American Security Resources Corp. - FORM 10-K

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EX-32.1 - CERTIFICATION - American Security Resources Corp.	arsc_ex321.htm
EX-31.1 - CERTIFICATION - American Security Resources Corp.	arsc_ex311.htm

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

þ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2010

Commission file number 000-27419

AMERICAN SECURITY RESOURCES CORPORATION

(Exact name of small business issuer as specified in its charter)

2525 Robin Hood Street, Suite 1100

Houston, Texas 77005

(Address of principal executive offices)

Nevada		90-0179050
(State of incorporation)		(I.R.S. Employer Identification No.)

Registrant’s telephone number, including area code: (713) 465-1001

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act: $.001 Par Value Common

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

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 o No þ

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 229.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No þ

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.

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 the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o

Accelerated filer o

Non-accelerated filer o

Smaller reporting company þ

(Do not check if a smaller reporting company)

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

The aggregate market value of the voting and non-voting common equity held by non-affiliates as of December 31, 2010 is $1,800,151 (based on its reported last sale price by the OTC Pink Sheets).

The number of shares outstanding of the Registrant's common stock as of December 31, 2010 was 19,414,684,920.

Documents Incorporated By Reference: None

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AMERICAN SECURITY RESOURCES CORPORATION

INDEX TO FORM 10-K

December 31, 2010

			Page No.
Part I	Item 1.	Description of Business	3
	Item 2.	Description of Property	4
	Item 3.	Legal Proceedings	4
	Item 4.	Submission of Matters to a Vote of Security Holders	5

Part II	Item 5.	Market for Common Equity and Related Stockholder Matters	5
	Item 6.	Selected Financial Data	6
	Item 7.	Management's Discussion and Analysis or Plan of Operation	7
	Item 8.	Financial Statements	10

Part III	Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	28
	Item 9A.	Controls and Procedures	28
	Item 10.	Directors, Executive Officers, Promoters and Control Persons Compliance with Section 16(a) of the Exchange Act Executive Compensation	30
	Item 11.	Executive Compensation	31
	Item 12.	Security Ownership of Certain Beneficial Owners and Management	32
	Item 13.	Certain Relationships and Related Party Transactions	32
	Item 14.	Principal Accountant Fees and Services	32
Part IV	Item 15.	Exhibits and Reports on Form 8-K	33
		Signatures	33

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PART I

ITEM 1. DESCRIPTION OF BUSINESS

Forward-Looking Statements

Certain statements concerning the Company's plans and intentions included herein may constitute forward-looking statements for purposes of the Securities Litigation Reform Act of 1995 for which the Company claims a safe harbor under that Act. There are a number of factors that may affect the future results of the Company, including, but not limited to, (a) the ability of the company to obtain additional funding for operations, (b) the continued availability of management to develop the business plan, (c) regulatory acceptance of our products in diverse localities and (d) successful development and market acceptance of the company’s products.

This periodic report may contain both historical facts and forward-looking statements. Any forward-looking statements involve risks and uncertainties, including, but not limited to, those mentioned above. Moreover, future revenue and margin trends cannot be reliably predicted.

Overview

AMERICAN SECURITY RESOURCES CORPORATION (the “Company” or ARSC) is a holding company with three wholly owned subsidiaries. Hydra Fuel Cell Corporation has completed several development stages of the HydraStax® unit and testing for certification is currently underway. We have two additional subsidiaries. We formed American Security Capital Corporation that is to provide financing options for the sales of products created by Hydra Fuel Cell and American Hydrogen. American Hydrogen Corporation is developing technologies to formulate hydrogen that we hope will change the economics of producing hydrogen sufficiently to enable the hydrogen economy.

Hydra Fuel Cell Corporation completed the initial development stage and several advanced stages of the HydraStax® unit and testing for certification is currently underway. We believe that the HydraStax® unit's cost per kWh will be significantly below that of its competitors, giving them a competitive edge as a replacement for residential grid power. Thus, upon certification Hydra intends to aggressively market these units and the Company is actively pursuing financing to begin manufacturing and distribution.

Hydra successfully defended itself from claims of patent infringement brought by a third party in 2006. Hydra’s fuel cell is original and Hydra categorically denied that it infringed on any patents. The Federal Court in Portland, Oregon dismissed the plaintiff’s suit against Hydra in 2008. We estimate that our Hydra Fuel Cell subsidiary will require approximately $1.5 million to produce and sell HydraStax® units to cash flow self-sufficiency. There is no guarantee that management will be successful in obtaining these funds.

On April 21, 2014, Hydrogen Future Corporation (OTCQB: HFCO) completed the acquisition of Hydra Fuel Cell Corporation (“Hydra”) from American Security Resources Corporation (Pink Sheets: ARSC). Hydra has developed advanced hydrogen fuel cell technology which it initially intends to deploy as residential and small commercial grid replacement for electric generation.

Under the agreement to acquire Hydra, HFCO acquired 100% of the common stock of Hydra in exchange for a convertible preferred share issued to ARSC. The preferred share is convertible into an amount equal to 100.2% of the then outstanding common stock of HFCO at the time of conversion, which is at the sole discretion of ARSC. This gives ARSC an effective 50.1% equity interest in HFCO.

American Hydrogen Corporation (AHC) was created to develop and commercialize technologies to formulate hydrogen that we believe will change the economics of producing hydrogen sufficiently to enable the hydrogen economy. The first hydrogen formulator that AHC will vend is expected to produce hydrogen from natural gas and propane and will be designed to provide hydrogen for Hydra’s fuel cells.

The Company continues to review acquisition opportunities that would enhance its fuel cell offerings and expand its offerings in alternative energy production.

The Company’s Internet address is http://www.americansecurityresources.com. Information contained on the Company’s web site is not a part of this report. The Company’s stock is traded on OTC Pink Sheets under the symbol “ARSC.PK.”

Organizational History

The Company, previously known as Computer Automation Systems, Inc., was reorganized and recapitalized in 2004 changing its name, first to Kahuna Network Security, Inc. and in July 2004, to American Security Resources Corporation with a business focus of acquiring companies in homeland security and national defense. In October 2005, the Company changed its focus to the development and commercialization of technologically advanced, high volume mass producible, hydrogen fuel cells and related clean energy technologies.

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The Company’s Products and Services

The Company is developing hydrogen fuel cells that it expects to begin delivering in 2011. Additionally, the Company is developing technologies to produce hydrogen at a reduced cost.

Employees

As of December 31, 2010, the Company had 2 two contract management members. None of the Company’s employees are covered by any collective bargaining agreements. Management believes that its relations with its employee contractors are good and the Company has not experienced any work stoppages attributable to employee disagreements.

The Company’s subsidiary, Hydra Fuel Cell Corporation, had six contractors working on the development of the Company’s proprietary HydraStax™ hydrogen fuel cells and other hydrogen related technologies.

The Company’s subsidiary, American Hydrogen Corporation, had three contractors working on the development of the Company’s hydrogen generators.

The Company’s subsidiary, American Security Capital, currently does not have any employees or contractors.

RISK FACTORS

Limited History

The Company is a startup with limited operating history and faces challenges typical of new businesses in highly competitive markets with many other providers of the same or essentially the same products and services.

No Revenue and Limited Resources

The Company is a start up business. There is no assurance that the Company will be able to finance its development, or that the Company will be able profitably to operate such business.

Limited Staff

The Company has two officers and five additional directors charged with the responsibility of executing the Company’s business strategy. Any death, injury or other incapacity of one or more of them could adversely affect the Company’s ability to complete its business strategy.

Volatility of Stock Market

There have been significant fluctuations in the market price for the Company's common stock. Factors such as variations in the Company's revenues, earnings, if any, and cash flow and announcements of innovations or acquisitions by the Company or its competitors could cause the market price of the common stock to fluctuate substantially. In addition, the stock market has experienced price and volume fluctuations that have particularly affected companies in the alternative energy business resulting in changes in the market price of the stocks of many companies which may not have been directly related to the operating performance of those companies. Such broad market fluctuations may adversely affect the market price of the Company’s common stock.

ITEM 2. DESCRIPTION OF PROPERTY

ASRC leased approximately 1,600 square feet of office space at 19 Briar Hollow Lane, Ste 125, Houston, TX 77027, for approximately $2,650 per month through March 31, 2012. Additionally, the Company’s Hydra Fuel Cell subsidiary leased approximately 5,000 square feet of office and light manufacturing space in Portland, Oregon, for approximately $4,930 per month. Currently the Company leases executive offices at 2525 Robin Hood Street, Suite 1100, Houston, Texas 77005 at a monthly rate of $500 per month. Hydra Fuel Cell Corporation was acquired by Hydrogen Future Corporation in April 2014 as discussed in the Note 15 - Subsequent Events on page 28 of the Financial Statements in this 10-K Report.

ITEM 3. LEGAL PROCEEDINGS

From time to time, the Company may become involved in litigation arising in the ordinary course of its business. The Company does not believe that any such litigation will have a material effect on the Company’s financial position or results of operations.

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ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

NONE

PART II

Item 5. Market for Common Equity and Related Stockholder Matters.

Market Information.

The Company’s common stock trades on Pink Sheets under the symbol “ARSC.PK”, and was formerly listed on the NASDAQ OTC Bulletin Board under the symbol “ARSC”. The market for the Company’s common stock on Pink Sheets and on the OTC Bulletin Board is limited, sporadic and highly volatile.

The following quotations were provided by Pink Sheets and the OTC Bulletin Board for the Company’s common stock for the last two years. The quotations represent inter-dealer prices and do not necessarily represent actual transactions. These quotations do not reflect dealer markups, markdowns or commissions.

