U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Form 10-Q

 

Mark One

 

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

 

For the quarterly period ended August 31, 2014

 

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

 

For the transition period from _______ to _______

 

Commission File No. 333-141060

 

Success Holding Group International Inc.

(Name of small business issuer in its charter)

 

Nevada		99-0378256
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

 

531 Airport North Office Park

Fort Wayne, Indiana 46825

(Address of principal executive offices)

 

(260) 490-9990

(Issuer’s telephone number)

 

Securities registered pursuant to Section 12(b) of the Act:		Name of each exchange on which registered:
None

 

Securities registered pursuant to Section 12(g) of the Act:

 

Common Stock, $0.001

(Title of Class) 

 

Indicate by checkmark whether the issuer: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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 x 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 (Section 229.405 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 x No ¨

 

Indicate by check mark whether the registrant is a large accelerated filed, an accelerated filer, a non-accelerated filer, or a smaller reporting company.

 

Large accelerated filer	¨	Accelerated filer	¨
Non-accelerated filer	¨	Smaller reporting company	x

 

 Indicate by checkmark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the most practicable date:

 

Class		Outstanding as of October 2, 2014
Common Stock, $0.001		36,680,000

 

 

 

 

INDEX

 

			Page
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS				3
PART I. FINANCIAL INFORMATION				4
Item 1.	Financial Statements			4
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations			12
Item 3.	Qualitative and Quantitative Disclosures About Market Risk			17
Item 4.	Controls and Procedures			17
PART II. OTHER INFORMATION				18
Item 1.	Legal Proceedings			18
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds			18
Item 3.	Defaults Upon Senior Securities			18
Item 4.	Mine Safety Disclosure			18
Item 5.	Other information			18
Item 6.	Exhibits			20
SIGNATURES				21

 

2

 

FORWARD LOOKING STATEMENTS

 

Statements made in this Form 10-Q that are not historical or current facts are "forward-looking statements" made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933 (the "Act") and Section 21E of the Securities Exchange Act of 1934. These statements often can be identified by the use of terms such as "may," "will," "expect," "believe," "anticipate," "estimate," "approximate" or "continue," or the negative thereof. We intend that such forward-looking statements be subject to the safe harbors for such statements. We wish to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. Any forward-looking statements represent management's best judgment as to what may occur in the future. However, forward-looking statements are subject to risks, uncertainties and important factors beyond our control that could cause actual results and events to differ materially from historical results of operations and events and those presently anticipated or projected. We disclaim any obligation subsequently to revise any forward-looking statements to reflect events or circumstances after the date of such statement or to reflect the occurrence of anticipated or unanticipated events.

 

3

 

PART I

 

ITEM 1. FINANCIAL STATEMENTS

  

SUCCESS HOLDING GROUP INTERNATIONAL INC.

(A Development Stage Company)

Consolidated Balance Sheets

 

		August 31,				February 28,
		2014				2014
		(Unaudited)
Assets
Current assets
Cash		$	1,989,861			$	1,597
Prepayment			800,000				-
Total Current Assets			2,789,861				1,597
Total Assets		$	2,789,861			$	1,597
Liabilities and Stockholders' Equity (Deficit)
Current Libilities
Accured Expenses		$	8,150			$	-
Due to Related Parties			1,179				9,000
Total Current Liabilities			9,329				9,000
Shareholder loan			2,700,000				-
Total Libilities			2,709,329				9,000
Stockholders' Equity (Deficit)
Common stock, $0.001 par value, 300,000,000 shares authorized; 36,680,000 shares issued and outstanding			36,680				36,680
Earnings (Deficit) accumulated during the development stage			43,852				(44,083	)
Total stockholders' equity (deficit)			80,532				(7,403	)
Total liabilities and stockholders' equity (deficit)		$	2,789,861			$	1,597

 

4

 

SUCCESS HOLDING GROUP INTERNATIONAL INC.

(A Development Stage Company)

Consolidated Statement Of Operations

(Unaudited)

 

		For the Three Months Ended August 31								For the Six Months Ended August 31								For the Period July 5, 2012 (Inception) to August 31
		2014				2013				2014				2013				2014
Revenue		$	190,000			$	-			$	190,000			$	-			$	190,000
Cost of Sales			100,000								100,000								100,000
Gross Margin			90,000				-				90,000				-				90,000
Operating Expenses
General and administrative			10,355				7,358				13,571				7,360				46,174
Net Income (Loss) from Operation			79,645				(7,358	)			76,429				(7,360	)			43,826
Other Income			11,506				-				11,506				-				11,506
Net Income (Loss) from Operation before Taxes			91,151				(7,358	)			87,935				(7,360	)			55,332
Provision for Income Taxes			-				-				-				-				-
Net Income (Loss)		$	91,151			$	(7,358	)		$	87,935			$	(7,360	)		$	55,332
Earnings (Loss) per common share-Basic and diluted		$	0.0025			$	(0.0002	)		$	0.0024			$	(0.0008	)
Weighted Average Number of Common Shares Outstanding Basic and diluted			36,680,000				36,680,000				36,680,000				9,170,000

 

5

 

SUCCESS HOLDING GROUP INTERNATIONAL INC.

