UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2015
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from [ ] to [ ]
Commission file number 333-181259
AFC BUILDING TECHNOLOGIES
INC.
(Exact name of registrant as specified in its
charter)
| Nevada | N/A |
| (State or other jurisdiction of incorporation or | (I.R.S. Employer Identification No.) |
| organization) | |
| 101 ½ Mary Street West, Whitby, ON, Canada | L1N 2R4 |
| (Address of principal executive offices) | (Zip Code) |
| Registrant's telephone number, including area code: | (905) 430-6433 |
Securities registered pursuant to Section 12(b) of the Act:
| Title of Each Class | Name of Each Exchange On Which Registered |
| N/A | N/A |
Securities registered pursuant to Section 12(g) of the Act:
N/A
(Title of class)
Indicate by check mark if the registrant is a well-known
seasoned issuer, as defined in Rule 405 the Securities Act.
Yes
[ ] No [X]
Indicate by check mark if the registrant is not required
to file reports pursuant to Section 13 or Section 15(d) of the Act
Yes [ ] No [X]
Indicate by check mark whether the registrant: (1) has
filed all reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports) and (2) has been subject
to such filing requirements for the last 90 days.
Yes [
] No [X]
Indicate by check mark whether the registrant has submitted
electronically and posted on its corporate Website, if any, every Interactive
Data File required to be submitted and posted pursuant to Rule 405 of Regulation
S-K (§229.405 of this chapter) during the preceding 12 months (or for such
shorter period that the registrant was required to submit and post such files).
Yes [X] No [ ]
Yes No Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ]
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 definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer [ ] | Accelerated filer [ ] |
| Non-accelerated filer [ ] | Smaller reporting company [X] |
Indicate by check mark whether the registrant is a shell
company (as defined in Rule 12b-2 of the Exchange Act).
Yes [ ] No
[X]
The aggregate market value of Common Stock held by non-affiliates of the Registrant on June 30, 2015 was $Ø based on no bid or asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter.
Indicate the number of shares outstanding of each of the
registrant’s classes of common stock as of the latest practicable date.
34,760,008 common shares as of April 19, 2017
DOCUMENTS INCORPORATED BY REFERENCE
None.
TABLE OF CONTENTS
PART I
Item 1. Business
This annual report contains forward-looking statements. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as “may”, “should”, “expects”, “plans”, “anticipates”, “believes”, “estimates”, “predicts”, “potential” or “continue” or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors that may cause our performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements.
Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.
Our consolidated financial statements are stated in United States dollars (US$) and are prepared in accordance with United States Generally Accepted Accounting Principles.
In this annual report, unless otherwise specified, all dollar amounts are expressed in United States dollars and all references to “common shares” refer to the common shares in our capital stock.
As used in this current report and unless otherwise indicated, the terms “we”, “us” and “our” mean AFC Building Technologies Inc., a company incorporated under the laws of the state of Nevada, and our former wholly-owned subsidiary, DSL Products Limited, a company incorporated under the laws of the Province of Ontario.
General Overview
We were incorporated under the laws of the state of Nevada on May 10, 2011 under the name Auto Tool Technologies Inc. and have been engaged in the distribution of hand tools throughout Canada. Our fiscal year end is December 31. We had one subsidiary, DSL Products Limited, a company incorporated under the laws of the Province of Ontario, which we acquired via a share exchange on December 30, 2011 in exchange for 240,000,000 shares of our common stock, and which operates our hand tool distribution business. Our business offices are currently located at 101 ½ Mary Street West, Whitby, Ontario, Canada, L1N 2R4. The address of agent for service in Nevada and registered corporate office is c/o National Registered Agents, Inc. of Nevada, 100 East William Street, Suite 204, Carson City, NV, 89701. Our telephone number is (905) 430-6433.
On December 19, 2013, our board of directors and a majority holder of our company’s voting securities approved a change of name of our company to AFC Building Technologies Inc.
In addition to the change of name, our board of directors and a majority holder of our company's voting securities approved a 1 old for 8 new forward split of our then issued and outstanding shares of common stock, pursuant to which our issued and outstanding shares increased from 4,345,001 shares of common stock to 34,760,008 shares of common stock, our authorized capital remains unchanged. All references to common stock have been retroactively re-stated.
A Certificate of Amendment to effect the change of name was filed and became effective with the Nevada Secretary of State on January 10, 2014.
These amendments were reviewed by the Financial Industry Regulatory Authority (FINRA) and approved for filing with an effective date of January 14, 2014. The forward split and name change became effective with the Over-the-Counter Bulletin Board at the opening of trading on January 14, 2014. Our trading symbol is “AFCT”. Our CUSIP number is 00108E 100.
Other than as set out in this annual report, we have not been involved in any bankruptcy, receivership or similar proceedings, nor have we been a party to any material reclassification, merger, consolidation or purchase or sale of a significant amount of assets not in the ordinary course of our business.
Our Current Business
On June 30, 2015, we decided that continuing the operations of our wholly-owned subsidiary, DSL Products Limited (“DSL”) would no longer be economically feasible. All of the shares of DSL held by us were returned to DSL for cancellation and as of June 30, 2015 we no longer held any interest in DSL. Concurrently with the discontinuation of the DSL operations, we entered into a license agreement for an exclusive worldwide license in regards to 15 domain names related to the automotive e-commerce business. In consideration for the granting of the license, we will pay to the licensor a royalty of 2.5% of gross sales for any revenue derived from the use of the licensed domains. Consistent with our historical operations in this area, we intend to continue to pursue automotive e-commerce opportunities.
Prior to our decision to discontinue operations, we imported and marketed hand tools, automotive accessories, lawn and garden products, home products, accessories and attachments for power tools, plumbing products, consumer mechanics tools, cargo control systems and accessories and fasteners. These products were sold to professional end users, distributors, and consumers, and are primarily distributed through retailers (including auto parts stores, home centers, mass merchants, hardware stores, and retail lumber yards).
Hand tools included measuring and leveling tools, hex key sets, hammers, demolition tools, knives and blades, screwdrivers, saws, chisels, clamps and clamping systems and consumer tackers. Automotive accessories included fuses and fuse sets, o-rings sets, specialty tools, tune-up kits, tire repair kits, electrical test kits, jumper cable sets, and mechanic gloves. Home products were comprised of cable ties, scissors, calculators, magnifying glasses, flexible flashlights, paint tools and cleaning brushes. Cargo control systems included ratchet tie-down straps, cambuckle sets, tow ropes, bungee cord sets and cargo nets.
Our products were sold throughout Canada. We contracted the services of a national manufacturer’s agency who call on current and prospective customers. We also sold our products on a wholesale basis via our website at www.toolcachecanada.com, which had on-line ordering capability which is secure and individualized to the respective customer.
Our plan had been to launch www.toolvalley.com as our retail consumer portal. However, we are currently reviewing our business strategy with respect to launching a business to consumer website. Major competitors including eBay and Amazon have recently launched major initiatives to sell auto parts and accessories on-line. We are continuing to monitor these developments. In addition, we are also currently reviewing other potential business ventures, in an effort to capitalize on our logistics and distribution expertise. We have not been able to raise, sufficient capital to launch our e-commerce business, particularly given these developments in the industry.
Competition
We will encounter active competition in all of our businesses from both larger and smaller companies that offer the same or similar products and services or that produce different products appropriate for the same uses via e-commerce. We have a large number of competitors; however, aside from a small number of who market a range of products somewhat comparable to us, the majority of our competitors compete only with respect to one or more individual products or product lines in that segment. Certain large customers offer private label brands (“house brands”) that compete across a wider spectrum of our DIY segment product offerings.
Customers
A significant portion of our products were sold to a wide variety of automotive parts stores and home centers in Canada. A consolidation of retailers both in Canada and abroad has occurred over time. While this consolidation and the domestic and international expansion of these large retailers has provided us with opportunities for growth, the increasing size and importance of individual customers creates a certain degree of exposure to potential sales volume loss.
During the year ended December 31, 2014 we relied on one customer for an aggregate of 30% and 34% of our revenues.
Suppliers
We had acquired our product for resale from established manufacturers and hand tool distributors. Almost all of our products were acquired as finished goods that are immediately ready for sale to our customers.
Intellectual Property
We had been granted a Canadian trademark registration for “Tool Valley.”
An exclusive worldwide license in regards to 15 domain names related to the automotive e-commerce business. In consideration for the granting of the license, we will pay to the licensor a royalty of 2.5% of gross sales for any revenue derived from the use of the licensed domains.
Employees
We have one employee other than our sole director and officer, Cindy Kelly. Management and office administration services are provided by Cindy Kelly & Associates under a management consulting agreement.
On December 30, 2011, we entered into a consulting agreement with Cindy Kelly & Associates. Under the terms of the agreement Cindy Kelly & Associates receives total compensation of CAD $75,000 a year. The agreement has an indefinite term, but may be terminated by Cindy Kelly & Associates by providing 90 days written notice.
Distribution Methods
We had warehoused and distributed our products from a third–party logistics provider based in Whitby, Ontario. The logistics provider invoiced us on a monthly basis for these services.
Government Regulation
There are no governmental regulations that are material to our operations.
Research and Development
We have incurred $Ø in research and development expenditures over the last two fiscal years.
Purchase of Significant Equipment
We do not intend to purchase any significant equipment over the twelve months.
REPORTS TO SECURITY HOLDERS
We are required to file annual, quarterly and current reports, proxy statements and other information with the Securities and Exchange Commission and our filings are available to the public over the internet at the Securities and Exchange Commission’s website at http://www.sec.gov. The public may read and copy any materials filed by us with the Securities and Exchange Commission at the Securities and Exchange Commission’s Public Reference Room at 100 F Street N.E. Washington D.C. 20549. The public may obtain information on the operation of the Public Reference Room by calling the Securities and Exchange Commission at 1-800-732-0330. The SEC also 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.
Item 1A. Risk Factors
As a “smaller reporting company”, we are not required to provide the information required by this Item.
Item 1B. Unresolved Staff Comments
As a “smaller reporting company”, we are not required to provide the information required by this Item.
