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 September 30, 2005

                                       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 Identification
 incorporation or organization)                        Number)

                73-595 El Paseo Suite 2204, Palm Desert, CA 92260
--------------------------------------------------------------------------------
                    (Address of principal executive offices)

                                 (760) 674-1063
--------------------------------------------------------------------------------
                           (Issuer's telephone number)

                                       N/A
         --------------------------------------------------------------
              (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 an  accelerated  filer (as
defined in Rule 12b-2 of the Exchange Act).  | | Yes    |X| No

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

    APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE
                              PRECEEDING FIVE YEARS

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 |_|

                      APPLICABLE ONLY TO CORPORATE ISSUERS:

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 classes of common stock, par
value $.001 per share, as of September 30, 2005 is 5,004,772 shares.

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

                            AFG ENTERPRISES USA, INC.
                          (A DEVELOPMENT STAGE COMPANY)

                                      INDEX


<TABLE>
<CAPTION>
                                                                                    Page No.
                                                                                    --------
<S>                                                                                   <C>
PART I.  FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

Balance Sheet - of Predecessor at December 31, 2004 and Successor
at September 30, 2005 (unaudited)                                                      3

Statement of Operations - of Predecessor for the Three Months Ended September
30, 2004 and of Successor for the Three Months Ended September 30, 2005                5

Statement of Operations - of Predecessor for the Nine Months Ended September 30,
2004, of Predecessor for the One Month Ended January 31, 2005, of Successor for
the Eight Months Ended September 30, 2005 and of Successor from February 1, 2005
(inception) through September 30, 2005 (unaudited)                                     6

Statement of Changes In Stockholders' Deficit - for the Nine Months
Ended September 30, 2005 (unaudited)                                                   7

Statement of Cash Flows - of Predecessor for the Nine Months Ended September 30,
2004, of Predecessor for the One Month Ended January 31, 2005, of Successor for
the Eight Months Ended September 30, 2005 and of Successor from February 1, 2005
(inception) through September 30, 2005 (unaudited)                                     8

Notes to Unaudited Financial Statements                                                9

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION                    11

ITEM 3.  CONTROLS AND PROCEDURES                                                      12

PART II. OTHER INFORMATION                                                            13

ITEM 1.  LEGAL PROCEEDINGS                                                            13

ITEM 2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS                  13

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES                                              13

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                          13

ITEM 5.  OTHER INFORMATION                                                            13

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K                                             13
</TABLE>

                                        1
<PAGE>

                                Explanatory Note

On November 12, 2002, AFG Enterprises USA, Inc. formerly In Store Media Systems,
Inc. (the "Company") filed a voluntary petition for reorganization under Chapter
11 of the federal  bankruptcy  laws  ("Bankruptcy  Code" or "Chapter 11") in the
United  States  Bankruptcy  Court  for the  District  of  Colorado  ("Bankruptcy
Court").  The Joint Plan of Reorganization (the "Plan") was confirmed on January
20, 2005, and became  effective on January 31, 2005 (the "Effective  Date").  In
the financial  statements  provided herein, all results for periods prior to and
including January 31, 2005 are referred to as those of the "Predecessor Company"
and all results for periods  including  and  subsequent  to February 1, 2005 are
referred  to as those of the  "Successor  Company".  Due to the  effects  of the
"fresh start" accounting,  results for the Predecessor Company and the Successor
Company are not comparable (See Note 1, "Basis of  Presentation,  Reorganization
and Fresh Start Accounting," of the notes to financial statements).


                                        2

<PAGE>

                            AFG ENTERPRISES USA, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                                  BALANCE SHEET
                      December 31, 2004 and September 30, 2005

                                     ASSETS



                                                  Predecessor        Successor
                                                    Company           Company
                                                  -----------       ----------
                                                   (Audited)        (Unaudited)

Current assets:
   Cash and cash equivalents                        $  6,809          $ 12,130
   Other current assets                               51,955             7,909
                                                    --------          --------

    Total current assets                              58,764            20,039

Other assets:
   Reorganization value in excess of amounts
    allocable to identifiable assets                      --            40,572

                                                    $ 58,764          $ 60,611
                                                    ========          ========


