have a limited number of clients but we intend to pursue additional business relationships with small to medium sized businesses in China, the Pacific Rim and United States.

  

Our initial business plan consisted of a wide range of consulting services including investor relations, merchant banking, listing advisory service and joint venture consulting services. We no longer provide and do not plan to provide any service in a nature of assisting to develop a market for their securities.

 

Our current business strategy is to provide consulting services to small to medium sized businesses.  We plan to undertake these services by initially examining a client’s corporate structure looking towards a way to streamline its operations, organization, or reporting structures. Once a structure is ascertained we will then design, develop and implement systems, procedures and controls to improve our client’s efficiencies and profitability. We will retain business strategy consultants as needed in order to assist our clients in the evolving market places and technologies. We refer to this as the strategy-led approach.

 

As part of our consulting services, we will help our clients identify business objectives and create and prioritize a portfolio of initiatives to increase the profitability and efficiency of their businesses. We design these initiatives to offer a variety of ways to maximize profitability in the new economic environment that has resulted from the widespread acceptance of technology.

 

After creating an initial strategy, we architect and build scalable objectives that can be adapted over time to meet our clients’ evolving needs. We assist our clients in implementing these strategies by linking the strategies with varied controls and systems and deploying the applications. We refer to the strategies that we develop and implement as well as our consulting services as “solutions” because our clients use these services to solve business problems or achieve business goals.

 

Our objective is to become a leader of small to medium sized business-consulting services. Our business strategy for accomplishing this objective includes attracting and retaining outstanding professionals on an as-needed basis, develop long-term client relationships, enhancing and extending our service offerings and building our corporate image. Our mission is to bridge U.S. and Chinese businesses in various fields to grow our consulting business. Our motto is to deliver reliable service and to provide value to our clients.

 

We plan to develop a niche for Cross-Cultural Corporate consulting for companies located in China and the US. We believe large international consulting companies are generally interested in larger client firms, potentially leaving an underserved niche for us among the small-to-medium size companies. We believe that our hands-on approach provides a competitive advantage and that during the next ten years China offers lucrative opportunities for our shareholders by forming a network between China and US. We look to assist Chinese companies in utilizing U.S. knowhow and technology in order to enhance their local competitiveness in China.  Likewise, we seek to enhance the global competitiveness of Chinese and American firms seeking to establish a presence overseas.

 

Change in Control

 

Pursuant to the terms of the Stock Purchase Agreements (“Stock Purchase Agreements”) dated July 30, 2014 between the Company, the majority shareholders of the Company (the “Sellers”) and certain buyers (the “Purchasers”), the Purchasers purchased from the Sellers, 29,316,924 shares of common stock of the Company, representing approximately 90% of the issued and outstanding shares of the Company, for an aggregate purchase price of $500,000 (the “Purchase Price”). As of the date hereof, $300,000 has been paid and the balance to pay before December 31, 2016 or sooner at a mutually agreed date. 

 

Effective July 30, 2014, Mr. Jen resigned as President, Chief Executive Officer and Chief Financial Officer of the Company. He will remain as a member of the Board of Directors of the Company. In addition, Mr. Tickel resigned from the Board of Directors of the Company. On the same day, the Company appointed Henry Lee to serve as the President, Chief Executive Officer, Chief Financial Officer and a member of the Board of Directors.

 

 

On September 30, 2014, the Company filed Articles of Amendment to the Articles of Incorporation, and changed its name from ACE Consulting Management, Inc. to Safco Investment Holding Corp., and to increase the number of authorized shares of capital stock to 100,000,000 shares of common stock; $0.001 par value and 30,000,000 shares of preferred stock S0.001 par value.

  

Business Strategy

 

We intend to build an international cross-cultural consulting firm for Chinese-American Businesses by nurturing relationships between each Continent.

 

Our current business strategy and our business strategy for the future are to provide cross-cultural business consulting services. We plan to undertake these services by initially examining a client’s corporate structure looking towards a way to streamline its operations, organization, or reporting structures. Once a structure is ascertained we will then design, develop and implement systems, procedures and controls to improve our client’s efficiencies and profitability. We will then look for opportunities for our clients to expand overseas.  We will retain business strategy consultants as needed in order to assist our client needs in the evolving market place. We refer to this as the strategy-led approach.

  

As part of our consulting services, we will help our clients identify business objectives and create and prioritize a portfolio of initiatives to increase the profitability and efficiency of their businesses.  After creating an initial strategy, we architect and build scalable objectives that can be adapted over time to meet our clients’ evolving needs. We assist our clients in implementing these strategies by linking the strategies with varied controls and systems and deploying the applications. We refer to the strategies that we develop and implement as well as our consulting services as “solutions” because our clients use these services to solve business problems or achieve business goals.

 

Our objective is to become a leader in small to medium sized cross-cultural business-consulting services. Our business strategy for accomplishing this objective includes attracting and retaining outstanding professionals on an as needed basis, developing long-term client relationships, enhancing and extending our service offerings while building our corporate image.

 

We may deliver our services through the services of Alex Jen and Gary Tickel, our sole officer and Directors or through the use of outside consultants with varied backgrounds in business strategy, operational, financial, and organizational management experience. Because these consultants have different skills and work closely together throughout a client engagement, we refer to them as being “integrated” and “multi-disciplinary.”

 

We believe Dr. Alex Jen has relevant experience to further develop the niche for cross cultural consulting. Dr. Alex Jen has cross-cultural and business backgrounds spanning two continents. He has worked for conglomerates with multiple divisions, including FMC and Proctor Gamble.  Dr. Jen is of Chinese descent is fluent in Mandarin and English and provides a broad project management, engineering and certification background from both continents. (See also “DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS”.)   Dr. Alex Jen will lead Chinese pursuits along with Mr. Gary Tickel; who has over twenty-eight years of experience related to investments, sources and uses of funds, and the management of business risks; will lead American pursuits.  (See also “DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS”).

 

Our strategy-led approach includes:

 

	○	analyzing the client's industry, business model and goals;
	○	developing a portfolio of solutions in the context of an overall business strategy; and
	○	developing and launching various objectives in a sequence that is designed to maximize profitability and shareholder value over the long term.

 

Our commitment to entrepreneurial innovation allows us to provide our clients with professional services from consultants who have extensive small to medium size business experience. Our delivery model is based upon a proprietary methodology that we call Profit design. This methodology is designed to ensure that we:

 

	○	involve all of our competencies in each phase of our engagements;
	○	take advantage of the standards, benchmarks and approaches we have developed; and
	○	follow detailed control procedures that are designed to ensure that we are delivering high quality solutions.