(A Development Stage Company)

Consolidated Statement of Cash Flows

(Unaudited)

 

		For the Six Months Ended August 31								For the Period July 5, 2012 (Inception) to August 31
		2014				2013				2014
Operating Activities
Net Income (loss) of the period		$	87,935			$	(7,360	)		$	55,332
Debt forgiveness from related parties			(11,500	)			-			$	(11,500	)
Prepayment (increase) decrease			(800,000	)			-				(800,000	)
Accrued expenses increase (decrease)			8,150				-				8,150
Net cash used in operating activities			(715,415	)			(7,360	)			(748,018	)
Financing Activities
Proceeds from sales of common stock			-				-				34,200
Proceeds from related parties			3,679				-				3,679
Loans from shareholders			2,700,000				-				2,700,000
Net cash provided by financing activities			2,703,679				-				2,737,879
Net increase (decrease) in cash and equivalents			1,988,264				(7,360	)			1,989,861
Cash and equivalents at beginning of the period			1,597				23,576				-
Cash and equivalents at end of the period		$	1,989,861			$	16,216			$	1,989,861
Supplemental cash flow information:
Interest paid		$	-			$	-
Income taxes paid		$	-			$	-

 

6

 

SUCCESS HOLDING GROUP INTERNATIONAL INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 1 – ORGANIZATION AND DESCRIPTION OF BUSINESS

 

Organization and Description of Business

 

SUCCESS HOLDING GROUP INTERNATIONAL INC. (“the Company”) was incorporated under the laws of the State of Nevada, in the United States of America on July 5, 2012. The Company acquired 100%  Celebrity Enterprise Co., Ltd. which was incorporated in Seychelles on August 15, 2014. The Company acquired 100% Success Entertainment Group Inc. which was incorporated in Cayman on August 28, 2014.

 

The Company has its operation strategy on movies investment, human resource training courses, and video advertisement cooperation to bring the Company operating income.

 

Celebrity Enterprise Co., Ltd., as a subsidiary of the Company generated some service revenue from assisting a series of seminar activities during the three months ended August 31, 2014.

 

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Interim Financial Statements

 

The accompanying unaudited consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission and should be read in conjunction with the Company’s audited financial statements and footnotes thereto for the year ended February 28, 2014, included in the Company’s Form 10-K filed on June 13, 2014. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been omitted pursuant to such rules and regulations. However, the Company believes that the disclosures are adequate to make the information presented not misleading. The financial statements reflect all adjustments (consisting primarily of normal recurring adjustments) that are, in the opinion of management necessary for a fair presentation of the Company’s financial position and results of operations. The operating results for the six months ended August 31, 2014 are not necessarily indicative of the results to be expected for any other interim period of a future year.

 

Basis of Presentation

 

The Company has prepared the accompanying consolidated financial statements in conformity with accounting principles generally accepted in the United States of America. All significant intercompany accounts and transactions between the Company and its subsidiaries have been eliminated in consolidation.

 

7

 

Reclassification

 

Certain amounts in the prior period financial statements have been reclassified to conform to the current period presentation. These reclassifications had no effect on reported losses.

 

Cash and Cash Equivalents

 

The Company's bank accounts are deposited in insured institutions. The Company's bank deposits has $1,989,861 and $1,597 on August 31, 2014 and February 28, 2014 respectively.

 

Concentration of Credit Risk

 

Financial instruments that potentially subject the Company to a significant concentration of credit risk consist primarily of cash and cash equivalents. The Company maintains deposits in federally insured financial institutions in excess of federally insured limits. However, management believes the Company is not exposed to significant credit risk due to the financial position of the depository institutions in which those deposits are held.

 

Earnings (Loss) Per Share

 

The Company computes earnings (loss) per share in accordance with “ASC-260”, “Earnings per Share” which requires presentation of both basic and diluted earnings per share on the face of the statement of operations. Basic earnings (loss) per share is computed by dividing net income (loss) available to common shareholders by the weighted average number of outstanding common shares during the period. Diluted earnings (loss) per share gives effect to all dilutive potential common shares outstanding during the period. Dilutive earnings (loss) per share excludes all potential common shares if their effect is anti-dilutive.

 

Dividends

 

The Company has not adopted any policy regarding payment of dividends. No dividends have been paid during any of the periods shown.

 

Income Taxes

 

The Company follows the liability method of accounting for income taxes. Under this method, deferred income tax assets and liabilities are recognized for the estimated tax consequences attributable to differences between the financial statement carrying values and their respective income tax basis (temporary differences). The effect on deferred income tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

 

Impairment of Long-Lived Assets

 

The Company continually monitors events and changes in circumstances that could indicate carrying amounts of long-lived assets may not be recoverable. When such events or changes in circumstances are present, the Company assesses the recoverability of long-lived assets by determining whether the carrying value of such assets will be recovered through undiscounted expected future cash flows. If the total of the future cash flows is less than the carrying amount of those assets, the Company recognizes an impairment loss based on the excess of the carrying amount over the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or the fair value less costs to sell.

