UNITED STATES

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 September 30, 2017



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

For the transition period from to

Commission file number: 000-27729

NZCH Corporation

(Exact name of registrant as specified in its charter)



Nevada		76-0571159
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
450 Park Avenue, 29th Floor New York, NY		10022
(Address of principal executive offices)		(Zip Code)

(212) 906-8555

(Registrant’s telephone number, including area code)

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

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

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

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. ¨

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

There were 50,004,474 shares of the registrant’s common stock outstanding as of October 17, 2017, $0.001 par value.

NZCH CORPORATION

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	Page

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements:

Condensed Balance Sheets as of September 30, 2017 (Unaudited) and December 31, 2016	3

Condensed Statements of Operations for the Three and Nine Months Ended September 30, 2017 and 2016 (Unaudited)	4

Condensed Statements of Cash Flows for the Nine Months Ended September 30, 2017 and 2016 (Unaudited)	5

Notes to Condensed Financial Statements (Unaudited)	6

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	7

Item 3. Quantitative and Qualitative Disclosures about Market Risk	8

Item 4. Controls and Procedures	8

PART II. OTHER INFORMATION

Item 1. Legal Proceedings	10

Item 1A. Risk Factors	10

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	11

Item 3. Defaults Upon Senior Securities	11

Item 4. Mine Safety Disclosures	11

Item 5. Other Information	11

Item 6. Exhibits	11

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PART I: FINANCIAL INFORMATION

Item 1. Financial Statements

NZCH CORPORATION

CONDENSED BALANCE SHEETS



	September 30, 2017			December 31, 2016
	(Unaudited)
ASSETS
Current assets:
Cash	$	750,095		$	840,890
Prepaid expense	8,699			3,772
Total assets	$	758,794		$	844,662
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and other current liabilities	$	2,294		$	3,421
Total liabilities	2,294			3,421
Commitments and contingencies
Stockholders’ equity:
Common stock	50,004			50,004
Additional paid in capital	11,180,077			11,154,979
Accumulated deficit	(10,473,581		)	(10,363,742		)
Total stockholders’ equity	756,500			841,241
Total liabilities and stockholders’ equity	$	758,794		$	844,662

See accompanying notes to condensed financial statements.

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NZCH CORPORATION

CONDENSED STATEMENTS OF OPERATIONS



	Three months ended September 30,						Nine months ended September 30,
	2017			2016			2017			2016
	(Unaudited)						(Unaudited)
Revenues	$	—		$	—		$	—		$	—
Cost of revenues	—			—			—			—
Gross profit	—			—			—			—
Operating expenses:
General and administrative	22,530			19,943			109,839			128,986
Total operating expenses	22,530			19,943			109,839			128,986
Operating loss	(22,530		)	(19,943		)	(109,839		)	(128,986		)
Gain on sale of domain names	—			—			—			375,000
(Loss) income before income taxes	(22,530		)	(19,943		)	(109,839		)	246,014
Income tax (benefit) expense	—			—			—			—
Net (loss) income	$	(22,530	)	$	(19,943	)	$	(109,839	)	$	246,014
Net income per common share – basic and diluted	$	—		$	—		$	—		$	—
Weighted average common shares outstanding – basic and diluted	50,004,474			50,004,474			50,004,474			50,004,474

See accompanying notes to condensed financial statements.

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NZCH CORPORATION

CONDENSED STATEMENTS OF CASH FLOWS



	Nine months ended September 30,
	2017			2016
	(Unaudited)
Cash flows from operating activities:
Net (loss) income	$	(109,839	)	$	246,014
Adjustments to reconcile net (loss) income to net cash used in operating activities:
Contributed capital from HRG Group, Inc. for unreimbursed management services (Note 2)	25,098			27,220
Gain on sale of domain names	—			(375,000		)
Changes in operating assets and liabilities:
Prepaid expense	(4,927		)	1,861
Accounts payable and other current liabilities	(1,127		)	(2,204		)
Payable to affiliate	—			(5,802		)
Net cash used in operating activities	(90,795		)	(107,911		)
Cash flows from investing activities:
Sale of domain names	—			375,000
Net cash provided in investing activities	—			375,000
Net (decrease) increase in cash	(90,795		)	267,089
Cash at beginning of period	840,890			595,514
Cash at end of period	$	750,095		$	862,603

See accompanying notes to condensed financial statements.

