UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

  

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

 

For the quarterly period ended September 30, 2016

 

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)

  

N/A

(Former name, former address and former fiscal year, if changed since last report)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities 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 whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See 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	☒

 

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

 

Indicate the number of shares outstanding of each of the issuer’s classes of common equity: 32,574,360 shares of the registrant’s common stock, par value of $0.001 per share, were outstanding as of November 21, 2016.

 

 

 

Safco Investment Holding Corp.

 

Quarterly Report on Form 10-Q

 

September 30, 2016

 

TABLE OF CONTENTS

 

		PAGE
PART 1 - FINANCIAL INFORMATION		1
Item 1.	Financial Statements	1
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	10
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	15
Item 4.	Controls and Procedures	15
PART II - OTHER INFORMATION		16
Item 1.	Legal Proceedings	16
Item 1A.	Risk Factors	16
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	16
Item 3.	Defaults Upon Senior Securities	16
Item 4.	Mine Safety Disclosures	16
Item 5.	Other Information	16
Item 6.	Exhibits	16
SIGNATURES		17

 

 

PART I - FINANCIAL INFORMATION

 

Item 1.

Financial Statements.

 

The following unaudited interim financial statements of Safco Investment Holding Corp. (referred to herein as the "Company," "we," "us" or "our") are included in this quarterly report on Form 10-Q:

 

Safco Investment Holding Corp

 

September 30, 2016 and 2015

(unaudited)

 

Index to the Financial Statements

 

Contents		Page(s)
Condensed Balance Sheets at September 30, 2016 (unaudited) and December 31, 2015		2
Condensed Statements of Operations for the Three and Nine Months Ended September 30, 2016 and 2015 (unaudited)		3
Condensed Statement of Changes in Stockholders’ Deficit for the Nine Months Ended September 30, 2016 (unaudited)		4
Condensed Statements of Cash Flows for the Nine Months Ended September 30, 2016 and 2015 (unaudited)		5
Notes to the Condensed Financial Statements (unaudited)		6

 

 

Safco Investment Holding Corp

Condensed Balance Sheets

 

		September 30, 2016				December 31, 2015
		(unaudited)
ASSETS
CURRENT ASSETS:
Cash		$	818			$	10,217
Total Current Assets			818				10,217
Total Assets		$	818			$	10,217
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
Accounts payable and accrued expenses		$	4,572			$	5,207
Advances from related party			54,880				39,218
Total Current Liabilities			59,452				44,425
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				1,632,034
Accumulated deficit			(1,723,242	)			(1,698,816	)
Total Stockholders' Deficit			(58,634	)			(34,208	)
Total Liabilities and Stockholders' Deficit		$	818			$	10,217

 

See accompanying notes to the condensed financial statements

 

 

 Safco Investment Holding Corp

 Condensed Statements of Operations

 

		For the Three Months				For the Three Months				For the Nine Months				For the Nine Months
		Ended				Ended				Ended				Ended
		September 30, 2016				September 30, 2015				September 30, 2016				September 30, 2015
		(Unaudited)				(Unaudited)				(Unaudited)				(Unaudited)
Net revenues		$	-			$	-			$	-			$	-
Operating expenses
Professional fees			4,371				7,014				22,788				27,211
General and administrative expenses			512				1,376				816				1,558
Total operating expenses			4,883				8,390				23,604				28,769
LOSS FROM OPERATIONS			(4,883	)			(8,390	)			(23,604	)			(28,769	)
Income tax provision			-				-				822				-
Net loss		$	(4,883	)		$	(8,390	)		$	(24,426	)		$	(28,769	)
Net loss per common share - Basic and diluted:		$	(0.00	)		$	(0.00	)		$	(0.00	)		$	(0.00	)
Weighted average common shares outstanding - basic and diluted			32,574,360				32,574,360				32,574,360				32,574,360

  

See accompanying notes to the condensed financial statements

 

 

Safco Investment Holding Corp

Condensed Statement of Changes in Stockholders' Deficit

For the nine months ended September 30, 2016

(unaudited)

 

