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 endedSeptember 30, 2015
or
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________ to ___________
Commission File Number333-181259
AFC BUILDING TECHNOLOGIES INC.
(Exact name of registrant as specified in its charter)
| Nevada | N/A |
| (State or other jurisdiction of incorporation or | (IRS Employer Identification No.) |
| organization) | |
| 101 Mary Street West, Whitby, ON, Canada | L1N 2R4 |
| (Address of principal executive offices) | (Zip Code) |
(905) 430-6433
(Registrant’s telephone number, including area code)
N/A
(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.
[X] YES [ ] 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 (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).
[X] YES [ ] NO
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a small reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer [ ] | Accelerated filer [ ] |
| Non-accelerated filer [ ] | Smaller reporting company [X] |
| (Do not check if a smaller reporting company) |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act)
[ ] YES [X] NO
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court.
[ ] YES [ ] NO
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.
34,760,008 common shares issued and outstanding as of January 5, 2017.
TABLE OF CONTENTS
PART I – FINANCIAL INFORMATION
Item 1. Financial Statements
Our unaudited consolidated interim financial statements for the three and nine month periods ended September 30, 2015 and 2014 form part of this quarterly report. Unless otherwise specified our financial statements are expressed in United States Dollars (US$) and are prepared in accordance with United States generally accepted accounting principles with the instructions to Form 10-Q and Article 8 of Regulation S-X.
Operating results for the nine month period ended September 30, 2015 are not necessarily indicative of the results that can be expected for the year ending December 31, 2015.
AFC Building Technologies Inc.
Balance Sheets
| September 30, | December 31, | |||||
| 2015 | 2014 | |||||
| (Unaudited) | ||||||
| ASSETS | ||||||
| Current Assets | ||||||
| Cash | $ | 204 | $ | 45,272 | ||
| Current assets of discontinued operations (Note 3) | – | 473,154 | ||||
| Total Current Assets | 204 | 518,426 | ||||
| Long-term assets of discontinued operations (Note 3) | – | 151 | ||||
| Total Assets | $ | 204 | $ | 518,577 | ||
| LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||
| Current Liabilities | ||||||
| Accounts payable | $ | 49,779 | $ | 54,719 | ||
| Due to related party (Note 2) | 309,009 | 329,944 | ||||
| Current liabilities of discontinued operations (Note 3) | – | 396,173 | ||||
| Total Liabilities | 358,788 | 780,836 | ||||
| Commitments and Contingencies (Note 1) | ||||||
| Stockholders’ Deficit | ||||||
| Preferred stock, $0.001 par value, 50,000,000 shares authorized, no shares issued and outstanding | – | – | ||||
| Common stock, $0.001 par value, 200,000,000 shares authorized, 34,760,008 shares issued and outstanding, respectively | 34,760 | 34,760 | ||||
| Additional paid in discount | (164,687 | ) | (128,755 | ) | ||
| Accumulated deficit | (293,725 | ) | (218,661 | ) | ||
| Accumulated other comprehensive income | 65,068 | 50,397 | ||||
| Total Stockholders’ Deficit | (358,584 | ) | (262,259 | ) | ||
| Total Liabilities and Stockholders’ Deficit | $ | 204 | $ | 518,577 |
F-1
AFC Building Technologies Inc.
