UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549  FORM 10-QSB   XQUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended Sept 30, 2006  ___ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____ to ____  ALCO, INC. (Name of small business issuer in its charter)  Nevada0-5110511-3644700(State or other jurisdiction of incorporation)(Commission File Number)(IRS Employer Identification No.)Suite 501, Bank of America Tower
12 Harcourt Road, Central
Hong Kong(Address of Principal Executive Office)Registrants telephone number, including area code:  852-2521-0373  Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities 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 XNo...  Applicable only to issuers involved in bankruptcy proceedings during the past five years.  Check whether the issuer has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court.  Yes...  No.....  Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   Yes. No X  Applicable only to corporate issuers  State the number of shares outstanding of each of the issuers classes of common equity, as of the latest practicable date. At Sept 30, 2006, the following shares were outstanding: 10,000,000.  Transitional Small Business Disclosure Format (Check one):  Yes...     No X   - 1 -        PART 1 - FINANCIAL INFORMATION   ITEM 1.  FINANCIAL STATEMENTS AND EXHIBITS  (a) 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-KSB for the year ended December 31, 2005.                  - 2 -           ALCO, INC. AND SUBSIDIARIES    CONSOLIDATED FINANCIAL STATEMENTS    Sept 30, 2006            - 3 -       CONTENTS      PAGEConsolidated Balance Sheet (unaudited)5Consolidated Statements of Operations (unaudited)7Consolidated Statements of Cash Flows (unaudited)9Notes to Unaudited Financial Statements11            - 4 -    ALCO, INC. AND SUBSIDIARIES  CONSOLIDATED BALANCE SHEET (UNAUDITED)   Sept 30,ASSETS2006Current Assets:Cash and cash equivalents (Note 3)$2,903,434Commissions receivable, net (Note 5)119,364Enrollment fee receivable-Total current assets3,022,798Property, plant and equipment, net (Note 6)73,968Other assetsDeposit and prepayment56,129Restricted Cash (Note 4)1,290,862Other Receivable40,129Due from shareholders  (Note 8)192Total other assets1,387,312Total Assets$4,484,078LIABILITIES AND STOCKHOLDERS' EQUITYCurrent Liabilities:Bank over draft  (Note 7)$44,190Trade accounts payable176,129Claims payable1,123,562Other payable-Accrued expenses53,673Deferred revenue5,417Due to directors (Note 9)15,496Income tax payable391,620Current portion of obligation from hire purchases lease1,763Total Current Liabilities1,811,850Long term portion of obligation from hire purchase lease8,191Minority interest34,985  - 5 -     Commitments and contingencies (Note 11)-Stockholders' Equity:Preferred stock, par value $0.01, 5,000,000 shares authorized;no shares issued and outstanding-Common stock, par value $0.001, 50,000,000 shares authorized;10,000,000 shares issued and outstanding as of Sept 30, 200610,000Additional Paid-in capital10,513Retained earnings2,608,539Stockholders' Equity2,629,052Total Liabilities and Stockholders' Equity$4,484,078     See Notes to Financial Statements            - 6 -       ALCO, INC. AND SUBSIDIARIES  CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)  For the Nine Months EndedSept 30,20062005RevenuesCommission income$2,655,437$2,211,978Consulting income4,56116,757Website advertising22,583-Enrollment Fee income953-Total revenues2,683,5342,228,735Operating ExpensesSalaries599,754252,204Travel expenses161,962145,962Rents288,026218,689Bad debt expenses-28,857Depreciation12,24917,990Exchange loss (gain)7,0903,275Other general and administrative270,434469,167Total Operating Expenses1,339,5151,136,144Income (Loss) from Operations1,344,0191,092,591Other Income (Expense)Other income25,02111,065Interest income53,85111,874Interest expense(4,012)(3,885)Total other income (expenses)74,86019,054Income (Loss) before provisionfor Income Taxes and Minority Interest1,418,8791,111,645Provision for Income Taxes254,036201,391Income (loss) before Minority Interest1,164,843910,254Minority Interest27,29425,705  - 7 -       Net Income (Loss)$1,137,549$884,549Basic and fully diluted earnings per share$0.11$0.09Weighted average shares outstanding10,000,00010,000,000             See Notes to Financial Statements      - 8 -      ALCO, INC. AND SUBSIDIARIES  CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)  For the Nine Months EndedSept 30,20062005Operating ActivitiesNet income$1,137,549$884,549Adjustments to reconcile net income tonet cash provided by operating activities:Depreciation12,24917,990Minority interest (income)27,29425,705Adjustment of minority interestChanges in operating assets and liabilities:(Increase)/decrease in commission receivable (net)19,956(162,365)(Increase)/decrease in restricted cash58,048(474,952)(Increase)/decrease in deposit and prepayment13,439(28,462)(Increase) in other