 

 

Specific Consulting Services

 

Our clients often experience similar problems regardless of the industry in which they operate within since we focus on providing our services for small to medium sized growth enterprises. We address our clients’ problems by categorizing them in three broad areas consisting of operational, organizational, and financial reporting problems. Some examples of specific types of problems include:

 

Potential Client Organizational Issues

 

	○	Goals and objectives for the company and its departments are not identified nor communicated effectively to appropriate levels of management
	○	Job descriptions are not utilized to detail work requirements, responsibilities, levels of authority, autonomy to make decisions, or standards of performance
	○	Roles and responsibilities are not clearly defined for managers or employees
	○	Managerial chains-of-command overlap in many departments, causing confusion and a loss of accountability
	○	Client companies current organizational structure is not defined or documented
	○	The company’s management team does not effectively transfer information between departments or shifts

 

Potential Solutions We May Offer To Client Organizational Issues

 

	○	Develop a complete personnel program to include formal policies and procedures, documentation and reviews and salary administration
	○	Implement management method and accountabilities for executive group, department heads, and supervisors
	○	Update or create an employee handbook
	○	Establish formal job descriptions, performance reviews, and pay for performance system to foster sales and profit growth
	○	Develop/publish organizational structure outlining management structure and each functional area of the business and chain of command
	○	Design and implement an incentive program basing compensation on savings earned to reward good employees/key people

 

Potential Client Operational Issues

 

	○	Company forecasting effectiveness is questionable
	○	Limited sales forecasting ability
	○	Operating budgets are not utilized effectively
	○	Inconsistent occurrence of management or production meetings, regardless of the attendance demonstrates a lack of value placed on the function
	○	No profitability planned by product mix
	○	All management levels below project manager do not have any real understanding of profit or loss on a job until after the fact

 

Potential Solutions We May Offer To Client Operational Issues

 

	○	Implement manning chart for facilities and manpower needs current and future
	○	Establish standards of performance for each position and department
	○	Improve asset utilization, i.e., cash, accounts receivable , inventory and equipment
	○	Develop and Implement system to effectively utilize operating budgets department by department
	○	Develop a marketing plan and sales budget for coming year by identifying target markets, promotion & pricing strategies and planned profitability
	○	Create standards for effective utilization of all strategic resources: human/culture, facility, equipment, inventory, capital, and management systems

 

Potential Client Financial Reporting Issues

 

	○	Management as a whole does not realize the value of information in regards to making management decisions. They generally do not use the reporting information available
	○	No daily or weekly " management reports"
	○	Operating statements are delayed week or months after the close of the month. Financial information approximately 60 days old is limited in its effectiveness as a management tool
	○	Although a business plan to guide the company may exist corporately, it typically lacks any real methodology to accomplish any stated goals.
	○	Breakdown of overhead costs not truly identified
	○	Lack of aggressive cash management program minimizing its collection and payables periods
	○	Access to financial or operational information is slow

 

 

Potential Solutions We May Offer To Client Financial Reporting Issues

 

	○	Implement financial management systems to include accounting systems, departmentalized profit and loss reporting, budget and operating plans, reporting methods, weekly/daily management reports, monthly financials, overhead and profit allocation, budget differences, and Profit analysis
	○	Establish Process of to track sales increase on value added basis • Integrate Profit planning into long term and short term business goals • Implement sound credit and collection policies and procedures to control days outstanding • Develop cash management
	○	Establish financial information for management reporting rather than accounting reporting
	○	Determine proper margins by product category and mix

  

When we have identified client projects that are beyond our employees expertise, or as required or requested by our clients we may retain outside consultants with specific industry or technical skills that our employees do not possess. As an example we may retain an outside computer consultant to determine specifications for Management Information Systems to meet the management and control requirements of our clients business. Additionally, we might retain an outside consultant specifically with manufacturing experience if we were working with a client to create a manufacturing procedures training manual or we might retain a consultant who is a financial specialist to develop overhead application rates for positions and departments for client projects

 

Marketing Strategy

 

The business development of the Company has been limited to referrals to date. We rely to a significant extent on the initial efforts of Dr. Alex Jen, President, and Mr. Gary Tickel, Director, to market our services. As we generate additional working capital we will shift our dependence to new officers and principals, employees and outside consultants retained by us to market our services. We will encourage our consultants to generate new business from both existing and new clients, and reward our consultants with increased compensation and promotions for obtaining new business. In pursuing new business we will focus on emphasizing our reputation and experience and with respect to our search for potential business consulting opportunities includes referrals from consultants, advisors, venture capitalists, members of the financial community and others who may present management with unsolicited proposals.

 

Consulting Industry and Competition

 

The business consulting industry in the United States and China is intensely competitive, highly fragmented and subject to rapid change. In general, there are few barriers to entry into our markets, and we expect to face additional competition from new entrants into the business consulting industries. We believe that the principal competitive factors in our market to be reputation, analytical ability, industry experience, service and price. We compete primarily with other business and management consulting firms, specialized or industry specific consulting firms, the consulting practices of large accounting firms and the internal professional resources of existing and potential clients. Furthermore, many of our competitors have international reputations as well as significantly greater personnel, financial, managerial, technical and marketing resources than we do. In addition, many of our competitors also have a significantly greater geographic presence than we do. We may be unable to compete successfully with our existing competitors or with any new competitors.

  

Intellectual Property

 

We do not own or license any intellectual property rights.

 

Government Regulation

 

Although government regulation does not impact our management consulting business directly with the exception of payroll taxes on the state and federal levels, we anticipate that our clients who engage in segments of business which involve an exposure to the Internet may have an impact. We are observing that laws and regulations directly applicable to Internet communications, commerce and marketing are becoming more prevalent. If any of these laws hinders the growth in use of the Internet generally or decreases for the acceptance of the Internet as a medium for communication, commerce and marketing, our prospects business may suffer materially. The United States Congress has enacted Internet laws regarding children’s privacy, copyrights and taxation. Other laws and regulations may be adopted covering issues such as user privacy, pricing, content, taxation and quality of products and services. State and foreign governments might attempt to regulate Internet transmissions or levy sales or other taxes relating to Internet activity. It may take years to determine whether and how existing laws such as those governing intellectual property, privacy, libel and taxation apply to the Internet and Internet advertising and marketing services. In addition, the growth and development of the market for Internet commerce may prompt calls for more stringent consumer protection laws, both in the United States and abroad, that may impose additional burdens on companies conducting business over the Internet.

 

Employees

 

As of March 31, 2016, we have no full time employees. Our officer and directors spend approximately 30 hours per week on Company matters. We may employ additional people as we continue to implement our plan of operation.

  

 

ITEM 1A.    RISK FACTORS

 

Smaller reporting companies are not required to provide the information required by this item.

 

ITEM 1B.    UNRESOLVED STAFF COMMENTS

 

Smaller reporting companies are not required to provide the information required by this item.

 

ITEM 2.       PROPERTIES.

 

Our principal executive office is located at 923 E. Valley Blvd, Suite 103B, San Gabriel, CA 91776 and our telephone number is (626) 307-2273.  Office space is provided by an officer of the Company at no cost.

 

ITEM 3.       LEGAL PROCEEDINGS

 

To the best of our knowledge, there are no material pending legal proceedings to which we are a party or of which any of our property is the subject.  From time to time, we may become involved in various lawsuits and legal proceedings, which arise, in the ordinary course of business.  However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business.

 

ITEM 4.       MINE SAFETY DISCLOSURES.

 

Not Applicable.

 

 

PART II

 

ITEM 5.       MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

 

Market Information

 

The Company’s common stock is currently trading on the OTC bulletin Board under symbol SIHC. Our stock is thinly traded and there is no active trading market developed for our shares of common stock.

 

Holders

 

As of March 31, 2016, we had approximately 73 holders of our common stock.