Item 2. Properties
Executive Offices
We do not own interests in any real property. Our executive office is located at 101 ½ Mary Street West, Whitby, Ontario, Canada, L1N 2R4. Our sole director and officer, has provided us with 1,000 square ft. of furnished office which is our principal executive office. This location currently serves as our primary office for planning and implementing our business plan. This space is currently sufficient for our purposes, and we expect it to be sufficient for the foreseeable future. Our sole director and officer charges our company $600 per month for use of this office space.
Item 3. Legal Proceedings
We know of no material, existing or pending legal proceedings against us, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which any of our directors, officers or affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our company.
Item 4. Mine Safety Disclosures
Not applicable.
PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Market Information
Our common stock has been quoted on the OTC Markets. Our common stock was quoted on the OTC Bulletin Board effective January 14, 2014, is no longer quoted on the OTC but is quoted on the "grey sheets". Our trading symbol is “AFCT”. There have been few trades of our common shares as at the date of this annual report. During year ended December 31, 2015 there had not been any trades of our common shares on the OTC.
OTC Market securities are not listed and traded on the floor of an organized national or regional stock exchange. Instead, OTC Market securities transactions are conducted through a telephone and computer network connecting dealers. OTC Market issuers are traditionally smaller companies that do not meet the financial and other listing requirements of a national or regional stock exchange.
Our common shares are issued in registered form. Island Stock Transfer, Roosevelt Office Center, 15500 Roosevelt Boulevard, Suite301, Clearwater, Florida 33760 (Telephone: 727-289-0010; Facsimile: 727-289-0069) is the registrar and transfer agent for our common shares.
Holders
As of April 19, 2017, there were approximately 9 holders of record of our common stock. As of such date, 34,760,008 common shares were issued and outstanding.
Dividend Policy
We have not paid any dividends since our incorporation and do not anticipate the payment of dividends in the foreseeable future. At present, our policy is to retain any earnings to develop and market our services. The payment of dividends in the future will depend upon, among other factors, our earnings, capital requirements, and operating financial conditions.
Equity Compensation Plan Information
We do not have any compensation plan under which equity securities are authorized for issuance.
Recent Sales of Unregistered Securities; Use of Proceeds from Registered Securities
We did not sell any equity securities which were not registered under the Securities Act during the year ended December 31, 2015 that were not otherwise disclosed in this annual report on Form 10-K, in our quarterly reports on Form 10-Q, or in our current reports on Form 8-K filed during the year ended December 31, 2015.
Purchase of Equity Securities by the Issuer and Affiliated Purchasers
We did not purchase any of our shares of common stock or other securities during our fourth quarter of our fiscal year ended December 31, 2015.
Item 6. Selected Financial Data
As a “smaller reporting company”, we are not required to provide the information required by this Item.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion should be read in conjunction with our audited consolidated financial statements and the related notes that appear elsewhere in this annual report. The discussions of results, causes and trends should not be construed to imply any conclusion that these results or trends will necessarily continue into the future.
Our audited consolidated financial statements are stated in United States dollars and are prepared in accordance with United States Generally Accepted Accounting Principles.
Liquidity and Financial Condition
Working Capital
| At | At | |||||
| December 31, | December 31, | |||||
| 2015 | 2014 | |||||
| Current assets | $ | 163 | $ | 518,426 | ||
| Current liabilities | $ | 76,324 | $ | 780,836 | ||
| Working capital (deficit) | $ | (76,161 | ) | $ | (262,410 | ) |
Cash Flows
| Year Ended | Year Ended | |||||
| December 31, | December 31, | |||||
| 2015 | 2014 | |||||
| Cash flows used in operating activities | $ | (149,659 | ) | $ | (22,922 | ) |
| Cash flows provided by financing activities | $ | 107,764 | $ | 11,096 | ||
| Net (decrease) in cash during year | $ | (45,109 | ) | $ | (16,677 | ) |
Operating Activities
Net cash used in operating activities was $149,659 for our year ended December 31, 2015 compared with cash used in operating activities of $22,922 in the same period in 2014. The increase of $126,737 used in operating activities is mainly attributable to increases in accounts receivable.
Financing Activities
Net cash provided by financing activities was $107,764 for our year ended December 31, 2015 compared to $11,096 in the same period in 2014. The increase was mainly attributable to an increase in net change of our line of credit.
Contractual Obligations
As a “smaller reporting company”, we are not required to provide tabular disclosure obligations.
Off-Balance Sheet Arrangements
We have no significant 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 are material to stockholders.
Results of Operations for our Years Ended December 31, 2015 and 2014
The following summary of our results of operations should be read in conjunction with our audited consolidated financial statements for the years ended December 31, 2015 and 2014.
Our operating results for the years ended December 31, 2015 and 2014 are summarized as follows:
| Year Ended | Year Ended | Change Between | |||||||
| December 31, | December 31, | Year Ended | |||||||
| 2015 | 2014 | December 31, | |||||||
| 2014 | |||||||||
| and Year Ended | |||||||||
| December 31, | |||||||||
| 2015 | |||||||||
| Revenue | $ | - | $ | - | $ | - | |||
| Cost of sales | $ | - | $ | - | $ | - | |||
| Total operating expenses | $ | 22,245 | $ | 33,087 | $ | (10,842 | ) | ||
| Other (income) expenses | $ | (6,932 | ) | $ | (5,645 | ) | $ | (1,287 | ) |
| Discontinued Operations | $ | 78,316 | $ | 19,795 | $ | 58,521 | |||
| Net loss | $ | 93,629 | $ | 47,237 | $ | (46,392 | ) |
Revenue
We had no revenues in the years ended December 31, 2015 and 2014, due to the discontinuation of our operations under our subsidiary.
Cost of Sales
Cost of sales have been recorded as $0 due to our discontinued operations.
Operating Expenses
Total operating expenses relating to bank charges, interest, selling, general and administrative expenses decreased for the year ended December 31, 2015 to $22,245 from $33,087 for the year ended December 31, 2014. This was due primarily to reductions in selling and marketing expenses and primarily as a result of our discontinued operations.
In the year ended December 31, 2015, we incurred net losses of $93,629.
Cash Requirements
Based on our planned expenditures, we will require approximately $30,000 over the next 12 months. In order to provide funds, we plan to pursue additional equity financing from private investors or possibly a registered public offering. We do not currently have any definitive arrangements in place for the completion of any further private placement financings and there is no assurance that we will be successful in completing any further private placement financings. If we are unable to achieve the necessary additional financing, then we plan to reduce the amounts that we spend on our business activities and administrative expenses in order to be within the amount of capital resources that are available to us.
We have not investigated the availability of commercial loans or other debt financing to supplement or meet our cash requirements. In the uncertain event that any such debt financing alternatives were available to us on acceptable terms, they would increase our liabilities and future cash commitments
Going Concern
Our consolidated audited financial statements for the year ended December 31, 2015 have been prepared on a going concern basis and contain an additional explanatory paragraph which identifies issues that raise substantial doubt about our ability to continue as a going concern. Our financial statements do not include any adjustments that might result from the outcome of this uncertainty.
The continuation of our company as a going concern is dependent upon the continued financial support from its shareholders and note holders, the ability of our company to obtain necessary equity financing to continue operations, and ultimately the attainment of profitable operations. As at December 31, 2015, our company has not generated any revenues, has a working capital deficit of $76,161, and has an accumulated deficit of $312,290 since inception. These factors raise substantial doubt regarding our company’s ability to continue as a going concern. These condensed consolidated financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should our company be unable to continue as a going concern.
Critical Accounting Policies
The discussion and analysis of our financial condition and results of operations is based upon the accompanying consolidated financial statements, which have been prepared in accordance with the accounting principles generally accepted in the United States of America and are expressed in United States dollars. Preparing financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses. These estimates and assumptions are affected by management’s application of accounting policies. We believe that understanding the basis and nature of the estimates and assumptions involved with the following aspects of our financial statements is critical to an understanding of our financial statements.
Basis of Presentation and Principles of Consolidation
The consolidated financial statements and related notes are presented in accordance with accounting principles generally accepted in the United States, and are expressed in US dollars. The consolidated financial statements include the accounts of our company and our previously wholly-owned subsidiary, DSL Products Limited through June 30, 2015. All intercompany accounts and transactions have been eliminated. Our company’s fiscal year-end is December 31.
Use of Estimates
The preparation of these consolidated financial statements in accordance with United States generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Our company regularly evaluates estimates and assumptions related to useful life and recoverability of long-lived assets, collectability of receivables and related bad debt expenses, inventory shrinkage and write off, deferred income tax asset valuations and loss contingencies. Our company bases its estimates and assumptions on current facts, historical experience and various other factors that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by our company may differ materially and adversely from our company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.
Cash and Cash Equivalents
Our company considers all highly liquid instruments with maturities of three months or less at the time of issuance to be cash equivalents.
Accounts Receivable and Allowance for Doubtful Accounts
Accounts receivable are stated at the amount billed to customers and are ordinarily due upon receipt. Our company provides an allowance for doubtful accounts, which is based upon a review of outstanding receivables, historical collection information and existing economic conditions. Provisions for doubtful accounts are recorded when it is deemed probable that the customer will not make the required payments at either the contractual due dates or in the future. At December 31, 2015 and 2014, there were no provisions for doubtful accounts necessary.
Inventory
Inventories are stated at the lower of cost or market. Cost is determined on a standard cost basis that approximates the first-in, first-out (FIFO) method. Market is determined based on net realizable value. Appropriate consideration is given to obsolescence, excessive levels, deterioration, and other factors in evaluating net realizable value. At December 31, 2015 the company recorded no inventory. At December 31, 2014 the company had $52,049 in inventory consisting of tools and tool displays. At December 31, 2014, we had recorded an inventory reserve of $10,476.
Property and Equipment
Property and equipment consists of furniture, fixtures and computer equipment and is recorded at cost. Depreciation is recorded on a straight-line basis over their estimated useful lives of five years.
Long Lived Assets
In accordance with ASC 360, Property Plant and Equipment our company tests long-lived assets or asset groups for recoverability when events or changes in circumstances indicate that their carrying amount may not be recoverable. Circumstances which could trigger a review include, but are not limited to: significant decreases in the market price of the asset; significant adverse changes in the business climate or legal factors; accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of the asset; current period cash flow or operating losses combined with a history of losses or a forecast of continuing losses associated with the use of the asset; and a current expectation that the asset will more likely than not be sold or disposed significantly before the end of its estimated useful life.
