U.S. SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

______________

 

FORM 10-K

 

(Mark one)

 

 

 

Commission File Number 000-52742

 

 

 

AMIWORLD, INC.

(Exact name of registrant as specified in its charter)

 

 

60 E. 42nd Street, Suite 1225

New York, NY 10165  

(Address of principal executive offices)

(212) 557-0223

(Registrant’s telephone number including area code)

 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of 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 Securities Act. Yes [_] No x

 

Indicate by check mark whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the 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 past 90 days. Yes x No [_]

 

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K 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. x

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

 

                Large accelerated filer [_]                                                                         Accelerated filer [_]

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes [_] No x

 

The aggregate market value of the shares of voting stock held by non-affiliates of Amiworld as of June 30, 2009 was $13,470,853.

 

As of April 13, 2010, the Registrant had 23,218,110 shares of Common Stock outstanding.

 

DOCUMENTS INCORPORATED BY REFERENCE - None

 

 

TABLE OF CONTENTS

 

 

 

 

 

 

FORWARD LOOKING STATEMENTS

 

This Annual Report on Form 10-K contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Act of 1934. The statements regarding Amiworld, Inc. and its subsidiaries contained in this report that are not historical in nature, particularly those that utilize terminology such as “may,” “will,” “should,” “likely,” “expects,” “anticipates,” “estimates,” “believes” or “plans,” or comparable terminology, are forward-looking statements based on current expectations and assumptions, and entail various risks and uncertainties that could cause actual results to differ materially from those expressed in such forward-looking statements.

 

Important factors known to us that could cause such material differences are identified in this report and in our “Risk Factors” in Item 1A. We undertake no obligation to correct or update any forward-looking statements, whether as a result of new information, future events or otherwise. You are advised, however, to consult any future disclosures we make on related subjects in future reports to the SEC.

 

PART I

 

 

HISTORY

 

We were incorporated under the laws of the State of Nevada on November 20, 2006. In March 2007, we merged with a predecessor company, Amiworld, Inc., a New York corporation (“Amiworld – NY”), for the purposes of affecting a reincorporation in the state of Nevada. We issued an aggregate of 372,000 shares of our Common Stock to the shareholders of Amiworld – NY in exchange for all of its issued and outstanding shares. We were the surviving entity in this merger. Following the closing of this merger, in March 2007, we engaged in a forward split of our Common Stock whereby we issued ten (10) shares of our Common Stock for every one (1) share then issued and outstanding. All references in this Report to our issued and outstanding Common Stock are provided on a post-forward split basis, unless otherwise indicated.

 

Our predecessor company, Amuru International Inc., was incorporated in the State of New York on October 30, 1998. On April 28, 1999, Amuru International Inc. amended its Certificate of Incorporation to change its name to Amiworld, Inc. (“Amiworld – NY”). On May 12, 1999, Amiworld – NY’s Common Stock was listed on the Bermuda Stock Exchange (BSX) under the symbol “AMI-BH.” Amiworld – NY was formed with a very narrow investment objective of acquiring resort properties in the eastern United States. While Amiworld – NY was seeking out appropriate resort properties, it also sought out alternative investments that could fulfill its investment objectives. Seeking diversity and desiring to get operations in place, Amiworld – NY made the decision to invest in non-resort investments. Unfortunately, these business ventures proved unsuccessful.

As a result, by 2004, Amiworld – NY had exhausted its available capital and management recognized the company had lost its viability. Amiworld – NY fell into default on its obligations to the BSX and with New York State and became an inactive corporation. Amiworld – NY regained its active status with the BSX and worked on resolving its default status with New York. In September 2005, Amiworld – NY received $200,000 in a private offering and, in December 2005, it received another $200,000 in a private offering from its then principal shareholders. This private capital was used to settle its existing debts and provided sufficient capital to cover operational costs. Amiworld – NY hired additional staff to explore new business ventures and as a result found several new developing businesses in which to invest. In December 2005, Amiworld – NY changed its business plan to invest in a variety of new investments including, but not limited to, shipping, technology, financial, and retail. We also reincorporated Amiworld- NY as a Nevada corporation.

As of the date of this Report we have four operating subsidiary companies engaged in the production of biodiesel, operating a petroleum refinery, oil reselling and shipping. See “Description of Business” below for a discussion of these endeavors.

 

 

Below is an organizational chart that includes all of our subsidiaries and the percentage of ownership that we hold in each:

 

 

DESCRIPTION OF CURRENT BUSINESS

 

We are a holding company that is currently operating through four divisions designed to complement each other. All four divisions principally focus on the production, acquisition and resale, and shipping of fuel related products. These operations include the following:

 

 

 

 

 

Following is a brief description of these operations:

 

 

Biodiesel Plant

 

               On November 30, 2006, we closed on the acquisition of land located in Santa Marta, Magdaleno, Colombia, the site of our biodiesel plant. This land consists of an aggregate of 40,010 square meters (9.9 acres). We completed construction of our plant during the fourth quarter of 2007. The plant currently has a production capacity of 120,000 liters (31,704 gallons) per day. The total cost to build our biodiesel plant was $9,062,538. During January 2008 we automated the plant to enable full capacity at a cost of $1,795,114.

 

Based upon advice of technicians that we have consulted with, the plant can be expanded to daily produce approximately 360,000 liters (96,000 gallons) with the addition of new processing equipment. We intend to expand to the 360,000 liters when market conditions warrant this expansion and we have sufficient available capital. See “LIQUIDITY AND CAPITAL RESOURCES,” below. There can be no assurances that we will have sufficient capital available to undertake this expansion.

 

In order to operate a successful biodiesel plant the most crucial element is the selection of viable feedstock. Feedstock is a product used as the basis for the manufacture of another product. In the case of biodiesel, the feedstock is usually agriculture-based products, such as rapeseed, soybean oils, mustard, palm oil, hemp, jatropha, and even algae. Additional sources include waste vegetable oil (used cooking oil), animal fats, and even sewage. While the sources are vast and a few have great promise for the future, the primary sources at present are rapeseed, soybean oils, palm oil, and jatropha.

 

          In selecting our feedstock crop and location for our refinery our primary considerations in the decision process were crop yields, feedstock costs, and countries with adequate supplies. Deforestation, environmental concerns, competition with food sources, and animal conservation are among the many concerns that the agriculture industry has faced in providing a supply line for the biodiesel industry. A careful balance of all of these interests must be met in order to maintain a viable and renewable source of supplies in the future. The following chart is a summary of the primary feedstock’s and their respective yields.

 

 

The following chart represents the costs per ton of palm oil:

 

 

 

Management believes that the combination of all of these factors made Colombia an ideal choice for the location of our plant. In addition to palm oil we also need a significant supply of Methanol, which accounts for approximately 9.6% of the raw materials. There are three basic routes to ester production from oils and fats:

 

 

The majority of producers currently use a base catalyzed reaction for economic reasons. We also use this process. The production starts with the procurement of raw materials, which are stored onsite in storage tanks. The material is then pumped into the refining unit.

 

We have plans to develop additional plants in the future based on this model plant and located on sites meeting similar criteria. However, it is also anticipated other criteria will be used in the future to bring the biodiesel to major markets, such as North America and Europe. Since we will utilize a multi-feedstock system, we can use alternative feedstock depending on where we locate these prospective plants. If we are successful, our overall plan of expansion includes the development additional plants so long as it is economically feasible to do so and demand continues to exceed supply. We can provide no assurances that we will develop additional plants in the future, or that if we do, we will be successful in meeting these objectives.

 

Petroleum Refinery

 

The land we purchased for our biodiesel plant was larger than we needed for our intended purposes. Of the approximately 9.9 acres acquired, we utilized less than half for the development of our biodiesel plant. As a result, JASB of New York Corp. (“JASB”), one of our principal shareholders and a company owned by our CEO and President, constructed a petroleum refinery adjacent to the biodiesel plant. JASB undertook this endeavor as a result of our limited financial abilities. The plant was constructed by Odin Petroil, S.A., a Colombian corporation (“Odin Petroil”), a 94.5% owned subsidiary of JASB.

 

On December 10, 2007, in a transaction classified in our financial statements included herein as a common control acquisition, we acquired JASB’s entire ownership interest in Odin Petroil in exchange for 7,814,772 shares of our “restricted” Common Stock. The site is approximately 20,000 square feet. Odin Petroil constructed this oil refinery and on October 1, 2007, the refinery completed all of its testing, staff training, and began its refining operations. During October 2007, Odin Petroil engaged in production

 

 

activities, but did not begin generating revenues until November 2007. Through automation of the plants refining ability, the plant became capable of producing 100% of its capacity in February 2008. JASB paid the entire construction costs for the refinery. The total cost of developing the refinery (excluding the land) paid by JASB was $5,617,536 plus an additional $396,998 in operational expenses for an aggregate investment of $6,014,534. The capacity at that time of completion was 30,000 barrels per month.

 

We installed an Automatic Atmospheric Refining Plant which provides for fractionated distillation, designed to meet operational needs and comply with all environmental regulations, including both Colombian and International standards related to refining, storage, transportation, products certification, spills prevention measures, firefighting system measures and standards and effluents controls. We also installed monitoring systems at this plant to allow managers and officers to observe activity and an automated system to measures the weight of each cargo. Also, a laboratory was built on this site that will have state-of-the-art equipment to guarantee quality control.

 

As a result of this acquisition, in addition to having the capacity to produce two distinct types of fuels we also can produce blended fuels. Colombia recently passed legislation requiring petroleum diesel fuel to be blended with biodiesel fuel on a 95:5 basis. The United States and other countries are increasingly working toward a mixture of 80:20 due to environmental benefits. Having the internal capacity to blend fuels is expected to give us a significant competitive advantage by eliminating the “middle-man.” Specifically, we will now have the ability to blend our own fuel, thus eliminating having the oil refineries perform this task and add a mark-up to their price for the blended fuel.

 

Effective June 19, 2008 our subsidiary company, Odin Petroil S.A. (“Odin”), entered into an agreement with FISS – Project Development Ltd., Colombia, South America (“FISS”), wherein FISS agreed to upgrade our existing oil distillation tower and to construct an additional oil distillation tower at our oil refinery in Santa Marta, Colombia. The total price payable for this tower was estimated at $8.67 million (US), which was to be payable through the issuance of 800,000 shares of our Common Stock plus cash payments of $4.67 million. The first phase of this project was completed during the 3^rd quarter of 2008 when our existing tower was upgraded to increase our capacity from 30,000 to 45,000 barrels per month. The second phase of the project was to add a second tower and additional tanks to increase our production by an additional 55,000 barrels per month. We delayed this expansion and have now modified this plan to allow for a production increase of 175,000 barrels per month. The expansion will include the construction of a new atmospheric distillation tower with its related accessories, including a Cummins Diesel Plant, boiler, pumps, and all related electrical and piping. FISS will also construct three storage tanks, each capable of storing 28,500 barrels of oil, and one storage tank capable of storing 28,500 barrels of diesel fuel. We are negotiating wth FISS the final details of this plan and related costs, but we tentatively believe the construction will cost approximately $22 million. To date we have completed the foundations for the tanks and we are working on acquiring material to construct the tanks. We intend to utlize both debt and equity capital to complete this expansion. We are presently in a private equity raise of capital in Colombia and we are in the process of securing additional bank financing for this project. We anticipate the project will be complete within 9 months after obtaining the financing.

 

On September 30, 2008, Odin Petroil, ZF Ltda. U (“Odin ZF”), a company which is owned by Mamoru Saito, our CEO, entered into a lease with a purchase option for another refinery in Colombia. At the same time Odin Petroil and Odin ZF entered into an agreement to finance this refinery. Pursuant to the terms of this agreement, Odin Petroil also has an option to assume this lease, including the option to purchase. Odin Petroil suspended this agreement during March 2009 due to complexities involved in the lease/purchase arrangement being done by Odin ZF. Should circumstances change, Odin Petroil continues to have an option to resume the lease and subsequently acquire this refinery at its option. Odin Petroil has continued to operate the facility in a management capacity and during 2009 terms were established, whereby we received a management fee of 300,000,000 pesos monthly (US$145,300). During 2009 Odin Petroil billed fees totaling 3,600,000,000 pesos (US$1,743,654). The contract is on a month to month basis and is cancellable by either party upon 30 days written notice. During our fiscal year-ended December 31, 2009, the cost of operation of this facility was approximately $900,000. The results of Odin ZF have been consolidated with our financial statements for the year ended December 31, 2009, included in this report.

 

In November 2008 we reached an agreement with Odin Energy Corporation (Panama Corporation), a majority owned subsidiary of JASB of New York Corporation (our principal shareholder), to supply biodiesel and petroleum diesel to its planned mixing plant and to subsequently sell the mixed products. Odin Energy Corporation

 

 

purchased approximately 2.5 acres of land adjacent to Odin Energy Santa Marta, Ltd. It is anticipated that construction of the mixing plant will be completed by the middle of 2010. Once completed the Odin Energy mixing plant will be capable of producing a number of biofuel blends to meet the requirements of various national governments including B5, which is mandated in Colombia, as well as other percentages such B7, B10, or B20, which may be required by other countries. Until this mixing plant is complete we will use temporary mixing facilities so that mixed products can be sold in the interim. Subject to available capital and/or financing, we are anticipating that we will acquire Odin Energy Corporation as a subsidiary during the 2^nd quarter of 2010. There are no assurances that the ability to blend fuels will result in any competitive advantages or that we can complete the acquisition of this entity.

 

We are hoping to construct additional tanks at the port zone for storage and shipping purposes for our diesel and petroleum products. We are currently in discussions with the port zone and they have provided us a plan to construct a storage area exclusive for fuel storage. We have sent a letter requesting inclusion in the project and we are expecting to receive information from the Port Society as to the location and the other necessary construction issues that will be made for piping and pumping purposes. Our current plan is to construct tanks with an approximately capacity of 600,000 barrels per month. We have not yet received estimates or approval from the port authority and cannot currently estimate the total project costs. This project is still in the planning phase by the Port Society.

 

Fuel Resale Business

 

Effective July 5, 2007, Odin Petroleum entered into a 12 month contract to transport oil with Petroleos Panamerican. The relevant agreement provided for the transportation of 300,000 gallons of oil monthly from Pointe-a-Pierre in Trinidad & Tobago to Cristobal, Panama. The oil was loaded monthly onto a tanker and the delivery was completed within an expected 21 days. The agreement provided for a fixed commission of $.20 per gallon and as a result we receive a fixed profit of $60,000 per month regardless of the amount of sales and related oil and shipping costs and we continued to receive this profit through June 2008. This contract is now complete and was not renewed.

