UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-QSB

     |X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
                              EXCHANGE ACT OF 1934

                  For the quarterly period ended March 31, 2006

                                       OR

     |_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                              EXCHANGE ACT OF 1934

              For the transition period from _________ to _________

                        Commission file number: 000-28515

                            AFG ENTERPRISES USA, INC.
--------------------------------------------------------------------------------
        (Exact name of small business issuer as specified in its charter)

                 Nevada                                   84-1249735
--------------------------------------------------------------------------------
      (State or other jurisdiction of                   (IRS Employer
       incorporation or organization)               Identification Number)

                       181 Wells Avenue, Newton, MA 02459
--------------------------------------------------------------------------------
                    (Address of principal executive offices)

                                 (617) 928-6001
--------------------------------------------------------------------------------
                           (Issuer's telephone number)

                   73-595 El Paseo Blvd, Palm Desert, CA 92260
                 Fiscal year changed from December 31 to June 30
--------------------------------------------------------------------------------
              (Former name, former address and former fiscal year,
                          if changed since last report)

                           --------------------------

Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15 (d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days: Yes |X| No
|_|

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

Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) after distribution of securities under a plan
confirmed by a court: Yes |X| No |_|


                                       1
<PAGE>

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: The number of shares outstanding of
the issuer's common stock, par value $.001 per share, as of May 15, 2006 is
5,100,441 shares.

Transitional Small Business Disclosure Format (Check one): Yes |_| No |X|


                                       2
<PAGE>

                            AFG ENTERPRISES USA, INC.
                                      INDEX

                                                                        Page No.
                                                                        --------
PART I.  FINANCIAL INFORMATION

ITEM 1.  CONSOLIDATED FINANCIAL STATEMENTS

Consolidated Balance Sheet - at March 31, 2006 (unaudited)                  4

Consolidated Statement of Operations - for the Three Months Ended
March 31, 2005 and 2006 (unaudited)                                         6

Consolidated Statement of Operations - for the Nine Months Ended March
31, 2005 and 2006 (unaudited)                                               7

Consolidated Statement of Changes in Stockholders' Equity - for the
Nine Months Ended March 31, 2006 (unaudited)                                8

Consolidated Statement of Cash Flows - for the Nine Months Ended March
31, 2005 and 2006 (unaudited)                                               9

Notes to Unaudited Consolidated Financial Statements                       10

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS
AND RESULTS OF OPERATONS                                                   17

ITEM 3. CONTROLS AND PROCEDURES                                            24

PART II. OTHER INFORMATION                                                 25

ITEM 1. LEGAL PROCEEDINGS                                                  25

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS        26

ITEM 3. DEFAULTS UPON SENIOR SECURITIES                                    27

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                27

ITEM 5. OTHER INFORMATION                                                  27

ITEM 6. EXHIBITS                                                           27


                                       3
<PAGE>

                       AFG ENTERPRISES USA, INC.
                      CONSOLIDATED BALANCE SHEET
                            March 31, 2006
                              (Unaudited)

                                ASSETS

Current assets
    Cash and cash equivalents                                       $ 2,398,615
    Restricted cash                                                  47,500,000
    Accounts receivable, net of allowance for doubtful
      accounts of $10,000                                               349,082
    Debt issuance costs                                               3,079,917
    Other current assets                                                179,042
                                                                    -----------

        Total current assets                                         53,506,656

Property and equipment, net                                             204,854
Goodwill                                                              4,772,413
Deposits                                                                 12,140
                                                                    -----------

              Total assets                                          $58,496,063
                                                                    ===========

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


                                  4
<PAGE>

                            AFG ENTERPRISES USA, INC.
                           CONSOLIDATED BALANCE SHEET
                                 March 31, 2006
                                   (Unaudited)

                 LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities
    Current portion of long-term debt net of discount of $329,750    52,420,250
    Accounts payable                                                    116,851
    Accrued liabilities                                               2,118,303
    Deferred revenue                                                  1,507,190
                                                                   ------------

        Total current liabilities                                    56,162,594

Commitments and contingencies

Stockholders' equity
    AFG Enterprises USA, Inc. common stock, $0.001 par value
      Authorized - 300,000,000 shares
      Issued and outstanding - 5,100,441 shares                           5,100
    Additional paid-in capital                                        2,182,237
    Retained earnings                                                   697,423
    Deferred compensation                                              (551,291)
                                                                   ------------

           Total stockholders' equity                                 2,333,469
                                                                   ------------

              Total liabilities and stockholders' equity           $ 58,496,063
                                                                   ============

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


                                  5
<PAGE>

                            AFG ENTERPRISES USA, INC.
                      CONSOLIDATED STATEMENT OF OPERATIONS
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                  Three Months     Three Months
                                                  Ended March      Ended March
                                                    31, 2005         31, 2006
                                                  -------------    -------------

                                                       2005             2006
                                                  -------------    -------------
<S>                                               <C>              <C>
Revenues
        ON Demand Revenues                        $          --    $     108,262
        Enterprise Revenues                           1,075,096          989,250
                                                  -------------    -------------
        Total Revenues                                1,075,096        1,097,512

Cost of goods sold
         ON Demand costs                                     --           51,350
         Enterprises costs                              413,975          368,846
                                                  -------------    -------------
        Total cost of goods                             413,975          420,196
                                                  -------------    -------------

Gross profit                                            661,121          677,316

Operating expenses
        Sales, general and administrative               441,441          865,411
        Research and development                        406,706          445,715
        Restructuring and other special charges         127,952          (20,787)
                                                  -------------    -------------

                     Total operating expenses           976,099        1,290,339
                                                  -------------    -------------

Loss from operations                                   (314,978)        (613,023)

Other income (expense), net
Interest (expense)                                      (87,500)        (275,272)
Other income (expense)                                    8,478          (14,862)
                                                  -------------    -------------
Total other income (expense), net                       (79,022)        (290,134)
                                                  -------------    -------------

Net loss before discontinued operations                (394,000)        (903,157)
                                                  -------------    -------------

         Loss from discontinued operations                   --         (146,548)
                                                  -------------    -------------

Net Loss                                          $    (394,000)   $  (1,049,705)
                                                  =============    =============
</TABLE>

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


                                  6
<PAGE>

                            AFG ENTERPRISES USA, INC.
                      CONSOLIDATED STATEMENT OF OPERATIONS
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                   Nine Months      Nine Months
                                                   Ended March      Ended March
                                                    31, 2005         31, 2006
                                                  -------------    -------------
Revenues                                               2005             2006
                                                  -------------    -------------
<S>                                               <C>              <C>
        ON Demand revenues                        $          --    $     190,501
        Enterprise revenues                           7,115,639        2,744,810
                                                  -------------    -------------
        Total revenues                                7,115,639        2,935,311

Cost of goods sold
         ON Demand costs                                     --          234,703
         Enterprises costs                            1,453,409        1,157,185
                                                  -------------    -------------
         Total cost of goods sold                     1,453,409        1,391,888
                                                  -------------    -------------

Gross profit                                          5,662,230        1,543,423

Operating expenses
        Sales, general and administrative             1,598,027        1,815,042
        Research and development                      1,372,319        1,341,813
        Restructuring and other special charges       3,608,062          (16,170)
        Settlement of claim                            (646,863)      (1,712,500)
                                                  -------------    -------------

                     Total operating expenses         5,931,545        1,428,185
                                                  -------------    -------------

Income/(loss) from operations                          (269,315)         115,238

Other income (expense), net
Interest (expense)                                     (260,234)        (581,497)
Other income (expense)                                 (248,679)         (45,055)
                                                  -------------    -------------
Total other income (expense), net                      (508,913)        (626,552)
                                                  -------------    -------------

Net loss before discontinued operations                (778,228)        (511,314)
                                                  -------------    -------------

         Loss from discontinued operations             (440,486)        (763,252)

Net Loss                                          $  (1,218,714)   $  (1,274,566)
                                                  =============    =============
</TABLE>

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


                                  7
<PAGE>

                            AFG ENTERPRISES USA, INC.
            CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
                    For the Nine Months Ended March 31, 2006
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                               AFG Enterprises
                                                       Firepond, Inc.              USA, Inc.
                                                        Common Stock             Common Stock
                                                  -----------------------   -------------------

                                                                  $0.01                  $0.001   Additional
                                                                   Par                    Par        Paid         Retained
                                                    Shares        Value      Shares      Value    In Capital      Earnings
                                                  -----------   ---------   ---------   -------   -----------    -----------
  <S>                                             <C>           <C>         <C>         <C>       <C>            <C>

Balance, June 30, 2005                             99,001,000   $ 990,010                         $(1,985,000)   $ 1,971,989

  FP Technology - Common Stock                                              2,016,124     2,016        47,984

  FP Technology - Additional Paid in Capital                                                          (50,000)

  Issuance of convertible debt with warrants                                                          510,000

  Issuance of convertible debt with warrants                                                          160,000

  Issuance of additional shares to 100%
    owner                                                                     161,290       161          (161)

  Existing AFG Enterprises equity at time
    of reverse merger                                                       1,108,502     1,108       (23,123)

  Issuance of common stock awards to
    directors and officers                                                  1,814,525     1,815       562,527

  Issuance of warrants in connection with
    debt financing                                                                                  1,970,000

  Net loss for the nine months ended
    March 31, 2006                                                                                                (1,274,566)

  Reclassification of Firepond equity as a
    result of Trust created to assume all prior
    liabilities                                   (99,001,000)   (990,010)         --        --       990,010             --
                                                  -----------   ---------   ---------   -------   -----------    -----------

Balance, March 31, 2006                                    --   $      --   5,100,441   $ 5,100   $ 2,182,237    $   697,423
                                                  ===========   =========   =========   =======   ===========    ===========
  <CAPTION>
                                                                    Accumulated
                                                                       Other       Stockholders'    Comprehensive
                                                    Deferred       Comprehensive      Equity            Income
                                                  Compensation     Income (Loss)     (Deficit)          (Loss)
                                                  ------------    -------------   -------------    -------------
  <S>                                             <C>             <C>             <C>              <C>

Balance, June 30, 2005                            $         --    $    (680,778)  $     296,221    $   1,291,211

  FP Technology - Common Stock                                                           50,000

  FP Technology - Additional Paid in Capital                                            (50,000)

  Issuance of convertible debt with warrants                                            510,000

  Issuance of convertible debt with warrants                                            160,000

  Issuance of additional shares to 100%
    owner                                                                                     0

  Existing AFG Enterprises equity at time
    of reverse merger                                                                   (22,015)

  Issuance of common stock awards to
    directors and officers                            (564,342)

  Issuance of warrants in connection with
    debt financing                                                                    1,970,000

  Net loss for the nine months ended
    March 31, 2006                                      13,051          680,778        (580,737)        (593,788)

  Reclassification of Firepond equity as a
    result of Trust created to assume all prior
    liabilities                                             --               --              --               --
                                                  ------------    -------------   -------------    -------------

Balance, March 31, 2006                           $   (551,291)   $          --   $   2,333,469    $     697,423
                                                  ============    =============   =============    =============
</TABLE>