receivable(38,262)(31,756)Increase/(decrease) in accounts payable(627,278)376,909Increase in claims payable588,927190,708Increase/(decrease) in other payable(31,648)15,182(Decrease) in accrued expenses12,90457,620Increase in deferred income5,417-Increase in income tax payable254,035186,276Net cash provided by operating activities1,432,6301,057,404Investing ActivitiesPurchase of fixed assets(58,583)(23,463)Net cash (used) by investing activities(58,583)(23,463)Financing ActivitiesBank overdraft-45,944Repayment of bank overdraft(1,713)-Loan from obligations under finance leases9,954(12,725)Repayment of amount due to shareholder(25,641)(66,665)Repayment of amount due to director(74,359)(116,376)Net cash (used) by financing activities(91,759)(149,822)Increase in cash1,282,288884,119  - 9 -       Cash at beginning of period1,621,146750,807Cash at end of period$2,903,434$1,634,926Supplemental Disclosures of Cash Flow Information:Cash paid (receive) during year for:Interest$4,012$3,885Income taxes$-$15,116   See Notes to Financial Statements            - 10 -      ALCO, INC. AND SUBSIDIARIES  NOTES TO FINANCIAL STATEMENTS  (UNAUDITED)   Note 1- ORGANIZATION AND OPERATIONS  Description of Business  ALCO, Inc., (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. on September 20, 2004.  The Company changed its name to ALCO, Inc. on January 7, 2006.  The Company is principally engaged in the marine insurance brokerage business in the Asia Pacific region, through its wholly owned subsidiary, AL Marine Holdings (BVI), Ltd., a British Virgin Islands corporation ("AL Marine").  Under the terms of the Agreement for the Share Exchange, Lotus has agreed to acquire all of the issued and outstanding stock of AL Marine and $50,000 in a share exchange transaction, in return for the issuance of 9,766,480 shares of stock of Lotus. Upon closing under the Agreement for Share Exchange, AL Marine would become a wholly-owned subsidiary of Lotus.  AL Marine is the 100% owner of Andrew Liu and Co., Ltd., a corporation principally engaged in the business of marine insurance brokerage in Asia.  AL Marine owns 60% of Chang An Consultants Ltd., a joint venture with China Changjiang National Shipping Corporation (CSC Group) that serves as a vehicle for the provision of marine insurance brokerage and other marine business services by AL Marine.  AL Marine owns 85% of EduShipAsia Ltd.  In 2005 and 2004, EduShipAsia Ltd. was appointed as an exclusive agent by the Institute of Chartered Shipbrokers (UK) ("ICS") to set up ICS's first distant learning center in Shanghai, PRC.  ALCO, Inc. and AL Marine are hereafter collectively referred to as the Company.  Control by Principal Stockholders  The directors, executive officers, their affiliates and related parties own, beneficially and in the aggregate, the majority of the voting power of the outstanding share capital of the Company. Accordingly, directors, executive officers and their affiliates, if they voted their shares uniformly, would have the ability to control the approval of most corporate actions, including approving significant expenses, increasing the authorized capital stock and the dissolution, merger or sale of the Company's assets.      - 11 -      ALCO, INC. AND SUBSIDIARIES  NOTES TO FINANCIAL STATEMENTS  (UNAUDITED)   Note 2- SIGNIFICANT ACCOUNTING POLICIES  Economic and Political Risks  The Company faces a number of risks and challenges since its assets are located in Hong Kong,  a Special Administrative Region of the People's Republic of China ("PRC"), and its revenues are derived from its operations therein.  The PRC is a developing country with an early stage market economic system, overshadowed by the state.  Its political and economic systems are very different from the more developed countries and are in a state of change.  The PRC also faces many social, economic and political challenges that may produce major shocks and instabilities and even crises, in both its domestic arena and in its relationships with other countries, including the United States.  Such shocks, instabilities and crises may in turn significantly and negatively affect the Company's performance.  Basis of Presentation  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.  The accompanying financial statements are prepared in accordance with generally accepted accounting principles in the United States of America ("US GAAP").  This basis of accounting differs from that used in the statutory accounts of the Company, which are prepared in accordance with the "Hong Kong Accounting Standard" ("HKAS").  Certain accounting principles, which are stipulated by US GAAP, are not applicable in the HKAS.  The difference between HKAS accounts of the Company and its US GAAP financial statements is immaterial.  The Company maintains its books and accounting records in Hong Kong dollar ("HK$"), which is determined as the functional currency.  