UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 10-QSB
(Mark one)
[X] Quarterly Report Under Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended March 31, 2005
[ ] Transition Report Under Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the transition period from ______________ to _____________
Commission File Number: 000-28453
Ameri-First Financial Group, Inc.
(Exact name of small business issuer as specified in its charter)
Delaware 75-2610236
(State of incorporation) (IRS Employer ID Number)
211 West Wall Street, Midland, TX 79701
(Address of principal executive offices)
(432) 682-1761
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. YES [ ] NO [X]
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act): YES [X] NO [ ]
State the number of shares outstanding of each of the issuer's classes of common
equity as of the latest practicable date: February 22, 2007: 5,054,422
Transitional Small Business Disclosure Format (check one): YES [ ] NO [X]
AMERI-FIRST FINANCIAL GROUP, INC.
Form 10-QSB for the Quarter ended March 31, 2005
Table of Contents
Page
----
PART I - FINANCIAL INFORMATION
Item 1 Financial Statements 3
Item 2 Management's Discussion and Analysis or Plan of Operation 8
Item 3 Controls and Procedures 11
PART II - OTHER INFORMATION
Item 1 Legal Proceedings 11
Item 2 Recent Sales of Unregistered Securities and Use of Proceeds 11
Item 3 Defaults Upon Senior Securities 11
Item 4 Submission of Matters to a Vote of Security Holders 11
Item 5 Other Information 11
Item 6 Exhibits 11
SIGNATURES 12
2
PART I
ITEM 1 - FINANCIAL STATEMENTS
AMERI-FIRST FINANCIAL GROUP, INC.
BALANCE SHEET
March 31, 2005
(UNAUDITED)
ASSETS
CURRENT ASSETS $ --
------------
TOTAL ASSETS $ --
============
LIABILITIES AND SHAREHOLDERS' DEFICIT
LIABILITIES
CURRENT LIABILITIES
Accounts payable - trade $ 8,260
Accrued interest payable to shareholder 118,512
Note payable to shareholder 740,000
------------
TOTAL LIABILITIES 866,772
------------
COMMITMENTS
SHAREHOLDERS' DEFICIT
Common stock - $0.00001 par value
25,000,000 shares authorized
5,054,422 shares issued and outstanding 50
Additional paid-in capital 31,445,482
Accumulated deficit (32,312,304)
------------
TOTAL SHAREHOLDERS' DEFICIT (866,772)
------------
TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT $ --
============
The accompanying notes are an integral part of these financial statements.
3
AMERI-FIRST FINANCIAL GROUP, INC.
STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
Three months ended March 31, 2005 and 2004
(UNAUDITED)
2005 2004
----------- -----------
REVENUES $ -- $ --
----------- -----------
EXPENSES
General and administrative expenses 8,260 --
Interest expense 11,100 11,100
----------- -----------
Total expenses 19,360 11,100
----------- -----------
LOSS BEFORE PROVISION FOR INCOME TAXES (19,360) (11,100)
PROVISION FOR INCOME TAXES -- --
----------- -----------
NET LOSS (19,360) (11,100)
OTHER COMPREHENSIVE INCOME -- --
----------- -----------
COMPREHENSIVE LOSS $ (19,360) $ (11,100)
=========== ===========
Earnings per share of common stock
outstanding computed on net loss -
basic and fully diluted nil nil
=========== ===========
Weighted-average number of shares
outstanding - basic and fully diluted 5,054,422 5,054,422
=========== ===========
The accompanying notes are an integral part of these financial statements.
4
AMERI-FIRST FINANCIAL GROUP, INC.