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

                                        3
<PAGE>

                            AFG ENTERPRISES USA, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                                  BALANCE SHEET
                      December 31, 2004 and September 30, 2005

                       LIABILITIES AND STOCKHOLDERS' DEFICIT


<TABLE>
<CAPTION>
                                                                                     Predecessor         Successor
                                                                                       Company            Company
                                                                                     -----------       ------------
<S>                                                                                  <C>               <C>

                                                                                      (Audited)         (Unaudited)

Liabilities Not Subject to Compromise
Current liabilities:
   Accounts payable                                                                  $     53,049      $      6,402
   Payroll liabilities                                                                         --             4,306
   Accrued expenses                                                                       312,584             2,455
   Interest payable                                                                        57,591             8,164
   Notes payable-related party                                                             87,100           270,500
   Short-term notes payable                                                               106,000                --
                                                                                     ------------      ------------

    Total current liabilities                                                             616,324           291,827

Liabilities Subject to Compromise
   Pre-Petition Liabilities                                                             1,557,931                --

Commitments and contingencies

Stockholders' deficit:
   Preferred stock, no par value; 50,000,000 shares authorized, 2 shares issued
    and outstanding liquidation preference $520,000 (2004) and 5,000,000 shares
    authorized; $0.001 par value, no shares issued (2005)                                 500,000                --
   Common stock, $.001 par value; 150,000,000 shares
    authorized, 88,126,148 issued (2004) 50,000,000
    shares authorized, 5,004,772 shares issued (2005)                                      88,126             5,005
   Additional paid-in capital                                                          21,567,220                --
   Stock subscriptions received                                                           150,000                --
   Treasury stock, at cost; 9,374,742 shares (2004), 0 shares (2005)                     (563,750)               --
   Deficit accumulated during the development stage                                   (23,857,087)         (236,221)
                                                                                     ------------      ------------

    Total stockholders' deficit                                                        (2,115,491)         (231,216)
                                                                                     ------------      ------------

                                                                                     $     58,764      $     60,611
                                                                                     ============      ============
</TABLE>


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

                                        4
<PAGE>

                            AFG ENTERPRISES USA, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                             STATEMENT OF OPERATIONS
                                   (Unaudited)

             For the Three Months Ended September 30, 2004 and 2005

<TABLE>
<CAPTION>
                                                      Predecessor       Successor
                                                        Company          Company
                                                     Three Months      Three Months
                                                     Ended 9/30/04     Ended 9/30/05
                                                     -------------     -------------
<S>                                                    <C>                <C>
             Revenues:
              Coupon handling fees and other           $        --        $       --

             Costs and Expenses:
                 General and administrative                  4,533            43,461
                                                     -------------     -------------
                    Total costs and expenses                 4,533            43,461
                                                     -------------     -------------

                      Operating loss                        (4,533)          (43,461)

             Other (expense):
              Interest expense                             (29,207)           (4,326)
                                                     -------------     -------------

              Total other (expense)                        (29,207)           (4,326)
                                                     -------------     -------------

             Loss before reorganization items              (33,740)          (47,787)

           Reorganization expense                           (2,978)              (45)
                                                     -------------     -------------
             Net loss                                  $   (36,718)       $  (47,832)
                                                     =============     =============


             Net loss applicable to common
              stockholders                             $   (36,718)       $  (47,832)
                                                     =============     =============

             Basic and diluted net loss per common
              share                                              *        $     (.01)
                                                     =============     =============

             Weighted average common shares
              outstanding                               78,800,000         5,002,900
                                                     =============     =============
</TABLE>


* less than ($.01) per share



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

                                        5
<PAGE>

                            AFG ENTERPRISES USA, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                             STATEMENT OF OPERATIONS
                                   (Unaudited)

                  For the Nine Months Ended September 30, 2004,
                 One Month Ended January 31, 2005, Eight Months
        Ended September 30, 2005 and for the Period from February 1, 2005
                     (inception) through September 30, 2005

<TABLE>
<CAPTION>
                                                                                                             Successor
                                                                                                              Company
                                             Predecessor           Predecessor          Successor            Cumulative
                                               Company               Company             Company           Amounts From
                                              Nine Months            One Month         Eight Months          Inception
                                            Ended 9/30/04         Ended 1/31/05       Ended 9/30/05       through 9/30/05
                                            -------------         -------------       -------------       ---------------
<S>                                          <C>                  <C>                  <C>                  <C>
Revenues:
    Coupon handling fees and other           $         --         $         --         $         --         $         --