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

                                  8
<PAGE>

                            AFG ENTERPRISES USA, INC.
                      CONSOLIDATED STATEMENT OF CASH FLOWS
                For the Nine Months Ended March 31, 2005 and 2006
                                   (Unaudited)

<TABLE>
<CAPTION>

                                                                                             2005             2006
      Cash flows from operating activities
<S>                                                                                      <C>            <C>
            Net loss                                                                     $(1,218,714)   $ (1,274,566)
            Adjustments to reconcile net loss to net cash used in operating activities
                 Settlement of claim                                                        (646,863)     (1,712,500)
                 Depreciation and amortization                                               330,877         483,905
                 Loss from discontinued operations                                           152,481         669,845
            Changes in assets and liabilities
                 Accounts receivables                                                       (258,271)        199,874
                 Unbilled services                                                            80,980           2,748
                 Assets to be sold                                                           491,742         106,374
                 Other current assets                                                        266,947        (124,366)
                 Accounts payable                                                           (354,014)        (42,892)
                 Accrued liabilities                                                         (34,653)      1,101,787
                 Restructuring accrual                                                      (209,009)             --
                 Deferred revenue                                                           (565,925)        318,903
                                                                                         -----------    ------------

                      Net cash used in operating activities                               (1,964,422)       (270,888)
                                                                                         -----------    ------------

      Cash flows from investing activities
            Purchase of property and equipment                                               (74,459)        (15,761)
            Restricted cash                                                                       --     (47,500,000)
            Other assets                                                                      35,921          20,802
                                                                                         -----------    ------------

                      Net cash used in investing activities                                  (38,538)    (47,494,959)
                                                                                         -----------    ------------

      Cash flows from financing activities
            Borrowings from note payable                                                          --      52,500,000
            Debt issuance costs                                                                   --      (1,109,917)
            Payments on notes payable                                                     (1,600,000)     (1,250,000)
                                                                                         -----------    ------------

                      Net cash provided by (used in) financing activities                 (1,600,000)     50,140,083
                                                                                         -----------    ------------

                           Net (decrease) increase in cash and cash equivalents           (3,602,960)      2,374,236

      Cash and cash equivalents, on June 30, 2004 and 2005                                 3,939,534          24,379
                                                                                         -----------    ------------

      Cash and cash equivalents, on March 31, 2005 and 2006                              $   336,574    $  2,398,615
                                                                                         ===========    ============

      Supplemental cash flow information:

      Interest paid                                                                      $         -    $    167,667
                                                                                         ===========    ============

Non Cash Financing and Investing Activities:
      During the nine months ended March 31, 2006, the Company issued
      convertible notes and warrants and valued the conversion rights and the
      warrants at $670,000.  The Company also issued warrants to noteholders
      and the underwriter valued at $1,970,000 for debt issuance costs.

</TABLE>

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

                                  9
<PAGE>

              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

      EXPLANATORY NOTE

      On March 29, 2006, AFG Enterprises  USA, Inc., a Nevada  corporation  (the
      "Company", "AFG", "we", "us" or "our"), entered into an Agreement and Plan
      of Merger by and among the  Company,  FP  Merger  Sub,  Inc.,  a  Delaware
      corporation and wholly-owned  subsidiary of the Company, and FP Technology
      Holdings, Inc., a Delaware corporation ("FP" or "FP Technology"), pursuant
      to which the Company  agreed to acquire all of the issued and  outstanding
      capital  stock of FP (the "FP  Acquisition").  The Company  completed  the
      acquisition  of  FP on  the  same  date,  and  FP  became  a  wholly-owned
      subsidiary of the Company.  In  connection  with the FP  Acquisition,  the
      Company changed its fiscal year from December 31 to June 30.

      As a result of the merger,  each share of common  stock of FP  outstanding
      immediately  prior to the  effective  time of the merger  (the  "Effective
      Time") was converted  into the right to receive  shares of common stock of
      the Company at an exchange ratio of 0.4032248  share of the Company common
      stock for each share of FP common stock.  The Company  issued an aggregate
      of 3,991,939  shares of its common stock,  par value $0.001 per share (the
      "Purchase Price") in exchange for all issued and outstanding  shares of FP
      common stock.  The issuance of such shares of common stock was exempt from
      registration  requirements  pursuant to Section 4(2) of the Securities Act
      of 1933,  as amended  (the  "Securities  Act"),  and Rule 506  promulgated
      thereunder.

      On September 13, 2005,  Firepond,  Inc. transferred most of its assets and
      liabilities  to  FP  as  part  of  a   restructuring   and  new  financing
      transaction,  pursuant to which  Trident  Growth Fund,  LLC provided  $2.5
      million in secured debt  financing in September  and November  2005 to FP.
      Before and after the described  transaction,  both  Firepond,  Inc. and FP
      were  owned  100% by the same  entity.  For the  period  from July 1, 2004
      through September 12, 2005, the financial  statements presented herein are
      those of  Firepond,  Inc. For the period from  September  13, 2005 through
      January  17,  2006  the  financial  statements  presented  herein  are the
      combined financial statements of Firepond, Inc. and FP.

      On January 17, 2006, Firepond,  Inc. was liquidated.  On the same date, as
      part of the process of winding up and dissolving  Firepond,  Inc., a trust
      was created to liquidate the remaining assets of Firepond,  Inc.,  enforce
      and pursue the causes of action of Firepond,  Inc.,  provide for a reserve
      against the payment of any contingent liabilities,  and distribute the net
      proceeds to its stockholder.

      Pursuant to FIN 46(R),  the financial  statements  included herein present
      the  consolidated  financial  statements of FP, AFG Enterprises  USA, Inc.
      (commencing  March  29,  2006)  and the  trust  created  to deal with post
      liquidation issues of Firepond, Inc.

1.    Basis of Presentation:

      The accompanying  unaudited  consolidated  financial  statements have been
      prepared by the Company.  In the opinion of management,  the  accompanying
      unaudited   consolidated  financial  statements  contain  all  adjustments
      (consisting  of  only  normal  recurring  accruals)  necessary  for a fair
      presentation  of the  financial  position  as of March 31,  2006,  and the
      results of operations  and cash flows for the periods ended March 31, 2005
      and 2006. The results of operations  for such periods are not  necessarily
      indicative  of the  results  expected  for the full fiscal year or for any
      future  period.   The  accompanying   unaudited   consolidated   financial
      statements  should  be read  in  conjunction  with  the  audited  combined
      financial statements of Firepond,  Inc. and FP Technology  Holdings,  Inc.
      included in the Form 8-K for the period ended June 30, 2005.


                                       10
<PAGE>

2.    Income taxes:

      No  provision  for income  taxes is required at March 31, 2006  because in
      management's estimation, the Company will not recognize any taxable income
      through the fiscal year ended June 30, 2006.

3.    Notes Payable:

      CAP Financing

      On  March  29,  2006,  the  Company  entered  into a  Securities  Purchase
      Agreement (the "Purchase Agreement") with certain institutional  investors
      (the  "Buyers"),  pursuant to which the Buyers  agreed to purchase (i) the
      Company's   Senior   Secured    Nonconvertible   Notes   due   2011   (the
      "Nonconvertible  Notes") in an aggregate  principal amount of $50,000,000,
      which Nonconvertible Notes may be exchanged for Senior Secured Convertible
      Notes  due  2011  (the   "Convertible   Notes",   and  together  with  the
      Nonconvertible  Notes,  the  "Notes") or redeemed,  and which  Convertible
      Notes are  convertible  into  shares of the  Company's  common  stock (the
      "Conversion Shares");  and (ii) warrants (the "Warrants") to acquire up to
      that number of shares of the  Company's  common  stock set forth  opposite
      each  Buyer's  name in the  Schedule of Buyers  attached  to the  Purchase
      Agreement  (the  "Warrant   Shares"),   exercisable   from  the  Threshold
      Acquisition  Date (as such term is  defined  in the  Indenture,  described
      below)  until March 29,  2011 at an  exercise  price equal to the lower of
      $8.00 and 125% of the per share price of the Company's  common stock to be
      sold in a new private  placement  transaction which the Company intends to
      complete  within  six  months.  The  purchase  and sale of the  Notes  and
      Warrants was consummated on March 29, 2006 (the "CAP Financing").

      On March 29, 2006,  the Company also  entered into a  Registration  Rights
      Agreement with the Buyers in the CAP Financing, whereby the Company agreed
      to provide certain registration rights in respect of the Conversion Shares
      and the Warrant  Shares under the Securities Act of 1933 and the rules and
      regulations promulgated thereunder, and applicable state securities laws.

      Pursuant  to  the  terms  of  an  Indenture  dated  March  29,  2006  (the
      "Indenture") executed by the Company, as Issuer, and The Bank of New York,
      as Trustee (in such  capacity,  the  "Trustee"),  the  Company  issued the
      Nonconvertible  Notes to the Buyers.  Under the terms of the Indenture and
      the Escrow Agreement dated March 29, 2006 (the "Escrow Agreement") between
      the Company and the  Trustee,  ninety-five  percent of the proceeds of the
      Nonconvertible  Notes  were paid  into an  interest-bearing  account  (the
      "Escrow Account") maintained by the Trustee for the benefit of the holders
      of the Nonconvertible Notes (the "Nonconvertible Holders").

      While any Nonconvertible Notes are outstanding, the Company may propose to
      consummate a business  combination  transaction  in which the Company will
      acquire by merger,  securities  purchase,  asset purchase or otherwise,  a
      majority of the assets or equity of another entity for a purchase price of
      at least $15,000,000,  and each Nonconvertible Holders may vote to approve
      such  transaction.  A pro  rata  amount  of the  principal  amount  of the
      Nonconvertible Notes of each Nonconvertible Holder voting in favor of such
      business combination  transaction will be exchanged for Convertible Notes,
      and an  amount  equal to the  total  principal  amount  of such  exchanged
      Nonconvertible  Notes will be released from the Escrow Account and used to
      consummate such business combination transaction.

      The indebtedness  evidenced by the Notes is senior secured indebtedness of
      the  Company,   and  ranks   superior  to  the  Company's   unsecured  and
      subordinated indebtedness. As security for the Company's obligations under
      the Indenture,  the Company and FP Technology  Holdings,  Inc., a Delaware
      corporation and wholly owned subsidiary of the Company ("FPT"),  have each
      executed  (i) a Security  Agreement  dated March 29,  2006 (the  "Security
      Agreement"),  pursuant  to which the  Company  and FPT  granted a security
      interest in all assets of the Company and FPT in favor of the Trustee,  in
      its capacity as collateral  agent for the  Nonconvertible  Holders and the
      holders of the  Convertible  Notes under the Indenture (in such  capacity,
      the "Collateral Agent"), and (ii) a Pledge Agreement dated March 29, 2006,
      pursuant to which the Company  pledged its interest in FPT in favor of the
      Collateral  Agent.  FPT has executed a separate  Guaranty  dated March 29,
      2006 in favor of the Collateral Agent.