Quarter ended:	High		Low
March 31, 2010	$	0.0006	$	0.0002
June 30, 2010	$	0.003	$	0.0001
September 30, 2010	$	0.0003	$	0.0001
December 31, 2010	$	0.0001	$	0.0001

March 31, 2009	$	0.034	$	0.0005
June 30, 2009	$	0.002	$	0.0003
September 30, 2009	$	0.0011	$	0.0003
December 31, 2009	$	0.0007	$	0.0003

Holders

The number of record holders of the Company's securities as of the date of this Report is approximately 351.

Dividends

The Company has not declared any cash dividends with respect to its common stock, and does not intend to declare cash dividends in the foreseeable future. There are no material restrictions limiting, or that are likely to limit, the Company's ability to pay dividends on its securities.

Recent Sales of Unregistered Securities

During the year ended December 31, 2010, ASRC issued 5,171,075,185 common shares to external parties in exchange for consulting and legal services recorded a total expense of $904,776. The expense is equal to the fair value of the shares based upon the closing price at the date that either a definitive agreement to issue the shares was reached with external parties or the date the Board authorized their issuance.

During the year ended December 31, 2010, ASRC issued 3,030,666,666 common shares in lieu of compensation to its Officers and Directors. The expense is equal to the fair value for services rendered. These shares were valued at $135,500 based on their market value at the time of issuance, as reflected in these financial statements.

During 2009, ASRC entered into a series of wrap around agreements with two accredited investment firms in which ASRC and the Chief Executive Officer and Chief Operating Office guaranteed the liability in exchange for settlement of accrued compensation to these individuals. The wrap around agreement allowed the investor to exchange the outstanding debt in exchange for common stock of the Company. During 2010, the Company issued 3,030,666,666 common shares in exchange for settlement of the accrued compensation of $135,500 to these executives.

During the year ended December 31, 2009, ASRC issued 2,116,514,414 common shares to external parties in exchange for consulting and legal services recorded a total expense of $1,488,450. The expense is equal to the fair value of the shares based upon the closing price at the date that either a definitive agreement to issue the shares was reached with external parties or the date the Board authorized their issuance.

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During the year ended December 31, 2009, ASRC issued 189,336,735 common shares in lieu of compensation to its Officers and Directors. The expense is equal to the fair value for services rendered. These shares were valued at $87,550 based on their market value at the time of issuance, as reflected in these financial statements.

During 2009, ASRC entered into a series of wrap around agreements with two accredited investment firms in which ASRC and the Chief Executive Officer and Chief Operating Office guaranteed the liability in exchange for settlement of accrued compensation to these individuals. The wrap around agreement allowed the investor to exchange the outstanding debt in exchange for common stock of the Company. During 2009, the Company issued 935,079,111 common shares in exchange for settlement of the accrued compensation of $206,449 to these executives.

The above transactions were completed pursuant to either Section 4(2) of the Securities Act or Rule 506 of Regulation D of the Securities Act or Rule 506 of Regulation D of the Securities Act. With respect to issuances made pursuant to Section 4(2) of the Securities Act, the transactions did not involve any public offering and were sold to a limited group of persons. Each investor either received adequate information about the Company or had access to such information. The Company determined that each investor had such knowledge and experience in financial and business matters that they were able to evaluate the merits and risks of an investment in the Company.

With respect to issuances made pursuant to Regulation D of the Securities Act, the Company determined that each purchaser was an “accredited investor” as defined in Rule 501(a) under the Securities Act, or if such investor was not an accredited investor, that such investor received the information required by Regulation D.

All sales of the Company’s securities were made by officers of the Company who have received no commission or other remuneration for the solicitation of any person in connection with the respective sales of the securities described above. The recipients of securities represented their intention to acquire the securities for investment only and not with a view to sale, or for sale in connection with any distribution thereof. Appropriate legends were affixed to the share certificates issued in these transactions.

Equity Compensation Plan Information

The Company has a 2009 stock incentive plan, as filed on Form S-8 on January 30, 2009, under which the Company is authorized to grant incentive shares of stock, to a maximum of 200 million (200,000,000) shares, to key employees, officers, directors, and consultants of the Company. The plan provides both for the direct award or sale of shares and for the grant of options to purchase shares.

The following table provides information as of December 31, 2010 regarding compensation plans (including individual compensation arrangements) under which equity securities are authorized for issuance:

Plan Category	Number of securities to be issued upon exercise of outstanding options, warrants and rights		Weighted-average exercise price of outstanding options, warrants and rights		Number of securities available for future issuance under equity compensation plans (excluding securities shown in first column)
Equity compensation plans approved by shareholders (1)(2)		0	$	0.00		200,000,000

Total		0	$	0.00		200,000,000

(1) Consists of shares of our common stock issued or remaining available for issuance under our stock compensation plan.

(2) Approved by shareholders of American Security Resources Corporation.

Item 6. Selected Financial Data

Not required for smaller reporting issuers.

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Item 7. Management's Discussion and Analysis or Plan of Operation

Overview.

Forward-Looking Statements

This Management’s Discussion and Analysis of Financial Condition and Results of Operations and other parts of this document contain forward-looking statements that involve risks and uncertainties, as well as current expectations and assumptions. From time to time, the Company may publish forward-looking statements, including those that are contained in this report, relating to such matters as anticipated financial performance, business prospects, technological developments, new products, research and development activities and similar matters. The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements. In order to comply with the terms of the safe harbor, the Company notes that a variety of factors could cause the Company’s actual results and experience to differ materially from the anticipated results or other expectations expressed in the Company’s forward-looking statements. The risks and uncertainties that may affect the operations, performance, development and results of the Company’s business include, but are not limited to, its ability to maintain sufficient liquidity to meet its obligations, maintaining compliance with the terms of its credit agreement, the ability to sell some or all of its business units and the amount of proceeds from any such sales, the impact of the significant reduction in research and development expenditures, limitations in its ability to fund capital expenditures to remain competitive, adverse changes in the global economy, sudden decreases in the demand for electronic products and semiconductors, the impact of competition, delays in product development schedules, delays due to technical difficulties related to developing and implementing technology, delays in delivery schedules, the ability to attract and maintain sufficient levels of people with specific technical talents, future results related to changes in demand for the Company’s products and services and the Company’s customers’ products and services, and other items discussed elsewhere in this report. The Company’s actual results could differ materially from those anticipated in these forward-looking statements, including those set forth elsewhere in this report. The Company assumes no obligation to update any such forward-looking statements.

Plan for Future Operations

In 2005, we acquired certain intellectual property and contracted with engineers to begin our hydrogen fuel cell division. Seven patent applications have been filed covering some of the innovations incorporated in the HydraStax® and we intend to file additional patent applications. In November 2008 the first of the patents was issued.

Our Hydra Fuel Cell subsidiary completed several development stages of the HydraStax® unit and testing for certification is currently underway. We believe that the HydraStax® unit's cost per kWh will be significantly below that of its competitors, giving it a competitive edge as a replacement for residential grid power. Thus, upon certification, Hydra intends to aggressively market these units. The Company is actively pursuing financing to begin manufacturing and distribution. Hydra installed two of its HydraStax® fuel cells in residences, one in Texas in October 2007 and one in Florida in December 2007, as “Beta Test demonstration units”. These were milestones for Hydra and for the fuel cell industry

American Hydrogen Corporation (AHC) was formed to develop and commercialize technologies to formulate hydrogen that we believe will change the economics of producing hydrogen sufficiently to enable the hydrogen economy.

The Company continues to review acquisition opportunities that would enhance its fuel cell offerings, expand its offerings in alternative energy production or represent opportunities in homeland security or national defense.

We have had no revenue since beginning our Hydra subsidiary. Although we expect revenues from our HydraStax™ unit during 2011, we do expect cash flows from distribution of the unit to become self-funding during 2011. We estimate that our Hydra Fuel Cell subsidiary will require approximately $1.5 million to produce and sell HydraStax® units to cash flow self-sufficiency. There is no guarantee that management will be successful in obtaining these funds.

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Critical Accounting Policies

The accompanying discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”). The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, and expenses, and related disclosure of contingent assets and liabilities. These estimates form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. We base our estimates and judgments on historical experience and all available information. However, future events are subject to change, and the best estimates and judgments routinely require adjustment. US GAAP requires us to make estimates and judgments in several areas, including those related to recording various accruals, income taxes, the useful lives of long-lived assets, such as property and equipment and intangible assets, and potential losses from contingencies and litigation. We believe the policies discussed below are the most critical to our financial statements because they are affected significantly by management’s judgments, assumptions and estimates.

Accounting for Stock-Based Compensation

Effective December 15, 2005, we adopted the provisions of FASB Accounting Standards Codification 718, “Compensation — Stock Compensation” (ASC 718), previously referred to as Statement of Financial Accounting Standards No. 123R, “Share-Based Payment” and applied the provisions of the Securities and Exchange Commission Staff Accounting Bulletin No. 107 using the modified-prospective transition method. Under this transition method, compensation cost recognized includes (a) the compensation cost for all share-based awards granted prior to, but not yet vested, as of December 15, 2005, based on the grant-date fair value estimated in accordance with the original provisions of ASC 718 and (b) the compensation cost for all share-based awards granted subsequent to December 15, 2005, based on the grant-date fair value estimated in accordance with the provisions of ASC 718. The Company had not issued any options to employees in the prior periods thus; there was no impact of adopting the new standard.

Additionally, we accounted for restricted stock awards granted using the measurement and recognition provisions of ASC 718. We measure the fair value of the restricted stock awards on the grant date and recognize them in earnings over the requisite service period for each separately vesting portion of the award.

The Company determines the value of stock options utilizing the Black-Scholes option-pricing model. Compensation costs for share-based awards with pro rata vesting are allocated to periods on a straight-line basis.

Intangible Assets

Intangible assets with estimable useful lives are amortized over respective estimated useful lives to their estimated residual values, and reviewed for impairment in accordance with FASB Accounting Standards Codification 360, “Property, Plant and Equipment” (ASC 360), previously referred to as Statement of Financial Accounting Standards No. 144, Accounting for Impairment or Disposal of Long-Lived Assets .