 

During December 2008 we began reselling diesel products acquired from other refineries in Colombia to a shipping company operating on the West coast of the United States. We have continued to make routine sales to this route and we are negotiating several new shipping arrangements and are confident that additional shipping arrangements will be added in the future. However, no assurances can be provided that we will enter into any new such agreements in the future.

 

Odin Petroleum and C.I. Odin Petroleum are also acting as sales agents for both Odin Energy and Odin Petroil. Odin Petroleum is currently focused principally on generating sales to cover the entire production of both plants. In addition we are continuing to seek out opportunities to develop additional trade routes and expand its transportation business.

 

Shipping Business

 

We also intend to diversify our business activities in a synergistic manner by developing the business plan of Great Voyages Co., Ltd. (“Great Voyages”) that is developing a cargo shipping business. The first part of the business is to charter ships for the shipment of oil and related petroleum products within the Caribbean region. During 2007-2008 we made shipments of oil, but have been inactive since, due primarily to the emphasis on our refining operations.

 

Marketing

 

There are several market segments we can pursue in our diesel and biodiesel operations, including:

 

 

 

 

 

 

In January 2008 Colombia implemented laws requiring a 5:95 mixture ratio of biodiesel to petroleum diesel. As a result, we have been selling all of our expected production within Colombia. Our primary market has been diesel refiners in Colombia who need to fulfill this mandate by acquiring biodiesel and mixing the product to meet the government requirements. Our product is generally used in vehicles and sold through gas stations throughout Colombia. We will continue to pursue these refiners and gas stations as our primary target. In addition to the Colombian government, we believe that there are private concerns in Colombia that will be interested in purchasing our biodiesel.

 

We also believe that there is an opportunity to sell our products internationally despite the additional cost of shipping. Because our costs are expected to be significantly lower than related costs for producers internationally, we believe we can be cost competitive with foreign producers and still generate profits from operations. As of the date of this report we have not exported our product and we have no immediate plans to export our product as long as we can sell our product within Colombia.

 

Our biodiesel business is servicing the following accounts:

 

 

We believe we have opportunities to sell our products in Panama and other countries in Central America, which would be ideal options as we can transport our products by either truck or ship without a substantial delivery time frame. We also believe there are opportunities in the Caribbean due to limited feedstocks and processing capabilities. We also could in the future ship our products to the U.S. If we are to ship to the U.S. we have observed the distributor concentration has a primary correlation to plant locations and current plant construction. The largest coastal gap between production and distributors at this point is Florida, parts of the Gulf Coast, and portions of the East Cost. Due to the proximity of Colombia to these locations, we feel this may represent the greatest opportunity for entry into the U.S. market. Our initial focus is on Florida ports, particularly in the lower portion of Florida as well as on the Gulf and Southern East Coast of the U.S. We feel there are also unique opportunities on the West Coast with California taking a pivotal lead in its approach to alternative fuels. However, costs for shipping through the Panama Canal and traveling this distance will be substantially higher than that of the Gulf Coast States. Prices from the refinery depend on the final destination of the product. Using these criteria, if we are marketing our biodiesel in the Western US, we must consider the cost of shipping and handling and offer an attractive price that come to balance those extra expenses. In order for us to do so, we also must consider that the transaction and the quantities must be attractive to us as well. We intend to consider these factors in determining our objective market.

 

Our petroleum products will be marketed first to the local market as a primary target. In particular we will focus our efforts on marketing to the Santa Marta Port and the ships that operate from this port. Due to the extent of diesel fuel consumed by cargo ships and our proximity to the port, this will be an ideal target. We have several consistent customers and we are working on establishing additional customers.

 

In the event sales cannot be done locally, we have the trucking capacity to deliver to other locations within Colombia and with Great Voyages at our disposal we will be able to ship to international markets as well.

 

 

EMPLOYEES

 

As of the date of this report we employ one hundred thirty-six (136) persons. On average, each of these employees devotes a minimum of 40 hours per week to our business activities. None of our employees are members of a union. We consider our employee labor relations to be good.

 

Relevant to our combined refinery plants, staffing levels change periodically depending on the level of automation we are able to obtain, sales levels, and changes in operational needs. Additional employment will be needed upon any future plant expansion or the construction of future plants. Our present staffing is detailed in the following chart.

 

We are continuing to develop our oil re-sell and shipping businesses. At this point the staffing is minimal and outsourced. We will eventually retain our own crews and sales force which will lead to increased company staffing. Management has not determined the level of staffing the will ultimately be needed for these endeavors.

 

COMPETITION

 

The biodiesel production industry is very competitive. We believe that our ability to successfully compete depends on many factors including but not limited to the economics of feedstock supply, proximity to major customers and extent of transportation infrastructure. Organizations that we deem our principal competition are currently producing biodiesel or are currently constructing biodiesel production capacity on a significant scale within our local target market of Colombia.

 

We believe our principal competitors at this time are the other producers of biodiesel in Colombia. The following is a list of companies we believe to be in operation as of the end of 2009 in Colombia:

 

 

 

 

 

Of these companies only Biocombusibles Sostenibles del Caribe operaties in the Santa Marta, Magdalena region and as such we believe this company to be our largest competitor. The current production capacity of biodiesel in Colombia is 496,000 tons per year. Our company currently account for 7.3% of production capacity for Colombia.

 

Our primary competition from our petroleum refinery is Telva, which is a company located in Barranquilla. It has a manual distillation tower and has a production capacity of 24,000 barrels per month. They mostly produce Ifo’s and fuel oil.

 

Our primary competition in the oil and fuel re-sell sector which competes with Odin Petroleum is Codis. It is a trading company that sells hydrocarbon derivatives to the marine sector.

 

If successful in the completion of Odin Energy Corporation we will be the only company in Colombia capable of producing petroleum diesel and biodiesel and mixing these products from a signal site, which we believe will give us a unique ability and allow our company advantage. There can be no assurances that we will be successful in our goal of becoming a competitive force in the industry.

 

TRADEMARKS-TRADENAMES

 

We currently do not have any registered trademarks or tradenames. We are currently at various stages in the application process for 6 patents in Colombia. These patents focus on utilizing new feedstock sources, better control of the composition and utilization of feedstocks, and alternative byproduct utilization. There can be no assurances that we will be successful in any of our applications or that any of the technologies developed by our company will produce increases sales or profits.

 

GOVERNMENT REGULATIONS

 

Our business operations are subject to extensive and frequently changing federal, state, provincial and local laws and regulations relating to the protection of the environment. These laws, the underlying regulatory requirements and the enforcement thereof, some of which are described below, impact, or may impact, our business operations by imposing:

 

 

In addition, some of the governmental regulations to which we are subject are helpful to our biodiesel marketing business and proposed biodiesel production business. The biodiesel fuel industry is greatly dependent upon tax policies and environmental regulations that favor the use of biodiesel in motor fuel blends in North America. Some of the governmental regulations applicable to our biodiesel marketing business and proposed biodiesel production business are briefly described below.

 

Colombia requires us to have an Environmental Management Plan in place and an Environmental Impact Study to be completed. Both of these must be submitted to and approved by the District Administrative Environmental Department. We submitted them upon completion of our biodiesel plant and received final approval on October 7, 2007 by resolution No. 226.

 

 

ITEM 1A.              RISK FACTORS

 

An investment in our Common Stock is a risky investment. Prospective investors should carefully consider the following risk factors before purchasing shares of our Common Stock. We believe that we have included all material risks.

 

RISKS RELATED TO OUR OPERATIONS

 

We have incurred losses to date. We did not begin generating revenues until late in our 2007 fiscal year when we completed our initial sale of oil. In addition, our biodiesel plant described herein did not become operational until the first quarter of 2008 and we acquired our refinery in December 2007. Neither our biodiesel plant or refinery is currently running at full capacity and we continue to expand these operations. As of December 31, 2008, we had an accumulated deficit of ($2,960,454) and incurred a net loss attributable to common shareholders of $360,939 in 2008. As of December 31, 2009, we had an accumulated deficit of ($5,691,153) and incurred a net loss attributable to common shareholders of $2,730,699 in 2009. Until we begin generating profitable operations on a regular basis, we expect to rely on cash from operations, as well as loans from affiliates, if necessary, and bank financing, when available, to fund all of the cash requirements of our business. We also anticipate that we may engage in another private equity offering over the next 12 months. There are no assurances that we will be able to attain, sustain or increase profitability on a quarterly or annual basis.

 

We have spent a significant amount of our capital on our refinery and biodiesel plant construction. We can make no assurances that this capital expenditure will successfully achieve desired results. If our refinery and biodiesel plant do not achieve desired results, our business and results of operation can be impacted. We are exploring new opportunities to diversify our operations in order to reduce this risk; however no assurances can be made that we will be able to successfully diversify our operations.

 

Any operational disruption at our facilities could result in a reduction of our sales volume, and could cause us to incur substantial losses. If our operations at our facilities experience a significant interruption due to a major accident or damage by severe weather or other natural disasters, our ability to generate revenues could be adversely impacted. In addition, our operations may be subject to labor disruptions and unscheduled downtime, or other operational hazards inherent in our industry, such as equipment failures, fires, explosions, abnormal pressures, blowouts, pipeline ruptures, transportation accidents and natural disasters. Some of these operational hazards may cause personal injury or loss of life, severe damage to or destruction of property and equipment or environmental damage, and may result in suspension of operations and the imposition of civil or criminal penalties. Our insurance may not cover or be adequate to fully cover the potential operational hazards described above.

 

Our financial performance will be dependent on prices and availability for raw materials, which are subject to and determined by market forces outside our control. An increase in the prices for these input commodities will materially affect our ability to operate at a profit. Our result of operations and financial condition may be affected by the cost and supply of palm oil. Crude oil, palm oil, and other materials are currently our largest expenses. The price of palm oil is influenced by weather conditions and other factors affecting crop yields, farmer planting decisions, the output and proximity of palm crush facilities, and general economic, market and regulatory factors. These factors include government policies and subsidies with respect to agriculture and international trade, and global and local demand and supply. The significance and relative effect of these factors on the price of raw materials is difficult to predict. Any event that tends to negatively affect the supply of palm oil could increase palm oil prices and potentially harm our business. If we are unable pass increases in these commodity prices on to our customers it may affect our ability to operate at profit. In addition, we may also have difficulty, from time to time, in sourcing raw materials on economical terms due to supply shortages. We do not anticipate any shortages arising because Colombia, our principal supplier of raw materials, currently is a net exporter of both oil and palm oil. However, if such a shortage occurs it could require us to suspend or limit operations until these raw materials become available at economical terms, which could have a material adverse effect on our business, results of operations and financial position.

 

There can be no assurances that we will be able to establish a steady supply of raw materials. We have established relationships with multiple supply vendors for each of our business operations. While we are currently in negotiations with each of them on an ongoing basis to purchase raw materials at competitive prices,

 

 

there can be no assurance that we will be able to reach an agreement with them in the future. We are working on a fixed long-term contract to maintain a steady supply, but for now we feel it is better to negotiate material purchases on a short term basis. We have received limited assurances from Colombian government officials of assistance in maintaining a steady supply of materials. Additionally, we hope in the future to develop our own supply chain that we hope will eventually include owning our own farms, pressing plants, and oil wells. However, we cannot provide any guarantees that we will be able to establish a steady supply of materials.

 

Future concerns over deforestation and other environmental concerns may limit crop productions of palm trees and other feedstock. This may limit the production by future farms and as such, create reductions in available feedstock supplies. We feel these risks have been partly reduced by our choice to locate in a palm oil rich country, which has limited internal consumption. We intend to acquire rights to palm oil processors and potentially farms in the future to combat this risk. There can be no assurance that we will be able to acquire such rights or farms on economically favorable terms, or at all. As of the date of this Report, to the best of our knowledge there are currently no efforts to limit additional plantations in Colombia. We will continue to monitor this and look for additional suppliers. Additionally, we will continue to explore alternative feedstock to ensure a steady supply.

 

The price we pay for materials at our facilities could also increase if additional production facilities are built in the same general vicinity. We are unaware of any other facility that is being planned in the vicinity of our plant. There are also competing interest for the supply of palm oil and other feedstock to produce biodiesel fuel. These competing interests include cooking products and usages of these products in producing other products. Additionally biodiesel plants are being rapidly constructed and expanded which will result in continued increases in demands. However, export of these products will continue to increase and other plants may be developed.

 

Declines in the prices of our products may have a significant negative impact on our financial performance. Our revenues will be affected by the price at which we can sell our products. These prices can be volatile as a result of a number of factors, including the overall supply and demand, the price of fuel, level of government support and the availability and price of competing products. Fuel prices are difficult to forecast because the market reflects the global economy, which is subject to political upheaval, natural disasters and other myriad factors. Even rumors of political instability can affect the price of our products. Further, exchange rates play a key role in domestic and international fuel pricing. Any lowering of diesel prices will likely also lead to lower prices for biodiesel, which may decrease our sales and reduce revenues.

 

Management believes our location gives us a competitive advantage in that we have market opportunities not just in Colombia, but also throughout South America, Central America, and the United States. In the foreseeable future we believe we will be able to produce biodiesel and diesel products at a substantially lower cost than other foreign producers, giving us a slightly greater buffer then the rest of our competitors, even with the cost of transportation. Many of our competitors have land locked facilities with no port access leaving only the prospect of utilizing ground fleets to deliver their biodiesel fuels. Ultimately this limits their market within a few hundred-mile radius, making it difficult for them to seek out secondary markets in which they might be able to obtain higher prices.

 

Because members of our management are also involved with other companies, there is a potential that conflicts of interest may arise in the future. JASB, one of our principal shareholders and co-owner of Great Voyages, one of our subsidiaries, is a company that is controlled by Mr. Saito, our Chief Executive Officer and a director. JASB has loaned us money from time to time in the past and may do so in the future. If such conflicts do arise, Mr. Saito intends to resolve any such conflicts in the most favorable manner to us. However, there may be situations that arise in the future that cannot be resolved in our favor.