                                       11
<PAGE>

      Terms of the Notes

      The  following  are  certain  additional   material  terms  of  the  Notes
      (capitalized  terms  used  but not  defined  in this  discussion  have the
      meanings ascribed to such terms in the Indenture):

      Interest Rate:

            Interest on the Notes  accrues at a rate equal to the greater of (A)
            4.51% and (B) the three  month U.S.  Treasury  Rate (as  reported on
            Bloomberg). The applicable Interest Rate will be determined for each
            quarterly  interest  period on the first Trading Day of such period.
            Interest on the Notes will accrue from the most recent date to which
            interest has been paid, or if no interest has been paid,  from March
            29 2006,  until the Principal  Amount is paid or duly made available
            for payment.

      Redemption Right of the Holder:

            Upon  the   consummation   of  an  Approved   Business   Combination
            Transaction,  the Company  will  automatically  redeem the  Business
            Combination Pro Rata Transaction Amount of Holders of Nonconvertible
            Notes voting against the applicable  Approval  Business  Combination
            Transaction  and if a Holder  votes  against all  Approved  Business
            Combination  Transactions,   thirty-one  days  after  the  Threshold
            Acquisition Date, the remaining  outstanding amount of such Holder's
            Note.

      Redemption by the Company at the Option of the Holder:

            Subject to the terms and  conditions of the  Indenture,  the Company
            will become  obligated,  at the option of the Holder,  (i) to redeem
            the Notes upon the request of such  Holder  after the failure by the
            Company to achieve  the numbers of  subscribers  required by Section
            10.17(b) of the Indenture in any two  consecutive  fiscal  quarters,
            (ii) to redeem the Notes upon the request of such Holder at any time
            after  the 18 month  anniversary  of the  original  issuance  of the
            Nonconvertible  Notes,  (iii) in connection with the Holder's making
            an Additional Contribution, or (iv) if the Company does not raise at
            least  $7,000,000  in  additional  capital  pursuant  to  an  equity
            offering within 6 months of the initial issuance of the Notes at the
            Optional  Redemption Price, (which Optional Redemption Price will be
            paid in cash).

      Repurchase  by the Company at the Option of the Holder Upon a  Fundamental
      Change:

      Subject to the terms and  conditions  of the  Indenture,  the Company will
      become obligated,  at the option of the Holder, to repurchase the Notes if
      a Fundamental  Change  occurs at any time prior to the Stated  Maturity at
      the  Fundamental  Change  Repurchase  Price,   (which  Fundamental  Change
      Repurchase Price,  excluding the Make-Whole Premium, will be paid in cash,
      plus any Make-Whole Premium required by the terms of the Indenture).

      Withdrawal of Fundamental Change Repurchase Notice:

            Holders  have the  right  to  withdraw,  in  whole  or in part,  any
            Fundamental  Change  Repurchase  Notice, by delivering to the Paying
            Agent  a  written  notice  of  withdrawal  in  accordance  with  the
            provisions of the Indenture.

      Business Combination Transactions:


                                       12
<PAGE>

            At any time after the date hereof, the Company may seek the approval
            of the Nonconvertible  Holders to a Business Combination Proposal by
            delivering  a  Business  Combination  Notice  to the  Nonconvertible
            Holders no earlier  than sixty (60)  Trading  Days and no later than
            twenty  (20)  Trading  Days  prior  to  the  date  of  the  Business
            Combination Vote. The record date for any Business  Combination Vote
            will be such date as set by the Company in the Business  Combination
            Notice,  which will be at least five (5)  Trading  Days prior to the
            date of such Business  Combination  Vote.  The  affirmative  vote of
            Nonconvertible Holders of at least 75% in aggregate Principal Amount
            of the  Outstanding  Notes are  required  to  approve  any  Business
            Combination  Proposal.  Within ten (10) Trading Days  following  the
            consummation of such Business Combination  Transaction,  the Trustee
            will  deliver a notice to each  Nonconvertible  Holder  listing  the
            Available  Amount of the Company  following the consummation of such
            Business   Combination   Transaction   and  the  Holder's   Business
            Combination Transaction Pro Rata Amount of such Business Combination
            Transaction.

      Penalty for Failure to Consummate Business Combination:

            If  Holders  of at least 75% in  aggregate  Principal  Amount of the
            Outstanding Nonconvertible Notes fail to vote in favor of a Business
            Combination  Proposal,  the Company will not be permitted to present
            any  further  Business  Combination  Proposals  to the Holders for a
            thirty day period thereafter.

      Event of Default:

            If an Event of Default will occur and be  continuing,  the Principal
            Amount plus accrued and unpaid interest and Liquidated  Damages,  if
            any,  through  such date on all the Notes  may be  declared  due and
            payable in the manner and with the effect provided in the Indenture.

      Trident Financing

      On September 13, 2005,  Trident Growth Fund,  L.P.  ("Trident")  loaned FP
      Technology Holdings,  Inc. $2,000,000.  Interest accrues on the associated
      secured note at 12% per annum.  Interest is payable monthly.  Principal is
      due  September  30,  2006  or  on  consummation  of a  change  in  control
      transaction.  The note was  originally  convertible  into shares of common
      stock based upon a fixed ratio. On or about November 25, 2005, the Company
      closed an additional  $500,000  note with Trident  Growth Fund on the same
      terms and  conditions  as the note  issued in  September  2005.  The funds
      received pursuant to these notes were used for working capital.

      In connection with the FP Acquisition and the CAP Financing,  on March 29,
      2006 the Company entered into a Master Amendment (the "Master Amendment"),
      by and among the Company, FP and Trident. The Master Amendment amended the
      operative  documents  entered  into by FP and  Trident  in  September  and
      November 2005.  The Master  Amendment also added the Company as a party to
      certain of these agreements.

      The Master  Amendment  amended  the  following  agreements  (the  "Trident
      Financing  Documents")  and added the  Company as a party to each of them:
      (i) Securities Purchase Agreement, dated September 13, 2005, as amended by
      that First  Amendment  dated  November 15, 2005;  (ii) 12% Senior  Secured
      Convertible  Debenture  No. 1, dated  September  13, 2005,  in the initial
      principal  amount  of  $2,000,000,  and  12%  Senior  Secured  Convertible
      Debenture No. 2, dated November 15, 2005, in the initial  principal amount
      of $500,000 (the "Trident Notes"); and (iii) Common Stock Purchase Warrant
      No. 1, dated September 13, 2005, and Common Stock Purchase  Warrant No. 2,
      dated  November  15,  2005 (the  "Trident  Warrants").  Under  the  Master
      Amendment,  the Trident Notes were amended to be convertible at a price of
      $6.40 per share, subject to the same anti-dilution  adjustments applicable
      to the Notes issued in the CAP  Financing.  In addition,  under the Master
      Amendment,  the Trident Warrants were amended to reflect an exercise price
      of $4.00 per share and the  amount of shares  issuable  under the  Trident
      Warrants  was  changed to  390,625  shares.  In  addition,  the  financial
      covenants under the Trident Financing  Documents were amended to match the
      financial covenants contained in the CAP Financing.


                                       13
<PAGE>

      In addition,  on March 29, 2006, the Company entered into an Intercreditor
      and  Subordination  Agreement  with  FP and  Trident  (the  "Subordination
      Agreement"),  pursuant to which Trident agreed to  subordinate  its rights
      under the Trident  Financing  Documents,  including a Security  Agreement,
      dated  September  13,  2005,  entered  into  between  Trident  and FP (the
      "Security Agreement").

      The Company  recorded debt issuance costs of $3,079,917 in connection with
      the warrants issued in the Trident borrowings and the CAP transaction.

      Benchmark Equity Group

      The  Company  is a party to a certain  Credit  Agreement  between  Acclaim
      Financial  Group Venture II, LLC ("AFGV") and the Company dated July,  15,
      2003 (the "Credit Agreement"),  pursuant to which the Company was indebted
      to AFGV in the amount of  approximately  $313,421 (the "Claim").  On March
      29,  2006,  AFGV sold its rights to the Claim to Benchmark  Equity  Group,
      Inc.  ("BMEG"),  which agreed with the Company to cancel the Claim in full
      in  exchange  for  1,008,062  shares of common  stock of the Company to be
      issued to BMEG or its designees, pursuant to an Exchange Agreement between
      the Company and BMEG (the  "Exchange  Agreement").  On March 29, 2006, the
      Company issued  1,008,062 shares of the Company's common stock to BMEG and
      its designees pursuant to the Exchange Agreement.


4.    Litigation:

      General Motors

      On October 19, 2001,  General Motors Corporation filed a complaint against
      Firepond,  Inc. in the Superior Court of Massachusetts,  Middlesex County,
      alleging,  among  other  things,  a breach of  contract  under  agreements
      entered into in 1994, as amended;  anticipatory  repudiation in the spring
      of 2000 of agreements entered into in 1994, as amended; unjust enrichment;
      establishment of a constructive  trust;  rescission and restitution  based
      upon failure of consideration  as well as extortion and coercion  relating
      to agreements entered into in 1994, as amended;  breach of the covenant of
      good faith and fair dealing; fraud; as well as violation of Chapter 93A of
      the General Laws of the Commonwealth of  Massachusetts  relating to unfair
      and deceptive  trade  practices.  General Motors' claims further relate to
      license agreements, services agreements and a general release entered into
      with the Firepond in May 2000.

      This  matter  was  settled  on  April  14,  2004,  per  the  terms  of the
      settlement, Firepond estimated and accrued a liability of $7,000,000 as of
      October  31,  2003.  During  the  period  ended  June 30,  2005,  Firepond
      negotiated  a  further  settlement  of the note  payable  and  recorded  a
      favorable settlement amount of $450,000 into its records.

      On December 7, 2004, Firepond entered into a revised settlement  agreement
      that  called  for a  promissory  note  of  $3,000,000,  the  assigning  of
      $1,350,000 of Firepond notes  receivable to General  Motors,  as well as a
      cash payment of $1,600,000.

      On September 13, 2005, Firepond, FP Technology Holdings,  Inc. and General
      Motors entered into a letter  agreement  whereby  General Motors  accepted
      $1,250,000  in cash  from FP  Technology  Holdings,  received  a  $250,000
      unsecured note from FP Technology  Holdings  Inc.,  cancelled the note due
      from Firepond and released its security interest in Firepond assets.

      Freightliner LLC


                                       14
<PAGE>

      On or about December 1, 2004,  Freightliner LLC filed a complaint  against
      the Firepond. The plaintiff alleges breach of contacts, breath of warranty
      arising out of the parties' License Agreement and Services Agreement. This
      matter  was  settled on August 1,  2005,  per the terms of the  settlement
      Firepond agreed to pay $3,000,000 over a period of 70 days. The settlement
      was covered by Firepond's  insurance carrier,  Steadfast Insurance Company
      ("Steadfast"),  which provided the full amount for the  settlement  except
      for a $50,000 deductible which Firepond accrued.  Firepond has agreed that
      Steadfast  has  the  right  to  seek a  judicial  determination  as to the
      reasonableness  of the settlement value of the Freightliner  claim and the
      $3,000,000 settlement. Firepond has acknowledged and granted Steadfast the
      right to recoup from Firepond the amount which  represents  the difference
      between the  judicially  determined  settlement  value and the  $3,000,000
      settlement,  if the court determines that the reasonable  settlement value
      of the Freightliner  claim is less than $3,000,000.  Steadfast and FP have
      agreed in mediation  that FP will not have a  reimbursement  obligation to
      Steadfast. The parties are in the process of documenting this agreement.