STATEMENTS OF CASH FLOWS
Three months ended March 31, 2005 and 2004
(UNAUDITED)
2005 2004
-------- --------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss for the period $(19,360) $(11,100)
Adjustments to reconcile net loss to net
cash used in operating activities
Depreciation and amortization -- --
Increase in accounts payable - trade 8,260 --
Increase in accrued interest payable 11,100 11,100
-------- --------
NET CASH USED IN OPERATING ACTIVITIES -- --
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES -- --
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES -- --
-------- --------
INCREASE (DECREASE) IN CASH -- --
Cash at beginning of period -- --
-------- --------
CASH AT END OF PERIOD $ -- $ --
======== ========
SUPPLEMENTAL DISCLOSURE OF INTEREST AND INCOME TAXES PAID
Interest paid for the year $ -- $ --
======== ========
Income taxes paid for the year $ -- $ --
======== ========
The accompanying notes are an integral part of these financial statements.
5
AMERI-FIRST FINANCIAL GROUP, INC.
NOTES TO FINANCIAL STATEMENTS
March 31, 2005
NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS
On March 22, 2000, pursuant to the closing of an Agreement and Plan of
Reorganization (the "Reorganization Agreement") between Itronics Communications
Corporation and Ameri-First Financial Group, Inc. (AFFG), a Nevada corporation,,
effected a change in control of Itronics Communications Corporation, which was
incorporated on August 22, 1995 under the laws of the State of Delaware.
The closing under the Reorganization Agreement consisted of a stock for stock
exchange in which Itronics Communications Corporation acquired all of the issued
and outstanding common stock of AFFG in exchange for the issuance of 9,386,116
shares of its common stock. As a result of this transaction, Itronics
Communications Corporation became a wholly-owned subsidiary of AFFG.
The Reorganization was approved by the unanimous consent of the Board of
Directors of Ameri-First Financial Group on March 20, 2000. The Reorganization
qualified as a reorganization within the meaning of Section 368(a)(1)(B) of the
Internal Revenue Code of 1986, as amended.
Prior to the Agreement, Ameri-First Financial Group had 9,386,116 shares of
common stock issued and outstanding. Following the Agreement, Ameri-First had
9,436,116 shares of common stock outstanding. Ameri-First Financial Group,
formerly known as Tahoe Pacific Corporation and Pacific Holdings, Inc., was
incorporated in the State of Nevada on September 27, 1996. Upon effectiveness of
the Reorganization Agreement, pursuant to Rule 12g-3(a) of the General Rules and
Regulations of the Securities and Exchange Commission, Ameri-First Financial
Group became the successor issuer to Itronics Communications Corporation, Inc.
for reporting purposes under the Securities Exchange Act of 1934 and elected to
report under the Act effective March 22, 2000.
For periods prior to 2000, the Company participated in numerous unsuccessful
ventures and corporate name changes, as discussed in greater detail in previous
Form 10-KSB filings.
In March 2000, Ameri-First acquired 5 hotel properties and began managing and
operating hotels. These hotel properties were foreclosed upon in December 2000.
Since December 2000, the Company has had no assets or operating activities.
On January 18, 2005, Registrant ("AMFG") and Wilkerson Consulting, Inc.
("Wilkerson") entered into a Debt and Stock Purchase Agreement with Glenn A.
Little ("Little") pursuant to which Little agreed to purchase $740,000 in
outstanding debt against AMFG held by Wilkerson and to purchase Wilkerson's
stock in the Company, (700,000 shares) for cash consideration of $60,000.
The purchase price was placed in the escrow account of Wilkerson's attorneys
pending completion of the following conditions precedent.
1. Receipt of a Good Standing Certificate from the State of Delaware
regarding AMFG;
2. Completion of GAAP audits and tax returns of AMFG for calendar years
2002 and 2003;
3. Affidavit from the Board of Directors of AMFG that there are no
additional outstanding debts or demands from either regulatory groups,
debtors, or stockholders;
4. Receipt of a tax lien and judgment search on AMFG showing no liens or
judgments; and
5. Receipt of resignations from the Board of Directors and all officers
of AMFG and the appointment of Glenn Little to the Board of Directors.