Statements of Operations and Comprehensive Income (Loss)
| Three Months Ended | Nine Months Ended | |||||||||||
| September 30, | September 30, | |||||||||||
| 2015 | 2014 | 2015 | 2014 | |||||||||
| Revenue | $ | – | $ | – | $ | – | $ | – | ||||
| Cost of Sales | – | – | – | – | ||||||||
| Gross Profit | – | – | – | – | ||||||||
| Expenses | ||||||||||||
| Bank charges and interest | 42 | 41 | 126 | 143 | ||||||||
| Selling, marketing and administrative | – | 19,633 | 3,555 | 28,824 | ||||||||
| Total Operating Expenses | 42 | 19,674 | 3,681 | 28,967 | ||||||||
| Loss Before Other Expenses | (42 | ) | (19,674 | ) | (3,681 | ) | (28,967 | ) | ||||
| Other Expenses | ||||||||||||
| Gain (Loss) on foreign exchange | 3,958 | 3,210 | 6,933 | 3,320 | ||||||||
| Income (Loss) before taxes | 3,916 | (16,464 | ) | 3,252 | (25,647 | ) | ||||||
| Income taxes | – | – | – | – | ||||||||
| Net Income (Loss) from continuing operations | 3,916 | (16,464 | ) | 3,252 | (25,647 | ) | ||||||
| Discontinued Operations | ||||||||||||
| Loss from discontinued operations | – | (16,960 | ) | (78,316 | ) | (14,382 | ) | |||||
| Net Income (Loss) | 3,916 | (33,424 | ) | (75,064 | ) | (40,029 | ) | |||||
| Foreign currency translation adjustments | – | 15,764 | 14,671 | 9,103 | ||||||||
| Comprehensive Income (Loss) | $ | 3,916 | $ | (17,660 | ) | $ | (60,393 | ) | $ | (30,926 | ) | |
| Income (Loss) per common share: | ||||||||||||
| Income (Loss) From Continuing Operations – Basic and Diluted | $ | 0.00 | $ | (0.00 | ) | $ | (0.00 | ) | $ | (0.00 | ) | |
| Income (Loss) From Discontinued Operations – Basic and Diluted | $ | 0.00 | $ | (0.00 | ) | $ | (0.00 | ) | $ | (0.00 | ) | |
| Weighted Average Shares Outstanding | 34,760,008 | 34,760,008 | 34,760,008 | 34,760,008 | ||||||||
F-2
AFC Building Technologies Inc
Statements of Cash Flows
| Nine Months Ended | ||||||
| September 30, | ||||||
| 2015 | 2014 | |||||
| Operating Activities | ||||||
| Net Loss | $ | (75,064 | ) | $ | (40,029 | ) |
| Adjustments to reconcile net loss to cash used in operating activities: | ||||||
| Depreciation expense | 142 | 675 | ||||
| Changes in operating assets and liabilities: | ||||||
| Prepaid expenses | 2,915 | – | ||||
| Inventories | 236 | 3,580 | ||||
| Accounts receivable | (62,693 | ) | 6,542 | |||
| Due to related parties | 11,925 | (28,660 | ) | |||
| Accounts payable and accrued liabilities | (27,079 | ) | (140,284 | ) | ||
| Net Cash Used in Operating Activities | (149,618 | ) | (198,176 | ) | ||
| Financing Activities | ||||||
| Bank overdraft | 31,616 | 39,570 | ||||
| Net change in line of credit | 76,148 | 99,197 | ||||
| Net Cash Provided By Financing Activities | 107,764 | 138,767 | ||||
| Effect of Exchange Rate Changes on Cash | (3,214 | ) | (2,170 | ) | ||
| Decrease In Cash | (45,068 | ) | (61,579 | ) | ||
| Cash - Beginning of Period | 45,272 | 61,949 | ||||
| Cash - End of Period | $ | 204 | $ | 370 | ||
| Supplemental Disclosures | ||||||
| Interest paid | $ | 5,542 | $ | 9,004 | ||
| Income taxes paid | $ | – | $ | – | ||
F-3
AFC Building Technologies Inc.