Off Balance Sheet Arrangements

The Company has no off balance sheet arrangements.

Recent Accounting Pronouncements

The Company has adopted all recently issued accounting pronouncements. The adoption of the accounting pronouncements, including those not yet effective, is not anticipated to have a material effect on the financial position or results of operations of the Company.

Financial Condition and Results of Operations

The Company had no revenue during the calendar years ended December 31, 2010 and 2009.

The Company had no gross profit during fiscal years 2010 and 2009. General and administrative expenses were $1,414,583 and $1,698,829 for the years ended December 31, 2010 and 2009 respectively. Principal general and administrative expenses included contracted services ($714,622 and $834,362, respectively); legal expenses ($324,386 and $341,141, respectively); payroll and contractors of $354,132 in 2009; commission of $136,225 in 2010; and rent ($112,286 and $111,158, respectively). Depreciation expense was $28,984 and $29,798 for the years ended December 31, 2010 and 2009, respectively.

Research and development expenses were $499,486 and $533,086 for the calendar years ended December 31, 2010 and 2009, respectively for costs incurred in its Hydra Fuel Cell and American Hydrogen subsidiaries relating to the development of its HydraStax® hydrogen fuel and hydrogen generator.

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Significant components of operating expenses for 2010 and 2009 were:

	2010		2009
Fair value of warrants issued for services	$	0	$	0
Stock issued for officers and directors' services		8,000		87,550
Stock issued to outside consultants		904,776		1,488,450
Totals	$	912,776	$	1,576,000

The Company had operating losses of $2,452,150 and $2,679,277 for the years ended December 31, 2010 and 2009 respectively.

Liquidity and Capital Resources.

We had no revenues for the years ended December 31, 2010 and 2009.

Our working capital deficit increased by $576,921 to ($2,291,445) at December 31, 2010 compared to ($1,714,524) at December 31, 2009. This deficit is primarily due to lack of revenues while we are in development stage and we continue to incur ordinary research and development and operating expenses as well as reflecting our outstanding debenture balances as current liabilities as a result of defaults under SEC filing provisions in those debenture agreements.

Our cash flows from operations were negative during the years ended December 31, 2010 and 2009, respectively, due to our lack of revenues and the continuation of research and development and operating costs. Our primary funding source was the exercise of stock options for cash, issuance of stock for cash, and proceeds from new convertible debentures resulting in total cash provided by financing activities of $58,811 for the year ended December 31, 2010 and $165,056 for the year ended December 31, 2009.

We consumed $69,839 in cash from operating activities for the year ended December 31, 2010 compared with $177,778 for the year ended December 31, 2009.

We had a net comprehensive loss of $2,452,150 and $2,679,277 or $0.00 and $0.00 per share for the year ended December 31, 2010 and 2009, respectively.

Our financial statements are prepared using principles applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. However, we do not have significant cash or other material liquid assets, nor do we have an established source of revenue sufficient to cover our operating costs and to allow us to continue as a going concern. We may, in the future, experience significant fluctuations in our results of operations. If we are required to obtain additional debt and equity financing or our illiquidity could suppress the value and price of our shares if and when trading in those shares develops. However, our future offerings of securities may not be undertaken, and if undertaken, may not be successful or the proceeds derived from these offerings may be less than anticipated and/or may be insufficient to fund operations and meet the needs of our business plan. Our current working capital is not sufficient to cover expected cash requirements for 2011 or to bring us to a positive cash flow position. If we do not raise sufficient capital to execute our business plan, it is possible that we will not be able to continue as a going concern.

We are attempting to raise additional capital through sales of common stock either through private placements or public offerings, as well as seeking other sources of funding. There are no assurances that ASRC will be able to achieve a level of revenues adequate to generate sufficient cash flow from operations or obtain the additional financing through private placements or public offerings to support the investment in Hydra’s fuel cell technology. If these funds are not available ASRC may not continue its operations or execute its business plan.

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ITEM 8 - FINANCIAL STATEMENTS

AMERICAN SECURITY RESOURCES CORPORATION

INDEX TO FINANCIAL STATEMENTS

	Page
Report of Independent Registered Public Accounting Firm		13

Financial Statements
Consolidated Balance Sheets at December 31, 2010 and 2009		14

Consolidated Statements of Operations for the years ended December 31, 2010 and 2009		15

Consolidated Statement of Shareholders’ Equity for the years ended December 31, 2010 and 2009		16
Consolidated Statements of Cash Flows for the years ended December 31, 2010 and 2009		20
Notes to Consolidated Financial Statements		21

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Management of

American Security Resources, Inc.

Houston, Texas

We have audited the accompanying consolidated balance sheets of American Security Resources Corporation as of December 31, 2010 and 2009, and the related consolidated statements of operations, cash flows and stockholders' equity for the years ended December 31, 2010 and 2009. 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 of these financial statements 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 provided a reasonable basis for our opinion.

We were not engaged to examine management’s assertion about the effectiveness of American Security Resources Corporation’s internal control over financial reporting as of December 31, 2010 and 2009 and, accordingly, we do not express an opinion thereon.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of American Security Resources Corporation as of December 31, 2010 and 2009, 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.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has suffered significant losses and will require additional capital to develop its business until the Company either (1) achieves a level of revenues adequate to generate sufficient cash flows from operations; or (2) obtains additional financing necessary to support its working capital requirements. These conditions raise substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ The Hall Group CPA’s

Dallas, Texas

October 10, 2014

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AMERICAN SECURITY RESOURCES CORPORATION

(A DEVELOPMENT STAGE ENTERPRISE)

CONSOLIDATED BALANCE SHEET

December 31, 2010 and 2009

	2010			2009
ASSETS
Cash in bank	$	1,371		$	12,399
Prepaid expenses		3,890			3,890
Total Current Assets		5,261			16,289

Equipment, net of accumulated depreciation of $119,413		14,758			43,744

Other assets		10,214			18,962

TOTAL ASSETS	$	30,233		$	78,995

LIABILITIES AND SHAREHOLDERS' (DEFICIT) EQUITY

CURRENT LIABILITIES
Accounts payable	$	701,579		$	58,940
Note payable		18,350			0
Advances from shareholders		16,660			0
Other current liabilities		596,711			424,393
Convertible debentures (net of discounts of $322,574 and $781,004)		444,132			33,154
Accrued interest on convertible debentures		4,986			5,762
Derivative liability		539,260			971,270

Total Current Liabilities		2,321,678			1,793,519

Long Term Liabilities		0			0

Total Liabilities		2,321,678			1,793,519

SHAREHOLDERS' (DEFICIT)
Preferred stock Series A - 1,000,000 shares authorized; $.001 par value; 1,000 shares issued and outstanding		1,000			1,000
Preferred stock Series B - 1,000,000 shares authorized; $.001 par value; No shares issued and outstanding		0			0
Common stock - 200,000,000 shares authorized; $.001 par value; 5,420,381,610 shares issued and outstanding		19,414,684			5,420,381
Additional paid-in capital		36,366,019			48,485,093
Deficit accumulated during the development stage		(25,964,864	)		(23,512,714	)
Deficit accumulated from prior operations		(32,108,284	)		(32,108,284	)

Total Shareholders' (Deficit)		(2,291,445	)		(1,714,524	)

TOTAL LIABILITIES AND SHAREHOLDERS' (DEFICIT)	$	30,233		$	78,995

The accompanying notes are an integral part of these financial statements.

- 12 -

AMERICAN SECURITY RESOURCES CORPORATION

(A DEVELOPMENT STAGE ENTERPRISE)

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009

	Year Ended December 31, 2010			Year Ended December 31, 2009

General and administrative expenses		1,414,583			1,698,829
Depreciation		28,984			29,798
Research and development expenses		499,486			533,085
Operating Loss		(1,943,053	)		(2,261,712	)

Other Income (Expense):
Interest income		0			0
Gain (loss) on derivative liability		432,010			(99,053	)
Permanent impairment of investment		0			0
Loss on license fee		0			0
Penalty on debenture default		0			(78,775	)
Interest expense		(941,107	)		(239,737	)
Net Loss		(2,452,150	)		(2,679,277	)

Other Comprehensive Loss:
Change in unrealized loss on investment available for sale		0			0

Comprehensive Loss	$	(2,452,150	)	$	(2,679,277	)

Loss per share - basic and fully diluted	$	(0.00	)	$	(0.00	)

Weighted average no. of shares outstanding		15,531,250,000			2,656,485,145

The accompanying notes are an integral part of these financial statements.

- 13 -

AMERICAN SECURITY RESOURCES CORPORATION

(A DEVELOPMENT STAGE ENTERPRISE)

CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY

FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009

				Accumulated Deficit
	No. of Shares	Paid-in Capital and Par Value		Development Stage		Prior Operations		Comprehensive Loss	Total
Balance, 12/31/08	502,704,604	51,223,284		(20,833,437	)	(32,108,284	)	0	(1,718,437
Shares issued for
Cash	238,791,067	111,945							111,945
O&D fees	189,336,735	87,550							87,550
Consulting service	2,116,514,414	1,488,450							1,488,450
Cashless exercise of warrants	28,036,255	-							-
Bashful Warrants	55,000,000	28,111							28,111
Conversion of Series B preferred	75,000,000	25,000							25,000

Accrued officer compensation pursuant to wrap around agreement.	935,079,111	206,449							206,449
Beneficial conversion feature related to convertible note	1,224,919,424	734,685							734,685

Net loss				(2,679,277	)				(2,679,277



Balance, 12/31/09	5,420,381,610	53,905,474		(23,512,714	)	(32,108,284	)	0	(1,715,524

Less: par value of common stock ($0.01)		(5,420,381	)

Additional paid-in capital		48,485,093
Plus 1,000,000 shares of Preferred Stock at .001 par value									1,000
Total stockholders’ equity									(1,714,524

The accompanying notes are an integral part of these financial statements.

