UNITED STATES SECURITIES & EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-Q
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[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2010
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER 0-29711
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AMERICAN FIBER GREEN PRODUCTS, INC.
(Exact name of issuer in its charter)
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NEVADA 91-1705387
(State or other jurisdiction (IRS Employer Identification No.)
of incorporation or organization)
4209 RALEIGH STREET, TAMPA, FL 33619
(Address of Principal Executive Offices) (Zip Code)
(813) 247-2770
(Issuer's telephone number)
(Former Name, Former Address and Former Fiscal Year,
if Changed Since Last Report)
Securities registered pursuant to Section 12(g) of the
Act:
$.001 par value preferred stock Over the Counter Bulletin Board
$.001 par value common stock Over the Counter Bulletin Board
Check whether the issuer is not required to file reports
pursuant to Section 13 or 15(d) of the Exchange
Act. [ ]
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.
[X] YES [ ] NO
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer. See definition of
"accelerated filer and Large accelerated filer" in Rule 12b-2 of the
Exchange Act. (Check one):
Large accelerated filer [ ] Accelerated filer [ ]
Non-accelerated filer [ ] Smaller reporting company [X]
Indicate by check mark whether the registrant is a shell company (as
defined in Rule 12b-2 of the Exchange Act).
[ ] YES [X] NO
Transitional Small Business Disclosure Format (check one):
Yes [ ] No [X]
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act).
Yes [ ] No [X]
There were 11,385,735 shares of the Registrant's $.001 par value common stock
outstanding as of June 30, 2010.
TABLE OF CONTENTS
AMERICAN FIBER GREEN PRODUCTS, INC.
FORM 10-Q - INDEX
PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATMENTS 4
Consolidated Condensed Balance Sheets 4
Consolidated Condensed Statements of Operations 5
Consolidated Condensed Statements of Changes in Stockholders' Deficit 6
Consolidated Condensed Statements of Cash Flows 7
Notes to Consolidated Condensed Financial Statements 8
Item 2. Management's Discussion and Analysis of Financial Condition And
Plan of Operation 12
Item 3. Quantitative and Qualitative Disclosures About Market 15
Item 4(T). Controls and Procedures 15
PART II OTHER INFORMATION
Item 1. Legal Proceedings 17
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 17
Item 3. Defaults Upon Senior Securities 17
Item 4. Removed and reserved 17
Item 5. Other Information 17
Item 6. Exhibits And Reports on Form 8-K 17
SIGNATURES 19
PART I--FINANCIAL INFORMATION
-----------------------------
AMERICAN FIBER GREEN PRODUCTS, INC.
-----------------------------------
Statements in this Form 10Q Quarterly Report may be "forward-looking
statements." Forward-looking statements include, but are not limited to,
statements that express our intentions, beliefs, expectations, strategies,
predictions or any other statements relating to our future activities or other
future events or conditions. These statements are based on our current
expectations, estimates and projections about our business based, in part, on
assumptions made by our management. These assumptions are not guarantees of
future performance and involve risks, uncertainties and assumptions that are
difficult to predict. Therefore, actual outcomes and results may differ
materially from what is expressed or forecasted in the forward-looking
statements due to numerous factors, including those risks discussed in this
Form10Q Quarterly Report, under "Management's Discussion and Analysis of
Financial Condition or Plan of Operation" and in other documents which we file
with the Securities and Exchange Commission.
In addition, such statements could be affected by risks and uncertainties
related to our financial condition, factors that affect our industry, market and
customer acceptance, changes in technology, fluctuations in our quarterly
results, our ability to continue and manage our growth, liquidity and other
capital resource issues, competition, fulfillment of contractual obligations by
other parties and general economic conditions. Any forward-looking statements
speak only as of the date on which they are made, and we do not undertake any
obligation to update any forward-looking statement to reflect events or
circumstances after the date of this Form 10Q Quarterly Report, except as
required by law.
PART I FINANCIAL INFORMATION
ITEM 1.
FINANCIAL STATMENTS
AMERICAN FIBER GREEN PRODUCTS, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
JUNE 30, DECEMBER
2010 31, 2009
-------------- ------------
(unaudited)
ASSETS
Current Assets:
Cash $ 70 $ 100
Other receivables, net 54,611 48,313
-------------- --------------
Total current assets 54,681 48,413
Notes receivable, net 98,405 98,405
Machinery, Equipment and Tooling, net of Accumulated Depreciation of $30,000 and
$27,500 20,000 22,500
------------ ------------
Total Assets $ 173,086 $ 169,318
============== ==============
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable $ 281,779 $ 265,624
Accrued expenses 3,450 4,932
Subscription payable 10,000 10,000
-------------- --------------
Total current liabilities 295,229 280,556
Notes payable to shareholders 296,035 293,035
Deferred wages 777,197 745,697
Accrued interest payable 702,285 658,265
Other payables, related parties 344,209 334,209
-------------- --------------
Total Liabilities 2,414,955 2,321,762
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Stockholders' Deficit
Preferred stock, $.001 par value; 5,000,000 shares authorized; no shares issued
or outstanding -- --
Common stock, $.001 par value; 350,000,000 shares authorized; 11,385,735 (June 30,
2010) and (December 31, 2009) shares issued and outstanding 11,386 11,386
Additional paid in capital 2,423,383 2,423,383
Accumulated deficit (4,676,638 ) (4,587,213 )
------------ --------------
Total stockholder's deficit (2,241,869 ) (2,152,444 )
------------ --------------
Total Liabilities and Stockholders' Deficit $ 173,086 $ 169,318
============== ==============
The accompanying notes are an integral part of the financial
statements.