 

Availability of charters and suitable ships for fuel transportation may become limited or costs may be increased by higher fuel, crew, and maintenance costs. We are marketing our products in Colombia and, if the economics are favorable, to other locations in North and South America. If we do sell our product outside of Colombia, we will need to arrange for transportation of our fuel. We expect that this transportation will be by cargo ships. There is a demand by competitors for charter ships and the costs of charters may become excessive in price if demand increases sharply. Additionally, higher prices for fueling, crewing, and maintaining charters may ultimately be passed on to us, thereby decreasing our potential to obtain profitability. We are exploring the possibility of developing our own fleet, thereby minimizing our need for charters. We hope to have the fleet sufficient in size to

 

 

meet all of our own shipping needs. We currently do not have the available capital to undertake this objective and there can be no assurances that we will have the financial resources available to allow us to accomplish this objective in the future.

 

We face competition in our industry. Many of our competitors have greater production, financial, research and development, personnel and marketing resources than we do. As a result, our competitors may be able to compete more aggressively than we can and sustain that competition over a longer period of time. Our resources may limit our ability to respond adequately to new developments and other competitive pressures. This failure could reduce our competitiveness and cause a decline in our market share, sales and profitability.

 

New plant construction or decreases in demand for our fuel products may result in excess production capacity, which could have an impact upon our ability to operate profitably. Increased competition for inputs could increase our raw material costs, which means that we may be unable to acquire the inputs needed or be unable to acquire the inputs at a profitable price. If the excess capacity occurs, we may be unable to market our products at profitable prices.

 

In the future we may also face competition from alternative fuels sources, such as, fuel cells, alternative fuels, gasoline oxygenates, clean burning gaseous fuels, and changes to biodiesel production methods. Competition from the advancement of other alternative fuels may lessen the demand for our products and negatively impact our potential profitability.

 

Labor costs will always be a factor in all of our businesses. We have chosen to locate in depressed labor markets to keep these costs minimized. However, these markets may change over time, perhaps at a rapid pace, which can increase our costs substantially. An increase in cost will have a negative impact on our anticipated results of operation.

 

Most of our technology is acquired from external vendors who service other clients with identical technology. Our technology is similar or identical to most of the current refineries and biodiesel plants and as such has only limited uniqueness. We consider one of our threats to be information regarding our supply sources and customer base. We limit access to both our purchasing and selling sources to key employees in their respective department to ensure minimal exposure for this data. There can be no assurances that our efforts in this regard will be successful, which may lead to negative consequences.

 

Changes in regulations may be adopted in the future or violations of regulations could occur. If these events occur, we will experience an increase in our costs and reduction of our anticipated profitability. We are subject to environmental regulations and will need to follow an Environmental Handling Plan that must be strictly followed. Changes in environmental laws and regulations could require us to invest or spend additional resources in order to comply with future environmental regulations. Future regulation may also require additional expense related to items, such as, payroll, property maintenance, and environmental issues. Violations of these laws and regulations could result in liabilities that affect our financial condition and the expense of compliance alone could be significant enough to reduce profits.

 

Changes in the political environment could result in increased expenses, loss of control of price, or even the nationalization of our business. We are operating in volatile political areas with extensive government control. As governments continue to work to protect consumers and keep prices for fuel products in check they often engage in regulatory or market control practices. These controls could impact our ability to operate profitably. Additionally, the countries that we operate in could become unstable in the future. Changes in political environments causing changes to government control over its energy sector could happen in jurisdictions where we operate. Even small changes in government control could impact us through tax hikes, control over commodity prices, and inflationary controls.

 

We may be sued or become a party to litigation, which could require significant management time and attention and result in significant legal expenses and may result in an unfavorable outcome which could have a material adverse effect on our business, financial condition, results of operations and cash flows. While we have no knowledge of any threatened litigation matters, we may be subject to lawsuits from time to time arising in the ordinary course of our business. We may be forced to incur costs and expenses in connection with defending

 

 

ourselves with respect to such litigation and the payment of any settlement or judgment in connection therewith if there is an unfavorable outcome. The expense of defending litigation may be significant. The amount of time to resolve lawsuits is unpredictable and defending ourselves may divert management’s attention from the day-to-day operations of our business, which could adversely affect our business, results of operations and cash flows. In addition, an unfavorable outcome in any such litigation could have a material adverse effect on our business, results of operations and cash flows.

 

Our success depends, to an extent, upon the continued services of Mamoru Saito and Takahito Sakagami, our Chief Executive Officer and President, respectively. We have made a significant effort to build a diverse management team with skills and industry experience sufficient to operate our Company on a day-to-day basis. Additionally, we have developed key relationships with suppliers and customers to ensure success in all aspects of our proposed operations. Despite these efforts, we continue to rely on the services of Messrs. Saito and Sakagami for strategic and operational management and the relationships they have built. Some of our competitor’s management have more experience than Messrs. Saito and Sakagami and our other members of management in the fuel industry. In addition, Mr. Saito devotes a minimum of approximately 40 hours per week to our business, provided that he is not required to address unexpected matters that arise in his other businesses, which happens from time to time. This may place us at a competitive disadvantage because we will greatly rely on these relationships in the conduct of our proposed operations and the execution of our business strategies. The loss of either Mr. Saito or Mr. Sakagami could also result in the loss of our favorable relationships with one or more of our suppliers and customers, as well as a loss of their business acumen. We have not entered into an employment agreement with either Mr. Saito or Mr. Sakagami. In addition, we do not maintain “key person” life insurance covering Messrs. Saito and Sakagami or any other executive officer. The loss of either Mr. Saito or Mr. Sakagami could also significantly delay or prevent the achievement of our business objectives.

 

We are currently experiencing a period of rapid growth that is imposing a significant burden on our current administrative and operational resources. Our ability to effectively manage our growth will require us to substantially expand the capabilities of our administrative and operational resources by attracting, training, managing and retaining additional qualified personnel, including additional members of management, technicians and others. To successfully operate our new facilities we need to manage operations and production, as well as marketing and selling the end products generated by our facilities. There can be no assurances that we will be able to do so. Our failure to successfully manage our growth may have a negative impact on our anticipated results of operations.

 

RISKS RELATED TO OUR COMMON STOCK

 

Holders of our Common Stock may suffer significant dilution in the future. In order to fully implement our business plan described in this Report, it is probable that we will require additional capital, either debt or equity, or both. As a result, it is possible that we may elect to raise additional equity capital by selling shares of our Common Stock or other securities in the future to raise the funds necessary to allow us to implement our business plan. If we do so, our current shareholders will suffer significant dilution.

 

There is a limited trading market for our securities and there can be no assurance that such a market will develop in the future. We were approved for listing our Common Stock for trading on the OTC Electronic Bulletin Board (the “OTCBB”) operated by the Financial Industry Regulatory Authority (“FINRA”), f/k/a the National Association of Securities Dealers, Inc., in February 2008. As of the date of this Report, trading in our Common Stock is limited. We are currently evaluating options for listing our Common Stock on exchanges in the U.S., Panama, and Japan. There is no assurance that a market will develop in the future or, if developed, that it will continue.

 

We do not have significant financial reporting experience, which may lead to delays in filing required reports with the Securities and Exchange Commission and suspension of quotation of our securities on the OTCBB or a national exchange, which will make it more difficult for you to sell your securities. The OTCBB and a national exchange each limit quotations to securities of issuers that are current in their reports filed with the Securities and Exchange Commission. Because we do not have significant financial reporting experience, we may experience delays in filing required reports with the Securities and Exchange Commission (the “SEC”). Because issuers whose securities are qualified for quotation on the OTCBB or any other national exchange are required to

 

 

file these reports with the Securities and Exchange Commission in a timely manner, the failure to do so may result in a suspension of trading or delisting.

 

There are no automated systems for negotiating trades on the OTCBB and it is possible for the price of a stock to go up or down significantly during a lapse of time between placing a market order and its execution, which may affect your trades in our securities. Because there are no automated systems for negotiating trades on the OTCBB, they are conducted via telephone. In times of heavy market volume, the limitations of this process may result in a significant increase in the time it takes to execute investor orders. Therefore, when investors place market orders, an order to buy or sell a specific number of shares at the current market price, it is possible for the price of a stock to go up or down significantly during the lapse of time between placing a market order and its execution.

 

Our stock may be considered a “penny stock” if it trades below $5.00 per share. This can adversely affect its liquidity. As of the date of this Report, our Common Stock trades in excess of $5.00 per share, but there can be no assurance that this price will be maintained in the future. If the trading price of our Common Stock falls below $5.00 per share, trading in our Common Stock will be subject to the requirements of Rule 15g-9 under the Securities Exchange Act of 1934. Under this rule, broker/dealers who recommend low-priced securities to persons other than established customers and accredited investors must satisfy special sales practice requirements. The broker/dealer must make an individualized written suitability determination for the purchaser and receive the purchaser’s written consent prior to the transaction.

 

SEC regulations also require additional disclosure in connection with any trades involving a “penny stock,” including the delivery, prior to any penny stock transaction, of a disclosure schedule explaining the penny stock market and its associated risks. In addition, broker-dealers must disclose commissions payable to both the broker-dealer and the registered representative and current quotations for the securities they offer. The additional burdens imposed upon broker-dealers by such requirements may discourage broker-dealers from recommending transactions in our securities, which could severely limit the liquidity of our securities and consequently adversely affect the market price for our securities. In addition, few broker or dealers are likely to undertake these compliance activities. Other risks associated with trading in penny stocks could also be price fluctuations and the lack of a liquid market.

 

We do not anticipate payment of dividends, and investors will be wholly dependent upon the market for the Common Stock to realize economic benefit from their investment. As holders of our Common Stock, you will only be entitled to receive those dividends that are declared by our Board of Directors out of retained earnings. We do not expect to have retained earnings available for declaration of dividends in the foreseeable future. There is no assurance that such retained earnings will ever materialize to permit payment of dividends to you. Our Board of Directors will determine future dividend policy based upon our results of operations, financial condition, capital requirements, reserve needs and other circumstances.

 

Any adverse effect on the market price of our Common Stock could make it difficult for us to raise additional capital through sales of equity securities at a time and at a price that we deem appropriate. Sales of substantial amounts of Common Stock, or in anticipation that such sales could occur, may materially and adversely affect prevailing market prices for our Common Stock.

 

The market price of our Common Stock may fluctuate significantly in the future. The market price of our Common Stock may fluctuate in response to one or more of the following factors, many of which are beyond our control:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The price at which you purchase shares of our Common Stock may not be indicative of the price that will prevail in the trading market. You may be unable to sell your shares of Common Stock at or above your purchase price, which may result in substantial losses to you and which may include the complete loss of your investment. In the past, securities class action litigation has often been brought against a company following periods of stock price volatility. We may be the target of similar litigation in the future. Securities litigation could result in substantial costs and divert management’s attention and our resources away from our business. Any of the risks described above could adversely affect our sales and profitability and also the price of our Common Stock.

 

RISKS RELATED TO OUR COMPANY

 

We may be exposed to potential risks relating to our internal controls over financial reporting and our ability to have those controls attested to by our independent auditors. As directed by Section 404 of the Sarbanes-Oxley Act of 2002 (“SOX 404”), the Securities and Exchange Commission adopted rules requiring public companies to include a report of management on the company’s internal controls over financial reporting in their SEC reports, including this Form 10-K. In addition, the independent registered public accounting firm auditing a company’s financial statements must also attest to and report on management’s assessment of the effectiveness of the company’s internal controls over financial reporting as well as the operating effectiveness of the company’s internal controls.

 

While we expect to expend significant resources in developing the necessary documentation and testing procedures required by SOX 404, there is a risk that we will not comply with all of the requirements imposed thereby. At present, there is no precedent available with which to measure compliance adequacy. Accordingly, there can be no positive assurance that we will receive a positive attestation from our independent auditors.

 

In the event we identify significant deficiencies or material weaknesses in our internal controls that we cannot remediate in a timely manner or we are unable to receive a positive attestation from our independent auditors with respect to our internal controls, investors and others may lose confidence in the reliability of our financial statements and our ability to obtain equity or debt financing could suffer.

 

Provisions of our Articles of Incorporation and Bylaws may delay or prevent a take-over that may not be in the best interests of our stockholders. Provisions of our Articles of Incorporation and Bylaws may be deemed to have anti-takeover effects, which include when and by whom special meetings of our stockholders may be called, and may delay, defer or prevent a takeover attempt. In addition, certain provisions of the Nevada Revised Statutes also may be deemed to have certain anti-takeover effects which include that control of shares acquired in excess of certain specified thresholds will not possess any voting rights unless these voting rights are approved by a majority of a corporation’s disinterested stockholders.

 

In addition, our Articles of Incorporation authorizes the issuance of up to 25,000,000 shares of Preferred Stock with such rights and preferences determined from time to time by our Board of Directors. No shares of our Preferred Stock are currently outstanding. Our Board of Directors may, without stockholder approval, issue

 

 

Preferred Stock with dividends, liquidation, conversion, voting or other rights that could adversely affect the voting power or other rights of the holders of our Common Stock.

 

Our management and principal shareholders have the ability to significantly influence or control matters requiring a shareholder vote and other shareholders may not have the ability to influence corporate transactions. Currently, Mr. Saito, our CEO and Chairman of our Board of Directors, owns in excess of a majority of our outstanding Common Stock. As a result, Mr. Saito, acting alone, has the ability to determine the outcome on all matters requiring approval of our shareholders, including the election of directors and approval of significant corporate transactions.

 

Each prospective purchaser is encouraged to carefully analyze the risks and merits of an investment in our Common Stock and should take into consideration when making such analysis, among others, the Risk Factors discussed above.

 

 

None.

 

 

On November 30, 2006, we closed on the acquisition of land located in Santa Marta, Magdaleno, Colombia, the site of our biodiesel plant and refinery. This land consists of an aggregate of 40,010 square meters (9.9 acres). We paid $452,903 ($1,041,675,000 pesos) to acquire this property. We paid cash for this acquisition.

 

We have a lease agreement for office space with JASB of New York Corporation at 60 East 42nd Street, Lincoln Building, Suite 1225, New York, NY 10165. A year lease renewal was entered into which runs until May 31, 2012. The monthly base rent until April 30, 2010 is $3,592 and the monthly base rent from May 1, 2010, until May 31, 2012, is $3,735. We had a lease agreement with Tory Pines Resort Inc. for an apartment to be used by our employees. The apartment is located at 240 East 47th Street, Apt.10E, New York, NY 10017. In August of 2008, an annual renewal agreement was made for a monthly rent of $2,925 which was effective until August 31, 2009. The lease was not renewed, but we have continued to occupy this apartment on a month to month basis. This apartment is utilized by management who travel into New York.