 

8

 

Recent accounting pronouncements

 

We have reviewed all the recent accounting pronouncements issued to date of the issuance of these financial statements, and we do not believe any of these pronouncements will have a material impact on the company.

 

Use of 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 the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates.

 

Stock-Based Compensation

 

As of August 31, 2014, the Company has not issued any stock-based payments.

 

Stock-based compensation is accounted for at fair value in accordance with ASC 718. To date, the Company has not adopted a stock option plan and has not granted any stock options.

 

Revenue Recognition

 

The Company recognizes revenue when products are fully delivered or services have been provided and collection is reasonably assured.

 

NOTE 3 – GOING CONCERN

 

The 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. The Company began to have net income for the three months ended August 31, 2014 and the net income caused accumulated earnings on August 31, 2014. However, the net income significantly depended on a particular project. The company is still in development stage and there is no assurance for the Company’s ability to generate profitable operations in the future. These factors raise substantial doubt about the ability of the Company to continue as a going concern. The consolidated financial statements have been prepared on a going basis and do not include any adjustments that might result from the outcome of this uncertainty.

 

9

 

NOTE 4 – SHAREHOLDER LOAN

 

In August 2014, the Company’s shareholder, Success Holding Group Corp. USA, loaned the Company. As of August 31, 2014, the loan balance is $2,700,000. The loan will mature in two years and the Company bears no interest for the period. The Company agrees to make $232,000 monthly payment for the principal from August 2015. The annual interest rate after maturity date is 3%.

 

NOTE 5 – COMMON STOCK

 

The Company has 75,000,000 common shares authorized with a par value of $0.001 per share.

 

On July 16, 2012, the Company issued 24,000,000 shares of its common stock at $0.00025 per share for total proceeds of $6,000. On November 2, 2012, the Company issued 4,000,000 shares of its common stock at $0.000625 per share for total proceeds of $2,500. On November 16, 2012, the Company issued 4,000,000 shares of its common stock at $0.00125 per share for total proceeds of $5,000. On January 16, 2013, the Company issued 4,680,000 shares of its common stock at $0.0025 per share for total proceeds of $11,700.

 

On July 8, 2014, the Company issued a stock dividend in order to effect a four-for-one stock split of the Company’s common stock. All share and earnings per share numbers prior to the July 8, 2014 stock split have been retroactively restated to reflect the stock dividend for all periods presented.

 

Total shares issued and outstanding as of August 31, 2014 were 36,680,000.

 

NOTE 6 – INCOME TAXES

 

As of August 31, 2014, the Company had net operating loss carry forwards of $4,097 that may be available to reduce future years’ taxable income through 2033. Future tax benefits which may arise as a result of these losses have not been recognized in these financial statements, as their realization is determined not likely to occur and accordingly, the Company has recorded a valuation allowance for the deferred tax asset relating to these tax loss carry-forwards.

 

10

 

NOTE 7 – SEGMENT REPORTING AND GEOGRAPHIC INFORMATION

 

The Company currently reports operations under one business segment

 

Geographic Information as of August 31, 2014 and for the six months ended August 31, 2014 are as follows:

 

For the six months ended August 31, 2014		USA				Taiwan
Revenue		$	-			$	190,000
Cost			-				100,000
Expenses			11,426				145
Other income			-				6
Net income (loss)		$	(11,426	)		$	89,861

 

August 31, 2014		USA				Taiwan
Assets		$	-			$	2,789,861
Liabilities			18,829				2,700,000
Net assets		$	(18,829	)		$	89,861

 

NOTE 8 – RELATED PARTY TRANSACTIONS

 

As of August 31, 2014, Success Holding Group Corp. USA, shareholder of the Company, has an outstanding receivable amount of $1,179 from the Company which it has advanced the amount to the Company to pay administrative and operating expenses.

 

11

 

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION

 

GENERAL

 

Success Holding Group International Inc., formerly known as Macco International Corp. (the "Company") was incorporated in the State of Nevada on July 5, 2012.

 

Effective June 20, 2014, the Board of Directors and the majority shareholders of the Company, approved an amendment to the articles of incorporation to change the name of the Company to "Success Holding Group International, Inc." (the “Name Change Amendment”). The Amendment was filed with the Secretary of State of Nevada on June 20, 2014 changing the name of the Company to "Success Holding Group International, Inc." (the "Name Change"). The Name Change was effected to better reflect the future business operations of the Company.

 

Subsidiaries

 

On August 28, 2014, the Board of Directors authorized the acquisition of all of the total issued and outstanding ordinary shares of Success Entertainment Group Inc., a corporation incorporated under the laws of the Cayman Island ("SEG"). Therefore, the Company acquired an aggregate 60,000,000 ordinary shares of SEG as follows: (i) 47,999,999 shares were acquired from Steve Andrew Chen; and (ii) 12,000,000 shares were acquired from Chi-Jui Hong. Thus, SEG is one of our wholly-owned subsidiaries. Messrs. Chen and Hong executed those certain share transfer forms dated August 28, 2014 pursuant to which for good and valuable consideration transferred their respective shares to us.