AMERICAN FIBER GREEN PRODUCTS, INC.
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
UNAUDITED
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
-----------------------------------------------------------
2010 2009 2010 2009
--------------- ----------------------------- -------------
REVENUES --- --- 695 ---
--------------- ----------------------------- -------------
OTHER INCOME (EXPENSE):
Marketing, general and
administrative expenses $ 26,263 $ 23,053 $ 49,343 $ 46,358
Interest expense 24,270 18,237 47,975 39,647
Interest income (3,643) (3,308) (7,199) (6,537)
--------------- ----------------------------- -------------
TOTAL OTHER INCOME (EXPENSE) (46,890) (37,982) (90,119) (79,468)
--------------- ----------------------------- -------------
INCOME (LOSS) BEFORE INCOME TAXES (46,890) (37,982) (89,424) (79,468)
--------------- ----------------------------- -------------
Income taxes -- -- -- --
--------------- ----------------------------- -------------
NET INCOME (LOSS) $ (46,890) $ (37,982)$ (89,424) $ (79,468)
=============== ============================= =============
Basic and diluted income (loss)
per share $ (0.00) $ (0.00)$ (0.01) $ (0.01)
=============== ============================= =============
Basic and diluted weighted average
number of common shares outstanding 11,385,735 11,385,735 11,385,735 11,385,735
=============== ============================= =============
The accompanying notes are an integral part of the financial statements.
AMERICAN FIBER GREEN PRODUCTS, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CHANGES IN
STOCKHOLDERS' DEFICIT FOR THE YEAR ENDED DECEMBER 31, 2009
AND THE SIX MONTHS
ENDED JUNE 30, 2010 UNAUDITED
COMMON COMMON ADDITIONAL ACCUMULATED
STOCK STOCK PAID IN DEFICIT
SHARES AMOUNT CAPITAL TOTAL
------------ ----------- ------------ ------------- ------------
Balance, December 31, 2008 11,385,735 11,386 2,423,383 (4,422,318 ) (1,987,549 )
Net loss (164,895 ) (164,895 )
Balance, December 31, 2009 11,385.735 11,386 2,423,383 ) (4,587,213 ) (2,152,444 )
Net loss for the three months
ended March 31, 2010 (unaudited) (42,534 ) (42,534 )
Balance, March 31, 2010 11,385,735 11,386 2,423,383 (4,629,747 ) (2,194,978 )
Net loss for the three months
ended June 30, 2010 (unaudited) (46,890 ) (46,890 )
-------------- ------------- -------------- --------------- --------------
Balance, June 30, 2010 11,385,735 $ 11,386 $ 2,423,383 $ (4,676,637 ) $(2,241,868 )
(unaudited)
============== ============= ============== =============== ==============
The accompanying notes are an integral part of the financial statements.
AMERICAN FIBER GREEN PRODUCTS, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30,
UNAUDITED
2010 2009
------------------------------
OPERATING ACTIVITIES
Net loss $ (89,424) $ (79,468)
Adjustments to reconcile net loss to net cash used by operating
activities:
Depreciation 2,500 2,500
Increase (decrease) in:
Prepaid expenses -- --
Interest receivable, related parties ( 6,299) ( 6,537)
Accounts payable and accrued expenses 14,672 11,461
Deferred compensation 31,500 31,500
---------------- ----------------
Net cash used by operating activities (47,051) (40,544)
---------------- ----------------
INVESTING ACTIVITIES
Other LT assets & liabilities 44,021 37,752
---------------- ----------------
Net cash used by investing activities 44,021 37,752
---------------- ----------------
FINANCING ACTIVITIES
Issuance of common stock --- ---
Proceeds from issuance of notes payable 3,000 2,767
Payments from issuance of notes payable --- ---
---------------- ----------------
Net cash provided by financing activities 3,000 2,767
---------------- ----------------
NET DECREASE IN CASH (30) (25)
CASH AT BEGINNING OF YEAR 100 25
---------------- ----------------
CASH AT END OF PERIOD $ 70 $ --
---------------- ----------------
The accompanying notes are an integral part of the financial statements.
AMERICAN FIBER GREEN PRODUCTS, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
AS OF JUNE 30, 2010 AND FOR THE
THREE MONTH PERIODS ENDED JUNE 30, 2010 AND 2009
UNAUDITED
NOTE 1 - ORGANIZATION AND BUSINESS
American Fiber Green Products, Inc. (AFBG) came into existence as a result of
the following transactions:
In March of 1993, William Amour founded Amour Hydro Press, Inc. (AHP) to conduct
research and development to commercialize proprietary technology that would
allow the Company to process waste fiberglass and resins into new commercially
viable products.
In January of 1996 the Board of Directors authorized the merger of AHP with
Amour Fiber Core, Inc. a Washington corporation. Each common share of Amour
Hydro Press, Inc. was exchanged for 280 common shares of Amour Fiber Core, Inc.
The authorized shares of Amour Fiber Core, Inc. were 5,000,000 shares. The
company operated under this configuration until June 1998 when the Board of
Directors approved a three for one forward split (3:1) increasing the authorized
shares from 5,000,000 to 15,000,000 common shares. Amendments to the Articles of
Incorporation were filed with the State of Washington. Although approved and
recorded, the 3:1 forward split was not reported to the transfer agent of the
Company. The resulting change in common stock was from 3,675,996 to 11,027,988
common shares issued and outstanding.