      IPO Litigation

      In August, 2001,  Firepond,  Inc. was named as a defendant in a securities
      class  action  filed in United  States  District  Court  for the  Southern
      District of New York  related to its initial  public  offering  ("IPO") in
      February,  2000. The lawsuit also named certain of the underwriters of the
      IPO,  including  FleetBoston,  Dain  Rauscher,  and SG  Cowan,  as well as
      officers and directors of Firepond, Klaus P. Besier and Paul K. McDermott,
      as defendants. Approximately 300 other issuers and their underwriters have
      had similar suits filed against them, all of which have been included in a
      single  coordinated  proceeding in the Southern  District of New York (the
      "IPO  Litigations").  The  complaints  allege that the  prospectus and the
      registration   statement   for  the  IPO  failed  to  disclose   that  the
      underwriters allegedly solicited and received "excessive" commissions from
      investors  and that some  investors in the IPO  allegedly  agreed with the
      underwriters  to buy  additional  shares  in the  aftermarket  in order to
      inflate the price of  Firepond's  stock.  An amended  complaint  was filed
      April 19, 2002.  Firepond,  Inc. and the officers and directors identified
      above were named in the suits pursuant to Section 11 of the Securities Act
      of 1933,  Section  10(b) of the  Exchange Act of 1934,  and other  related
      provisions.  The complaints seek unspecified damages,  attorney and expert
      fees, and other unspecified litigation costs.

      In June 2003, a proposed  settlement  of this  litigation  was  structured
      between the plaintiffs, the issuer defendants in the consolidated actions,
      the issuer  officers and directors  named as defendants,  and the issuers'
      insurance companies.  On or about July 30, 2003, a committee of Firepond's
      Board of Directors conditionally approved the proposed partial settlement.
      The settlement  would provide,  among other things,  a release of Firepond
      and of the individual defendants for the conduct alleged to be wrongful in
      the  amended   complaint.   Firepond   would  agree  to  undertake   other
      responsibilities  under the  partial  settlement,  including  agreeing  to
      assign away, not assert,  or release certain  potential claims the Company
      may have  against its  underwriters.  Any direct  financial  impact of the
      proposed  settlement  is  expected  to be  borne by  Firepond's  insurance
      carriers.

      In October 2003, the action involving  Firepond was designated (along with
      several  other  actions) as a test or "focus"  case for  purposes of class
      certification and merits discovery in the actions  proceeding  against the
      Underwriter defendants. The fact that Firepond is a defendant in a "focus"
      case does not impact its  participation in the settlement.  However,  as a
      "focus" case defendant,  Firepond may be subjected to additional discovery
      and  other   involvement  in  the  proceedings   against  the  Underwriter
      defendants as compared to other issuer defendants.

      In June 2004,  an agreement of  settlement  was submitted to the court for
      preliminary approval. The court granted the preliminary approval motion on
      February 15, 2005, subject to certain modifications.

      On August 31, 2005, the court issued a preliminary order further approving
      the modifications to the settlement and certifying the settlement classes.
      The court also appointed the Notice  Administrator  for the settlement and
      ordered that notice of the  settlement be  distributed  to all  settlement
      class  members  beginning on November 15, 2005.  The  settlement  fairness
      hearing was held on April 24, 2006,  and the court reserved  decision.  If
      the court determines that the settlement is fair to the class members, the
      settlement will be approved.  There can be no assurance that this proposed
      settlement  would be approved and  implemented  in its current form, or at
      all.

      Due to the inherent uncertainties of litigation and because the settlement
      approval process is at a preliminary  stage, we cannot accurately  predict
      the ultimate outcome of the matter.


                                       15
<PAGE>

      The Company may from time to time also be subject to various  other claims
      and legal  actions  arising in the  ordinary  course of  business.  In the
      opinion of management, after consultation with legal counsel, the ultimate
      disposition of these matters is not expected to have a material  effect on
      the Company's business, financial condition, or results of operations.

5.    Restricted Stock Awards:

      In connection  with the  employment of the Chief  Executive  Officer,  the
      Chief Financial  Officer,  the recruitment of an independent  board member
      and the completion of certain financing  transactions,  the Company issued
      restricted  stock  awards  to  the  Chief  Executive  Officer,  the  Chief
      Financial Officer and certain directors. Additionally, prior to completion
      of the  acquisition  of FP by AFG,  FP issued to its  majority  beneficial
      shareholder  161,290 additional shares of common stock. In connection with
      the stock awards to the officers and directors, 1,814,525 shares of common
      stock were issed valued at $564,342 and recorded as deferred  compensation
      to be amortized over the respective vesting periods.


                                       16
<PAGE>

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

Certain  statements  in this  "Management's  Discussion  and Analysis or Plan of
Operation" are forward-looking  statements that involve risks and uncertainties.
Words such as anticipates,  expects, intends, plans, believes, seeks, estimates,
and  similar  expressions   identify  such   forward-looking   statements.   The
forward-looking  statements  contained herein are based on current  expectations
and entail  various risks and  uncertainties  that could cause actual results to
differ  materially  from these  expressed  in such  forward-looking  statements.
Factors that might cause such a difference  include,  among other things,  those
set forth under "Risk Factors" contained in our Current Report on Form 8-K filed
on April 4, 2006  (reporting a change in shell  company  status under Item 5.06)
and those appearing elsewhere in this Form 10-QSB.  Readers are cautioned not to
place  undue  reliance  on  these  forward-looking  statements,   which  reflect
management's  analysis  only as of the date hereof.  We assume no  obligation to
update these forward-looking  statements to reflect actual results or changes in
factors or assumptions affecting forward-looking statements.


OVERVIEW

On March  29,  2006,  AFG  Enterprises  USA,  Inc.,  a Nevada  corporation  (the
"Company",  "AFG",  "we", "us" or "our"),  entered into an Agreement and Plan of
Merger by and among the Company, FP Merger Sub, Inc., a Delaware corporation and
wholly-owned  subsidiary  of the Company,  and FP Technology  Holdings,  Inc., a
Delaware  corporation ("FP" or "FP  Technology"),  pursuant to which the Company
agreed to acquire all of the issued and outstanding capital stock of FP (the "FP
Acquisition"). The Company completed the acquisition of FP on the same date, and
FP became a wholly-owned  subsidiary of the Company.  In connection  with the FP
Acquisition, the Company changed its fiscal year from December 31 to June 30.

As a result  of the  merger,  each  share  of  common  stock  of FP  outstanding
immediately prior to the effective time of the merger (the "Effective Time") was
converted  into the right to receive shares of common stock of the Company at an
exchange ratio of 0.4032248  share of the Company common stock for each share of
FP common  stock.  The Company  issued an aggregate  of 3,991,939  shares of its
common stock, par value $0.001 per share (the "Purchase  Price") in exchange for
all issued and outstanding shares of FP common stock.

On  September  13,  2005,  Firepond,  Inc.  transferred  most of its  assets and
liabilities  to FP as part of a  restructuring  and new  financing  transaction,
pursuant to which Trident Growth Fund, LLC provided $2.5 million in secured debt
financing in September  and November  2005 to FP. Before and after the described
transaction,  both Firepond, Inc. and FP were owned 100% by the same entity. For
the  period  from  July 1,  2004  through  September  12,  2005,  the  financial
statements  presented  herein are those of  Firepond,  Inc.  For the period from
September 13, 2005 through January 17, 2006 the financial  statements  presented
herein are the combined financial statements of Firepond, Inc. and FP.

In January 17, 2006, Firepond, Inc. was liquidated. On the same date, as part of
the process of winding up and dissolving Firepond,  Inc., a trust was created to
liquidate the remaining assets of Firepond,  Inc., enforce and pursue the causes
of action of Firepond,  Inc.,  provide for a reserve  against the payment of any
contingent liabilities, and distribute the net proceeds to its stockholder.

Pursuant to FIN 46(R),  the financial  statements  included  herein  present the
consolidated  financial  statements of FP, AFG Enterprises USA, Inc. (commencing
March 29, 2006) and the trust  created to deal with post  liquidation  issues of
Firepond, Inc.

The Company,  through its wholly-owned subsidiary FP Technology Holdings,  Inc.,
is a leading provider of OnDemand services that optimize the process of building
accurate  quotes  and  proposals  from  complex  product  catalogs  and  pricing
matrixes. The Firepond OnDemand  configuration,  price quote system guides sales
people,  channel  partners  and  customers  through  the entire  "lead-to-order"
business   process  --   delivering   needs   analysis,   product   and  pricing
configuration,  quote and proposal generation,  and order management. We provide
interactive selling solutions over the Internet in a true OnDemand  multi-tenant
environment helping our subscribers profitably acquire and retain customers. The
complementary  configuration,  pricing and guided selling solutions are based on
patented  technology.  Our solutions  help drive new revenue  streams,  increase
profitability,  and manage customer  interactions across all channels throughout
the sales cycle.

CRITICAL ACCOUNTING POLICIES

In  December  2001,  the SEC  requested  that all  registrants  list  their most
"critical  accounting policies" in the Management's  Discussion & Analysis.  The
SEC indicated that a "critical accounting policy" is one which is both important
to the portrayal of the Company's  financial  condition and results and requires
our most difficult,  subjective or complex  judgments,  often as a result of the
need to  make  estimates  about  the  effect  of  matters  that  are  inherently
uncertain.   We  believe  that  the  following   accounting  policies  fit  this
definition:


                                       17
<PAGE>

      Enterprise Revenue Recognition

The Company recognizes revenue based on the provisions of the American Institute
of  Certified  Pubic  Accountants  (AICPA)  Statement  of  Position,  No.  97-2,
"Software  Revenue  Recognition"  ("SOP  97-2"),  as amended,  and  Statement of
Position No. 81-1,  "Accounting for Performance of Construction-Type and Certain
Production-Type Contracts" ("SOP 81-1").

The Company generates revenue from license and service revenue.  License revenue
is generated  from  licensing  the rights to the use of the  Company's  packaged
software  products.  Service  revenue is  generated  from sales of  maintenance,
consulting  and  training  services  performed  for  customers  that license the
Company's products.

The Company has concluded that  generally,  where the Company is responsible for
implementation services for the SalesPerformer product suite and its components,
the implementation  services are essential to the customer's use of the packaged
software  products.  In  such  arrangements,   the  Company  recognizes  revenue
following the  percentage-of-completion  method over the implementation  period.
Percentage of completion is measured by the percentage of  implementation  hours
incurred to date compared to estimated total implementation hours.

This method is used because  management has determined  that past experience has
shown  expended  hours to be the best measure of progress on these  engagements.
When the current  estimates of total contract revenue and contract cost indicate
a loss, a provision for the entire loss on the contract is recorded.

In situations where the Company is not responsible for  implementation  services
for the SalesPerformer product suite, the Company recognizes revenue on delivery
of the  packaged  software if there is  persuasive  evidence of an  arrangement,
collection is probable and the fee is fixed or determinable. In situations where
the  Company  is  not   responsible   for   implementation   services   for  the
SalesPerformer product suite, but is obligated to provide unspecified additional
software  products  in  the  future,   the  Company   recognizes  revenue  as  a
subscription over the term of the commitment period.