		Common Stock,
		Par Value $0.001								Additional								Total
		Number of Shares				Amount				Paid-in Capital				Accumulated Deficit				Stockholders' Deficit
Balance, December 31, 2015			32,574,360			$	32,574			$	1,632,034			$	(1,698,816	)		$	(34,208	)
Net loss			-				-				-				(24,426	)			(24,426	)
Balance, September 30, 2016			32,574,360			$	32,574			$	1,632,034			$	(1,723,242	)		$	(58,634	)

 

See accompanying notes to the condensed financial statements

 

 

Safco Investment Holding Corp

Condensed Statements of Cash Flows

 

		For the Nine Months				For the Nine Months
		Ended				Ended
		September 30, 2016				September 30, 2015
		(Unaudited)				(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss		$	(24,426	)		$	(28,769	)
Adjustments to reconcile net loss to net cash used in operating activities
Changes in operating assets and liabilities:
Accounts payable and accrued expenses			(635	)			6,990
NET CASH USED IN OPERATING ACTIVITIES			(25,061	)			(21,779	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Advances from shareholders			15,662				19,354
Capital contribution-Stockholder's payment for accrued expenses			-				601
NET CASH PROVIDED BY FINANCING ACTIVITIES			15,662				19,955
NET CHANGE IN CASH			(9,399	)			(1,824	)
Cash at beginning of period			10,217				2,447
Cash at end of period		$	818			$	623
SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION:
Interest paid		$	-			$	-
Income tax paid		$	-			$	-

 

See accompanying notes to the condensed financial statements

 

 

Safco Investment Corp

September 30, 2016 and 2015

Notes to the Condensed Financial Statements

(unaudited)

 

Note 1 - Organization and Operations and Basis of Presentation

 

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 share value.

 

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 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.

 

Meanwhile, we have not generated meaningful revenues and our limited assets consist solely of cash.

 

The unaudited condensed financial statements of the Company for the nine months ended September 30, 2016 and 2015 have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information, applied on a consistent basis, and pursuant to the requirements for reporting on Form 10-Q and the requirements of Regulation S-K and Regulation S-X promulgated under the Securities Act of 1933, as amended (the “Securities Act”) . Accordingly, they do not include all the information and footnotes required by U.S. GAAP for complete audited financial statements. However, the information included in these financial statements reflects all adjustments (consisting solely of normal recurring adjustments), which are, in the opinion of management, necessary for the fair presentation of the Company’s financial position and the results of operations. Results shown for interim periods are not necessarily indicative of the results to be obtained for a full fiscal year or any future annual or interim period. The balance sheet information as of December 31, 2015 was derived from the audited financial statements as of and for the year ended December 31, 2015 included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on April 14, 2016. These financial statements should be read in conjunction with that report.

 

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 an accumulated deficit of $58,634 at September 30, 2016, and incurred a net loss of $24,426 and used cash in operating activities of $25,061 for the reporting period then ended. These and other factors raise substantial doubt about the Company's ability to continue as a going concern. In addition, the Company's independent certified public accounting firm in its report on the December 31, 2015 financial statements has raised 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 generate 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.

 

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, valuation of deferred tax asset 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. The Company derived no revenue during nine months periods ended September 30, 2016 and 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 September 30, 2016 and 2015.

  

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 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 – Related Party Transactions

 

Advances from stockholder

 

From time to time, a stockholder 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 September 30, 2016 and December 31, 2015, the balance of amounts advanced by a stockholder to the Company, used for working capital purposes, amounted to $54,880 and $39,218, respectively.

 

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 4 – Subsequent Event

 

On July 30, 2014, the Company, the former majority shareholders of the Company (the “Sellers”) and Pan Asia Holdings Corp. (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”). Through September 30, 2016, $300,000 has been paid and the balance was to be paid before December 31, 2016 or sooner at a mutually agreed date.   On October 14^th, 2016, Purchasers and Sellers mutually agreed to terminate the Securities Purchase Agreement, and the Purchasers returned 20,521,846 shares to the Sellers.   

 

The 20,521,846 shares returned by the Purchasers were reissued to Chi Jen Chen, a related party to the Seller. This transaction constituted a change of control in the registrant.