Within months of these actions, William Amour, founder and driving force behind
the business was diagnosed with cancer and died in 1999. Attempts by the board
to continue the operation of Amour Fiber Core, Inc. resulted in substantially
more debt and ultimately the cessation of operations. The value of the company
was in the exclusive rights to the proprietary technology, as well as the
resources developed to source raw material and vendors and the ability to create
viable products from waste material. There were 884 shareholders of record at
the time of William Amour's passing and they remained committed to the success
of the Company. The Company ceased operations in January 2000, however,
management continued to search for investors to be able to restart production.
On September 15, 2001, after several months of discussion and negotiations,
Kenneth McCleave incorporated American Leisure Products, Inc. a Florida
corporation, of which he was the sole shareholder of the 100,000 issued and
outstanding shares for the purpose of merger with Amour Fiber Core, Inc. The
terms and conditions of said merger included Mr. McCleave's assistance in
resolution of a number of problems restricting Amour. Litigation with the
landlord and disgruntled note holders threatened the collapse of the Company
unless amicable resolution was achieved. The terms of the merger were
established and the concerns were resolved over the subsequent 24 months.
In May of 2004, following appropriate shareholder consent and board action,
Amour Fiber Core, Inc. (Washington) merged with a newly formed Nevada
corporation of the same name and with the same issued and outstanding shares
11,027,988. Amour Fiber Core, Inc. (Nevada) has authorized 350,000,000 common
and 5,000,000 preferred shares.
On May 24, 2004, Amour Fiber Core, Inc. (Nevada) then entered into an Agreement
and Plan of Merger with American Leisure Products, Inc., a Florida corporation
with a total issued and outstanding 100,000 common shares. A 1:6 reverse split
of the Amour Fiber Core, Inc. shares held by the AFC shareholders reduced the
issued and outstanding common shares of AFC (Nevada) from 11,027,988 to
1,837,998. The merger called for each share of ALP to convert to 73.52 shares of
Amour Fiber Core, Inc. (Nevada). The sole shareholder of ALP received 7,352,000
shares of Amour Fiber Core, Inc. (Nevada) in the merger (i.e. a conversion ratio
of 73.52:1). Following this transaction, Amour Fiber Core, Inc. (Nevada) had
9,189,998 shares outstanding.
Following this merger and in keeping with the Shareholder Consent and subsequent
board action, the name of Amour Fiber Core, Inc. (Nevada) was changed to
American Fiber Green Products, Inc. American Leisure Products, Inc. (a Florida
corporation) became a wholly owned subsidiary of American Fiber Green Products,
Inc. The assets and opportunities of American Fiber Green Products, Inc. (f/k/a
Amour Nevada and Amour Washington) were moved to a newly formed, Amour Fiber
Core, Inc., (a Florida Corporation) as a wholly owned subsidiary. The resulting
structure is American Fiber Green Products, Inc. (Nevada) holding 100% of the
stock of American Leisure Products, Inc. (Florida) and Amour Fiber Core, Inc.
(Florida).
AMERICAN FIBER GREEN PRODUCTS, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
AS OF JUNE 30, 2010 AND FOR THE
THREE MONTH PERIODS ENDED JUNE 30, 2010 AND 2009
UNAUDITED
NOTE 2 - GOING CONCERN
The accompanying consolidated condensed financial statements have been prepared
assuming the Company will continue as a going concern. The Company's continued
existence is dependent upon the Company's ability to obtain additional debt
and/or equity financing. The Company has incurred losses since inception and,
the Company has not generated any revenues from its products. These factors
raise substantial doubt about the ability of the Company to continue as a going
concern. The Company will begin construction of a plant upon funding and expects
to complete the project and to begin production within the next 18 months.
Although the cost of construction has not been quantified, the Company estimates
the cost to be approximately $250,000 per plant unit. Management plans to raise
additional funds through the sale of sub-licensing agreements, project
financings or through future sales of their common stock, until such time as the
Company's revenues are sufficient to meet its cost structure, and ultimately
achieve profitable operations. There is no assurance that the Company will be
successful in raising additional capital or achieving profitable operations. The
consolidated financial statements do not include any adjustments that might
result from the outcome of these uncertainties.
NOTE 3 - FINANCIAL STATEMENTS
In the opinion of management, all adjustments consisting only of normal
recurring adjustments necessary for a fair statement of (a) the results of
operations for the six month periods ended June 31, 2010 and 2009, (b) the
financial position at June 30, 2010 and December 31, 2009, and (c) cash flows
for the six month periods ended June 30, 2010 and 2009, have been made. The
unaudited financial statements and notes are presented as permitted by Form
10-Q. Accordingly, certain information and note disclosures normally included in
the financial statements prepared in accordance with accounting principles
generally accepted in the United States of America have been omitted. The
accompanying financial statements and notes should be read in conjunction with
the audited financial statements and notes of the Company for the fiscal year
ended December 31, 2009. The results of operations for the six month periods
ended June 30, 2010 and 2009 are not necessarily indicative of those to be
expected for the entire year.
The accompanying consolidated financial statements include the activity of the
Company and its wholly owned subsidiaries. All intercompany transactions have
been eliminated in consolidation.
The preparation of consolidated financial statements in conformity with
accounting principles generally accepted in the United States of America
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 consolidated financial statements, and the
reported amounts of revenues and expenses during the reported periods. Actual
results could materially differ from those estimates.