Costs and expenses:
    General and administrative                    122,515                1,860              221,079              221,079
                                             ------------         ------------         ------------         ------------

      Total costs and expenses                    122,515                1,860              221,079              221,079
                                             ------------         ------------         ------------         ------------

      Operating loss                             (122,515)              (1,860)            (221,079)            (221,079)

Other (expense):
    Litigation settlement                          10,000                   --                   --                   --
    Interest expense                             (107,844)              (2,261)              (8,164)              (8,164)
                                             ------------         ------------         ------------         ------------

      Total other (expense)                       (97,844)              (2,261)              (8,164)              (8,164)
                                             ------------         ------------         ------------         ------------

    Loss before reorganization items             (220,359)              (4,121)            (229,243)            (229,243)

Reorganization expense                            (12,017)              (1,041)              (6,978)              (6,978)
                                             ------------         ------------         ------------         ------------

Net loss                                         (232,376)              (5,162)            (236,221)            (236,221)
                                             ------------         ------------         ------------         ------------

Net loss applicable to common
    stockholders                             $   (232,376)        $     (5,162)        $   (236,221)        $   (236,221)
                                             ============         ============         ============         ============

Basic and diluted net loss per common
    share                                               *                    *         $       (.05)        $       (.05)
                                             ============         ============         ============         ============

Weighted average common shares
    outstanding                                78,800,000           78,800,000            5,001,100            5,001,100
                                             ============         ============         ============         ============
</TABLE>


* less than ($.01) per share

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

                                        6
<PAGE>

                            AFG ENTERPRISES USA, INC.
                         (A DEVELOPMENT STAGE COMPANY)
                 STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIT
                    For the Nine Months Ended September 30, 2005
                                   (Unaudited)




<TABLE>
<CAPTION>
                                               Preferred stock                      Common stock
                                        ----------------------------      ----------------------------
                                          Shares            Amount          Shares           Amount
                                        -----------      -----------      -----------      -----------

<S>                                     <C>              <C>              <C>              <C>
Balance, December 31, 2004                        2      $   500,000       88,126,148      $    88,126

   Net loss for the one month ended
     January 31, 2005

   Reorganization entries required
     under fresh start accounting                (2)     $  (500,000)     (83,126,148)     $   (83,126)

   Issuance of additional shares as
     part of reoganization                                                      4,772      $         5

Net loss for the eight months ended
     September 30, 2005                          --               --               --               --
                                        -----------      -----------      -----------      -----------
Balance, September 30, 2005                      --      $        --        5,004,772      $     5,005
                                        ===========      ===========      ===========      ===========
</TABLE>

<TABLE>
<CAPTION>
                                                                                                      Deficit
                                                                                                     accumulated
                                              Additional                                             during the
                                               paid-in            Stock            Treasury          development
                                               capital        subscriptions         stock              stage             Total
                                             ------------      ------------      ------------      ------------      ------------
<S>                                          <C>               <C>               <C>               <C>               <C>
Balance, December 31, 2004                   $ 21,567,220      $    150,000      $   (563,750)     $(23,857,087)     $ (2,115,491)

   Net loss for the one month ended
     January 31, 2005                                                                              $     (5,162)     $     (5,162)

   Reorganization entries required under
    fresh start accounting                   $(21,567,220)     $   (150,000)     $    563,750      $ 23,862,249      $  2,125,653

   Issuance of additional shares as
    part of reorganization                             --                --                --                --      $          5

Net loss for the eight months ended
     September 30, 2005                                --                --                --      $   (236,221)     $   (236,221)
                                             ------------      ------------      ------------      ------------      ------------
Balance, September 30, 2005                  $         --      $         --      $         --      $   (236,221)     $   (231,216)
                                             ============      ============      ============      ============      ============
</TABLE>


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

                                        7


<PAGE>

                            AFG ENTERPRISES USA, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                             STATEMENT OF CASH FLOWS

 For the Nine Months Ended September 30, 2004, One Month Ended January 31, 2005,
                  Eight Months Ended September 30, 2005 and for
                  the Period from February 1, 2005 (inception)
                           through September 30, 2005
                                   (Unaudited)


