UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
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FORM 10-K
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[X] ANNUAL REPORT PURSUANT TO SECTION
13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934.
FOR THE FISCAL YEAR ENDED DECEMBER
31, 2011
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934.
FOR THE TRANSITION PERIOD FROM , 20
, TO , 20 .
--- --- --- ---
COMMISSION FILE NUMBER
000-28978
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AMERICAN FIBER GREEN PRODUCTS, INC.
(Exact Name of Registrant as Specified
in its Charter)
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NEVADA 91-1705387
(State or Other Jurisdiction of (I.R.S.
Employer
Incorporation or Organization) Identification
Number)
4209 RALEIGH STREET, TAMPA, FL 33619
(Address of Principal Executive Offices)
(813) 247-2770
(Registrant's Telephone Number, Including
Area Code)
SECURITIES REGISTERED PURSUANT TO
SECTION 12(G) OF THE ACT:
TITLE OF EACH CLASS:
PREFERRED STOCK, PAR VALUE $0.001
PER SHARE
COMMON STOCK, PAR VALUE $0.001 PER
SHARE
Indicate by check mark if the registrant is a well-known
seasoned issuer, as defined in Rule 405 of the Securities Acts. . [_] YES [X] NO
Indicate by check mark if the registrant is not required
to file reports pursuant to Section 13 or 15(d) of the Act. [_] YES [X] NO
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
Check if there is no disclosure of delinquent filers in
response to Item 405 of Regulation S-B contained in this form, and no disclosure will be contained, to the best of registrant's
knowledge, in definitive proxy of information statements incorporated by reference in Part III of this Form 10-K or any amendment
to this Form 10-K [X]
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 (Section 232.405) during the preceding 12 months. Yes [_] No [X]
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of "accelerated
filer and large 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]
Indicate by check mark whether the registrant is a shell
company (as defined in Rule 12b-2 of the Act) [_] YES [X] NO
The aggregate market value of the voting and non-voting
common equity held by
non-affiliates of the registrant was approximately $3,171,521
as of the last
business day of the registrant's most recently completed
second fiscal quarter, based upon the closing sale price on the OTC:BB reported for such date. Shares of common stock held by each
officer and director and by each person who owns 10% or more of the outstanding common stock have been excluded in that such persons
may be deemed to be affiliates. This determination of affiliate status is not necessarily a conclusive determination for other
purposes.
There were 11,543,235 shares of the Registrant's $.001
par value common stock
outstanding as of March 30, 2012.
AMERICAN FIBER GREEN PRODUCTS, INC.
ANNUAL REPORT ON FORM 10-K
FOR THE YEAR ENDED
DECEMBER 31, 2011
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TABLE OF CONTENTS
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PART I
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PAGE
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Item 1
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Description of Business
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1
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Item 1A
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Risks Particular to the Company's
Business
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9
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Item 2
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Description of Property
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9
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Item 3
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Legal Proceedings
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9
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Item 4
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Removed and Reserved
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9
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PART II
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Item 5
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Market for Registrant's Common Equity,
Related Stockholder Matters
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and Issuer Purchase of Equity Securities
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10
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Item 6
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Selected Financial Data
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10
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Item 7
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Management's Discussion and Analysis
of Financial Condition and
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Results of Operation
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11
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Item 8
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Financial Statements and Supplementary
Data
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17
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Item 9
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Changes in and Disagreements with
Accountants on Accounting and
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Financial Disclosure
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29
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Item 9A
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Controls and Procedures
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29
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Item 9B
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Other Information
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30
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PART III
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Item 10
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Directors and Executive Officers and
Corporate Governance
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31
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Item 11
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Executive Compensation
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32
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Item 12
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Security Ownership of Certain Beneficial
Owners and Management
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and Related Stockholder Matters
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33
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Item 13
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Certain Relationships and Related
Party Transactions, and
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Director Independence
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34
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Item 14
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Principal Accountant's Fees and Services
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34
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PART IV
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Item 15
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Exhibits
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34
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Signatures
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35
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AMERICAN FIBER GREEN PRODUCTS, INC.
This Annual Report on Form 10-K and the documents incorporated
herein by reference contain forward-looking statements that have been made pursuant to the provisions of the Private Securities
Litigation Reform Act of 1995. Such forward-looking statements are based on current expectations, estimates and projections about
Turbine Truck Engines Inc.'s industry, management beliefs, and assumptions made by management. Words such as "anticipates,"
"expects," "intends," "plans," "believes," "seeks," "estimates," variations
of such words and similar expressions are intended to identify such forward-looking statements. These statements are not guarantees
of future performance and are subject to certain risks, uncertainties and assumptions that are difficult to predict; therefore,
actual results and outcomes may differ materially from what is expressed or forecasted in any such forward-looking statements.
PART I
ITEM 1.
DESCRIPTION OF BUSINESS
Company History
American Fiber Green Products, Inc., formerly known as
Amour Fiber Core, Inc.
until May 26, 2004, 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 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 with Barb Amour and Gerald Rau, directors of Amour Fiber Core, Inc., Kenneth McCleave (unaffiliated with the registrant
prior to the merger) incorporated American Leisure Products, Inc. (ALP) a Florida corporation, of which Kenneth McCleave was the
sole shareholder of the 100,000 issued and outstanding shares for the purpose of merger with Amour Fiber Core, Inc. (AFC) 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
of 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).
Amour Fiber Core, Inc
AFC's primary purpose is performing reclamation manufacturing
of commercial fiberglass products from molded fiberglass waste and outdated resin waste. The Company has advanced reclamation techniques
combined with a proprietary process to reclaim fiberglass waste products, obsolete fiberglass molded products and outdated or excess
fiberglass resins. These waste products are key ingredients in the production of the Amour fiberglass products. Management believes
that its ability to transform fiberglass waste into viable commercial products will cause diversion of thousands of tons of refuse
from landfills and transform the waste into recycled products with commercial applications. The Company has exclusive rights to
two patents for its technologies. Three immediate sources of income are expected; tipping fees, sale of sub-licensing agreements
and marketing of finished goods.
American Leisure Products, Inc.
The Company's second operating subsidiary is American Leisure
Products, Inc.
("ALP"), which was incorporated in Florida on
September 15, 2001, in order to
merge with Amour Fiber Core, Inc. Following the merger
on May 24, 2004, ALP began to focus on producing a variety of fiberglass products that provide recreational enjoyment, such as
the "Hot Rod" car industry and the "Marine Industry". Various molds, tooling and equipment were located or
built to facilitate this plan of operation. ALP plans to grow through acquisition and strategic partnerships for production of
fiberglass cars and boats. Our fiberglass production facilities will also provide future revenue through the production of fiberglass
vintage car replicas, boats and other leisure products from current molds and tooling and future acquired molds. See Plan of Operation
under Part 2, Item 7.
COMPANY AND BUSINESS OVERVIEW
The Company's executive management team is:
Kenneth W. McCleave Chairman of the Board
Daniel L. Hefner President, Chief Executive Officer and
Director
Frank D. Puissegur Chief Financial Officer
Our business plan is to engage in both fiberglass reclamation
manufacturing and production of fiberglass leisure products from virgin material.
We have developed, tested and placed into limited commercial
production a new technology for fiberglass reclamation manufacturing. We have 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. Our
initial plan is to produce general planks or boards for marine decking and seawalls. From the planking, we will continue to "brand"
our name through park benches and picnic tables, as well as a variety of additional products.
The Company may offer contracts for sub-licensing of our
patented technology. The Company believes that licensing our technology to businesses in both foreign and domestic markets could
be an effective method of maximizing the return on our investment in the research and development of our fiberglass recycling technology,
without significant additional capital outlays. Additionally, such licensing agreements could increase our public visibility and
general awareness of our technology. The licensee would 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 is significantly below the production costs of products produced by the Company, the Company may also offer to
purchase product from the licensees. Management believes that establishing licensees in various foreign countries could be an effective
means of introducing our technology into new markets without major capital outlays.
The sub-licensing agreements would be for a ten year period
with two five year renewal extensions possible. The one-time fee for the sub-licensing will be variable from a low of $1,000,000
up to $20,000,000 depending upon coverage area. Construction of the processing plant will also be an income stream with the Company
providing prefabricated equipment and erection to the sub-licensee. The revenue is variable by components, configuration and distance.
