UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended March 31, 2015

or

o 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: 0-51105

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 x   No o

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 x   No o

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 the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o  No x

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APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.  

Yes o  No o

APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.  As of May 15, 2015, there were 10,336,000 shares of the registrant’s common stock, $0.001 par value, outstanding

TABLE OF CONTENTS

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PART I - FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

The consolidated financial statements of ALCO, Inc. and subsidiaries (collectively, the "Company"), included herein were prepared, without audit, pursuant to rules and regulations of the Securities and Exchange Commission.  Because certain information and notes normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America were condensed or omitted pursuant to such rules and regulations, these financial statements should be read in conjunction with the financial statements and notes thereto included in the audited financial statements of the Company as included in the Company's Form 10-K for the year ended December 31, 2014.

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ALCO, INC

CONSOLIDATED BALANCE SHEETS

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ALCO, INC

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (UNAUDITED)

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ALCO, INC

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

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ALCO, INC

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

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ALCO, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 (UNAUDITED)

Note 1 – Organization and Operations

Description of Business and Basis of Presentation

ALCO, Inc. (“ALCO,” “we,” “us,” the “Company”) was incorporated under the laws of the State of Nevada on June 7, 1999 as Seahorse, Inc. and changed its name to Lotus Capital Corp. (“Lotus”) on September 20, 2004.  The Company changed its name to ALCO, Inc. on February 13, 2006.

The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the SEC instructions to Form 10-Q.  Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.  In the opinion of management, all adjustments (consisting of only normal recurring adjustments) considered necessary for a fair presentation have been included.  Results for the three-month period ended March 31, 2015 are not necessarily indicative of the results that may be expected for the year ended December 31, 2015. For further information, refer to the consolidated financial statements and footnotes thereto included in ALCO’s Annual Report on Form 10-K for the fiscal year ended December 31, 2014.

The consolidated financial statements include the accounts of the Company and all its majority-owned subsidiaries which require consolidation.  Inter-company transactions have been eliminated in consolidation.

Certain accounting principles, which are stipulated by General Accepted Accounting Principles in the United States (“US GAAP”), are not applicable in the Hong Kong Accounting Standards (“HKAS”).  The difference between HKAS accounts of the Company and its US GAAP financial statements is immaterial.

Note 2 – Significant Accounting Policies

For significant accounting policies, see notes to the consolidated financial statements included in the Company’s annual report of Form 10-K for the year ended December 31, 2014 filed with the SEC.

Use of Estimates

The preparation of financial statements in conformity with US GAAP 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 revenue and expenses during the reporting period.  Actual results, when ultimately realized could differ from those estimates.

Foreign Currency and Other Comprehensive Loss

The accompanying financial statements are presented in United States (US) dollars.  The functional currency of Andrew Liu & Co Ltd (“ALC”), Chang An Consultants Ltd (“CAC”) and Edushipasia Limited (“ESA”) is the Hong Kong dollar (HK$).  The financial statements are translated into US dollars from HK$ at year-end exchange rates for assets and liabilities, and weighted average exchange rates for revenues and expenses.  Capital accounts are translated at their historical exchange rates when the capital transactions occurred.

The Hong Kong Monetary Authority (“HKMA”), Hong Kong's central bank, maintains a Linked Exchange Rate System since 1983.  The HKMA operates Convertibility Undertakings on both the strong side and the weak side of the Linked Rate of US$1: HK$7.8.  In fact, the exchange rate for HK$ to US dollars has varied by only 100ths during 2015 and 2014.  Thus, the consistent exchange rate used has been 7.80 HK$ per each US dollar.  Since there have been no greater fluctuations in the exchange rate, there is no gain or loss from foreign currency translation and no resulting other comprehensive income or loss.

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Foreign currency transactions are those that required settlement in a currency other than HK$.  Gain or loss from foreign currency transactions, or exchange loss, are recognized in income in the period they occur.