 

Dividends

 

To date, we have not declared or paid any dividends on our common stock. We currently do not anticipate paying any cash dividends in the foreseeable future on our common stock. Although we intend to retain our earnings, if any, to finance the exploration and growth of our business, our Board of Directors has the discretion to declare and pay dividends in the future.

 

Payment of dividends in the future will depend upon our earnings, capital requirements, and any other factors that our Board of Directors deems relevant.

 

Recent Sales of Unregistered Securities

 

None.

 

ITEM 6.       SELECTED FINANCIAL DATA.

 

Smaller reporting companies are not required to provide the information required by this item.

 

ITEM 7.       MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION. 

 

You should read the following discussion together with our financial statements and the related notes included elsewhere in this annual report on Form 10-K. This discussion contains forward-looking statements that are based on our current expectations, estimates and projections about our business and operations. Our actual results may differ materially from those currently anticipated and expressed in such forward-looking statements.

  

General

 

We are a business consulting firm that applies our services to a broad range of clients that will enable companies to effectively increase profitability as well as advance the development of their businesses. We provide advice for clients involved in many matters and general corporate strategies.

 

We derive revenues principally from professional services rendered by our employee. In most instances, we charge clients on a time-and-materials basis and recognize revenues in the period when we provide our services. We charge consultants’ time at hourly rates and on a per project basis. However, in the future, as we retain the services of additional outside employee consultants with differing skills, our hourly rates may vary from consultant to consultant depending on a consultant’s position, experience and expertise, and other factors. Outside experts will not bill clients directly for their services, all of the billing will be done through our office. As a result, we will generate substantially all of our own professional services fees from the work of our own full-time consultants. Factors that affect our professional services fees include the number and scope of client engagements, the number of consultants employed by us, the consultants’ billing rates, and the number of hours worked by the consultants.

  

On July 30, 2014, the Company, the former majority shareholders of the Company (the “Sellers”) and certain buyers (the “Purchasers”) entered into a stock purchase agreement (the “Stock Purchase Agreement”), whereby the Purchasers purchased from the Sellers, 29,316,924 shares of common stock, par value $0.001 per share, of the Company, representing approximately 90% of the issued and outstanding shares of the Company, for an aggregate purchase price of $500,000 (the “Purchase Price”). As of the date hereof, $300,000 has been paid and the balance to pay before December 31, 2016 or sooner at a mutually agreed date. 

 

 

 

In connection with the Stock Purchase Agreement, on July 30, 2014, Alex Jen submitted to the Company a resignation letter pursuant to which he resigned as the President, Chief Executive Officer and Chief Financial Officer of the Company effectively immediately. He remains as a member of the Board of Directors of the Company. In addition, Gary A. Tickel resigned from the Board of Directors of the Company. Mr. Jen’s and Mr. Tickel’s resignations were not a result of any disagreements relating to the Company’s operations, policies or practices.

 

On July 30, 2014, the Board of Directors of the Company accepted the resignations of Mr. Jen and Mr. Tickel and appointed Henry Lee to serve as the President, Chief Executive Officer, Chief Financial Officer and a member of the Board of Directors.

 

On September 30, 2014, we filed an amendment to our Certificate of Incorporation to change the Company’s name to Safco Investment Holding Corp., and to increase the number of authorized shares of capital stock to 100,000,000 shares of common stock; $0.001 par value and 30,000,000 shares of preferred stock S0.001 par value.

 

Plan of Operation

 

We have commenced limited operations and will require additional capital to recruit personnel to operate business and to implement our business plan.

 

Our current business is generated through referrals. We plan to initiate marketing efforts through a variety of venues for our future business including trade associations, chambers of commerce and alumni associations.

 

We seek to become a bridge between China and the U.S., with our business background and extensive knowledge we can assist China companies to acquire U.S. technology or equipment to facilitate and implement their existing business in China.

 

On November 10, 2010, we entered into a business consultant agreement with Shanghai Tongao Investment Consulting Co, Ltd. for general business advisory services. The term of the agreement is for a period of two years, which can be cancelled by either party on a 30-day written notice to the other party. The compensation for this agreement shall be paid at the rate of $80/hour for work performed in accordance with this agreement. However, we shall be paid at least $12,000 per year regardless of the amount of time spent in accordance with this agreement. The business consultant agreement with Shanghai Tongao Investment Consulting Co, Ltd. has expired. However, we continue to provide general business advisory services to this client.

 

On August 30, 2011, we terminated the service agreements with Beijing Poly Design Ltd. and Shanghai Gaogo Design and Construction Ltd. due to the change of business environment in China which has caused difficulties to us in conducting businesses contemplated under these service agreements in reasonable profit margin. Subsequently, we made a strategic decision to no longer provide services to clients in connection with the food processing industry.

   

On December 2, 2011 we entered into a business consultant agreement with Vivid Spa Corp. Vivid Spa Corp is a company specializing in health care, specifically skin care and massage therapy, located in Los Angeles, California. We assist Vivid Spa with its selection and export of U.S. made essential oils and aroma therapy products. We also provide consulting assistance regarding opening Spa facilities in Shanghai & Beijing and regarding introducing U.S. made products - including essential oils and aroma formula therapies - in China. During this engagement, we provide a site analysis and rent comparison study for select locations in Shanghai and Beijing. We also provide Vivid Spa Corp. analysis for licensing the business and obtaining permits for local facilities and outdoor signage in China. Consulting services has included container and airfreight shipping options, customs duties, and advice on clearing customs and product inspections upon arrival in China as well as providing market data on pricing, on brand positioning, and on customer acquisition.

 

In the next 12 months if we are unable to satisfy our cash requirements, our major shareholders have indicated that they are willing to loan additional funds to the Company to cover any shortfalls, although there is no written agreement or guarantee.

 

We plan to raise funds through equity financing in the next 12 months. If we successfully raise the funds, it will be used for our operations and to invest in potential joint venture or acquisition.

 

Results of Operation 

 

For the twelve months ended December 31, 2015 and December 31, 2014, we had no revenue and $19,000 respectively.  Expenses for the period ended December 31, 2015 totaled $33,159 resulting in a net loss of $33,981. Expenses for the period ended December 31, 2015 consisted of $826 in general and administrative expenses, $32,333 in professional fees, and $0 in consulting fees. In comparison, expenses for the same period ended December 31, 2014 totaled $48,484 resulting in a net loss of $30,306. Expenses for the period ended December 31, 2014 consisted of $1,674 in general and administrative expenses, and $46,810 in professional fees, $0 in consulting fees. The increase in the expenses for the same period ended December 31, 2015 is primarily due to the loss of revenue.

 

 

Liquidity and Capital Resources 

 

At December 31, 2015 the Company had $10,217 in cash. We will rely upon the issuance of common stock and additional capital contributions from shareholders to fund administrative expenses for our planned business strategy.

 

As reflected in the accompanying financial statements, the Company has net cash used in operations of $29,049 for the year 2015 and has an accumulated deficit of $1,698,816. This raises substantial doubt about its ability to continue as a going concern.  The ability of the Company to continue as a going concern is dependent on the Company’s ability to raise additional capital and implement its business plan.  The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

 

Management believes that actions presently being taken to obtain additional funding and implement its strategic plans provide the opportunity for the Company to continue as a going concern.