Assets and liabilities of the Company are translated at the prevailing exchange rate at each year-end. Contributed capital accounts are translated using the historical rate of exchange when capital is injected. Income statement accounts are translated at the average rate of exchange during the year. Translation adjustments arising from the use of different exchange rates from period to period are include in the cumulative translation adjustment account in shareholders' equity. Gain and losses resulting from foreign currency transactions are included in operations.    - 12 -      ALCO, INC. AND SUBSIDIARIES  NOTES TO FINANCIAL STATEMENTS  (UNAUDITED)   Note 2- SIGNIFICANT ACCOUNTING POLICIES  Concentration of Credit Risk  Financial instruments which subject the Company to concentrations of credit risk consist principally of accounts receivable and cash.  Exposure to losses on receivables is dependent on each customer's financial condition.  The Company controls its exposure to credit risk through a process of credit approvals, credit limits and monitoring procedures, establishing allowances for anticipated losses.  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.  Significant Estimates  Several areas require significant management estimates relating to uncertainties for which it is reasonably possible that there will be a material change in the near term. The more significant areas requiring the use of management estimates relate to the valuation of accounts receivable and payable, equipment, accrued liabilities, and the useful lives for amortization and depreciation.  Revenue Recognition  Commission revenue is recognized as of the effective date of the insurance policy or the date the customer is billed, whichever is later. At that date, the earnings process has been completed and the Company can reliably estimate the impact of policy cancellations based upon historical cancellation experience adjusted by known circumstances. The policy cancellation reserve is periodically evaluated and adjusted as necessary. Subsequent commission adjustments are recognized upon notification from the insurance companies. Commission revenues are reported net of commissions paid to sub-brokers. Consulting income is recognized as services are rendered.  Cash and Cash Equivalents  The Company invests idle cash primarily in money market accounts, certificates of deposit and short-term commercial paper. Money market funds and all highly liquid debt instruments with an original maturity of three months or less are considered cash equivalents.  - 13 -      ALCO, INC. AND SUBSIDIARIES  NOTES TO FINANCIAL STATEMENTS  (UNAUDITED)   Note 2- SIGNIFICANT ACCOUNTING POLICIES (continued)  Commissions Receivable  Commissions receivable are reported as net of premiums receivable from customers and premiums payable to  respective insurers and commissions payable to sub-brokers, if any, then less an allowance for any doubtful amounts.  We made allowance for doubtful accounts based on a review of all outstanding amounts on a monthly basis. We analyze the aging of receivable balances, historical bad debts, customer concentrations, customer credit-worthiness, current economic trends and changes in our customer payment terms. Significant changes in customer concentration or payment terms, deterioration of customer credit-worthiness or weakening in economic trends could have a significant impact on the collectibility of receivables and the allowance. If the financial condition of our customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances will be made.  Property, Plant and Equipment  Property, plant and equipment are carried at cost.  The cost of repairs and maintenance is expensed as incurred; major replacements and improvements are capitalized.  When assets are retired or disposed of, the cost and accumulated depreciation are removed from the accounts, and any resulting gains or losses are included in the income statement in the year of disposition.  Depreciation is calculated on a straight-line basis over the estimated useful life of the assets.  The annual percentages applied are:  Motor vehicles20%Furniture and fixtures15%Office equipment15%Leasehold improvements20%  Accounts Payable and Claims Payable  In its capacity as an insurance agent or broker, the Company collects premiums from insureds and, after deducting its commissions, remits the premiums to the respective insurers; the Company also collects claims or refunds from insurers on behalf of insureds. Unremitted insurance premiums and claims are held in a fiduciary capacity. The obligation to remit premiums is recorded as accounts payable and the obligation to remit claims and refunds is recorded as claims payable on the balance sheet.  - 14 -      ALCO, INC. AND SUBSIDIARIES  NOTES TO FINANCIAL STATEMENTS  (UNAUDITED)   Note 2- SIGNIFICANT ACCOUNTING POLICIES (continued)  Pension Costs  Mandatory contributions are made to the Hong Kong's Mandatory Provident Fund (MPF), based on a percentage of the employees' basic salaries.  