<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended June 30, 1998
Commission File No. 0-28978
Amour Fiber Core, Inc.
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(Exact name of registrant as specified in its charter)
Washington 91-1705387
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
1120 East Stevens, P.O. Box 42, Sultan, WA 98294
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(Address of principal executive offices)
(360) 793-0146
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(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act during the past 12 months (or such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. Yes [X]
No [_]
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date:
Common Stock: 3,220,011 shares
Transitional Small Business Disclosure Format (Check one): Yes [_] No [X]
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
CONSOLIDATED CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, 1998 June 30, 1997
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<S> <C> <C>
ASSETS
Current assets:
Cash $ 56,879 $ 294,161
Receivables, net - Trade 10,883 5,394
Inventory, finished goods 11,886 8,699
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Total current assets 79,648 308,521
Machinery and Equipment, at cost 607,168 777,035
Less: accumulated depreciation (130,901) (84,099)
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Net machinery and equipment 476,267 689,936
Original cost net 2,400
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Total assets $ 558,932 $ 692,936
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LIABILITIES
Current liabilities:
Accounts payable 24,164 3,642
Total current liabilities 24,164 3,642
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Other liabilities:
Shareholder Loans 59,100
Deferred wages 136,654 74,346
Customer security deposit 22,200
Notes payable 100,000
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Total other liabilities: 317,954 74,346
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Total liabilities 342,118 77,988
Stockholders Equity:
Common stock 2,210,235 2,067,164
Accumulated Retained Earnings (1,993,421) (1,452,216)
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Total stockholders equity 216,814 614,948
Total Liabilities and Stockholders Equity $ 558,932 $ 692,936
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</TABLE>
See accompanying Notes to Financial Statements
2
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CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
Six Months Ended Six Months Ended
June 30, 1998 June 30, 1997
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<S> <C> <C>
Revenues
Sales $ 1,985 $ 57,998
Disposal Fees 1,041 19,782
Adjustments 890
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Net revenues 3,896 77,780
Total 3,896 77,780
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Costs and expenses:
Cost of sales 75 13,040
Research & development 0 0
Marketing, general and
administrative 188,617 255,607
Adjustments 0 64,740
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Operating costs and expenses 188,692 78,599
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Net income (loss) (184,796) (190,876)
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Earnings per common and
common equivalent share(*) (0.05) (0.06)
</TABLE>
(*) Weighted average number of common and common equivalent shares outstanding
on June 30, 1998 was 3,682,184 and on June 30, 1997 was 3,298,203.
See accompanying Notes to Financial Statements
3
<PAGE>
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
Six Months Ended Six Months Ended
June 30, 1998 June 30, 1997
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<S> <C> <C>
Cash Flows Provided by (used for)
Operating Activities:
Net Loss $(184,796) $(190,867)
Adjustments to reconcile net loss
to net cash used for operating
activities:
Deferred Compensation 62,308
Depreciation 15,614 6,766
Change in accounts receivable (9,079) (4,091)
Change in accounts payable 5,283 (52,030)
Inventory (1,243) (267)
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Net cash used for operating activities (111,913) 240,489
Cash Flows provided by (used for)
Investing Activities:
Capital expenditures (11,377) (13,604)
Other assets (617)
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Net cash used for Investing Activities: (11,994) (13,604)
Cash Flows provided by (used for)
Financing Activities:
Capital stock issued 16,452 574,136
Change in employee receivable
Change in shareholder loans payable 59,100 (41,185)
Notes payable others 100,000 0
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Net cash provided by financing activities 175,552 532,951
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Net change in cash 51,645 278,858
Cash at beginning of period 5,234 15,303
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Cash at end of period 56,879 294,161
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</TABLE>
See accompanying Notes to Financial Statements
4
<PAGE>
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
1. The accompanying interim consolidated condensed financial statements of
Amour Fiber Core Inc. (the "Company") have been prepared in conformity with
generally accepted accounting principles, consistent in all material respects
with those applied in the Annual Report on Form 10-K for the year ended December
31, 1997. The interim financial information is unaudited, but reflects all
normal adjustments which are, in the opinion of management, necessary to provide
a fair statement of results for the interim periods presented. The interim
financial statements should be read in connection with the financial statements
in the Company's Annual Report on form 10-K for the year ended December 31,
1997.
2. Earnings per common and common equivalent share were based upon a weighted
average number of common and common equivalent shares outstanding which for June
30, 1998 was 3,682,184 shares and for June 30, 1997 was 3,298,203 shares.