 

Off Balance Sheet Arrangements

 

As of December 31, 2015, we do not have any off-balance sheet arrangements.

 

ITEM 7A.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

 

Smaller reporting companies are not required to provide the information required by this item.

 

  

ITEM 8.       FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

 

Safco Investment Holding Corp

 

December 31, 2015 and 2014

 

Index to the Financial Statements

 

Contents		Page(s)
Report of Independent Registered Public Accounting Firm		F-1 - F-2
Balance Sheets at December 31, 2015 and 2014		F-3
Statements of Operations for the Years Ended December 31, 2015 and 2014		F-4
Statements of Changes in Stockholders’ Deficit for the Years Ended December 31, 2015 and 2014		F-5
Statements of Cash Flows for the Years Ended December 31, 2015 and 2014		F-6
Notes to the Financial Statements		F-7

 

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

The Board of Directors and Stockholders of

Safco Investment Holdings Corp.

 

We have audited the accompanying balance sheet of Safco Investment Holdings Corp. (the “Company”) as of December 31, 2014 and the related statements of operations, stockholders’ equity and cash flows for the year then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

 

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

 

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2014 and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.

 

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the financial statements, the Company had an accumulated deficit at December 31, 2014, and had a net loss and net cash used in operating activities for the year then ended. These factors raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regards to these matters are also described in Note 3. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

/s/ Li and Company, PC

Li and Company, PC

 

Skillman, New Jersey

March 31, 2015

 

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

To the Board of Directors

Safco Investment Holding Corp.

San Gabriel, California

 

We have audited the accompanying balance sheet of Safco Investment Holding Corp. as of December 31, 2015 and the related statements of operations, stockholders’ deficit and cash flows for the year then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

 

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that we considered appropriate under the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

 

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Safco Investment Holding Corp. as of December 31, 2015, and the results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.

 

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the financial statements, the Company has experienced recurring operating losses and negative operating cash flows operations, and has no source of recurring revenue as of December 31, 2015. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 3 to the financial statements. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

/s/ Weinberg & Company, PA.

WEINBERG & COMPANY, P.A.

Los Angeles, California

April 14, 2016

 

Safco Investment Holding Corp

Balance Sheets

 

		December 31, 2015				December 31, 2014
ASSETS
CURRENT ASSETS:
Cash		$	10,217			$	2,447
Total Current Assets			10,217				2,447
Total Assets		$	10,217			$	2,447
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
Accounts payable and accrued expenses		$	5,207			$	275
Advances from related party			39,218				3,000
Total Current Liabilities			44,425				3,275
STOCKHOLDERS' DEFICIT:
Preferred stock at $0.001 par value: 30,000,000 shares authorized;  none issued or outstanding			-				-
Common stock par value $0.001: 100,000,000 shares authorized; 32,574,360 shares issued and outstanding			32,574				32,574
Additional paid-in capital			1,632,034				1,631,433
Accumulated deficit			(1,698,816	)			(1,664,835	)
Total Stockholders' Deficit			(34,208	)			(828	)
Total Liabilities and Stockholders' Deficit		$	10,217			$	2,447

 

See accompanying notes to the financial statements

 

 

Safco Investment Holding Corp

Statements of Operations

 

		For the Year				For the Year
		Ended				Ended
		December 31, 2015				December 31, 2014
Net revenues		$	-			$	19,000
Operating expenses
Professional fees			32,333				46,810
General and administrative expenses			826				1,674
Total operating expenses			33,159				48,484
Loss from operations			(33,159	)			(29,484	)
Income tax provision			822				822
Net loss		$	(33,981	)		$	(30,306	)
Net loss per common share
- Basic and diluted:		$	(0.00	)		$	(0.00	)
Weighted average common shares outstanding
- basic and diluted			32,574,360				32,574,360

 

See accompanying notes to the financial statements

 

 

Safco Investment Holding Corp

Statements of Changes in Stockholders' Equity (Deficit)

For the year ended December 31, 2015 and 2014

 

		Common Stock, Par Value $0.001								Additional								Total Stockholders'
		Number of Shares				Amount				Paid-in Capital				Accumulated Deficit				Equity (Deficit)
Balance, December 31, 2013			32,574,360			$	32,574			$	1,603,894			$	(1,634,529	)		$	1,939
Contributed Capital											27,539								27,539
Net loss															(30,306	)			(30,306	)
Balance, December 31, 2014			32,574,360				32,574				1,631,433				(1,664,835	)			(828	)
Contributed Capital											601								601
Net loss															(33,981	)			(33,981	)
Balance, December 31, 2015			32,574,360			$	32,574			$	1,632,034			$	(1,698,816	)		$	(34,208	)

 

See accompanying notes to the financial statements

 

 

Safco Investment Holding Corp

Statements of Cash Flows

 

		For the Year				For the Year
		Ended				ended
		December 31, 2015				December 31, 2014
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss		$	(33,981	)		$	(30,306	)
Adjustments to reconcile net loss to net cash used in operating activities
Changes in operating assets and liabilities:
Accounts payable and accrued expenses			4,932				275
NET CASH USED IN OPERATING ACTIVITIES			(29,049	)			(30,031	)
NET CASH USED IN INVESTING ACTIVITIES			-				-
CASH FLOWS FROM FINANCING ACTIVITIES:
Advances from shareholders			39,218				-
Repayment of advance from former shareholders			(2,399	)			-
NET CASH PROVIDED BY FINANCING ACTIVITIES			36,819				-
NET CHANGE IN CASH			7,770				(2,492	)
Cash at beginning of period			2,447				4,939
Cash at end of period		$	10,217			$	2,447
SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION:
Interest paid		$	-			$	-
Income tax paid		$	800			$	800
NON CASH INVESTING AND FINANCING ACTIVITIES
Related party advance reclassified as contribution of capital		$	601			$	27,539

 

See accompanying notes to the financial statements

 

Safco Investment Corp

December 31, 2015 and 2014

Notes to the Financial Statements

 

Note 1 - Organization and Operations

 

Safco Investment Corp (formerly “ACE Consulting Management, Inc.” or the “Company”) was incorporated on September 19, 2003 under the laws of the State of Delaware. The Company engages in consulting to corporations to improve growth strategies, performance enhancement and maximization of shareholder value.

 

Change in Control

 

Pursuant to the terms of the Stock Purchase Agreements (“Stock Purchase Agreements”) dated July 30, 2014 between the Company, the majority shareholders of the Company (the “Sellers”) and certain buyers (the “Purchasers”), the Purchasers purchased from the Sellers, 29,316,924 shares of common stock of the Company, representing approximately 90% of the issued and outstanding shares of the Company, for an aggregate purchase price of $500,000 (the “Purchase Price”). As of the date hereof, $300,000 has been paid and the balance to pay before December 31, 2016 or sooner at a mutually agreed date. 

 

Effective July 30, 2014, Mr. Jen resigned as President, Chief Executive Officer and Chief Financial Officer of the Company. He will remain as a member of the Board of Directors of the Company. In addition, Mr. Tickel resigned from the Board of Directors of the Company. On the same day, the Company appointed Henry Lee to serve as the President, Chief Executive Officer, Chief Financial Officer and a member of the Board of Directors.