All of the above lease agreements are with related parties.

We also lease an office at United Business Center, Tower 2, Office 1406, Bogota, Colombia. This space is currently being occupied by C.I. Odin Petroleum as a sales office. We pay a monthly lease payment of $3,372. The lease payment will be increased annually by a percentage equal to the Consumer Price Index, published by the National Administrateve Department of Statics for the calendar year immediately preceding the term of the contract plus two points. Additionally we are obligated to a management fee of $407 per month and we are responsible for all utilities. This lease expires December 1, 2011.

We also lease three offices at Bahia Centro Building, Career 1^st. No. 22-58, Santa Marta, Colombia. We pay monthly lease payments of $789, $2,018, and $1,299. These leases expire on August 31, 2010, December 5, 2010, and December 10, 2010, respectively. We expect to maintain these locations or similar locations upon expiration of these leases.

We also lease four furnished apartments, including (i) an apartment for which we pay monthly rent of $1,482 plus costs; (ii) an apartment for which we pay a monthly rent of $630 plus costs; (iii) an apartment for which we pay a monthly rent of $431 plus costs/ and (iv) an apartment for which we pay a monthly rent of $1,400 plus costs. These leases expire on June 10, 2010, December 1, 2010, February 26, 2010, and January 31, 2010, respectively. These leases are used by managers at the facility and for our senior management as temporary housing. Renewal of these leases is determined on an as needed basis. The lease that matured February 26, 2010 was extended for an additional year term and the lease that ended January 31, 2010 was not renewed.

 

Rent expense for all leases for December 31, 2009 and 2008 was $112,487 and $142,872 respectively.

 

 

 

 

To our knowledge, there are no material legal proceedings by or against us, either pending or contemplated.

 

 

No matters were submitted to our shareholders during the three-month period ended December 31, 2009.

 

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PART II

 

ITEM 5.    MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

 

MARKET INFORMATION

 

Trading of our Common Stock commenced on the OTCBB in February 2008. It trades under the symbol “AMWO.”

 

The table below sets forth the reported high and low bid prices for the periods indicated. The bid prices shown reflect quotations between dealers, without adjustment for markups, markdowns or commissions, and may not represent actual transactions in our Common Stock.

 

 

As of April 13, 2009, the closing bid price of our Common Stock was $5.35.

 

Trading volume in our Common Stock is very limited. As a result, the trading price of our Common Stock is subject to significant fluctuations. We believe that this limited trading activity is as a result of most of our shareholders holding their shares as a long term investment. In addition, because most of our shareholders are foreign residents, they are not familiar with the OTCBB. We have attempted to work with various investor relations companies, but these results have not met our expectations. See “PART I, ITEM 1, BUSINESS – INVESTOR RELATIONS.

 

In order to increase our expose in the investment community, during 2008 we submitted applications to list our Common Stock for trading on NASDAQ and the American Stock Exchange. The OTC Electronic Bulletin Board is not considered a national exchange. As of the date of this Report NADAQ has advised us that in order to list our stock we will need to demonstrate that we can meet the listing requirements related to market value and bid price. We have agreed to take steps to address these areas of concern. We are taking steps to alleviate this issue by entering into investment banking agreements with licensed broker dealers who have expressed an interest in working with us to accomplish our aforesaid objectives and thereafter, submit a revised application for listing on NASDAQ. As of the date of this Report we have not entered into any definitive agreement with any investment banking group and there can be no assurances that such an agreement will be executed in the future. Failure to increase the trading volume in our common stock in the future may inhibit our ability to have our application for listing on NASDAQ or another national exchange approved in the future.

 

In November 2008 our management submitted a listing application to list our Common Stock for trading on the American Stock Exchange. Management withdrew the application in December 2008. We may resubmit this application if management believes it is in our best interest. See “PART I, ITEM 1A, RISK FACTORS.”

 

HOLDERS

 

We had 447 holders of record of our Common Stock as of April 14, 2010 not including those persons who hold their shares in “street name.”

 

 

 

DIVIDENDS

 

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 earnings, if any, to develop and market our products. The payment of dividends in the future will depend upon, among other factors, our earnings, capital requirements, and operating financial conditions.

 

 

Not applicable.

 

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 financial statements and notes thereto included herein. In connection with, and because we desire to take advantage of, the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, we caution readers regarding certain forward looking statements in the following discussion and elsewhere in this report and in any other statement made by, or on our behalf, whether or not in future filings with the Securities and Exchange Commission. Forward looking statements are statements not based on historical information and which relate to future operations, strategies, financial results or other developments. Forward looking statements are necessarily based upon estimates and assumptions that are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control and many of which, with respect to future business decisions, are subject to change. These uncertainties and contingencies can affect actual results and could cause actual results to differ materially from those expressed in any forward looking statements made by, or on our behalf. We disclaim any obligation to update forward looking statements.

 

OVERVIEW

 

We were incorporated under the laws of the State of Nevada on November 20, 2006.

 

We are currently a holding company that operates through four divisions, including:

 

 

 

 

 

As of the date of this Report, our intention is to concentrate our efforts and resources into the operations of our biodiesel and petroleum refineries. If we are successful in this endeavor we will then address the development of the proposed businesses of Great Voyages. See “PART I, ITEM 1A, RISK FACTORS.”

 

 

RESULTS OF OPERATIONS

 

Comparison of Results of Operations for the Fiscal Years Ended December 31, 2009 and 2008

 

During our fiscal year ended December 31, 2009 our revenues increased by $44,789,387, from $19,395,820 during our fiscal year ended December 31, 2008, to $64,185,207 in our fiscal year ended December 31, 2009. This was primarily attributable to increased revenues from Odin Petroleum (fuel resale), which increased by $46,952,428, from $5,894,522 during our fiscal year ended December 31, 2008, to $52,846,950 in our fiscal year ended December 31, 2009. The increase was due to having 10 sales during the year ended December 31, 2009, versus only having two sales for the year ended December 31, 2008. In addition, our revenues from Odin Energy (biodiesel operations) increased by $2,722,567 from $4,099,464 during our fiscal year ended December 31, 2008, to $6,822,031 in our fiscal year ended December 31, 2009. This increase was the result of increased product sales of 23,292 (108% increase) barrels from 21,599 barrels in our fiscal year ended December 31, 2008, to 44,891 barrels during our fiscal year ended December 31, 2009. Due to market conditions, the average price we were able to sell our biodiesel decreased by approximately $20 per barrel from approximately $181 in 2008, to approximately $161 in 2009. Our revenues from Odin Petroil (refinery operations) decreased by $4,525,608, from $9,041,834 during our fiscal year ended December 31, 2008, to $4,516,226 for the fiscal year ended December 31, 2009. This decrease was primarily related to the decrease of an average price per barrel of diesel of approximately $27.56, from approximately $82.06 during 2008, to approximately $54.50 in 2009. This decrease was also attributable to a decline in sales of refined diesel products, which decreased by 34,695 barrels (33% decrease), from 104,908 barrels during our fiscal year ended December 31, 2008, to 70,213 barrels in our fiscal year ended December 31, 2009. We had a decrease in the volume of barrels sold primarily due to the termination of the Van Oil contract that we had during the 3^rd and 4^th quarter of 2008. Our revenues from oil trading commission decreased by $360,000 from 2008 to 2009 as a result of having no commissions during 2009. The contract we had related to this revenue stream expired in June 2008 and was not renewed.

 

Cost of goods sold was $59,702,198 during our fiscal year ended December 31, 2009, compared to $15,603,819 for the fiscal year ended December 31, 2008, an increase of $44,098,379. Our cost of goods sold for our fuel resale products increased by $44,604,807 from $5,599,796 in our fiscal year ended December 31, 2008, to $50,204,603 during our fiscal year ended December 31, 2009. These increases were primarily as a result of increased sales. Our cost of goods sold for our petroleum diesel decreased by $2,835,497, from $6,800,156 in our fiscal year ended December 31, 2008, to $3,964,659 during our fiscal year ended December 31, 2009, primarily as a result of decreased sales in this division. Our cost of goods sold for biodiesel increased by $2,329,069, from $3,203,867 in our fiscal year ended December 31, 2008, to $5,532,936 during our fiscal year ended December 31, 2009, due to increased sales.

 

Our gross profit was $4,483,009 (7% of sales) during our fiscal year ended December 31, 2009, compared to $3,792,001 (19.6% of sales) during our fiscal year ended December 31, 2008, an increase of $691,008. Our gross profit from petroleum diesel decreased by $1,690,111, from $2,241,678 (24.8% of sales) in our fiscal year ended December 31, 2008, to $551,567 (12.2%) during our fiscal year ended December 31, 2009, primarily as the result of having full production costs combined with a decrease in sales. Our gross profit from biodiesel increased by $393,498 from $895,597 (21.8% of sales) in our fiscal year ended December 31, 2008, to $1,289,095 (18.9% of sales) during our fiscal year ended December 31, 2009. Our gross profit from fuel resale increased by $2,347,621 from $294,726 (5% of sales) for the fiscal year ended December 31, 2008, to $2,642,347 (5% of sales) for the fiscal year ended December 31, 2009. Our gross profit from oil trading commissions decreased by $360,000 compared to our fiscal year-ended December 31, 2008. We did not generate any revenue from oil trading commissions during 2009. The contract we had related to oil re-sell expired in June 2008 and was not renewed. During the third quarter of 2009 Odin Petroil did not have any sales as its sales are primarily to shipping companies and as such sales are typically related to periods when ships are at port and during that time frame we did not make any sales to our normal vendors. During the three month period ended December 31, 2009 these sales resumed and Odin Petroil generated $1,607,219 in sales.

 

Our general and administrative expense increased by $2,639,664 from $4,128,118 during our fiscal year ended December 31, 2008, to $6,767,781 in our fiscal year ended December 31, 2009, primarily as a result of our expansion of our operations and the addition of additional refining capacity and the addition of staff and office related to the formation of Grupo Odin. Our general and administrative expense rose in several categories,

 

 

including: (i) wage expense increased by $179,192 due to the expansion of our operations and the addition of staff in Grupo Odin; (ii) increases of $88,047 in legal, accounting and professional fees, which increased as a result of costs increased audit fees, compliance with Sarbanes Oxley, and consulting fees related to our listing efforts; (iii) supplies and other office costs increased by $413,893. These cost increases primarily consisted of expenses related to general office costs , which increased by approximately $347,490, the establishment of new offices and Grupo Odin startup costs of approximately $6,936, additional bank fees of $33,958 and other miscellaneous items of approximately $25,509; (iv) postage and shipping increased by $41,122 due to increased sales; (v) we incurred production related costs during a period of inactivity of our petroleum refinery of $2,073,361, which was approximately 14% in personnel costs, approximately 34% in outside services and utilities, and the balance in indirect overhead; (vi) we incurred $569,291 in research and development costs in order to improve the efficiency of our biodiesel refinery, that was undertaken in order to add the ability to refine alternative feedstocks, and our pursuant of patents related to biodiesel production; and (vii) advertising, marketing, and public relations increased by $243,268 as a result of increased marketing efforts and our utilization of agents receiving commissions. These increases in marketing were partially offset by a reduction in our investor relations program in the amount of $132,419. Our general and administrative expense also decreased in several categories due to changes in our operations, including (i) telephone and utilities decreased by $154,995 due to the utilization of Skype and reduced long distance calling costs; (ii) hotel, travel, and entertainment decreased $85,163 as a result a reduced need for travel now that our plants are operational; (iii) rents decreased by $20,550; (iv) depreciation decreased by $220,798 due to changes in translation rates and changes in asset life; and (iv) our compensation expense related to stock and options decreased by $500,000 due to the fact we did not issue stock for our investors relations campaign which we did incur during 2008. We expect that our general and administrative expense will continue to rise during 2010 as we increase sales and add additional refining capacity. A summary of our General and Administrative Expenses is as follows:

 

 

Our other income and (expense) decreased by $542,870 from income of $33,903 during our fiscal year ended December 31, 2008, to an expense of $508,967 in our fiscal year ended December 31, 2009. This decrease is attributable to (i) an increase of $4,884 in interest income; (ii) an increase of $534,684 in interest expense as a result of carrying additional debt financing to continue to develop our operations; and (iii) a decrease in miscellaneous income of $13,070. Miscellaneous income for our fiscal year ended December 31, 2008 consisted of $37,700 in sales of residual fuel products, $23,894 in cafeteria income, and $2,010 in fees charged for the use of our labs. Miscellaneous income in our fiscal year ended December 31, 2009 consisted principally of shipping fees of $43,370 and $7,164 in various recouped fees.

 

 

 

As a result, we incurred a net loss of $2,793,739 during the fiscal year ended December 31, 2009 (approximately $0.11 per share), compared to a net loss of $360,939 during the fiscal year ended December 31, 2008 (approximately $0.01 per share). We continue to expand our sales and capacity and believe we will be able to generate profitability as a result of these efforts in the foreseeable future.

 

LIQUIDITY AND CAPITAL RESOURCES

 

At December 31, 2009, we had $3,336,012 in cash.

 

Historically, we engaged in limited debt financing through affiliated companies. While there is no relevant written agreement, we have an ongoing ability to borrow funds on an as-needed basis. These loans were temporary and carried no interest or repayment terms. JASB, an affiliated company and one of our principal shareholders, and other entities owned and controlled by Mr. Saito, our CEO and President, made similar loans to us in the past.

 

Relevant thereto, on September 24, 2008, we received a loan from JASB in the principal amount of $1,803,158. We took this loan in expectation of our purchase of the second petroleum diesel refinery in Santa Marta, Colombia. After review of this proposed transaction, we elected to lease this facility rather than acquire the same at that time. Management believed that by leasing and operating this facility prior to our acquisition of the same, we would have a better understanding of plant operations. We repaid this loan in October 2008. No interest was paid. See “PART I, ITEM 1, BUSINESS.”

 

We believe we will be able to obtain additional loans from these affiliated entities in the future should the need arise. Our Board of Directors, on a case-by-case basis, will make future decisions on indebtedness. Terms and conditions will be made in accordance with standard market practices. Repayment terms will need to coincide with our ability to generate ongoing profits and cash flows and consideration will need to be made to our liquidity and our ability to service our existing operations prior to the inception of new lending.

 

On February 12, 2008, we closed a private offering of restricted shares of our Common Stock. We received gross proceeds of $6,200,000 ($5,727,000 net) from the sale of 3,100,000 shares ($2.00 per share). The shares were sold to a total of 47 investors, none of whom that are residents of the United States. We utilized the proceeds derived from this offering for completing our refineries and funding the commencement of operations. We relied upon the exemption from registration afforded by Regulation S, promulgated under the Securities Act of 1933, as amended, to issue the shares.