The functional currency of Shanghai Heshili Broker Co. Limited (“SHB”) and AL Marine Consulting Services (Shanghai) Ltd (“ALM Shanghai”) is the Chinese Yuan (“CNY”). The financial statements of SHB and ALM Shanghai are translated into United States dollars in accordance with FASB Accounting Standards Codification TM (ASC) No. 830, " Foreign Currency Matters”, using year-end rates of exchange for assets and liabilities, and average rates of exchange for the period for revenues, costs, and expenses and historical rates for the equity.  Translation adjustments resulting from the process of translating the local currency financial statements into U.S. dollars are included in determining comprehensive income.

The exchange rates used to translate amounts in CNY into U.S. Dollars for the purposes of preparing the consolidated financial statements were as follows:  

Balance sheet items, as of year-end date:

 US$0.16044:CNY1

Amounts included in the statements of operations, statements of changes in shareholders’ equity and statements of cash flows for the year: US$0.15962:CNY1

The functional currency of ALCO Insurance Brokers Pte Limited (“ALCO Insurance”) is the Singapore Dollar (“SGD”).  The financial statements of ALCO Insurance are translated into United States dollars in accordance with ASC 830, "Foreign Currency Matters”, using year-end rates of exchange for assets and liabilities, and average rates of exchange for the period for revenues, costs, and expenses and historical rates for the equity.  Translation adjustments resulting from the process of translating the local currency financial statements into U.S. dollars are included in determining comprehensive income.

The exchange rates used to translate amounts in SGD into U.S. Dollars for the purposes of preparing the consolidated financial statements were as follows:  

Balance sheet items, as of year-end date:

 US$0.72264:SGD1

Amounts included in the statements of operations, statements of changes in shareholders’ equity and statements of cash flows for the year: US$0.73006:SGD1

Earnings Per Share

Basic earnings per share is computed by dividing income available to common shareholders by the weighted-average number of common shares outstanding during the period.  Diluted earnings per share is computed similar to basic earnings per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. There were no dilutive shares for the three-month period ended March 31, 2015.

Recent Accounting Pronouncements

In February 2015, the FASB issued ASU 2015-02, “Amendments to the Consolidation Analysis”. The amendments in the ASU provide an additional requirement for a limited partnership or similar entity to qualify as a voting interest entity and also amend the criteria for consolidating such an entity. In addition, the new guidance amends the criteria for evaluating fees paid to a decision maker or service provider as a variable interest and amends the criteria for evaluating the effect of fee arrangements and related parties on a variable interest entity primary beneficiary determination. This standard is effective for interim and annual reporting periods beginning after December 15, 2015. The Company is currently in the process of evaluating the impact of the adoption on its consolidated financial statements.

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Note 3 – Cash

The Company established a bank guarantee of HK$45,000 (approximately US$5,770) credit line with the China Construction Bank (Asia).  The interest rate and charges are subject to change from time to time.  The bank guarantee credit line is pledged of $6,419 fixed deposit as shown as above.  On March 31, 2015, a bank guarantee of $5,541 was provided.

Cash balances are held principally at one financial institution and are not insured.  The Company believes it mitigates its risk by investing in or through major financial institutions.  Recoverability is dependent upon the performance of the institution.  Although the cash balances are not insured, however, starting in September 2006, cash balances (except accounts with overdraft facilities) are protected by the Deposit Protection Scheme which is maintaining by the Hong Kong Deposit Protection Board, an independent statutory body established under the Deposit Protection Scheme Ordinance (Cap. 581).

Under the scheme, compensation up to a limit of HK$100,000 (approximately $12,821) per depositor would be paid from the scheme to depositor if the bank with which the depositor holds his/her eligible deposits fails.  On October 14, 2008, the Hong Kong Government announced that they would use the Exchange Fund to guarantee the repayment of all customer deposits held in authorized institutions in Hong Kong, following the principles of the Deposit Protection Scheme.  This action began on October 14, 2008 and expired at the end of 2010.  Following the enactment of the Deposit Protection Scheme (Amendment) Ordinance 2010 in June 2010, the protection limit of the Deposit Protection Scheme is increased from HK$100,000 per depositor to HK$500,000 (approximately $64,103) per depositor effective from January 1, 2011.