For product  sales that are  recognized  on  delivery,  the Company will execute
contracts that govern the terms and conditions of each software license, as well
as maintenance  arrangements and other services arrangements.  If an arrangement
includes an acceptance provision,  acceptance occurs upon the earlier of receipt
of a written customer acceptance or expiration of the acceptance period.

Revenue under multiple element arrangements, which may include several different
software products and services sold together, is allocated to each element based
on the residual  method in  accordance  with  Statement  of Position,  No. 98-9,
"Software  Revenue  Recognition  with  Respect  to Certain  Arrangements"  ("SOP
98-9").  The Company uses the  residual  method when  vendor-specific  objective
evidence of fair value does not exist for one of the  delivered  elements in the
arrangement.  Under  the  residual  method,  the fair  value of the  undelivered
elements is deferred and  subsequently  recognized.  The Company has established
sufficient   vendor-specific   objective  evidence  for  professional  services,
training and  maintenance  and support  services based on the price charged when
these elements are sold  separately.  Accordingly,  software  license revenue is
recognized  under the  residual  method in  arrangements  in which  software  is
licensed with  professional  services,  training,  and  maintenance  and support
services.

Revenue from  maintenance  services is  recognized  ratably over the term of the
contract,  typically  one year.  Consulting  revenue  is  primarily  related  to
implementation  services performed on a time-and-materials  basis under separate
service   arrangements.   Revenue  from  consulting  and  training  services  is
recognized as services are performed.

       OnDemand Hosted Licensed Revenue


                                       18
<PAGE>

For  Firepond  OnDemand  contracts,  the  Company  does not  actually  deliver a
software  product to a customer  for  installation  on the  customer's  in-house
systems  but rather  makes the  software  available  to the  customer  through a
Company  hosting  arrangement.  In this case the Company  installs  and runs the
software  application  either  on  its  own  or a  third-party's  server  giving
customers  access to the  application  via the  Internet  or a  dedicated  line.
Accordingly,  the Company evaluates its revenue  recognition in consideration of
SOP 97-2 or whether such activity falls outside of such guidance.

An Emerging Issues Task Force was tasked with assessing the applicability of SOP
97-2 to  such  hosting  arrangements  and  considering  how a  vendor's  hosting
obligation  would impact revenue  recognition.  This discussion  resulted in the
issuance of EITF  00-03,  Application  of AICPA  Statement  of Position  97-2 to
Arrangements  That Include the Right to Use Software Stored on Another  Entity's
Hardware.  Under EITF 00-03,  the Task Force reached a consensus  that a hosting
arrangement is within the scope of SOP 97-2 if:

      o     the customer has the  contractual  right to take  possession  of the
            software at any time during the hosting period  without  significant
            penalty; and

      o     it is feasible  for the  customer to either run the  software on its
            own hardware or contract with another party  unrelated to the vendor
            to host the software without significant penalty.

This  allows the  Company  the  ability  to  recognize  that  portion of the fee
attributable  to the license on delivery,  while that portion of the fee related
to the hosting  element would be recognized  ratably as the service is provided,
assuming  all other  revenue  recognition  criteria  have been met. If a hosting
arrangement fails to meet the requirements of EITF 00-03 then the arrangement is
not considered to have a software  element and therefore is outside of the scope
of SOP 97-2. The hosting  arrangement,  which would follow a services accounting
model,  would then  likely be  accounted  for in  accordance  with the  guidance
contained in Staff  Accounting  Bulletin  ("SAB") 101. SAB 101 contains the same
four basic criteria for revenue recognition as SOP 97-2:

      o     Persuasive evidence of an arrangement exists;
      o     Delivery has occurred or services have been rendered;
      o     The vendor's price to the buyer is fixed or determinable; and
      o     Collectibility is reasonably assured.

Once these  conditions  have been met,  revenue can be  recognized.  SAB 101 was
amended by SAB 104 which  codified  current  and  existing  revenue  recognition
issues. In consideration of the above criteria,  in general terms,  revenue from
product-related  hosted  solution  is  recognized  ratably  over the term of the
contract after payment has been received.  Hosted solution includes  unspecified
upgrades, end user support up to two primary contacts and hosted server support.

Revenue from  maintenance  services is  recognized  ratably over the term of the
contract,  typically  one year.  Consulting  revenue  is  primarily  related  to
implementation  services performed on a time-and-materials  basis under separate
service   arrangements.   Revenue  from  consulting  and  training  services  is
recognized as services are performed.

Firepond  recorded  deferred  revenue on amounts billed or collected by Firepond
before satisfying the above revenue  recognition  criteria.  Deferred revenue at
March 31, 2006 consisted of the following:

                                     Period Ended
                                    March 31, 2006
      Product license               $      179,808
      Product-related services              79,291
      Product-related maintenance        1,248,091
                                    --------------
                                    $    1,507,190


                                       19
<PAGE>

      Cost of Revenue

Cost of licenses includes royalties,  media,  product packaging,  documentation,
and other production costs.

Cost of product-related  services and maintenance and cost of custom development
services revenue consist  primarily of salaries,  related costs for development,
consulting,  training and customer support personnel, including cost of services
provided by third-party consultants engaged by the Company.

      Property and Equipment

Property and equipment are stated at cost.  Depreciation  is computed  using the
straight-line method over the estimated useful lives of the assets, as follows:

      Computer equipment and software             2 to 5 years
      Furniture and fixtures                      5 years
      Leasehold improvements                      5 years

The cost of assets  retired  or  disposed  of and the  accumulated  depreciation
thereon is removed from the accounts with any gain or loss realized upon sale or
disposal credited or charged to operations, respectively.

      Goodwill

Prior to the January 1, 2002 implementation of Statement of Financial Accounting
Standards No. 142, "Goodwill and Other Intangible Assets" (SFAS 142"),  goodwill
was  amortized  on a  straight-line  basis  over 5-20  years.  Since  that date,
goodwill has been subject to periodic  impairment  tests in accordance with SFAS
142.

The Company  identifies  and records  impairment  losses on  long-lived  assets,
including  goodwill that is not identified with an impaired  asset,  when events
and  circumstances  indicate  that  an  asset  might  be  impaired.  Events  and
circumstances  that may indicate that an asset is impaired  include  significant
decreases in the market value of an asset,  a change in the  operating  model or
strategy and competitive forces.

If events and  circumstances  indicate that the carrying  amount of an asset may
not be recoverable and the expected  undiscounted  future cash flow attributable
to the asset is less than the carrying  amount of the asset,  an impairment loss
equal to the  excess  of the  asset's  carrying  value  over  its fair  value is
recorded.  Fair value is  determined  based on the  present  value of  estimated
expected  future cash flows  using a discount  rate  commensurate  with the risk
involved,  quoted market prices or appraised values,  depending on the nature of
the assets.

      Computer Software Development Costs and Research and Development Expenses

The Company  incurs  software  development  costs  associated  with its licensed
products as well as new products.  Since June 1997, the Company  determined that
technological  feasibility  occurs upon the successful  development of a working
model,  which happens late in the development cycle and close to general release
of the  products.  Because  the  development  costs  incurred  between  the time
technological  feasibility is established and general release of the product are
not material, the Company expenses these costs as incurred.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In November 2004, the FASB issued SFAS No. 151,  "Inventory Costs". SFAS No. 151
amends the accounting for abnormal  amounts of idle facility  expense,  freight,
handling costs, and wasted material (spoilage) under the guidance in ARB No. 43,
Chapter 4,"Inventory Pricing".  Paragraph 5 of ARB No. 43, Chapter 4, previously
stated  that ". . .  under  some  circumstances,  items  such  as idle  facility
expense,  excessive  spoilage,  double freight,  and re-handling costs may be so
abnormal  as to  require  treatment  as  current  period  charges.  . . ."  This
Statement  requires  that those items be recognized  as  current-period  charges
regardless  of whether they meet the  criterion of "so  abnormal."  In addition,
this Statement  requires that  allocation of fixed  production  overheads to the
costs  of  conversion  be  based  on  the  normal  capacity  of  the  production
facilities.  This  statement is effective for inventory  costs  incurred  during
fiscal years beginning after June 15, 2005.  Management does not expect adoption
of SFAS No. 151 to have a material impact on the Company's financial statements.


                                       20
<PAGE>

In  December  2004,  the FASB issued SFAS No.  153,  "Exchanges  of  Nonmonetary
Assets,"  an  amendment  to  Opinion  No.  29,   "Accounting   for   Nonmonetary
Transactions".  Statement No. 153 eliminates certain differences in the guidance
in Opinion No. 29 as compared to the guidance  contained in standards  issued by
the  International  Accounting  Standards Board. The amendment to Opinion No. 29
eliminates  the fair  value  exception  for  nonmonetary  exchanges  of  similar
productive  assets and  replaces it with a general  exception  for  exchanges of
nonmonetary assets that do not have commercial  substance.  Such an exchange has
commercial  substance  if the future  cash flows of the entity are  expected  to
change significantly as a result of the exchange.  SFAS No. 153 is effective for
nonmonetary asset exchanges  occurring in periods beginning after June 15, 2005.
Earlier  application is permitted for nonmonetary  asset exchanges  occurring in
periods  beginning after December 16, 2004.  Management does not expect adoption
of SFAS No. 153 to have a material impact on the Company's financial statements.

In May,  2005 the FASB  issued  SFAS No.  154,  "Accounting  Changes  and  Error
Corrections  - a  replacement  of APB Opinion No. 20 and FASB  Statement No. 3."
SFAS No. 154 replaces APB Opinion ("APB") No. 20, "Accounting Changes", and SFAS
No. 3,  "Reporting  Accounting  Changes in Interim  Financial  Statements,"  and
changes the  requirements  for the  accounting  for and reporting of a change in
accounting  principle.  SFAS No.  154 will  apply to all  voluntary  changes  in
accounting   principle  as  well  as  to  changes   required  by  an  accounting
pronouncement  in the unusual instance that the  pronouncement  does not include
specific  transition  provisions.  APB No.  20  previously  required  that  most
voluntary  changes in  accounting  principle be  recognized  by including in net
income of the period of the change the cumulative  effect of changing to the new
accounting principle.  SFAS No. 154 requires retrospective  application to prior
periods' financial statements of changes in accounting  principle,  unless it is
impracticable to determine either the period-specific  effects or the cumulative
effect of the change.  When it is impracticable to determine the period-specific
effects  of an  accounting  change  on  one or  more  individual  prior  periods
presented, SFAS No. 154 requires that the new accounting principle be applied to
the  balances of assets and  liabilities  as of the  beginning  of the  earliest
period  for  which   retrospective   application  is  practicable   and  that  a
corresponding adjustment be made to the opening balance of retained earnings (or
other  appropriate  components  of equity  or net  assets  in the  statement  of
financial  position)  for that period  rather  than being  reported in an income
statement.  When it is  impracticable  to  determine  the  cumulative  effect of
applying a change in  accounting  principle to all prior  periods,  SFAS No. 154
requires  that the new  accounting  principle  be applied as if it were  adopted
prospectively  from the earliest date practicable.  SFAS No. 154 carries forward
without change the guidance contained in APB No. 20 for reporting the correction
of an error in previously issued financial statements and a change in accounting
estimate,  and also the  guidance  in APB No. 20  requiring  justification  of a
change in accounting principle on the basis of preferability.