 

On August 18, 2014, the Company filed Articles of Amendment to the Articles of Incorporation, and changed its name from ACE Consulting Management, Inc. to Safco Investment Holding Corp.

 

Note 2 - Summary of Significant Accounting Policies

 

The Management of the Company is responsible for the selection and use of appropriate accounting policies and the appropriateness of accounting policies and their application. Critical accounting policies and practices are those that are both most important to the portrayal of the Company’s financial condition and results and require management’s most difficult, subjective, or complex judgments, often as a result of the need to make estimates about the effects of matters that are inherently uncertain. The Company’s significant and critical accounting policies and practices are disclosed below as required by generally accepted accounting principles.

 

Management Estimates

 

The preparation of financial statements in conformity with generally accepted accounting principles 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. Significant estimates reflected in the financial statements include, but are not limited to, reserves for uncollectible accounts, valuation of deferred tax assets, and share-based compensation costs. Changes in facts and circumstances may result in revised estimates. Actual results could differ from those estimates.

 

Fair Value of Financial Instruments

 

The Company follows paragraph 820-10-35-37 of the FASB Accounting Standards Codification (“Paragraph 820-10-35-37”) to measure the fair value of its financial instruments and paragraph 825-10-50-10 of the FASB Accounting Standards Codification for disclosures about fair value of its financial instruments. Paragraph 820-10-35-37 establishes a framework for measuring fair value in accounting principles generally accepted in the United States of America (U.S. GAAP), and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, Paragraph 820-10-35-37 establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three (3) broad levels. The three (3) levels of fair value hierarchy defined by Paragraph 820-10-35-37 are described below:

 

Level 1		Quoted market prices available in active markets for identical assets or liabilities as of the reporting date.
Level 2		Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date.
Level 3		Pricing inputs that are generally observable inputs and not corroborated by market data.

 

 

Financial assets are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption or input is unobservable.

 

The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument.

 

The carrying amounts of the Company’s financial assets and liabilities, such as cash and accrued expenses approximate their fair values because of the short maturity of these instruments.

 

Transactions involving related parties cannot be presumed to be carried out on an arm's-length basis, as the requisite conditions of competitive, free-market dealings may not exist. Representations about transactions with related parties, if made, shall not imply that the related party transactions were consummated on terms equivalent to those that prevail in arm's-length transactions unless such representations can be substantiated.

 

Revenue Recognition

 

The Company follows paragraph 605-10-S99-1 of the FASB Accounting Standards Codification for revenue recognition. The Company will recognize revenue when it is realized or realizable and earned. The Company considers revenue realized or realizable and earned when all of the following criteria are met: (i) persuasive evidence of an arrangement exists, (ii) the product has been shipped or the services have been rendered to the customer, (iii) the sales price is fixed or determinable, and (iv) collectability is reasonably assured. One customer accounted for 100% of the Company’s revenue for the years ended December 31, 2014. The Company derived no revenue during the year ending December 31, 2015.

 

Stock-Based Compensation

 

The Company periodically issues stock options and warrants to employees and non-employees in capital raising transactions, for services and for financing costs. The Company accounts for share-based payments under the guidance as set forth in the Share-Based Payment Topic of the FASB Accounting Standards Codification, which requires the measurement and recognition of compensation expense for all share-based payment awards made to employees, officers, directors, and consultants, including employee stock options, based on estimated fair values. The Company estimates the fair value of share-based payment awards to employees and directors on the date of grant using an option-pricing model, and the value of the portion of the award that is ultimately expected to vest is recognized as expense over the required service period in the Company's Statements of Operations. The Company accounts for stock option and warrant grants issued and vesting to non-employees in accordance with the authoritative guidance where the value of the stock compensation is based upon the measurement date as determined at either a) the date at which a performance commitment is reached, or b) the date at which the necessary performance to earn the equity instruments is complete. Stock-based compensation is based on awards ultimately expected to vest and is reduced for estimated forfeitures. Forfeitures are estimated at the time of grant and revised, as necessary, in subsequent periods if actual forfeitures differ from those estimates.

 

The fair value of the Company’s stock option and warrant grants are estimated using the Black-Scholes-Merton Option Pricing model, which uses certain assumptions related to risk-free interest rates, expected volatility, expected life of the stock options or warrants, and future dividends. Compensation expense is recorded based upon the value derived from the Black-Scholes-Merton Option Pricing model, and based on actual experience. The assumptions used in the Black-Scholes-Merton Option Pricing model could materially affect compensation expense recorded in future periods.

 

Income Taxes

 

The Company uses an asset and liability approach for financial accounting and reporting for income taxes that allows recognition and measurement of deferred tax assets based upon the likelihood of realization of tax benefits in future years. Under the asset and liability approach, deferred taxes are provided for the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. A valuation allowance is provided for deferred tax assets if it is more likely than not these items will either expire before the Company is able to realize their benefits, or that future deductibility is uncertain. The Company’s policy is to recognize interest and/or penalties related to income tax matters in income tax expense.

 

 

Net Income (Loss) per Common Share

 

Basic earnings (loss) per share is computed by dividing the net income (loss) applicable to Common Stockholders by the weighted average number of shares of Common Stock outstanding during the year. Diluted earnings (loss) per share is computed by dividing the net income (loss) applicable to Common Stockholders by the weighted average number of common shares outstanding plus the number of additional common shares that would have been outstanding if all dilutive potential common shares had been issued, using the treasury stock method. Potential common shares are excluded from the computation if their effect is anti-dilutive.

 

There were no potentially outstanding dilutive common shares for the reporting period ended December 31, 2015 and 2014.

  

Recently Issued Accounting Pronouncements

 

In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers. ASU 2014-09 is a comprehensive revenue recognition standard that will supersede nearly all existing revenue recognition guidance under current U.S. GAAP and replace it with a principle based approach for determining revenue recognition. ASU 2014-09 will require that companies recognize revenue based on the value of transferred goods or services as they occur in the contract. The ASU also will require additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. ASU 2014-09 is effective for interim and annual periods beginning after December 15, 2017. Early adoption is permitted only in annual reporting periods beginning after December 15, 2016, including interim periods therein. Entities will be able to transition to the standard either retrospectively or as a cumulative-effect adjustment as of the date of adoption. The Company is in the process of evaluating the impact of ASU 2014-09 on the Company’s financial statements and disclosures.

 

In June 2014, the FASB issued Accounting Standards Update No. 2014-12, Compensation – Stock Compensation. The pronouncement was issued to clarify the accounting for share-based payments when the terms of an award provide that a performance target could be achieved after the requisite service period. The pronouncement is effective for reporting periods beginning after December 15, 2015. The adoption of ASU 2014-12 will not have a significant impact on the Company’s consolidated financial position or results of operations.

 

In August 2014, the FASB issued Accounting Standards Update No. 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern, which provides guidance on determining when and how to disclose going-concern uncertainties in the financial statements. ASU 2014-15 requires management to perform interim and annual assessments of an entity’s ability to continue as a going concern within one year of the date the financial statements are issued.  An entity must provide certain disclosures if conditions or events raise substantial doubt about the entity’s ability to continue as a going concern.  ASU 2014-15 is effective for annual periods ending after December 15, 2016, and interim periods thereafter. Early adoption is permitted. The Company is currently evaluating the impact the adoption of ASU 2014-15 on the Company’s financial statements and disclosures.

