NATURE OF BUSINESS

12 Months Ended

Dec. 31, 2015

Organization, Consolidation and Presentation of Financial Statements [Abstract]

NOTE 1. NATURE OF BUSINESS

Organization.

AF Ocean Investment Management Company was incorporated under the laws of the State of Florida on April 2, 2003. We have one wholly-owned subsidiary, AF Ocean Investment Management Company (Shanghai Ltd.) (the “Subsidiary”), which we acquired as of July 6, 2012. AF Ocean Investment Management Company (together with its wholly-owned subsidiary, hereinafter collectively referred to as the “Company”, “AF Ocean” “our” or “we”) promotes business relations and exchanges between Chinese and U.S. companies, facilitating international mergers and acquisitions, and increasing co-operation between Chinese companies and Wall Street financial institutions. The mission is to help Wall Street investors identify and work with respectable and reputable Chinese counterparts and companies and assist Chinese corporations to understand that the only way to benefit from the world’s biggest capital market is through strict and consistent adherence to the rules and regulations that govern companies listed on American stock exchanges.

On July 24, 2014, we issued 5,000,000 shares of Series A Convertible Preferred Stock (the “Preferred Shares”) in connection with a transfer of Pilot New Energy Research Institute of Beijing's (the “Institute's”) intellectual property in the form of non-patented technology relating to a new energy electric vehicle based on electromagnetic induction (the “Technology”) to the Subsidiary. In exchange for the transfer of the Technology to the Subsidiary, we agreed to issue the Preferred Shares to the Institute's sole legal representative, Mr. Andy Fan, our principal shareholder and sole director. We believe that the Technology will be our primary business enterprise going forward. After acquiring the Technology, we issued 167,012,323 common shares valued at $1,670,123 to 3,160 people that will enable us to effectively market the Technology to many organizations in China that we otherwise would not have been able to reach with other marketing programs relating to the Technology.

Financial Instruments

The carrying amounts of current assets and current liabilities approximate their fair value because of the relatively short period of time between the origination of these instruments and their expected realization.

Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 820 “Fair Value Measurements and Disclosures” (ASC 820) defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy that distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are described below:

·	Level 1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities
·	Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, including quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates); and inputs that are derived principally from or corroborated by observable market data by correlation or other means.
·	Level 3 - Inputs that are both significant to the fair value measurement and unobservable.

Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of December 31, 2015. The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values due to the short-term nature of these instruments.

The Company applied ASC 820 for all non-financial assets and liabilities measured at fair value on a non-recurring basis. The adoption of ASC 820 for non-financial assets and liabilities did not have a significant impact on the Company’s financial statements.

As of December 31, 2015 and 2014 the fair values of the Company’s financial instruments approximate their historical carrying amount.

AF OCEAN INVESTMENT MANAGEMENT Co 10-K