- 14 -

AMERICAN SECURITY RESOURCES CORPORATION

(A DEVELOPMENT STAGE ENTERPRISE)

CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY

FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009

						Accumulated Deficit
	No. of Shares		Paid-in Capital and Par Value			Development Stage			Prior Operations			Comprehensive Loss		Total
Balance, 12/31/09	5,420,381,610	$	53,905,474		$	(23,512,714	)	$	(32,108,284	)	$	0	$	(1,715,524	)
Shares issued for
Cash	506,311,459		71,253											71,253
O&D fees	100,000,000		8,000											8,000
Consulting service	5,171,075,185		904,776											904,776

Accrued officer compensation pursuant to wrap around agreement	2,030,666,666		127,500											127,500

Beneficial conversion feature related to convertible note	6,186,250,000		763,700											763,700

Net loss						(2,452,150	)							(2,452,150	)

Balance, 12/31/10	19,414,684,920		55,780,703		$	(25,964,864	)	$	(32,108,284	)	$	0	$	(2,292,445	)

Less: par value of common stock ($0.01)			(19,414,684	)

Additional paid-in capital		$	36,366,019
Plus 1,000,000 shares of Preferred Stock at .001 par value														1,000
Total stockholders’ equity													$	(2,291,445	)

The accompanying notes are an integral part of these financial statements.

- 15 -

AMERICAN SECURITY RESOURCES CORPORATION

(A DEVELOPMENT STAGE ENTERPRISE)

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009

	Year Ended December 31, 2010			Year Ended December 31, 2009
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(2,452,150	)	$	(2,679,277	)
Adjustments to reconcile net loss to net cash from operating activities:
Depreciation and amortization		28,986			29,798
Contingent penalty		0			78,775
Common stock issued for services		1,040,276			1,750,200
Preferred stock issued for services		0			0
(Gain) loss on derivatives		(432,010	)		99,053
Amortization of discount on convertible debenture, net		467,178			102,131
Stock option and warrant expense		763,700			0
Change in operating assets and liabilities:
Prepaid expenses		0			135,672
Deferred finance costs		0			0
Accounts payable		342,639			(34,836	)
Accrued liabilities		172,318			367,376
Accrued interest		(776	)		(26,670	)
Net cash used in operating activities		(69,839	)		(177,778	)

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment		0			0
Purchase of License Agreement		0			0
Net cash provided from (used in) investing activities		0			0

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from the sale of common stock		71,253			111,945
Proceeds from sale of preferred stock		0			25,000
Shareholders loans		16,660			0
Proceeds (pay down) - convertible note		(29,102	)		0
Net borrowings/(pay downs) on line of credit		0			0
Settlement of derivative liabilities		0			0
Proceeds from issuance of warrants		0			28,111
Net cash provided from financing activities		58,811			165,056

Net change in cash and cash equivalents		(11,028	)		(12,722	)
Cash and cash equivalents, beginning of period		12,399			25,121
Cash and cash equivalents, end of period	$	1,371		$	12,399

Supplemental disclosure of non-cash financing activities:
Stock issued for accrued expenses	$	0		$	686,748
Cashless exercise of warrants	$	0		$	19,000
Cash paid for interest and income taxes	$	0		$	162,246

The accompanying notes are an integral part of these financial statements

- 16 -

AMERICAN SECURITY RESOURCES CORPORATION

(A DEVELOPMENT STAGE ENTERPRISE)

NOTES TO FINANCIAL STATEMENTS

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization

The Company was incorporated in Nevada in 1998. It began operations as Computer Automation Systems, Inc. In January of 2004, the Company was recapitalized and its name was changed to Kahuna Network Security Inc. On July 2, 2004, the Board of Directors voted to change the name of the Company to American Security Resources Corporation (“ASRC” or “the Company”), a change that was ratified by a majority of the Company’s shareholders in July of 2004.

Significant Accounting Policies

Basis of presentation

The consolidated financial statements include the accounts of American Security Resources Corporation and its wholly-owned subsidiaries. Significant inter-company accounts and transactions have been eliminated. Management determined that ASRC, upon embarking on the new business plan of development and marketing of the HydraStax hydrogen fuel cell.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect certain reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Cash and Cash Equivalents

For purposes of the statement of cash flows, ASRC considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents.

Property and Equipment

Property and Equipment is valued at cost.

Additions are capitalized and maintenance and repairs are charged to expense as incurred. Gains and losses on dispositions of equipment are reflected in operations. Depreciation is provided using the straight-line method over the estimated useful lives of the assets.

Impairment of Long-Lived Assets

ASRC reviews the carrying value of its long-lived assets annually or whenever events or changes in circumstances indicate that the historical cost-carrying value of an asset may no longer be appropriate. ASRC assesses recoverability of the carrying value of the asset by estimating the future net cash flows expected to result from the asset, including eventual disposition. If the future net cash flows are less than the carrying value of the asset, an impairment loss is recorded equal to the difference between the asset’s carrying value and fair value.

Intangible Assets

Research and Development Costs

All research and development costs are expensed as incurred, including primarily contracting costs.

Income Taxes

The Company accounts for income taxes in accordance with FASB Accounting Standards Codification 740, “Income Taxes” (ASC 740), previously referred to as Statement of Financial Accounting Standards No. 109, “Accounting for Income Taxes,” and Financial Accounting Standard Board Interpretation No. 48, “Accounting for Uncertainty in Income Taxes.” Under ASC 740, we recognize deferred tax assets and liabilities for the future tax consequences attributable to temporary differences between the financial statements

- 17 -

carrying amounts of existing assets and liabilities and their respective tax basis. We measure deferred tax assets and liabilities using enacted tax rates expected to apply to taxable income in the years in which we expect those temporary differences to be recovered or settled. We record valuation allowances to reduce our deferred tax assets to the amount expected to be realized by considering all available positive and negative evidence.

Pursuant to ASC 740, we must consider all positive and negative evidence regarding the realization of deferred tax assets, including past operating results and future sources of taxable income. Under the provisions of ASC 740-10, we determined that our net deferred tax asset needed to be fully reserved given recent results of operations.

In June 2006, the Financial Accounting Standards Board issued Interpretation No. 48 (FIN 48), Accounting for Uncertainty in Income Taxes, also included in ASC 740. The Interpretation clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and measurement attributes of income tax positions taken or expected to be taken on a tax return. Under FIN 48, the impact of an uncertain tax position taken or expected to be taken on an income tax return must be recognized in the financial statements at the largest amount that is more-likely-than-not to be sustained upon audit by the relevant taxing authority. An uncertain income tax position will not be recognized in the financial statements unless it is more likely than not of being sustained.

Basic and Diluted Net Loss Per Share

The basic net loss per common share is computed by dividing the net loss by the weighted average number of common shares outstanding. Diluted net loss per common share is computed by dividing the net loss adjusted on an "as if converted" basis, by the weighted average number of common shares outstanding plus potential dilutive securities. For the years ended December 31, 2010 and 2009, potential dilutive securities had an anti-dilutive effect and were not included in the calculation of diluted net loss per common share. The number of potentially dilutive securities that were not included in the computation of diluted EPS because to do so would have been antidilutive was 9,838,000 common stock potentially issuable under outstanding options/warrants.

Stock Based Compensation

Fair Value of Financial Instruments

The Company’s financial instruments consist primarily of cash and cash equivalents, accounts receivable and accounts payable. Management believes that the carrying values of these assets and liabilities are representative of their respective fair values based on their short-term nature.

Recently issued accounting pronouncements

In December 2010, the FASB issued amended guidance related to Business Combinations. The amendments affect any public entity that enters into business combinations that are material on an individual or aggregate basis. The amendments specify that if a public entity presents comparative financial statements, the entity should disclose revenue and earnings of the combined entity as though the business combination(s) that occurred during the current year had occurred as of the beginning of the comparable prior annual reporting period only. The amendments also expand the supplemental pro forma disclosures to include a description of the nature and amount of material, nonrecurring pro forma adjustments directly attributable to the business combination included in the reported pro forma revenue and earnings. The amendments are effective prospectively for business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2010. Early adoption is permitted. The Company will assess the impact of these amendments on its consolidated financial position and results of operations if and when an acquisition occurs.

- 18 -

In December 2010, the FASB issued amended guidance related to Intangibles - Goodwill and Other. The amendments modify Step 1 of the goodwill impairment test for reporting units with zero or negative carrying amounts. For those reporting units, an entity is required to perform Step 2 of the goodwill impairment test if it is more likely than not that a goodwill impairment exists. In determining whether it is more likely than not that a goodwill impairment exists, an entity should consider whether there are any adverse qualitative factors indicating that an impairment may exist. The qualitative factors are consistent with the existing guidance and examples, which require that goodwill of a reporting unit be tested for impairment between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. For public entities, the amendments are effective for fiscal years, and interim periods within those years, beginning after December 15, 2010. Early adoption is not permitted. The Company does not believe that this guidance will have a material impact on its consolidated financial position and results of operations.

In July 2010, the FASB issued ASU No. 2010-20, "Disclosures about the Credit Quality of Financing Receivables and the Allowance for Credit Losses (Topic 310)." ASU No. 2010-20 requires increased disclosures about the credit quality of financing receivables and allowances for credit losses, including disclosure about credit quality indicators, past due information and modifications of finance receivables. The guidance is generally effective for reporting periods ending after December 15, 2010. The adoption of ASU No. 2010-20 did not have a significant impact on the Company's consolidated financial position and results of operations.