Recoverability is assessed based on the carrying amount of the asset and its fair value which is generally determined based on the sum of the undiscounted cash flows expected to result from the use and the eventual disposal of the asset, as well as specific appraisal in certain instances. An impairment loss is recognized when the carrying amount is not recoverable and exceeds fair value.
Financial Instruments/Concentrations
Our company’s financial instruments consist principally of cash, accounts receivable, accounts payable, and loan payable. Pursuant to ASC 820, Fair Value Measurements and Disclosures and ASC 825, Financial Instruments the fair value of cash equivalent is determined based on “Level 1” inputs, which consist of quoted prices in active markets for identical assets. Our company believes that the recorded values of all of our company’s other financial instruments approximate their current fair values because of their nature and relatively short maturity dates or durations.
Shipping and Freight
Shipping and freight costs are classified as part of the operating expenses. These costs are considered recurring costs that are incurred in order to generate sales.
Foreign Currency Translation
The functional currency of our company is the Canadian dollar and the reporting currency of our company is the United States dollar. The consolidated financial statements of our company were translated to United States dollars in accordance with ASC 830, Foreign Currency Translation Matters , using period-end rates of exchange for assets and liabilities, and average rates of exchange for the year for revenues and expenses. Translation gains (losses) are recorded in accumulated other comprehensive income (loss) as a component of stockholders’ equity. Gains and losses arising on foreign currency denominated transactions included in the determination of income. Foreign currency transactions are primarily undertaken in United States dollars. Our company has not, to the date of these consolidated financial statements, entered into derivative instruments to offset the impact of foreign currency fluctuations.
Comprehensive Income (Loss)
ASC 220, Comprehensive Income establishes standards for the reporting and display of comprehensive income (loss) and its components in the consolidated financial statements. During the years ended December 31, 2015 and 2014, our company’s only component of comprehensive income was foreign currency translation adjustment.
Basic and Diluted Net Loss Per Share
Our company computes net loss per share in accordance with ASC 260, Earnings per Share . ASC 260 requires presentation of both basic and diluted earnings per share (EPS) on the face of the statement of operations. Basic EPS is computed by dividing net income (loss) available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all potentially dilutive shares if their effect is anti-dilutive. Our company did not have any dilutive potential shares outstanding at December 31, 2015 or 2014.
Discontinued Operations
The results of discontinued operations are presented separately, net of tax, from the results of ongoing operations for all periods presented. The expenses included in the results of discontinued operations are the direct operating expenses incurred by the disposed components that may be reasonably segregated from the costs of the ongoing operations of the Company. Assets and liabilities related to discontinued operations are disclosed in Note 6.
Income Taxes
Potential benefits of income tax losses are not recognized in the accounts until realization is more likely than not. Our company has adopted ASC 740, Income Taxes as of its inception. Pursuant to ASC 740 our company is required to compute tax asset benefits for net operating losses carried forward. The potential benefits of net operating losses have not been recognized in these consolidated financial statements because our company cannot be assured it is more likely than not it will utilize the net operating losses carried forward in future years. As of December 31, 2014 and 2013, our company had no accrued interest or penalties related to uncertain tax positions.
Revenue Recognition
Our company recognizes revenue when persuasive evidence of an arrangement exists, products have been shipped, the sales price is fixed or determinable, and collectability is reasonably assured.
Recent Accounting Pronouncements
Our company has implemented all new accounting pronouncements that are in effect and that may impact its consolidated financial statements and does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
As a “smaller reporting company”, we are not required to provide the information required by this Item.
Item 8. Financial Statements and Supplementary Data
AFC Building Technologies Inc.
December 31, 2015
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of
AFC Building
Technologies, Inc. and Subsidiary
We have audited the accompanying balance sheets of AFC Building Technologies, Inc. and Subsidiary as of December 31, 2015 and 2014, and the related consolidated statements of operations and comprehensive loss, stockholders’ equity (deficit), and cash flows for each of the years then ended. AFC Building Technologies, Inc. and Subsidiary’s management is responsible for these financial statements. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. The company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are 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, we express no such opinion. An audit also 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. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of AFC Building Technologies, Inc. and Subsidiary as of December 31, 2015 and 2014, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2015, in conformity with accounting principles generally accepted in the United States of America.
The accompanying consolidated financial statements have been prepared on the going concern basis. As discussed in Note 7 to the financial statements, there is substantial doubt about the Company’s ability to continue as a going concern, which is dependent upon the continued financial support from its shareholders and note holders. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Our opinion is not modified with respect to that matter.
/s/ Haynie & Company
Haynie & Company
Salt Lake City, Utah
April 20, 2017
F-1
AFC Building Technologies Inc.
Consolidated Balance Sheets
F-2
AFC Building Technologies Inc.
Consolidated Statements of
Operations and Comprehensive Income (Loss)
| Year Ended | ||||||
| December 31, | ||||||
| 2015 | 2014 | |||||
| Revenue | $ | – | $ | – | ||
| Cost of Sales | – | – | ||||
| Gross Profit | – | – | ||||
| Expenses | ||||||
| Bank charges and interest | 167 | 183 | ||||
| Selling, general and administrative | 22,078 | 32,904 | ||||
| Total Operating Expenses | 22,245 | 33,087 | ||||
| Loss Before Other Expenses | (22,245 | ) | (33,087 | ) | ||
| Other Expenses | ||||||
| Gain on foreign exchange | 6,932 | 5,645 | ||||
| Loss before taxes | (15,313 | ) | (27,442 | ) | ||
| Income taxes | – | – | ||||
| Loss from continuing operations | (15,313 | ) | (27,442 | ) | ||
| Discontinued Operations | ||||||
| Loss from discontinued operations | (78,316 | ) | (19,795 | ) | ||
| Net Loss | (93,629 | ) | (47,237 | ) | ||
| Foreign currency translation adjustments | 14,671 | 16,234 | ||||
| Comprehensive Loss | $ | (78,958 | ) | $ | (31,003 | ) |
| Loss per common share: | ||||||
| Loss From Continuing Operations – Basic and Diluted | $ | (0.00 | ) | $ | (0.00 | ) |
| Loss From Discontinued Operations – Basic and Diluted | $ | (0.00 | ) | $ | (0.00 | ) |
| Weighted Average Shares Outstanding | 34,760,008 | 34,760,008 | ||||
F-3
AFC Building Technologies Inc.
Consolidated Statements of
Cash Flows
| Year Ended | ||||||
| December 31 | ||||||
| 2015 | 2014 | |||||
| Operating Activities | ||||||
| Net Loss | $ | (93,629 | ) | $ | (47,237 | ) |
| Adjustments to reconcile net loss to cash used in operating activities: | ||||||
| Depreciation expense | 142 | 892 | ||||
| Changes in operating assets and liabilities: | ||||||
| Prepaid expenses | 2,915 | (5,151 | ) | |||
| Inventories | 236 | (5,659 | ) | |||
| Accounts receivable | (62,693 | ) | 43,842 | |||
| Due to related parties | 11,925 | 52,850 | ||||
| Accounts payable and accrued liabilities | (8,555 | ) | (62,459 | ) | ||
| Net Cash Used in Operating Activities | (149,659 | ) | (22,922 | ) | ||
| Financing Activities | ||||||
| Bank overdraft | 31,616 | (9,207 | ) | |||
| Net change in line of credit | 76,148 | 20,303 | ||||
| Net Cash Provided By Financing Activities | 107,764 | 11,096 | ||||
| Effect of Exchange Rate Changes on Cash | (3,214 | ) | (4,851 | ) | ||
| Decrease In Cash | (45,109 | ) | (16,677 | ) | ||
| Cash - Beginning of Period | 45,272 | 61,949 | ||||
| Cash - End of Period | $ | 163 | $ | 45,272 | ||
| Supplemental Disclosures | ||||||
| Interest paid | $ | 5,542 | $ | 12,527 | ||
| Income taxes paid | $ | – | $ | – | ||
| Supplemental disclosure of non-cash investing and financing activities | ||||||
| Forgiveness of debt by related party | $ | 300,988 | $ | – | ||
| Distribution of subsidiary to shareholder | $ | 29,136 | $ | – | ||
F-4
AFC Building Technologies Inc.
Consolidated Statements of
Stockholders’ Equity (Deficit)
(Expressed in US dollars)
| Additional | Accumulated | |||||||||||||||||
| Paid-In | Retained | Other | ||||||||||||||||
| Common Stock | (Deficit) | Earnings | Comprehensive | |||||||||||||||
| Shares | Amount | Capital | (Deficit) | Income | Total | |||||||||||||
| Balance, December 31, 2013 | 34,760,008 | $ | 34,760 | $ | (128,755 | ) | $ | (171,424 | ) | $ | 34,163 | $ | (231,256 | ) | ||||
| Foreign currency translation adjustments | – | – | – | – | 16,234 | 16,234 | ||||||||||||
| Net loss for the year | – | – | – | (47,237 | ) | – | (47,237 | ) | ||||||||||
| Balance, December 31, 2014 | 34,760,008 | $ | 34,760 | $ | (128,755 | ) | $ | (218,661 | ) | $ | 50,397 | $ | (262,259 | ) | ||||
| Foreign currency translation adjustments | – | – | – | – | 14,671 | 14,671 | ||||||||||||
| Disposal of subsidiary and forgiveness of debt | – | – | 330,124 | – | (65,068 | ) | 265,056 | |||||||||||
| Net loss for the year | – | – | – | (93,629 | ) | – | (93,629 | ) | ||||||||||
| Balance, December 31, 2015 | 34,760,008 | $ | 34,760 | $ | 201,369 | $ | (312,290 | ) | $ | – | $ | (76,161 | ) | |||||
F-5
AFC Building Technologies Inc.