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NZCH CORPORATION

NOTES TO CONDENSED FINANCIAL STATEMENTS

(Unaudited)

Note 1. Basis of Presentation

The unaudited condensed financial statements included herein have been prepared by NZCH Corporation (“NZCH” or the “Company”) pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). The financial statements reflect all adjustments that are, in the opinion of management, necessary for a fair statement of such information. All such adjustments are of a normal recurring nature. Although the Company believes that the disclosures are adequate to make the information presented not misleading, certain information and footnote disclosures, including a description of significant accounting policies normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”), have been condensed or omitted pursuant to such rules and regulations. The year-end condensed balance sheet data was derived from audited financial statements, but does not include all disclosures required by US GAAP. These interim financial statements should be read in conjunction with the financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016 filed with the SEC on March 16, 2017. The results of operations for the nine months ended September 30, 2017 are not necessarily indicative of the results for any subsequent periods or the entire fiscal year ending December 31, 2017.

Note 2. Related Party Transactions

Since its inception, the Company has utilized the services of the management and staff of HRG Group, Inc., its principal stockholder (the Company’s “Principal Stockholder”), under a shared services agreement that allocated these costs on a percentage of time basis. The Company also shares office space with its Principal Stockholder under such agreement. Through September 30, 2017, the Principal Stockholder has waived its rights under the shared services agreement to be reimbursed for these costs. The Company recorded approximately $8,197 and $7,250 as contributed capital for such services for the three months ended September 30, 2017 and 2016, respectively, and $25,098 and $27,220 for the nine months ended September 30, 2017 and 2016, respectively. The Company believes these allocations were made on a reasonable basis; however, they do not necessarily represent the costs that would have been incurred by the Company on a stand-alone basis.

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

This “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of NZCH Corporation (the “Company,” “NZCH,” “we,” “us,” or “our”) should be read in conjunction with our unaudited condensed financial statements included elsewhere in this report and “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2016 (the “Form 10-K”) filed with the Securities and Exchange Commission (the “SEC”) on March 16, 2017. Certain statements we make under this Item 2 constitute “forward-looking statements” under the Private Securities Litigation Reform Act of 1995. See “Forward-Looking Statements” in “Part II — Other Information” of this report. You should consider our forward-looking statements in light of our unaudited condensed financial statements, related notes, and other financial information appearing elsewhere in this report, our Form 10-K and our other filings with the SEC.

Overview

The Company was incorporated in Nevada in 1999 for the purpose of creating and operating a global network of independently owned websites. HRG Group, Inc. (our “Principal Stockholder” or “HRG”) owns approximately 99.5% of our outstanding common stock. Currently, we have no business operations, other than complying with our reporting requirements under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). While it is possible that we may search for assets or businesses to acquire so that we may in the future become an operating company, we expect, although there can be no assurance, that we will wind-down our business, liquidate our operations and/or dissolve the Company. It is also possible that HRG may sell the Company or otherwise distribute its interest in the Company.

We have broad discretion in selecting a business strategy for the Company and there can be no assurance that we will be successful in implementing such a strategy. If we elect to pursue a business combination, we have broad discretion in identifying and selecting both the industries and the possible acquisition or business combination opportunities. We have not identified a specific industry to focus on, and have no present plans, proposals, arrangements or understandings with respect to a business combination or acquisition.

On April 14, 2017, HRG and Mr. Omar Asali, the Chief Executive Officer (“CEO”) and director of the Company, entered into a Separation and Release Agreement pursuant to which, among other things, Mr. Asali ceased his employment with the Company and resigned from the Board of Directors of the Company. On April 14, 2017, Mr. Joseph S. Steinberg, the CEO and Chairman of the Board of Directors of HRG, was appointed as Chairman of the Board of Directors and CEO of NZCH.

Results of Operations

For the three and nine months ended September 30, 2017 and 2016, our operations consisted of the following:

Revenues. We had no revenues for the three and nine months ended September 30, 2017 and 2016, and we do not presently have any revenue-generating business.

Cost of Revenues. We had no cost of revenues for the three and nine months ended September 30, 2017 and 2016.

General and Administrative Expenses. General and administrative expenses consist primarily of legal and accounting professional services, printing and filing costs, expenses allocated for services by our Principal Stockholder under a shared services agreement, and various other costs. General and administrative expenses increased by $2,587 to $22,530 for the three months ended September 30, 2017 from $19,943 for the three months ended September 30, 2016. General and administrative expenses decreased $19,147 to $109,839 for the nine months ended September 30, 2017 from $128,986 for the nine months ended September 30, 2016 primarily due to lower audit and filing fees.