Royalties will be required from sub-licensees based upon the products and volume on a sliding scale. Finally, Company owned facilities
will produce products to be sold commercially.
Additionally, the Company plans to generate revenues by
making waste generators aware of our proprietary process for the recycling of fiberglass. The Amour division will offer an alternative
to "filling the landfills" by offering its process through Sub-License Agreements worldwide. Currently, most of the world's
fiberglass is not being recycled and is discarded into landfills. Waste generators will be solicited to pay tipping fees that currently
go to the landfills for disposal of the waste, to Amour Fiber Core, Inc. By becoming a client of American Fiber Green Products,
Inc. the waste generator will now become part of a genuine recycling operation, achieving coveted 'green status'. Amour will receive
'inventory' at a profit or for minimal cost. To date, we have not entered into any sub-licensing agreements and the terms and fees
that are outlined above have not yet been accepted by anyone and are subject to negotiations.
See the discussion of the Company's plan of operations
under Part 2, Item 7.
The Company's corporate offices and manufacturing facilities
are presently located at 4209 Raleigh Street, Tampa, Florida 33619. Our website is www.americanfibergreenproducts.com.
In Western States, where the Company's facilities were
originally located, the typical cost to a manufacturer to dispose of fiberglass waste in an approved landfill varies from $25 -
$140 per ton, plus shipping costs. The disposal fee for resin waste in an approved landfill is typically $250 - $350 per 55 gallon
drum, plus shipping costs. These costs appear to be representative of the disposal costs of these types of waste throughout the
United States. The goal of the Company is to expand its manufacturing capacity to support the processing of a significant percentage
of the outdated resins and molded fiberglass waste which are shipped to landfills. The Company will accept resins and fiberglass
waste materials from a variety of suppliers. Past suppliers have included the US Navy, The Boeing Company, various boat manufacturers
and general fiberglass manufacturers. The Company anticipates that adequate fiberglass wastes and related materials can be obtained
from domestic sources; however, should these sources prove to be inadequate, the Company can purchase new materials to supplement
any deficiency.
The processing fees charged by the Company will range from
$100 - $250 per 55 gallon drum for disposal of resins and an average processing fee of $120 per ton for molded fiberglass waste.
The revenue from these items is driven by the geographical location of the manufacturing facility. As the Company expands production
of the manufacturing plant, it is anticipated that the Company will receive additional processing fees from new manufacturers who
will utilize the Company's recycling services.
GROWTH STRATEGY
Management believes that there are significant opportunities
to increase revenues and market position in the recycling and manufacturing industries through the following:
o Optimizing our marketing plan;
o Maintaining our state-of-the-art technology position;
o Managing our raw material inventory;
o Expanding our products so that new products may be offered;
o Increasing our sales volume;
o Expanding to regional offices; and,
o Maintaining a conservative balance sheet and disciplined
capital spending
program.
Once production commences, the Company will market these
product lines:
o Railroad ties
o Parking stops
o Dock Fendering Systems
o Vessel Fendering Systems
o Bridge Fendering Systems
o Seawalls
Focusing on Developing Amour as a Brand Name
--------------------------------------------
Increasing Amour's reputation and name/brand recognition
among its customers, manufacturers, employees, management, shareholders, and the investment community is a primary goal of management.
Regulatory Mandates
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The Company's business model takes into consideration regulatory
mandates.
The Company maintains a website with the address www.americanfibergreenproducts.com.
The Company is not including the information contained on its website as part of, or incorporating it by reference into, this report
on Form 10-K. The Company will make available, free of charge, through our website, all filings as soon as reasonably practicable
as we electronically file these materials with, or otherwise furnish them to, the Securities and Exchange Commission ("SEC").
The Company is an electronic filer with the SEC and the
SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers
that file electronically with the SEC at http://www.sec.gov.
The Company intends to apply for and receive certification
from regulatory agencies, including the Department of Ecology and the US Environmental Protection Agency, to accept certain wastes,
including molded fiberglass, resins and related materials. The Company's manufacturing process and facilities require no additional
environmental clearances, other than compliance with the standard regulations and rules which are applicable to US manufacturers
of fiberglass products.
Actions by Federal, state and local governments concerning
environmental matters could result in laws or regulations that could increase the costs of producing the products manufactured
by the Company or otherwise adversely affect demand for its products. The Company does not currently anticipate any material adverse
effect on its operations, financial conditions or competitive position as a result of its efforts to comply with environmental
requirements. Some risk of environmental liability is inherent in the nature of the Company's business and there can be no assurance
that material environmental liabilities will not arise. It is also possible that future developments in environmental regulations
could lead to material environmental compliance or cleanup costs. If the Company were to lose its certification to accept fiberglass
wastes, it would be necessary to use new resins in the manufacturing process, which could reduce the Company's cost advantage.
In compliance with the general intent of Federal and local
environmental regulations as they apply to the disposal of outdated resins and fiberglass wastes, some suppliers of recyclable
materials require approval or certification of the Company as one of their "authorized" recipients prior to utilization
of the Company's services. In conjunction with these procedural requirements, the Company will seek certification that the Company's
process is approved and the Company is authorized as a recipient of outdated resins and fiberglass wastes.
The Company's products are required to meet material regulations
by various federal, state, and local government agencies and the performance standards or requirements of its various customers.
As an example, vehicle bumper stops are required to meet standards and guidelines established by the US Department of Transportation
(DOT). Additionally, many customers request samples of products for testing prior to committing the Company's product to open purchase
order procurement. The Company has actively supported potential customers in the testing and evaluation of each product and anticipates
the continuation of this procedure as the Company expands its customer base and introduces new products.
How We Will Manage Our Operations
---------------------------------
We will electronically hand off to our in-house Customer
Care Representatives the handling of customer calls, sales, verifications, billing and shipping. Customer orders will be processed
in our Florida operations facility. Both of our subsidiaries' success will rest on our ability to satisfy our customer's needs.
Our products meet with instant market approval through carefully crafted aesthetics, function, features and competitive pricing.
We hold weekly meetings with all key members of the operational areas of the Company, including sales, compliance, billing, shipping
and administration. Such operational weekly meetings result in a thorough discussion of weekly results and problems, with plans
and goals for the week set at such meetings. Prospective customers view our material through our website with information of how
to contact Amour Fiber Core or American Leisure Products. Once a customer contacts us, our Customer Care Representatives will explain
the benefits of our service, qualify the prospective customer, and answers any questions they may have. All of these factors help
to solidify customer retention rates and expected long-term brand loyalty.
The overall marketing plan for our product is based on
the following fundamentals:
Amour Fiber Core
o Verify the customers are qualified;
o Establish Licensee's for each specific product they will
market;
o Identify a continuous supply of new opportunities, to
fill the sales "funnel";
o Ship the products directly;
o Maintain contact with the customer (to ensure on-going
education and
regulatory compliance);
o Establish a distribution network;
o Develop a system to minimize delivery lead time.; o Establish
protocols to promote follow up sales or referrals from existing
customers; And,
Obtain feedback from the customer base to continually improve
the product and the sales channel.
American Leisure Products
The overall marketing plan for our product is based on
the following fundamentals:
o Establish a professional, qualified and capable distribution
dealer network;
o Identify a continuous supply of new opportunities to
fill the sales "funnel";
o Manage a system to minimize delivery lead time;
o Manage the systems to promote follow up sales or referrals
from existing
customers; and,
o Obtain feedback from the customer base to continually
improve the product and the sales channel.
AMERICAN LEISURE PRODUCTS
GENERAL DEVELOPMENT OF BUSINESS
American Leisure Products will produce fiber- reinforced
plastic composite parts. Although ALP will produce products from its own molds and tooling, we will also be able to serve as an
outsource to many industries, including: transportation, marine, commercial and architectural. The reputation and experience of
our production employees creates a demand for our services in the market place. Our experience in building custom molds for multiple
industries is in high demand. Generally, the explosive demand for fiberglass recreational products to fill the demands of affluent
'baby boomers' with leisure time on their hands bodes well for ALP and other producers for several years to come. ALP has positioned
itself to be a leader within the Fiberglass Reinforced Plastic (FRP) industry by means of its unique designs and product variety,
as well as the experience and skill of its employees and management.