Notes to the Consolidated
Financial Statements
December 31, 2015
(Expressed in US dollars)
| 1. |
Nature of Operations |
|
AFC Building Technologies Inc. (the “Company”) was incorporated under the laws of the State of Nevada on May 10, 2011. Effective January 10, 2014, the Company changed its name from Auto Tool Technologies Inc. to AFC Building Technologies Inc. The Company was engaged in the sales and distribution of hand tools in Canada. |
|
|
On June 30, 2015, the Company decided that continuing the operations of its wholly-owned subsidiary, DSL Products Limited (“DSL”) would no longer be economically feasible. All of the shares of DSL held by the Company were returned to DSL for cancellation and as of June 30, 2015 the Company no longer held any interest in DSL. The Company determined the operations of DSL met the criteria of being reported as a discontinued operation. As a result, the Company’s historical financial statements have been revised to present the operating results of the DSL business as a discontinued operation. The results of operations from DSL are presented as “Loss from discontinued operations” in the Statements of Operations. Unless otherwise noted, the discussion in the notes to these Financial Statements relates solely to the Company's continuing operations. The Company is in the process of determining a new line of business. |
|
|
Going Concern |
|
|
These financial statements have been prepared on a going concern basis, which implies the Company will continue to realize its assets and discharge its liabilities in the normal course of business. The continuation of the Company as a going concern is dependent upon the continued financial support from its shareholders and note holders, the ability of the Company to obtain necessary equity financing to continue operations, and ultimately the attainment of profitable operations. As at December 31, 2015, the Company has not generated any revenues, has a working capital deficit of $59,301, and has an accumulated deficit of $295,430 since inception. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern. These condensed financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. |
|
|
Summary of Significant Accounting Policies |
| a) |
Basis of Presentation and Principles of Consolidation |
|
|
These consolidated financial statements and related notes are presented in accordance with accounting principles generally accepted in the United States, and are expressed in US dollars. The Company’s fiscal year-end is December 31. |
||
| b) |
Use of Estimates |
|
|
The preparation of these consolidated financial statements in accordance with United States generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. The Company regularly evaluates estimates and assumptions related to useful life and recoverability of long-lived assets, collectability of receivables and related bad debt expenses, inventory shrinkage and write off, deferred income tax asset valuations and loss contingencies. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected. |
||
| c) |
Cash and Cash Equivalents |
|
|
The Company considers all highly liquid instruments with maturities of three months or less at the time of issuance to be cash equivalents. |
||
| d) |
Accounts Receivable and Allowance for Doubtful Accounts |
F-6
AFC Building Technologies Inc.
Notes to the Consolidated
Financial Statements
December 31, 2015
(Expressed in US dollars)
|
Accounts receivable are stated at the amount billed to customers and are ordinarily due upon receipt. The Company provides an allowance for doubtful accounts, which is based upon a review of outstanding receivables, historical collection information and existing economic conditions. Provisions for doubtful accounts are recorded when it is deemed probable that the customer will not make the required payments at either the contractual due dates or in the future. At December 31, 2015 and 2014, there were no provisions for doubtful accounts necessary. |
||
| e) |
Inventory |
|
|
Inventories are stated at the lower of cost or market. Cost is determined on a standard cost basis that approximates the first-in, first-out (FIFO) method. Market is determined based on net realizable value. Appropriate consideration is given to obsolescence, excessive levels, deterioration, and other factors in evaluating net realizable value. At December 31, 2015, the Company had no inventory. At December 31, 2014, the Company had inventory which consisted of tools and tool displays, of $52,049 net. At December 31, 2014, the Company had recorded an inventory reserve of $10,476 and is included in current assets of discontinued operations. |
||
| f) |
Property and Equipment |
|
|
Property and equipment consists of furniture, fixtures and computer equipment and is recorded at cost. Depreciation is recorded on a straight-line basis over their estimated useful lives of five years. |
||
| g) |
Long lived assets |
|
|
In accordance with ASC 360, Property Plant and Equipment the Company tests long-lived assets or asset groups for recoverability when events or changes in circumstances indicate that their carrying amount may not be recoverable. Circumstances which could trigger a review include, but are not limited to: significant decreases in the market price of the asset; significant adverse changes in the business climate or legal factors; accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of the asset; current period cash flow or operating losses combined with a history of losses or a forecast of continuing losses associated with the use of the asset; and a current expectation that the asset will more likely than not be sold or disposed significantly before the end of its estimated useful life. Recoverability is assessed based on the carrying amount of the asset and its fair value which is generally determined based on the sum of the undiscounted cash flows expected to result from the use and the eventual disposal of the asset, as well as specific appraisal in certain instances. An impairment loss is recognized when the carrying amount is not recoverable and exceeds fair value. |
||
| h) |
Financial Instruments/Concentrations |
|
|
The Company’s financial instruments consist principally of cash, accounts receivable, accounts payable, and loan payable. Pursuant to ASC 820, Fair Value Measurements and Disclosures and ASC 825, Financial Instruments the fair value of cash equivalents are determined based on “Level 1” inputs, which consist of quoted prices in active markets for identical assets. The Company believes that the recorded values of all of the Company’s other financial instruments approximate their current fair values because of their nature and relatively short maturity dates or durations. |
||
| i) |
Shipping and Freight |
|
|
Shipping and freight costs are classified as part of the operating expenses. These costs are considered recurring costs that are incurred in order to generate sales. These expenses were incurred as part of the Company’s discontinued operations and have been presented as part of loss from discontinued operations. |
||
| j) |
Foreign Currency Translation |
|
|
The functional currency of the Company is the Canadian dollar and the reporting currency of the Company is the United States dollar. The consolidated financial statements of the Company were translated to United States dollars in accordance with ASC 830, Foreign Currency Translation Matters , using period-end rates of exchange for assets and liabilities, and average rates of exchange for the year for revenues and expenses. The period-end rate of exchange was $0.7225 and the average rate of exchange for the year was $0.7821 Translation gains (losses) are recorded in accumulated other comprehensive income (loss) as a component of stockholders’ equity. Gains and losses arising on foreign currency denominated transactions included in the determination of income. Foreign currency transactions are primarily undertaken in United States dollars. |
F-7
AFC Building Technologies Inc.
Notes to the Consolidated
Financial Statements
December 31, 2015
(Expressed in US dollars)
|
The Company has not, to the date of these consolidated financial statements, entered into derivative instruments to offset the impact of foreign currency fluctuations. |
||
| k) |
Comprehensive Income (Loss) |
|
|
ASC 220, Comprehensive Income establishes standards for the reporting and display of comprehensive income (loss) and its components in the consolidated financial statements. During the years ended December 31, 2015 and 2014, the Company’s only component of comprehensive income was foreign currency translation adjustments. |
||
| l) |
Basic and Diluted Net Loss Per Share |
|
|
The Company computes net loss per share in accordance with ASC 260, Earnings per Share . ASC 260 requires presentation of both basic and diluted earnings per share (EPS) on the face of the statement of operations. Basic EPS is computed by dividing net income (loss) available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all potentially dilutive shares if their effect is anti-dilutive. The Company did not have any dilutive potential shares outstanding at December 31, 2015 or 2014. |
||
| m) |
Income Taxes |
|
|
Potential benefits of income tax losses are not recognized in the accounts until realization is more likely than not. The Company has adopted ASC 740, Income Taxes as of its inception. Pursuant to ASC 740 the Company is required to compute tax asset benefits for net operating losses carried forward. The potential benefits of net operating losses have not been recognized in these consolidated financial statements because the Company cannot be assured it is more likely than not it will utilize the net operating losses carried forward in future years. As of December 31, 2015 and 2014, the Company had no accrued interest or penalties related to uncertain tax positions. |
||
| n) |
Revenue Recognition |
|
|
The Company recognizes revenue when persuasive evidence of an arrangement exists, products have been shipped, the sales price is fixed or determinable, and collectability is reasonably assured. |
||
| o) |
Advertising Costs |
|
|
The Company expenses the cost of advertising and promotional materials when incurred. Total advertising costs were $5,677 and $7,407 for the years ended December 31, 2015 and 2014, respectively. These expenses were incurred as part of the Company’s discontinued operations and have been presented as part of loss from discontinued operations. |
||
| p) |
Discontinued Operations |
|
|
The results of discontinued operations are presented separately, net of tax, from the results of ongoing operations for all periods presented. The expenses included in the results of discontinued operations are the direct operating expenses incurred by the disposed components that may be reasonably segregated from the costs of the ongoing operations of the Company. Assets and liabilities related to discontinued operations are disclosed in Note 6. The Company disposed of DSL on June 30, 2015. |
||
| q) |
Recent Accounting Pronouncements |
|
|
The Company has implemented all new accounting pronouncements that are in effect and that may impact its financial statements. Additionally, the Company has considered all pronouncements issued but not yet effective and does not believe that there are any other new accounting pronouncements that might have a material impact on its financial position or results of operations. |
| 5 |
Related Party Transactions |
|
| a) |
At December 31, 2015, the Company owed $0 (December 31, 2014 - $322,398) to a company owned by a shareholder of the Company, representing cash advances, net of expense reimbursements and accrued interest. During December 2015, a company controlled by a shareholder agreed to forgive $300,988 of amounts owed by the Company. As the debt forgiven was owed to a related party, the Company recognized the amount forgiven as an equity transaction recorded in additional paid-in capital. The amount was unsecured and due on demand. |
|
F-8
AFC Building Technologies Inc.
Notes to the Consolidated
Financial Statements
December 31, 2015
(Expressed in US dollars)
| b) |
At December 31, 2015, the Company owed $8,021 (December 31, 2014 - $7,546) to the President of the Company. These were monies advanced by the shareholder for general working capital purposes, (i.e. accounting and professional fees) as required. The amount is unsecured, non-interest bearing and due on demand. |
|
| c) |
During the year ended December 31, 2015, the Company incurred $27,640 (2014 - $62,819) of contractor expenses to the President of the Company. These expenses were incurred as part of the Company’s discontinued operations and have been presented as part of loss from discontinued operations. |
| 6. |
Discontinued Operations and Deconsolidation of Subsidiary |
|
On June 30, 2015, the Company discontinued the operations of its wholly-owned subsidiary DSL. DSL sold hand tools in Canada. All of the shares of DSL held by the Company were returned to DSL for cancellation and as of June 30, 2015 the Company no longer held any interest in DSL. As the subsidiary was distributed to a shareholder, the Company recorded the deconsolidation of the subsidiary as an equity transaction, which resulted in a charge of $65,068 to additional paid in capital. The Company has recognized the separation of DSL in accordance with Accounting Standards Codification (ASC) 205-20, Discontinued Operations . As such, the historical results of DSL have been classified as discontinued operations. |
|
|
The Company’s historical financial statements have been revised to present the operating results of the DSL business as a discontinued operation. Assets and liabilities related to the discontinued operations of DSL are as follows: |
F-9
AFC Building Technologies Inc.