Note 4 – Commissions Receivable

Note 5 – Fiduciary Asset

Fiduciary assets are cash balances held by a bank, mainly consisting of premiums collected from customers and payable to insurers, and claims received from insurers and payable to policyholders.

When the Company receives a premium from a customer, it debits the lump sum amount into one bank account and establishes a schedule to keep track of the amount of premium payable to the insurer.  At the monthly closing, the Company reclassifies the amount of premium payable to insurers as fiduciary assets.  Also, when the Company receives a claim on behalf of a policyholder, it debits fiduciary assets and credits claims payable and other payables, if necessary.  The fiduciary asset had a balance of $2,414,792 and $2,015,759 at March 31, 2015 and December 31, 2014, respectively.

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Note 6 – Fair Value of Investments and Investment Income

The following are the Company’s investments owned and securities sold by level within the fair value hierarchy at March 31, 2015 and December 31, 2014:

The Company’s short-term investment represents the certificate of deposit with the maturity of one year with the financial institution.

Unrealized loss of $37,859 and $27,506 for the investments in stock were recognized in the other comprehensive income for the three months ended March 31, 2015 and 2014, respectively.  All these losses are related to the investments listed in the Hong Kong Stock Exchange.

Note 7 – Due to Directors

Due to director represents loans payable that are unsecured, non-interest bearing and have no fixed terms of repayment, therefore, deemed payable on demand.

Note 8 – Stock-based Compensation

During the three months ended March 31, 2015 and 2014, the Company recognized $1,856 of stock-based compensation expense.

Note 9 – Related Party Transaction

The Company rents quarters for directors in Hong Kong and Shanghai from companies owned by directors of the Company. The relevant rent expenses consist of following:

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Note 10 – Income Taxes

The Company's effective tax rate for the three months ended March 31, 2015 and 2014 was -6.54% and -20.75%, respectively.  The provisions for income taxes for the periods ended March 31, 2015 and 2014 are summarized as follows:

A reconciliation between the income tax computed at the U.S. statutory rate and the Company’s provision for income tax is as follows:

Note 11 – Loans Receivable

On August 4, 2011, the Company’s subsidiary Andrew Liu & Company Limited (“ALC”) entered into a loan agreement with its clients, Jian Mao International Shipping Co Ltd (“JMISCL”) and Jian Xing Intl Shipping Co Ltd (“JXISCL”).  Under the loan agreement, ALC will make available to JMISCL and JXISCL an on demand loan facility in the principal amount of up to $3,000,000.  The loan is interest free and secured by the claim proceeds under a claim filed by JMISCL and JXISCL under the terms an existing Hull & Machinery insurance policy insuring a vessel owned and managed by JMISCL and JXISCL respectively. The loan is payable upon demand at any time following settlement of the claim if the claim proceeds are not adequate to cover the loan in full, and in any event is due and payable in full on or before August 4, 2012.  As of August 4, 2012, the balance of the loan is $1,912,000.

On August 4, 2012, 2013 and 2014, ALC entered into loan extension agreements with JMISCL and JXISCL, respectively.  Under the three extension agreements, the payable due date is extended to August 4, 2015.  All terms and conditions of the loan agreement and the balance of the loan remain unchanged.