GROWTH STRATEGY
Growth is intended to be achieved by establishing brand
recognition for American Leisure Products, both as an owned product line and as a reliable outsource for the FRP manufacturing
industry. ALP will increase its customer base requiring FRP products to be built as our reputation for quality and delivery reliability
becomes known. These customers require products to be built as they do not have the facilities and/or knowledge to produce these
products in-house.
In addition to the outside work, ALP intends to produce
"in-house" products described below that the Company owns or controls. These products will focus on the recreation industry.
Growth will be achieved by establishing dealers for the replica car bodies and FRP parts and by participating in rallies and gatherings
of hobbyists for the various products. Support will be available through employees who can assist with questions, printed material,
and commitments by the Company and the dealer at national shows, all linked through the Company's web site. Advertisement in regional
and national publications will increase brand recognition. Our research shows that the dealer network in the "hot markets"
in the US could reach a potential of 200 plus dealers. The use of the Internet will allow communication with worldwide customers.
PRODUCTS
ANTIQUE “REPLICARS”
o
Nostalgic replica automobiles (commonly referred to as Hot Rods)
are provided at completion levels from the hobbyist who wants to build his own car to the enthusiast that wants to buy a complete
automobile ready to drive away. These cars are offered in a number of package configured to serve every segment of the market:
o
Phase 1: These parts packages include all of the major body
components. The customer will build the car from the ground up. This customer is normally a serious hobbyist with tools, equipment
or and the required skills.
o
Phase 2: These parts packages include all components required,
less the engine and the interior. This includes the frame, suspension, breaks, body, steering, wheels, etc. This customer is the
hobbyist who wants to build a car and has the space, some equipment, but wants all of the components (already fitted) and complete.
o
Phase
3: This level is for the enthusiast who does not have the place, time, equipment, or skills to build an automobile. Building
the cars at various stages will reduce a major part of the dealer’s time. The Company will support the dealers with
cars (nick-named rollers). These “rollers” will be assembled based on various stages of work with easy
step-by-step processes to complete. By building the cars in these stages, it will allow the final car to be completed with a
minimum of effort.
BOATS
ALP will produce fiberglass boats from molds and tooling
that will be exclusive to ALP. These boats have long histories and continue to receive regional and nation recognition for their
quality construction, unique style and the fierce loyalty of their owners. ALP will produce trawlers, sailboats and flats boats
from their own exclusive lines as well as provide outsource service for other manufacturers as need and opportunity allow.
OTHER PRODUCTS
From time to time as opportunities arise, ALP may opt to
develop other products to build for their own account or others. The level of skill and expertise of the management and employees
of ALP enhances their imagination and market awareness. Design and /or redesign of a product for the market is within their in-house
skills as well as the ability to build the tooling and molds that bring those designs to reality and to market.
FUTURE GROWTH STRATEGY
We will expand the dealer network through direct marketing
from the factory. Each dealer will have an area that will be negotiated based on commitments and the demographics that needs to
be covered. The "Dealer Package" will be for a certain minimum requirement and a commitment for delivery of additional
cars for the remaining year based on the geographic area of the dealer.
See the discussion of the Company's plan of operations
under Part 2, Item 7.
ANTIQUE “REPLICAR” RENTAL
Our market research indicates that a business opportunity
grows substantially when we use our own manufactured vintage car products in a rental fleet network in vacation areas. Demand for
a fresh, new, fun alternative form of transportation is an exciting prospect for consumers and investors alike.
o Rental locations will be established throughout the country
to satisfy the
demand for exotic and premium rentals
in locations such as Miami, FL, Daytona, FL, Las Vegas, NV, Los Angeles, CA, etc. The Company intends to use these centers to rent,
service, and sell its products.
o Parts and service. The parts required to assemble these
vintage cars will be made available to our dealer network as well as retail consumers. Through the use of our web site, both dealers
and consumers will be able to interface with the factory for their needs. The service category includes revenues from
customers for the repair of damaged items or items that
need to be installed.
COMPETITION - AMOUR FIBER CORE
RECYCLING
The Company is aware of several experimental fiberglass
recycling projects and a few prototype or development stage commercial fiberglass recycling companies. Most of these competitors
utilize a process which grinds the fiberglass into a fine powder and feeds the powder into the fluid being sprayed, under pressure,
onto fiberglass molds. The Company is not aware of any fiberglass recycling companies which utilize any process similar to the
Company's proprietary process; however, it is possible that others are in the early stages of developing other fiberglass recycling
technologies. The Company believes that the patent issued to the Amour Family Trust and licensed to the Company will be sufficient
to prevent any potential competitors from utilizing any process similar to that used by the Company.
PRODUCTS
The Company will compete worldwide with a variety of manufacturers
of wood, plastic, concrete and fiberglass products, including many large industrial corporations with resources significantly greater
than those of the Company.
The Company competes with new fiberglass products based
upon price. New fiberglass products are manufactured with new resins and new glass fibers, which add raw material costs to the
wholesale price of the product. Manufacturing of the Company's product does not incur the same raw materials costs and, therefore,
to the extent the Company utilizes recyclable resins and fiberglass wastes, the Company's products may have a sales price advantage.
There are a number of businesses that make or could make fiberglass tables and benches. In general, these businesses must purchase
raw materials to manufacture their products and therefore have higher costs of goods sold.
Like other fiberglass products, the Company's products
are typically sold at a price higher than similar wood products; however, like other fiberglass products, the Company's products
have strong resistance to moisture, dry rot and surface damage. The Amour products also present features of higher strength and
durability. The Company believes these long-term benefits off-set the higher price of the product. The Company's products are similar
in cost to new and recycled plastic products. The advantages that the Company's products have over plastic products are higher
modulus of rupture and elasticity, higher compression allowance, higher density and better structural integrity.
AMERICAN LEISURE PRODUCTS
The Company believes its products provide an overall better
value for the customer when compared to its competition, because of exceptional features such as selling kits that allow for lower
cost entry into the hobby. Even though the feature benefits may be compelling, ALP products will remain competitively priced. The
Company does not anticipate erosion in margin due to competition. The leisure market is expanding rapidly and maintenance of market
share will ensure growth. Most of the competitors in this market offer a cost effective, reliable product that will meet or exceed
the functional application requirements.
The distinguishing advantages for ALP are a competitive
price point, a superior product, ongoing product evaluation, and quality control and support. A complete technical comparison is
available which gives ALP an advantage over its competitors by providing a greater perceived value to the Customer.
EMPLOYEES
As of December 31, 2011, the Company employed three full-time
employees. The Company may engage independent contractors and other temporary employees in its operations as required. None of
the Company's employees are represented by a labor union and the Company considers its employee relations to be good. The Company
believes that its future success will depend in part on its continued ability to attract, hire and retain qualified personnel.
ITEM 1A.
RISKS PARTICULAR TO THE COMPANY'S BUSINESS
The risk to the company's business model is that the time
it takes to fund, organize and begin operations will leave the door open for others to create a competitive solution that could
cause us to lose our uniqueness.
ITEM 2.
DESCRIPTION OF PROPERTY
Our office and production facilities are located at 4209
Raleigh Street, Tampa, Florida 33619. Currently, a related company, Public Acquisition Company, has a lease/option on the property
where AFGP is located. No rental fee is charged by the related party, but there is no guarantee that this arrangement will continue.
The office is approximately 1,000 square feet and is in a condition adequate for our operations. The production facilities are
presently sufficient for operations . Additional adjacent property is available for lease or purchase. The terms of the lease agreement
require thirty days written notice by either party to terminate the lease.
ITEM 3.
LEGAL PROCEEDINGS
The Company is not involved in any legal proceedings and
is not aware of any pending or threatened claims.
The Company expects that it may become 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 4.
MINE SAFETY DISCLOSURES
None.
PART II
ITEM 5.
MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER
MATTERS AND ISSUER PURCHASE OF EQUITY SECURITIES
The Company's common stock is traded on the Over The Counter
Bulletin Board (OTCBB) under the symbol "AFBG". The table below sets forth the high and low bid prices for the Company's
common stock for each calendar quarter of the prior and current year. Quotations reflect inter-dealer prices, without retail mark-up,
mark-down or commission, and may not represent actual transactions.