Liquidity and Capital Resources

We have not generated any significant revenue since our inception. As a result, our primary source of liquidity has been from our initial capitalization.

Since our inception, we have utilized services of the management and staff and occupied office space of our Principal Stockholder under a shared services agreement that allocated these costs. Our Principal Stockholder has waived its rights under the shared services agreement to be reimbursed these costs through September 30, 2017. For the three months ended September 30, 2017 and 2016, we recorded approximately $8,197 and $7,250, respectively, as contributed capital for these services and for the nine months ended September 30, 2017 and 2016, we recorded approximately $25,098 and $27,220, respectively.

As of September 30, 2017, our cash balance was $750,095 and owned certain other intangible assets to which we ascribe no value. We believe that we have sufficient resources to satisfy our existing liabilities and our anticipated operating expenses for the next twelve months. Until such time as we actively pursue a business combination, asset acquisition or liquidate our operations, we expect these expenses to consist mainly of general and administrative expenses incurred in connection with maintaining our status as a public reporting company. We have no commitments for capital expenditures and foresee none, except for possible future business combinations, asset acquisitions or in connection with our liquidation and wind up. In order to effect a business

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combination, asset acquisition or our liquidation and wind up, however, we may need additional financing. There is no assurance that any such financing will be available or available on terms favorable or acceptable to us.

Off-Balance Sheet Arrangements

We did not have any off-balance sheet arrangements at September 30, 2017 that have or are reasonably likely to have a current or future material effect on our financial position, results of operations or cash flows.

Summary of Cash Flows

Cash used in operating activities was $90,795 for the nine months ended September 30, 2017 compared to $107,911 for the nine months ended September 30, 2016. The decrease in cash used in operating activities was primarily due to timing of payments on outstanding balances due to affiliates and third parties and lower general and administrative expenses as discussed above, during the nine months ended September 30, 2017 as compared to the nine months ended September 30, 2016.

We had no cash flows related to investing activities for the nine months ended September 30, 2017. Cash provided by investing activities was $375,000 for the nine months ended September 30, 2016 related to the Domain Sale during the nine months ended September 30, 2016.

We had no cash flows related to financing activities for the nine months ended September 30, 2017 and 2016.

Recent Accounting Pronouncements Not Yet Adopted

There were no relevant recent accounting pronouncements not yet adopted at September 30, 2017.

Critical Accounting Policies and Estimates

As of September 30, 2017, our critical accounting policies and estimates have not changed materially from those set forth in our Form 10-K.

Contractual Obligations

We do not have any long-term debt obligations, capital leases obligations, operating lease obligations or purchase obligations at September 30, 2017.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

We do not have any market risk exposure to changes in interest rates, foreign currency exchange rates, equity prices or commodity prices at September 30, 2017. We had no outstanding derivative instruments or long-term debt at September 30, 2017.

Item 4. Controls and Procedures

Evaluation of disclosure controls and procedures

An evaluation was performed under the supervision of the Company’s management, including the Principal Executive Officer and Principal Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) as of the end of the period covered by this report. Based on that evaluation, the Company’s management, including the Principal Executive Officer and Principal Financial Officer, concluded that, as of September 30, 2017, the Company’s disclosure controls and procedures were effective to ensure that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and is accumulated and communicated to the Company’s management, including the Company’s Principal Executive Officer and Principal Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Notwithstanding the foregoing, there can be no assurance that the Company’s disclosure controls and procedures will detect or uncover all failures of persons within the Company to disclose material information otherwise required to be set forth in the Company’s periodic reports. There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable, not absolute, assurance of achieving their control objectives.

Changes in Internal Controls Over Financial Reporting

An evaluation was performed under the supervision of the Company’s management, including the Principal Executive Officer and Principal Financial Officer, of whether any change in the Company’s internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) occurred during the quarter ended September 30, 2017. Based on that evaluation, the Company’s management, including the Principal Executive Officer and Principal Financial Officer, concluded that no significant

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changes in the Company’s internal controls over financial reporting occurred during the quarter ended September 30, 2017 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

Limitations on the Effectiveness of Controls

Our management, including our Principal Executive Officer and Principal Financial Officer, does not expect that the Company’s disclosure controls and procedures or the Company’s internal controls over financial reporting will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected.