SFAS No. 154 is effective for accounting  changes and corrections of errors made
in fiscal years beginning  after December 15, 2005.  Early adoption is permitted
for accounting  changes and corrections of errors made in fiscal years beginning
after the date SFAS No. 154 was issued.  The Company  presently does not believe
that the adoption of the provisions of SFAS No. 154 will have a material  affect
on its financial statements.

In December  2004,  the FASB issued SFAS No. 123  (Revised  2004),  "Share Based
Payment,"  which  eliminates  the use of APB Opinion No. 25 and will require the
Company to measure the cost of  employee  services  received in exchange  for an
award of equity  instruments  based on the  grant-date  fair value of the award.
That cost  will be  recognized  over the  period  during  which an  employee  is
required to provide  service in exchange for the reward (the  requisite  service
period).  No  compensation  cost is recognized for equity  instruments for which
employees do not render the  requisite  service.  The  grant-date  fair value of
employee  share  options  and  similar   instruments  will  be  estimated  using
option-pricing   models  adjusted  for  the  unique   characteristics  of  those
instruments.  SFAS 123  (Revised)  must be  applied  to all  options  granted or
modified after its effective date and also to recognize the cost associated with
the portion of any option  awards made  before its  effective  date for with the
associated  service has not been rendered as of its effective date. On April 14,
2005, the U.S. Securities and Exchange  Commission  announced that the effective
date of SFAS  123(Revised)  is deferred for calendar  year  companies  until the
beginning of 2006.


                                       21
<PAGE>

The Company is still  studying the  requirements  of SFAS No. 123 (Revised 2004)
and has not yet determined what impact it will have on the Company's  results of
operations and financial  position.  However,  FP Technology  issued  restricted
stock grants to Bill Santo  (750,000  Common  shares) and Stephen Peary (500,025
Common  shares) in January  2006. In addition,  FP Technology  issued a total of
3,100,008  shares of its restricted  common stock to its directors and executive
officers in March of 2006 in  connection  with the CAP  Financing,  which shares
were exchanged for 1,250,000 shares of the Company's  restricted common stock as
a result of the merger.  The impact of these  restricted stock grants on Company
earnings is being studied.

In March 2005, the FASB issued FASB  Interpretation  ("FIN") No. 47, "Accounting
for Conditional  Asset  Retirement  Obligations".  FIN No. 47 clarifies that the
term conditional asset retirement  obligation as used in FASB Statement No. 143,
"Accounting for Asset Retirement  Obligations,"  refers to a legal obligation to
perform an asset  retirement  activity  in which the  timing and (or)  method of
settlement  are  conditional on a future event that may or may not be within the
control of the entity.  The obligation to perform the asset retirement  activity
is unconditional even though uncertainty exists about the timing and (or) method
of  settlement.  Uncertainty  about the timing  and/or method of settlement of a
conditional asset retirement  obligation should be factored into the measurement
of the liability when sufficient  information  exists.  This interpretation also
clarifies  when an  entity  would  have  sufficient  information  to  reasonably
estimate  the fair  value  of an  asset  retirement  obligation.  Fin No.  47 is
effective no later than the end of fiscal  years ending after  December 15, 2005
(December 31, 2005 for calendar-year  companies).  Retrospective  application of
interim financial information is permitted but is not required.  Management does
not expect  adoption  of FIN No. 47 to have a material  impact on the  Company's
financial statements.

The Company  generated  revenues from  operations of $2,935,311 and an operating
income of $115,238 for the nine months ended March 31, 2006.

At March 31, 2006,  the Company had  stockholders'  equity of  $2,333,469  which
reflects  $5,100 of AFG Enterprises  USA, Inc.  common stock  additional paid in
capital  of  $2,182,237   and  retained   earnings  of  $697,423  less  deferred
compensation of $551,291.  The deferred stock compensation  amount is the result
of stock awards made to certain officers and directors.

FINANCIAL CONDITION

The Company had $58,496,063 in total assets and $56,162,594 in total liabilities
at March 31, 2006,  as compared to  $6,090,867  and  $4,721,871  at December 31,
2005,  respectively.  The Company had $ 5,882,846 and $5,586,625 in total assets
and total liabilities,  respectively, at June 30, 2005 (June 30 is the Company's
current fiscal  year-end).  Accounts  payable at March 31, 2006 were $116,851 as
compared to $199,546 at December 31, 2005.  Accrued  expenses were $2,118,303 at
March 31,  2006  compared  to  $814,799 at  December  31,  2005.  Notes  payable
increased from $2,244,750 at December 31, 2005 to $52,420,250 at March 31, 2006.
As a result of these  changes,  the  Company  had a working  capital  deficit of
$2,655,938  at March 31,  2006 as  compared  to a  working  capital  deficit  of
$3,406,692 at December 31, 2005. These changes  primarily  reflect the growth in
the  Company's  business and the  completion  of the CAP  Financing on March 29,
2006, as further discussed below.

RESULTS OF OPERATIONS

Quarter ended March 31, 2006 compared to quarter ended March 31, 2005

OnDemand revenue increased from $40,684 for the quarter ended December 31, 05 to
$108,262  for the quarter  ended  March 31, 2006 or an increase of 166.1%.  Such
increase  was  attributable  to  subscriptions  and  services  provided  to  new
customers.  Enterprise revenue, consisting primarily of maintenance and services
associated with existing enterprise  customers,  decreased 8.0% from the quarter
ended  December  31, 2005 to the quarter  ended March 31, 2006,  reflecting  the
Company's refocus as an OnDemand software provider.


                                       22
<PAGE>

For the three months ended March 31, 2006,  the Company  sustained a net loss of
$1,049,705,  as compared to a net loss of $394,000  for the quarter  ended March
31, 2005.  Revenues for the three months ended March 31, 2006 were $1,097,512 as
compared to revenues of $1,075,096  for the three months ended March 31, 2005 or
an increase of 2.1%. Cost of goods sold were $420,196 in the quarter ended March
31, 2006 as  compared  to  $413,975 in the prior year  quarter or an increase of
1.5%.

Operating  expenses were $1,290,339 in the March 31, 2006 quarter as compared to
$976,099 for the quarter ended March 31, 2005 representing an increase of 32.2%.
Such increase was a result of increases in general and  administrative  expenses
and other costs and expenses  associated  with the refocus to OnDemand  software
and increased interest expense. General and administrative expenses increased by
$423,970 or 96.0%  primarily for salaries and other  personnel-related  cost for
executive,   financial,   human  resource,   information  services,   and  other
administrative  functions, as well as legal and accounting costs associated with
the closing of the merger and the CAP  Financing  transaction.  Other income and
expenses  increased  $211,112  from $79,022 to $290,134  from the March 31, 2005
quarter to the March 31, 2006 quarter, an increase of 267.2% due to the increase
in interest expense  associated with the debt financings closed in September and
November of 2005.

During the quarter  ended March 31, 2006,  Firepond  liquidated  the last of its
foreign  operations  requiring the Company for  accounting  purposes to record a
loss from discontinued operations of $146,548 in connection with this activity.

Nine Months  Ended March 31,  2006  compared to the Nine Months  Ended March 31,
2005

For the nine months ended March 31, 2006, the Company had revenues of $2,935,311
and  expenses of  $2,820,073  and other  expenses  of  $626,552  and a loss from
discontinued  operations  of  $763,252.   These  expenses  include  general  and
administrative  expenses related to the restructuring of the Company,  its shift
from a provider of  Enterprise  software to a provider of OnDemand  services and
the  costs  associated  with  the  merger  and  capital  financing  transaction.
Additionally, the liquidation of all remaining foreign operations was completed.

For the nine months  ended March 31, 2006,  the Company  sustained a net loss of
$1,274,566,  as compared to a net loss of  $1,218,714  for the nine months ended
March  31,  2005.  Revenues  for the nine  months  ended  March  31,  2006  were
$2,935,311 as compared to revenues of $7,115,639 for the nine months ended March
31,  2005 or a  decrease  of  58.8%.  The  decrease  is a direct  result  of the
Company's  strategic decision to focus on the OnDemand  business.  Cost of goods
sold were  $1,391,888  in the  quarter  ended  March  31,  2006 as  compared  to
$1,453,409 in the prior year quarter or a decrease of 4.23%.

Operating  expenses were $1,428,185 in the March 31, 2006 quarter as compared to
$5,931,545  for the  quarter  ended March 31,  2005  representing  a decrease of
75.9%.  In  the  prior  period,  the  Company  had  substantially   completed  a
restructuring  of the Company and had  recorded  $3.6  million in  restructuring
costs.  Additionally,  in the nine  months  ended  March 31,  2006,  the Company
recorded the GM Settlement  which resulted in a favorable  reduction in expenses
of $1,712,500.  Sales, general and administrative  expense increased as a result
of increases in general and administrative expenses and other costs and expenses
associated with the refocus to OnDemand software and increased interest expense.
General and administrative expenses increased by $217,015 or 13.6% primarily for
salaries  and  other  personnel-related  cost for  executive,  financial,  human
resource,  information services, and other administrative  functions, as well as
legal and  accounting  costs  associated  with the closing of the merger and the
financing  transaction.  Other  income  and  expenses  increased  $117,639  from
$508,913  to  $626,552  from the March 31,  2005  quarter to the March 31,  2006
quarter, an increase of 23.1% due to the increase in interest expense associated
primarily with the debt financings closed in September and November of 2005.

During the nine months ended March 31, 2006, Firepond liquidated the last of its
foreign  operations  requiring the Company for  accounting  purposes to record a
loss from discontinued operations of $763,252 in connection with this activity.


                                       23
<PAGE>

The Company has no off-balance sheet arrangements.

LIQUIDITY AND CAPITAL RESOURCES

On March 29, 2006, the Company  consummated a transaction  (the "CAP Financing")
pursuant to which the Company with certain  institutional  investors  (i) Senior
Secured  Nonconvertible  Notes  due 2011 in an  aggregate  principal  amount  of
$50,000,000,  which  Nonconvertible  Notes may be exchanged  for Senior  Secured
Convertible  Notes  due  2011 or  redeemed,  and  which  Convertible  Notes  are
convertible  into shares of the  Company's  common  stock;  and (ii) warrants to
acquire shares of the Company's common stock.  For further  details,  please see
Note 4 to Notes to Unaudited Financial Statements includes elsewhere herein.

At March 31, 2006,  the Company had cash and cash  equivalents  of $2,398,615 as
compared to $471,527 at December 31, 2005.  Restricted cash equaled $47,500,000.
Working  capital  was a deficit  $2,655,938  at March 31,  2006 as compared to a
deficit of $3,406,692  at December 31, 2005. At March 31, 2006,  the Company had
$56,162,594 in current  liabilities of which  $52,420,250  was short-term  notes
payable. The remaining portion of the Company's current liabilities is primarily
comprised of accounts payable of $116,851, accrued liabilities of $2,118,303 and
deferred  revenue of  $1,507,190.  The increase in  restricted  cash and current
liabilities reflects the completion of the CAP Financing.

