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| AFBG.OB > SEC Filings for AFBG.OB > Form 10-Q on 20-May-2009 | All Recent SEC Filings |
20-May-2009
Quarterly Report
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.
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 no revenue for the three months ended March 31, 2009. The Company has 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, 2009 and 2010. 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 March 31, 2009 of $21,410, compared to interest expense of $31,071 for the three months ended March 31, 2008. Interest was charged based on the stated interest rates set forth in the notes. Reduced interest expense of $9,661 is due to notes payable plus accrued interest being converted to stock in 2008 at $0.05 per share according to note holder agreements. The Company has also negotiated with note holders and assigns to have interest after 3-31-08 forgiven on four additional notes.
Marketing, general and administrative expenses for the three months ended March 31, 2009 were $23,304 compared to $34,523 for the three months ended March 31, 2008.
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 2009 will be a significant growth year, and besides the operational business strategies discussed above, we intend to implement the following plans in 2009 and 2010 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 March 31, 2009, the Company has had a net loss of $41,485 and cash used by operations of $25, and negative working capital of $331,882 at March 31, 2009. 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 its 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
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 in the future to incur capital expenditures. Since our inception, the research and development has been completed. For each division in 2009-2010, we expect to have total capital expenditures of $525,000.00 - Amour Fiber Core $250,000 for the pilot plant, American Leisure Products $275,000.
ITEM 3.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
Not Applicable
ITEM 4(T).
CONTROLS AND PROCEDURES
Evaluation of disclosure controls and procedures.
The Company's Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of the Company's disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the three month period ending March 31, 2009 covered by this Quarterly Report on Form 10-Q. Based upon such evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, the Company's disclosure controls and procedures were not effective as required under Rules 13a-15(e) and 15d-15(e) under the Exchange Act. This conclusion by the Company's Chief Executive Officer and Chief Financial Officer does not relate to reporting periods after March 31, 2009.
Management's Report on Internal Control over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) of the Company. Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America.
The Company's internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company's assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies and procedures may deteriorate.
Management, under the supervision of the Company's Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness of internal control over financial reporting based on the framework in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, management concluded that the Company's internal control over financial reporting was not effective as of March 31, 2009 under the criteria set forth in the Internal Control-Integrated Framework.
This annual report does not include an attestation report of the Company's registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by our registered public accounting firm pursuant to temporary rules of the SEC that permit us to provide only management's report in this Quarterly Report on Form 10-Q.
Changes in Internal Control over Financial Reporting
No change in the Company's internal control over financial reporting occurred during the quarter ended March 31, 2009, that materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.
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.
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