6
In the event such conditions were not completed within 120 days of the date of
the agreement, the $60,000 purchase price was to be returned to Little and the
transaction terminated. A closing of the transaction was scheduled on May 5,
2005. At the Closing, Little was advised that the conditions precedent for the
Closing regarding the GAAP audits and tax returns had not been completed. At the
request of Wilkerson's legal counsel, Little granted an extension of time for
completion of the conditions precedent.
Despite their failure to complete the GAAP Audits and tax returns as required,
the officers and directors of the Company delivered their resignations and the
appointment of Little as the sole officer and director of AMFG. On November 2,
2005, Wilkerson delivered the required corporate resolution to effect the
transfer of Wilkerson's shares to Little.
Notwithstanding the resignations of the officers and directors of AMFG and their
unilateral appointment of Little as the sole officer and director of AMFG and
the eventual delivery to Little by Wilkerson of the required resolutions to
transfer Wilkerson's stock into Little's name, Little did not deem the
transaction closed due to the failure of Wilkerson and AMFG to fulfill the
conditions precedent relating to the audit and tax returns.
On January 2, 2006, Little waived the failure of the completion of conditions
precedent and accepted his appointment as an officer and director of the
Registrant and deemed the transaction closed as of that date.
The Company's current principal business activity is to seek a suitable reverse
acquisition candidate through acquisition, merger or other suitable business
combination method.
NOTE 2 - PREPARATION OF FINANCIAL STATEMENTS
The Company follows the accrual basis of accounting in accordance with
accounting principles generally accepted in the United States of America and has
a year-end of December 31.
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
Management further acknowledges that it is solely responsible for adopting sound
accounting practices, establishing and maintaining a system of internal
accounting control and preventing and detecting fraud. The Company's system of
internal accounting control is designed to assure, among other items, that 1)
recorded transactions are valid; 2) valid transactions are recorded; and 3)
transactions are recorded in the proper period in a timely manner to produce
financial statements which present fairly the financial condition, results of
operations and cash flows of the Company for the respective periods being
presented
During interim periods, the Company follows the accounting policies set forth in
its annual audited financial statements filed with the U. S. Securities and
Exchange Commission on its Annual Report on Form 10-KSB for the year ended
December 31, 2004. The information presented within these interim financial
statements may not include all disclosures required by generally accepted
accounting principles and the users of financial information provided for
interim periods should refer to the annual financial information and footnotes
when reviewing the interim financial results presented herein
In the opinion of management, the accompanying interim financial statements,
prepared in accordance with the U. S. Securities and Exchange Commission's
instructions for Form 10-QSB, are unaudited and contain all material
adjustments, consisting only of normal recurring adjustments necessary to
present fairly the financial condition, results of operations and cash flows of
the Company for the respective interim periods presented. The current period
results of operations are not necessarily indicative of results which ultimately
will be reported for the full fiscal year ending December 31, 2005.
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NOTE 3 - NOTE PAYABLE TO SHAREHOLDER AND SHAREHOLDER ADVANCES
On August 1, 2002, the Company issued a $740,000 note to Wilkerson Consulting,
Inc. as compensation to replace a guarantee related to a former officer's debt.
This note was unsecured and bore interest at 6% on unpaid principal and 10% on
matured unpaid principal. The note on demand, or if no demand is made, the
entire principal amount and all accrued interest shall be due and payable on
July 31, 2006.
Ameri-First and its current controlling shareholder, Glenn A. Little, have
acknowledged that outside funds are necessary to support the corporate entity
and comply with the periodic reporting requirements of the Securities Exchange
Act of 1934, as amended. To this end, Mr. Little has agreed to lend the Company
up to $50,000 with a maturity period not to exceed two (2) years from the
initial funding date at an interest rate of 6.0% per annum. As of March 31.
2005, Mr. Little has advanced approximately $50,000 under this agreement, with
an initial maturity date in May 2007.