Statements of Cash Flows
| 1. | Nature of Operations |
AFC Building Technologies Inc. (the “Company”) was incorporated under the laws of the State of Nevada on May 10, 2011. Effective January 10, 2014, the Company changed its name from Auto Tool Technologies Inc. to AFC Building Technologies Inc. The Company was engaged in the sales and distribution of hand tools in Canada. | |
On June 30, 2015, the Company decided that continuing the operations of its wholly-owned subsidiary, DSL Products Limited (“DSL”) would no longer be economically feasible. All of the shares of DSL held by the Company were returned to DSL for cancellation and as of June 30, 2015 the Company no longer held any interest in DSL. The Company determined the operations of DSL met the criteria of being reported as a discontinued operation. As a result, the Company’s historical financial statements have been revised to present the operating results of the DSL business as a discontinued operation. The results of operations from DSL are presented as “Loss from discontinued operations” in the Statements of Operations. Unless otherwise noted, the discussion in the notes to these Financial Statements relates solely to the Company's continuing operations. The Company is in the process of determining a new line of business. | |
These financial statements have been prepared on a going concern basis, which implies the Company will continue to realize its assets and discharge its liabilities in the normal course of business. The continuation of the Company as a going concern is dependent upon the continued financial support from its shareholders and note holders, the ability of the Company to obtain necessary equity financing to continue operations, and ultimately the attainment of profitable operations. As at September 30, 2015, the Company has not generated any revenues, has a working capital deficit of $358,584, and has an accumulated deficit of $293,725 since inception. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern. These condensed financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. | |
Summary of Significant Accounting Policies | |
Basis of Presentation | |
The unaudited interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the Securities and Exchange Commission (“SEC”) instructions for companies filing Form 10-Q. In the opinion of management, the unaudited interim financial statements have been prepared on the same basis as the annual financial statements and reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly the financial position as of September 30, 2015, and the results of operations and cash flows for the periods then ended. The financial data and other information disclosed in the notes to the interim financial statements related to this period are unaudited. The results for the three-month and nine-month periods ended September 30, 2015 are not necessarily indicative of the results to be expected for any subsequent quarter or the entire year ending December 31, 2015. The unaudited interim financial statements have been condensed and certain information and footnote disclosure normally included in financial statements in accordance with GAAP have been omitted pursuant to the Securities and Exchange Commission's rules and regulations and do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. Therefore, these unaudited interim financial statements should be read in conjunction with the Company’s annual audited financial statements and notes thereto for the year ended December 31, 2014, included in the Company’s Form 10-K filed on March 30, 2015 with the SEC. | |
Discontinued Operations | |
The results of discontinued operations are presented separately, net of tax, from the results of ongoing operations for all periods presented. The expenses included in the results of discontinued operations are the direct operating expenses incurred by the disposed components that may be reasonably segregated from the costs of the ongoing operations of the Company. The Company disposed of DSL on June 30, 2015. |
F-4
AFC Building Technologies Inc.
Statements of Cash Flows
| 2. | Related Party Transactions | |
| a) | At September 30, 2015, the Company owed $300,988 (December 31, 2014 - $322,398) to a company owned by a shareholder of the Company, representing cash advances, net of expense reimbursements and accrued interest. The amount is unsecured and due on demand. At September 30, 2015, the Company owed $8,021 (December 31, 2014 - $7,546) to the President of the Company. These were monies advanced by the shareholder for general working capital purposes, (i.e. accounting and professional fees) as required. The amount is unsecured, non-interest bearing and due on demand. | |
| b) | During the nine months ended September 30, 2015, the Company incurred $27,640 (2014 - $47,815) of contractor expenses to the President of the Company. These expenses were incurred as part of the Company’s discontinued operations and have been presented as part of loss from discontinued operations. | |
| 3. | Discontinued Operations and Deconsolidation of Subsidiary |
On June 30, 2015, the Company discontinued the operations of its wholly-owned subsidiary DSL. DSL sold hand tools in Canada. All of the shares of DSL held by the Company were returned to DSL for cancellation and as of June 30, 2015 the Company no longer held any interest in DSL. The Company recorded the deconsolidation of the subsidiary as an equity transaction, which resulted in a charge of $35,932 to additional paid in capital. The Company has recognized the separation of DSL in accordance with Accounting Standards Codification (ASC) 205-20,Discontinued Operations. As such, the historical results of DSL have been classified as discontinued operations. | |
The Company’s historical financial statements have been revised to present the operating results of the DSL business as a discontinued operation. Assets and liabilities related to the discontinued operations of DSL are as follows: |
| December 31, | ||||
| 2014 | ||||
| Accounts receivable | $ | 91,173 | ||
| Inventory | 52,049 | |||
| Prepaid expenses | 7,534 | |||
| Due from related party | 322,398 | |||
| Total Current Assets | 473,154 | |||
| Property and equipment, net of accumulated depreciation of $20,068 | 151 | |||
| Total Assets | $ | 473,305 | ||
| Current Liabilities | ||||
| Checks written in excess of funds on deposit | $ | 1,215 | ||
| Accounts payable | 202,693 | |||
| Accrued liabilities | 2,810 | |||
| Due to related party | 50,977 | |||
| Line of credit | 138,478 | |||
| Total Liabilities | $ | 396,173 |
F-5
AFC Building Technologies Inc.