 

In February 2016, the FASB issued Accounting Standards Update (ASU) No. 2016-02, Leases. ASU 2016-02 requires a lessee to record a right of use asset and a corresponding lease liability on the balance sheet for all leases with terms longer than 12 months. ASU 2016-02 is effective for all interim and annual reporting periods beginning after December 15, 2018. Early adoption is permitted. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. The Company is in the process of evaluating the impact of ASU 2016-02 on the Company’s financial statements and disclosures. 

 

Note 3 – Going Concern

 

These financial statements have been prepared on a going concern basis which assumes the Company will be able to realize its assets and discharge its liabilities in the normal course of business for the foreseeable future. As reflected in the financial statements, the Company had stockholders’ deficit of $34,208 at December 31, 2015, and incurred a net loss of $33,981 and used cash in operating activities of $29,049 for the reporting period then ended. These and other factors raise substantial doubt about the Company's ability to continue as a going concern. The financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern.

 

 

The Company is attempting to generate sufficient revenue; however, the Company’s cash position may not be sufficient to support its daily operations. While the Company believes in the viability of its strategy to increase revenue and in its ability to raise additional funds, there can be no assurances to that effect. The ability of the Company to continue as a going concern is dependent upon its ability to further implement its business plan and generate sufficient revenue and its ability to raise additional funds. However there is no assurance that such funds will be available.

 

Note 4 – Related Party Transactions

 

Advances from Former Shareholder

 

From time to time, a related party of the Company advance funds to the Company for working capital purpose. Those advances are unsecured, non-interest bearing and due on demand.

 

In November 2011, a former stockholder of the Company advanced $3,000 to the Company for working capital purposes, $2,399 of which was repaid and $601 was re-classed as contribution of capital in the period ending December 31, 2015.

 

Advances from Current Shareholder

 

From time to time, a shareholder of the Company advanced funds to the Company for working capital purpose. Those advances are unsecured, non-interest bearing and due on demand.

 

As of December 31, 2015, a stockholder of the Company advanced $39,218 to the Company for working capital purposes.  These funds are unsecured, non-interest bearing due on demand.

 

Free Office Space

 

The Company has been provided office space by an officer of the Company at no cost. The management determined that such cost is nominal and did not recognize the rent expense in its financial statements.

 

Note 5 – Deferred Tax Assets and Income Tax Provision

 

Deferred Tax Assets

 

At December 31, 2015, the Company had net operating loss (“NOL”) carry–forwards for Federal income tax purposes of $1,698,816 that may be offset against future taxable income through 2035. No tax benefit has been reported with respect to these net operating loss carry-forwards because the Company believes that the realization of the Company’s net deferred tax assets of approximately $577,597 was not considered more likely than not and accordingly, the potential tax benefits of the net loss carry-forwards are offset by a full valuation allowance.

 

Deferred tax assets consist primarily of the tax effect of NOL carry-forwards. The Company has provided a full valuation allowance on the deferred tax assets because of the uncertainty regarding the probability of its realization.  The valuation allowance increased approximately $11,553 and $10,304 for the reporting period ended December 31, 2015 and 2014, respectively.

 

Components of deferred tax assets in the balance sheets are as follows:

 

		December 31, 2015				December 31, 2014
Net deferred tax assets – non-current:
Expected income tax benefit from NOL carry-forwards		$	577,597			$	566,044
Less valuation allowance			(577,597	)			(566,044	)
Deferred tax assets, net of valuation allowance		$	-			$	-

 

Income Tax Provision in the Statements of Operations

 

A reconciliation of the federal statutory income tax rate and the effective income tax rate as a percentage of income before income tax provision is as follows:

 

		For the reporting period ended December 31, 2015				For the reporting period ended December 31, 2014
Federal statutory income tax rate			34.0	%			34.0	%
Change in valuation allowance on net operating loss carry-forwards			(34.0	)			(34.0	)
Effective income tax rate			0.0	%			0.0	%

 

 

ITEM 9.       CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

 

(1)	Previous Independent Registered Public Accounting Firm
	(i)	On March 28, 2016, the Company dismissed its independent registered public accounting firm, Li and Company, PC (“LICO”).
	(ii)	The reports of LICO on the financial statements of the Company as of December 31, 2014 and 2013, and the related statements of operations, comprehensive loss, changes in stockholders’ deficiency, and cash flows for the two years then ended December 31, 2014 and 2013 did not contain an adverse opinion or disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope or accounting principles other than an explanatory paragraph as to a going concern.
	(iii)	The decision to change independent registered public accounting firm was recommended and approved by the Board of Directors of the Company.
	(iv)	During the Company’s two most recent fiscal years ended December 31, 2014 and 2013 and any subsequent interim periods through March 28, 2016, the date of dismissal, (a) there were no disagreements with LICO on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of LICO, would have caused it to make reference thereto in its reports on the financial statements for such years and (b) there were no “reportable events” as described in Item 304(a)(1)(v) of Regulation S-K.
	(v)	On March 28, 2016 the Company provided LICO with a copy of this Current Report and has requested that it furnish the Company with a letter addressed to the U.S. Securities and Exchange Commission stating whether it agrees with the above statements. A copy of such letter is attached as Exhibit 16.1 to the Current Report on Form 8-K filed with the SEC on April 1, 2016.
(2)	New Independent Registered Public Accounting Firm
	On March 28, 2016, the Board of Directors of the Company engaged Weinberg & Company (“Weinberg”) as its new independent registered public accounting firm to audit and review the Company’s financial statements. During the two most recent fiscal years ended December 31, 2014 and 2013 and any subsequent interim periods through the date hereof prior to the engagement of Weinberg, neither the Company, nor someone on its behalf, has consulted Weinberg regarding:
	(i)	either: the application of accounting principles to a specified transaction, either completed or proposed; or the type of audit opinion that might be rendered on the Company’s consolidated financial statements, and either a written report was provided to the Company or oral advice was provided that the new independent registered public accounting firm concluded was an important factor considered by the Company in reaching a decision as to the accounting, auditing or financial reporting issue; or
	(ii)	any matter that was either the subject of a disagreement as defined in paragraph 304(a)(1)(iv) of Regulation S-K or a reportable event as described in paragraph 304(a)(1)(v) of Regulation S-K.

 

ITEM 9A.    CONTROLS AND PROCEDURES.

 

Evaluation of Disclosure Controls and Procedures

 

Pursuant to Rule 13a-15(b) under the Securities Exchange Act of 1934 (“Exchange Act”), the Company carried out an evaluation, with the participation of the Company’s management, including the Company’s President, Chief Executive Officer and Chief Financial Officer (the Company’s principal executive officer and principal financial officer), of the effectiveness of the Company’s disclosure controls and procedures (as defined under Rule 13a-15(e) under the Exchange Act) as of the end of the period covered by this report. Based on that evaluation, the President and Chief Executive Officer and Chief 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 to ensure that information required to be included in our periodic SEC filings is recorded, processed, summarized, and reported within the time periods specified in the SEC rules and forms, due to the material weaknesses identified below.

  

 

Management's Annual Report on Internal Control Over Financial Reporting.