Notes to the Consolidated
Financial Statements
December 31, 2015
(Expressed in US dollars)
Summarized results of the discontinued operation are as follows for the year ended December 31, 2015 and 2014:
| Year | Year | ||||||
| Ended | Ended | ||||||
| December 31, | December 31, | ||||||
| 2015 | 2014 | ||||||
| Revenue | $ | 359,017 | $ | 844,556 | |||
| Cost of Sales | 265,888 | 545,631 | |||||
| Gross Profit | 93,129 | 298,925 | |||||
| Expenses | |||||||
| Bank charges and interest | 6,811 | 15,885 | |||||
| Selling, marketing and administrative | 136,290 | 269,801 | |||||
| Total Expenses | 143,101 | 285,686 | |||||
| Other Expenses | |||||||
| Loss on foreign exchange | (28,344 | ) | (33,034 | ) | |||
| Loss from Discontinued Operations | $ | (78,316 | ) | $ | (19,795 | ) |
Cash flows from discontinued operations:
| Year | Year | ||||||
| Ended | Ended | ||||||
| December 31, | December 31, | ||||||
| 2015 | 2014 | ||||||
| Operating cash flows | $ | (149,490 | ) | $ | (22,739 | ) | |
| Investing cash flows | – | – | |||||
| Financing cash flows | 107,765 | 11,096 | |||||
| Net cash flows used in discontinued operations | $ | (41,725 | ) | $ | (11,643 | ) |
| 7. |
Licensing Agreement |
|
On June 30, 2015, the Company entered into a license agreement with a shareholder of the Company. Pursuant to the agreement, the Company received an exclusive worldwide license in regards to 15 domain names related to the automotive e-commerce business for a period of 40 years. In consideration for the granting of the license, the Company will pay to the licensor a royalty of 2.5% of gross sales for any revenue derived from the use of the licensed domains. |
|
| 8. |
Common Stock |
|
The Company effected a 8-1 forward stock split of the issued and outstanding shares of common stock on January 10, 2014. All share and per share information has been retroactively adjusted to reflect the forward stock split. |
F-10
AFC Building Technologies Inc.
Notes to the Consolidated
Financial Statements
December 31, 2015
(Expressed in US dollars)
| 9. |
Income Taxes |
|
The provision for income taxes differs from the amount computed by applying the statutory income tax rate to loss before income taxes as follows at December 31: |
| 2015 | 2014 | ||||||
| $ | $ | ||||||
| Net Loss Before Taxes | (93,629 | ) | (47,237 | ) | |||
| Net loss before taxes at effective tax rate | (36,515 | ) | (7,558 | ) | |||
| Non-deductible expenses | (2,704 | ) | 567 | ||||
| Valuation allowance | 39,219 | 6,991 | |||||
| Provision for income taxes at combined tax rates | – | – |
|
Deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carryforwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax basis. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in the tax laws and rates on the date of enactment. The Company recognizes interest and penalties related to unrecognized tax benefits within income tax expense. At December 31, 2015, the Company had net operating loss carryforwards of approximately $105,600 that may be offset against future taxable income from the year 2015 through 2030. This results in a deferred tax asset of $35,911 as of December 31, 2015. At December 31, 2014, the Company had net operating loss carryforwards of approximately $152,300. This results in a deferred tax asset of $24,369. The Company had deferred tax assets of $1,676 as of December 31, 2014, resulting from the inventory allowance recorded. During the year ended December 31, 2015, the Company disposed of its wholly owned subsidiary which resulted in the disposition of $48,500 of net operating loss carryforwards and the $1,676 deferred asset relating to an inventory allowance. The Company has fully allowed for these assets as of the years then ended. The valuation allowance is estimated to be approximately $35,911 and $26,045 for the years ended December 31, 2015 and 2014, respectively. |
|
| 10. |
Subsequent Events |
|
Management has evaluated subsequent events pursuant to ASC Topic 855, and has determined there are no subsequent events to disclose. |
F-11
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
There were no disagreements related to accounting principles or practices, financial statement disclosure, internal controls or auditing scope or procedure during the two fiscal years and interim periods, including the interim period up through the date the relationship ended.
Item 9A. Evaluation of Disclosure Controls and Procedures
Pursuant to Rule 13a-15(b) under the Securities Exchange Act of 1934 (“Exchange Act”), our company carried out an evaluation, with the participation of our company’s management, including our president (our principal executive officer, principal financial officer and principal accounting officer), of the effectiveness of our company’s disclosure controls and procedures (as defined under Rule 13a-15(e) under the Exchange Act) as of the end of the period covered by this Report. Based upon that evaluation, our president (our principal executive officer, principal financial officer and principal accounting officer) concluded that our company’s disclosure controls and procedures are not effective due to lack of segregation of duties to ensure that information required to be disclosed by our company in the reports that our company files or submits under the Exchange Act, is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our company’s management, including our president (our principal executive officer, principal financial officer and principal accounting officer), as appropriate, to allow timely decisions regarding required disclosure.
Management's Annual Report on Internal Control Over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting. As such term is defined in Exchange Act Rule 13a-15(f), “internal control over financial reporting” is a process designed by, or under the supervision of, the principal executive and principal financial officers, or persons performing similar functions, and effected by the board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States. Internal control over financial reporting includes those policies and procedures that: (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of assets of our company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of the financial statements in accordance with accounting principles generally accepted in the United States, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and the directors of the company; and (iii) provide reasonable assurance regarding prevention of unauthorized acquisition, use, or disposition of our company’s assets that could have a material effect on the financial statements.
As described above, our management conducted evaluation of the effectiveness of our company’s internal control over financial reporting based on the criteria in Internal Control -- Integrated Framework (2013) issued by COSO. The matters involving internal controls that our management considered to be material weakness under COSO were:
| (a) |
insufficient written policies and policies and procedure for accounting and financial reporting; and |
| (b) |
adequately segregate duties within the company due to an insufficient number of staff. |
Our management believes that the material weakness set forth above did not have an effect on our company’s financial results as reported by the captioned filing. We are committed to improving our financial organization. Management believes that by preparing and implementing sufficient written policies, checklists and recruitment of sufficient full time staff will remedy the above-mentioned material weaknesses that we identified
This report does not include an attestation report of our independent registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our company’s registered public accounting firm pursuant to rules of the Securities and Exchange Commission that permit our company to provide only management’s report in this Report.
Changes in Internal Controls
During the period ended December 31, 2015, there were no changes in our internal control over financial reporting that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Item 9B. Other Information
None.
PART III
Item 10. Directors, Executive Officers and Corporate Governance
All directors of our company hold office until the next annual meeting of the security holders or until their successors have been elected and qualified. The officers of our company are appointed by our board of directors and hold office until their death, resignation or removal from office. Our directors and executive officers, their ages, positions held, and duration as such, are as follows:
|
Name
|
Position Held
with our company |
Age
|
Date First Elected or
Appointed
|
| Cindy Lee Kelly | President, Chief Executive Officer, Chief Financial Officer, Secretary, Treasurer and Director | 57 | May 10, 2011 |
Business Experience
The following is a brief account of the education and business experience during at least the past five years of each director, executive officer and key employee of our company, indicating the person’s principal occupation during that period, and the name and principal business of the organization in which such occupation and employment were carried out.
Cindy Lee Kelly - President, Chief Executive Officer, Chief Financial Officer, Secretary, Treasurer and Director
Ms. Kelly was appointed as president, chief executive officer, chief financial officer, secretary, treasurer and director of our company on May 10, 2011.
Cindy Kelly began her career in 1983 with MCL Electronics, Ltd., a Toronto based company that specialized in manufacturing and distributing electronic household products. In 1988, she joined Harada Antennas Ltd., as the Office Manager. In 1994, Ms. Kelly joined Supplier Services, Ltd., as general manager. In 1998 she was promoted to president. In 2005, Ms. Kelly joined DSL Products Limited. From 2005 to 2011 she was vice-president. In 2011, Ms. Kelly was named president and sole director of DSL Products Limited.
In 2005, Ms. Kelly formed her own consulting firm – Cindy Kelly & Associates. She provides administrative and management services to a number of companies, including our company.
Ms. Kelly does not hold any other directorships in any company with a class of securities registered pursuant to Section 12 of the Exchange Act or subject to the requirements of Section 15(d) of such Act or any company registered as an investment company under the Investment Company Act of 1940.
Significant Employees
There are no individuals other than our executive officers who make a significant contribution to our business.
Family Relationships
There are no family relationships between any of our directors, executive officers and proposed directors or executive officers.
Involvement in Certain Legal Proceedings
To the best of our knowledge, none of our directors or executive officers has, during the past ten years:
| 1. |
been convicted in a criminal proceeding or been subject to a pending criminal proceeding (excluding traffic violations and other minor offences); |
|
| 2. |
had any bankruptcy petition filed by or against the business or property of the person, or of any partnership, corporation or business association of which he was a general partner or executive officer, either at the time of the bankruptcy filing or within two years prior to that time; |
|
| 3. |
been subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction or federal or state authority, permanently or temporarily enjoining, barring, suspending or otherwise limiting, his involvement in any type of business, securities, futures, commodities, investment, banking, savings and loan, or insurance activities, or to be associated with persons engaged in any such activity; |
|
| 4. |
been found by a court of competent jurisdiction in a civil action or by the Securities and Exchange Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated; |
|
| 5. |
been the subject of, or a party to, any federal or state judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated (not including any settlement of a civil proceeding among private litigants), relating to an alleged violation of any federal or state securities or commodities law or regulation, any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order, or any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or |
|
| 6. |
been the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C. 78c(a)(26))), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C. 1(a)(29))), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member. |
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Our common stock is not registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Accordingly, our officers, directors, and principal stockholders are not subject to the beneficial ownership reporting requirements of Section 16(a) of the Exchange Act.