 

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

 

This quarterly report on Form 10-Q and other reports filed by Safco Investment Holding Corp. (the “Company”) from time to time with the SEC (collectively, the “Filings”) contain or may contain forward-looking statements and information that are based upon beliefs of, and information currently available to, the Company’s management as well as estimates and assumptions made by Company’s management. Readers are cautioned not to place undue reliance on these forward-looking statements, which are only predictions and speak only as of the date hereof. When used in the Filings, the words “anticipate,” “believe,” “estimate,” “expect,” “future,” “intend,” “plan,” or the negative of these terms and similar expressions as they relate to the Company or the Company’s management identify forward-looking statements. Such statements reflect the current view of the Company with respect to future events and are subject to risks, uncertainties, assumptions, and other factors, including the risks relating to the Company’s business, industry, and the Company’s operations and results of operations. Should one or more of these risks or uncertainties materialize, or should the underlying assumptions prove incorrect, actual results may differ significantly from those anticipated, believed, estimated, expected, intended, or planned.

 

Although the Company believes that the expectations reflected in the forward-looking statements are reasonable, the Company cannot guarantee future results, levels of activity, performance, or achievements. Except as required by applicable law, including the securities laws of the United States, the Company does not intend to update any of the forward-looking statements to conform these statements to actual results.

 

Our financial statements are prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). These accounting principles require us to make certain estimates, judgments and assumptions. We believe that the estimates, judgments and assumptions upon which we rely are reasonable based upon information available to us at the time that these estimates, judgments and assumptions are made. These estimates, judgments and assumptions can affect the reported amounts of assets and liabilities as of the date of the financial statements as well as the reported amounts of revenues and expenses during the periods presented. Our financial statements would be affected to the extent there are material differences between these estimates and actual results. In many cases, the accounting treatment of a particular transaction is specifically dictated by GAAP and does not require management’s judgment in its application. There are also areas in which management’s judgment in selecting any available alternative would not produce a materially different result. The following discussion should be read in conjunction with our financial statements and notes thereto appearing elsewhere in this report.

 

 

Business Overview

 

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 Pan Asia Holdings Corp. (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”).     Through September 30, 2016, $300,000 has been paid and the balance was to be paid before December 31, 2016 or sooner at a mutually agreed date.   On October 14^th, 2016, Purchasers and Sellers mutually agreed to terminate the Securities Purchase Agreement, and the Purchasers has returned 20,521,846 shares to the Sellers.    

 

The 20,521,846 shares returned by the Purchasers were reissued to Chi Jen Chen, a related party to the Seller.   This transaction constituted a change of control in the registrant.

 

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.

 

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 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.

 

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 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 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.

 

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.

 

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 three months ended September 30, 2016 and 2015

 

For the three months ended September 30, 2016, we generated no revenue as compared to no revenue for the same period ended September 30, 2015.

 

Expenses for the three months ended September 30, 2016 totaled $4,883 resulting in a net loss of $4,883. Expenses for the three months ended September 30, 2016 consisted of $512 in general and administrative expenses and $4,371 in professional fees. In comparison, expenses for the same period ended September 30, 2015 totaled $8,390 resulting in a net loss of $8,390. Expenses for the period ended September 30, 2015 consisted of $1,376 in general and administrative expenses and $7,014 in professional fees. The decrease in the expenses for the three months ended September 30, 2016 and 2015 was a result of decrease in professional fees and decrease in general and administrative expenses.

 

 

For the nine months ended September 30, 2016 and 2015

 

For the nine months ended September 30, 2016, we generated no revenue as compared to no revenue for the same period ended September 30, 2015.

 

Expenses for the nine months ended September 30, 2016 totaled $23,604 resulting in a net loss of $24,426. Expenses for the nine months ended September 30, 2016 consisted of $816 in general and administrative expenses and $22,788 in professional fees. In comparison, expenses for the same period ended September 30, 2015 totaled $28,769 resulting in a net loss of $28,769. Expenses for the nine months ended September 30, 2015 consisted of $1,558 in general and administrative expenses and $27,211 in professional fees. The decrease in the expenses for the nine months ended September 30, 2016 and 2015 was a result of a decrease in professional expenses and a decrease in general and administrative expenses.