The cost of these payments are charged to the profit and loss accounts as they become payable in accordance with the rule of the MPF Scheme.  The employer contributions vest fully with the employees when contributed into the MPF Scheme.  Income Taxes  Income tax expense is based on reported income before income taxes. Deferred income taxes reflect the effect of temporary differences between assets and liabilities that are recognized for financial reporting purposes and the amounts that are recognized for income tax purposes. In accordance with Statement of Financial Accounting Standards (SFAS) No. 109, "Accounting for Income Taxes," these deferred taxes are measured by applying currently enacted tax laws.  The effective tax rate was 17.5% in 2006 and 2005.  The Company did not provide any current or deferred income tax provision or benefit for any period presented to date because book income is substantially equal to taxable income, with only minor timing differences with regard to the depreciation of fixed assets. Management has determined that any deferred tax asset or liability is inconsequential, and not material to the financial statements.  Fair Value of Financial Instruments  The carrying value of financial instruments, including cash and cash equivalents, receivables, accounts payable and accrued expenses, approximates their fair value at Sept 30, 2006, due to the relatively short-term nature of these instruments.  Interim Financial Information  The unaudited interim financial statements have been prepared in accordance with United States generally accepted accounting principles for interim financial information. In the opinion of management, all adjustments considered necessary for a fair presentation of the financial position, results of operations and cash flows as at Sept 30, 2006, and 2005, have been included.  Readers of these financial statements should note that the interim results for the nine  month period ended Sept 30, 2006, are not necessarily indicative of the results that may be expected for the fiscal year as a whole.  - 15 -       ALCO, INC. AND SUBSIDIARIES  NOTES TO FINANCIAL STATEMENTS  (UNAUDITED)   Note 2- SIGNIFICANT ACCOUNTING POLICIES (continued)  Valuation of Long-Lived Assets  The Company periodically analyzes its long-lived assets for potential impairment, assessing the appropriateness of lives and recoverability of unamortized balances through measurement of undiscounted operating cash flows on a basis consistent with US GAAP.  Related Party Transactions  The captions "Due from directors" and "Due from shareholders" represent loans receivable that are unsecured, non-interest bearing and have no fixed terms of repayment, and therefore are not considered current assets.  The captions "Due to directors" and  "Due to shareholders" represent loans payable that are unsecured, non-interest bearing and have no fixed terms of repayment, therefore, deemed payable on demand.  The Company rents office space in Hong Kong and Shanghai from a company owned by directors of the Company.  Foreign Currency and Other Comprehensive Income  The accompanying financial statements are presented in United States (US) dollars. The functional currency is the Hong Kong dollar (HK$). The financial statements are translated into US dollars from HK$ at period 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, maintain 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 the period of 2006 and 2005. 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.  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.  - 16 -       ALCO, INC. AND SUBSIDIARIES  NOTES TO FINANCIAL STATEMENTS  (UNAUDITED)   Note 2- SIGNIFICANT ACCOUNTING POLICIES (continued)  Reverse Stock Split  On August 11, 2005, our Board of Directors approved a 10-for-1 reverse stock split of our outstanding shares of capital stock.  The reverse stock split became effective on September 26, 2005.  All share and per share information included in these consolidated financial statements have been adjusted to reflect this reverse stock split.  Earnings (Loss) Per Share  Basic earnings (loss) per share is computed by dividing income (loss) 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.  As of 30 September, 2006, there are no potentially dilutive securities issued and outstanding.  Note 3- CASH  Cash consists of the following:Sept 30,2006Cash on hand$3,488Cash in BankBank of America Asia Ltd2,894,538Bank of China5,408$2,903,434 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.  Note 4- RESTRICTED CASH  Restricted cash are cash balances held by a bank, mainly consisting of premium collected from customers and payable to issuers, and claims received from issuers and payable to policyholders.  The restricted cash balance was $1,290,862 as of Sept 30, 2006.  - 17 -       ALCO, INC. AND SUBSIDIARIES  NOTES TO FINANCIAL STATEMENTS  (UNAUDITED)  Note 5- COMMISSIONS RECEIVABLE  Commissions receivable consist of the following:Sept 30,2006Commissions receivable$231,741Less: allowances for doubtful accounts112,377$119,364 Note 6- PROPERTY, PLANT AND EQUIPMENT  Property, Plant and Equipment consist of the following at Sept 30,2006:Furniture and fixtures$154,743Office equipment107,592Leasehold improvements86,452348,787Less: Accumulated depreciation274,819$73,968  Depreciation expense for the nine months ended Sept 30, 2006 and 2005 was $12,249 and $17,990, respectively.  Note 7- BANK OVERDRAFT  The Bank Over Draft consist of the following as of Sept 30, 2006:LoanMonthlyFinancial InstitutionsAmountDurationInterest RateCollateral *United Oversea BankRepayable on demand3% over Prime Lending rate$12,821Repayable on demand2% over Prime Lending rate31,369$44,190(*) Pledged of GBP 26,000 certificate of deposit (CD) in the name of third parties and Personal guarantee for $12,821 signed by third parties  - 18 -         ALCO, INC. AND SUBSIDIARIES  NOTES TO FINANCIAL STATEMENTS  (UNAUDITED)  Note 8- DUE FROM SHAREHOLDERS  Due from shareholders consists of the following:Sept 30,2006Chiang Wei Heng Henry$128Chin Tsu- Kuang64$192  Note 9- DUE TO DIRECTORS  Due to directors consists of the following:Sept 30,2006Andrew Liu Fu Kang$15,496$15,496  Note 10- RELATED PARTY TRANSACTION  The Company rents office space in Hong Kong and Shanghai from companies owned by directors of the Company.  The relevant rent expenses consist of following:  Sept 30,20062005LocationLandlordHK Office Room 501 and 502AFortune Ocean Ltd$83,308$78,923HK Office Room 502BFortune Ocean Ltd26,308-Shanghai Office and quarterFortune Ocean and Andrew Liu Fu Kang46,15430,769First Pacific Development LtdHK Director (Andrew) quarter15,000-$170,770$109,692   - 19 -      ALCO, INC. AND SUBSIDIARIES  NOTES TO FINANCIAL STATEMENTS  (UNAUDITED)   Note 11- COMMITMENTS AND CONTINGENCIES  The Company's business operations exist solely in the PRC and are subject to significant risks not typically associated with companies in North America and Western Europe.  These include risks associated with, among others, the political, economic and legal environments and foreign currency limitations.  The Company's results may thus be adversely affected by changes in the political and social conditions in the PRC, and by changes in governmental policies, laws, regulations, anti-inflationary measures, currency conversion and remittance limitation, and rates and methods of taxation, among other things.              - 20 -      ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATION  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-QSB 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.  NINE MONTHS ENDED SEPTEMBER 30, 2006 COMPARED WITH NINE MONTHS ENDED SEPTEMBER 30, 2005  RESULTS OF OPERATIONS  Revenue:   Revenue for the nine-month period ended September 30, 2006 was $2,683,534 compared to $2,228,735 for the nine-month period ended September 30, 2005.  The increase of approximately 20% was due to an increase in our premium income in the insurance business, in website advertising income and in consulting income.  Net income before tax and minority interest:  Net income for the nine-month period ended September 30, 2006 was $1,418,879.  Net income for the nine-month period ended September 30, 2005 was $1,111,645.  The increase in net income from operations was primarily due to increased business.  Interest income increased to $53,851 for the nine months ended September 30, 2006 from $11,874 for the nine-month period ended September 30, 2005.  Operating expenses:  The operating expenses for the nine-month period ended September 30, 2006 were $1,339,515, compared to operating expenses of $1,136,144 for the nine-month period ended September 30, 2005.   The increase was primarily due to increases in salaries ($599,754 for the period ended September 30, 2006 compared to $252,204 for the period ended September 30, 2005) and rent ($288,026 for the nine month period ended September 30, 2005 compared with $218,689 for the nine month period ended September 30, 2006), with a decrease in bad debt expenses ($0 for the nine month period ended September 30, 2006 compared with $28,857 for the nine month period ended September 30, 2005).  Travel expenses increased from $145,962 for the nine months ended September 30, 2005 to $161,962 for the nine months ended September 30, 2006    - 21 -       LIQUIDITY AND CAPITAL RESOURCES  As of September 30, 2006, commissions receivable were $119,364, trade accounts payable and claims payable were $176,129 and $1,123,562, respectively.  For the nine-month period ended September 30, 2006, cash provided by operating activities totaled $1,432,630 compared to $1,057,404 for the nine-month period ended September 30, 2005. The receipt of funds was primarily due to net income for the year plus increases in claims payable, accrued expenses, deferred income and income tax payable and a decrease in commission receivable, restricted cash, deposit and prepayment partially offset by increases in other receivable, accounts payable and other payable.  