Code of Ethics
We plan to adopt a code of ethics that obligates our directors, officers and employees to disclose potential conflicts of interest and prohibits those persons from engaging in such transactions without our consent.
Board and Committee Meetings
Our board of directors held no formal meetings during the year ended December 31, 2015. All proceedings of the board of directors were conducted by resolutions consented to in writing by all the directors and filed with the minutes of the proceedings of the directors. Such resolutions consented to in writing by the directors entitled to vote on that resolution at a meeting of the directors are, according to the Nevada General Corporate Law and our Bylaws, as valid and effective as if they had been passed at a meeting of the directors duly called and held.
For the year ended December 31, 2015, there was no standing nominating committee or committee performing similar functions for our company. Ms. Kelly participates in the consideration of director nominees.
Nomination Process
As of December 31, 2015, we did not effect any material changes to the procedures by which our shareholders may recommend nominees to our board of directors. Our board of directors does not have a policy with regards to the consideration of any director candidates recommended by our shareholders. Our board of directors has determined that it is in the best position to evaluate our company’s requirements as well as the qualifications of each candidate when the board considers a nominee for a position on our board of directors. If shareholders wish to recommend candidates directly to our board, they may do so by sending communications to the president of our company at the address on the cover of this annual report.
Audit Committee
We do not currently have an audit committee or a committee performing similar functions. The board of directors as a whole participates in the review of financial statements and disclosure.
Audit Committee Financial Expert
Our board of directors has determined that none of the members of our audit committee qualifies as an “audit committee financial expert” as defined in Item 407(d)(5)(ii) of Regulation S-K, and is “independent” as the term is used in Item 7(d)(3)(iv) of Schedule 14A under the Securities Exchange Act of 1934, as amended.
We believe that the members of our board of directors are collectively capable of analyzing and evaluating our financial statements and understanding internal controls and procedures for financial reporting. We believe that retaining an independent director who would qualify as an “audit committee financial expert” would be overly costly and burdensome and is not warranted in our circumstances given the early stages of our development and the fact that we have not generated any material revenues to date. In addition, we currently do not have nominating, compensation or audit committees or committees performing similar functions nor do we have a written nominating, compensation or audit committee charter. Our board of directors does not believe that it is necessary to have such committees because it believes the functions of such committees can be adequately performed by our board of directors.
Item 11. Executive Compensation
The particulars of the compensation paid to the following persons:
| (a) |
our principal executive officer; |
| (b) |
each of our two most highly compensated executive officers who were serving as executive officers at the end of the years ended December 31, 2015 and 2014; and |
|
| (c) |
up to two additional individuals for whom disclosure would have been provided under (b) but for the fact that the individual was not serving as our executive officer at the end of the years ended December 31, 2014 and 2013, |
who we will collectively refer to as the named executive officers of our company, are set out in the following summary compensation table, except that no disclosure is provided for any named executive officer, other than our principal executive officers, whose total compensation did not exceed $100,000 for the respective fiscal year:
| SUMMARY COMPENSATION TABLE | |||||||||
|
Name and Principal Position |
Year |
Salary ($) |
Bonus ($) |
Stock Awards ($) |
Option Awards ($) |
Non- Equity Incentive Plan Compensa- tion ($) |
Change in Pension Value and Nonqualified Deferred Compensation Earnings ($) |
All Other Compensa- tion ($) |
Total ($) |
|
Cindy Lee Kelly
(1)
President, Chief Executive Officer, Chief Financial Officer, Secretary, Treasurer and Director |
2015
2014 |
-
- |
-
- |
-
- |
-
- |
-
- |
-
- |
27,640
62,819 (2) |
27,640
62,819 |
| (1) |
Cindy Lee Kelly was appointed as president, chief executive officer, chief financial officer, secretary, treasurer and director of our company on May 10, 2011. |
| (2) |
These amounts were paid to Cindy Kelly & Associates for the provision of all services related to our administration, office expenses and related overheads. |
Stock Option Plan
Currently, we do not have a stock option plan in favor of any director, officer, consultant or employee of our company.
Stock Options/SAR Grants
During our fiscal year ended December 31, 2015 there were no options granted to our named officers or directors.
Outstanding Equity Awards at Fiscal Year End
No equity awards were outstanding as of the year ended December 31, 2015.
Compensation of Directors
We have not provided any compensation to Ms. Kelly for performance of her services as our sole director and officer since the inception of our company.
Ms. Kelly, our sole director and officer, has historically provided consulting services to our subsidiary through a consulting arrangement between our subsidiary, DSL Products Limited, and Cindy Kelly & Associates. On December 30, 2011, our subsidiary and Cindy Kelly and Associates entered into a written agreement in regards to this arrangement.
Pension, Retirement or Similar Benefit Plans
There are no arrangements or plans in which we provide pension, retirement or similar benefits for directors or executive officers. We have no material bonus or profit sharing plans pursuant to which cash or non-cash compensation is or may be paid to our directors or executive officers, except that stock options may be granted at the discretion of the board of directors or a committee thereof.
Indebtedness of Directors, Senior Officers, Executive Officers and Other Management
None of our directors or executive officers or any associate or affiliate of our company during the last two fiscal years is or has been indebted to our company by way of guarantee, support agreement, letter of credit or other s imilar agreement or understanding currently outstanding.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The following table sets forth, as of April 19, 2017, certain information with respect to the beneficial ownership of our common shares by each shareholder known by us to be the beneficial owner of more than 5% of our common shares, as well as by each of our current directors and executive officers as a group. Each person has sole voting investment power with respect to the shares of common stock, except as otherwise indicated. Beneficial ownership consists of a direct interest in the shares of common stock, except as otherwise indicated.
|
Name and Address of Beneficial Owner
|
Amount and Nature of
Beneficial Ownership |
Percentage
of Class (1) |
|
Cindy Lee Kelly
(2)
101 ½ Mary Street West Whitby, Ontario, Canada, L1N 2R4 |
160,008 Common Shares
|
0.46%
|
| Directors and Executive Officers as a Group | 160,008 Common Shares | 0.46% |
|
Avis Financial Corporation
Talstrasse 20 Zurich, Switzerland, CH-8001 |
24,000,000 Common Shares
|
69.045%
|
| Over 5% Shareholders as a Group | 24,000,000 Common Shares | 69.045% |
| (1) |
Under Rule 13d-3, a beneficial owner of a security includes any person who, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise has or shares: (i) voting power, which includes the power to vote, or to direct the voting of shares; and (ii) investment power, which includes the power to dispose or direct the disposition of shares. Certain shares may be deemed to be beneficially owned by more than one person (if, for example, persons share the power to vote or the power to dispose of the shares). In addition, shares are deemed to be beneficially owned by a person if the person has the right to acquire the shares (for example, upon exercise of an option) within 60 days of the date as of which the information is provided. In computing the percentage ownership of any person, the amount of shares outstanding is deemed to include the amount of shares beneficially owned by such person (and only such person) by reason of these acquisition rights. As a result, the percentage of outstanding shares of any person as shown in this table does not necessarily reflect the person’s actual ownership or voting power with respect to the number of shares of common stock actually outstanding on April 19, 2017. As of April 19, 2017, we had 34,760,008 shares of our common stock issued and outstanding. All figures assume full dilution of convertible securities held. |
| (2) |
Cindy Kelly has acted as our sole director and officer since May 10, 2011. |
Securities Authorized for Issuance Under Equity Compensation Plans
There were no unexercised options, stock that has not vested and equity incentive plan awards for our named executive officers during the last two fiscal years.
Changes in Control
We are unaware of any contract or other arrangement the operation of which may at a subsequent date result in a change in control of our company.
Item 13. Certain Relationships and Related Transactions, and Director Independence
During the year ended December 31, 2015, we incurred $27,640 (2014 - $62,819) of contractor expenses to the president of our company.
Ms. Kelly is our only promoter, as defined in Rule 405 of Regulation C, due to her participation in and management of the business since our incorporation.
Except as disclosed herein, no director, executive officer, shareholder holding at least 5% of shares of our common stock, or any family member thereof, had any material interest, direct or indirect, in any transaction, or proposed transaction since the year ended December 31, 2015, in which the amount involved in the transaction exceeded or exceeds the lesser of $120,000 or one percent of the average of our total assets at the year-end for the last three completed fiscal years.
Director Independence
We currently act with one director, Cindy Lee Kelly. We have determined that our director is not an “independent director” as defined in NASDAQ Marketplace Rule 4200(a)(15).
We do not have a standing audit, compensation or nominating committee, our board of directors acts in such capacities. We believe that our board of directors is capable of analyzing and evaluating our financial statements and understanding internal controls and procedures for financial reporting. The board of directors of our company do not believe that it is necessary to have a standing audit, compensation or nominating committee because we believe that the functions of such committees can be adequately performed by the our sole director. Additionally, we believe that retaining an independent director who would qualify as an “audit committee financial expert” would be overly costly and burdensome and is not warranted in our circumstances given the early stages of our development.
Item 14. Principal Accounting Fees and Services
The aggregate fees billed for the most recently completed fiscal year ended December 31, 2015 and for fiscal year ended December 31, 2014 for professional services rendered by the principal accountant for the audit of our annual financial statements and review of the financial statements included in our quarterly reports on Form 10-Q and services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for these fiscal periods were as follows:
| Year Ended | ||
|
December 31,
2015 |
December 31,
2014 |
|
| Audit Fees | $10,000 | $26,200 |
| Audit Related Fees | - | - |
| Tax Fees | - | - |
| All Other Fees | - | - |
| Total | $10,000 | $26,200 |
Effective May 6, 2003, the Securities and Exchange Commission adopted rules that require that before our independent auditors are engaged by us to render any auditing or permitted non-audit related service, the engagement be:
Our board of directors pre-approves all services provided by our independent auditors. All of the above services and fees were reviewed and approved by the board of directors either before or after the respective services were rendered.
Our board of directors has considered the nature and amount of fees billed by our independent auditors and believes that the provision of services for activities unrelated to the audit is compatible with maintaining our independent auditors’ independence.