 

As of December 31, 2015, management assessed the effectiveness of our internal control over financial reporting. The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting for the Company.  Internal control over financial reporting is defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Securities Exchange Act of 1934, as amended, as a process designed by, or under the supervision of, the Company’s President, Chief Executive Officer and Chief Financial Officer and effected by the Company’s Board of Directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP in the United States of America and includes those policies and procedures that:

 

●

Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect our transactions and dispositions of our assets;

 

●

Provide reasonable assurance our transactions are recorded as necessary to permit preparation of our financial statements in accordance with GAAP, and that receipts and expenditures are being made only in accordance with authorizations of our management and directors; and

 

●

Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statement.

 

In evaluating the effectiveness of our internal control over financial reporting, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control – Integrated Framework (2013 framework). Based on that evaluation, our President, Chief Executive Officer and Chief Financial Officer who also serves as our principal accounting officer, concluded that, during the period covered by this report, such internal controls and procedures were ineffective to detect the inappropriate application of US GAAP rules as more fully described below.

 

This was due to deficiencies that existed in the design or operation of our internal controls over financial reporting that adversely affected our internal controls and that amounted to be material weaknesses.

 

The matters involving internal controls and procedures that our management considered to be material weaknesses under the standards of the Public Company Accounting Oversight Board were: (i) lack of a functioning audit committee due to a lack of a majority of independent members and a lack of a majority of outside directors on our board of directors, resulting in ineffective oversight in the establishment and monitoring of required internal controls and procedures; (ii) inadequate segregation of duties consistent with control objectives; and (iii) ineffective controls over period end financial disclosure and reporting processes.  The aforementioned material weaknesses were identified by our President, Chief Executive Officer and Chief Financial Officer, in connection with the review of our financial statements as of December 31, 2015.

 

Management believes that the lack of a functioning audit committee and the lack of a majority of outside directors on our board of directors results in ineffective oversight in the establishment and monitoring of required internal controls and procedures, which could result in a material misstatement in our financial statements in future periods.

 

Our management has begun evaluating remedies to reduce these deficiencies. However, we will not be able to implement any remedial measures, such as appointing independent members on our board of directors, until we have sufficient fund to do so.

 

Changes in Internal Controls over financial reporting

 

No change in our internal control over financial reporting occurred during the fourth fiscal quarter of the year ended December 31, 2015 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 

ITEM 9B.    OTHER INFORMATION

 

None.

 

 

PART III

 

ITEM 10.    DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.

 

Directors and Executive Officers

 

The following sets forth information about our directors and executive officers as of the date of this report:

 

Name		Age		Positions and Offices Held
Henry Lee		64		President, Chief Executive Officer, Chief Financial Officer and Director
Alex Jen		72		Director

 

Henry Lee has decades of experience in international trading, logistic industry and business investment. Mr. Lee is the founder of Safeco Group in 1985 and was appointed as Managing Director since inception. Mr. Lee has also developed and started new ventures in his past years of business investment in Asia region. Mr. Lee received a B.A. degree in Business Management from Taiwan National Chung Hsing University. Through the years Mr. Lee has developed extensive relationship and significant experience in greater China market. At present Mr. Lee serves as Vice President of Taiwanese Chamber of Commerce Association in Nanning, Guangxi province, China.

 

Alex Jen, Ph.D., served as the Director of the Company since inception. Dr. Jen served as President of Omni Consultant Ltd starting in December 2002 doing consulting work for Chinese firms exporting merchandise to the United States until his resignation in December 2004. He has extensive experiences in the development, manufacturing and marketing of new products in the pharmaceutical, consumer chemicals, foods, and electronic industries. He has held various positions at FMC Corporation from 1971 to 1972 as Development Engineer, Abbott Laboratories from 1972 to 1976 as Project Manager, Proctor and Gamble Company and Clorox from 1976 to 1992 as Project Engineer, and Fortron/Source Corporation from 1992 to 2002 as Vice President of China Operations. Dr. Jen received his Ph.D. in Chemical Engineering from the University of Massachusetts at Amherst in 1968.    Dr. Jen is of Chinese descent and provides a broad project management, engineering and certification background from both continents.

 

There are no agreements or understandings for the officer or directors to resign at the request of another person and the above-named officer and director is not acting on behalf of nor will act at the direction of any other person.

 

Term of Office

 

Our directors hold office until the next annual general meeting of our stockholders and until their successors have been duly elected and qualified or until removed from office in accordance with our bylaws. Our officers are elected by and serve at the discretion of the board of directors.

 

Family Relationships

 

There are no family relationships between any of our directors or executive officers.

 

Certain Legal Proceedings

 

To our knowledge, no director, nominee for director, or executive officer of the Company has been a party in any legal proceeding material to an evaluation of his ability or integrity during the past ten years.

 

Potential Conflicts of Interest

 

We are not aware of any current or potential conflicts of interest with our director or executive officer.

 

Board Committees

 

We have not formed an Audit Committee, Compensation Committee or Nominating and Corporate Governance Committee as of the filing of this Annual Report. Our Board of Directors performs the principal functions of an Audit Committee. We currently do not have an audit committee financial expert on our Board of Directors.  We believe that an audit committee financial expert is not required because the cost of hiring an audit committee financial expert to act as one of our directors and to be a member of an Audit Committee outweighs the benefits of having an audit committee financial expert at this time.

  

We do not have a financial expert serving on the Board of Directors or employed as an officer based on management’s belief that the cost of obtaining the services of a person who meets the criteria for a financial expert under Item 401(e) of Regulation S-B is beyond its limited financial resources and the financial skills of such an expert are simply not required or necessary for us to maintain effective internal controls and procedures for financial reporting in light of the limited scope and simplicity of accounting issues raised in its financial statements at this stage of its development.

 

 

Compliance with Section 16(A) Of The Exchange Act.

 

Section 16(a) of the Exchange Act requires the Company’s officers and directors, and persons who beneficially own more than 10% of a registered class of the Company’s equity securities, to file reports of ownership and changes in ownership with the Securities and Exchange Commission and are required to furnish copies to the Company. Based solely on our review of the reports filed with the SEC, no person failed to timely file reports required by Section 16(a) in the past two fiscal years, other than that Alex Jen failed to file a Form 4 in connection with his resignation as President, Chief Executive Officer and Chief Financial Officer, and that Gary A. Tickel failed to file a Form 4 in connection with his resignation as Director of the Company on July 30, 2014.

 

Code of Ethics

 

The company has adopted a Code of Ethics applicable to its Principal Executive Officer and Principal Financial Officer. This Code of Ethics was previously filed as an exhibit to our Annual Report on Form 10-K for the fiscal year ended December 31, 2008, filed with the SEC on February 13, 2009.

 

ITEM 11.    EXECUTIVE COMPENSATION

 

The following summary compensation table sets forth all compensation awarded to, earned by, or paid to the named executive officers paid by us during the years ended December 31, 2015 and December 31, 2014.