 

Mr. Chen is our Chairman of the Board of Directors and Mr. Hong is our Chief Executive Officer and a member of the Board of Directors of SHGT. Thus, this was an affiliate transaction.

 

On August 15, 2014, the Board of Directors authorized the execution of that certain form of transfer of shares between us and Wen-Chi Huang (the "Transfer of Shares"). In accordance with the Transfer of Shares, the Company acquired all of the total issued and outstanding ordinary shares of Celebrity Enterprise Co., Ltd, a corporation incorporated under the laws of the Republic of Seychelles ("CEC"). The Company acquired an aggregate 10,000 ordinary shares of CEC from Wen-Chi Huang for good and valuable consideration in the amount of $10,000. Thus, CEC is one of our wholly-owned subsidiaries.

 

Forward Stock Split

 

On June 14, 2014, the majority shareholders of the Company approved a forward stock split of four for one (4:1) of the Company's total issued and outstanding shares of common stock (the “Stock Split”) and the Name Change Amendment. Pursuant to the Company's Bylaws and the Nevada Revised Statutes, a vote by the holders of at least a majority of the Company’s outstanding votes is required to effect the Stock Split and the Name Change. The Company’s articles of incorporation does not authorize cumulative voting. As of the record date of June 14, 2014, the Company had 9,170,000 voting shares of common stock issued and outstanding. The consenting stockholders of the shares of common stock are entitled to 6,200,000 votes, which represents approximately 67.6% of the voting rights associated with the Company’s shares of common stock. The consenting stockholders voted in favor of the Stock Split and the Name Change described herein in a unanimous written consent dated June 14, 2014.

 

12

 

The Board of Directors had previously considered factors regarding their approval of the Stock Split including, but not limited to: (i) the current volume of trading and trading price of the Company’s shares of common stock on the OTC Market and potential to increase the marketability and liquidity of the Company’s common stock based on structuring of potential business operations and acquisition; and (ii) limitation of marketability of the Company’s common stock among brokerage firms and institutional investors based upon current per-share price. The Board of Directors of the Company approved the Name Change and the Stock Split and recommended the majority shareholders of the Company review and approve the Name Change and the Stock Split.

 

The Stock Split was effected on July 8, 2014 based upon the filing of appropriate documentation with FINRA. The Stock Split increased the Company's total issued and outstanding shares of common stock from approximately 9,170,000 shares to 36,680,000 shares of common stock. The common stock will continue to be $0.001 par value. The trading symbol of the Company changed to "SHGT".

 

The Name Change was effected to better reflect the proposed future business operations of the Company.

 

Change in Control

 

On June 13, 2014, there was a change in control of the Company. In accordance with the terms and provisions of that certain stock purchase agreement dated April 23, 2014 (the ("Stock Purchase Agreement") by and among Sandu Mazilu and Ana Mazilu, equity holders in the aggregate of 6,200,000 pre-Stock split shares of common stock of the Company (collectively, the "Control Block Shareholders"), and Success Holding Group Corp., a Nevada corporation (the "Control Block Purchaser"), the Control Block Purchaser purchased from the Control Block Shareholders all of the 6,200,000 pre-Stock Split shares of common stock held of record, respectively. See Part II. Item 5. Other Information".

 

CURRENT BUSINESS OPERATIONS

 

SHGT is currently seeking and identifying private and public companies in Asia as acquisition and merger candidates, including the integration of chain store and band names IOT (Internet of Things), alternative energy technology, internet and logistics.

 

Internet Movies

 

The current focus of the Company and its operations is the Internet movie business in China. The Company has completed the filming of the inspirational Internet movie "The Pronunciation Class of Love". Filming was completed in Taipei on August 25, 2014. The Internet movie "The Pronunciation Class of Love" was filmed by executive producer Steven Andrew Chen, our Chairman . Yen-Ming Chen directed comedy actor Handian Chen along with female idol star Lara and TV-Show Host Jacky Wu in "The Pronunciation Class of Love". Management anticipates the film to be released on the Internet in during October 2014. Internet movies are extremely popular in China and Asia. Management believes historical numbers reflect that production of Internet movies in Asia involving well known actors and entertainers will cost approximately $600,000 and generate between $1,000,000 and $2,000,000 in revenue annually.