 

On August 11, 2008, we closed a private offering of restricted shares of our Common Stock. We received gross proceeds of $2,550,000 ($2,311,350 net) from the sale of 510,000 shares ($5.00 per share). The shares were sold to a total of 55 investors, none of whom that are residents of the United States. We utilized the proceeds derived from this offering for the purpose of acquiring an inventory of petroleum crude and palm oil and the development of our oil resell business. We relied upon the exemption from registration afforded by Regulation S, promulgated under the Securities Act of 1933, as amended, to issue the shares.

 

 

 

 

The February 12, 2008 offering raised an aggregate of $5,727,000; $4,146,000 in 2007 from the sale of 2,250,000 shares and $1,581,000 in 2008 from the sale of 850,000 shares of common stock. Also, in the August 11, 2008 offering, we raised an aggregate of $2,311,350 through the sale of 510,000 shares. Total proceeds from the two placements conducted in 2008 were $3,892,350 from the sale of 1,360,000 shares.

 

In July 2008, two of our subsidiary companies, Odin Energy and Odin Petroil, obtained unsecured revolving lines of credit from Bancolombia in the aggregate amounts of 500,000,000 pesos (US$257,929) each. Subsequently, these two subsidiaries have made routine draws and payments pursuant to the terms of this agreement. At December 31, 2009, our subsidiary companies had a balance of 505,478,559 pesos (US$247,271) each. These lines of credit mature between January 19, 2010 and March 22, 2010. We continue to make draws on these lines of credits which create new maturity dates. Interest currently accrues at the rates between 11.8459% to 15.4598% per annum.

 

During October 2008, our subsidiary, C.I. Odin Petroleum, entered into an agreement with Bancolombia to allow it to factor purchase-sale commercial and exchange bills, checks, and other securities for periods generally ranging between 30 to 180 days. The interest and terms vary based on current bank rates. As of December 31, 2009 this company had an aggregate debt related to this agreement of 3,308,175,172 pesos (US$1,618,296).

 

During September 2009, two of our subsidiary companies, Odin Energy and Odin Petroil, obtained loans from Banco GNB Sudameris in the aggregate amounts of 1,000,000,000 pesos (US$515,857) each. At December 31, 2009, the balance on these loans was 1,038,168,186 (US$507,853) each. These loans matured on December 7, 2009 and were extended until June 9, 2010 and June 10, 2010, respectively. Interest currently accrues at 12.56% per annum.

 

During October 2009, two of our subsidiary companies, Odin Energy and Odin Petroil, obtained loans from Banco Colpatria Red Multibanco Colpatria S.A. in the aggregate amounts of 250,000,000 pesos (US$134,583) each. At December 31, 2009, the balance on these loans was 252,969,444 (US$123,749) each. These loans matured on February 15, 2010 and were paid off. Interest accrued on these obligations at the rate of 12.55% per annum.

 

During November 2009, two of our subsidiary companies, Odin Energy and Odin Petroil, obtained loans from Davivienda in the aggregate amounts of 850,000,000 pesos (US$424,951) each. These obligations provided for quarterly payments of principal and interest of 226,884,845 pesos (approximately $US113,429) for each loan. At December 31, 2009, the balance on these loans was 858,076,889 (US$419,756) each. These loans mature on November 19, 2010. Interest currently accrues at 10.69% per annum.

 

During December 2009 our subsidiary company, Odin Petroil, obtained a factoring arrangement with Bancolex in the aggregate amount of 187,068,091 pesos (US$91,510) for the purchase of 1,320 barrels of crude. This factoring agreement matured on February 16, 2010 and was paid in full at maturity. Interest on the factoring arrangement was 6,547,383 pesos (US$3,171).

 

During the 4^th quarter of 2009 our subsidiary, Grupo Odin, commenced a private placement of convertible preferred stock. During this period Grupo Odin raised an aggregate of 558,500,000 pesos (approx. US$273,208).  Grupo Odin issued 558,500 shares of its convertible preferred stock, which represents approximately 0.3% of the company. This offering is continuing as of the date of this Report. Our principal shareholder, JASB of NY, Inc. and another affiliated entity, C.I. JASB Colombia, Ltda. also exchanged loans equal to 1,640,000,000 pesos (approximately $US865,755) into 8,200,000 shares, representing approximately 4.5% of Grupo Odin’s issued and outstanding stock. We own approximately 95.2% of Grupo Odin.

 

On December 18, 2009, we received a loan in the principal amount of $1,000,000, with interest accruing at the rate of 9.6%. The loan is not secured and is payable December 18, 2010.

 

We believe that we have sufficient funds available from these fund raising efforts, as well as from our recently commenced operations, to allow us to be able to continue to develop our business plan over the next 12 months and in the foreseeable future. Our objective in 2010 is to increase production of both our petroleum refinery and biodiesel plant by approximately 10-20%. If we are successful in increasing production accordingly and are able to increase sales to absorb this increased production, we believe that we will generate a profit from operations

 

 

during our fiscal year ended December 31, 2010. We expect to raise additional equity in the future in order to provide the financing for the expansion of our current refineries and to increase marketing efforts.. There are no assurances that we will be successful in these efforts. Failure to raise additional capital may have a negative impact on our results of operation.

 

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

 

CRITICAL ACCOUNTING ESTIMATES

 

The discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these consolidated financial statements requires us to make estimates and judgments that affect the amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, we evaluate our estimates based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. The following represents a summary of our critical accounting policies, defined as those policies that we believe are the most important to the portrayal of our financial condition and results of operations and that require management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effects of matters that are inherently uncertain.

 

Leases – We follow the guidance in ASC 840-10, Leases, as amended, which requires us to evaluate the lease agreements we enter into to determine whether they represent operating or capital leases at the inception of the lease.

 

Revenue Recognition – In general, we record revenue when persuasive evidence of an arrangement exists, services have been rendered or product delivery has occurred, the sales price to the customer is fixed or determinable, and collectability is reasonably assured. The following policies reflect specific criteria for the revenue stream of the Company:

 

Revenue is recognized by the Company as earned under contract terms, in general upon shipment of ordered fuel products.

 

Foreign currency translation – Our functional currency is United States dollars and the functional currency of our subsidiaries is currently Colombia pesos. The operations of our subsidiaries are translated into U.S. dollars in accordance with ASC 830-10, Foreign Currency Translation as follows:

 

 

 

Translation adjustments are included as a separate component of stockholders’ equity (deficiency) as a component of comprehensive income or loss.

 

We and our subsidiaries translate foreign currency transactions into the Company’s functional currency at the exchange rate effective on the transaction date. Monetary items denominated in foreign currencies are translated into the functional currency at exchange rates in effect at the balance sheet date. Foreign exchange gains and losses are included in income.

 

Stock-based compensation – The Company records compensation expense for the fair value of stock options that are granted. Expense is recognized on a pro-rata basis over the vesting periods, if any, of the options. The fair value of stock options is estimated using the Black-Scholes option pricing model.

 

 

Recent accounting pronouncements – In June 2009, the FASB released the final version of its new Accounting Standards Codification (the “Codification”) as the single authoritative source for US GAAP. The Codification replaces all previous US GAAP accounting standards as described in ASC 105 (SFAS 168 - The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles). While not intended to change US GAAP, the Codification significantly changes the way in which the accounting literature is organized. It is structured by accounting topic to help accountants and auditors more quickly identify the guidance that applies to a specific accounting issue. However, because the Codification completely replaces existing standards, it will affect the way US GAAP is referenced by companies in their financial statements and accounting policies. The Codification is effective for financial statements that cover interim and annual periods ending after September 15, 2009. The adoption of the Codification did not have a material impact on our financial statements.

 

In May, 2009, the ASC guidance for subsequent events was updated to establish accounting and reporting standards for events that occur after the balance sheet date but before financial statements are issued. The guidance was amended in February, 2010. The update sets forth: (i) the period after the balance sheet date during which management of a reporting entity should evaluate events or transactions that may occur for potential recognition or disclosure in the financial statements, (ii) the circumstances under which an entity should recognize events or transactions occurring after the balance sheet in its financial statements, and (iii) the disclosures that an entity should make about events or transactions occurring after the balance sheet date in its financial statements. The Company adopted the updated guidance in 2009. The adoption had no impact on the Company’s consolidated financial position, results of operations or cash flows.

 

Various standard setting bodies have issued accounting pronouncements that have not yet been adopted by the Company. A brief discussion of the pronouncement is presented in the following paragraphs. The Company is currently evaluating the potential future impact on its financial statements from the implementation of these new standards.

 

TRENDS

 

Our primary business over the next 12 months will be the continued expansion and operation of our biodiesel plant and oil refinery. Both of our plants are currently operational. We are currently continuing to build our supply and customer bases.

 

In addition, we are also exploring the possibility of developing additional refineries, including other refineries in coastal cities in Colombia. We have developed what we consider to be a strong working relationship with the government in Colombia and have learned about the various aspects of developing refineries in that country. It would therefore make economic sense for us to consider expansion in this area.

 

We are also exploring the possibility of engaging in limited oil exploration activities in Colombia in order to reduce our crude costs and secure future sources of crude for our operations. However, as of the date of this report, we are in the discussion phase only and no definitive decisions on this matter have been made.

 

Management intends to pursue implementation of related businesses, including developing an oil resell business and an oil shipping business. We expect to finance the oil shipping business through a combination of using existing funds, if any, bank financing, private equity offering or funding through affiliated entities. Oil trades conducted are expected to be of a short-term nature and will be pre-arranged on both the buying and selling side to reduce risk. Our intention is to utilize the necessary funds for a period not to exceed two to three weeks. We are currently in the process of discussing this proposed business with various entities in the industry.

 

The shipping business will be conducted through Great Voyages and will be implemented in conjunction with the implementation of production of our biodiesel fuel plant and petroleum refinery and the possible corresponding need to ship our end product. We are working on plans to purchase or lease vessels in the future. We have delayed this plan until market conditions warrant the addition of ships. It is anticipated that ships will be acquired in the 500 to 2,000 ton class.

 

 

INFLATION

 

Although our operations are influenced by general economic conditions, we do not believe that inflation had a material effect on our results of operations during 2009.

 

OFF-BALANCE SHEET ARRANGEMENTS

 

We have not entered into any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources and would be considered material to investors.

 

 

Not applicable.

 

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

 

 

 

 

AMIWORLD, INC.

_________________________________________

 

TABLE OF CONTENTS

 

 

 

 

 

 

 

 

 

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

Shareholders and Board of Directors

Amiworld, Inc.

 

We have audited the accompanying consolidated balance sheets of Amiworld, Inc. as of December 31, 2009 and 2008, and the related consolidated statements of operations and comprehensive income (loss), stockholders' equity, and cash flows for the years then ended. These financial statements are the responsibility of the Company's management. 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. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes 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 Amiworld, Inc. as of December 31, 2009 and 2008, and the results of its operations, and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

 

 

Denver, Colorado

April 14, 2010

 

 

 

 

 

 

F-1

 

 

AMIWORLD, INC.

CONSOLIDATED BALANCE SHEETS

 

 

See accompanying notes to the consolidated financial statements.

F-2

 

 

AMIWORLD, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

AND COMPREHENSIVE (INCOME/LOSS)

 

 

See accompanying notes to the consolidated financial statements.

F-3

 

 

AMIWORLD, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

 

 

See accompanying notes to the consolidated financial statements

F-4.

 

 

AMIWORLD, INC.

CONSOLIDATED STA TEMENTS OF STOCKHOLDERS’ EQUITY

 

 

See accompanying notes to the consolidated financial statements.

 

F-5

 

AMIWORLD, INC.

Notes to the Consolidated Financial Statements

December 31, 2009 and 2008

 

 

Amiworld, Inc. (the “Company”) was incorporated in the State of New York, on October 30, 1998 as Amuru International Inc. The Company changed its name on April 28, 1999 by filing an amendment to the certificate of incorporation. The Company on November 20, 2006 formed a Nevada corporation by the same name and conducted a private placement. On March 30, 2007, the Nevada corporation acquired all outstanding shares of the New York corporation in exchange for stock and the New York corporation was subsequently dissolved effectively re-incorporating the Company to Nevada and recapitalizing the Company with a new share structure.

 

The primary objective of the Company has been revised and the Company has now placed emphasis on developing its energy and energy related businesses. The primary divisions of the Company are the operation of a bio-diesel factory in Colombia and a petroleum refinery in Colombia. Additional operations will include the acquisition of oil tankers and the brokerage of oil related products in South America, Central America, the Caribbean, and the United States. The Company continues to have other investment objectives, such as the pursuit of real estate, managed futures, technology and retail firms, and any other investments that offer short term gains that may be pursued in the future.

 

The Company in March 2007 also acquired a subsidiary, Odin Energy Santa Marta Corporation S.A. (Odin Energy), in a transaction accounted for as a common control acquisition. The results of operations of Amiworld, Inc.-New York have been consolidated with those of Amiworld, Inc.-Nevada from its inception November 17, 2006 forward and with those of Odin Energy from its inception September 11, 2006 forward. In addition, the Company consolidated the activities of its subsidiary, Odin Petroleum, Inc.

 

The Company in April 2007 also acquired a 45% interest in Great Voyages Co., Ltd., a New York corporation owned by JASB of New York Corp., a New York corporation owned by the Company’s CEO and President, for the purpose of acquiring ships to transport goods, which upon commencement of this business will be limited to oil shipments. We issued an aggregate of 45,000 shares of our Common Stock for this 45% interest. The 45% acquisition of Great Voyages is treated as an investment accounted for under the equity method.

 

Odin Petroil S.A. (Odin Petroil) was incorporated in Colombia on March 6, 2007. On December 10, 2007, in an acquisition classified as a transaction between parties under common control, Amiworld, Inc. acquired 94.5% of the outstanding shares of Odin Petroil (7,814,772 shares of Amiworld, Inc. were issued for 7,843,500 shares of Odin Petroil), making Odin Petroil a majority owned subsidiary of Amiworld, Inc.