Note 12 –Noncontrolling Interest

On March 13, 2015, the Company’s subsidiary, Chang An Consultants Ltd., declared dividends of HK$2,550,000, or $326,923.  The Company has paid 40% of the dividends or $130,769 to the noncontrolling shareholders.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

DISCLAIMER REGARDING FORWARD-LOOKING STATEMENTS

Certain statements in this report, including statements in the following discussion, are what are known as “forward-looking statements”, which are basically statements about the future.  For that reason, these statements involve risk and uncertainty since no one can accurately predict the future.  Words such as “plans,” “intends,” “will,” “hopes,” “seeks,” “anticipates,” “expects,” and the like, often identify such forward-looking statements, but are not the only indication that a statement is a forward-looking statement.  Such forward-looking statements include statements concerning our plans and objectives with respect to the present and future operations of the Company, and statements which express or imply that such present and future operations will or may produce revenues, income or profits.  Numerous factors and future events could cause the Company to change such plans and objectives, or fail to successfully implement such plans or achieve such objectives, or cause such present and future operations to fail to produce revenues, income or profits.  Therefore, the reader is advised that the following discussion should be considered in light of the discussion of risks and other factors contained in this report on Form 10-K and in the Company’s other filings with the Securities and Exchange Commission.  No statements contained in the following discussion should be construed as a guarantee or assurance of future performance or future results.

PLAN OF OPERATIONS

To cope with the difficult shipping market in 2014, there were several tasks in the management’s plan of operations for 2014.  The first task was tightening control measures to monitor and reduce operating expenses.  Management believes that this task was successfully completed as other general and administrative expense decreased 10% in 2014 when compared to 2013.  Although salaries and travel expenses increased 6% and 7% respectively, it was because the level of marketing activities increased in 2014.  The second task was enhancing our credit controls to improve the average collection period for outstanding receivables.  Management believes that the enhancement was successful although the average collection period increased from 34 days in 2013 to 35 days in 2014.  The third task was carrying out an audit review for our Singapore subsidiary.  This task was completed and no significant finding was noticed during the audit.  The fourth task was organizing marketing activities with our business partners and putting more effort into acquiring new clients.  We believe that this task was successfully achieved as our client retention rate increased by 1 point to 78% and 68 new clients were acquired during 2014.

Management believes that the 2015 fiscal year will still be a difficult year even though the shipping market is expected to be improved to some extent.  However, many companies, including us, have been facing pressures from increasing operating costs such as salaries and rent.  Therefore, the Company plans to continue to tighten control measures in order to monitor and reduce operating expenses.  Meanwhile, we will maintain the current level of marketing activities to promote the Company to new clients and to strengthen our relationship with our existing clients.  In addition, because current market conditions are still bad, with many shipping companies facing liquidity problems, we will maintain our credit controls to retain, or further reduce, the average collection period for outstanding receivables.   

We believe the plans mentioned above will help to turn the Company back to profitability.  However, implementation of the plans will depend on the market situation, associated risk factors and our internal resources.  There is no assurance that we will be able to implement these plans within the foreseeable future.

We do not have any material off-balance sheet arrangements.

RESULTS OF OPERATIONS

THREE MONTHS ENDED MARCH 31, 2015 COMPARED WITH THREE MONTHS ENDED MARCH 31, 2014

Revenue

Revenue for the three months ending March 31, 2015 was $1,241,860, as compared to $1,156,892 for the same period of 2014.  

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The increase of $84,968 or approximately 7% was mainly due to increases of commission income, consulting income, and enrollment fee income which was partially offset by a decrease of website advertising.

Commission income, which is based on a percentage of the premiums paid by the insured, and increased by $82,439 or 7% when compared to the same period in last year.  The increase was mainly contributed by ALC and SHB which was partially offset by a decrease of CAC and KIM.  If the contributions from SHB and KIM are excluded, commission income of the group for the same period of 2015 increased by $85,842 or 8% as compared to the same period of 2014.  The factors which resulted in the increase of commission income attributable to ALC and SHB were 3% increase in the number of clients and 4% increase in the average commission earned per client.

Some clients sold their vessels as scrap during the period because of the poor shipping market.  Such sales result in lowered demand for insurance.  However, the Company’s number of clients still increased during the period because of our marketing activities and acquisition of new clients.  Average commission earned per client increased during the period because of increases in the commission percentage.  During the period of 2015, total commission income contributed by ALC, CAC, SHB and KIM was 87%, 6%, 1% and 6% respectively.  