 

The Company previously announced signing certain contracts with an Internet movie team and some of Asia's top actors, directors and producers (collectively, the "Internet Movie Contracts"). During July 2014, Steve Andrew Chen invited Jacky Wu (Tsung -Hsien Wu) who is considered the god father of variety shows, and his daughter Sandy Wu (Shan–Ju, Wu), to attend New Wave of Asian Film media conference in Shanghai, China. Jacky Wu accepted the position of movie director on behalf of SHGT. Jacky Wu produced China LETV "Rock n' Road", the internet movie which management believes reached over 1,000,000,000 viewers. The SHGT Internet team is comprised of five major Asian directors. The Internet Movie Contracts provide for each of the five directors to create a series of thirty positive Internet movies, which will involve many of China's top actors It is the Company's plan for the "Inspirational Series" Internet movies to produce thirty episodes during the next year. It is intended that Jacky Wu will direct certain episodes and invite famous celebrities and superstars in each episode with the main principal line of positive energy encouraged series. Management also anticipates that Ping-Yuan, Huang, the famous love song singer, will perform the inspirational series as the leading role. It is the intent of the Company to combine its resources with professional production teams to build a positive energy stream to lead and encourage young people to pursue their dreams. To continue this operational strategy, the Company plans on commencing production of its second drama with the cooperation of Hong Kong's love story novel writer, Amy Cheung, and Fortune Media Corp.

 

13

 

Gridow Inc.

 

The Company, through its subsidiary, SEG, signed a contract (the "Gridow Contract") with Gridow Inc., a leading cloud service company ("Gridow"), which provides professional video cloud service in Asia Pacific. The Gridow Contract provides for the establishment of a strategic cooperative partnership. SEG and Gridow will cooperate to offer a high-standard, professional video cloud service in Greater China where jointly they will be releasing the series of Internet micro films discussed above. They will combine their expertise and share channels in an innovative marketing way for both Internet and mobile users.

 

SEG was established in 2014 and expects to invest and to produce three to five major motion pictures that will be released in theatres globally and thirty internet movies that will be released on TV channels and professional video clouds in Asia and North America. Our Chairman of the Board, Steve Andrew Chen, is a well known orator in Asia and a global marketing master. Mr. Chen will use his experience that has brought him over 30,000,000 students and fans to maximize the Company's products to the massive audiences in China and the rest of Asia. Management believes that Asia has an insatiable appetite for movies and technology and the Company and its employees plan on becoming one of Asia's top fulfillers of their entertainment needs.

 

Gridow is a leading enterprise video cloud service provider. It was founded by many IT domain angel investors and ITIC (Industrial Technology Investment Corp.), a Venture Capital company of ITRI (Industrial Technology Research Institute) in Taiwan. With accumulated years of successful experiences, Gridow has enabled joint services with ChungHwa Telecom in Taiwan and NTT Communications in Japanese to provide professional business video services for many enterprise and customers in Taiwan and Japan. Both companies believe that the collaboration and experience will bring about a brand-new video service that will enhance their clients in the Greater China area.

 

Seminars

 

During September 2014, our Chairman of the Board, Steve Andrew Chen, held seminars throughout Southern Asia. Mr. Chen held motivational seminars at which the Company charged admission fees and sold CDs, books and other materials. After costs, the Company realized a profit of approximately $500,000 per event. It is anticipated that for fiscal year July 1, 2014 through June 30, 2015, Mr. Chen will be holding seminars on a monthly basis. See "Plan of Operation".  

  

RESULTS OF OPERATION

 

Our financial statements have been prepared assuming that we will continue as a going concern and, accordingly, do not include adjustments relating to the recoverability and realization of assets and classification of liabilities that might be necessary should we be unable to continue in operation.

 

We expect we will require additional capital to meet our long term operating requirements.

 

14

 

Six Month Period Ended August 31, 2014 Compared to the Six Month Period Ended August 31, 2013.

 

During the six month period ended August 31, 2014, we generated revenue of $190,000 compared to $-0- for the six month period ended August 31, 2013. The revenue was generated from the seminars. During the six month period ended August 31, 2014, we incurred $100,000 (2013: $-0-) in cost of sales thus resulting in a gross margin of $90,000.

 

During the six month period ended August 31, 2014, we incurred general and administrative expenses $13,571 compared to $7,360 incurred for the six month period ended August 31, 2013, which is an increase of $6,211. General and administrative expenses increased during the six month period ended August 31, 2014 compared to the six month period ended August 31, 2013 due to the increase in salaries and professional fees resulting from increased scale and scope of business operations. General and administrative expenses generally relate to corporate overhead, financial and administrative contracted services.

 

Our net income from operations for the six month period ended August 31, 2014 was $76,429 compared to a net loss from operations of $7,360 for the six month period ended August 31, 2013 due to the factors discussed above.

 

During the six month period ended August 31, 2014, we also recorded other income of $11,506 (2013: $-0-). The increase in other income is due to debt forgiveness from related parties and interest income in 2014.

 

Thus, our net income for the six month period ended August 31, 2014 was $87,935 or per share of $0.0024 compared to a net loss of $7,360 or per share of $0.0008. The weighted average number of shares outstanding during the six month period ended August 31, 2014 was 36,680,000 (which takes into consideration the Forward Stock Split) compared to 9,170,000 shares outstanding during the six month period ended August 31, 2013.

 

Three Month Period Ended August 31, 2014 Compared to Three Month Period Ended August 31, 2013.