 

On July 23, 2009 Grupo Odin, S.A. was incorporated in Colombia. On September 7, 2009 Amiworld invested 8,898,000 pesos ($953) in exchange for 9,490 shares (94.96%) of the outstanding shares of Grupo Odin S.A. making Grupo Odin S.A. a majority owned subsidiary of Amiworld. The results of operations of Amiworld, Inc. and Grupo Odin S.A. have been consolidated from Grupo Odin, S.A.’s inception July 23, 2009 forward. During the 4^th quarter of 2009 Grupo Odin, S.A. acquired Amiworld’s interest in all of our Colombian subsidiaries in exchange for a controlling interest in Grupo Odin, S.A. This company is intended to act as a holding company for our Colombian subsidiaries.

 

 

F-6

 

 

AMIWORLD, INC.

Notes to the Consolidated Financial Statements

December 31, 2009 and 2008

 

 

On September 30, 2008 Odin Petroil, ZF Ltda. U (Odin ZF), a company which is owned by Mamoru Saito, our CEO entered into a lease with a purchase option for another refinery in Colombia. At the same time Odin Petroil and Odin ZF entered into an agreement to finance this refinery with an option to assume this lease and purchase option. Odin Petroil suspended this agreement during March 2009 due to complexities involved in the lease/purchase arrangement being done by Odin ZF. Should circumstances change, Odin Petroil continues to have an option to resume the lease and subsequently acquire this refinery at its option. Odin Petroil has continued to operate the facility in a management capacity and during 2009 terms were established, whereby we received a management fee of 300,000,000 pesos monthly (US$145,300). During 2009 Odin Petroil billed fees totalling 3,600,000,000 pesos (US$1,743,654). The contract is on a month to month basis and is cancellable by either party upon 30 days written notice. During our fiscal year-ended December 31, 2009, the cost of operation of this facility was approximately $900,000. The results of Odin ZF have been consolidated with Amiworld for the year ended December 31, 2009.

 

 

These financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America.

 

 

The accompanying consolidated financial statements include the accounts of Amiworld, Inc. and its majority owned subsidiaries Grupo Odin S.A., Odin ZF and Odin Petroleum, Inc. All intercompany accounts and transactions have been eliminated in consolidation. The Company consolidates any VIE of which it is the primary beneficiary. The primary beneficiary is the enterprise that absorbs a majority of expected losses or receives a majority of residual returns (if the losses or returns occur), or both. Generally, if we are the primary beneficiary of a VIE, then we initially record the assets, liabilities and noncontrolling interests of the VIE in our consolidated financial statements at fair value.

 

 

The Company regularly reviews the carrying value of intangible and other long-lived assets for the existence of facts or circumstances, both internally and externally, that may suggest impariment. If impairment testing indicates a lack of recoverability, an impariment loss is recognized by the Company if the carrying amount of a long-lived asset exceeds its fair value. The Company has determined that no impairment existed at December 31, 2009 or 2008.

 

 

In general, the Company records revenue when persuasive evidence of an arrangement exists, services have been rendered or product delivery has occurred, the sales price to the customer is fixed or determinable, and collectability is reasonably assured. The following policies reflect specific criteria for the revenue stream of the Company:

 

Revenue is recognized by the Company as earned under contract terms, in general upon shipment of ordered fuel products.

 

 

F-7

 

 

AMIWORLD, INC.

Notes to the Consolidated Financial Statements

December 31, 2009 and 2008

 

 

 

The Company extends credit to its customers based upon a written credit policy. Accounts receivable are recorded at the invoiced amount and do not bear interest. The allowance for doubtful accounts is the Company’s best estimate for the amount of probable credit losses in the Company’s existing accounts receivable. The Company establishes an allowance for doubtful accounts based upon factors surrounding the credit risk of specific customers, historical trends, and other information. Receivable balances are reviewed on an aged basis and account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. There was no reserve at December 31, 2009 and 2008.

 

 

The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the balance sheet, as well as reported amounts of income and expenses during the fiscal year. Actual results could differ from those estimates.

 

 

The Company considers all highly liquid investments with an original maturity of three months or less as cash equivalents. The Company has approximately $2,144,306 and $4,210,759 on deposit at a single financial institution as of December 31, 2009 and December 2008, respectively.

 

 

The Company’s financial assets that are exposed to credit risk consist primarily of cash and equivalents and accounts receivable. Concentrations of credit risk with respect to accounts receivable are limited due to the generally short payment terms.

 

 

Inventories, consisting of petroleum based products, are stated at the lower of cost or market (average units of production method). Costs capitalized to inventory include the purchase price, transportation costs, processing costs, and any other expenditures incurred in bringing the goods to the point of sale. Costs of goods sold include those expenditures capitalized to inventory.

 

 

Propertyand equipment acquired is stated at cost. Depreciation is calculated on the straight line method based on the useful life of the assets with lives of 15-20 years for buildings, 5 years for machinery and vehicles, and 5-10 years for equipment and furniture.

 

 

F-8

 

 

AMIWORLD, INC.

Notes to the Consolidated Financial Statements

December 31, 2009 and 2008

 

 

 

Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of December 31, 2009 and 2008. The respective carrying value of certain on-balance-sheet financial instruments, approximate their fair values. These financial instruments include cash, accounts receivable, accounts payable, accrued expenses, notes payable and due to affiliates. Fair values were assumed to approximate carrying values for these financial instruments because they are short term in nature and their carrying amounts approximate fair values or they are receivable or payable on demand.

 

 

The Company capitalizes costs associated with the construction of its bio-diesel plant and petroleum refinery.

 

 

The currency of the Company’s foreign subsidiaries is the Colombian Peso.

 

Monetary assets and liabilities expressed in foreign currencies are translated into U.S. dollars at year end rates. Transactions in foreign currencies are translated into U.S. dollars at the exchange rate in effect on the transaction date.

 

Realized exchange gains or losses on transactions during the year are credited or charged to the profit and loss account. Unrealized exchange gains or losses arising on the translation of foreign currency monetary assets and liabilities are credited or charged to the other comprehensive income (loss).

 

 

The Company calculates net income (loss) per share as required by Accounting Standards Codification topic 260 (ASC 260), "Earnings per Share." Basic earnings (loss) per share are calculated by dividing net income (loss) by the weighted average number of common shares outstanding for the period. Diluted earnings loss) per share is calculated by dividing net income (loss) by the weighted average number of common shares and dilutive common stock equivalents outstanding. During periods in which the Company incurs loses common stock equivalents (consisting of stock options at December 31, 2009 and 2008), if any, are not considered, as their effect would be anti dilutive.

 

 

The Company accounts for comprehensive income (loss) under ASC topic 220, “Comprehensive Income.” ASC 220 establishes standards for reporting and display of comprehensive income and its components. The foreign currency translation gain (loss) resulting from the translation of the consolidated financial statements of Grupo Odin, S.A. and Odin ZF, expressed in Colombian pesos, to United States dollars are reported as other comprehensive income (loss) in the Statements of Operations and as accumulated other comprehensive income (loss) in Stockholders’ Equity.

 

F-9

 

 

AMIWORLD, INC.

Notes to the Consolidated Financial Statements

December 31, 2009 and 2008

 

 

 

The Company follows ASC topic 280, “Segment Reporting.” Certain information is disclosed, based on the way management organizes financial information for making operating decisions and assessing performance. The Company currently operates in a single segment and will evaluate additional segment disclosure requirements as it expands its operations.

 

 

The Company accounts for income taxes using the asset and liability approach in accordance with ASC 740, “Income Taxes.” The asset and liability approach requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax basis of assets and liabilities. A valuation allowance is provided when it is more likely than not that some portion or all of the deferred tax assets will not be realized.

The provision for income taxes consists of an amount for the taxes currently payable and a provision for the tax consequences deferred to future periods.

 

 

The Company derives revenue from sales of petroleum and palm oil based products, although it does not currently separate the sales of various products into operating segments. The Company's sales are external and international. In 2009, one customer accounted for approximately 81.6% of sales. In 2008, three customers accounted for approximately 61% of sales.

 

As of December 31, 2009 and 2008, contracts receivable from one customer and three customers accounted for approximately 95.4% and 99.5%, respectively of accounts receivable.

 

 

Advance deposits consist of prepayments and deposits on contracts and are classified as a liability until products are shipped. There were no advance deposits at December 31, 2009. Advance deposits aggregated $1,801,149 at December 31, 2008.

 

 

The Company records compensation expense for the fair value of stock options that are granted. Expense is recognized on a pro-rata basis over the vesting periods, if any, of the options. The fair value of stock options is estimated using the Black-Scholes option pricing model.

 

 

Certain amounts in the prior year financial statements have been reclassified to conform to the current year presentation. There was no effect on previously reported net loss and per share amounts.

 

F-10

 

 

AMIWORLD, INC.

Notes to the Consolidated Financial Statements

December 31, 2009 and 2008

 

 

 

In June 2009, the FASB released the final version of its new Accounting Standards Codification (the “Codification”) as the single authoritative source for US GAAP. The Codification replaces all previous US GAAP accounting standards as described in ASC 105 (SFAS 168 - The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles). While not intended to change US GAAP, the Codification significantly changes the way in which the accounting literature is organized. It is structured by accounting topic to help accountants and auditors more quickly identify the guidance that applies to a specific accounting issue. However, because the Codification completely replaces existing standards, it will affect the way US GAAP is referenced by companies in their financial statements and accounting policies. The Codification is effective for financial statements that cover interim and annual periods ending after September 15, 2009. The adoption of the Codification did not have a material impact on our financial statements.

 

In May, 2009, the ASC guidance for subsequent events was updated to establish accounting and reporting standards for events that occur after the balance sheet date but before financial statements are issued. The guidance was amended in February, 2010. The update sets forth: (i) the period after the balance sheet date during which management of a reporting entity should evaluate events or transactions that may occur for potential recognition or disclosure in the financial statements, (ii) the circumstances under which an entity should recognize events or transactions occurring after the balance sheet in its financial statements, and (iii) the disclosures that an entity should make about events or transactions occurring after the balance sheet date in its financial statements. The Company adopted the updated guidance in 2009. The adoption had no impact on the Company’s consolidated financial position, results of operations or cash flows.

 

Various standard setting bodies have issued accounting pronouncements that have not yet been adopted by the Company. A brief discussion of the pronouncement is presented in the following paragraphs. The Company is currently evaluating the potential future impact on its financial statements from the implementation of these new standards.

 

Accounting Standards Update (ASU) 2010-06 amends existing disclosure requirements about fair value measurements by adding required disclosures about items transferring into and out of levels 1 and 2 in the fair value hierarchy; adding separate disclosures about purchase, sales, issuances, and settlements relative to level 3 measurements; and clarifying, among other things, the existing fair value disclosures about the level of disaggregation. This ASU will be effective for the first quarter of 2010.

 

 

The Company evaluates its long-lived assets for impairment. If impairment indicators exist, the Company performs additional analysis to quantify the amount by which capitalized costs exceed recoverable value. The periodic evaluation of capitalized costs is based upon expected future cash flows, including estimated salvage values. As of December 31, 2009, the Company’s mineral resources do not meet the definition of proven or probable reserves or value beyond proven and probable reserves and any potential revenue has been excluded from the cash flow assumptions. Accordingly, recoverability of capitalized cost is based primarily on estimated salvage values, or alternative future uses.

 

 

F-11

 

 

AMIWORLD, INC.

Notes to the Consolidated Financial Statements

December 31, 2009 and 2008

 

(3) Related Party Transactions

 

From time to time both we, have borrowed, loaned, and conducted business with our affiliated entities. Following is a table of balances owed by us, or to us, as of December 31, 2009 and 2008:

 

 

These balances carry no stated interest or repayment terms.

 

On February 1, 2007, the Company entered into a contract with JASB Corporation to act as its agent for oil trades. Under the terms of this contract, the Company received total revenues of $360,000 during 2008. On March 24, 2009 the Company entered into a contract with JASB Corporation to allow Amiworld to utilize JASB Corporation’s office staff, office space, and office equipment, among other things for the purpose of aiding Odin Petroleum’s efforts to sale our products. We paid JASB fees of approximately $73,398 during 2009.

 

On September 30, 2008 Odin ZF, a company which is owned by Mamoru Saito, our CEO entered into a lease with a purchase option for another refinery in Colombia. At the same time Odin Petroil and Odin ZF entered into an agreement to finance this refinery with an option to assume this lease and purchase option. Odin Petroil suspended this agreement during March 2009 due to complexities involved in the lease/purchase arrangement being done by Odin ZF. Should circumstances change, Odin Petroil continues to have an option to resume the lease and subsequently acquire this refinery at its option. Odin Petroil has continued to operate the facility in a management capacity and during 2009 terms were established, whereby we received a management fee of 300,000,000 pesos monthly (US$145,300). During 2009 Odin Petroil billed fees totalling 3,600,000,000 pesos (US$1,743,654). The contract is on a month to month basis and is cancellable by either party upon 30 days written notice. During our fiscal year-ended December 31, 2009, the cost of operation of this facility was approximately $900,000. The results of Odin ZF have been consolidated with Amiworld for the year ended December 31, 2009.

 

 

Prepaid expenses consist of the following at December 31,

 

 

 

F-12

 

 

AMIWORLD, INC.

Notes to the Consolidated Financial Statements

December 31, 2009 and 2008

 

 

Fixed assets consist of the following at December 31,

 

 

 

 

Deposits consist of the following at December 31,

 

 

 

 

The Company accounts for income taxes under ASC 740, “Income Taxes.” Under ASC 740, deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss 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 bases. 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 tax laws and rates on the date of enactment.

 

At December 31, 2009 and 2008, the Company had net operating loss carryforwards of approximately $4,875,000 and $2,100,000, respectively, which will expire in 2028. The deferred tax asset of approximately $1,625,000 created by the net operating losses have been offset by a 100% valuation allowance. The change in the valuation allowance in 2009 and 2008 was approximately $(925,000) and $(150,000), respectively.

 

The reconciliation of income tax computed at the federal statutory rate to income tax expense is as follows:

 

 

 

F-13

 

 

AMIWORLD, INC.

Notes to the Consolidated Financial Statements

December 31, 2009 and 2008

 

 

The Company’s authorized share capital is comprised of 175,000,000 voting common shares with a par value of $0.001 and 25,000,000 non-voting preferred shares with a par value of $0.001. No rights or preferences on the preferred stock have been established by the Board of Directors of Amiworld, Inc.

 

During 2008, the Company issued 1,360,000 shares of common stock for cash aggregating $3,892,350 pursuant to a private placement.

 

During 2008, the Company issued 100,000 shares of common stock with a fair value of $500,000 for services.