BID PRICES
-----------------------------
LOW HIGH
------------ -------------
FISCAL 2010
First Quarter (January 1, 2010 through March 31, 2010)
$0.47 $.65
Second Quarter (April 1, 2010 through June 30, 2010)
$0.26
$0.62
Third Quarter (July 1, 2010 through September 30, 2010)
$0.40 $0.70
Fourth Quarter (October 1, 2010 through December 31, 2010)
$0.40 $0.70
FISCAL 2011
First Quarter (January 1, 2011 through March 31, 2011)
$0.25 $0.63
Second Quarter (April 1, 2011 through June 30, 2011)
$0.50
$0.51
Third Quarter (July 1, 2011 through September 30, 2011)
$0.15 $0.50
Fourth Quarter (October 1, 2011 through December 31, 2011)
$0.30 $0.79
Currently there are no outstanding warrants or options
to purchase stock.
PENNY STOCK REGULATIONS:
The Company's common stock is subject to provisions of
Section 15(g) and Rule 15g-9 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), commonly referred
to as the "penny stock rule." Section 15(g) sets forth certain requirements for transactions in penny stocks, and Rule
15g-9(d) incorporates the definition of "penny stock" that is found in Rule 3a51-1 of the Exchange Act. The SEC generally
defines "penny stock" to be any equity security that has a market price less than $5.00 per share, subject to certain
exceptions. As long as the Company's common stock is deemed to be a penny stock, trading in the shares will be subject to additional
sales practice requirements on broker-dealers who sell penny stocks to persons other than established customers
and accredited investors.
Dividends
The Company does not anticipate paying any cash dividends
on its Common Stock in the foreseeable future. The Company expects to retain, if any, its future earnings for expansion or development
of the Company's business. The decision to pay dividends, any, in the future is within the discretion of the Board of Directors
and will depend upon the Company's earnings, capital requirements, financial condition and other relevant factors such as contractual
obligations. There can be no assurance that dividends can or will ever be paid.
During the year ended December 31, 2011, 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.
ITEM 6.
SELECTED FINANCIAL DATA
Not applicable.
ITEM 7.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS 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 the Company's consolidated 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."
The following management discussion should be read together
with the AFGP's consolidated financial statements included in this registration statement See "Index to Financial Statements"
at page F-1. Those consolidated financial statements have been prepared in accordance with generally accepted accounting principles
of the United States of America.
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. (AFGP) The company established that the future operations of the two merged companies
would represent two divisions of AFGP. 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 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, anticipated to be constructed
in Florida in 2012 will produce general planking or boards for marine decking and seawalls. Marketing the planking we 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 our 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 $100,394 in revenue for the year ended
December 31, 2011 and $ 695 in revenue for the year ended December 31, 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
2012. The Company has begun the process of identifying 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 year ended December
31, 2011, of $102,136. Interest for the year ended December 31, 2010 was $98,552. Interest was charged based on the stated interest
rates set forth in the notes. Marketing, general and administrative expenses for the same periods were $80,628 and $96,938 respectively.
Income tax expense.
The Company has incurred net operating losses since inception.
At December 31, 2011 the Company had a net operating loss carry forward of approximately $4,910,931. For U.S. tax purposes the
net operating losses will begin expiring in twenty years. We have had a change of ownership as defined by the Internal Revenue
Code section 382. As a result, a substantial annual limitation may be imposed upon the future utilization of our net operating
loss carry forwards.
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 numbers 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 2012 will be a significant growth year, and besides the operational business strategies discussed above, we intend
to implement the following plans in 2012 in order to maintain and expand our opportunity.
The Company continues to seek funding which will allow
us 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
During the years ended December 31, 2011 and 2010 the Company
used cash from operating activities of $107,097 and $94,804 respectively. The increase in cash used is due primarily to the start-up
of operations and those related expenses.
During the years ended December 31, 2011 and 2010 the Company
used cash in investing activities of $ 9,647 and $-0- respectively. The use during 2011 is due to purchasing the necessary equipment.
During the years ended December 31, 2011 and 2010 the Company
provided cash from financing activities of $120,760 and $94,745, respectively. This increase in of cash provided by financing activities
is primarily due to the increase in other notes payable related party.
The aggregate value of outstanding loans as of December
31, 2011 is $658,861. This amount is comprised of convertible notes payable of $286,035 and notes payables – related party
of $372,826. Notes payable are due on demand, with accumulated interest on a compound basis at rates specified in each note. Notes
payable – related party of $372,826 includes $368,911 due to one related party.
Cash flows from operations have been derived primarily
from increased liabilities and issuance of equity. As of December 31, 2011, working capital deficit was $2,596,231. As current
operating cash flow is insufficient to finance the Company's planned growth, we will continue to seek additional financing from
alternative sources, including bank loans, supplier agreements and other financing arrangements.
The Company's financial statements have been prepared assuming
that the Company will continue as a going concern. For the year ended December 31, 2011, the Company had a net loss of $132,935,
cash used by operations of $107,097, and negative working capital of $2,596,231. 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 continue operations
and to sustain 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 during the next twelve months largely from debt
and equity financings until such time that funds
provided by operations are sufficient to fund working capital
requirements. However, there can be no assurance that any such financing will be available, and that if available, that it will
be available on terms that are favorable or acceptable to the Company.
The planned construction of the Pilot Plant is expected
to cost approximately $525,000. The Company plans to acquire funding for the construction from outside investors, establishment
of license agreements, government grants or through a stock offering.
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 $0.001, none has been issued.
Capital expenditures
We expect to incur capital expenditures in the future.
Since our inception, the research and development has been completed. For each division in 2012-2013, we expect to have total capital
expenditures of $525,000 -- Amour Fiber Core $250,000 for the pilot plant and American Leisure Products $275,000.
OFF-BALANCE SHEET ARRANGEMENTS
We do not have any 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 investors.
SIGNIFICANT ACCOUNTING POLICIES
The accounting policies of the Company are in accordance
with generally accepted accounting principles of the United States of America, and their basis of application is consistent. Outlined
below are those policies considered particularly significant:
The preparation of 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
financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ
from those estimates.
Common stock transactions for services are recorded at
either the fair value of the stock issued or the fair value of the services rendered, whichever is more evident on the day that
the transactions are executed. The certificates must be issued subsequent to the transaction date.
Research and development costs are charged to operations
when incurred and are included in operating expenses.
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.
For purpose of the statement of cash flows, the Company
considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents.
Inventory is valued at the lower of cost or market. All
inventory will be evaluated periodically for excess amounts on hand and obsolescence. If necessary, appropriate reserves will be
established.
Property and equipment are stated at cost and are depreciated
over their estimated useful lives. Depreciation is currently recorded as Marketing, General and Administrative expense. At such
time as assets are transferred to revenue generating production, their associated depreciation will be recorded as Cost of Sales.
The Company recognizes other revenues from 1) tipping fees
in the acquisition of scrap fiberglass, 2) sale of products produced with reclaimed fiberglass, 3) fees charged for licensing and
installation of the proprietary reclamation and manufacturing processes, 4) royalties charged to licensees for revenues generated
by using our licensed processes, 5) sales of other fiberglass products (reproduction cars, boats). Revenue is recorded when products
and services are provided to the customer.
Project development costs are expensed as incurred. The
cost of equipment that will be acquired or constructed for project development activities, and that have alternative future uses,
both in project development, marketing or sales, will be classified as property and equipment and depreciated over their estimated
useful lives. To date, project development costs include the development, engineering, and marketing expenses related to the Company's
fiberglass reclamation process and associated product development.
Effect of Inflation
We do not believe that inflation has had a material effect
on our business, results of operations or financial condition during the past two years.
NEW ACCOUNTING PRONOUNCEMENTS
Recent
accounting pronouncements issued by FASB (including EITF), the AICPA and the SEC did not or are not believed by
management
to have a material impact on the Company’s present or future financial statements.
ITEM 8.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
AMERICAN FIBER GREEN PRODUCTS, INC.