  

Liquidity and Capital Resources

 

The following is a summary of the Company's cash flows provided by (used in) operating, investing, and financing activities for the nine months ended September 30, 2016:

 

		For the nine months ended September 30, 2016
Net Cash (Used in) Operating Activities		$	(25,061	)
Net Cash (Used in) Investing Activities		$	-
Net Cash Provided by Financing Activities		$	15,662

 

For the nine months ended September 30, 2016, the net cash used in operating activities was $25,061. For the nine months ended September 30, 2016, the net cash used in investing activities was $0. The net cash provided by financing activities was $15,662 for the nine months ended September 30, 2016. As of September 30, 2016, we had $818 cash on hand. The Company is also dependent upon the receipt of capital investment or other financing to fund its ongoing operations and to execute its business plan. If continued funding and capital resources are unavailable at reasonable terms, the Company may not be able to implement its plan of operations.

 

As reflected in the accompanying condensed financial statements, we have minimal operations and had a stockholders’ deficit at September 30, 2016. This raises substantial doubt about our ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent on our ability to raise additional capital and implement our business plan. In addition, the Company’s independent certified public accounting firm in its report on the December 31, 2015 financial statements raised 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 if we are 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. If we are unable to satisfy our cash requirements, our major shareholders have indicated their willingness to provide additional funds to the Company to cover any shortfalls, however, no written agreement or guarantee exists to this effect.

 

 

Critical Accounting Policies and 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.

 

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. 

 

Off Balance Sheet Arrangement

 

We do not have any off-balance sheet arrangement. 

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

 

We do not hold any derivative instruments and do not engage in any hedging activities.

 

Item 4. Controls and Procedures.

 

(a)

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 Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”) (the Company’s principal financial and accounting 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 upon that evaluation, the Company’s CEO and CFO concluded that the Company’s disclosure controls and procedures are not effective as of September 30, 2016 to ensure that information required to be disclosed by the Company in the reports that the Company files or submits under the Exchange Act, is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including the Company’s CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure for the reason described below.

 

Because of our limited operations, we have a limited number of employees which prohibits a segregation of duties. In addition, we lack a formal audit committee with a financial expert. As we grow and expand our operations we will engage additional employees and experts as needed. However, there can be no assurance that our operations will expand.

   

(b)

Changes in Internal Controls

 

There have been no changes in our internal control over financial reporting that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

 

PART II - OTHER INFORMATION

 

Item 1. Legal Proceedings.

 

We are currently not involved in any litigation that we believe could have a material adverse effect on our financial condition or results of operations. There is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the executive officers of our Company or any of our subsidiaries, threatened against or affecting our company, our common stock, any of our subsidiaries or of our companies or our subsidiaries’ officers or directors in their capacities as such, in which an adverse decision could have a material adverse effect.

 

Item 1A. Risk Factors.

 

Not applicable because we are a smaller reporting company.

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

 

There were no unregistered sales of the Company’s equity securities during the three months ended September 30, 2016, that were not otherwise disclosed in a Current Report on Form 8-K. 

 

Item 3. Defaults Upon Senior Securities.

 

There were no defaults upon senior securities during the quarter ended September 30, 2016. 

 

Item 4. Mine Safety Disclosures.

 

Not applicable.

 

Item 5. Other Information.

 

There is no other information required to be disclosed under this item which was not previously disclosed. 

 

Item 6. Exhibits.

 

Exhibit Number		Description
31.1		Certifications of the Chief Executive Officer and Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1+		Certifications of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2+		Certifications of the Chief 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.DEF		XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB		XBRL Taxonomy Extension Label Linkbase Document.
101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document.

 

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

 

 

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.

 

	Safco Investment Holding Corp.
Date: November 21, 2016	By:	/s/ Henry Lee
		Henry Lee
		President, Chief Executive Officer and Chief Financial Officer
		(Principal Executive Officer and Principal Financial Officer)

 

 

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