Statements of Cash Flows
Summarized results of the discontinued operation are as follows for the three and nine months ended September 30, 2015 and 2014:
| Three Months | Three Months | Nine Months | Nine Months | ||||||||||
| Ended | Ended | Ended | Ended | ||||||||||
| September 30, | September 30, | September 30, | September 30, | ||||||||||
| 2015 | 2014 | 2015 | 2014 | ||||||||||
| Revenue | $ | – | $ | 203,091 | $ | 359,017 | $ | 638,954 | |||||
| Cost of Sales | – | 137,151 | 265,888 | 433,655 | |||||||||
| Gross Profit | – | 65,940 | 93,129 | 205,299 | |||||||||
| Expenses | |||||||||||||
| Bank charges and interest | – | 3,586 | 6,811 | 11,444 | |||||||||
| Selling, marketing and administrative | – | 63,344 | 136,290 | 186,822 | |||||||||
| Total Expenses | – | 66,930 | 143,101 | 198,266 | |||||||||
| Other Expenses | |||||||||||||
| Gain (Loss) on foreign exchange | – | (15,970 | ) | (28,344 | ) | (21,415 | ) | ||||||
| Net Income (Loss) from Discontinued Operations | $ | – | $ | (16,960 | ) | $ | (78,316 | ) | $ | (14,382 | ) |
Cash flows from discontinued operations:
| Nine Months | Nine Months | ||||||
| Ended | Ended | ||||||
| September 30, | September 30, | ||||||
| 2015 | 2014 | ||||||
| Operating cash flows | $ | (149,490 | ) | $ | (198,033 | ) | |
| Investing cash flows | – | – | |||||
| Financing cash flows | 107,765 | 138,767 | |||||
| Net cash flows provided by discontinued operations | $ | (41,725 | ) | $ | (59,266 | ) |
| 4. | Licensing Agreement |
On June 30, 2015, the Company entered into a license agreement with a shareholder of the Company. Pursuant to the agreement, the Company received an exclusive worldwide license in regards to 15 domain names related to the automotive e-commerce business for a period of 40 years. In consideration for the granting of the license, we will pay to the licensor a royalty of 2.5% of gross sales for any revenue derived from the use of the licensed domains. | |
| 5. | Subsequent Events |
Management has evaluated subsequent events pursuant to ASC Topic 855, and has determined there are no subsequent events to disclose other than the following: | |
During December 2015, a company controlled by a shareholder agreed to forgive $350,305 of amounts owed by the Company. As the debt forgiven was owed to a related party, the Company recognized the amount forgiven as an equity transaction recorded in additional paid in capital. |
F-6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Forward-Looking Statements
This quarterly report contains forward-looking statements. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as “may”, “should”, “expects”, “plans”, “anticipates”, “believes”, “estimates”, “predicts”, “potential” or “continue” or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors that may cause our or our industry’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements.
Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.
Unless otherwise specified our financial statements are expressed in United States Dollars (US$) and are prepared in accordance with United States generally accepted accounting principles.
In this quarterly report, unless otherwise specified, all dollar amounts are expressed in United States dollars and all references to “common shares” refer to the common shares in our capital stock.