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PART II: OTHER INFORMATION

FORWARD-LOOKING STATEMENTS

CAUTIONARY STATEMENT FOR PURPOSES OF THE “SAFE HARBOR” PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995.

NZCH Corporation (referred to as the “Company,” “NZCH,” “we,” “us,” or “our”) has made forward-looking statements in this Quarterly Report on Form 10-Q that are subject to risks and uncertainties. These statements are based on the beliefs and assumptions of our management. Generally, forward-looking statements include information concerning possible or assumed future actions, events or results of operations of the Company. Forward-looking statements include, without limitation, the information regarding our assets and operations and management’s plans for the Company.

Forward-looking statements may be preceded by, followed by or include the words “may,” “will,” “believe,” “expect,” “anticipate,” “intend,” “plan,” “estimate,” “could,” “might,” or “continue” or the negative or other variations thereof or comparable terminology. We claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 for all forward-looking statements.

Forward-looking statements are not guarantees of performance. You should understand that the following important factors, in addition to those discussed in “Part I-Item 1A. Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2016 filed with the Securities and Exchange Commission (the “SEC”) on March 16, 2017 (the “Form 10-K”), could affect our future results and could cause those results or other outcomes to differ materially from those expressed or implied in the forward-looking statements.

Important factors that could affect our future results include, without limitation, the following:


•	The impact of having no source of revenue;


•	The impact of our inability to effectively or successfully implement our business strategy;


•	The impact of HRG Group, Inc. (our “Principal Stockholder” or “HRG”) deciding not to maintain its investment in the Company (including selling the Company and/or otherwise distributing its interest in the Company);


•	The controlling effect of our Principal Stockholder whose interests may conflict with interests of our other stockholders;


•	The impact of a determination that we are an investment company;


•	The impact of the structure of an acquisition or business combination on our stockholders;


•	The impact of management devoting insignificant time to our activities;


•	The impact of delays or difficulty in satisfying the requirements of Section 404 of the Sarbanes-Oxley Act of 2002 or negative reports concerning our internal controls;


•	The impact of our categorization as a “shell company” as that term is used in the SEC’s rules;


•	The effect of a limited public market for our common stock on the trading activity and market value of our stock;


•	The potential liabilities or loss of benefits associated with being a member of our Principal Stockholder’s consolidated tax group;


•	The effect of our intention not to pay any cash dividends on our common stock;


•	The effect of the anti-takeover provisions in our corporate documents on the market price of our common stock; and


•	The volatility of our common stock, including the effect of a substantial amount of our common stock being eligible for sale into the market on our stock price.

Some of the above-mentioned factors are described in further detail in the section entitled “Risk Factors” set forth in our Form 10-K. You should assume the information appearing in this report is accurate only as of September 30, 2017 or as otherwise specified herein, as our business, financial condition, results of operations and prospects may have changed since that date. Except as required by applicable law, including the securities laws of the U.S. and the rules and regulations of the SEC, we undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise to reflect actual results or changes in factors or assumptions affecting such forward-looking statements.

Item 1. Legal Proceedings

None.

Item 1A. Risk Factors

When considering an investment in the Company, you should carefully consider the risk factors discussed in the Company’s Form 10-K. Any of these risk factors could materially and adversely affect the Company’s business, financial condition and results of operations, and these risk factors are not the only risks that the Company may face. Additional risks and uncertainties not presently

known to the Company or that are not currently believed to be material also may adversely affect the Company. There have been no material changes in the Company’s risk factors from those disclosed in Part I, Item 1A, of the Form 10-K.

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

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

Item 6. Exhibits



Exhibit No.		Description of Exhibits
31.1*		Certification of Principal Executive Officer Pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2*		Certification of Principal Financial Officer Pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1**		Certification of Principal 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 Principal 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 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


*	Filed herewith


**	Furnished herewith

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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.




		NZCH CORPORATION
		(Registrant)

Dated:	October 19, 2017	By:	/s/ GEORGE C. NICHOLSON

			Senior Vice President, Chief Accounting Officer and Chief Financial Officer
			(on behalf of the Registrant and as Principal Financial Officer)

Large accelerated filer

Accelerated filer

Non-accelerated filer

x (Do not check if a smaller reporting company)

Smaller reporting company

Emerging growth company

NZCH Corp 10-Q