 

SUMMARY COMPENSATION TABLE

 

Name and Principal Position		Year				Salary ($)				Bonus ($)				Stock Awards ($)				Option Awards ($)				Non-Equity Incentive Plan Compensation ($)				Non-Qualified Deferred Compensation Earnings ($)				All Other Compensation ($)				Totals ($)
Alex Jen, Former President, Chief Executive Officer Chief Financial			2015			$	0				0				0				0				0				0			$	0			$	0
Officer			2014			$	0				0				0				0				0				0			$	0			$	0
Henry Lee, President, Chief Executive Officer and Chief			2015			$	0				0				0				0				0				0			$	0			$	0
Financial Officer			2014			$	0				0				0				0				0				0			$	0			$	0

  

Employment Agreements

 

We do not have any employment agreements in place with our sole officer or directors.

 

Outstanding Equity Awards at Fiscal Year End

 

None of our executive officers received any equity awards, including, options, restricted stock or other equity incentives during the fiscal year ended December 31, 2015.

 

Compensation of Directors

 

Our directors do not receive any compensation for their services as directors. The Board of Directors has the authority to fix the compensation of directors. No amounts have been paid to, or accrued to, directors in such capacity.

 

 

ITEM 12.    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

 

The following table sets forth certain information as of the date hereof with respect to the beneficial ownership of our ordinary shares, the sole outstanding class of our voting securities, by (i) each stockholder known to be the beneficial owner of 5% or more of the outstanding ordinary shares of the Company, (ii) each executive officer and director, and (iii) all executive officers and directors as a group. Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission and generally includes voting or investment power with respect to securities. ordinary shares subject to options, warrants or convertible securities exercisable or convertible within 60 days as of the date hereof are deemed outstanding for computing the percentage of the person or entity holding such options, warrants or convertible securities but are not deemed outstanding for computing the percentage of any other person and is based on 32,574,360 ordinary shares issued and outstanding as of March 31, 2016.

 

Name		Number of Shares Beneficially Owned				Percent of Class (1)
Pan Asia Holding Corp.  8FL, No. 167 Chang An E. Road., Sec 2  Taipei, Taiwan			22,867,201	(2)			70.20	%
Alex Jen, Director  711 N. 1st Avenue  Arcadia, California 91006			0				0	%
Rostar International Holdings Ltd.  Unit D, 5/F, No.430-436 Nathan Road  Kowloon, Hong Kong			2,345,354	(3)			7.20	%
Ting-Wei Lee  4 FL, No.4 Alley 35, Lane 179  Nei Hu Road., Sec.2  Taipei, Taiwan			1,759,015				5.40	%
All Executive Officers and Directors as a group (1 person)			22,867,201				70.20	%

 

(1)	Applicable percentage ownership is based on 32,574,360 shares of Common Stock outstanding as of March 31, 2016.
(2)	Henry Lee, our Chief Executive Officer, Chief Financial Officer and Director, has the sole voting and dispositive control over these securities.
(3)	Chang Jung Lee has sole voting and dispositive control over these securities.

 

ITEM 13.    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.

 

From time to time, a related party of the Company advance funds to the Company for working capital purpose. Those advances are unsecured, non-interest bearing and due on demand.

 

Advances from Former Shareholder

 

In November 2011, a former stockholder of the Company advanced $3,000 to the Company for working capital purposes, $2,399 of which was repaid and $601 was re-classed as contribution of capital in the period ending December 31, 2015.

 

Advances from Current Shareholder

 

From time to time, a shareholder of the Company advance funds to the Company for working capital purpose. Those advances are unsecured, non-interest bearing and due on demand.

 

As of December 31, 2015, a stockholder of the Company advanced $39,218 to the Company for working capital purposes. These funds are unsecured, non-interest bearing and due on demand.

 

Free Office Space

 

The Company has been provided office space by an officer of the Company at no cost.

 

  

ITEM 14.    PRINCIPAL ACCOUNTANT FEES AND SERVICES

 

Audit Fees

 

The aggregate fees billed for each of the last two fiscal years for professional services rendered by the principal accountant for the audit of the Company’s annual financial statements and review of financial statements included in the Company’s Form 10-K or 10-Q or services that are normally provided by the accountant in connection with statutory and regulatory filings was $11,000 and $9,750 for the fiscal year ended December 31, 2015 and 2014, respectively.

 

Audit Related Fees

  

The Company has been provided office space by an officer of the Company at no cost. The management determined that such cost is nominal and did not recognize the rent expense in its financial statements.

  

There were no fees for audit related services for the years ended December 31, 2015 and 2014.

 

Tax Fees

 

For the Company’s fiscal years ended December 31, 2015 and 2014, we were not billed for professional services rendered for tax compliance, tax advice, and tax planning.

 

All Other Fees

 

The Company did not incur any other fees related to services rendered by our principal accountant for the fiscal years ended December 31, 2015 and 2014.

 

Effective May 6, 2003, the Securities and Exchange Commission adopted rules that require that before our auditor is engaged by us to render any auditing or permitted non-audit related service, the engagement be:

 

- approved by our audit committee; or

 

- entered into pursuant to pre-approval policies and procedures established by the audit committee, provided the policies and procedures are detailed as to the particular  service,  the  audit committee is informed of each service, and such policies and procedures do not include delegation of the audit committee's responsibilities to management.

 

We do not have an audit committee.  Our entire board of directors pre-approves all services provided by our independent auditors.

 

All of the above services and fees were reviewed and approved by the entire board of directors before the respective services were rendered.

 

 

PART IV

 

ITEM 15.    EXHIBITS, FINANCIAL STATEMENT SCHEDULES.

 

a) Documents filed as part of this Annual Report

 

1. Financial Statements

 

2. Financial Statement Schedules

 

3. Exhibits

 

Exhibits #		Title
3.1		Certificate Of Incorporation (Incorporated by reference to Form 10SB filed on October 9, 2003.)
3.2		Certificate Of Amendment Of Certificate Of Incorporation (Incorporated by reference to Form S-1 filed on September 16, 2010.)
3.3		Certificate of Amendment of Certificate of Incorporation, dated September 30, 2014. (Incorporated by reference to the Quarter Report on Form 10-Q filed on November 13, 2014.)
3.4		By-Laws (Incorporated by reference to Form 10SB filed on October 9, 2003.)
14.1		Code of Ethics (Incorporated by reference to Form 10-KSB filed on March 22, 2005.)
31.1		Certification of Principal Executive Officer and Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1+		Certification of Principal Executive Officer and Principal Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS		XBRL Instance Document
101.SCH		XBRL Taxonomy Extension Schema Document
101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB		XBRL Taxonomy Extension Label Linkbase Document
101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF		XBRL Taxonomy Extension Definition Linkbase Document

 

+	In accordance with the SEC Release 33-8238, deemed being furnished and not filed.

 

 

SIGNATURES

 

Pursuant to the requirement of Section 13 or 15(d) of the Securities Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

	Safco Investment Holding Corp.
	By:	/s/ Henry Lee
		Henry Lee President, Chief Executive Officer, and Chief Financial Officer (Duly Authorized Officer, Principal Executive Officer and Principal Financial Officer)
	Date:	April 14, 2016

 

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

 

Name		Title		Date
/s/ Henry Lee		President, Chief Executive Officer, Chief		April 14, 2016
Henry Lee		Financial Officer, and Chairman of the Board of Directors (Principal Executive Officer and Principal Financial Officer)
/s/ Alex Jen		Director		April 14, 2016
Alex Jen

 

 

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