As used in this quarterly report and unless otherwise indicated, the terms “we”, “us”, “our” and “our company” mean AFC Building Technologies Inc., a company incorporated under the laws of the state of Nevada, and our formerly wholly-owned subsidiary, DSL Products Limited, a company incorporated under the laws of the Province of Ontario, Canada, unless otherwise indicated.
General Overview
We were incorporated under the laws of the state of Nevada on May 10, 2011. Our fiscal year end is December 31. Our business offices are currently located at 101 Mary Street West, Whitby, Ontario, Canada, L1N 2R4. The address of agent for service in Nevada and registered corporate office is c/o National Registered Agents, Inc. of Nevada, 100 East William Street, Suite 204, Carson City, NV, 89701. Our telephone number is (905) 430-6433.
Our Current Business
7
On June 30, 2015, we decided that continuing the operations of its wholly-owned subsidiary, DSL Products Limited (“DSL”) would no longer be economically feasible. All of the shares of DSL held by us were returned to DSL for cancellation and as of June 30, 2015 we no longer held any interest in DSL. Concurrently with the discontinuation of the DSL operations, we entered into a license agreement for an exclusive worldwide license in regards to 15 domain names related to the automotive e-commerce business. In consideration for the granting of the license, we will pay to the licensor a royalty of 2.5% of gross sales for any revenue derived from the use of the licensed domains. Consistent with our historical operations in this area, we intend to continue to pursue automotive e-commerce opportunities.
Cash Requirements
Based on our planned expenditures, we will require approximately $30,000 over the next 12 months. In order to provide funds, we plan to pursue additional equity financing from private investors or possibly a registered public offering. We do not currently have any definitive arrangements in place for the completion of any further private placement financings and there is no assurance that we will be successful in completing any further private placement financings. If we are unable to achieve the necessary additional financing, then we plan to reduce the amounts that we spend on our business activities and administrative expenses in order to be within the amount of capital resources that are available to us.
We have not investigated the availability of commercial loans or other debt financing to supplement or meet our cash requirements. In the uncertain event that any such debt financing alternatives were available to us on acceptable terms, they would increase our liabilities and future cash commitments.
Future Financings
We will continue to rely on equity sales of our common shares and funding from directors and shareholders in order to continue to fund our business operations. Issuances of additional shares will result in dilution to existing stockholders. There is no assurance that we will achieve any additional sales of the equity securities or arrange for debt or other financing to fund our operations and other activities.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to stockholders.
Results of Continuing Operations
The following summary of our results of operations should be read in conjunction with our financial statements for the quarter ended September 30, 2015, which are included herein.
8
Three Months Ended September 30, 2015 and September 30, 2014
Our operating results for the three months ended September 30, 2015 and September 30, 2014are summarized as follows:
| Three | Three | |||||
| Months | Months | |||||
| Ended | Ended | |||||
| September 30, | September 30, | |||||
| 2015 | 2014 | |||||
| Revenue | $ | - | $ | - | ||
| Cost of sales | $ | - | $ | - | ||
| Bank charges and interest | $ | 42 | $ | 41 | ||
| Selling, marketing and administrative | $ | - | $ | 19,633 | ||
| Loss (gain) on foreign exchange | $ | (42 | ) | $ | (19,674 | ) |
| Net Income (Loss) from continuing operations | $ | 3,916 | $ | (16,464 | ) | |
| Income (Loss) from discontinued operations | $ | - | $ | (16,960 | ) | |
| Net Income (Loss) | $ | 3,916 | $ | (33,424 | ) |
Our financial statements report a net loss of $3,916 for the three month period ended September 30, 2015 compared to a net loss of $33,424 for the three month period ended September 30, 2014. Our net loss for the three months ended September 30, 2015 decreased $29,508 primarily as a result of DSL being disposed of as of June 30, 2016, all of the revenues and expenses for DSL were reclassified and shown as “Loss from discontinued operations” on the statement of operations.