NOTE 4 - SUBSEQUENT EVENT
On January 18, 2005, the Company and Wilkerson Consulting, Inc. ("Wilkerson")
entered into a Debt and Stock Purchase Agreement with Glenn A. Little ("Little")
pursuant to which Little agreed to purchase $740,000 in outstanding debt against
AMFG held by Wilkerson and to purchase Wilkerson's stock in the Company,
(700,000 shares) for cash consideration of $60,000. The note payable to
shareholder remains outstanding as of February 2007.
The purchase price was placed in the escrow account of Wilkerson's attorneys
pending completion of the following conditions precedent: (i) Receipt of a Good
Standing Certificate from the State of Delaware regarding AMFG; (ii) Completion
of GAAP audits and tax returns of AMFG for calendar years 2002 and 2003; (iii)
Affidavit from the Board of Directors of AMFG that there are no additional
outstanding debts or demands from either regulatory groups, debtors, or
stockholders; (iv) Receipt of a tax lien and judgment search on AMFG showing no
liens or judgments; and (v) Receipt of resignations from the Board of Directors
and all officers of AMFG and the appointment of Glenn Little to the Board of
Directors.
Certain events were not completed within 120 days of the date of the agreement
plus an extension of time, consequently, the officers and directors of the
Company resigned and the Company appointed Little as the sole officer and
director of the Company. On November 2, 2005, Wilkerson delivered the required
corporate resolution to effect the transfer of Wilkerson's shares to Little.
On January 2, 2006, Little waived the failure of the completion of conditions
precedent and accepted his appointment as an officer and director of the
Registrant and deemed the transaction closed as of that date.
PART I - ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
(1) CAUTION REGARDING FORWARD-LOOKING INFORMATION
Certain statements contained in this quarterly filing, including, without
limitation, statements containing the words "believes", "anticipates", "expects"
and words of similar import, constitute forward-looking statements. Such
forward-looking statements involve known and unknown risks, uncertainties and
other factors that may cause the actual results, performance or achievements of
the Company, or industry results, to be materially different from any future
results, performance or achievements expressed or implied by such
forward-looking statements.
Such factors include, among others, the following: international, national and
local general economic and market conditions: demographic changes; the ability
of the Company to sustain, manage or forecast its growth; the ability of the
Company to successfully make and integrate acquisitions; raw material costs and
8
availability; new product development and introduction; existing government
regulations and changes in, or the failure to comply with, government
regulations; adverse publicity; competition; the loss of significant customers
or suppliers; fluctuations and difficulty in forecasting operating results;
changes in business strategy or development plans; business disruptions; the
ability to attract and retain qualified personnel; the ability to protect
technology; and other factors referenced in this and previous filings.
Given these uncertainties, readers of this Form 10-QSB and investors are
cautioned not to place undue reliance on such forward-looking statements. The
Company disclaims any obligation to update any such factors or to publicly
announce the result of any revisions to any of the forward-looking statements
contained herein to reflect future events or developments.
(2) RESULTS OF OPERATIONS
The Company had no revenue for either of the three month periods ended March 31,
2005 and 2004, respectively.
General and administrative expenses for the three month periods ended March 31,
2005 and 2004 were nominal. The Company has been delinquent in providing
periodic filings pursuant to the Securities Exchange Act of 1934. It is
anticipated that future expenditure levels will increase as the Company intends
to fully comply with it's periodic reporting requirements. Earnings per share
for the respective three month periods ended March 31, 2005 and 2004 was $0.00
and $0.00 based on the weighted-average shares issued and outstanding at the end
of each respective period.
The Company does not expect to generate any meaningful revenue or incur
operating expenses for purposes other than fulfilling the obligations of a
reporting company under the Securities Exchange Act of 1934 unless and until
such time that the Company's operating subsidiary begins meaningful operations.