Consolidated Financial Statements
For The Years Ended December 31, 2011
and 2010
Reports of Independent Registered
Public Accounting Firm
Contents
Report of Independent Registered Public Accounting Firm
Financial Statements:
Consolidated Balance Sheets
Consolidated Statements of Operations Consolidated
Statement of Changes in Stockholders' Deficit
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
|
Peter Messineo
Certified Public Accountant
1982 Otter Way Palm Harbor FL 34685
peter@pm-cpa.com
T 727.421.6268 F 727.674.0511
|
REPORT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
To the Board of Directors and
Stockholders of American Fiber Green Products, Inc.:
I have audited the consolidated balance sheets of American Fiber
Green Products, Inc. as of December 31, 2011 and 2010 and the related consolidated statements of operations, changes in stockholder’s
deficit, and cash flows for the years then ended. These consolidated financial statements are the responsibility of the Company’s
management. My responsibility is to express an opinion on these consolidated financial statements based on my audits.
I conducted my audit in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards require that I plan and perform the audits to obtain reasonable
assurance about whether the financial statements were free of material misstatement. The Company was not required to have, nor
was I engaged to perform, an audit of its internal control over financial reporting. My audit included consideration of internal
control over financial reporting as a basis for designing audit procedures that were appropriate in the circumstances, but not
for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.
Accordingly, I express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. I believe that my audit provides a reasonable basis for my opinion.
In my opinion, the consolidated financial statements, referred
to above, present fairly, in all material respects, the financial position of American Fiber Green Products, Inc. as of December
31, 2011 and 2010, and the consolidated results of its operations and its cash flows for the years then ended, in conformity with
accounting principles generally accepted in the United States of America.
The accompanying consolidated financial
statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 2 to the consolidated
financial statements, the Company has history of recurring losses, has negative working capital, and is requiring traditional financing
or equity funding to advance its operating plan. These conditions raise substantial doubt about the Company’s ability to
continue as a going concern. Further information and management’s plans in regard to this uncertainty are
also described in Note 2. The consolidated
financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ Peter Messineo, CPA
Peter Messineo, CPA
Palm Harbor, Florida
April 6, 2012
AMERICAN FIBER GREEN PRODUCTS, INC.
CONSOLIDATED BALANCE SHEETS
|
December 31,
|
2011
|
2010
|
|
|
Assets
|
|
|
Current assets:
|
|
|
Cash
|
$ 4,057
|
$ 41
|
Accounts receivable
|
16,994
|
|
Interest receivable, related parties
|
78,223
|
62,120
|
Total current assets
|
99,274
|
62,161
|
|
|
Furniture and equipment, net of accumulated depreciation of $37,982 and $32,500, respectively
|
21,664
|
17,500
|
Other assets:
|
|
|
Notes receivable, net
|
98,405
|
98,405
|
|
$ 219,343
|
$ 178,066
|
|
|
Liabilities and Stockholders’ Deficit
|
|
|
Current liabilities:
|
|
|
Accounts payable, including related party payables of $115,349 and $117,957 at December 31, 2011 and 2010, respectively
|
$ 302,642
|
$ 296,292
|
Accrued expenses
|
4,550
|
6,050
|
Deferred wages
|
867,298
|
808,697
|
Convertible notes payable
|
286,035
|
296,035
|
Accrued interest
|
852,154
|
750,045
|
Notes payable – related parties
|
372,826
|
354,174
|
Total current liabilities
|
2,685,505
|
2,511,293
|
|
|
Stockholders’ deficit:
|
|
|
Preferred stock; $0.001 par value; 5,000,000 shares authorized; 0 shares issued and outstanding
|
—
|
—
|
Common stock; $0.001 par value; 350,000,000 shares authorized; 11,385,735 and 11,385,735
shares issued and outstanding at December 31, 2011 and
2010, respectively
|
11,386
|
11,386
|
Additional paid in capital
|
2,423,383
|
2,423,383
|
Accumulated deficit
|
(4,900,931)
|
(4,767,996)
|
Total stockholders’ deficit
|
(2,466,162)
|
(2,333,227)
|
|
$ 219,343
|
$ 178,066
|
The accompanying notes are an integral
part of the financial statements.
AMERICAN FIBER GREEN PRODUCTS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 2011
AND 2010
|
Year Ended December 31,
|
2011
|
2010
|
|
|
Revenue
|
$ 100,394
|
$ --
|
Costs of sales
|
76,666
|
--
|
Gross profit
|
23,728
|
--
|
|
|
|
Operating expenses
|
|
|
Marketing, general and administrative expenses
|
80,629
|
96,938
|
|
|
|
Operating loss
|
(56,901)
|
(96,938)
|
|
|
|
Other (income)
expense:
|
|
|
Interest expense
|
102,136
|
98,552
|
Interest
income
|
(16,102)
|
(14,707)
|
Debt forgiveness
|
(10,000)
|
--
|
Total other (income) expense
|
76,034
|
83,845
|
Net loss
|
$(132,935)
|
$(180,783)
|
|
|
|
|
|
|
|
|
Net loss per common share, basic and diluted
|
$
(0.01)
|
$ (0.02)
|
|
|
|
Weighted average number of common shares
|
11,385,735
|
11,385,735
|
The accompanying notes are an integral part of the financial
statements.
AMERICAN FIBER GREEN PRODUCTS, INC.
CONSOLIDATED STATEMENTS OF CHANGES
IN STOCKHOLDERS' DEFICIT
FOR THE YEARS ENDED DECEMBER 31, 2011
AND 2010
|
Common Stock
|
Capital in
Excess of
Par Value
|
Accumulated
Deficit
|
Total
Stockholders’
Deficit
|
Shares
|
Amount
|
|
|
|
|
|
|
Balance, December 31, 2009
|
11,385,735
|
$11,386
|
$2,423,383
|
$(4,587,213)
|
$(2,152,444)
|
|
|
|
|
|
|
Net loss
|
—
|
—
|
—
|
(180,783)
|
(180,783)
|
Balance, December 31, 2010
|
11,385,735
|
11,386
|
$2,423,383
|
(4,767,996)
|
(2,333,227)
|
Net loss
|
—
|
—
|
—
|
(132,935)
|
(132,935)
|
Balance, December 31, 2011
|
11,385,735
|
$
11,386
|
$2,423,383
|
$(4,900,931)
|
$(2,466,162)
|
The accompanying notes are an integral
part of the financial statements.
AMERICAN FIBER GREEN PRODUCTS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
Years Ended December 31,
|
2011
|
2010
|
|
|
Operating activities
|
|
|
Net loss
|
$(132,935)
|
$(180,783)
|
Adjustments to reconcile net loss to net cash used by operating activities:
|
|
|
Depreciation
|
5,482
|
5,000
|
Forgiveness of debt
Cancel
|
10,000
|
--
|
(Increase) decrease in:
|
|
|
Accounts receivable
|
(16,994)
|
--
|
Interest receivable
|
(16,102)
|
(13,807)
|
Increase (decrease) in:
|
|
|
Accounts payable
|
6,350
|
30,668
|
Accrued expenses
|
(1,500)
|
1,118
|
Deferred compensation
|
58,601
|
63,000
|
Net cash used by operating activities
|
(107,097)
|
(94,804)
|
|
|
|
Investing activities
|
|
|
Purchase of equipment
|
(9,647)
|
|
Net cash used by investing activities
|
(9,647)
|
—
|
|
|
|
Financing
activities
|
|
|
Proceeds from issuance (settlement) of notes payable
|
18,651
|
(5,000)
|
Increase in interest payable to shareholders
|
102,109
|
91,780
|
Proceeds from issuance of other long term liabilities
|
0
|
(35)
|
Net cash provided by financing activities
|
120,760
|
94,745
|
|
|
Net (decrease) increase in cash
|
4,016
|
(59)
|
Cash and cash equivalents, beginning of period
|
41
|
100
|
|
|
Cash and cash equivalents, end of period
|
$ 4,057
|
$ 41
|
Cash paid during the year for interest
|
$ —
|
$ —
|
The accompanying notes are an integral part of the financial
statements.
AMERICAN FIBER GREEN PRODUCTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2011
AND 2010
NOTE 1 - ORGANIZATION AND BUSINESS
American Fiber Green Products, Inc. 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 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
of 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)
NOTE 2 - GOING CONCERN
The accompanying consolidated 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, has an accumulated
deficit, and negative cash flows from operating activities. These factors raise substantial doubt about the ability of the Company
to continue as a going concern.