 

During the three month period ended August 31, 2014, we generated revenue of $190,000 compared to $-0- for the three month period ended August 31, 2013. The revenue was generated from the seminars. During the three month period ended August 31, 2014, we incurred $100,000 (2013: $-0-) in cost of sales thus resulting in a gross margin of $90,000.

 

During the three month period ended August 31, 2014, we incurred general and administrative expenses $10,355 compared to $7,358 incurred during the three month period ended August 31, 2013, which is an increase of $2,997. General and administrative expenses increased during the three month period ended August 31, 2014 as compared to the three month period ended August 31, 2013 due to the increase in professional and consulting fees resulting from increased scale of operations. General and administrative expenses related to corporate overhead, financial and administrative contracted services.

 

Our net income from operations for the three month period ended August 31, 2014 was $79,645 compared to a net loss from operations of $7,358 for the three month period ended August 31, 2013 due to the factors discussed above.

 

During the three month period ended August 31, 2014, we also recorded other income of $11,506 (2013: $-0-). The increase in other income is due to debt forgiveness from related parties and interest income in 2014.

 

Thus, our net income for the three month period ended August 31, 2014 was $91,151 or per share of $0.0025 compared to a net loss of $7,358 or per share of $0.0002. The weighted average number of shares outstanding during both three month periods ended August 31, 2014 was 36,680,000 (which takes into consideration the Forward Stock Split).

 

15

 

LIQUIDITY AND CAPITAL RESOURCES

 

Six Month Period Ended August 31, 2014

 

As of August 31, 2014, our current assets were $2,789,861 and our current liabilities were $9,329, which resulted in a working capital surplus of $2,780,532. As of August 31, 2014, current assets were comprised of: (i) $1,989,861 in cash; and (ii) $800,000 in prepayment. As of August 31, 2014, current liabilities were comprised of: (i) $8,150 in accrued expenses; and (ii) $1,179 due to related party.

 

As of August 31, 2014, our total assets were $2,789,861 comprised entirely of current assets. The increase in total assets from fiscal year ended February 28, 2014 was primarily due to the increase in cash of $1,989,861.

 

As of August 31, 2014, our total liabilities were $2,709,329 comprised of: (i) $9,329 in current liabilities; and (ii) $2,700,000 in shareholder loan. The increase in total liabilities during fiscal year ended August 31, 2014 from fiscal year ended February 28, 2014 was primarily due to the increase in shareholder loan of $2,700,000.  See - "Material Commitments" below.

 

Stockholders’ deficit decreased from $44,083 for fiscal year ended February 28, 2014 to stockholders’ equity of $43,852 for six month period ended August 31, 2014.

 

Cash Flows from Operating Activities

 

For the six month period ended August 31, 2014, net cash flows used in operating activities was $715,415 compared to net cash flows used in operating activities of $7,360 for the six month period ended August 31, 2013. Net cash flows used in operating activities during the six month period ended August 31, 2014 consisted primarily of net income of $87,935, which was changed by: (i) an increase of $800,000 in prepayment; (ii) $11,500 gain on debt forgiveness from related parties; and (iii) decrease of $8,150 in accrued expenses.

 

For the six month period ended August 31, 2013, net cash flows used in operating activities was $7,360.

 

Cash Flows from Investing Activities

 

We have not generated or used any cash flows from investing activities during the six months ended August 31, 2014 and 2013.

 

Cash Flows from Financing Activities

 

We have financed our operations primarily from either advancement from our director or the issuance of equity. For the six month period ended August 31, 2014, cash flows provided by financing activities was $2,703,679 compared to $-0- for the six month period ended August 31, 2013. Cash flows from financing activities of $2,703,679 for the six month period ended August 31, 2014 consisted of: (i) $2,700,000 in loan from shareholder; and (ii) $3,679 in proceeds from related parties.

 

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Material Commitments

 

During August 2014, our majority shareholder, Success Holding Group Corp. USA ("Success Holding") loaned an aggregate of $2,700,000 to our wholly-owned subsidiaries. Our wholly-owned subsidiaries issued three promissory notes as follows: (i) promissory note in the principal amount of $1,000,000 dated August 18, 2014 issued by Celebrity Enterprise Co. Ltd. to Success Holding (the "Celebrity Enterprise Note"); (ii) promissory note in the principal amount of $50,000 dated August 28, 2014 issued by Celebrity Enterprise Co. Ltd. to Success Holding (the "Celebrity Enterprise Note II"); and (iii) promissory note in the principal amount of $1,500,000 dated August 28, 2014 issued by Success Entertainment Group Inc. to Success Holding  (the "Success Entertainment Note").

 

The terms and provisions of the Celebrity Enterprise Note are as follows: (i) interest free loan from August 18, 2014 to August 17, 2016; (ii) through our wholly-owned subsidiary, Celebrity Enterprise Co. Ltd, we shall make repayments to Success Holding of $90,000 monthly commencing January 1, 2015 on the 30th day of each month; and (iii) in the event we fail to repay, we shall pay an annual interest rate of 3%.