Item 2. Management's Discussion and Analysis or Plan of Operation.
General. The Company continues to develop new products while attempting to
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increase the marketing of its existing product lines. Many of the new products
require extensive certification and testing by potential customers and
government agencies before they can be produced or sold in commercial
quantities, so revenues from these products have been insignificant, while
associated expenses have been high. In addition, the Company has been actively
attempting to license its technology in an effort to minimize the capital
investment that would be necessary to develop new applications or to produce in
commercial quantities.
As of June 30, 1998, the Company had an accumulated deficit of $1,993,421.
It can be expected that the future operating results will continue to be subject
to many of the problems, expenses, delays and risks inherent in the
establishment of a new business enterprise, many of which the Company cannot
control.
The Company has formulated its business plans and strategies based on
certain assumptions of the Company's management regarding the size of the market
for the products which the Company will be able to offer, the Company's
anticipated share of the market, and the estimated prices for and acceptance of
the Company's products. The Company continues to believe its business plans and
the assumptions upon which they are based are valid. Although these plans and
assumptions are based on the best estimates of management, there can be no
assurance that these assessments will prove to be correct. No independent
marketing studies have been conducted on behalf of or otherwise obtained by the
Company, nor are any such studies planned. Any future success that the Company
might enjoy will depend upon many factors, including factors which may be beyond
the control of the Company or which cannot be predicted at this time. These
factors may include product obsolescence, increased levels of
5
<PAGE>
competition, including the entry of additional competitors and increased success
by existing competitors, changes in general economic conditions, increases in
operating costs including cost of supplies, personnel and equipment, reduced
margins caused by competitive pressures and other factors, and changes in
governmental regulation imposed under federal, state or local laws.
The Company's operating results may vary significantly due to a variety of
factors including changing customers profiles, the availability and cost of raw
materials, the introduction of new products by the Company or its competitors,
the timing of the Company's advertising and promotional campaigns, pricing
pressures, general economic and industry conditions that affect customer demand,
and other factors.
Results of Operations (Six Months Ended June 30, 1998 Compared to Six
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Months Ended June 30, 1997). The Company realized net revenues from the sale of
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products and disposal fees during the six months ended June 30, 1998 of $3,896,
a decrease of $73,884 from the prior period.
Costs of goods sold decreased due to the lower sales levels and the
availability of recyclable materials received.
Liquidity and Capital Resources. On June 30, 1998, the Company had cash on
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hand of $56,879. The Company's principal sources of liquidity have been sales of
securities and licensing fees. Management anticipates that additional capital
will be required to finance the Company's operations. The Company believes that
expected cash flow plus anticipated equity financings will be sufficient to
finance the Company's operations at currently anticipated levels for a period of
at least twelve months. However, there can be no assurance that the Company will
not encounter unforeseen difficulties that may deplete its capital resources
more rapidly than anticipated.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
The Company is not a party to any material legal proceeding.
Item 2. Changes in Securities and Use of Proceeds
Inapplicable.
Item 3. Defaults upon Senior Securities.
Inapplicable.
Item 4. Submission of Matters to a Vote of Security Holders
Inapplicable.
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<PAGE>
Item 5. Other Information
Inapplicable.
Item 6. Exhibits and Reports on Form 8-K
Exhibit 27. Financial Data Schedule
Signatures
In accordance with the requirements of the Exchange Act, the Registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Date: August 27, 1998 AMOUR FIBER CORE INC.
By: /s/ C.A. TONY PETERSON
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C.A. Tony Peterson, Chief Financial Officer
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<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 56,879
<SECURITIES> 0
<RECEIVABLES> 10,883
<ALLOWANCES> 0
<INVENTORY> 11,886
<CURRENT-ASSETS> 79,648
<PP&E> 607,168
<DEPRECIATION> 130,901
<TOTAL-ASSETS> 558,932
<CURRENT-LIABILITIES> 24,164
<BONDS> 0
0
0
<COMMON> 2,210,235
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 558,932
<SALES> 1,965
<TOTAL-REVENUES> 3,896
<CGS> 75
<TOTAL-COSTS> 188,692
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (184,796)
<INCOME-TAX> 0
<INCOME-CONTINUING> (184,796)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (184,796)
<EPS-PRIMARY> (.05)
<EPS-DILUTED> (.05)
</TABLE>