NOTE 4 - NOTES RECEIVABLE
The Company has made loans to several companies, both owned by officers and
stockholders of the Company and to unrelated parties. The purpose of these loans
was to invest in other fiberglass manufacturing businesses in order to
facilitate the development and production of fiberglass products. The Company
does not expect repayment of these amounts to occur during the next 12 months.
Notes receivable are made up of the following:
Note receivable, related party, 10% interest, due May 12, 2004 (past maturity 6,000
Note receivable, related party, 10% interest, due April 30, 2005 (past maturity) 52,452
Note receivable, related party, 10% interest, due April 22, 2005 (past maturity) 20,253
Note receivable, related party, 8% interest, due April 20, 2008(past maturity) 14,700
Note receivable, unrelated party, 8% interest, due August 8, 2008 (past maturity) 5,000
-----------
$ 98,405
===========
AMERICAN FIBER GREEN PRODUCTS, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
AS OF JUNE 30, 2010 AND FOR THE
SIX MONTH PERIODS ENDED JUNE 30, 2010 AND 2009
UNAUDITED
The above related party transactions are not necessarily indicative of the terms
and amounts that would have been incurred had comparable agreements been made
with independent parties.
NOTE 5 - COMMITMENTS AND CONTINGENCIES
The Company entered into an employment agreement with a key employee. The
employment agreement is for a period of three years, with prescribed percentage
increases beginning in 2007. Increases for 2007 and 2008 were waived. A 5%
increase was effective 1/1/09 for a total annual rate under the employment
agreement of $63,000. The employment contract has been renewed in 2010. The
Company expects all terms and conditions to remain consistent with the previous
contract.
The Company anticipates that it will enter into employment contracts with two
other key employees in 2010 under similar terms and conditions. Specifics will
be determined by the Compensation Committee and approved by the Board of
Directors.
The Company entered into an agreement with three individuals to join the
Company's board of directors. Directors will be reimbursed for actual expenses
incurred while performing their duties. Under the terms of the agreement the
individuals will receive no other compensation, although this may change in the
future.
NOTE 6 - RELATED PARTY TRANSACTIONS
The Company is currently operating in a facility leased and operated by Tampa
Fiberglass Inc. (TFI). TFI is owned by Ken McCleave, Chairman of AFGP. No
occupancy cost has been charged to AFGP by TFI as of June 30, 2010. There is no
assurance that this favorable treatment will continue in the future if AFGP
begins to facilitate operations at that site.
The above related party transactions are not necessarily indicative of the terms
and amounts that would have been incurred had comparable agreements been made
with independent parties.
NOTE 7 - DEFERRED WAGES
The Company has accrued salaries owed to four individuals. Only one of the four
employees is covered by an employment agreement, see Note 5. The amounts due are
fixed without any interest or other escalating cost and the Company does not
expect to make any payments on these deferred wages during the next twelve
months, and therefore the balances are classified as non-current.
NOTE 8 - NOTES PAYABLE
Notes payable at June 30, 2010 consist of the following:
Note payable, individual, past maturity, 8.75% interest; unsecured $ 101,500
Note payable, individual, past maturity, 14.00% interest; unsecured $ 30,000
Note payable, individual, past maturity, 14.00% interest; unsecured $ 10,000
Note payable, individual, past maturity, 14.00% interest; unsecured $ 10,000
Note payable, individual, past maturity, 10.50% interest; unsecured $ 100,000
Note payable, individual, past maturity, 10.50% interest; unsecured $ 18,000
Note payable, individual, past maturity, no interest; unsecured $ 15,000
Note payable, individual, past maturity, 10.00% interest; unsecured $ 1,535
Note payable, individual, past maturity, 16.50% interest; unsecured $ 7,000
Note payable, individual, on demand, 8.0% interest; unsecured $ 3,000
AMERICAN FIBER GREEN PRODUCTS, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
AS OF JUNE 30, 2010 AND FOR THE
SIX MONTH PERIODS ENDED JUNE 30, 2010 AND 2009
UNAUDITED
NOTE 9 - OTHER PAYABLES, RELATED PARTIES
Long-term payables are due to PAC (Public Acquisition Company - a wholly owned
business of Kenneth McCleave), Nimble Boat Works (a wholly owned business of
Kenneth McCleave), Daniel L. Hefner (President and Chief Operating Officer of
AFBG) for
cash advances made to AFBG.
Due to PAC $ 341,685
Due to Nimble Boat Works $ 1,574
Due to Dan Hefner $ 950
Company loans payable to PAC in the amount of $314,670, included above, bear
interest ($214,670 at 10% pa and $100,000 at 8% pa.) These loans were primarily
associated with the acquisition of Amour Fiber Core.