 

During 2008, the Company issued 800,000 shares common stock in exchangefor the expansion of the Company’s petroleum refinery. These shares were valued at $4,000,000.

 

During 2008 the Company issued 1,490,000 options to purchase common stock at a price of $1 per share for a period of 5 years. These options were valued at their fair market value of $1,490,000 using the Black-Scholes option pricing model.

 

This model is affected by our stock price on the date of the grant as well as assumptions regarding a number of highly complex and subjective variables. These variables include expected term, expected risk-free rate of return, expected volatility, and expected dividend yield, each of which is more fully described below. The assumptions for expected term and expected volatility are the two assumptions that significantly affect the grant date fair value.

 

Expected Term: The expected term of an option is the period of time that such option is expected to be outstanding. The average expected term is determined using a trinomial lattice simulation model.

 

Risk-free Interest Rate: We base the risk-free interest rate used in the trinomial lattice valuation method on the implied yield at the grant date of the U.S. Treasury zero-coupon issue with an equivalent term to the stock-based award being valued. Where the expected term of a stock-based award does not correspond with the term for which a zero coupon interest rate is quoted, we use the nearest interest rate from the available maturities.

 

Expected Stock Price Volatility: Effective January 1, 2006, we evaluated the assumptions used to estimate volatility and determined that, under SAB 107, we should use a blended average of our volatility and the volatility of certain peer companies. We believe that the use of this blended average peer volatility is more reflective of market conditions and a better indicator of our expected volatility due to the limited trading history available for our Company since its last change of control, prior to which we operated under a different business model.

 

Dividend Yield: Because we have never paid a dividend and do not expect to begin doing so in the foreseeable future, we have assumed a 0% dividend yield in valuing our stock-based awards.

 

The fair value of stock option awards granted during the year ended December 31, 2008 was estimated as of the grant date using the following weighted average assumptions:

 

Expected term 5 years, risk-free interest rate 2.75%, expected volatility .01%, and dividend yield 0%. Based on these assumptions, the fair value per share at the grant date was $1.00.

 

F-14

 

 

AMIWORLD, INC.

Notes to the Consolidated Financial Statements

December 31, 2009 and 2008

 

 

The status of our stock options awards is summarized as follows:

 

 

The following table summarizes information about our options outstanding at December 31, 2009:

 

Outstanding and exercisable:

 

 

 

As of December 31, 2009, the aggregate intrinsic value of all stock options outstanding and exercisable was approximately $6,775,200.

 

The Company has received investments in our subsidiaries which constitute a non-controlling interest in our company. The non-controlling interest in our subsidiaries are detailed in the following table:

 

 

 

F-15

 

 

AMIWORLD, INC.

Notes to the Consolidated Financial Statements

December 31, 2009 and 2008

 

 

Leases

 

The Company has a sub-lease agreement for office space with JASB of New York Corporation at 60 East 42nd Street, Lincoln Building, Suite 1225, New York, NY 10165. Minimum annual lease payments are $43,100 through April 30, 2010 and $44,824 through May 31, 2012.

 

The Company had a lease agreement with Tory Pines Resort Inc. for an apartment to be used by the Company’s employees. The apartment is located at 240 East 47th Street, Apt.10E, New York, NY 10017. In August of 2008, an annual renewal agreement was made for a monthly rent of $2,925 which was effective until August 31, 2009. The lease was not renewed, but the Company continues to lease the apartment on a month to month basis.

 

All of the above lease agreements are with related parties.

 

We also lease an office at United Business Center, Tower 2, Office 1406, Bogota, Colombia,. This space is currently being occupied by C.I. Odin Petroleum as a sales office. We pay a monthly lease payment of $3,372. The lease payment will be increased annually by a percentage equal to the Consumer Price Index, published by the National Administrateve Department of Statics for the calendar year immediately preceding the term of the contract plus two points. Additionally we are obligated to a management fee of $407 per month and we are responsible for all utilities. This lease expires December 1, 2011.

 

We also lease three offices at Bahia Centro Building, Career 1^st. No. 22-58, Santa Marta, Colombia. We pay a monthly lease payments of $789, $2,018, and $1,299. These leases expire on August 31, 2010, December 5, 2010, and December 10, 2010, respectively.

 

We also lease four furnished apartments, including (i) an apartment for which we pay monthly rent of $1,482 plus costs; (ii) an apartment for which we pay a monthly rent of $630 plus costs; (iii) an apartment for which we pay a monthly rent of $431 plus costs; and (iv) an apartment for which we pay a monthly rent of $1,400 plus costs. These leases expire on June 10, 2010, December 1, 2010, February 26, 2010, and January 31, 2010, respectively. These leases are used by managers at the facility and for our senior management as temporary housing. Renewal of these leases is determined on an as needed basis. The lease maturing February 26, 2010 was renewed automatically and the lease ending January 31, 2010 was not renewed.

 

Rent expense for all leases for December 31, 2009 and 2008, was $112,487 and $142,872 respectively.

 

Future lease payments for all leases are as follows:

 

 

 

 

F-16

 

 

AMIWORLD, INC.

Notes to the Consolidated Financial Statements

December 31, 2009 and 2008

 

 

Commitments

 

Effective June 19, 2008 our subsidiary company, Odin Petroil S.A. (“Odin”), entered into an agreement with FISS – Project Development Ltd., Colombia, South America (“FISS”), wherein FISS agreed to upgrade our existing oil distillation tower and to construct an additional oil distillation tower at our oil refinery in Santa Marta, Colombia. The total price payable for this tower was estimated at $8.67 million (US), which was to be payable through the issuance of 800,000 shares of our Common Stock plus cash payments of $4.67 million. The first phase of this project was completed during the 3^rd quarter of 2008 when our existing tower was upgraded to increase our capacity from 30,000 to 45,000 barrels per month. The second phase of the project was to add a second tower and additional tanks to increase our production by an additional 55,000 barrels per month. We delayed this expansion and have now modified this plan to allow for a production increase of 175,000 barrels per month. The expansion will include the construction of a new atmospheric distillation tower with its related accessories, including a Cummins Diesel Plant, boiler, pumps, and all related electrical and piping. FISS will also construct three storage tanks, each capable of storing 28,500 barrels of oil, and one storage tank capable of storing 28,500 barrels of diesel fuel. We are negotiating wth FISS the final details of this plan and related costs, but we tentatively believe the construction will cost approximately $22 million. To date we have completed the foundations for the tanks and we are working on acquiring material to construct the tanks. We are presently in a private equity raise of capital in Colombia and we are in the process of securing additional bank financing for this project. We anticipate the project will be complete within 9 months after obtaining the financing.

 

On September 30, 2008 Odin ZF, a company which is owned by Mamoru Saito, our CEO entered into a lease with a purchase option for another refinery in Colombia. At the same time Odin Petroil and Odin ZF entered into an agreement to finance this refinery with an option to assume this lease and purchase option. Odin Petroil suspended this agreement during March 2009 due to complexities involved in the lease/purchase arrangement being done by Odin ZF. Should circumstances change, Odin Petroil continues to have an option to resume the lease and subsequently acquire this refinery at its option. Odin Petroil has continued to operate the facility in a management capacity and during 2009 terms were established, whereby we received a management fee of 300,000,000 pesos monthly (US$145,300). During 2009 Odin Petroil billed fees totalling 3,600,000,000 pesos (US$1,743,654). The contract is on a month to month basis and is cancellable by either party upon 30 days written notice. During our fiscal year-ended December 31, 2009, the cost of operation of this facility was approximately $900,000. The results of Odin ZF have been consolidated with Amiworld for the year ended December 31, 2009.

 

(10)  Notes Payable

 

In July 2008, two of our subsidiary companies, Odin Energy and Odin Petroil, obtained unsecured revolving lines of credit from Bancolombia in the aggregate amounts of 500,000,000 pesos (US$257,929) each. Subsequently, these two subsidiaries have made routine draws and payments pursuant to the terms of this agreement. At December 31, 2009, our subsidiary companies had a balance of 505,478,559 pesos (US$247,271) each. At December 31, 2008, Odin Energy had a balance of $458,332,665 pesos (US$203,548) and Odin Petroil had a balance of $462,624,484 (US$205,455). These lines of credit mature between January 19, 2010 and March 22, 2010. We continue to make draws on these lines of credits which create new maturity dates. Interest currently accrues at the rates between 11.8459% to 15.4598% per annum.

 

 

F-17

 

 

AMIWORLD, INC.

Notes to the Consolidated Financial Statements

December 31, 2009 and 2008

 

(10)  Notes Payable (continued)

 

During October 2008, our subsidiary, C.I. Odin Petroleum, entered into an agreement with Bancolombia to allow it to factor purchase-sale commercial and exchange bills, checks, and other securities for periods generally ranging between 30 to 180 days. The interest and terms vary based on current bank rates. The company had an aggregate debt related to this agreement 3,308,175,172 pesos (US$1,618,296) and 3,507,525,648 pesos (US$1,557,717) as of December 31, 2009 and December 31, 2008, respectively.

 

During September 2009, two of our subsidiary companies, Odin Energy and Odin Petroil, obtained loans from Banco GNB Sudameris in the aggregate amounts of 1,000,000,000 pesos (US$515,857) each. At December 31, 2009, the balance on these loans was 1,038,168,186 (US$507,853) each. These loans matured on December 7, 2009 and were extended until June 9, 2010 and June 10, 2010, respectively. Interest currently accrues at 12.56% per annum.

 

During October 2009, two of our subsidiary companies, Odin Energy and Odin Petroil, obtained loans from Banco Colpatria Red Multibanco Colpatria S.A. in the aggregate amounts of 250,000,000 pesos (US$134,583) each. At December 31, 2009, the balance on these loans was 252,969,444 (US$123,749) each. These loans matured on February 15, 2010 and were paid off Interest accrued on these obligations at the rate of 12.55% per annum.

 

During November 2009, two of our subsidiary companies, Odin Energy and Odin Petroil, obtained loans from Davivienda in the aggregate amounts of 850,000,000 pesos (US$424,951) each. These obligations provided for quarterly payments of principal and interest of 226,884,845 pesos (approximately $US113,429) for each loan. At December 31, 2009, the balance on these loans was 858,076,889 (US$419,756) each. These loans mature on November 19, 2010. Interest currently accrues at 10.69% per annum.

 

During December 2009 our subsidiary company, Odin Petroil, obtained a factoring arrangement with Bancolex in the aggregate amount of 187,068,091 pesos (US$91,510) for the purchase of 1,320 barrels of crude. This factoring agreement matured on February 16, 2010 and was paid in full at maturity. Interest on the factoring arrangement was 6,547,383 pesos (US$3,171).

 

On December 18, 2009, we received a loan in the principal amount of $1,000,000, with interest accruing at the rate of 9.6%. The loan is not secured and is payable December 18, 2010.

 

 

The Company has evaluated events and transactions that occurred between December 31, 2009 and the date the consolidated financial statements were available for issue, for possible disclosure or recognition in the consolidated financial statements. The Company has determined that there were no such events or transactions that warrant disclosure or recognition in the consolidated financial statements.

 

 

F-18

 

 

ITEM 9.          CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

 

None

 

 

DISCLOSURE CONTROLS AND PROCEDURES

 

Disclosure Controls and Procedures- Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this report.

 

These controls are designed to ensure that information required to be disclosed in the reports we file or submit pursuant to the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission, and that such information is accumulated and communicated to our management, including our CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure.

 

Based on this evaluation, our CEO and CFO concluded that our disclosure controls and procedures were effective as of December 31, 2009, at the reasonable assurance level.

 

We believe that our consolidated financial statements presented in this annual report on Form 10-K/A4 fairly present, in all material respects, our financial position, results of operations, and cash flows for all periods presented herein.

 

Inherent Limitations -Our management, including our Chief Executive Officer and Chief Financial Officer, do not expect that our disclosure controls and procedures will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. The design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdown can occur because of simple error or mistake. In particular, many of our current processes rely upon manual reviews and processes to ensure that neither human error nor system weakness has resulted in erroneous reporting of financial data.

 

Changes in Internal Control over Financial Reporting – There were no changes in our internal control over financial reporting during the fiscal year ended December 31, 2009, which were identified in conjunction with management’s evaluation required by paragraph (d) of Rules 13a-15 and 15d-15 under the Exchange Act, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

This Annual Report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit us to provide only management’s report in this Annual Report.

 

MANAGEMENT REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

 

Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Exchange Act. Those rules define internal control over financial reporting as a process designed to provide reasonable assurance regarding the reliability of

 

 

financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that:

 

 

 

 

Because of its inherent limitations, internal controls over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

 

Management assessed the effectiveness of our internal control over financial reporting as of December 31, 2009. In making this assessment, our management used the criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

 

Based on an assessment carried out during the period December 27-29, 2009, management believes that, as of December 31, 2009, our internal control over financial reporting was effective.

 

 

None.

 

[The remainder of this page is intentionally left blank.]

 

 

PART III

 

 

Following is a list of our officers and directors:

 

 

Each of our directors serve as director until our next Annual Meeting of Stockholders to be held in 2010 and the election and qualification of the director’s respective successor or until the director’s earlier death, removal or resignation.

 

The following is a biographical summary of the business experience of our current Officers and Directors:

 

Mamoru Saitohas been our Chief Executive Officer, Secretary and Directorsince our inception in November 2006. Prior, since November 1998, he held similar positions with our predecessor, Amiworld, Inc., a New York corporation (“Amiworld – NY”), which merged into our Company in March 2007 in order to affect a reincorporation in the State of Nevada. Mr. Saito manages overall operations of our Company and coordinates and oversees all key decisions. Since 1980, Mr. Saito has coordinated numerous investments in the United States on behalf of high net worth Japanese nationals. Since 1988, Mr. Saito has been an active investor in the United States and has expanded his enterprise to include operations in Japan, the United States, Canada, Venezuela, Colombia, the Caribbean, and Europe. Mr. Saito commutes between New York, Venezuela, Colombia, Panama, and Japan. He is also the President and principal shareholder JASB of New York Corp., a privately held New York corporation that holds various interests in a variety of companies. Mr. Saito is a 1968 graduate of Tohoku Gakuin University with a degree in Economics. Mr. Saito devotes, on the average, approximately forty hours per week to our business,

 

Takahito Sakagamibecame ourPresident and a Director in March 2007 upon the closing of the Merger with Amiworld – NY. Mr. Sakagami manages our daily operations and our marketing division. Prior, from November 1998 through March 2007, he was President of Amiworld – NY. In addition, since July 1994, Mr. Sakagami has been President of JASB of New York Corp., a privately held New York corporation that is also one of our principal shareholders. He has extensive international and domestic business experience. In 1985, Mr. Sakagami formed Amuru 21, a private Japanese company. He merged his company with Mr. Saito’s group of companies in 1994. During 1995, Mr. Saito and Mr. Sakagami worked together on a successful venture to import apparel from the United States into Japan. During 2005, Mr. Sakagami was placed in charge of all marketing activities of Amiworld – NY. Throughout the years this role was expanded and Mr. Sakagami is now the COO for all of Mr. Saito’s companies where his responsibilities include almost all aspects of day-to-day operations. He devotes substantially all of his business time to our affairs.