At March 31, 2005 and 2004, respectively, the Company had negative working
capital of approximately $867,000 and $814,000, respectively.
It is the belief of management and significant stockholders that they will
provide sufficient working capital necessary to support and preserve the
integrity of the corporate entity will be present. However, there is no legal
obligation for either management or significant stockholders to provide
additional future funding. Should this pledge fail to provide financing, the
Company has not identified any alternative sources. Consequently, there is
substantial doubt about the Company's ability to continue as a going concern.
The Company's need for working capital may change dramatically as a result of
any business acquisition or combination transaction. There can be no assurance
that the Company will identify any such business, product, technology or company
suitable for acquisition in the future. Further, there can be no assurance that
the Company would be successful in consummating any acquisition on favorable
terms or that it will be able to profitably manage the business, product,
technology or company it acquires.
PLAN OF BUSINESS
GENERAL
The Company intends to locate and combine with an existing, privately-held
company which is profitable or, in management's view, has growth potential,
irrespective of the industry in which it is engaged. However, the Company does
not intend to combine with a private company which may be deemed to be an
investment company subject to the Investment Company Act of 1940. A combination
may be structured as a merger, consolidation, exchange of the Company's common
stock for stock or assets or any other form which will result in the combined
enterprise's becoming a publicly-held corporation.
Pending negotiation and consummation of a combination, the Company anticipates
that it will have, aside from carrying on its search for a combination partner,
no business activities, and, thus, will have no source of revenue. Should the
9
Company incur any significant liabilities prior to a combination with a private
company, it may not be able to satisfy such liabilities as are incurred.
If the Company's management pursues one or more combination opportunities beyond
the preliminary negotiations stage and those negotiations are subsequently
terminated, it is foreseeable that such efforts will exhaust the Company's
ability to continue to seek such combination opportunities before any successful
combination can be consummated. In that event, the Company's common stock will
become worthless and holders of the Company's common stock will receive a
nominal distribution, if any, upon the Company's liquidation and dissolution.
COMBINATION SUITABILITY STANDARDS
In its pursuit for a combination partner, the Company's management intends to
consider only combination candidates which are profitable or, in management's
view, have growth potential. The Company's management does not intend to pursue
any combination proposal beyond the preliminary negotiation stage with any
combination candidate which does not furnish the Company with audited financial
statements for at least its most recent fiscal year and unaudited financial
statements for interim periods subsequent to the date of such audited financial
statements, or is in a position to provide such financial statements in a timely
manner. The Company will, if necessary funds are available, engage attorneys
and/or accountants in its efforts to investigate a combination candidate and to
consummate a business combination. The Company may require payment of fees by
such combination candidate to fund the investigation of such candidate. In the
event such a combination candidate is engaged in a high technology business, the
Company may also obtain reports from independent organizations of recognized
standing covering the technology being developed and/or used by the candidate.
The Company's limited financial resources may make the acquisition of such
reports difficult or even impossible to obtain and, thus, there can be no
assurance that the Company will have sufficient funds to obtain such reports
when considering combination proposals or candidates. To the extent the Company
is unable to obtain the advice or reports from experts, the risks of any
combined enterprise's being unsuccessful will be enhanced. Furthermore, to the
knowledge of the Company's officers and directors, neither the candidate nor any
of its directors, executive officers, principal shareholders or general
partners:
(1) will not have been convicted of securities fraud, mail fraud, tax
fraud, embezzlement, bribery, or a similar criminal offense involving
misappropriation or theft of funds, or be the subject of a pending
investigation or indictment involving any of those offenses;
(2) will not have been subject to a temporary or permanent injunction or
restraining order arising from unlawful transactions in securities,
whether as issuer, underwriter, broker, dealer, or investment advisor,
may be the subject of any pending investigation or a defendant in a
pending lawsuit arising from or based upon allegations of unlawful
transactions in securities; or
(3) will not have been a defendant in a civil action which resulted in a
final judgment against it or him awarding damages or rescission based
upon unlawful practices or sales of securities.