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND PLAN OF
OPERATION
THIS FILING CONTAINS FORWARD-LOOKING STATEMENTS. THE WORDS "ANTICIPATED,"
"BELIEVE," "EXPECT," "PLAN," "INTEND," "SEEK," "ESTIMATE," "PROJECT," "WILL,"
"COULD," "MAY," AND SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY FORWARD-LOOKING
STATEMENTS. THESE STATEMENTS INCLUDE, AMONG OTHERS, INFORMATION REGARDING FUTURE
OPERATIONS, FUTURE CAPITAL EXPENDITURES, AND FUTURE NET CASH FLOW. SUCH
STATEMENTS REFLECT THE COMPANY'S CURRENT VIEWS WITH RESPECT TO FUTURE EVENTS AND
FINANCIAL PERFORMANCE AND INVOLVE RISKS AND UNCERTAINTIES, INCLUDING, WITHOUT
LIMITATION, GENERAL ECONOMIC AND BUSINESS CONDITIONS, CHANGES IN FOREIGN,
POLITICAL, SOCIAL, AND ECONOMIC CONDITIONS, REGULATORY INITIATIVES AND
COMPLIANCE WITH GOVERNMENTAL REGULATIONS, THE ABILITY TO ACHIEVE FURTHER MARKET
PENETRATION AND ADDITIONAL CUSTOMERS, AND VARIOUS OTHER MATTERS, MANY OF WHICH
ARE BEYOND THE COMPANY'S CONTROL. SHOULD ONE OR MORE OF THESE RISKS OR
UNCERTAINTIES OCCUR, OR SHOULD UNDERLYING ASSUMPTIONS PROVE TO BE INCORRECT,
ACTUAL RESULTS MAY VARY MATERIALLY AND ADVERSELY FROM THOSE ANTICIPATED,
BELIEVED, ESTIMATED, OR OTHERWISE INDICATED. CONSEQUENTLY, ALL OF THE
FORWARD-LOOKING STATEMENTS MADE IN THIS FILING ARE QUALIFIED BY THESE CAUTIONARY
STATEMENTS AND THERE CAN BE NO ASSURANCE OF THE ACTUAL RESULTS OR DEVELOPMENTS.
The following discussion and analysis should be read in conjunction with
"Selected Financial Data" and our financial statements and related notes thereto
included elsewhere in this registration statement. Portions of this document
that are not statements of historical or current fact are forward-looking
statements that involve risk and uncertainties, such as statements of our plans,
objectives, expectations and intentions. The cautionary statements made in this
registration statement should be read as applying to all related
forward-looking statements wherever they appear in this registration statement.
Our actual results could differ materially from those anticipated in the
forward-looking statements. Factors that could cause our actual results to
differ materially from those anticipated include those discussed in "Risk
Factors," "Business" and "Forward-Looking Statements."
GENERAL OVERVIEW
American Fiber Green Products, Inc.
From its inception, American Fiber Green Products, Inc. (f/k/a Amour Hydro
Press, Inc; Amour Fiber Core, Inc. [Washington]; Amour Fiber Core, Inc.
[Nevada]) has had a focus on the production of Fiberglass Reinforced Plastic
(FRP) products to take to market, beginning with the patented recycling
technology developed by William Amour, the Company's founder. After spending
millions of dollars on research and development and proving that the technology
could, in fact, recycle fiberglass waste and produce superior fiberglass
products, the Company was forced to suspend operations due to the death of Mr.
Amour in 1999. Several years of stagnation and distress left the Company, its
creditors and its nearly 850 shareholders on the verge of total loss. In 2001
Kenneth McCleave started dialogue with the Management and shareholders of the
Company about merging with American Leisure Products, Inc., a company that would
use virgin materials to produce vintage cars, boats and other FRP products.
These discussions resulted in a concerted effort by McCleave and his team, as
well as the Officers and Directors of the Company, to establish support for and
confidence in the proposed plan of merger. In May of 2004 after much creditor
negotiation, resolution of legal matters and personal visits with hundreds of
shareholders representing over 70% of the issued and outstanding shares of the
Company's common stock, the merger was completed between Amour Fiber Core, Inc.
(Nevada) and American Leisure Products, Inc. (Florida). Simultaneously, the
combined companies effected a name change to American Fiber Green Products, Inc.
(AFBG). The Company established that the future operations of the two merged
companies would represent two divisions of AFBG. Amour Fiber Core, Inc.
(Florida) had been formed to be a subsidiary of American Fiber Green Products,
Inc. specifically fiberglass waste recycling. American Leisure Products, Inc.
(Florida) will produce fiberglass components from new materials.
Amour Fiber Core
We plan to generate revenues from several areas; a technology and proprietary
process for the recycling of fiberglass. Revenues can be produced from the
following areas:
Amour Fiber Core's primary focus will be to recycle fiberglass, produce products
from recycled material and sell license agreements for its process. The Company
has developed, tested and previously placed into limited commercial production,
a new technology for fiberglass reclamation manufacturing. It has adapted this
technology to establish a manufacturing business. From the research and
development in Amour's early stages many different products have been prototyped
and tested. Building on this foundation, management has determined that the
pilot plant to be constructed in Florida and will produce general planking or
boards for marine decking and seawalls. Marketing the planking will help to
"brand" our name through park benches and picnic tables as part of our first
line of finished goods.
We intend to offer contracts for licensing of our patented technology. The
Company believes that licensing its technology to businesses in foreign
countries and the North American market can be an effective method to maximize
the return on its investment in the continued development of its fiberglass
recycling technology, without significant additional capital outlays.
Additionally, such licensing agreements will increase the Company's public
visibility and general awareness of its technology. The licensee will be
required to pay an upfront fee for the sub-license, equipment and training prior
to delivery and a royalty fee to the Company for each item produced by the
licensee. If the wholesale price of the licensee's produced products are
significantly below the production costs of products produced by the Company,
the Company may also offer to purchase product from the licensees. The Company
believes the establishment of licensees in various foreign countries is an
effective means of introducing the Company's technology into new markets without
major capital outlays.