The Company anticipates beginning construction of a pilot
plant within the next 12 months and expects to complete the project and to begin production of scrapped fiberglass reclamation
as a raw material within the next 24 months. Although the cost of construction is not readily determinable, the Company estimates
the cost to be approximately $250,000 for the pilot plant and as much as $1.6M for a full function plant. 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 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying consolidated financial statements include
the activity of the Company and its wholly owned subsidiaries. All inter-company 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.
Certain accounts and financial statement classifications
in the prior periods have been reclassified to conform to the current period financial statement presentation.
For purpose of the statement of cash flows, the Company
considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents.
Inventory is valued at the lower of cost or market. Inventory
will be evaluated periodically for excess amounts on hand and obsolescence. If necessary, appropriate reserves will be established.
Property and equipment are stated at cost and are depreciated
over their estimated useful lives. Depreciation is currently recorded as Marketing, General and Administrative expense. At such
time as assets are transferred to revenue generating production, their associated depreciation will be recorded as Cost of Sales.
Property and equipment consist of mold tooling with estimated
useful lives of 3 - 10 years.
The Company recognizes revenues from 1) tipping fees in
the acquisition of scrap fiberglass, 2) sale of products produced with reclaimed fiberglass, 3) fees charged for licensing and
installation of the proprietary reclamation and manufacturing processes, 4) royalties charged to licensees for revenues generated
by using our licensed processes, 5) sales of other fiberglass products (reproduction cars, boats). Revenue is recorded when products
and services are provided to the customer.
Project development costs are expensed as incurred. The
cost of equipment that will be acquired or constructed for project development activities, and that have alternative future uses,
both in project development, marketing or sales, will be classified as property and equipment and depreciated over their estimated
useful lives. To date, project development costs include the development, engineering, and marketing expenses related to the Company's
fiberglass reclamation process and associated product development.
Income taxes are provided for the tax effects of transactions
reported in the financial statements and consist of taxes currently due plus deferred taxes resulting from temporary differences.
Such temporary differences result from differences in the carrying value of assets and liabilities for tax and financial reporting
purposes. The deferred tax assets and liabilities represent the future tax consequences of those differences, which will either
be taxable or deductible when the assets and liabilities are recovered or settled. Valuation allowances are established when necessary
to reduce deferred tax assets to the amount expected to be realized.
The Company adopted the provisions of FASB ASC 740-10 "Uncertainty
in Income Taxes" (ASC 740-10), on January 1, 2007. The Company has not recognized a liability as a result of the implementation
of ASC 740-10. A reconciliation of the beginning and ending amount of unrecognized tax benefits has not been provided since there
is no unrecognized benefit since the date of adoption. The Company has not recognized interest expense or penalties as a result
of the implementation of ASC 740-10. If there were an unrecognized tax benefit, the Company would recognize interest accrued related
to unrecognized tax benefits in interest expense and penalties in operating expenses.
The fair value of financial instruments approximated their
carrying values at December 31, 2011. The financial instruments consist of cash, interest receivable, notes receivable, accounts
payable and notes payable.
The Company presents basic loss per share ("EPS")
and diluted EPS on the face of the consolidated statement of operations. Basic loss per share is computed as net loss divided by
the weighted average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution that could
occur from common shares issuable through stock options, warrants, and other convertible securities. As of December 31, 2011 and
2010, there existed notes payable with conversion features (see Notes Payable footnote) which, due to the net loss, had an anti-dilutive
effect and therefore were not recognized. Restricted shares are considered outstanding and included in the computation of both
the basic and fully diluted earnings per share computations. Common stock that is restricted until certain conditions have been
met are only included in the per share computation once the condition has been satisfied. At December 31, 2011 and 2010, there
were no restricted shares that were considered restricted.
The Company's operations are subject to production of a
new processing technology. Significant technical and regulatory changes can have a dramatic effect on product opportunities. Design
and development of new processes are critical elements to achieve and maintain profitability in the Company's new industry segment.
The Company may be subject to federal, state and local
environmental laws and regulations. The Company does not anticipate expenditures to comply with such laws and does not believe
that regulations will have a material impact on the Company's financial position, results of operations, or liquidity. The Company
believes that its operations comply, in all material respects, with applicable federal, state, and local environmental laws and
regulations.
In January 2010, the FASB issued ASU No. 2010-06, Fair
Value Measurements and Disclosures ("ASU 2010-06"). This standard updates FASB ASC 820, Fair Value Measurements ("ASC
820"). ASU 2010-06 requires additional disclosures about fair value measurements including transfers in and out of Levels
1 and 2 and separate disclosures about purchases, sales, issuances, and settlements relating to Level 3 measurements. It also clarifies
existing fair value disclosures about the level of disaggregation and about inputs and valuation techniques used to measure fair
value. The standard is effective for interim and annual reporting periods beginning after December 15, 2009 except for the disclosures
about purchases, sales, issuances and settlements which is effective for fiscal years
beginning after December 15, 2010 and for interim periods
within those fiscal years. The Company adopted ASU 2010-06 on January 1, 2010, which had no material impact on the financial statements.
Other recent accounting pronouncements issued by the FASB
(including its EITF), the AICPA, and the SEC did not or are not believed by management to have a material impact on the Company's
present or future financial statements.
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:
|
December 31,
|
2011
|
2010
|
Note receivable, related party, 10% interest, past maturity
|
$ 6,000
|
$6,000
|
Note receivable, related party, 10% interest, past maturity
|
52,452
|
52,452
|
Note receivable, related party, 10% interest, past maturity
|
20,253
|
20,253
|
Note receivable, related party, 8% interest, past maturity
|
14,700
|
14,700
|
Note receivable, related party, 8% interest, past maturity
|
5,000
|
5,000
|
|
$98,405
|
$98,405
|
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 continued without change, on agreement with parties involved, and is expected to be
renewed in 2012. 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 2012 under similar terms and conditions. Specifics will be determined by the Compensation
Committee and approved by the Board of Directors.
NOTE 6 - STOCKHOLDERS' EQUITY
Founder Shares
In May 2004, the Board of Amour Fiber Core Inc. a Washington
corporation approved to reincorporate it in Nevada and reduce the number of shares outstanding. It merged into a newly organized
Nevada corporation (also named "Amour Fiber Core, Inc."), and each share of Amour Fiber Core, Inc. (Washington) was converted
into 1/6 of a share of Amour Fiber Core, Inc. (Nevada). As a result, the surviving corporation, Amour Fiber Core, Inc. (Nevada)
has a total of (1,837,998) shares outstanding. Amour Fiber Core Inc. (Nevada) has 350 million shares of Common Stock authorized
and 5 million shares of "blank check" preferred authorized.
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
of 100,000 common shares. The 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 this reverse merger. Following the transaction, Amour Fiber Core, Inc. (Nevada) had 9,189,998 shares outstanding.
The assets of ALP (Tooling) were added to the assets of AFC in a purchase transaction with a corresponding capital contribution
amount of $50,000 recorded as Additional Paid-In Capital.
At the time of this reverse merger, in accordance with
SFAS 141 (pilcrow)17, the smaller combining entity (ALP), a) holds a majority of the voting rights, (80.0%) of the combined company
(AFC) common shares outstanding; and b)comprises the senior management of the combined company.
NOTE 7 - 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 during 2011 or 2010. There is no assurance that this favorable treatment will continue in the future if AFGP begins
to facilitate operations at that site.
Accounts payable includes related party payables of $115,349
and $117,957 as of December 31, 2011 and 2010, respectively.
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 8 - DEFERRED WAGES
The Company has accrued salaries owed to four individuals.
Three of the individuals' employment contracts are expired. All balances due are fixed without any interest or other escalating
cost. The Company does not expect to make any payments on these deferred wages during the next twelve months, but the balances
are classified as current liabilities. Accrued salaries are $867,298 and $808,697 as of December 31, 2011 and 2012, respectively.
NOTE 9 – CONVERTIBLE NOTES PAYABLE
The Company has adopted ASC 470-20, "Debt
with Conversion and Other Options". The Company incurred debt with a conversion feature that provides for a rate of conversion
that is below market value. This feature is recorded by the Company as a beneficial conversion feature pursuant to FASB ASC 470-20.
Expense recorded on the Company's financial statements during the years ended December 31, 2011 and 2010 as a result of this adoption
totaled $0 and $0, respectively.