PART IV
Item 15. Exhibits, Financial Statement Schedules
| (a) |
Financial Statements |
||
| (1) |
Financial statements for our company are listed in the index under Item 8 of this document |
||
| (2) |
All financial statement schedules are omitted because they are not applicable, not material or the required information is shown in the financial statements or notes thereto. |
||
| (b) |
Exhibits |
||
| Exhibit | Description |
| Number | |
| (3) |
Articles of Incorporation and Bylaws |
| 3.1 |
Articles of Incorporation (incorporated by reference to our Registration Statement on Form S- 1 filed on May 9, 2012). |
| 3.2 |
By-laws (incorporated by reference to our Registration Statement on Form S-1 filed on May 9, 2012). |
| 3.2 |
Certificate of Amendment (incorporated by reference to our Current Report on Form 8-K filed on January 13, 2014 |
| (10) |
Material Contracts |
| 10.1 |
Consulting Agreement dated December 30, 2011 between our company and Cindy Kelly & Associates (incorporated by reference to our Registration Statement on Form S-1 filed on May 9, 2012). |
| 10.2 |
Share Purchase Agreement dated December 30, 2011 between our company and Rossland Asset Management Ltd. (incorporated by reference to our Registration Statement on Form S-1 filed on May 9, 2012). |
| 10.3* |
License Agreement dated June 30, 2015 between our company and I.S. Grant. |
| (31) |
Rule 13a-14(a)/15d-14(a) Certifications |
| 31.1* | |
|
|
|
| (32) |
Section 1350 Certifications |
|
|
|
| 32.1* | |
|
|
|
| (101)* |
Interactive Data Files |
|
|
|
| 101.INS | |
| 101.SCH | |
| 101.CAL | |
| 101.DEF | |
| 101.LAB | |
| 101.PRE |
* Filed herewith.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereto duly authorized.
| AFC BUILDING TECHNOLOGIES INC. | |
| (Registrant) | |
| Dated: April 20, 2017 | /s/ Cindy Lee Kelly |
| Cindy Lee Kelly | |
| President, Chief Executive Officer, Chief | |
| Financial Officer, Secretary, Treasurer and Director | |
| (Principal Executive Officer, Principal | |
| Financial Officer and Principal Accounting Officer) |
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
| Dated: April 20, 2017 | /s/ Cindy Lee Kelly |
| Cindy Lee Kelly | |
| President, Chief Executive Officer, Chief | |
| Financial Officer, Secretary, Treasurer and Director | |
| (Principal Executive Officer, Principal Financial | |
| Officer and Principal Accounting Officer) |
LICENSE AGREEMENT
THIS AGREEMENT dated for reference the 30th day of June, 2015.
BETWEEN:
IAN GRANT , an individual with an address c/o 200-252 Pall Mall Street, London, Ontario N6A 5P6
(herein called “Licensor”)
AND:
AFC BUILDING TECHNOLOGIES INC. , a corporation existing under the laws of the State of Nevada with its executive office at 101 ½ Mary Street West, Whitby, Ontario L1N 2R4
(herein called “Licensee”)
WHEREAS:
A. The Licensor owns certain website addresses/domain names relevant to the automotive e-commerce business (the “ E-Commerce Domains ”);
B. The Licensor and the Licensee wish to enter into a license agreement whereby the Licensor will grant to the Licensee an exclusive worldwide license, to exploit the E-Commerce Domains in all fields of use for a period of 40 years (the “ Domain License ”); and
C. The Licensor has agreed to grant the Licensee the Domain License under the terms and conditions as set forth in this License Agreement.
NOW THEREFORE in consideration of the premises and the respective covenants, agreements representations, warranties and indemnities of the parties herein contained and for other good and valuable consideration (the receipt and sufficiency of which is hereby acknowledged) the parties hereto covenant and agree as follows:
| 1. |
DEFINED TERMS |
| 1.1 |
For the purposes of this Agreement, unless the context otherwise requires, the following terms will have the respective meanings set out below and grammatical variations of such terms will have corresponding meanings: |
| (a) |
“Affiliate” has the meaning given to that term in the Securities Act of 1933, as amended, and the Rules and Regulations of the Securities and Exchange Commission promulgated thereunder; |
|
| (b) |
“Associate” has the meaning given to that term in the Securities Act of 1933, as amended, and the Rules and Regulations of the Securities and Exchange Commission promulgated thereunder; |
|
| (c) |
“Business Day” means any day which is not a Saturday, Sunday or statutory holiday in Nevada; |
|
| (d) |
“Effective Date” means June 30, 2015; |
|
| (e) |
“Gross Sales” means the aggregate of all sums actually received from all third party sources by Licensee, by any affiliate of Licensee, or by any authorized entity acting on Licensee’s behalf, which sums are derived from the applicable exploitation of the Licensed IP. There shall be excluded from the Gross Sales the following: |
| (i) |
Any sums received and thereafter refunded, and if any such sums shall have theretofore been taken into account, then an amount equal to the sum refunded shall be eliminated from subsequent receipts; |
|
| (ii) |
Any withholding, sales tax, consumption tax or other applicable taxes collected in respect of the sales; |
|
| (iii) |
Any and all sales which are refundable until earned or forfeited (but all non-refundable advances or advances which are subject only to delivery or the passage of time shall be included in Gross Sales); and |
|
| (iv) |
Any payments of Gross Sales payable to any non Affiliate of Licensee. |
| (f) |
“IP” means the E-Commerce Domains described in Schedule 1; |
|
| (g) |
“Licensed IP” means the Domain License and all intellectual property of the Licensor related thereto; |
|
| (h) |
“E-Commerce Domains” means the domain addresses listed in Schedule 1; |
|
| (i) |
“Currency” unless otherwise indicated, all dollar amounts in this License Agreement are expressed in United States funds. |
| 1.2 |
Sections and Headings . The division of this License Agreement into Articles, sections and subsections and the insertion of headings are for convenience of reference only and will not affect the interpretation of this License Agreement. Unless otherwise indicated, any reference in this License Agreement to an Article, section, subsection or Schedule refers to the specified Article, section or subsection of or Schedule to this License Agreement. |
| 1.3 |
Number, Gender and Persons . In this License Agreement, words importing the singular number only will include the plural and vice versa, words importing gender will include all genders and words importing persons will include individuals, corporations, partnerships, associations, trusts, unincorporated organizations, governmental bodies and other legal or business entities of any kind whatsoever. |
| 1.4 |
Accounting Principles . Except as otherwise stated, any reference in this License Agreement to generally accepted accounting principles refers to generally accepted accounting principles that have been established in the United States of America, including those approved from time to time by the American Institute of Certified Public Accountants or any successor body thereto. |
| 1.5 |
Entire Agreement . This License Agreement constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior agreements, understandings, negotiations and discussions, whether written or oral. There are no conditions, covenants, agreements, representations, warranties or other provisions, express or implied, collateral, statutory or otherwise, relating to the subject matter hereof except as herein provided. |
| 1.6 |
Time of Essence . Time will be of the essence of this License Agreement. |
| 1.7 |
Applicable Law . This License Agreement will be construed, interpreted and enforced in accordance with, and the respective rights and obligations of the parties will be governed by, the laws of the State of Nevada and the federal laws of United States applicable therein, and each party irrevocably and unconditionally submits to the non-exclusive jurisdiction of the courts of such state and all courts competent to hear appeals there from and waives, so far as is legally possible, its right to have any legal action relating to this License Agreement tried by a jury. |
| 1.8 |
Amendments and Waivers . No amendment or waiver of any provision of this License Agreement will be binding on either party unless consented to in writing by such party. No waiver of any provision of this License Agreement will constitute a waiver of any other provision, nor will any waiver constitute a continuing waiver unless otherwise provided. |
| 1.9 |
Schedules . The following Schedules are attached to and form part of this License Agreement: |
Schedule 1 - Description of IP/Domains
| 2. |
GRANT OF LICENSE |
| 2.1 |
The Licensor hereby grants to the Licensee, effective as of the Effective Date and for a period of 40 years, an exclusive worldwide license to use the Domain License. |
| 2.2 |
Licensee shall not assign or sublicense the rights granted under this license. |
| 2.3 |
The Licensee agrees to assist the Licensor in recording this License Agreement with appropriate government authorities where such recording is required by law or regulation or where such recording is permitted or desired by the Licensor. |
| 2.4 |
The Licensor shall not continue to use the Licensed IP and shall not sell or agree to sell all or any portion of the Licensed IP, while this License Agreement is in effect. |
| 3. |
OWNERSHIP |
| 3.1 |
Licensee acknowledges and agrees that, as between the parties to this License Agreement and subject to the rights and licenses granted herein, Licensor is, and at all times shall remain, the sole and exclusive owner of all right, title and interest, throughout the world, in and to all Licensed IP, and any copies of the Licensed IP, whether made on or behalf of Licensor or Licensee. |
| 4. |
LICENSE FEE |
| 4.1 |
The license fee payable by the Licensee to the Licensor for the Licenses shall consist of a royalty equal to 2.5 percent of the Gross Sales derived from the exploitation of the Licensed IP (the “ Royalty ”). |
| 4.2 |
The Royalty shall be payable within thirty (30) days following the end of the then-current calendar quarter. All payments to be made hereunder shall be made in United States dollars. Payments originating in any other currency shall be converted to United States dollars using the rate of exchange as published by Bank of America on the date such payment is due. |
| 5. |
TERMINATION AND EXTENSION |
| 5.1 |
Except as otherwise provided, this License Agreement shall terminate automatically at the end of the term specified in Section 1. |
| 6. |
INDEMNIFICATION, REMEDIES, SURVIVAL |
| 6.1 |
For the purposes of this Section 6 the terms “ Loss ” and “ Losses ” mean any and all demands, claims, actions or causes of action, assessments, losses, damages, liabilities, costs, and expenses, including without limitation, interest, penalties, fines and reasonable attorneys, accountants and other professional fees and expenses, but excluding any indirect, consequential or punitive damages suffered by Licensor or Licensee including damages for lost profits or lost business opportunities. |
| 6.2 |
Agreement of Licensor to Indemnify |
| (a) |
Licensor will indemnify, defend, and hold harmless, to the full extent of the law, for a period of three years from the termination of the License Agreement, the Licensee and its shareholders from, against, and in respect of any and all Losses asserted against, relating to, imposed upon, or incurred by the Licensee and its shareholders by reason of, resulting from, based upon or arising out of: |
| (i) |
the breach by Licensor of any representation or warranty of Licensor contained in or made pursuant to this License Agreement, any Licensor document or any certificate or other instrument delivered pursuant to this License Agreement; or |
|
| (ii) |