Net Income from continuing operations for the three months ended September 30, 2015 was $3,916 compared to a net loss of $16,464 during the three months ended September 30, 2014. The main reason for the decrease in net loss from continuing operations for the three months ended September 30, 2015 compared to the three months ended September 30, 2014 was a decrease in selling, marketing and general and administrative expenses.
Nine Months Ended September 30, 2015 and September 30, 2014
Our operating results for the nine months ended September 30, 2015 and September 30, 2014are summarized as follows:
| Nine | Nine | |||||
| Months | Months | |||||
| Ended | Ended | |||||
| September 30, | September 30, | |||||
| 2015 | 2014 | |||||
| Revenue | $ | - | $ | - | ||
| Cost of sales | $ | - | $ | - | ||
| Bank charges and interest | $ | 126 | $ | 143 | ||
| Selling, marketing and administrative | $ | 3,555 | $ | 28 | ||
| Loss (gain) on foreign exchange | $ | 6,933 | $ | 3,320 | ||
| Net Income (Loss) from continuing operations | $ | 3,252 | $ | (25,647 | ) | |
| Income (Loss) from discontinued operations | $ | (78,316 | ) | $ | (14,382 | ) |
| Net Loss | $ | (75,064 | ) | $ | (40,029 | ) |
9
Our financial statements report a net loss of $75,064 for the nine month period ended September 30, 2015 compared to a net loss of $40,029 for the nine-month period ended September 30, 2014. Our net loss for the nine months ended September 30, 2015 has increased $35,035 primarily as a result of DSL being disposed of as of June 30, 2016, all of the revenues and expenses for DSL were reclassified and shown as “Loss from discontinued operations” on the statement of operations.
Net Income from continuing operations for the nine months ended September 30, 2015 was $3,252 compared to a net loss of $25,647 during the nine months ended September 30, 2014. The main reason for the decrease in net loss from continuing operations for the nine months ended September 30, 2015 compared to the nine months ended September 30, 2014 was a decrease in selling, marketing and general and administrative expenses.
Liquidity and Financial Condition
Working Capital
| At | At | |||||
| September | December | |||||
| 30, | 31, | |||||
| 2015 | 2014 | |||||
| Current assets | $ | 204 | $ | 518,426 | ||
| Current liabilities | $ | 358,788 | $ | 780,836 | ||
| Working capital (deficit) | $ | (358,584 | ) | $ | (262,410 | ) |
Our total current assets as of September 30, 2015 were $204 as compared to total current assets of $518,426 as of December 31, 2014. The decrease of $96,174 in working capital was primarily due DSL being disposed of in this last quarter.
Cash Flows
| Nine | Nine | |||||
| Months | Months | |||||
| Ended | Ended | |||||
| September 30, | September 30, | |||||
| 2015 | 2014 | |||||
| Net cash provided by (used in) operating activities | $ | (149,618 | ) | $ | (198,176 | ) |
| Net cash provided by (used in) investing activities | $ | - | $ | - | ||
| Net cash provided by financing activities | $ | 107,764 | $ | 138,767 | ||
| Net increase (decrease) in cash during period | $ | (45,068 | ) | $ | (61,579 | ) |
Operating Activities
Net cash used in operating activities was $149,618 in the nine months ended September 30, 2015 compared with net cash used in operating activities of $198,176 in the nine months ended September 30, 2014. This decrease was the result of a decrease in net loss.
10
Financing Activities
Net cash provided by financing activities was $107,764 in the nine months ended September 30, 2015 compared to $138,767 provided by financing activities in the nine months ended September 30, 2014. This decrease was the result of a decrease in funds from the Company’s line of credit.
Going Concern
Our consolidated financial statements for the nine month period ended September 30, 2015 have been prepared on a going concern basis and contain an additional explanatory paragraph which identifies issues that raise substantial doubt about our ability to continue as a going concern. Our financial statements do not include any adjustments that might result from the outcome of this uncertainty.