American Leisure Products
American Leisure Products (ALP) will produce FRP parts within the fiberglass
industry. In addition, the Company will produce parts from the company owned
molds for the after market hot rod industry and the marine industry. ALP will
produce and sell vintage car bodies, boats, and other fiberglass components in
the leisure products line. The leisure market has been defined in recent years
as one of the fastest growing market segments because of 'baby boomers' who have
reached a point of financial affluence and increasing leisure time. Their desire
to enjoy the 'fruits of their labor' has created a massive market that our
products will feed. The Company currently owns molds for several products, but
will also be acquiring additional molds and tooling as funding is achieved
through debt or equity or the combination.
RESULTS OF OPERATIONS
Revenues
The Company had revenue of $-0- for the three months ended June 30, 2010. The
Company had suspended all operations for the past several years while management
effected the changes in corporate structure, built a management team, studied
the market trends, and generated investment interest in the Company's business
model and opportunity. The Company plans to build a pilot plant in during the
years ended December 31, 2010 and 2011. The Company has begun the process of
establishing a network of sub-licensees to collect and process waste fiberglass
and to produce finished goods from that process. These sub-licenses will provide
income to the Company in initial fees for acquiring the license as well as
ongoing revenue from production royalties.
Expenses
The Company incurred interest expense for the three months ended June 30, 2010
of $24,270, compared to interest expense of $18,237 for the three months ended
June 30, 2009. Interest was charged based on the stated interest rates set forth
in the notes.
Marketing, general and administrative expenses for the three months ended June
30, 2010 were $26,263 compared to $23,053 for the three months ended June 30,
2009.
GENERAL TRENDS AND OUTLOOK
We believe that our immediate outlook is extremely favorable, as we believe
there is no other company competing with us on a nationwide basis in our market
niche for recycling fiberglass and only a limited number of companies competing
with us in of our products within American Leisure Products. However, there is
no assurance that such national competitor will not arise in the future. We do
not anticipate any major changes in the Recycling industry. We believe that 2010
will be a significant growth year, and besides the operational business
strategies discussed above, we intend to implement the following plans in 2010
and 2011 in order to maintain and expand our opportunity.
We plan to staff our facility in Tampa, Florida, with customer service
representatives and logistical support personnel to build our Pilot Plant and
complete our tooling requirements. Currently this facility is limited in staff.
The Tampa plant will serve as the selling platform for the sub-licensing of
Amour Fiber Core's patented technology. Additionally, we will utilize this
facility to directly distribute American Leisure's products to the market.
As we gain strength and stability in the U.S. domestic market, we intend to
expand our influence and market in other areas of the world through our license
agreements. Inquiries about acquiring use of the Amour recycling technology have
been received from Japan, Australia, England, France, Turkey, Egypt, the African
continent, Indonesia, Ireland, the Caribbean basin and Canada.
LIQUIDITY AND CAPITAL RESOURCES
The Company's financial statements have been prepared assuming that the Company
will continue as a going concern. For the three months ended June 30, 2010, the
Company had a net loss of $46,890, cash used by operations of $30 and negative
working capital of $240,547. In view of these matters, recoverability of
recorded asset amounts shown in the accompanying consolidated financial
statements is dependent upon the Company's ability to expand operations and to
achieve a level of profitability. The Company has financed its activities
principally from private funding. The Company intends to finance future
development activities and its working capital needs largely from the sale of
equity securities until such time that funds provided by operations are
sufficient to fund working capital requirements.
UNPREDICTABILITY OF FUTURE REVENUES; POTENTIAL FLUCTUATIONS IN QUARTERLY
OPERATING RESULTS; SEASONALITY
As a result of the Company's limited operating history, the Company is unable to
accurately forecast its revenues. The Company's current and future expense
levels are based largely on its investment plans and estimates of future
revenues and are to a large extent fixed and expected to increase.
Sales and operating results generally depend on the volume of, timing of and
ability to fulfill the number of orders received and the ability to obtain raw
materials at a reasonable price. The Company may be unable to adjust spending in
a timely manner to compensate for any unexpected revenue shortfall. Accordingly,
any significant shortfall in revenues in relation to the Company's planned
expenditures would have an immediate adverse effect on the Company's business,
prospects, financial condition and results of operations. Further, as a
strategic response to changes in the competitive environment, the Company may
from time to time make certain pricing, service or marketing decisions which
could have a material adverse effect on its business, prospects, financial
condition and results of operations.
The Company expects to experience significant fluctuations in its future
quarterly operating results due to a variety of factors, many of which are
outside the Company's control. Factors that may adversely affect the Company's
quarterly operating results include
(i) the Company's ability to retain
customers, attract new customers at a steady rate and maintain customer
satisfaction, we cannot be sure that we will be able to attract sufficient
customers to maintain or grow revenue and consequently our long term growth and
success may be negatively impacted; (ii) the announcement or introduction of new
technology by the Company and its competitors, we cannot be sure that our
competition will not significantly impact our customer base, and thereby
negatively impact our revenues, with new and improved technology; (iii) price
competition or higher prices in the industry, we cannot be sure that we will be
able to maintain our current pricing structure and gross margins to be able to
compete with new competitors at reasonable prices; (iv) the Company's ability to
upgrade and develop its systems and infrastructure and attract new personnel in
a timely and effective manner, the Company cannot be sure that it will be able
to raise sufficient capital in order for it to grow its infrastructure; (v)
governmental regulation, the Company must comply with regulations from several
governmental agencies to ensure compliance of products, recycling processes and
manufacturing facilities, but there is no assurance that the regulations will
not change or become more restrictive in the future, thereby limiting the
ability of the Company to produce cost effective products.