In April 2010, the FASB issued ASU No. 2010-17, "Revenue Recognition- Milestone Method (Topic 605)," which provides guidance on the criteria that should be met for determining whether the milestone method of revenue recognition is appropriate. This ASU is effective in fiscal years, and interim periods within those years, beginning on or after June 15, 2010. We do not expect the adoption of ASU No. 2010-17 to have a significant impact on the Company's consolidated financial position and results of operations.

In April 2010, the FASB issued ASU No. 2010-13, "Compensation - Stock Compensation (Topic 718)," which provides guidance on the classification of a share-based payment award as either equity or a liability. A share-based payment award that contains a condition that is not a market, performance, or service condition is required to be classified as a liability. This ASU is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2010. The Company does not expect the adoption of ASU No. 2010-13 to have a significant impact on the Company's consolidated financial position and results of operations.

In February 2010, the FASB issued ASU No. 2010-09, "Subsequent Events (Topic 855) - Amendments to Certain Disclosure Requirements." The objective of this ASU was to remove the requirement for an SEC filer to disclose a date through which subsequent events have been evaluated in both issued and revised financial statements. This ASU is to be applied immediately upon issuance. The Company adopted this ASU in the first quarter of 2010 and the adoption of this ASU did not have an effect on the Company's consolidated financial position and results of operations.

In January 2010, the FASB issued ASU No. 2010-06, "Fair Value Measurements and Disclosures (Topic 820) - Improving Disclosures about Fair Value Measurements." This ASU requires new disclosures regarding significant transfers in and out of Levels 1 and 2, and information about activity in Level 3 fair value measurements. In addition, this ASU clarifies existing disclosures regarding input and valuation techniques, as well as the level of disaggregation for each class of assets and liabilities. This ASU was effective for interim and annual reporting periods beginning after December 15, 2009, except for certain Level 3 activity disclosure requirements, which are effective for reporting periods beginning after December 15, 2010. The Company adopted the new guidance in the first quarter of 2010, except for the disclosures related to purchases, sales, issuance and settlements, which will be effective for the Company beginning in the first quarter of 2011. Because these new standards are related primarily to disclosures, their adoption has not had and is not expected to have a significant impact on the Company's consolidated financial position and results of operations.

Management does not believe that any other recently issued, but not yet effective, accounting standards or pronouncements, if currently adopted, would have a material effect on the Company’s financial statements.

- 19 -

NOTE 2 - GOING CONCERN

As shown in the accompanying consolidated financial statements, ASRC incurred recurring losses from continuing operations of $2,546,680 and $2,679,277 in the years ended 2010 and 2009, respectively. This condition creates an uncertainty as to ASRC’s ability to continue as a going concern. Management is trying to raise additional capital through sales of common stock either through private placements or public offerings, as well as seeking other sources of funding. There are no assurances that ASRC will be able to achieve a level of revenues adequate to generate sufficient cash flow from operations or obtain the additional financing through private placements or public offerings to support the investment in Hydra’s fuel cell technology. If these funds are not available ASRC may not continue its operations or execute its business plan. The conditions raise substantial doubt about ASRC’s ability to continue as a going concern. The consolidated financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might be necessary should ASRC be unable to continue as a going concern.

NOTE 3 - PROPERTY AND EQUIPMENT

Property and equipment consisted of the following at December 31, 2010 and 2009:

2010

Description	Life	Amount		Accumulated Depreciation		Net Book Value
Office furniture and equipment	Generally 5 years	$	43,199	$	37,551	$	5,648
Equipment	From 3 to 7 years		119,958		110,848		9,110
Totals		$	163,157	$	148,399	$	14,758

2009

Description	Life	Amount		Accumulated Depreciation		Net Book Value
Office furniture and equipment	Generally 5 years	$	43,199	$	30,104	$	13,095
Equipment	From 3 to 7 years		119,958		89,309		30,649
Totals		$	163,157	$	119,413	$	43,744

NOTE 4 - INTANGIBLES

The Company’s wholly-owned subsidiary, Hydra Fuel Cell Corporation, has received two patents – US 7,445,647 B1 for a method for making fuel cells and US 7,776,485 B1 for a fuel cell stack including a housing for holding fuel cells. It also has four patent pending applications that relate to the fuel products and a trademark for HYDRASTAX.

NOTE 5 – CONVERTIBLE DEBENTURE

Convertible debentures outstanding as of December 31, 2010 and 2009 were as follows;

	2010				2009
	Outstanding Balance of Convertible Debenture		Unamortized Discount		Outstanding Balance of Convertible Debenture		Unamortized Discount

December 13, 2007 Debenture	$	284,300	$	284,300	$	350,000	$	350,000
February 28, 2008 Debenture		482,406		38,274		431,004		397,850
Total Convertible Debentures at December 31, 2010	$	766,706	$	322,574	$	781,004	$	747,850

- 20 -

Following is a description of each of the convertible debentures listed above:

December 13, 2007 Debenture

The Company entered into a Securities Purchase Agreement with an accredited investor on December 13, 2007for the sale of $1,500,000 in a convertible debenture bearing interest at 7.25% per annum, payable on or before December 12, 2010.

A prospectus relates to the resale of the common stock underlying the convertible debenture. The terms of the convertible debenture calls for the investor to provide the Company with an aggregate of $1,500,000 as follows;

$200,000 was disbursed on December 13, 2007, with aggregate additional funding of $575,000 during the year ended December 31, 2008.

$1,300,000 secured promissory note bearing interest at 7.75% per annum, due on demand at any time after February 1, 2011. The investor is obligated to make monthly periodic prepayments of $250,000 during each month that the promissory in outstanding. Interest is payable on a monthly basis, commencing January 15, 2008. The interest rate shall be increased by 0.25 percentage points per each Periodic Prepayment that is not paid by the investor, provided however that in no event shall the interest rate exceed an amount equal to 12.5%. During the year ended December 31, 2008, the Company received $575,000 under this promissory note.

Accordingly, we have received a total of $794,000 pursuant to the Securities Purchase Agreement through December 31, 2010. Pursuant to the convertible debenture the investor may convert the amount paid towards the Securities Purchase Agreement into common stock of the Company at a conversion price equal to the lesser of (i) $0.25, or (ii) 80% of the average of the 5 lowest volume weighted average prices during the 20 trading days prior to investor’s election to convert (the percentage being a “Discount Multiplier”). If any portion of the principal or accrued interest on this convertible debenture is not paid within ten (10) days of when it is due, the Discount Multiplier shall decrease by one percentage point (1%) for all conversions of the convertible debenture. If the investor elects to convert a portion of the convertible debenture and, on the day that the election is made, the volume weighted average price is below $0.01, we shall have the right to prepay that portion of the convertible debenture that investor elected to convert, plus any accrued and unpaid interest, at 150% of such amount. In the event that we elect to prepay that portion of the convertible debenture, investor shall have the right to withdraw its conversion notice.

We evaluated this agreement pursuant to FASB Statement No. 133 and due to the Company’s option to settle in cash if the weighted average price drops below a certain point and sufficient shares appear available, we determined no embedded derivatives existed and FASB No. 133 did not apply.

As required by Emerging Issues Task Force Issue 98-05 “Accounting for Convertible Securities with Beneficial Conversion Features”, we valued the beneficial conversion feature related to the outstanding debt which was treated as a loan discount and amortized to interest expense using the effective interest rate method over the life of the note.

During the year ended December 31, 2010, the investor converted $65,700 of the outstanding principal into 821,250,000 shares of common stock of the Company.

In accordance with the option allowed in SFAS 155, the Company has elected to value the derivative separately at the fair value on the issuance date using the Black-Scholes valuation model and bifurcate the instrument. The result of the valuation is a discount on debt of $284,300 as of December 31, 2010. We estimated the fair value of the derivative using the Black-Scholes valuation method with assumptions including: (1) term of 4 years; (2) a computed volatility rate from 132% to 197%(3) a discount rate of 2.10% and (4) zero dividends. The discount is equal to the value of the note issued, as it can only be discounted up to the value of the note and is being amortized over the life of the note using the effective interest method. For the year ended December 31, 2010 $0 was amortized.

In accordance with the option allowed in SFAS 155, the Company has elected to value the derivative separately at the fair value on the issuance date using the Black-Scholes valuation model and bifurcate the instrument. The result of the valuation is a derivative liability in the amount of $355,102 as of December 31, 2010. We estimated the fair value of the derivative using the Black-Scholes valuation method with assumptions including: (1) term of 4 years; (2) a computed volatility rate from 132% to 197%(3) a discount rate of 45% and (4) zero dividends. The discount is equal to the value of the note issued, as it can only be discounted up to the value of the note and is being amortized over the life of the note using the effective interest method. The gain/loss on derivative is equal to the difference between the discount on debt and the derivative liability. The instrument was re-valued at period end, and the resulting change for the year of $46,907 was included in the statement of operations as a net gain on the derivative liability.

- 21 -

In the event that we default on the payment of the convertible debenture, the investor shall have the right to declare the outstanding principal and accrued interest immediately due and payable in cash at a price of 150% of the outstanding principal and accrued interest. The company became in default on this debenture when we were unable to timely file required periodic and annual reports required to be filed pursuant to Section 12 or 15(d) of the 1934 Securities and Exchange Act. One of the requirements in our convertible debenture agreement was that the Company timely file all reports required As a result, the convertible debenture was callable by the holder at 150% of the unpaid principal balance at December 31, 2009.

Subsequent to December 31, 2009, the Company and the investor reached a settlement agreement whereby both parties agreed to dismiss their respective claims against the other, and mutually agreed the outstanding principal due under the original convertible debenture to the investor of $350,000 would be paid though a stock conversion program, with interest of 7 ¼% from May 1, 2010 until the outstanding principal is fully converted. The note balance outstanding at December 31, 2010 was $284,300 and was offset by a discount of $284,300. The settlement agreement provides for daily trading limits of the Company’s common stock by the investor, as well as penalties for violations of the trading restrictions.