Consulting income for the three months period ended March 31, 2015 was $8,378 as compared to $6,000 for the comparable period of 2014.  The increase of $2,378 or approximately 40% was mainly due to the fact that demand for the services increased.  Enrollment fee for the three months period ended March 31, 2015 were $2,209 as compared to $1,391 for the same period of 2014.  The increase was mainly due to the increase of enrollment during the period.  

Operating expenses

Operating expenses for the three months ending March 31, 2015 were $1,428,891, as compared to $1,257,749 for the same period of 2014.  The increase of $171,142 or approximately 14% was mainly due to increases in salary, travel, bad debt, and depreciation & amortization, which decreases were partially offset by increases in rents and depreciation and amortization expense and other general & administrative expenses.

The reasons for the increases and decreases in the major items of operating expense in 2015, as compared to the same period of 2014, are as follows:

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Salaries – increased $150,762 or 19% for the three months ended March 31, 2015 as compared to the same period of 2014.  The increase is mainly due to headcount and pay rate increases.

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Travel Expenses – increased $22,899 or 40% for the three months ended March 31, 2015 as compared to the same period of last year.  The increase was because of more marketing activities during the period.

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Rent – decreased $2,023 or 1% for the three months ended March 31, 2015 as compared to the same period of last year.  The decrease was mainly due to the exchange difference.

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Bad debt expenses – increased by $3,971 or 41% for the three months ended March 31, 2015 as compared to the same period of last year.  The increase was mainly due to the provision of doubtful debts increased during the period.

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Depreciation and amortization – increased $1,393 or 4% for the three months ended March 31, 2015 as compared to the same period of last year.  Because the real property located in United States purchased in July 2014, depreciation of the buildings started to charge at that time.  During the three months ended March 31, 2015, depreciation for fixed assets was $38,133, an increase of $1,602, or 4%, from $36,531 in the comparable period of 2014, which was caused by the reason stated as above.  Regarding the amortization charged for intangible asset, it was $2,776 for the three months ended March 31, 2015, a decrease of $209 or 7% as compared to the same period of 2014.

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Other general & administrative expenses – decreased $5,860 or 3% the three months ended March 31, 2015 as compared to the same period of last year.  The decrease was due to the effort of expense control, which partially offset by an increase of exchange loss.

Net loss before tax and noncontrolling interest

Net loss before tax and noncontrolling interest for the three months ending March 31, 2015 was $149,872 compared to $71,993 for the three months period ended March 31, 2014.  The increase in the pre-tax loss of $77,879, or approximately 108%, was mainly because the 14% increase in operating expenses during the period was greater than the 7% increase in revenues.   Causes

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for the revenue decrease were discussed in the section of Revenue above, while causes for the operating expense increase will be discussed in the section of Operating expenses below.  

Other income increased to $37,159 for the three months ending March 31, 2015 from $28,864 for the same period of 2014.  The increase of $8,295 was mainly due to the increase in other revenue and investment income which was partially offset by interest income.  Interest income decreased by 93% to $778 during the period.  The decrease is due to the loans made to third parties in 2014 but no such income in 2015.  Investment income increased by 10% to $7,985 for the three months ending March 31, 2015 as compared to $7,233 in the comparable period of 2014.  It was mainly as a result of an increase in dividend income received from publicly traded equity securities owned by the Company.  

Other revenue for the three months period ended March 31, 2015 was $28,683 compared to $13,859 for the comparable period of 2014.  The increase of $14,824 or approximately 107% mainly due to the receipt of allowance from government in relation to the Company joined an employment programme organized by the government, and a receipt of cash refund from the provident fund scheme.