 

Yuji Adachiwas appointed as a Director of our Company in March 2007 upon the closing of the Merger with Amiworld – NY. Prior, from November 1998 until March 2007, he was a director of Amiworld – NY. In

 

 

addition, since April 1992, he has been employed by Adachi Enterprises in Burnaby, British Colombia, Canada, a driving school. He graduated in 1974 from the Kyoto University of Foreign Language. He devotes only such time as necessary to our business.

 

David Garin was appointed as our Chief Financial Officer, Treasurer and a director in January 2010. Since March 2007 Mr. Garin has been employed by us as our Vice President of Finance. Mr. Garin’s principal responsibility has been the oversight of our accounting and financial functions. Mr. Garin has been employed as a member of Mr. Saito’s group of companies since November 1994. Mr. Garin graduated from Western State College with a B.A. in Accounting and Business Administration in 1990 and the University of Denver with a Master of Accountancy in 1992. Mr. Garin holds an active CPA license in the State of Colorado and a Series 6 and Series 63 SEC license and currently has memberships in the Colorado Society of CPA’s and the American Institute of CPA’s. He devotes substantially all of his business time to our affairs.

 

Fermin Veitiawas appointed as a director of our Company in January 2010. Since June 2006 Mr. Veitia has been employed by Amiworld, Inc. as general manager of our biodiesel plant and petroleum refinery. Prior, from March 2002 through June 2006, Mr. Veitia owned and managed Oersveca, a Venezuela corporation devoted to construction, electrical engineering, and mechanics. Mr. Veitia earned a mechanical engineering degree from Lisandro Alvarado Politechnical University in 1989. He devotes substantially all of his time to our affairs.

 

Luis Martinez was appointed as a director of our Company in January 2010. Mr. Martinez commenced his employment with Amiworld, Inc. in December 2006 as an accountant. Since that time he has served in a variety of positions with us, including purchasing manager, assistant general manager and plant supervisor. He currently serves in the position of head of corporate planning and resource management, a position he assumed in August 2009. Prior, from October 2000 through November 2006, Mr. Martinez served as project control officer for Sierra Nevada de Santa Marta Foundation, a company engaged in environmental projects. During his career he has served in a variety of capacities in the energy sector. Mr. Martinez earned his degree in accounting specializing in project development and information systems from University of Atlantico in 1982. Mr. Martinez holds an active CPA license in Colombia. He devotes substantially all of his business time to our affairs.

 

 

COMPENSATION COMMITTEE REPORT

The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation SK with management of the Company. Based on this review, the Compensation Committee recommended to the Company’s Board that the Compensation Discussion and Analysis be included in this report.

 

April 13, 2010

 

The information contained in the report above shall not be deemed to be “soliciting material” or to be “filed” with the Securities and Exchange Commission, nor shall such information be incorporated by reference into any future filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent that the Company specifically incorporates it by reference in such filing.

 

 

COMPENSATION DISCUSSION AND ANALYSIS

 

We have a Compensation Committee comprised of two directors, including Messrs. Mamoru Saito (Chairman) and Yuji Adachi. Mr. Adachi is an independent director. Under our Compensation Committee charter, our Compensation Committee determines and approves all elements of executive officer compensation. To date, none of our executive officers have received any compensation and it is not expected that this will change in the foreseeable future.

 

The Compensation Committee’s primary objectives in determining executive officer compensation are:

 

 

 

SUMMARY COMPENSATION TABLE

 

During our fiscal years ended December 31, 2009, 2008, 2007 and 2006, no executive officer received any compensation. It is not anticipated that any of our executive officers will receive material compensation in the foreseeable future. Following is a table containing the aggregate compensation paid to our Chief Executive Officer and all other officers who received aggregate compensation exceeding $100,000 during our fiscal year ended December 31, 2009:

 

 

EMPLOYMENT AGREEMENTS

 

None of our executive officers is party to an employment agreement with us.

 

STOCK PLAN

 

In October 2007, our Board of Directors and a majority of our shareholders approved by consent our “2007 Stock Option Plan” (the “Plan”). This Plan provides for the grant of incentive and non-qualified stock options that may be issued to key employees, non-employee directors, independent contractors and others, and we originally reserved 1,500,000 shares of our Common Stock for issuance under the Plan. In April, 2009, the number of shares reserved under the Plan was increased to 3,000,000 shares. The options are to be granted for a term of not more than ten (10) years, except the term is five (5) years for options granted to any person who is a “control person,” as defined under the Securities Act of 1933, as amended, and other terms and conditions that are usual and customary.

 

As of the date of this report, options to purchase 1,411,500 shares of our Common Stock have been issued at an exercise price of $1.00 per share, except for those 550,000 options issued to our control persons, which are exercisable at a price of $1.10 per share. None have been exercised. During our fiscal year ended December 31, 2009, options to purchase 78,500 shares were terminated as a result of termination of employment. These options

 

 

were issued during our fiscal year ended December 31, 2007. No options were issued during our fiscal year ended December 31, 2009.

 

ITEM 12.   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

 

The following table sets forth certain information regarding the ownership of Common Stock as of April 14, 2010, by (i) each person known to us to own more than 5% of our outstanding common stock, (ii) each of our directors, (iii) each of our executive officers, and (iv) all of our directors and executive officers as a group. Unless otherwise indicated, all shares are owned directly and the indicated person has sole voting and investment power. Included in the table are shares of our Common Stock that underlie outstanding options that may be exercised over the next year.

 

__________________

 

ITEM 13.   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE

 

RELATED PARTY TRANSACTIONS

 

In December 2006, we formed Odin Petroleum Corp., a New York corporation, which will engage in the oil brokering business, by purchasing and selling oil on the open market, which will be shipped by ships provided by

 

 

Great Voyages. We own a 95% interest in this company. The remaining 5% interest in Odin Petroleum is owned by our management.

 

In July 2009, we formed Grupo Odin S.A., a Colombian corporation formed to act as a holding company for all of our Colombian subsidiaries. Approximately 4.5% of the minority shareholders of Grupo Odin are related parties. Grupo Odin S.A. acts as a holding company for Odin Energy Santa Marta Corporation S.A. and Odin Petroil, S.A. All minority shareholders of Odin Petroleum, Ltd., Odin Energy Santa Marta, S.A., and Odin Petroil, S.A. are related parties.

 

From time to time both we and our predecessor company, Amiworld-NY have borrowed, loaned, and conducted business with our affiliated entities. Following is a table of balances owed by us, or to us, as of December 31, 2009 and 2008:

 

 

These balances carry no stated interest or repayment terms.

 

On February 1, 2007, we entered into a contract with JASB Corporation to act as its agent for oil trades. Under the terms of this contract we received total revenues of $360,000 during 2008. On March 24, 2009, we entered int a contract with JASB Corporation to allow us to utilize JASB Corporation’s office staff, office space, and office equipment, among other things for the purpose of aiding Odin Petroleum’s efforts to sale our products. During 2009 we paid JASB fees of approximately $73,398.

 

On September 30, 2008, Odin agreed to lease and operate another petroleum diesel refinery in the free trade zone in Santa Marta, Colombia. Odin terminated this lease due to complexities involved in the lease/purchase arrangement being done by Odin Petroil ZF Ltda. U, which is a company owned by Mamoru Saito, our CEO. Odin has continued to operate the facility in a management capacity and during 2009 terms were established, whereby we received a management fee of 300,000,000 pesos monthly (US$145,300). During 2009 Odin billed fees totalling 3,600,000,000 pesos (US$1,743,654). The contract is on a month to month basis and is cancellable by either party upon 30 days written notice. Should circumstances change Odin continues to have an option to resume the lease and subsequently acquire this refinery at its option. In accordance with ARB No. 51 the results of Odin Petroil ZF Ltda. U have been consolidated with Amiworld for the year ended December 31, 2009.

 

On September 30, 2008, Odin Petroil, ZF Ltda. U (“Odin ZF”), a company which is owned by Mamoru Saito, our CEO, entered into a lease with a purchase option for another refinery in Colombia. At the same time Odin Petroil and Odin ZF entered into an agreement to finance this refinery. Pursuant to the terms of this agreement, Odin Petroil also has an option to assume this lease, including the option to purchase. Odin Petroil suspended this agreement during March 2009 due to complexities involved in the lease/purchase arrangement being done by Odin ZF. Should circumstances change, Odin Petroil continues to have an option to resume the lease and subsequently acquire this refinery at its option. Odin Petroil has continued to operate the facility in a management capacity and during 2009 terms were established whereby we received a management fee of 300,000,000 pesos monthly (US$145,300). During 2009, Odin Petroil billed fees totaling 3,600,000,000 pesos (US$1,743,654). The contract is on a month to month basis and is cancellable by either party upon 30 days written notice. During our fiscal year ended December 31, 2009, the cost of operation of this facility was approximately $900,000. The results of Odin ZF have been consolidated with our financial statements for the year ended December 31, 2009, included in this report.

 

Our headquarters are located at 60 E. 42nd Street, Suite 1225, New York, New York 10165, telephone (212) 557-0223. This space consists of approximately 543 square feet of executive office space and is subleased

 

 

pursuant to a verbal agreement on a month-to-month basis from a company owned by Mr. Saito, our Chief Executive Officer, at a monthly rental rate of $3,592. We also pay for utilities on this space, which varies from month to month.

 

We also sublease an apartment on a month-to-month basis that is used by our employees, located at 240 East 47th Street, Apt.10E, New York, NY 10017. This property is leased pursuant to a verbal agreement from Tory Pines Resort Inc. (“Tory Pines”), an affiliated entity, at a monthly rent of $2,925. Tory Pines is owned by Mr. Saito, our CEO and President.

 

JASB, one of our principal shareholders and a company owned by Mr. Saito, our CEO and President, did construct a petroleum refinery adjacent to the biodiesel plant recently constructed by us. From April 2007 through December 10, 2007, we leased this property to JASB at a rate of approximately $4,550 per month (10,000,000 pesos), which is consistent with applicable lease rates in Santa Marta, Colombia. On December 10, 2007, we acquired JASB’s entire ownership interest of 94.5% of stock in exchange for 7,814,772 shares of our “restricted” Common Stock, wherein we acquired all of JASB’s interest in Odin Petroil, S.A., a Colombian corporation (“Odin”). The consideration for the acquisition of Odin was determined based upon an independent valuation of Odin. We valued the shares of our Common Stock issued in this transaction at $1.50 per share.

 

In July 2009, we formed Grupo Odin S.A., a Colombian corporation formed to act as a holding company for all of our Colombian subsidiaries. Approximately 4% of the minority shareholders of Grupo Odin are related parties. Grupo Odin S.A. acts as a holding company for Odin Energy Santa Marta Corporation S.A. and Odin Petroil, S.A. All minority shareholders of Odin Petroleum, Ltd., Odin Energy Santa Marta, S.A., and Odin Petroil, S.A. are related parties.

 

Messrs. Saito and Sakagami are deemed “promoters” of our Company, as that term is defined under Rule 405 of Regulation C promulgated under the Securities Act of 1933, as amended. Neither Messrs. Saito nor Sakagami received any compensation from us as a result of their activities relating to our Company, either directly or indirectly.

 

There are no other related party transactions that are required to be disclosed pursuant to Regulation S-K promulgated under the Securities Act of 1933, as amended.

 

DIRECTOR INDEPENDENCE

 

In January 2010, two of the three members of our Audit Committee resigned as directors. There were no disagreements between us and these former Board members on any of our business practices or procedures. As a result, only Mr. Adachi remains as an independent director of our Company. We intend to solicit new independent directors in the foreseeable future and re-establish our Audit Committee, as well as our Compensation Committee and Governance Committee.

 

Our Audit Committee is responsible for approving all audit, audit-related, tax and other services. The Audit Committee pre-approves all auditing services and permitted non-audit services, including all fees and terms to be performed for us by our independent auditor at the beginning of the fiscal year. Non-audit services are reviewed and pre-approved by project at the beginning of the fiscal year. Any additional non-audit services contemplated by the Company after the beginning of the fiscal year are submitted to the Audit Committee Chairman for pre-approval prior to engaging the independent auditor for such services. Such interim pre-approvals are reviewed with the full Audit Committee at its next meeting for ratification. Our Audit Committee met three (3) times during our fiscal year ended December 31, 2009.

 

 

FEES PAID TO INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMS

The following table presents fees for professional audit services rendered by Stark Winter Schenkein & Co., LLP for the years ended December 31, 2009 and December 31, 2008.

 

 

 

 

Audit Fees. Consist of amounts billed for professional services rendered for the audit of our annual consolidated financial statements included in our Annual Reports on Forms 10-K or 10-KSB, and reviews of our interim consolidated financial statements included in our Quarterly Reports on Forms 10-Q or 10-QSB, and our Registration Statement on Form SB-2, including amendments thereto.

 

Tax Fees. Consists of amounts billed for professional services rendered for tax return preparation, tax planning and tax advice.

All Other Fees. Consists of amounts billed for services other than those noted above.

 

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PART IV

 

 

 

 

          Following are a list of exhibits which we previously filed in other reports which we filed with the SEC, including the Exhibit No., description of the exhibit and the identity of the Report where the exhibit was filed.

 

 

 

 

 

 

59

 

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 thereunder duly authorized.

 

 

 

In accordance with the Exchange Act, this Report has been signed below by the following persons on behalf of the registrant and in the capacities indicated on April 15, 2010.

 

s/Mamoru Saito_______________________

Mamoru Saito, Director

 

s/Takahito Sakagami___________________

Takahito Sakagami, Director

 

s/Fermin Veitia_______________________

Fermin Veitia, Director

 

____________________________________

Yuji Adachi, Director

 

s/David Garin_________________________

David Garin, Director

 

____________________________________

Luis Martinez, Director