February 28, 2008 Debenture

On February 28, 2008, the Company entered into a Securities Purchase Agreement with an accredited investor for the sale of an aggregate of $515,000 in a convertible debenture bearing interest at 12.5% per annum, payable on or before February 28, 2012. The investor is guaranteed a 37.5% return on the investment and each advance is payable back to the investor at 150%. There were $35,000 in financing costs for this debt issuance. The financing costs were deferred and amortized using the effective interest method. This expense was $8,748 for the year ended December 31, 2010.

Pursuant to the convertible debenture the investor may convert the debenture into common stock of the Company at a conversion price equal to 80% of the volume weighted average price for three regular trading days selected by the debenture holder from twenty trading days ending on the trading day immediately before the conversion date.

We evaluated this agreement pursuant to FASB Statement No. 133 and due to there being a fixed maturity amount of $482,406 due on December 31, 2011, the Company determined no embedded derivative existed and FASB No. 133 did not apply.

In accordance with the option allowed in SFAS 155, the Company has elected to bifurcate the instrument. The result of the valuation is a discount on debt of $38,274 as of December 31, 2010. The discount is equal to the value of the note issued, as it can only be discounted up to the value of the note and is being amortized over the life of the note using the effective interest method. For the year ended December 31 $195,358 was amortized and is included in interest expense. The gain/loss on derivative is equal to the difference between the discount on debt and the derivative liability. The instrument was re-valued at period end, and the resulting change for the year of $348,350 was included in the statement of operations as a net gain on the derivative liability.

During the year ended December 31, 2010, the investor converted $496,000 of the outstanding principal into 2,840,000,000 shares of common stock of the Company.

Effective November 17, 2009, the Company and the Investor entered into a settlement agreement whereby the Investor agreed to a settlement amount of $431,004, including all unpaid principal, interest and penalties, to be paid in cash or common stock of the Company, subject to an ownership limitation, as defined in the settlement agreement. Interest on the settlement amount accrued at 8.75% beginning November 6, 2009, and all unpaid principal and accrued interest was due on or before December 31, 2010.The Company is subject to certain covenants and reporting requirements. The Company recorded a penalty charge in the fourth quarter of $78,775 in the fourth quarter of 2009 in connection with the settlement agreement.

Effective December 31, 2010, the Company and the Investor entered into a settlement agreement whereby the Investor agreed to a settlement amount of $482,406, including all unpaid principal, interest and penalties, to be paid by the Company. Interest on the settlement amount will accrue at 10.0% beginning December 31, 2010, and all unpaid principal and accrued interest is due on or before December 31, 2011. The Company is subject to certain covenants and reporting requirements. The Company recorded a penalty charge of $308,815 in the fourth quarter of 2010 in connection with the settlement agreement.

- 22 -

As the settlement agreement resulted in a modification of the principal outstanding, payment terms and due dates, we evaluated this agreement pursuant to FASB Statement No. 133 and due to there being a fixed maturity amount to be paid by the Company at December 31, 2011, the Company determined no embedded derivative existed and FASB No. 133 did not apply. In accordance with the option allowed in SFAS 155, the Company has elected to bifurcate the instrument. The result of the valuation is a discount on debt of $38,274. The discount is equal to the value of the note issued, as it can only be discounted up to the value of the note and is being amortized over the life of the note using the effective interest method. For the year ended December 31, 2009 $33,154 was amortized and is included in interest expense.

Derivative Liability

The Company evaluated all convertible debt and outstanding warrants to determine whether these instruments may be tainted from the aforementioned derivative. All warrants outstanding were considered tainted as a result of the derivative treatment. The Company valued these warrants using the Black-Scholes valuation model. The result of the valuation is a derivative liability in the amount of $1,419. We estimated the fair value of the derivative using the Black-Scholes valuation method with assumptions including: (1) term ranging from 1.71 to 2.75 years; (2) a computed volatility rate ranging from 339% to 675% (3) a discount rate ranging from 0.37% to 1.79% and (4) zero dividends. The valuation of these warrants was treated the same way as the liability associated with the debt. There were no other instruments found to be tainted by the derivative treatment.

	2010				2009
	Derivative Liability		Gain (Loss) on Derivative year		Derivative Liability		Gain (Loss) on Derivative year ended
December 2007 Debenture	$	335,688	$	66,321	$	433,199	$	(83,199	)
February 2008 Debenture		202,153		363,218		534,067	$	(63,332	)
Warrants Outstanding		1,419		2,471		4,004		47,478
Derivative Liability	$	539,260	$	432,010	$	971,270	$	(99,053	)

NOTE 6 - COMMON STOCK

During 2009, ASRC entered into a series of wrap around agreements with two accredited investment firms in which ASRC and the Chief Executive Officer and Chief Operating Office guaranteed the liability in exchange for settlement of accrued compensation to these individuals. The wrap around agreement allowed the investor to exchange the outstanding debt in exchange for common stock of the Company. During 2009, the Company issued 935,079,111 common shares in exchange for settlement of the accrued compensation of $206,449 to these executives.

During the year ended December 31, 2009, ASRC issued 238,791,067 common shares for cash totaling $92,945.

During the year ended December 31, 2009, ASRC issued 28,036,255 common shares under cashless warrant exercise.

During the year ended December 31, 2009, ASRC issued 55,000,000 common shares from the exercise of warrant agreements resulting in total cash proceeds of $28,111.

During the year ended December 31, 2009, ASRC received conversion notices under convertible debenture agreements to issue an aggregate of 1,224,919,424 common shares for total debt reductions of $734,685.

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During the year ended December 31, 2010 ASRC issued 5,171,075,185 common shares to external parties in exchange for consulting and legal services recorded a total expense of $904,776. The expense is equal to the fair value of the shares based upon the closing price at the date that either a definitive agreement to issue the shares was reached with external parties or the date the Board authorized their issuance.

During the year ended December 31, 2010, ASRC issued 100,000,000 common shares in lieu of compensation to its Officers and Directors. The expense is equal to the fair value for services rendered. These shares were valued at $8,000 based on their market value at the time of issuance, as reflected in these financial statements.

During the year ended December 31, 2010, ASRC issued 2,030,666,666 of common shares pursuant to a wraparound agreement with an accredited investment firm. This agreement is a wrap-around agreement issued in exchange for accrued compensation due to the officers of ASRC in the amount of $127,500.

During the year ended December 31, 2010, ASRC issued 6,186,250,000 of common shares pursuant to a beneficial conversion feature related to convertible notes and such shares were valued at $763,700 based on their market value at the time of issuance, as reflected in these financial statements.

During the year ended December 31, 2010, ASRC issued 506,311,459 common shares for cash totaling $71,253.

NOTE 7 – PREFERRED STOCK

On March 12, 2009, the Company issued 25,000 shares of its Series B Preferred Stock for a total of $25,000. Subsequently, during the fourth quarter of fiscal 2009, the shareholder converted the Series B preferred stock into 75,000,000 shares of common stock of the Company.

NOTE 8 - STOCK-BASED COMPENSATION

During 2009, ASRC entered into a series of wrap around agreements with two accredited investment firms in which ASRC and the Chief Executive Officer and Chief Operating Office guaranteed the liability in exchange for settlement of accrued compensation to these individuals. The wrap around agreement allowed the investor to exchange the outstanding debt in exchange for common stock of the Company. During 2009, the Company issued 935,079,111 common shares in exchange for settlement of the accrued compensation of $206,449 to these executives.

During 2010, ASRC entered into a series of wrap around agreements with two accredited investment firms in which ASRC and the Chief Executive Officer and Chief Operating Office guaranteed the liability in exchange for settlement of accrued compensation to these individuals. The wrap around agreement allowed the investor to exchange the outstanding debt in exchange for common stock of the Company. During 2009, the Company issued 2,030,666,666 common shares in exchange for settlement of the accrued compensation of $127,500 to these executives.

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NOTE 9 –WARRANTS AND OPTIONS

In 2007, ASRC issued 650,000 shares and granted warrants to purchase 650,000 shares of our common stock pursuant to a Private Placement Memorandum with two accredited investors whereby the investors purchased 650,000 Investment Units consisting of (a) 1 share of common stock, (b) ½ of one option to purchase a share of our common stock at $0.10 and (c) ½ of one option to purchase a share of our common stock at $0.20. These warrants vested immediately and had a term of three years. We allocated the proceeds of $32,500 to the warrants and common stock based on the relative fair value of each. We estimated the fair value of these warrants using the Black Scholes method with assumptions including: (1) term of 3 years; (2) a computed volatility rate of 194.65% (3) a discount rate of 4.78 % and (4) zero dividends. The relative fair value of these options was estimated to be $18,931 and was included in general and administration expenses for the year ended December 31, 2007.

In 2007, ASRC granted options to purchase 500,000 shares to each member of our Board of Directors, to the Chief Technology Officer of our Hydra Fuel Cell subsidiary, and our Chief Financial Officer with an exercise price equal to $0.071. The options vested immediately and expire on December 31, 2011. We estimated the fair value of these options using the Black Scholes method with assumptions including: (1) term of 5 years; (2) a computed volatility 217% (3) a discount rate of 4.78% and (4) zero dividends. The fair value of these options was estimated to be $332,123 and is included in general and administrative expenses for the year ended December 31, 2007.

In 2008, the Company granted warrants to purchase an aggregate 10,000,000 shares of common stock pursuant to a consulting agreement. The warrants are exercisable over a one year period at an exercise price of $0.005 per share. We estimated the fair value of these options using the Black Scholes method with assumptions including: (1) term of 1 year; (2) a computed volatility 285% (3) a discount rate of 4.3% and (4) zero dividends. The fair value of these options was estimated to be $11,826 and is included in general and administrative expenses for the year ended December 31, 2008. These warrants expired in the fourth quarter of fiscal 2009.