 

The terms and provisions of the Celebrity Enterprise Note II are as follows: (i) interest free loan from August 18, 2014 to August 17, 2016; (ii) through our wholly-owned subsidiary, Celebrity Enterprise Co. Ltd., we shall make repayments to Success Holding of $42,000 monthly commencing January 1, 2015 on the 30th day of each month; and (iii) in the event we fail to repay, we shall pay an annual interest rate of 3%.

 

The terms and provisions of the Success Entertainment Note are as follows: (i) interest free loan from August 28, 2014 to August 27, 2016; (ii) through our wholly-owned subsidiary, Success Entertainment Group Inc., we shall make repayments to Success Holding of $100,000 monthly commencing January 1, 2015 on the 30th day of each month; and (iii) in the event we fail to repay, we shall pay an annual interest rate of 3%.

 

As of August 31, 2014, Success Holding is also owed $1,179, which it previously advanced to the Company to pay administrative and operating expenses.

 

Plan of Operation and Funding

 

As discussed above, we received loans aggregating $2,700,000. The loan resulted in an increase in assets on our balance sheet of $2,000,000 and a liability of $2,700,000. The use of the loaned funds has enabled us to realize revenues of $2,100,500 in the month of September 2014.  September's revenues are from the following activities: (i) approximately $1.510,500 resulting from monthly training seminars held by our Chairman Steve Andrew Chen; and (ii) approximately $590.000 from advertising sponsorship of the Internet movie "The Pronunciation of Love". Management believes that we are transitioning into a full operating company with revenues and earnings. We anticipate pre-tax earnings for this fiscal year of approximately $0.40 per share and Mr. Chen fully expects the future earnings to continue increasing into the future,

  

We expect that working capital requirements will continue to be funded through a combination of our existing funds. Our working capital requirements are expected to increase in line with the growth of our business.

  

Off-Balance Sheet Arrangements

 

As of the date of this Quarterly Report, we do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.

 

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

 

As a “smaller reporting company” as defined by Item 10 of Regulation S-K, we are not required to provide information required by this Item.

 

ITEM 4. CONTROLS AND PROCEDURES

 

Our management is responsible for establishing and maintaining a system of disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act) that is designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including its principal executive officer or officers and principal financial officer or officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

 

An evaluation was conducted under the supervision and with the participation of our management of the effectiveness of the design and operation of our disclosure controls and procedures as of May 31, 2014. Based on that evaluation, our management concluded that our disclosure controls and procedures were not effective as of such date to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms. Such officer also confirmed that there was no change in our internal control over financial reporting during the three month period ended May 31, 2014 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 

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PART II. OTHER INFORMATION

 

ITEM 1. LEGAL PROCEEDINGS

 

Management is not aware of any legal proceedings contemplated by any governmental authority or any other party involving us or our properties. As of the date of this Quarterly Report, no director, officer or affiliate is (i) a party adverse to us in any legal proceeding, or (ii) has an adverse interest to us in any legal proceedings. Management is not aware of any other legal proceedings pending or that have been threatened against us or our properties.

 

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

 

On July 8, 2014, in accordance with the Stock Split, the Company issued a further 27,510,000 shares of common stock to its shareholders. The Stock Split was effected based upon the filing of appropriate documentation with FINRA. The Stock Split increased the Company's total issued and outstanding shares of common stock from approximately 9,170,000 shares to 36,680,000 shares of common stock

 

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

 

We have no senior securities outstanding in any of the periods presented in these financial statements.

 

ITEM 4. MINING SAFETY DISCLOSURES

 

Not applicable.

 

ITEM 5. OTHER INFORMATION

 

Departure of Directors or Pricipal Officer; Election of Directors; Appointment of Principal Officers

 

In accordance with the terms and provisions of the Stock Purchase Agreement, the Company accepted the resignations of its sole officer and director, Sandu Mazilu as President/Chief Executive Officer, Secretary, Treasurer/Chief Financial Officer, effective June 13, 2014. Simultaneously, the Board of Directors appointed the following individuals: (i) Steve Chen as a member of the Board of Directors and the Chief Executive Officer; and (ii) Brian Kistler as a member of the Board of Directors and the President, Secretary and Treasurer/Chief Financial Officer.

 

Steve Chen Biography. During the past twenty years, Mr. Chen has been involved with a number of merger and acquisition activities involving both publicly traded and private companies. Several of the acquisitions involved the integration of chain stores and brand names, fiber optics, alternative energy technology, the Internet and logistics. Mr. Chen is also a renowned inspirational marketing speaker and a top-selling author of numerous self motivation books and multi-media courses. Mr. Chen is current the chairman of Success Holding Group Inc. (Cayman Islands) and the chairman of Success Prime Corp. (Taiwan). Mr. Chen was born in Taiwan and studied at Pepperdine University. He currently resides in both Taiwan and China.