Capital Stock
Preferred Stock
Although the board has authorized 5,000,000 shares of preferred stock, par value
$.001, none have been issued.
Capital Expenditures
We expect to incur capital expenditures in the future in the future. Since our
inception, the research and development has been completed. For each division in
2010-2011, we expect to have total capital expenditures of $525,000. Amour Fiber
Core will use $250,000 for the pilot plant and American Leisure Products will
use $275,000.
ITEM 3.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
Not Applicable
ITEM 4(T).
CONTROLS AND PROCEDURES
Evaluation of disclosure controls and procedures.
- -------------------------------------------------
Under the supervision and with the participation of our management, including
our Chief Executive Officer and our Chief Financial Officer, we carried out an
evaluation of the effectiveness of the design and operation of our disclosure
controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the
Exchange Act. Management conducted its evaluation based on the framework in
Internal Control - Integrated Framework issued by the Committee on Sponsoring
Organizations of the Treadway Commission (COSO). Based on that evaluation, our
Chief Executive Officer and our Chief Financial Officer have concluded that, at
December 31, 2009, such disclosure controls and procedures were effective.
Disclosure controls and procedures are controls and other procedures that are
designed to ensure that information required to be disclosed in our reports
filed or submitted under the Exchange Act is recorded, processed, summarized and
reported within the time periods specified in the SEC's rules and forms.
Disclosure controls and procedures include, without limitation, controls and
procedures designed to ensure that information required to be disclosed in our
reports filed or submitted under the Exchange Act is accumulated and
communicated to management, including our Chief Executive Officer and Chief
Financial Officer, or persons performing similar functions, as appropriate, to
allow timely decisions regarding required disclosure.
Management's Report on Internal Control over Financial Reporting
- ----------------------------------------------------------------
The Company's management is responsible for establishing and maintaining
adequate internal control over financial reporting (as defined in Rue 13a-15(f)
under the Exchange Act). Internal control over financial reporting is a process,
including policies and procedures, designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of
financial statements for external reporting purposes in accordance with U.S.
generally accepted accounting principles.
Our management assessed our internal
control over financial reporting based on the Internal Control - Integrated
Framework issued by the COSO. Based on the results of this assessment, our
management concluded that our internal control over financial reporting was
effective as of March 31, 2010 based on such criteria.
A control system, no matter how well conceived or operated, can provide only
reasonable, not absolute assurance that the objectives of the control system are
met under all potential conditions, regardless of how remote, and may not
prevent or detect all errors and all fraud. 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 prevented or detected. Our internal control over financial reporting is
designed to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles.
Our disclosure controls and procedures are designed to provide reasonable, not
absolute, assurance that the objectives of our disclosure control system are
met. Because of inherent limitations in all control systems, no evaluation of
controls can provide absolute assurance that all control issues, if any, within
a company have been detected. Based on their evaluation as of the end of the
period covered by this report, management concluded that our disclosure controls
and procedures were sufficiently effective to provide reasonable assurance that
the objectives of our disclosure control system were met.
Changes in Internal Control over Financial Reporting
No change in the Company's internal control over financial reporting occurred
during the quarter ended June 30, 2010, that materially affected, or is
reasonably likely to materially affect, the Company's internal control over
financial reporting.
CHANGE IN INTERNAL CONTROLS
There have been no changes in internal controls over financial reporting that
occurred during the most recent fiscal quarter that have materially affected, or
are reasonably likely to materially affect, our internal controls over financial
reporting.
PART II--OTHER INFORMATION
ITEM 1.
LEGAL PROCEEDINGS
The Company is not involved in any legal proceedings and is not aware of any
pending or threatened claims.
The Company expects to be subject to legal proceedings and claims from time to
time in the ordinary course of its business, including, but not limited to,
claims of alleged infringement of the trademarks and other intellectual property
rights of third parties by the Company and its licensees. Such claims, even if
not meritorious, could result in the expenditure of significant financial and
managerial resources.
ITEM 2.
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
During the three month period ended June 30, 2010, there was no modification of
any instruments defining the rights of holders of the Company's common stock and
no limitation or qualification of the rights evidenced by the Company's common
stock as a result of the issuance of any other class of securities or the
modification thereof.
During the period covered by this filing, the Company did not sell any
securities that were not registered under the Securities Act.
ITEM 3.
DEFAULTS UPON SENIOR SECURITIES
There have been no defaults in any material payments during the covered period.
ITEM 4.
REMOVED AND RESERVED
ITEM 5.
OTHER INFORMATION
The Company does not have any other material information to report with respect
to the three month period ended June 30, 2010.
ITEM 6.
