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EX-32.1 - EXHIBIT 32.1 - AFC BUILDING TECHNOLOGIES INC.exhibit32-1.htm
EX-31.1 - EXHIBIT 31.1 - AFC BUILDING TECHNOLOGIES INC.exhibit31-1.htm
EX-10.3 - EXHIBIT 10.3 - AFC BUILDING TECHNOLOGIES INC.exhibit10-3.htm

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

Item 1. Business 4
     
Item 1A. Risk Factors 6
     
Item 1B. Unresolved Staff Comments 6
     
Item 2. Properties 7
     
Item 3. Legal Proceedings 7
     
Item 4. Mine Safety Disclosures 7
     
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 7
     
Item 6. Selected Financial Data 8
     
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 8
     
Item 7A. Quantitative and Qualitative Disclosures About Market Risk 12
     
Item 8. Financial Statements and Supplementary Data 12
     
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure 14
     
Item 9A. Controls and Procedures 14
     
Item 9B. Other Information 15
     
Item 10. Directors, Executive Officers and Corporate Governance 15
     
Item 11. Executive Compensation 17
     
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 19
     
Item 13. Certain Relationships and Related Transactions, and Director Independence 20
     
Item 14. Principal Accounting Fees and Services 20
     
Item 15. Exhibits, Financial Statement Schedules 22


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.”

  • Serial/File No. 1293373
  • Trademark: Tool Valley
  • Registration No.: TMA819,674
  • Registration date: 12 Mar 2012

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

  Index
   
Report of Independent Registered Public Accounting Firm F–1
   
Consolidated Balance Sheets F–2
   
Consolidated Statements of Operations and Comprehensive Loss F–3
   
Consolidated Statements of Cash Flows F–4
   
Consolidated Statements of Stockholders’ Equity (Deficit) F–5
   
Notes to the Consolidated Financial Statements F–6


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

    December 31,     December 31,  
    2015     2014  
             
ASSETS            
             
Current Assets            
             
   Cash $  163   $  45,272  
   Current assets of discontinued operations (Note 6)       473,154  
             
Total Current Assets   163     518,426  
             
Long-term assets of discontinued operations (Note 6)       151  
             
Total Assets $  163   $  518,577  
             
             
LIABILITIES AND STOCKHOLDERS’ DEFICIT            
             
Current Liabilities            
             
   Accounts payable $  68,303   $  54,719  
   Due to related party (Note 5)   8,021     329,944  
   Current liabilities of discontinued operations (Note 6)       396,173  
             
Total Liabilities   76,324     780,836  
             
Commitments and Contingencies (Note 1)            
             
Stockholders’ Deficit            
             
Preferred stock, $0.001 par value, 50,000,000 shares authorized, no shares issued and outstanding        
             
Common stock, $0.001 par value, 200,000,000 shares authorized, 34,760,008 shares issued and outstanding, respectively   34,760     34,760  
             
Additional paid-in capital (discount)   201,369     (128,755 )
             
Accumulated deficit   (312,290 )   (218,661 )
             
Accumulated other comprehensive income       50,397  
             
Total Stockholders’ Deficit   (76,161 )   (262,259 )
             
Total Liabilities and Stockholders’ Deficit $  163   $  518,577  

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:


      December 31,  
      2014  
         
         
     Accounts receivable $  91,173  
     Inventory   52,049  
     Prepaid expenses   7,534  
     Due from related party   322,398  
  Total Current Assets   473,154  
  Property and equipment, net of accumulated depreciation of $20,068   151  
  Total Assets $  473,305  
  Current Liabilities      
     Checks written in excess of funds on deposit $  1,215  
     Accounts payable   202,693  
     Accrued liabilities   2,810  
     Due to related party   50,977  
     Line of credit   138,478  
  Total Liabilities $  396,173  

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 similar 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:

  • approved by our audit committee (which consists of our entire board of directors); or
  • entered into pursuant to pre-approval policies and procedures established by the board of directors, provided the policies and procedures are detailed as to the particular service, the board of directors is informed of each service, and such policies and procedures do not include delegation of the board of directors' responsibilities to management.

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*

Section 302 Certification under the Sarbanes-Oxley Act of 2002 of the Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer

 

 

(32)

Section 1350 Certifications

 

 

32.1*

Section 906 Certification under the Sarbanes-Oxley Act of 2002 of the Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer

 

 

(101)*

Interactive Data Files

 

 

101.INS

XBRL Instance Document

101.SCH

XBRL Taxonomy Extension Schema Document

101.CAL

XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF

XBRL Taxonomy Extension Definition Linkbase Document

101.LAB

XBRL Taxonomy Extension Label Linkbase Document

101.PRE

XBRL Taxonomy Extension Presentation Linkbase Document

* 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)