the breach or partial breach by Licensor of any covenant or agreement of Licensor made in or pursuant to this License Agreement, any Licensor document or any certificate or other instrument delivered pursuant to this License Agreement. |
| 6.3 |
Agreement of Licensee to Indemnify |
| (a) |
Licensee will indemnify, defend, and hold harmless, to the full extent of the law, for a period of three years from the termination of this License Agreement, the Licensor from, against, for, and in respect of any and all Losses asserted against, relating to, imposed upon, or incurred by Licensor by reason of, resulting from, based upon or arising out of: |
||
| (i) |
the breach by Licensee of any representation or warranty of Licensee contained in or made pursuant to this License Agreement, any Licensee document or any certificate or other instrument delivered pursuant to this License Agreement; or |
||
| (ii) |
the breach or partial breach by Licensee of any covenant or agreement of Licensee made in or pursuant to this Agreement, any Licensee document or any certificate or other instrument delivered pursuant to this License Agreement. |
||
| 7. |
REPRESENTATIONS AND WARRANTIES OF THE LICENSOR |
| 7.1 |
The Licensor represents and warrants to the Licensee, with the intent that the Licensee will rely thereon in entering into this License Agreement and in concluding the transactions contemplated hereby, as follows: |
| (a) |
Licensor warrants that to the best of its knowledge the use of the Licensed IP as intended through this License Agreement, does not infringe upon the rights of third parties; |
|
| (b) |
Licensor warrants that to the best of its knowledge the Licensed IP is valid, maintained and enforceable towards third parties worldwide, other than France, Iran or Russia, and that the Licensed IP shall be properly maintained during the term of this License Agreement. |
|
| (c) |
the execution and delivery of this License Agreement and the completion of the transactions contemplated hereby have been duly and validly authorized by all necessary limited liability company action on the part of the Licensor, and this License Agreement constitutes a valid and binding obligation of the Licensor enforceable against the Licensor in accordance with its terms; except as enforcement may be limited by bankruptcy, insolvency and other laws affecting the rights of creditors generally and except that equitable remedies may be granted only in the discretion of a court of competent jurisdiction; |
| (d) |
neither the execution and delivery of this License Agreement nor the performance of the Licensor’s obligations hereunder will: |
| (i) |
violate or constitute default under any order, decree, judgment, statute, by-law, rule, regulation, or restriction applicable to the Licensor, the IP, or any contract, agreement, instrument, covenant, mortgage, or security, to which the Licensor is a party or which are binding upon the Licensor, |
|
| (ii) |
to the knowledge of the Licensor, result in any fees, duties, taxes, assessments, penalties or other amounts becoming due or payable by the Licensee under any sales tax legislation. . |
|
| (iii) |
give rise to the creation or imposition of any encumbrance on the IP, |
|
| (iv) |
violate or constitute default under any license, permit, approval, consent or authorization held by the Licensor, or |
|
| (v) |
violate or trigger any liability on behalf of the Licensee pursuant to any legislation governing the licensing of the IP by the Licensor; |
| (e) |
the Licensor owns and possesses and has good and marketable title to the IP free and clear of all encumbrances of every kind and nature whatsoever; |
|
| (f) |
no person other than the Licensee has any written or oral agreement or option or any right or privilege (whether by law, pre-emptive or contractual) capable of becoming an agreement or option for the purchase or acquisition from the Licensor of any of the Licensed IP; |
|
| (g) |
There are no actions, suits, proceedings, investigations, complaints, orders, directives, or notices of defect or noncompliance by or before any court, governmental or domestic commission, department, board, tribunal, or authority, or administrative, licensing, or regulatory agency, body, or officer issued, pending, or to the best of the Licensor’s knowledge threatened against or affecting the Licensor or in respect of the IP; and |
|
| (h) |
there is no requirement applicable to the Licensor to make any filing with, give any notice to or to obtain any license, permit, certificate, registration, authorization, consent or approval of, any governmental or regulatory authority as a condition to the lawful consummation of the transactions contemplated by this Agreement. |
| 8. |
REPRESENTATIONS OF THE LICENSEE |
| 8.1 |
The Licensee represents and warrants to the Licensor as follows, with the intent that the Licensor will rely thereon in entering into this License Agreement and in concluding the transactions contemplated hereby, that: |
| (a) |
the Licensee is a corporation duly incorporated, validly existing, and in good standing under the laws of the State of Nevada and has the power, authority, and capacity to enter into this License Agreement and to carry out its terms; |
|
| (b) |
the execution and delivery of this License Agreement and the completion of the transactions contemplated hereby has been duly and validly authorized by all necessary corporate action on the part of the Licensee, and this Agreement constitutes a valid and binding obligation of the Licensee enforceable against the Licensee in accordance with its terms; except as enforcement may be limited by bankruptcy, insolvency and other laws affecting the rights of creditors generally and except that equitable remedies may be granted only in the discretion of a court of competent jurisdiction; |
| (c) |
there is no requirement for the Licensee to make any filing with, give any notice to or obtain any license, permit, certificate, registration, authorization, consent or approval of, any government or regulatory authority as a condition to the lawful consummation of the transactions contemplated by this License Agreement; and |
|
| (d) |
neither the execution and delivery of this License Agreement nor the performance of the Licensee’s obligations hereunder will violate or constitute a default under the constating documents, by-laws, or articles of the Licensee, any order, decree, judgment, statute, by-law, rule, regulation, or restriction applicable to the Licensee, or any contract, agreement, instrument, covenant, mortgage or security to which the Licensee is a party or which are binding upon the Licensee. |
| 9. |
NON MERGER |
| 9.1 |
The representations, warranties, covenants, and agreements of the Licensor contained herein and those contained in the documents and instruments delivered pursuant hereto or in connection herewith will survive the Effective Date and the term of this License Agreement, and notwithstanding the completion of the transactions contemplated hereby, the waiver of any condition contained herein (unless such waiver expressly releases the Licensor of such representation, warranty, covenant, or agreement), or any investigation by the Licensee, same will remain in full force and effect. |
| 9.2 |
The representations, warranties, covenants, and agreements of the Licensee contained herein and those contained in the documents and instruments delivered pursuant hereto or in connection herewith will survive the Effective Date and the term of this License Agreement, and notwithstanding the completion of the transactions contemplated hereby, the waiver of any condition contained herein (unless such waiver expressly releases the Licensee of such representation, warranty, covenant, or agreement), or any investigation by the Licensor, same will remain in full force and effect. |
| 10. |
FURTHER ASSURANCES |
| 10.1 |
From time to time subsequent to the Effective Date, the parties covenant and agree, at the expense of the requesting party, to promptly execute and deliver all such further documents and instruments and do all such further acts and things as may be required to carry out the full intent and meaning of this Agreement and to effect the transactions contemplated hereby. |
| 11. |
ASSIGNMENT |
| 11.1 |
This Agreement may not be assigned by any party hereto without the prior written consent of the other parties hereto. |
| 12. |
SUCCESSORS AND ASSIGNS |
| 12.1 |
This Agreement will enure to the benefit of and be binding upon the parties hereto and their respective successors and permitted assigns. |
| 13. |
COUNTERPARTS |
| 13.1 |
This Agreement may be executed in several counterparts, each of which will be deemed to be an original and all of which will together constitute one and the same instrument. |
| 14. |
NOTICES |
| 14.1 |
Any notice required or permitted to be given under this Agreement will be in writing and may be given by personal service or by prepaid registered mail, and addressed to the proper party or transmitted by electronic facsimile generating proof of receipt of transmission at the address of the applicable party first stated above. |
| 15. |
REFERENCE DATE |
| 15.1 |
This Agreement is dated for reference as of the date first above written, but will become binding as of the date of execution and delivery by all parties hereto and subject to compliance with the terms and conditions hereof. References herein to the date of the Agreement or to the date hereof shall be deemed to mean the date set forth in the preamble to this Agreement. |
IN WITNESS WHEREOF the parties have executed and delivered this agreement on the Effective Date.
| Ian Grant |
| IAN GRANT |
AFC BUILDING TECHNOLOGIES INC.
| Per: | Cindy Kelly |
| Authorized Signatory |
SCHEDULE 1
EXHIBIT 31.1
CERTIFICATION PURSUANT TO
18 U.S.C. ss 1350, AS
ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF
2002
I, Cindy Lee Kelly, certify that:
| 1. |
I have reviewed this annual report on Form 10-K of AFC Building Technologies Inc.; |
| 2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. |
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| (a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
|
| (b) |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
|
| (c) |
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
|
| (d) |
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
| 5. |
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
| (a) |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
|
| (b) |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
Date: April 20, 2017
| /s/ Cindy Lee Kelly |
| Cindy Lee Kelly |
| President, Chief Executive Officer, Chief Financial |
| Officer, Secretary, Treasurer and Director |
| (Principal Executive Officer, Principal Financial |
| Officer and Principal Accounting Officer) |
EXHIBIT 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED
PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
I, Cindy Lee Kelly, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
| (1) |
the Annual Report on Form 10-K of AFC Building Technologies Inc. for the year ended December 31, 2015 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
| (2) |
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of AFC Building Technologies Inc. |
Dated: April 20, 2017
| /s/ Cindy Lee Kelly |
| Cindy Lee Kelly |
| President, Chief Executive Officer, Chief Financial Officer, |
| Secretary, Treasurer and Director |
| (Principal Executive Officer, Principal Financial Officer and |
| Principal Accounting Officer) |
| AFC Building Technologies Inc. |
A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to AFC Building Technologies Inc. and will be retained by AFC Building Technologies Inc. and furnished to the Securities and Exchange Commission or its staff upon request.