For the nine-month period ended September 30, 2006, cash used in investing activities amounted to $58,583, compared to $23,463 for the nine months ended September 30, 2006. The use of funds was for the purchase of office equipment.  For the nine month period ended September 30, 2006, cash used in financing activities amounted to $91,759 (compared to $149,822 for the nine month period ended September 30, 2005) which was due to an increase in repayment of bank overdraft, repayment of amount due to shareholder, repayment of amount due to director and partially offset by increase in a loan from obligations under finance leases  For the nine-month period ended September 30, 2006, ALCOs balance sheet (unaudited) reflects current and total assets of $4,484,078 and total liabilities of $1,820,041.  ALCO has cash and cash equivalents of approximately $2,903,434 as of September 30, 2006.   ALCO has sufficient funds to satisfy its financial commitments and working capital requirements. During the period, the ALCO had no material commitments for capital expenditures and off-balance sheet arrangements.   ITEM 3. 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.   - 22 -      As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our chief executive officer and principal accounting officer, of the effectiveness of the design and operation of our disclosure controls and procedures.  Based on this evaluation, our chief executive officer and principal accounting officer concluded that our 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 office and principal accounting officer also concluded that our disclosure controls and procedures were effective as of September 30, 2006 to provide reasonable assurance of the achievement of these objectives.  There was no change in the Company's internal control over financial reporting during the quarter ended September 30, 2006, that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.             - 23 -      PART II - OTHER INFORMATION   ITEM 1. LEGAL PROCEEDINGS None.   ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS None.  ITEM 3. DEFAULTS UPON SENIOR SECURITIES None.  ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None.  ITEM 5. OTHER INFORMATION None  ITEM 6. EXHIBITS  The following exhibits are filed herewith:  2.1 Agreement for Share Exchange dated November 22, 2005, by and among LOTUS CAPITAL CORP., a Nevada corporation, AL MARINE HOLDINGS LTD., a British Virgin Islands corporation, and the Shareholders of AL MARINE (herein incorporated by reference from report on Form 8-K for report dated November 22, 2005 and filed with the Securities and Exchange Commission on December 9, 2005).  3.1 Articles of Incorporation (herein incorporated by reference from Registration Statement on Form 10-SB filed with the Securities and Exchange Commission on January 6, 2005).  3.1(b) Amendment to Articles of Incorporation (herein incorporated by reference from Registration Statementon Form 10-SB filed with the Securities and Exchange Commission on January 6, 2005).  3.2 Bylaws (herein incorporated by reference from Registration Statement on Form 10-SB filed with the Securities and Exchange Commission on January 6, 2005).  10.1 Exclusive representative agreement between ALC and The Strike Club (herein incorporated by reference from the Registration Statement on Form SB-2 filed with the Securities and Exchange Commission on June 5, 2006).  10.2 Agreement between EduShipAsia Ltd. and the Institute of Chartered Shipbrokers appointing EduShipAsia Ltd. as ICSs exclusive agent in China (herein incorporated by reference from the Registration Statement on Form SB-2 filed with the Securities and Exchange Commission on June 5, 2006).  10.3 Employment Agreement between Andrew Liu & Company, Ltd. and Andrew Liu. (Herein incorporated by reference from the Registration Statement on Form SB-2 filed  - 24 -      with the Securities and Exchange Commission on September 14, 2006)  10.4 Employment Agreement between Andew Liu & Company, Ltd. and John Liu. (herein incorporated by reference from the Registration Statement on Form SB-2 filed with the Securities and Exchange Commission on September 14, 2006).  31.1 Certifications 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 Certifications 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 Certifications pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.  32.2 Certifications pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.              - 25 -       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.   ALCO, INC.   By: /s/ Andrew Liu, CEO and Chairman  Date:   November 14, 2006   By: /s/ Yip Kam Ming, Chief Financial Officer  Date:  November 14, 2006   By: /s/ John Liu, Director  Date:   November 14, 2006            - 26 -