Net income and loss

The Company incurred a net loss of $159,679 during the three months period ended March 31, 2015. In order to return the company to profitability, we will continue to implement our operations plan which is stated in the “PLAN OF OPERATIONS” section above.  In accordance with our operations plan, we will continue to put efforts into establishment of new clients, credit control and control on expenses.

LIQUIDITY AND CAPITAL RESOURCES

Cash flow

For the three months ended March 31, 2015, cash used in operating activities totaled $563,194.  This was primarily due to the net loss during the period plus a decrease in enrollment fees, deposits and prepayments, other receivables, tax receivable, claims payable, other payables, and accrued expenses, which was partially offset by an increase in commission receivable, fiduciary asset, and accounts payable.

Net loss after adjustments of non-cash activities for the three months ending March 31, 2015 increased by $72,039, or 184% as compared to the same period of 2014. The changes in operating assets and liabilities for the three months ending March 31, 2015 decreased $145,241 or 47% as compared to the same period of 2014.  As a result, net cash used in operating activities for the three months ended March 31, 2015 increased by $217,280 or approximately 63% as compared to the same period of last year.

For the three months ended March 31, 2015, cash used in investing activities amounted to $20,117 as compared to cash provided by investing activities with $595,315 for the same period of last year.  For the first quarter of 2015, the fund was mainly used for the purchase of fixed assets.  For the first quarter of 2014, loan repaid from third party was $620,000 and sales proceed for disposal of fixed assets was $7,389, which was partially offset by the purchase of fixed assets totalled $32,074.

For the three months ended March 31, 2015 and 2014, cash used in finance activities totaled $131,713 and $216 respectively.  For 2015, the funds were mainly used for the dividend payment to minority shareholders, repayment of obligations under capital lease and principal payments on related party debt, which was partially offset by the borrowings on related party debt.  For 2014, the fund borrowed from related parties almost offset the payments on related parties debt.

Assets and liabilities

For the three months ended March 31, 2015, the Group’s balance sheet reflects total assets of $12,954,234 and total liabilities of $2,938,210.  Total assets decreased $305,256, or approximately 2%, and total liabilities increased $66,739, or approximately 2%, when compared to the year ended December 31, 2014.  The decrease of total assets was mainly due to a decrease of cash and cash equivalents, short-term investment, enrolment fee receivable, property, plant and equipment, goodwill, intangible

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asset, deposit and prepayment, and marketable securities which was partially offset by an increase of commission receivable, fiduciary asset and other receivable.  In addition, the increase of total liabilities was mainly due to an increase of trade accounts payable, tax payable, due to directors and obligation from hire purchase which was partially offset by a decrease of claim payable, other payable, and accrued expenses.

As at March 31, 2015, commission receivable was $428,843 as compared to $322,589 as at December 31, 2014, while trade accounts payable was $2,563,566 as compared to December 31, 2014 balance of $2,376,271.  Each of these changes was due to the timing of commissions received from customers and the timing of making payments to insurers in relation to the period end.  In addition, because marine insurance usually renews in late February every year, and the average collection period increased during the period, commission receivable as at March 31, 2015 increased by $106,254 or 33% as compared to December 31, 2014 balance.  In addition, because certain advances on behalf of customers were paid, other receivable increased by $6,504 or 5% as compared to the year end of 2014.  Furthermore, because certain fund received on behalf of customers had been paid during the period, the other payable decreased $21,356 or 10% as compared to the year end of 2014.  On the other hand, certain claim proceeds received on behalf of customers had been paid, the claim payable decreased by $4,715 or 6% as compared to the year end of 2014.

As at March 31, 2015, loan receivable was $1,912,000 which remained unchanged during the period.  Accrued expenses of $65,125 as at March 31, 2015, reduced by $105,075 or approximately 61% from $170,200 as at December 31, 2014.  The reduction was mainly due to the payment of accrued expenses which were provided for the year of 2014.  