EXHIBITS AND REPORTS ON FORM 8-K
EXHIBIT # DESCRIPTION
- ----------------------------------------------------------------------
2.1 Merger between Hydro Press and Amour, dated 3/12/93*
2.2 Agreement and Plan of Merger between Amour Fiber Core [Nevada] and
American Leisure Products, dated 5/24/2004*
2.3 Agreement and Plan of Merger between Amour Fiber Core [Washington] and
Amour Fiber Core [Nevada], dated 5/25/2004*
3.1 Article of Incorporation of Amour Fiber Core, Inc. [Washington], dated
12/22/95*
3.2 Article of Amendment for 3 to 1 forward split dated 6/9/98*
3.3 Articles of Incorporation of American Leisure Products, Inc., dated
9/2/2001*
3.4 Articles of Incorporation of Amour Fiber Core, Inc. [Florida], dated
9/15/2001*
3.5 Articles of Incorporation of Amour Fiber Core, Inc. [Nevada], dated
March 2004*
3.6 Bylaws*
10 Employment Agreement with Kenneth W. McCleave, dated 10/1/2001*
10.2 Exclusive license agreement with the Amour Family Trust *
31.1 Certification of the Chief Financial Officer
31.2 Certification of the Principal Executive Officer
32 Certification pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002
* These exhibits are filed as part of Form 10SB registration statement
filed with the SEC on February 22, 2007 and incorporated by reference.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has caused this report to be signed on its behalf by the undersigned,
thereto duly authorized:
Date: August 16, 2010 AMERICAN FIBER GREEN PRODUCTS, INC.
By: /s/ DANIEL L. HEFNER
-------------------------------
Daniel L. Hefner,
President and Director
(Principal Executive Officer)
By: /s/ MICHAEL A. FREID
-------------------------------
Michael A. Freid,
Chief Financial Officer and
Principal Accounting Officer
EXHIBIT 31.1
CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES
OXLEY ACT OF 2002 AND RULE 13A-14 OF THE EXCHANGE ACT
OF 1934
CERTIFICATION
-------------
I, Daniel L. Hefner, certify that:
1. I have reviewed this quarterly report on Form 10-Q of American Fiber Green
Products, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements
made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as
of, and for, the periods presented in this report;
4. The registrant's other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial
reporting (as defined in Exchange Act Rules 13a - 15(f) and 15d - 15(f)) for the
registrant and have:
a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our supervision,
to ensure that material information relating to the registrant, including
its consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being
prepared;
b) Designed such internal control over financial reporting, or caused
such internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting
principles;
c) Evaluated the effectiveness of the registrant's disclosure controls
and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of
the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrant's internal
control over financial reporting that occurred during the registrant's
most recent fiscal quarter (the registrant's fourth fiscal quarter in the
case of the annual report) that has materially affected, or is reasonably
likely to materially affect, the registrant's internal control over
financial reporting; and
5. The registrant's other certifying officer(s) and I have disclosed, based on
our most recent evaluation of internal control over financial reporting, to the
registrant's auditors and the audit committee of the registrant's board of
directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant's ability to record,
process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
control over financial reporting.
Date: August 16, 2010 /s/ Daniel L. Hefner
-----------------------------------------
Daniel L. Hefner
President and Principal Executive Officer
EXHIBIT 31.2
CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES
OXLEY ACT OF 2002 AND RULE 13A-14 OF THE EXCHANGE ACT
OF 1934
CERTIFICATION
-------------
I, Michael A. Freid, certify that:
1. I have reviewed this quarterly report on Form 10-Q of American Fiber Green
Products, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements
made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as
of, and for, the periods presented in this report;
4. The registrant's other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial
reporting (as defined in Exchange Act Rules 13a - 15(f) and 15d - 15(f)) for the
registrant and have:
a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our supervision,
to ensure that material information relating to the registrant, including
its consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being
prepared;
b) Designed such internal control over financial reporting, or caused
such internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting
principles;
c) Evaluated the effectiveness of the registrant's disclosure controls
and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of
the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrant's internal
control over financial reporting that occurred during the registrant's
most recent fiscal quarter (the registrant's fourth fiscal quarter in the
case of the annual report) that has materially affected, or is reasonably
likely to materially affect, the registrant's internal control over
financial reporting; and
5. The registrant's other certifying officer(s) and I have disclosed, based on
our most recent evaluation of internal control over financial reporting, to the
registrant's auditors and the audit committee of the registrant's board of
directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant's ability to record,
process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
control over financial reporting.
Date: August 16, 2010 /s/ Michael A. Freid
---------------------------------------
Michael A. Freid
Chief Financial Officer and Principal
Accounting Officer
EXHIBIT 32.1
CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER
PURSUANT TO 18 U.S. C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of American Fiber Green Products, Inc.,
(the "Company") on Form 10-Q for the period ended June 30, 2010 as filed with
the Securities and Exchange Commission on the date hereof (the "Report"), I,
Daniel L. Hefner, President and Principal Executive Officer of the Company,
certify, pursuant to 18 U.S. C. Section 1350, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002, that, to my knowledge:
(1) The Report fully complies with the requirements of Section 13 (a) or 15 (d)
of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the Company.
Date: August 16, 2010 /s/ Daniel L. Hefner
------------------------------------
Daniel L. Hefner
President and Principal Executive
Officer
EXHIBIT 32.2
CERTIFICATION OF THE PRINCIPAL FINANCIAL OFFICER
PURSUANT TO 18 U.S. C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of American Fiber Green Products, Inc.,
(the "Company") on Form 10-Q for the period ended June 30, 2010 as filed with
the Securities and Exchange Commission on the date hereof (the "Report"), I,
Michael A. Freid, Chief Financial Officer and Principal Accounting Officer of
the Company, certify, pursuant to 18 U.S. C. Section 1350, as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:
(1) The Report fully complies with the requirements of Section 13 (a) or 15 (d)
of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the Company.
Date: August 16, 2010 /s/ Michael A. Freid
---------------------------------------
Michael A. Freid
Chief Financial Officer and Principal
Accounting Officer