The Company has issued convertible notes payables to the
following individuals:
|
December 31,
|
|
2011
|
2010
|
Three notes payable to Robert Chilpala, dated June 4,
1998, July 10, 1999 and December 11, 1999, interest rate at 10.5%, 10.5% and 0% respectively principle and interest payable on
demand, convertible to common stock at $0.05 per share.
|
$ 133,000
|
$ 133,000
|
One note payable to Gerald Rau, dated 4/1/2000, interest rate at 8.75%, past due and convertible to common stock at $0.05 per share
|
101,500
|
101,500
|
Three notes payable to Les Smyth, dated September 15, 1998, June 14, 1999 and June 14, 1999, interest rates at 14%, past due and convertible to common stock at $0.05 per share
|
50,000
|
50,000
|
Note payable to B Carroll, dated March 22, 2007, interest at 10%, past due and convertible to common stock at $1.00 per share
|
--
|
10,000
|
One note payable to Ken McCleave, dated April 8, 2005, interest rate at 10% and past due.
|
1,535
|
1,535
|
Total convertible notes
|
$ 286,035
|
$ 296,035
|
During 2008, the Company negotiated with note holders and
assigns to have interest after March 31, 2008 forgiven on two notes.
Interest accrued on the above notes per individual is as
follows:
|
December 31,
|
|
2011
|
2010
|
R. Chlipala
|
$ 361,558
|
$ 313,955
|
G. Rau
|
91,336
|
91,336
|
L. Smyth
|
131,320
|
131,320
|
B Carroll
|
6,084
|
4,560
|
K. McCleave
|
2,226
|
1,879
|
PAC
|
250,303
|
199,356
|
ICF
|
8,972
|
7,465
|
D. Hefner
|
355
|
174
|
Total
|
$ 852,154
|
$ 750,045
|
In a 2004 the Company agreed to allow the outstanding loans,
including accrued interest at that time, to be convertible into shares of common stock at a rate of $.05 per share, the then fair
market value of the shares. The total original amount of the loans still outstanding at December 31, 2011 is $284,500 plus previously
accrued interest of $222,655 for the years ended December 31, 2011, respectively. The total common shares, if converted, would
be approximately 10,100,000 shares as of December 31, 2011.
NOTE 10 - Notes Payable- RELATED PARTIES
Related party notes 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), and Daniel
L. Hefner (President and Chief Executive Officer of AFGP) for cash advances made to AFGP.
|
December 31,
|
|
2011
|
2010
|
Six notes payable Due to PAC, dated May 14, 2004, through December 2004 and October 3, 2009, interest rates at 10% and 8%, principle and interest due on demand.-
|
$ 360,336
|
$ 341,685
|
Note Payable to ICF, interest rate at 8%, payable on demand
|
$7,000
|
$7,000
|
Note payable to Due to Nimble Boat Works, interest rate at 8% payable on demand
|
1,574
|
1,574
|
Two notes to Due to Dan Hefner, interest rate at 8% , payable on demand
|
3,915
|
3,915
|
Total other long-term payables
|
$ 372,825
|
$ 354,174
|
Interest accrued on the above loans is $259,611 and $211,556
at December 31, 2011 and 2010, respectively.
NOTE 11 - INCOME TAXES
The Company has incurred significant operating losses since
its inception and, therefore, no tax liabilities have been incurred for the periods presented. The amount of unused tax losses
available to carry forward and apply against taxable income in future years totaled approximately $3,181,000 at December 31, 2009
2011and $3,209,000 at December 31, 2010. The loss carry forwards expire beginning in 2013, 20 years after inception. Due to the
Company's continued losses, management has established a valuation allowance equal to the amount of deferred tax asset because
it is more likely than not that the Company will not realize this benefit.
In addition, Amour is not current in their federal and
state income tax filings. The Company has not determined the tax implications and considering the net operating losses and that
Amour has not had active operations or income for a significant period, the effect of non-filing is not expected to be significant.
Temporary differences affecting the deferred tax asset
are as follows:
|
December 31,
|
|
2011
|
2010
|
Accumulated deficit
|
$ 4,900,931
|
$ 4,767,996
|
Difference between tax and book for related party accruals:
|
|
|
Wages
|
(867,298)
|
(808,697)
|
Interest
|
(852,154)
|
(750,045)
|
|
3,181,479
|
3,209,254
|
Valuation allowance
|
(3,181,479)
|
(3,209,254)
|
|
—
|
—
|
The valuation allowance decreased by $27,775 during the
year ended December 31, 2011 and increased by $26,004 during the year ended December 31, 2010.
ITEM 9
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISLCOSURE
None.
ITEM 9A
DISCLOSURE 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, 2011, 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 ANNUAL 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 December 31, 2011 based on such criteria.
LIMITATIONS ON THE EFFECTIVENESS OF CONTROLS
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
There were no changes in our internal control over financial
reporting that occurred during the fourth fiscal quarter ended December 31, 2010 that have materially affected, or are reasonably
likely to materially affect, our internal control over financial reporting.
AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
This Annual Report does not include an attestation report
of the Company's independent registered public accounting firm regarding internal control over financial reporting. Management's
report was not subject to attestation by the Company's registered public accounting firm pursuant to temporary rules of the Securities
and Exchange Commission that permit the Company to provide only management's report in this Annual Report.
ITEM 9B.
OTHER INFORMATION
None
PART III
ITEM 10.
DIRECTORS AND EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The following table sets forth the names and ages of our
current directors and executive officers, their principal offices and positions The Board of Directors elects our executive officers
annually. Our directors serve one-year terms or until their successors are elected and accept their positions. The executive officers
serve terms of one year or until their death, resignation or removal by the Board of Directors. There are no family relationships
or understandings between any of the directors and executive officers. In addition, there was no arrangement or understanding between
any executive officer and any other person pursuant to which any person was selected as an executive officer.
NAME OF DIRECTOR OR EXECUTIVE OFFICER AGE CURRENT POSITION
AND OFFICE
----------------------------------------------- ------
---------------
Daniel L. Hefner 61 President, Chief
Executive Officer and
Director
Kenneth W. McCleave 58 Chairman of the Board
of Directors
Frank D. Puissegur 53 Chief Financial Officer
Daniel L. Hefner, 61, has been President of American Commerce
Solutions, Inc. (OTC: BB: AACS) since September, 2002 and Chief Executive Officer since March 2002. He previously served as Executive
Vice President from June 2000 to June 2001 and as interim President from June 2001 through February 2002. Mr. Hefner has been a
director of the Company since June 2000. Mr. Hefner formerly served as President of International Machine and Welding, Inc. He
formerly served as President, and is now serving as Vice President of International Commerce and Finance, Inc. an investment/consulting
company for manufacturing and technology companies, and he has held these positions since August 1999. Mr. Hefner has been active
for over twenty years as an independent consultant to individuals or
business seeking to begin operations or to create turnarounds
of existing business. Mr. Hefner additionally maintains licensure as a Florida Real Estate Broker. During the same period, Mr.
Hefner also operated his own independent real estate brokerage operation where he continues to serve as President and Chief Executive
Officer. From March to October 1999, Mr. Hefner was Chief Operating Officer for Chronicle Communications, Inc. (OTCBB: CRNC), a
Tampa based printer and publishing firm.
Kenneth W. McCleave is a 58 year old entrepreneur with
a special knack for sales and marketing. Starting in business as a boiler-room, telemarketing top salesman, Mr. McCleave rose to
owner, CEO and President of multi-million dollar Sports Holding, Inc. selling and distributing motorcycle and water craft parts
and boat manufacturing from 1987 through 1990 and United Printing and Publishing, a web printing company from 1990 through 1998.
In 1998 Mr. McCleave orchestrated the sale of UPP to the publicly traded, Chronicle Communications, Inc. and became the President
of this OTC: Bulletin Board holding company. After assuring proper transition to the new management, Mr. McCleave left to found
his latest ventures, Affordable Fiberglass Group and American Leisure Products, Inc., which merged with Amour Fiber Core Inc. a
Washington State based fiberglass recycling company.
Throughout his business career Mr. McCleave has been personally
responsible for the success of the sales and marketing of the products and services offered to a wide variety of customers. Gifted
at setting up efficient manufacturing and recycling operations Mr. McCleave has a penchant for maximizing limited resources. He
has demonstrated a tireless drive to succeed and with proper capitalization will move this latest venture into high visibility
and profitability with a service and group of products that will delight the concerned and investing public.