The  Company  will  require  additional  working  capital in the near term.  The
Company  believes  it has  access  to  additional  sources  of  equity  and debt
financing but can provide no assurance that  additional  funds will be available
at all, or if available,  on commercially acceptable terms or in a timely manner
to enable the Company to continue its operations in the normal  course.  Company
operations are presently being funded by internal  cashflow and a portion of the
capital  financing  recently  completed.  The Company recently closed The Senior
Secured  Nonconvertible  Notes to pursue its business  strategy by (1) expanding
marketing  of its  OnDemand  software  business  and  (2)  acquiring  compatible
OnDemand applications through targeted acquisitions. The Company has $47,500,000
in restricted cash to be used in implementing its acquisition program.

Since December 31, 2005, the Company's cash position has increased.  At December
31, 2005, the Company had available  cash of $471,527,  as compared to available
cash of  $2,398,615  at March 31, 2006.  The increase in cash is a result of the
Company's recently issued Senior Secured Nonconvertible Notes.

ITEM 3. CONTROLS AND PROCEDURES

      (a) Evaluation of Disclosure Controls and Procedures.

We conducted an evaluation  under the supervision and with the  participation of
our  management,  including  our Chief  Executive  Officer  and Chief  Financial
Officer,  of the  effectiveness  of the design and  operation of our  disclosure
controls and  procedures  (as defined in Rules  13a-15(e)  under the  Securities
Exchange Act of 1934  ("Exchange  Act")) as of March 31,  2006.  Based upon that
evaluation,  our Chief  Executive  Officer  and  Chief  Financial  Officer  have
determined  that our disclosure  controls and procedures  have been designed and
are being  operated  in a manner that  provides  reasonable  assurance  that the
information  required to be  disclosed  in our Exchange Act reports is recorded,
processed,  summarized  and reported  within the time  periods  specified in the
Securities and Exchange  Commission's rules and forms, 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  the  disclosure
controls  and  procedures,  our  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 our
management  necessarily  is required to apply its  judgment  in  evaluating  the
cost-benefit relationship of possible controls and procedures.

      (b) Management's responsibility for financial statements


                                       24
<PAGE>

Our  management  is  responsible  for  the  integrity  and  objectivity  of  all
information presented in this report. The consolidated financial statements were
prepared in conformity  with  accounting  principles  generally  accepted in the
United  States  of  America  and  include  amounts  based on  management's  best
estimates  and  judgments.   Management  believes  the  consolidated   financial
statements  fairly reflect the form and substance of  transactions  and that the
financial  statements  fairly  represent  the Company's  financial  position and
results of operations for the periods and as of the dates stated therein.

      (c) Changes in internal control over financial reporting

There have been no changes in our  internal  control  over  financial  reporting
during the quarter ended March 31, 2006 that have  materially  affected,  or are
reasonably  likely to materially  affect,  our internal  control over  financial
reporting.

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Freightliner LLC

On or about  December  1,  2004,  Freightliner  LLC  filed a  complaint  against
Firepond.  The plaintiff alleges breach of contacts,  breath of warranty arising
out of the parties' License  Agreement and Services  Agreement.  This matter was
settled on August 1, 2005,  per the terms of the settlement  Firepond  agreed to
pay  $3,000,000  over a  period  of 70  days.  The  settlement  was  covered  by
Firepond's insurance carrier,  Steadfast Insurance Company ("Steadfast"),  which
provided  the full  amount for the  settlement  except for a $50,000  deductible
which Firepond accrued. Firepond has agreed that Steadfast has the right to seek
a judicial determination as to the reasonableness of the settlement value of the
Freightliner claim and the $3,000,000 settlement.  Firepond has acknowledged and
granted  Steadfast the right to recoup from Firepond the amount which represents
the  difference  between  the  judicially  determined  settlement  value and the
$3,000,000  settlement,  if the court determines that the reasonable  settlement
value of the Freightliner  claim is less than $3,000,000.  Steadfast and FP have
agreed  in  mediation  that FP  will  not  have a  reimbursement  obligation  to
Steadfast. The parties are in the process of documenting this agreement.

IPO Litigation

In August, 2001,  Firepond,  Inc. was named as a defendant in a securities class
action filed in United States  District  Court for the Southern  District of New
York  related to its initial  public  offering  ("IPO") in February,  2000.  The
lawsuit  also  named  certain  of  the   underwriters  of  the  IPO,   including
FleetBoston,  Dain Rauscher,  and SG Cowan, as well as officers and directors of
Firepond,  Klaus P. Besier and Paul K. McDermott,  as defendants.  Approximately
300 other  issuers and their  underwriters  have had similar suits filed against
them, all of which have been included in a single coordinated  proceeding in the
Southern  District of New York (the "IPO  Litigations").  The complaints  allege
that  the  prospectus  and the  registration  statement  for the IPO  failed  to
disclose that the  underwriters  allegedly  solicited  and received  "excessive"
commissions  from investors and that some investors in the IPO allegedly  agreed
with the  underwriters  to buy additional  shares in the aftermarket in order to
inflate the price of Firepond's  stock. An amended complaint was filed April 19,
2002. Firepond,  Inc. and the officers and directors identified above were named
in the suits pursuant to Section 11 of the Securities Act of 1933, Section 10(b)
of the Exchange Act of 1934, and other related  provisions.  The complaints seek
unspecified damages,  attorney and expert fees, and other unspecified litigation
costs.

In June 2003, a proposed  settlement of this  litigation was structured  between
the plaintiffs,  the issuer defendants in the consolidated  actions,  the issuer
officers  and  directors  named  as  defendants,   and  the  issuers'  insurance
companies.  On or about  July 30,  2003,  a  committee  of  Firepond's  Board of
Directors conditionally approved the proposed partial settlement. The settlement
would provide,  among other things,  a release of Firepond and of the individual
defendants  for the conduct  alleged to be  wrongful  in the amended  complaint.
Firepond  would  agree to  undertake  other  responsibilities  under the partial
settlement,  including  agreeing to assign away, not assert,  or release certain
potential  claims the Company  may have  against  its  underwriters.  Any direct
financial  impact  of  the  proposed  settlement  is  expected  to be  borne  by
Firepond's insurance carriers.


                                       25
<PAGE>

In October  2003,  the action  involving  Firepond  was  designated  (along with
several  other  actions)  as a test  or  "focus"  case  for  purposes  of  class
certification  and  merits  discovery  in the  actions  proceeding  against  the
Underwriter defendants.  The fact that Firepond is a defendant in a "focus" case
does not impact its participation in the settlement.  However, as a "focus" case
defendant,   Firepond  may  be  subjected  to  additional  discovery  and  other
involvement in the proceedings against the Underwriter defendants as compared to
other issuer defendants.

In June  2004,  an  agreement  of  settlement  was  submitted  to the  court for
preliminary  approval.  The court  granted the  preliminary  approval  motion on
February 15, 2005, subject to certain modifications.

On August 31, 2005, the court issued a preliminary  order further  approving the
modifications to the settlement and certifying the settlement classes. The court
also  appointed the Notice  Administrator  for the  settlement  and ordered that
notice  of the  settlement  be  distributed  to  all  settlement  class  members
beginning on November  15, 2005.  The  settlement  fairness  hearing was held on
April 24, 2006, and the court reserved  decision.  If the court  determines that
the  settlement is fair to the class members,  the settlement  will be approved.
There can be no assurance  that this proposed  settlement  would be approved and
implemented in its current form, or at all.

Due to the  inherent  uncertainties  of  litigation  and because the  settlement
approval  process is at a preliminary  stage, we cannot  accurately  predict the
ultimate outcome of the matter.

The  Company may from time to time also be subject to various  other  claims and
legal  actions  arising in the ordinary  course of  business.  In the opinion of
management,  after consultation with legal counsel,  the ultimate disposition of
these  matters  is not  expected  to have a  material  effect  on the  Company's
business, financial condition, or results of operations.

ITEM 2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS


On March 29, 2006,  the Company  entered into an Agreement and Plan of Merger by
and among the Company,  FP Merger Sub,  Inc. and FP Technology  Holdings,  Inc.,
pursuant to which the Company acquired all of the issued and outstanding capital
stock of FP (the "FP  Acquisition").  As a result of the  merger,  each share of
common stock of FP  outstanding  immediately  prior to the effective time of the
merger was  converted  into the right to receive  shares of common  stock of the
Company at an exchange ratio of 0.4032248  share of the Company common stock for
each share of FP common  stock.  The Company  issued an  aggregate  of 3,991,939
shares of its  common  stock,  par value  $0.001 per share in  exchange  for all
issued and outstanding shares of FP common stock. The issuance of such shares of
common stock was exempt from registration  requirements pursuant to Section 4(2)
of the Securities Act of 1933, as amended (the  "Securities  Act"), and Rule 506
promulgated thereunder.

In connection  with the  acquisition of FP as previously  described  above,  the
Company also  completed  the following  transactions.  These  transactions  were
exempt from registration requirements pursuant to Section 4(2) of the Securities
Act of 1933,  as  amended  (the  "Securities  Act"),  and  Rule 506  promulgated
thereunder.

On March 29,  2006,  the Company  entered  into the CAP  Financing  with certain
investors  (the  "Buyers"),  pursuant to which the Buyers agreed to purchase (i)
the Company's Senior Secured  Nonconvertible Notes due 2011 (the "Nonconvertible
Notes") in an aggregate  principal amount of $50,000,000,  which  Nonconvertible
Notes  may be  exchanged  for  Senior  Secured  Convertible  Notes due 2011 (the
"Convertible Notes", and together with the Nonconvertible Notes, the "Notes") or
redeemed,  and  which  Convertible  Notes  are  convertible  into  shares of the
Company's  common  stock  (the  "Conversion  Shares");  and (ii)  warrants  (the
"Warrants") to acquire up to that number of shares of the Company's common stock
set forth  opposite each Buyer's name in the Schedule of Buyers  attached to the
Purchase  Agreement  (the  "Warrant  Shares"),  exercisable  from the  Threshold
Acquisition Date (as such term is defined in the related  Indenture) until March
29,  2011 at an  exercise  price equal to the lower of $8.00 and 125% of the per
share price of the Company's common stock to be sold in a new private  placement
transaction  which the  Company  intends  to  complete  within six  months.  The
purchase and sale of the Notes and Warrants was consummated on March 29, 2006.


                                       26
<PAGE>

On March 29, 2006 the  Company  entered  into a Master  Amendment  (the  "Master
Amendment"),  by and  among  the  Company,  FP and  Trident  Growth  Fund,  L.P.
("Trident").  The Master Amendment amended the operative  documents entered into
by FP in September and November 2005 relating to certain financing  transactions
between FP and Trident  pursuant to which  Trident  provided  $2,500,000 in debt
financing  to FP. The  Master  Amendment  also  added the  Company as a party to
certain of these agreements.


