SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarter Ended Sept. 30, 1997 Commission File No. 0-28978 Amour Fiber Core, Inc. ---------------------- (Exact name of registrant as specified in its charter) Washington 91-1705387 ------------------ ---------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 1120 East Stevens, P.O. Box 42, Sultan, WA 98294 (360) 793-0146 ----------------------------------------------------------------- (Address, including zip code, and telephone number, including area code, of registrant; Principal executive offices and principal place of business) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [_] Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Outstanding at Class Sept. 30, 1997 ----- -------------- Common Stock, No Par Value 3,421,330 AMOUR FIBER CORE, INC. INDEX Part I - Financial Information Page Number Item 1. Financial Statements Consolidated Condensed, Balance Sheets (unaudited) Consolidated Condensed Statement of Operations (unaudited) Consolidated Condensed Statement of Cash Flows (unaudited) Notes to Consolidated Condensed Financial Statements Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operation Part II - Other Information Item 1. Legal Proceedings Item 2. Changes in Securities Item 3. Defaults upon Senior Securities Item 4. Submission of Matters to a Vote of Security Holders Item 5. Other Information Item 6. Exhibit and Reports on Form 8-K Signature /s/ C.A. TONY PETERSON ----------------------------- C.F.O. Amour Fiber Core, Inc. 1 Part I - Financial Information Item 1. Financial Statements AMOUR FIBER CORE INC. (A Development Stage Company) CONSOLIDATED CONDENSED BALANCE SHEETS (10Q) Sept. 30, 1997 Dec. 31, 1996 (Unaudited) Audited ---------------- ------------- ASSETS Current assets: Cash $ 95,699.64 $ 15,303 Receivables, net - Trade 361,425.81 1,303 - Employees -- - Shareholders -- Inventory, fin goods 9,240.00 8,699 Total current assets 466,365.00 25,305 -------------- ----------- Machinery and Equipment, at cost 573,087.00 451,910 Less: accumulated depreciation (84,060.00) (77,333) Building improvements 1,659.80 -- -------------- ----------- Net machinery and equipment 489,067.00 374,577 -------------- ----------- Other assets 3,000.00 3,000 -------------- ----------- Total assets $ 958,391.72 $ 402,882 ============== =========== LIABILITIES Current liabilities: Accounts payable 25,004.34 55,672 -------------- ----------- Total current liabilities 25,004.34 55,672 Other liabilities: Shareholder loans 0.00 41,185 Deferred wages 74,346.00 74,346 -------------- ----------- Total other liabilities 74,346.00 115,531 -------------- ----------- Total liabilities $ 99,550.00 $ 171,203 ============== =========== Stockholders' equity: Common stock 2,072,781.00 1,493,028 Retained deficit 1,261,939.00 (1,261,349) Net income 47,409.74 -- -------------- ----------- Total stockholder's equity $ 858,842.00 $231,679 ============== =========== Total liabilities and Stockholders' equity $ 958,392.00 $ 402,882 ============== =========== See accompanying notes 3 AMOUR FIBER CORE INC. (A Development Stage Company) CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS (10Q) 9 Months Ended 9 Months Ended Sept. 30, 1997 Sept. 30, 1996 (Unaudited) (Unaudited) ----------- ----------- Revenues Sales/Lic. Fee 512,966 7,129 Disposal Fees 20,778 7,129 Net revenues 533,744 7,129 Total $ 533,744 $ 7,129 --------- --------- Costs and expenses: Cost of sales 14,668 7,519 Research & development 0 780 Marketing general and administrative 471,666 39,943 Adjustment 64,740 (73,012) Operating costs and expenses 486,334 48,242 --------- --------- Net income (loss) $ 47,410 $ (41,113) ========= ========= Earnings per common and common equipment share(*) $ 0.014 $ (0.03) (*)Weighted average number of common and common equipment shares outstanding on June 30, 1996 was 3,298,203 shares and on June 30, 1997 was 3,419,644. See accompanying notes 4 AMOUR FIBER CORE INC. (A Development Stage Company) CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS (10Q) 9 Months Ended 9 Months Ended Sept. 30, 1997 Sept. 30, 1996 (Unaudited) (Unaudited) ---------------- ---------------- Cash Flows Provided by (used for) Operating Activities: Net Loss $ 47,410 $(326,252) Adjustments to reconcile net loss to net cash used for operating activities: Deferred Compensation 0 23,346 Depreciation 6,727 16,971 Change in accounts receivable (360,122) 5,112 Change in accounts payable (30,468) 54,150 Inventory (541) 0 --------- --------- Net cash used for operating activities 336,994 (226,673) Cash Flows provided by (used for) Investing Activities: Capital expenditures (121,177) (147,779) --------- --------- Net cash used for Investing Activities: (121,177) (147,779) Cash Flows provided by (used for) Financing Activities: Capital stock issued 579,753 46,505 Change in employee receivable 0 (760) Change in shareholder loans pay./rec. (41,185) 351,846 --------- --------- Net cash provided by financing activities 538,753 397,586 --------- --------- Net change in cash 80,397 23,134 Cash at beginning of period 15,303 4,175 --------- --------- Cash at end of period $ 95,700 $ 27,134 --------- --------- See accompanying notes 5 AMOUR FIBER CORE INC. (A Development Stage Company) NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS 1. The accompanying interim consolidated condensed financial statements of Amour Fiber Core Inc. ("Amour," the "Company," or the "Registrant") have been prepared in conformity with generally accepted accounting principals, consistent in all material respects with those applied in the Annual Report on Form 10-K for the year ended December 31, 1996. The interim financial information is unaudited, but reflects all normal adjustments which are, in the opinion of management, necessary to provide a fair statement of results for the interim periods presented. The interim financial statements should be read in connection with the financial statements in the Company's Annual Report on form 10-K dated March 3, 1997 for the year ended December 31, 1996. 