Because the interest rate is maintained at a very low level in the recent years, since 2008, the Company has purchased publicly traded equity securities with high dividend yields for long term investment purpose.  As of March 31, 2015, the market value of the equity securities was $343,341, which represents a decrease of $37,863 or approximately 10% as compared to the market value of $381,204 for the last year.  The decrease was due to the change of fair values between March 31, 2015 and December 31, 2014.

As at March 31, 2015, property, plant and equipment were $4,016,069 as compared to $4,035,084 as at December 31, 2014.  The decrease of $19,015 or approximately 0.5% was mainly due to the depreciation.  Due to the fact that the Company acquired a subsidiary in 2012, certain assets such as customer list and goodwill were recognized in the same year.  As of March 31, 2015, the carrying value of customer lists was $5,495 and the carrying value of goodwill was $71,052.

The Company has bank and cash equivalents of approximately $3,309,811 as at March 31, 2015.  The Company has sufficient funds to satisfy its financial commitments and working capital requirements for the next twelve months.  As of March31, 2015, the Company had $0 of commitments for capital expenditures and off-balance sheet arrangements. The company has lease commitments of $397,635.

OFF BALANCE SHEET ARRANGEMENTS

We do not have any material off-balance sheet arrangements.

RECENT ACCOUNTING PRONOUNCEMENTS

For information about new accounting pronouncements and the potential impact on our Consolidated Financial Statements, see Note 2 of the Notes to Consolidated Financial Statements in this Form 10-Q and Note 2 of the Notes to Consolidated Financial Statements in our 2014 Form 10-K.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

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ITEM 4(T). CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

The Securities and Exchange Commission defines the term “disclosure controls and procedures” to mean a company's controls and other procedures of an issuer that are designed to ensure that information required to be disclosed in the reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange 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 Securities Exchange Act of 1934 is accumulated and communicated to the issuer’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.  The Company maintains such a system of controls and procedures in an effort to ensure that all information which it is required to disclose in the reports it files under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified under the SEC's rules and forms and that information required to be disclosed is accumulated and communicated to principal executive and principal financial officers to allow timely decisions regarding disclosure.

As of the end of the period covered by this report, The Company's management, with the participation of the chief executive officer and the chief financial officer, carried out an evaluation of the effectiveness of the design and operation of the Company's "disclosure, controls and procedures" (as defined in the Exchange Act Rules 13a-15(3) and 15-d-15(3) as of the end of the period covered by this annual report (the "Evaluation Date").  Based on that evaluation, the chief executive officer and the chief financial officer concluded that, as of the Evaluation Date, the Company’s disclosure controls and procedures are designed to provide reasonable assurance of achieving the objectives of timely alerting them to material information required to be included in our periodic SEC reports and of ensuring that such information is recorded, processed, summarized and reported with the time periods specified.  Our chief executive officer and chief financial officer also concluded that our disclosure controls and procedures were effective as of March 31, 2015 to provide reasonable assurance of the achievement of these objectives.

Changes in Internal Controls Over Financial Reporting

There have not been any changes in our internal control over financial reporting (as such term is defined in Rule 13a-15(f) under the Exchange Act) or any other factors during the three months ended March 31, 2015, 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

None.

ITEM 1A. RISK FACTORS

Not applicable.

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

 Not Applicable.

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ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not applicable.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

The following exhibits are filed herewith:

31.1

Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2

Certification of Chief Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1

Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2

Certification of Chief Financial Officer pursuant to 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 Schema Document

101

CAL XBRL Taxonomy Extension Calculation Linkbase Document

101

LAB XBRL Taxonomy Extension Label Linkbase Document

101

PRE XBRL Taxonomy Extension Presentation Linkbase Document

101

DEF XBRL Taxonomy Extension Definition Linkbase Document

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SIGNATURES

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

ALCO, INC.

(Registrant)

By: /s/ Andrew Liu, CEO and Chairman

Date:  May 15, 2015

By: /s/ John Liu, Director

Date:  May 15, 2015

By: /s/ Colman Au, Chief Financial Officer

Date:  May 15, 2015

20