The Master Amendment  amended the following  agreements (the "Trident  Financing
Documents")  and added the  Company as a party to each of them:  (i)  Securities
Purchase Agreement, dated September 13, 2005, as amended by that First Amendment
dated November 15, 2005;  (ii) 12% Senior Secured  Convertible  Debenture No. 1,
dated September 13, 2005, in the initial principal amount of $2,000,000, and 12%
Senior  Secured  Convertible  Debenture  No. 2, dated  November 15, 2005, in the
initial  principal  amount of $500,000;  and (iii) Common Stock Purchase Warrant
No. 1, dated September 13, 2005, and Common Stock Purchase  Warrant No. 2, dated
November 15, 2005.

The Company is a party to a certain Credit Agreement  between Acclaim  Financial
Group Venture II, LLC ("AFGV") and the Company dated July, 15, 2003 (the "Credit
Agreement"), pursuant to which the Company was indebted to AFGV in the amount of
approximately $313,421.44 (the "Claim"). On March 29, 2006, AFGV sold its rights
to the Claim to Benchmark  Equity Group,  Inc.  ("BMEG"),  which agreed with the
Company to cancel the Claim in full in exchange for  1,008,062  shares of common
stock of the  Company  to be issued  to BMEG or its  designees,  pursuant  to an
Exchange Agreement between the Company and BMEG (the "Exchange  Agreement").  On
March 29, 2006,  the Company  issued  1,008,062  shares of the Company's  common
stock to BMEG and its designees pursuant to the Exchange Agreement.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

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

On January 2, 2006, the Board of Directors and certain principal shareholders of
the Company holding 3,000,000 shares of common stock (representing approximately
60% of the total issued and outstanding shares of common stock of the Company at
that  time),   adopted   resolutions  to  amend  and  restate  the  Articles  of
Incorporation of the Company to effect:

      1. An  increase  the  number of  authorized  shares of common  stock  from
50,000,000 shares to 300,000,000 shares; and

      2. Reverse split the outstanding  shares of common stock on a ratio of one
new share  for each 50  outstanding  shares  (with any  fractional  share  being
rounded to the next highest whole number of shares).

The  foregoing  resolutions  became  effective  upon the filing of  Amended  and
Restated Articles of Incorporation of the Company on March 6, 2006.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS


                                       27
<PAGE>

<TABLE>
<CAPTION>
Exhibit No.   Description
-----------   -----------
<S>           <C>
   2.1        Agreement and Plan of Merger, dated March 29, 2006, by and among AFG Enterprises USA, Inc., FP Merger Sub,
              Inc., and FP Technology Holdings, Inc. (incorporated by reference from Exhibit 2.1 to the Registrant's
              Current Report on Form 8-K filed on April 4, 2006 reporting the Registrant's change in shell company status).

   3.1        Amended and Restated Articles of Incorporation of AFG Enterprises USA, Inc. (incorporated by reference from
              Exhibit 3.1 to the Registrant's Current Report on Form 8-K filed on April 4, 2006 reporting the Registrant's
              change in shell company status).

   3.2        Amended and Restated Bylaws of AFG Enterprises USA, Inc. (incorporated by reference from Exhibit 3.2 to the
              Registrant's Current Report on Form 8-K filed on April 4, 2006 reporting the Registrant's change in shell
              company status).

   4.1        Specimen of Common Stock of AFG Enterprises USA, Inc. (incorporated by reference from Exhibit 4.1 to the
              Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 2005).

   10.1       Securities Purchase Agreement, dated as of March 29, 2006, by and among AFG Enterprises USA, Inc. and the
              investors listed on the Schedule of Buyers attached thereto (incorporated by reference from Exhibit 99.1 to
              the Registrant's Current Report on Form 8-K filed on April 4, 2006 reporting the completion of the CAP
              Financing).

   10.2       Indenture, dated as of March 29, 2006, between AFG Enterprises USA, Inc. and The Bank of New York
              (incorporated by reference from Exhibit 99.2 to the Registrant's Current Report on Form 8-K filed on April 4,
              2006 reporting the completion of the CAP Financing).

   10.3       Form of Global Senior Secured Nonconvertible Note Due 2011, dated as of March 29, 2006 (incorporated by
              reference from Exhibit 99.3 to the Registrant's Current Report on Form 8-K filed on April 4, 2006 reporting
              the completion of the CAP Financing).

   10.4       Form of Warrant, dated as of March 29, 2006 (incorporated by reference from Exhibit 99.4 to the Registrant's
              Current Report on Form 8-K filed on April 4, 2006 reporting the completion of the CAP Financing).

   10.5       Escrow  Agreement,  dated as of March 29, 2006, by and between The Bank of New York, as Escrow Agent, The Bank
              of New York,  as  Collateral  Agent,  The Bank of New York, as Trustee for the holders of certain notes of the
              Company under the Indenture dated as of as of March 29, 2006 with the Company,  and the Company  (incorporated
              by  reference  from  Exhibit  99.5 to the  Registrant's  Current  Report  on Form 8-K  filed on April 4,  2006
              reporting the completion of the CAP Financing).

   10.6       Security Agreement, dated as of March 29, 2006, by AFG Enterprises USA, Inc. and certain Guarantors in favor
              of The Bank of New York in its capacity as collateral agent for the Holders (incorporated by reference from
              Exhibit 99.6 to the Registrant's Current Report on Form 8-K filed on April 4, 2006 reporting the completion
              of the CAP Financing).

   10.7       Pledge Agreement, dated as of March 29, 2006, made by certain pledgors, in favor of The Bank of New York, in
              its capacity as collateral agent (incorporated by reference from Exhibit 99.7 to the Registrant's Current
              Report on Form 8-K filed on April 4, 2006 reporting the completion of the CAP Financing).

   10.8       Guaranty, dated as of March 29, 2006, made by FP Technology Holdings, Inc. in favor of The Bank of New York,
              in its capacity as collateral agent (incorporated by reference from Exhibit 99.8 to the Registrant's Current
              Report on Form 8-K filed on April 4, 2006 reporting the completion of the CAP Financing).

   10.9       Registration Rights Agreement, dated as of March 29, 2006, of AFG Enterprises USA, Inc. (incorporated by
              reference from Exhibit 99.9 to the Registrant's Current Report on Form 8-K filed on April 4, 2006 reporting
              the completion of the CAP Financing).

   10.10      Account Control  Agreement by and among AFG Enterprises  USA Inc. and The Bank of New York.  (incorporated  by
              reference from Exhibit 99.10 to the  Registrant's  Current Report on Form 8-K filed on April 4, 2006 reporting
              the completion of the CAP Financing).

   10.11      Master Amendment, dated as of March 29, 2006, by and between FP Technology Holdings, Inc., Trident Growth
              Fund, L.P. and AFG Enterprises USA, Inc. (incorporated by reference from Exhibit 99.11 to the Registrant's
              Current Report on Form 8-K filed on April 4, 2006 reporting the completion of the CAP Financing).
</TABLE>


                                       28
<PAGE>

<TABLE>
<CAPTION>
<S>           <C>
   10.12      Securities Purchase Agreement, dated as of September 12, 2005, by and among FP Technology Holdings, Inc. and
              Trident Growth Fund, L.P. (incorporated by reference from Exhibit 99.12 to the Registrant's Current Report on
              Form 8-K filed on April 4, 2006 reporting the completion of the CAP Financing).

   10.13      Form of 12% Senior Secured Convertible Debenture of FP Technology Holdings, Inc. issued in initial principal
              amounts of $2,500,000 (incorporated by reference from Exhibit 99.13 to the Registrant's Current Report on
              Form 8-K filed on April 4, 2006 reporting the completion of the CAP Financing).

   10.14      Form of Warrants issued to Trident Growth Fund, L.P. (incorporated by reference from Exhibit 99.14 to the
              Registrant's Current Report on Form 8-K filed on April 4, 2006 reporting the completion of the CAP Financing).

   10.15      Intercreditor and Subordination Agreement, dated as of March 29, 2006, by Trident Growth Fund, L.P., AFG
              Enterprises USA, Inc. and FP Technology Holdings, Inc., in favor of the holders of the Senior Indebtedness
              and The Bank of New York, a New York corporation, as collateral agent for the Senior Lenders (incorporated by
              reference from Exhibit 99.15 to the Registrant's Current Report on Form 8-K filed on April 4, 2006 reporting
              the completion of the CAP Financing).

   10.16      Security Agreement, dated as of September 13, 2005, by and among FP Technology holdings, Inc. and Trident
              Growth Fund, L.P., and First Amendment thereto, dated as of November 15, 2005 (incorporated by reference from
              Exhibit 99.16 to the Registrant's Current Report on Form 8-K filed on April 4, 2006 reporting the completion
              of the CAP Financing).

   10.17      Credit Agreement, dated as of July 15, 2003, by and between AFG Enterprises USA, Inc. and Acclaim Financial
              Group Ventures II, LLC (incorporated by reference from Exhibit 10.11 to the Registrant's Annual Report on
              Form 10-K for the fiscal year ended December 31, 2002, filed on April 20, 2005).

   10.18      Exchange Agreement, made as of March 29, 2006, by and between AFG Enterprises USA, Inc. and Benchmark Equity
              Group, Inc. (incorporated by reference from Exhibit 99.18 to the Registrant's Current Report on Form 8-K
              filed on April 4, 2006 reporting the completion of the CAP Financing).

   10.19      Placement Agreement, dated as of November 3, 2005, by and between FP Technology Holdings, inc. and Rodman &
              Renshaw, LLC (incorporated by reference from Exhibit 99.19 to the Registrant's Current Report on Form 8-K
              filed on April 4, 2006 reporting the completion of the CAP Financing).

   10.20      Employment Agreement, dated March 16, 2006, by and between Firepond, Inc. and William Santo (incorporated by
              reference from Exhibit 99.1 to the Registrant's Current Report on Form 8-K filed on April 4, 2006 reporting
              the Registrant's change in shell company status).

   10.21      Employment Agreement, dated March 16, 2006, by and between Firepond, Inc. and Stephen Peary (incorporated by
              reference from Exhibit 99.2 to the Registrant's Current Report on Form 8-K filed on April 4, 2006 reporting
              the Registrant's change in shell company status).

   31.1       Certification of principal executive officer pursuant to section 302 of Sarbanes-Oxley of 2002*

   31.2       Certification of principal financial and accounting officer pursuant to section 302 of Sarbanes-Oxley of 2002*

   32.1       Certification of principal executive officer pursuant to section 906 of the Public Company Accounting Reform
              and Investor Protection Act of 2002*

   32.2       Certification of principal financial and accounting officer pursuant to section 906 of the Public Company
              Accounting Reform and Investor Protection Act of 2002*
</TABLE>

* Filed herewith.


                                       29
<PAGE>

                                   Signatures

In accordance with the  requirements of the Securities  Exchange Act of 1934, as
amended,  the  Registrant  caused  this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

                                            AFG ENTERPRISES USA, INC.
                                            (Registrant)
Dated:  May 19, 2006                        /s/  William Santo
                                            ------------------------------------
                                            Chief Executive Officer

Dated:  May 19, 2006                        /s/  Stephen Peary
                                            ------------------------------------
                                            Chief Financial Officer

                                       30