Frank D. Puissegur, graduated from the University of South
Florida in 1981 with a BA in Accountancy. He earned his CPA certificate in 1984. Mr. Puissegur has spent his entire career in public
accounting. Frank was appointed to the Florida Board of Accountancy in 2000. While on the board he served in several capacities
including chairing the probable cause committee, the laws and rules committee, and the board itself. Mr. Puissegur was reappointed
to the board in 2004 and served the maximum allowed term of eight years. He continues to sit on the continuing education committee,
another committee, that he chaired while an active member of the board.
AUDIT COMMITTEE
The Audit Committee consists of Frank Puissegur, Daniel
Hefner and Kenneth McCleave. The Audit Committee selects the independent auditors; reviews the results and scope of the audit and
other services provided by the Company's independent auditors and reviews and evaluate the Company's internal control functions.
The board of directors has determined that Frank Puissegur is the audit committee "financial expert"; as such term is
defined under federal securities law. However, as an Officer of the Company, he is not considered "independent" as disclosed
in Management's Report on Internal Control Over Financial Reporting. He is an expert by virtue of: (i) education and experience
as a principal financial officer, principal accounting officer, controller, public accountant or auditor or experience in one or
more positions that involve the performance of similar functions; (ii) experience actively supervising a
principal financial officer, principal accounting officer,
controller, public accountant, auditor or person performing similar functions; (iii) experience overseeing or assessing the performance
of companies or public accountants with respect to the preparation, auditing or evaluation of financial statements; and (iv) other
relevant experience.
CODE OF ETHICS
We have adopted a code of ethics meeting the requirements
of Section 406 of the Sarbanes-Oxley Act of 2002. We believe our code of ethics is reasonably designed to deter wrong doing and
promote honest and ethical conduct; provide full, fair, accurate, timely and understandable disclosure in public reports; comply
with applicable laws; ensure prompt internal reporting of violations; and provide accountability for adherence to the provisions
of the code of ethics.
ITEM 11.
EXECUTIVE COMPENSATION
The following table sets forth the total compensation paid
to or accrued, during the years ended December 31, 2011 and 2010 to AFGP's highest paid executive officers. No restricted stock
awards, long-term incentive plan payout or other types of compensation, other than the compensation identified in the chart below,
were paid to these executive officers during that fiscal year.
Summary Compensation Table
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Name and principal
position
(a)
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Year
(b)
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Salary
($)
(c)
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Bonus
($)
(d)
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Stock
Awards
($)(2)
(e)
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Option
Awards
($)(2)
(f)
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Non-Equity
Incentive
Plan
(g)
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Non-qualified
Deferred
Compensation
Earnings
($)
(h)
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All other
compensation
($)
(i)
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Total
($)
(j)
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Kenneth McCleave
Chairman of the Board of Directors
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2011
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$63,000
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—
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—
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—
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—
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—
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—
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$63,000
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2010
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$63,000
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—
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—
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—
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—
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—
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—
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$63,000
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Daniel Hefner,
Chief Executive Officer and President
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2011
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—
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—
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—
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—
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—
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—
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—
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—
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2010
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—
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—
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—
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—
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—
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—
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—
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—
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Frank D. Puissegur C
hief Financial
Officer
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2011
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$
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—
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—
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—
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—
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—
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—
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—
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—
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2010
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$
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—
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—
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—
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—
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—
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—
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—
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—
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We may hire additional executive employees and/or change
the compensation paid to and benefits received by our current executive employees, as our Board of Directors deems advisable or
necessary. We plan to reimburse our executive employees for all travel expenses incurred in connection with the business of the
Company. To date, the Company's Board of Directors has not adopted any retirement, pension, profit sharing or other similar programs
for our executive employees.
No officers or directors of the Company have received compensation
in excess of $100,000 per year.
ITEM 12.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
AND RELATED
STOCKHOLDER MATTERS
The following table sets forth information as to the ownership
of shares of our Common Stock as of December 31, 2011 with respect to (i) holders known to American Fiber Green Products who beneficially
own more than five percent (5%) of the outstanding Common Stock, (ii) each director, (iii) President and certain other executive
officers, and (iv) all directors and executive officers as a group. The percentage of ownership has been calculated based on 11,385,735
shares of Common Stock outstanding as of December 31, 2010.
Common Stock
Beneficially
Owned
Number of Shares
of Common Stock
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Percentage
of
Class
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Kenneth McCleave, 9401 Oak Street, Riverview, FL 33569*
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1,916,854
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6.83
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%
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Daniel Hefner, 1502 N. Taylor Road, Brandon, FL 33510*
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1,801,240
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15.82
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%
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Robert Maxwell, N/A, Florida
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1,801,240
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15.82
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%
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Frank Puissegur, Box 6196 Lakeland, FL 33807*
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0
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0.00
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%
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Barb Amour, Monroe, WA 98272
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673,111
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5.91
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%
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*All officers and directors as a group (3 persons)
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3,718,094
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32.65
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%
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As used in this table, "beneficial ownership"
means the sole or shared power to vote or to direct the voting of a security or the sole or shared investment power with respect
to a security (i.e., the power to dispose of or to direct the disposition of a security)
ITEM 12.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company is currently operating in a facility leased
and operated by Public Acquisition Company (PAC). PAC is owned by Kenneth McCleave, Chairman of AFGP and Daniel L.Hefner. No occupancy
cost has been charged to AFGP by PAC as of December 31, 2011. There is no assurance that this favorable treatment will continue
in the future if AFGP begins to facilitate operations at that site.
The Company carries a Note Payable to Kenneth McCleave,
Chairman of AFGP in the amount of $1,535 for a loan made to the Company. The note bears an annual interest rate of 10% and is payable
on demand. Refer to Note 8 of the consolidated financial statements.
The Company carries long-term liabilities with PAC (Public
Acquisition Company - a wholly owned business of Kenneth McCleave, Chairman of AFGP), Nimble Boat Works (a wholly owned business
of Ken McCleave, Chairman of AFGP) and Daniel Hefner (President and Chief Executive Officer of AFGP) for cash advances made to
AFGP. Refer to Note 9 of the consolidated financial statements.
The Company carries notes receivable from American Commerce
Solutions (ACS) and Chariot Manufacturing Company. Daniel Hefner (President and Chief Executive Officer of AFGP) is also President
and Chief Executive Officer of ACS. Chariot Manufacturing Company is a wholly owned subsidiary of ACS. Kenneth McCleave (Chairman
of AFGP) is also Chief Operating Officer and General Manager of Chariot Manufacturing Company.
ITEM 13.
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS, AND
DIRECTOR INDEPENDENCE
None.
ITEM 14.
PRINCIPAL ACCOUNTING FEES AND SERVICES
Audit Fees
The aggregate audit fees billed for the years ended December
31, 2011 and 2010 was $3,000 and $3,000, respectively. Audit services include the audits of the financial statements included in
the Company's annual reports on Form 10-K and reviews of interim financial statements included in the Company's quarterly reports
on Form 10-Q.
Audit-Related Fees
None.
Tax Fees
None
All Other Fees
None
Audit Committee Pre-Approval Process, Policies and Procedures
Our principal auditors have performed their audit procedures
in accordance with pre-approved policies and procedures established by our Board of Directors. Our principal auditors have informed
our Board of the scope and nature of each service provided. With respect to the provisions of services other than audit, review,
or attest services, our principal accountants brought such services to the attention of our Board of Directors, or one or more
members of our Board of Directors to whom authority to grant such approval had been delegated by the Board, prior to commencing
such services.
ITEM 15.
EXHIBITS
EXHIBIT # DESCRIPTION
2 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
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*
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 Section 12 of the Securities
Exchange Act of
1934, the registrant has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly authorized.
Date:
March 30, 2012
AMERICAN FIBER GREEN PRODUCTS, INC.
By: /s/ DANIEL L. HEFNER
--------------------------------
Daniel L. Hefner,
President and Director
(Principal Executive Officer)
By: /s/ FRANK D. PUISSEGUR
--------------------------------
Frank D. Puissegur,
Chief Financial Officer and
Principal Accounting Officer
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