The Company's officers and directors will make these determinations by asking
pertinent questions of the management of prospective combination candidates.
Such persons will also ask pertinent questions of others who may be involved in
the combination proceedings. However, the officers and directors of the Company
will not generally take other steps to verify independently information obtained
in this manner which is favorable. Unless something comes to their attention
which puts them on notice of a possible disqualification which is being
concealed from them, such persons will rely on information received from the
management of the prospective combination candidate and from others who may be
involved in the combination proceedings.
(3) LIQUIDITY AND CAPITAL RESOURCES
It is the belief of management and significant stockholders that they will
provide sufficient working capital necessary to support and preserve the
integrity of the corporate entity will be present. However, there is no legal
obligation for either management or significant stockholders to provide
additional future funding. Should this pledge fail to provide financing, the
10
Company has not identified any alternative sources. Consequently, there is
substantial doubt about the Company's ability to continue as a going concern.
The Company has no current plans, proposals, arrangements or understandings with
respect to the sale or issuance of additional securities prior to the location
of a merger or acquisition candidate. Accordingly, there can be no assurance
that sufficient funds will be available to the Company to allow it to cover the
expenses related to such activities.
The Company does not currently contemplate making a Regulation S offering.
Regardless of whether the Company's cash assets prove to be inadequate to meet
the Company's operational needs, the Company might seek to compensate providers
of services by issuances of stock in lieu of cash.
ITEM 3 - CONTROLS AND PROCEDURES
As required by Rule 13a-15 under the Exchange Act, within the 90 days prior to
the filing date of this report, the Company carried out an evaluation of the
effectiveness of the design and operation of the Company's disclosure controls
and procedures. This evaluation was carried out under the supervision and with
the participation of the Company's management, including the Company's
President, Chief Executive and Chief Financial Officer. Based upon that
evaluation, the Company's President, Chief Executive and Chief Financial Officer
concluded that the Company's disclosure controls and procedures are effective.
There have been no significant changes in the Company's internal controls or in
other factors, which could significantly affect internal controls subsequent to
the date the Company carried out its evaluation.
Disclosure controls and procedures are controls and other procedures that are
designed to ensure that information required to be disclosed in Company reports
filed or submitted under the Exchange Act is recorded, processed, summarized and
reported, within the time periods specified in the Securities and Exchange
Commission's rules and forms. Disclosure controls and procedures include,
without limitation, controls and procedures designed to ensure that information
required to be disclosed in Company reports filed under the Exchange Act is
accumulated and communicated to management, including the Company's Chief
Executive and Chief Financial Officer as appropriate, to allow timely decisions
regarding required disclosure.
PART II - OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS
None
ITEM 2 - RECENT SALES OF UNREGISTERED SECURITIES AND USE OF PROCEEDS
None
ITEM 3 - DEFAULTS ON SENIOR SECURITIES
None
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company has held no regularly scheduled, called or special meetings of
shareholders during the reporting period.
ITEM 5 - OTHER INFORMATION
None
ITEM 6 - EXHIBITS
31.1 Certification pursuant to Section 302 of Sarbanes-Oxley Act of 2002
31.2 Certification pursuant to Section 302 of Sarbanes-Oxley Act of 2002
32.1 Certification pursuant to Section 906 of Sarbanes-Oxley Act of 2002
32.2 Certification pursuant to Section 906 of Sarbanes-Oxley Act of 2002
11
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
AMERI-FIRST FINANCIAL GROUP, INC.
Dated: February 22, 2007 /s/ Glenn A Little
----------------- ---------------------------------
Glenn A Little
President,
Chief Executive Officer,
and Director
Dated: February 22, 2007 /s/ Glenn A. Little
----------------- ---------------------------------
Glenn A. Little
Secretary, Treasurer and
Director and
Chief Financial Officer
12