 

Effective September 24, 2014, Mr. Chen resigned as the Chief Executive Officer of the Company and retains all other positions, including Chairman of the Board.

 

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Brian Kistler Biography. Mr. Kistler has extensive work history of over twenty five years in the financial services industry. He began working at the securities firm Edward Jones in 1987. Mr. Kistler then joined Linsco/Private Ledger in 1992, an independent broker/dealer firm, where he worked as an independent contractor. In 1994 he was recruited by broker/dealer Hilliard Lyons to develop the northeast area of Indiana. In 1999 Mr. Kistler joined Raymond James & Associates to manage their recently acquired Fort Wayne, Indiana office. Subsequently, he became the manager of nine (9) Raymond James offices in northern Indiana. During his time as manager, the revenues and assets under management grew substantially as a direct result of Mr. Kistler's ability to recruit, retain and train high quality financial advisers. Mr. Kistler left Raymond James in December 2005 to focus on the development of the Freedom Energy Holdings. Mr. Kistler is the founder of the Freedom Energy Holdings and serves as president and as its chief executive officer. Mr. Kistler serves as consultant to many public companies, assisting with the preparation and compliance of regulatory filings and corporate governance.

 

On September 24, 2014, the Board of Directors accepted the consent from and approved the appointment of Chris (Chi Jui) Hong as our Chief Executive Officer and a member of the Board of Directors.

 

Chris (Chi Jui) Hong Biography. During the past thirty years, Mr. Hong has been involved in investment management specializing in business model innovation and capital investment. Mr. Hong has served as a member of board of directors for several publicly listed companies in Taiwan and Hong Kong, including Acme Food Groups, Sinho Group, SPC Inc. and ORFF Inc. Mr. Hong works between Taiwan and China. Mr. Hong will be focusing on acquisitions or mergers with potential candidate enterprises and businesses. He intends to target potential investments in approximately thirty well-known brands to assist the Company in becoming a major holding group over the next ten to twenty years.

 

Mr. Hong graduated from Fu Jen Catholic University with a B.S. and EMBA degree majoring in mass communications.

 

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

 

In accordance with the terms and provisions of the Stock Purchase Agreement, the Control Block Purchaser purchased from the Control Block Shareholders all of the 6,200,000 pre-Stock Split shares of common stock held of record, respectively. Thus, this represented a change in control of the Company.

 

The following table sets forth certain information, as of the date of this Quarterly Report, with respect to the beneficial ownership of the outstanding common stock by: (i) any holder of more than five (5%) percent; (ii) each of the Company’s executive officers and directors; and (iii) the Company’s directors and executive officers as a group. Except as otherwise indicated, each of the stockholders listed below has sole voting and investment power over the shares beneficially owned. Unless otherwise indicated, each of the stockholders named in the table below has sole voting and investment power with respect to such shares of common stock. Beneficial ownership consists of a direct interest in the shares of common stock, except as otherwise indicated. As of the date of this Quarterly Report, there are 36,680,000 post Stock Split shares of common stock issued and outstanding.

 

Name and Address of Beneficial Owner (1)		Amount and Nature of Beneficial Ownership (1)				Percentage of Beneficial Ownership
Directors and Officers:
Steve Andrew Chen 531 Airport North Office Park Fort Wayne, Indiana 46825			-0-				0	%
Brian Kistler 531 Airport North Office Park Fort Wayne, Indiana 46825			-0-				0	%
Chi Jui Hong 531 Airport North Office Park Fort Wayne, Indiana 46825			-0-				0	%
All executive officers and directors as a group (2 persons)			-0-				0	%
Beneficial Shareholders Greater than 10%
Success Holding Group Corp. USA 531 Airport North Office Park Fort Wayne, Indiana 46825			24,800,000				67.6	%

 

*	Less than one percent.

 

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ITEM 6. EXHIBITS

 

Exhibits:

 

10.01		Promissory Note dated August 18, 2014 between Celebrity Enterprise Co. Ltd. and Success Holding Group Corp. USA.
10.02		Promissory Note dated August 28, 2014 between Celebrity Enterprise Co. Ltd. and Success Holding Group Corp. USA.
10.03		Promissory Note dated August 28, 2014 between Success Entertainment Group Inc. and Success Holding Group Corp. USA.
31.1		Certification of Chief Executive Officer pursuant to Securities Exchange Act of 1934 Rule 13a-14(a) or 15d-14(a).
31.2		Certification of Chief Financial Officer pursuant to Securities Exchange Act of 1934 Rule 13a-14(a) or 15d-14(a).
32.1		Certifications pursuant to Securities Exchange Act of 1934 Rule 13a-14(b) or 15d-14(b) and 18 U.S.C. Section 1350, as adopted 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

 

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SIGNATURES

 

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

 

	Success Holding Group International Inc.
Dated: October 14, 2014	By:	/s/ Chi Jui Hong
		Chi Jui Hong
		Chief Executive Officer
Dated: October 14, 2014	By:	/s/ Brian Kistler
		Brian Kistler
		Chief Financial Officer

 

 

 

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