The Company evaluated all outstanding warrants to determine whether these instruments may be tainted from the aforementioned derivative. All warrants outstanding were considered tainted as a result of the derivative treatment. The Company valued these warrants using the Black-Scholes valuation model. The result of the valuation is a derivative liability in the amount of $4,004. We estimated the fair value of the derivative using the Black-Scholes valuation method with assumptions including: (1) term ranging from 1 to 2 years; (2) a computed volatility rate of 229-345% (3) a discount rate ranging from 0.37% to 0.45% and (4) zero dividends. The valuation of these warrants was treated the same way as the liability associated with the debt. There were no other instruments found to be tainted by the derivative treatment.

Summary of warrant and options information is as follows:

	Weighted Avg. Exercise Price		Outstanding Beginning of Period		New Grants		Forfeitures and Cancellations			Exercises			Outstanding End of Period
December 31, 2008				102,769,250		32,400,000		(20,669,761	)		(72,595,914	)		41,903,575
2009 Activity:
Forfeitures and cashless exercise	$	0.0039						29,415,575						(29,415,575	)
Consultant grants and exercises	$	0.0005				83,036,255					(83,036,255	)		-
December 31, 2009				41,903,575		83,036,255		(29,415,575	)		(83,036,255	)		12,488,000

Forfeitures and cashless exercise	$	0.04		-		-		2,650,000			-			(2,650,000	)
Consultant grants and exercises				-		-		-			-			-
December 31, 2010				12,488,000		-		(2,650,000	)		-			9,838,000

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NOTE 11- INCOME TAXES

ASRC uses the liability method, where deferred tax assets and liabilities are determined based on the expected future tax consequences of temporary differences between the carrying amounts of assets and liabilities for financial and income tax reporting purposes. During fiscal 2010 and 2009, ASRC incurred net losses and, therefore, has no tax liability. The net deferred tax asset generated by the loss carry-forward and temporary differences has been fully reserved. The cumulative net operating loss carry-forward is approximately $20,900,000 at December 31, 2010 and will expire in the years 2019 and 2029. The resulting deferred tax asset arising from NOL carry forwards of $7,100,000 has been fully reserved.

NOTE 12 - RELATED PARTY TRANSACTIONS

As described in Note 7 above, during the year ended December 31, 2008, ASRC issued a total of 64,510,448 shares of our common stock to our Chairman and Chief Executive Officer, Frank Neukomm, our President and Chief Operating Officer, Robert Farr, and the President of our subsidiary Hydra Fuel Cell, in lieu of compensation which were due to them. These shares were valued at $619,780 based on their market value at the date of grant.

During the year ended December 31, 2008, ASRC issued 500,000 shares of our common stock to our Board of Directors as compensation for their service. These shares were valued at $39,000 based on their market value in these financial statements. The amount is equal to the fair value of the shares at the time the Board authorized their issuance.

During 2009, ASRC entered into a series of wrap around agreements with two accredited investment firms in which ASRC and the Chief Executive Officer and Chief Operating Office guaranteed the liability in exchange for settlement of accrued compensation to these individuals. The wrap around agreement allowed the investor to exchange the outstanding debt in exchange for common stock of the Company. During 2009, the Company issued 935,079,111 common shares in exchange for settlement of the accrued compensation of $206,449 to these executives.

During 2010, ASRC entered into a series of wrap around agreements with two accredited investment firms in which ASRC and the Chief Executive Officer and Chief Operating Office guaranteed the liability in exchange for settlement of accrued compensation to these individuals. The wrap around agreement allowed the investor to exchange the outstanding debt in exchange for common stock of the Company. During 2010, the Company issued 2,030,666,666 common shares in exchange for settlement of the accrued compensation of $127,500 to these executives.

NOTE 13 - LEASES

ASRC leased office space under an operating lease during 2009 and 2008. The lease agreement provided for monthly rent of $2,650 to be paid through March 31, 2012. Additionally, ASRC’s subsidiary, Hydra Fuel Cell Corporation leases approximately 5,000 square feet in Portland, Oregon for monthly rent of $4,930.

Minimum lease payments due under non-cancelable leases over the next five years and thereafter are as follows as of December 31, 2010:

Year Ending December 31,

2011		31,800
2012		7,950
2013		-
2014		-
2015		-
Total	$	39,750

Total rent expense was $112,286 and $100,314 during 2010 and 2009, respectively.

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NOTE 14 – COMMITMENTS AND CONTINGENCIES

As previously mentioned in Note 4, ASRC was in default with two Securities Purchase Agreements with two accredited investment firms during the year ended December 31, 2009.

On April 7, 2010, the Company and one investor reached a settlement agreement whereby both parties agreed to dismiss their respective claims against the other, and mutually agreed the outstanding principal due under the original convertible debenture to the investor of $350,000 would be paid through a stock conversion program, with interest of 7 ¼% from May 1, 2010 until the outstanding principal is fully converted. The settlement agreement provides for daily trading limits of the Company’s common stock by the investor, as well as penalties for violations of the trading restrictions.

Effective December 31, 2010, the Company and one investor entered into a settlement agreement whereby the Investor agreed to a settlement amount of $482,406, including all unpaid principal, interest and penalties, to be paid in cash or common stock of the Company, subject to an ownership limitation, as defined in the settlement agreement. Interest on the settlement amount will accrue at 10.0% beginning December 31, 2010, and all unpaid principal and accrued interest is due on or before December 31, 2010.The Company is subject to certain covenants and reporting requirements. The Company recorded a penalty charge in the fourth quarter of $308,815 in connection with the settlement agreement.

NOTE 15 – SUBSEQUENT EVENTS

As mentioned in Note 14, the Company settled its arrangement with an accredited investor due to default in the original debenture agreement.

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ITEM 9. Changes In and Disagreements with Accountants on Accounting and Financial Disclosure.

On May 31, 2011, P. S. Stephenson Co. was dismissed as the independent auditor for American Security Resources Corporation.

From the date on which P S Stephenson Co. was engaged until the date they were dismissed, there were no disagreements with P S Stephenson Co. on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of P S Stephenson Co., would have caused P S Stephenson Co. to make reference to the subject matter of the disagreements in connection with any reports it would have issued, and there were no “reportable events” as that term is defined in Item 304(a) (1) (iv) of Regulation S-B.

P S Stephenson Co’s reports on the Company’s financial statements for years ended December 31, 2008, through December 31, 2009 did not contain adverse opinions or disclaimers of opinion, nor were they qualified or modified as to uncertainty, audit scope or accounting principles.

On June 1, 2011, Registrant executed an engagement letter with Hall Group CPA’s to assume the role of its new certifying accountant. Hall Group CPA’s has been asked to perform the quarterly review of Registrant for the quarter and year ended December 31, 2010.

The engagement of the new principal auditor was recommended and approved by the Board of Directors of Registrant.

Item 9A(T). Controls and Procedures.

Disclosure Controls and Procedures

The Company's management evaluated, with the participation of its Chief Executive Officer ("CEO") and Chief Financial Officer ("CFO"), the effectiveness of the design/operation of its disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended ("Exchange Act")) as of December 31, 2010.

Disclosure controls and procedures refer to controls and other procedures designed to ensure that information required to be disclosed in the reports we file or submit under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC and that such information is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating our disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating and implementing possible controls and procedures.

Management conducted its evaluation of disclosure controls and procedures under the supervision of our principal executive officer and our principal financial officer. Based on that evaluation, management concluded that, considering the existence of material weaknesses identified, our internal control over financial reporting disclosure controls and procedures were not effective as of December 31, 2010.

Material Weaknesses Identified

We identified the following deficiencies which together constitute a material weakness in our assessment of the effectiveness of internal control over financial reporting as of December 31, 2010:

o The Company has inadequate segregation of duties within its cash disbursement control design.

o During the year ended December 31, 2010, the company internally performed all aspects of our financial reporting process, including, but not limited to the underlying accounting records and record journal entries and responsibility for the preparation of the financial statement due to the fact these duties were performed often times by the same people, a lack of review was created over the financial reporting process that might result in a failure to detect errors in spreadsheets, calculations, or assumptions used to compile the financial statement and related disclosures as filed with the SEC. These control deficiencies could result in a material misstatement to our interim or annual financial statements that would not be prevented or detected.

o The Company does not have a sufficient number of independent directors for our board and audit committee. We currently have no independent director on our board, which is comprised of two directors, and we do not have a functioning audit committee. As a publicly traded company, we should strive to have a majority of our board of directors be independent.

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The Company is continuing the process of remediating its control deficiencies. However, the material weakness in internal control over financial reporting that has been identified will not be remediated until numerous internal controls are implemented and operate for a period of time, are tested, and the Company is able to conclude that such internal controls are operating effectively. The Company cannot provide assurance that these procedures will be successful in identifying material errors that may exist in the financial statements. The Company cannot make assurances that it will not identify additional material weaknesses in its internal control over financial reporting in the future. Management plans, as capital becomes available to the Company, to increase the accounting and financial reporting staff and provide future investments in the continuing education and public company accounting training of our accounting and financial professionals.

Management's Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our management is also required to assess and report on the effectiveness of our internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act of 2002 ("Section 404"). Management assessed the effectiveness of our internal control over financial reporting as of December 31, 2010. In making this assessment, we used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO)

in Internal Control - Integrated Framework.

Changes in Internal Controls over Financial Reporting

Other than the matters discussed above, during the period covered by this report, there were no significant changes in the Company's internal controls over financial reporting that have materially affected or are reasonably likely to materially affect the Company's internal controls over financial reporting.

It should be noted that any system of controls, however well designed and operated, can provide only reasonable, and not absolute, assurance that the objectives of the system are met. In addition, the design of any control system is based in part upon certain assumptions about the likelihood of future events. Because of these and other inherent limitations of control system, there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote.