2. Earnings per common and common equipment share were based upon a weighted average number of common and common equipment shares outstanding which for June 30, 1997 was 3,421,330 shares and for June 30, 1996 was 3,257,960. Part I - Item 2 - ---------------- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS General The Company's recent public offering is designed to generate adequate funds to allow for growth of the Company's sales and manufacturing capacity that would not be achieved if the Company relied only on internally generated funds. The Company's business plans continue to stress growth of the customer base over short-term profits; the Company's management believes net earnings will be driven by continued growth of the customer base. As of June 30, 1997, the Company had an unaudited accumulated deficit of $1,452,216. It can be expected that the future operating results will continue to be subject to many of the problems, expenses, delays and risks inherent in the establishment of a new business enterprise, many of which the Company cannot control. There can be no assurance, therefore, that the Company will be able to achieve or sustain profitability. Even if the Company's operations prove to be marginally profitable, the value of the Company's common stock, and the potential return to investors, could be substantially diminished. Consequently, an investment in the Company is highly speculative and no assurance can be given that purchasers of the shares of common stock will realize any return on their investment or that purchasers will not lose their entire investment. The Company has formulated its business plans and strategies based on certain assumptions of the Company's management regarding the size of the market for the products which the Company will be able to offer, the Company's anticipated share of the market, and the estimated prices for and acceptance of the Company's products. The Company continues to believe its business plans and the assumptions upon which they are based are valid. Although these plans and assumptions are based on the best estimates of management, there can be no assurance that these assessments will prove to be correct. No independent marketing studies have been conducted on behalf of or otherwise obtained by the Company, nor are any such studies planned. Any future success that the Company might enjoy will depend upon many factors, including factors which may be beyond the control of the Company or which cannot be predicted at this time. These factors may include product obsolescence, increased levels of competition, including the entry of additional competitors and increased success by existing competitors, changes in general economic conditions, increases in operating costs including cost of supplies, personnel and equipment, reduced margins caused by competitive pressures and other factors, and changes in governmental regulation imposed under federal, state or local laws. 6 The Company's operating results may vary significantly due to a variety of factors including changing customers profiles, the availability and cost of raw materials, the introduction of new products by the Company or its competitors, the timing of the Company's advertising and promotional campaigns, pricing pressures, general economic and industry conditions that affect customer demand, and other factors. Statements contained herein that are not purely historical are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including but not limited to statements regarding the Company's exceptions, hopes, beliefs, intentions or strategies regarding the future. Actual results could differ materially from those projected in any forward-looking statements as a result of a number of factors, including those detailed in this Section, as well as those set forth elsewhere herein. The forward-looking statements are made as of the date of these financial statements and the Company assumes no obligation to update the forward-looking statements, or to update the reasons why actual results could differ materially from those projected in the forward-looking statements. Results of Operations The Company realized net sales during the second quarter of 1997 of $77,780 an increase over net sales of generated during the second quarter of 1996. This increase was due to the commitment of the Company to the development of new products, the design of new production equipment and the need for additional capital to complete a new production line. Specifically the increase was in licensing sales, disposal fees and Product Sales. Liquidity and Capital Resources On Sept. 30, 1997, the Company had cash on hand of $95,699.64. However, from inception through Sept. 30, 1997, the Company has operated at a loss, as its efforts had been focused on the design and development of a manufacturing process and products. Management anticipated that additional capital will be required to finance the Company's operations. During March of 1996 the Company filed for the right to sell shares of common stock to the public. On November 8, 1996, the Company received authority to sell up to 300,000 shares of its common stock to the public at a price of $6.00 per share. The offering is self underwritten and the Company is proceeding with the sale of the subject shares. A major portion of the proceeds will be used to finance expansion of the manufacturing plant activities. The Company believes that expected cash flow plus the anticipated proceeds from the offering will finance the Company's operations at currently anticipated levels for a period of at least 12 months. However, there can be no assurance that the Company will not encounter unforeseen difficulties that may deplete its capital resources more rapidly than anticipated. Part II - Other Information - --------------------------- Item 1 - Legal Proceedings - ------ The Company has no current participation in any legal proceedings. Item 2 - Changes in Securities - ------ None Item 3 - Defaults upon Senior Securities - ------ None 7 Item 4 - Submission of Matters to a Vote of Security Holders - ------ On December 14, 1996 at the annual shareholders meeting, the shareholders approved retention of the Board of Directors. Item 5 - Other Information - ------ On November 8, 1996 the Company's Registration Statement became effective. As of June 30, 1997 the Company was proceeding with a self underwritten offering of 300,000 shares of common stock. Item 6 - Exhibits and Reports on Form 8-K - ------ 27 Financial Data Schedule Signatures Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has dully caused this report to be signed on its behalf by the undersigned thereunto duly authorized. AMOUR FIBER CORE INC. (Registrant) Date November 17, 1997 By: /s/ C.A. TONY PETERSON ---------------------- C.A. Tony Peterson Director and Chief Financial and Principal Accounting Officer 8