The continuation of our company as a going concern is dependent upon the continued financial support from its shareholders and note holders, the ability of our company to obtain necessary equity financing to continue operations, and ultimately the attainment of profitable operations. As at September 30, 2015, our company has not generated any revenues, has a working capital deficit of $358,584, and has an accumulated deficit of $293,725 since inception. These factors raise substantial doubt regarding our company’s ability to continue as a going concern. These condensed consolidated financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should our company be unable to continue as a going concern.
Critical Accounting Policies
These financial statements and related notes are expressed in US dollars. The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, DSL Products Limited. All inter-company accounts and transactions have been eliminated. The Company’s fiscal year-end is December 31.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
As a “smaller reporting company”, we are not required to provide the information required by this Item.
Item 4. Controls and Procedures
Management’s Report on Disclosure Controls and Procedures
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms, and that such information is accumulated and communicated to our management, including our chief executive officer and chief financial officer (our principal executive officer, principal financial officer and principle accounting officer) to allow for timely decisions regarding required disclosure.
11
As of the end of our quarter covered by this report, we carried out an evaluation, under the supervision and with the participation of our chief executive officer and chief financial officer (our principal executive officer, principal financial officer and principle accounting officer), of the effectiveness of the design and operation of our disclosure controls and procedures. Based on the foregoing, our chief executive officer and chief financial officer (our principal executive officer, principal financial officer and principle accounting officer) concluded that our disclosure controls and procedures were effective as of the end of the period covered by this quarterly report.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting during the quarterly period covered by this report 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
We know of no material, existing or pending legal proceedings against us, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which any of our directors, officers or affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our company.
Item 1A. Risk Factors
As a “smaller reporting company”, we are not required to provide the information required by this Item.
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
Not applicable.
12
Item 6. Exhibits
| Exhibit | Description |
| Number | |
| (3) | Articles of Incorporation and Bylaws |
| 3.1 | Articles of Incorporation (incorporated by reference from our Registration Statement on Form S-1 filed on May 9, 2012) |
| 3.2 | By-laws (incorporated by reference from our Registration Statement on Form S-1 filed on May 9, 2012) |
| 3.3 | Certificate of Amendment ((incorporated by reference to our Current Report on Form 8-K filed on January 13, 2014) |
| (10) | Material Contracts |
| 10.1 | Consulting Agreement dated December 30, 2011 between our company and Cindy Kelly & Associates (incorporated by reference from our Registration Statement on Form S-1 filed on May 9, 2012) |
| 10.2 | Share Purchase Agreement dated December 30, 2011 between our company and Rossland Asset Management Ltd. (incorporated by reference from our Registration Statement on Form S-1 filed on May 9, 2012) |
| (21) | Subsidiaries of the Registrant |
| 21.1 | DSL Products Limited, a wholly-owned Ontario corporation |
| (31) | Rule 13a-14(a)/15d-14(a) Certifications |
| 31.1* | |
| (32) | Section 1350 Certifications |
| 32.1* | |
| 101* | Interactive Data File |
| 101.INS | |
| 101.SCH | |
| 101.CAL | |
| 101.DEF | |
| 101.LAB | |
| 101.PRE |
| * | Filed herewith. |
| ** | Furnished herewith. Pursuant to Rule 406T of Regulation S-T, the Interactive Data Files on Exhibit 101 hereto are deemed not filed or part of any registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, are deemed not filed for purposes of Section 18 of the Securities and Exchange Act of 1934, and otherwise are not subject to liability under those sections. |
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
| AFC BUILDING TECHNOLOGIES INC. | ||
| (Registrant) | ||
| Dated: January 5, 2017 | By: | /s/ Cindy Lee Kelly |
| Cindy Lee Kelly | ||
| President, Chief Executive Officer, Chief Financial | ||
| Officer, Secretary, Treasurer and Director | ||
| (Principal Executive Officer, Principal Financial | ||
| Officer and Principal Accounting Officer) | ||
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