Auditor Attestation

This annual report does not include an attestation report of the company's registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by the company's registered public accounting firm pursuant to rules of the Securities and Exchange Commission that permit the company to provide only management's report.

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PART III

ITEM 10 - Directors, Executives Officers, Promoters and Control Persons

The Company has adopted a Code of Ethics that applies to all of its Directors, Officers (including its CEO, CFO and chief accounting officer and any person performing similar functions) and all employees. The Code is attached hereto by reference.

Directors and Executive Officers

The following table sets forth the names of all current directors and executive officers of the Company as of December 31, 2010. These persons will serve until the next annual meeting of the stockholders or until their successors are elected or appointed and qualified, or their prior resignation or termination.

Name	Positions Held	Date of Election or Designation
Robert C. Farr	President/COO	11/23/05
	Director	10/27/04

Frank Neukomm	Director	02/25/04
	Secretary	11/08/04
	Chairman/CEO	11/23/05

Robert J. Wilson	Director	07/21/05
Sam Lindsey	CFO (1)	11/1/08
John A. Wilkinson	CFO (1)	04/1/09
Alvie T. Merrill	Director	10/11/06
James R. Twedt	Director	10/11/06
R. Brian Klock	Director	01/10/09

(1)	Mr. Lindsey performed the Chief Financial Officer duties for the Company on a contract basis until he was replaced by John A. Wilkinson CPA in April 2009.

Business Experience

Frank Neukomm (58), Chairman/ CEO, has an extensive background in finance, mergers and acquisitions, and sales and marketing. Mr. Neukomm has served as a senior executive of brokerage and M & A companies, software companies and telecom companies. Mr. Neukomm has been instrumental in purchasing or starting companies in industries as diverse as insurance, consumer retail goods, industrial services and wireless telecommunications. Since 1995, Mr. Neukomm has served as President of NeuHaus Advisors, Inc., a consulting firm to the telecommunications industry.

Robert Farr (62), President/COO has extensive Fortune 500 management experience in a variety of industries. His experience extends to domestic and international finance, marketing, manufacturing and distribution. He is the Principal of Creative Equity Strategies.

John A. Wilkinson, CPA, CFO, has over twenty years public accounting experience and CFO experience. He previously served as chief accounting officer of Computer Automation Systems Inc., a predecessor enterprise to ARSC.

Robert J Wilson, Director, is a CPA and an independent Director who serves as Audit Committee Chairman.

Alvie T. Merrill, Director, is Chairman of Merrill-Zurich Inc., a diversified real estate management and consulting firm. Mr. Merrill is also President of A. T. Merrill Business Consulting that has advised over 200 public and private companies since 1980. Mr. Merrill has extensive public company experience from his consulting activities and is active in numerous civic and charitable organizations in hometown of Lake Jackson, Texas.

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James R. Twedt, Director, has over forty years of public and private company accounting and management experience. He has been the President and CEO of Hydra Fuel Cell Corp. since inception and has led the subsidiary from startup to production in less than twelve months. He previously served as CFO of Computer Automation Systems, Inc., a predecessor enterprise to American Security Resources Corp.

R. Brian Klock, Director, is a retired Naval officer with significant experience in intelligence and financial matters.

Compliance with Section 16(a) of the Exchange Act

Each of the Company's directors and executive officers filed a Form 3 Initial Statement of Beneficial Ownership of Securities with the Securities and Exchange Commission. To the best knowledge of management, all reports required to be filed by members of management under Section 16(a) of the 1934 Act have been filed.

Item 11. Executive Compensation.

Messrs. Robert Farr, Director and Chief Operating Officer, and Frank Neukomm, Chairman and Chief Executive Officer, each had $15,000 per month compensation, accrued as independent consulting services, during 2010 for a total annual amount of $180,000, respectively and $12,000 per month compensation, accrued as independent consulting services, during 2009 and 2008 for a total annual amount of $144,000, respectively. Of that amount, Robert Farr was paid $128,850 and $144,000 in cash in2010and 2009. Of that amount, Frank Neukomm was paid $111,144and $14,000 in cash during 2010and 2009. Mr. Wilkinson, Chief Financial Officer, provides CFO services as an independent CPA and received $24,835 cash compensation in 2010 plus an accrued $6,700 and no cash compensation during 2009.

Additionally, Messrs. Farr and Neukomm received 4 million and 1 million warrants, respectively, to purchase common shares of the Company. The option strike price is $0.19, expire on January 23, 2011 and contain a cashless provision.

Executive compensation for 2010, 2009 and 2008 were as follows:

Name	Position or Title	Year	Salary		Bonus		Stock Awards		All Other
Robert Farr	Chief Operating Officer	2010	$	180,000	$	0	$	0	$	0
		2009	$	144,000		0		0		0
		2008	$	144,000		0		0		0

Frank Neukomm	Chief Executive Officer	2010	$	180,000		0		0		0
		2009	$	144,000		0		0		0
		2008	$	144,000		0		0		0

John Wilkinson	Chief Financial Officer	2010	$	31,535		0		0		0
		2009		0		0		0		0

Randall Newton	Chief Financial Officer	2008		0		0		0		0

Except as set forth above, no cash compensation, deferred compensation or long-term incentive plan awards were issued or granted to the Company's management during the calendar years ended December 31, 2010, 2009 and 2008.

Compensation of Directors

Certain Directors were compensated with restricted stock during 2010 for attending meetings and for work performed. Total stock awarded was 100,000,000 shares in 2010 which were valued at $8,000. Additionally directors were awarded 5,500,000 warrants to purchase common shares of the Company. The option strike price is $0.19, expire on January 23, 2011 and contain a cashless provision.

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Item 12. Security Ownership of Certain Beneficial Owners and Management.

Security Ownership of Certain Beneficial Owners.

The following table sets forth the share holdings of officer, directors and those persons who own more than five percent of the company's common stock, including stock options, outstanding as of the date of this Report, assuming 19,414,684,920 shares are outstanding (the number outstanding at the date of this report):

Name and Address	Type of Ownership	No. of Shares Beneficially Owned		Percent of Class

Frank Neukomm 19 Briar Hollow Lane, Suite 125 Houston, TX 77027	Personal		556,879,116		2.87	%
Robert Farr 19 Briar Hollow Lane, Suite 125 Houston, TX 77027	Personal		589,352,948		3.04	%
James Twedt 19 Briar Hollow Lane, Suite 125 Houston, TX 77027	Personal		266,946,939		1.37	%

*Mr. Neukomm’s share number includes 162,500 shares held by The Neukomm Children’s Trust for which he is the trustee.

Item 13. Certain Relationships and Related Transactions.

There have been no material transactions, series of similar transactions, currently proposed transactions, or series of similar transactions, to which the Company and any director, executive officer, five percent stockholder or associate of any of these persons is or was a party.

Mr. Robert Farr, President and COO is in a social relationship with MS Diane Lundell, P & L Solutions, which provides Peachtree advisory services and consults on bookkeeping matters with the Company. Ms Lundell has no control or involvement with the Company’s cash or financial decision making.

Item 14. Principal Accountant Fees and Services

(1) Audit Fees

The aggregate fees billed for each of the last two fiscal years for professional services rendered by the principal accountant for the audit of the registrant's annual financial statements and review of financial statements included in the registrant's Form 10-Q or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for the fiscal years ending December 31, 2010 and 2009 were: $60,500 and $27,500 respectively.

(2) Audit-Related Fees

The aggregate fees billed in each of the last two fiscal years for assurance and related services by the principal accountant that are reasonably related to the performance of the audit or review of the registrant's financial statements and are not reported under item (1) for the fiscal years ending December 31, 2010 and 2009 were: $0 and $0, respectively.

The nature of the services comprising the fees herein disclosed are: none provided.

(3) Tax Fees

The aggregate fees billed for professional services rendered by the principal accountant for tax compliance, tax advice, and tax planning for the fiscal years ending December 31, 2010 and 2009 were: $0 and $0, respectively.

The nature of the services comprising the fees herein disclosed are: none provided

(4) All Other Fees

No aggregate fees were billed for professional services provided by the principal accountant, other than the services reported in items (1) through (3) for the fiscal years ending December 31, 2010 and 2009.

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(5) Audit Committee

The registrant's Audit Committee, or officers performing such functions of the Audit Committee, have approved the principal accountant's performance of services for the audit of the registrant's annual financial statements and review of financial statements included in the registrant's Form 10-Q or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for the fiscal year ending December 31, 2009. Audit-related fees, tax fees, and all other fees, if any, were approved by the Audit Committee or officers performing such functions of the Audit Committee.

(6) Work Performance by others

None

PART IV

Item 15. Exhibits and Reports on Form 8-K.

Reports on Form 8-K. -- None

31.1	Certifications of the Chief Executive Officer and Chief Financial Officer required by Rule 13A-14 or Rule 15D-14 under the Securities Exchange Act of 1934, As Amended
32.1	Certification of the Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

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Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this report has been signed below by the following persons in the capacities and on the dates indicated.

	American Security Resources Corporation

Date: November 5, 2014	By:	/s/Frank Neukomm
		Chief Executive Officer and Chairman (Principal Executive Officer)

Date: November 5, 2014	By:	/s/ Robert Farr
		President, Chief Operating Officer and Director
		Principal Financial Officer
Date: November 5, 2014	By:	/s/ Randy Moseley
		Chief Financial Officer

Date: November 5, 2014	By:	/s/Robert J. Wilson
		Director

Date: November 5, 2014	By:	/s/Alvie T. Merrill
		Director

Date: November 5, 2014	By:	/s/James R. Twedt
		Director

Date: November 5, 2014	By:	/s/R. Brian Klock
		Director

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American Security Resources Corp. - FORM 10-K - November 5, 2014

Attached files

American Security Resources Corp. Reports