<TABLE>
<CAPTION>
                                                         Predecessor        Predecessor        Successor          Successor
                                                           Company            Company           Company            Company
                                                          Nine Months        One Month        Eight Months        Cumulative
                                                        Ended 9/30/04      Ended 1/31/05      Ended 9/30/05      Amounts From
                                                                                                                  Inception
                                                       --------------      -------------      -------------      ------------
<S>                                                               <C>                <C>                <C>               <C>
Cash flows from operating activities:

   Net loss                                            $     (232,376)     $      (5,162)     $    (236,221)     $   (236,221)
   Adjustments to reconcile net loss to net
     cash used in operating activities:
       Depreciation, amortization and impairment               88,191                 --                 --                --
       Amortization of debt issuance costs                     86,667                 --                 --                --
       Changes in assets and liabilities:
        Other assets                                           (1,834)            14,342             29,704            29,704
        Accounts payable                                         (671)           (26,219)             4,898             4,898
        Interest payable                                       21,177              2,261              8,164             8,164
        Accrued expenses                                       23,124           (125,161)           (70,033)          (70,033)
                                                       --------------      -------------      -------------      ------------

       Total adjustments                                      216,654           (134,777)           (27,267)          (27,267)
                                                       --------------      -------------      -------------      ------------

       Net cash used in operations                            (15,722)          (139,939)          (263,488)         (263,488)

Cash flows from financing activities:
   Proceeds from notes payable                                 20,000            138,248            270,500           270,500
                                                       --------------      -------------      -------------      ------------

       Net cash provided by financing activities               20,000            138,248            270,500           270,500
                                                       --------------      -------------      -------------      ------------

Net increase (decrease) in cash                                 4,278             (1,691)             7,012             7,012

Cash and cash equivalents at beginning of period                6,109              6,809              5,118             5,118
                                                       --------------      -------------      -------------      ------------

Cash and cash equivalents at end of period             $       10,387      $       5,118      $      12,130      $     12,130
                                                       ==============      =============      =============      ============
</TABLE>


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

                                        8


<PAGE>


Notes to Unaudited Financial Statements

1.   Basis of Presentation, Reorganization and Fresh Start Accounting: The
     accompanying unaudited financial statements have been prepared by the
     Company. In the opinion of management, the accompanying unaudited financial
     statements contain all adjustments (consisting of only normal recurring
     accruals) necessary for a fair presentation of the financial position as of
     September 30, 2005, and the results of operations and cash flows for the
     periods ended September 30, 2004, January 1, 2005 and September 30, 2005.

     The accompanying financial statements have been prepared assuming that the
     Company will continue as a going concern. The Company is in the development
     stage and has been primarily involved in research and development
     activities, resulting in significant losses and a stockholders' deficit at
     September 30, 2005 of $231,216 and has recently emerged from reorganization
     under Chapter 11 of the United States Bankruptcy Code. These conditions
     raise substantial doubt about its ability to continue as a going concern.
     The financial statements do not include any adjustments that might result
     from the outcome of this uncertainty.

     On November 12, 2004, a Plan of Reorganization (the "Plan") for the Company
     was filed with the Bankruptcy Court. The Plan was jointly proposed by the
     Company and AFGVII (collectively referred to as the "Plan Proponents").
     Also on November 16, 2004, a Disclosure Statement to be used in soliciting
     votes to accept or reject the Plan (the "Disclosure Statement") was
     approved by the Bankruptcy Court and a hearing to determine whether the
     Bankruptcy Court should approve the Plan was held on January 20, 2005. The
     Plan became final on January 31, 2005 (the "Effective Date") and was
     implemented on such date for accounting purposes.

     References in these financial statements to "Predecessor Company" refer to
     the Company prior to and including January 31, 2005. References to
     "Successor Company" refer to the Company on and after February 1, 2005,
     after giving effect to cancellation of all outstanding securities of the
     Predecessor Company and the issuance of new securities of the Successor
     Company in accordance with the Plan and implementation of "fresh start"
     accounting.

     Upon emergence from bankruptcy, the Company implemented fresh-start
     accounting under the provisions of SOP 90-7. Under SOP 90-7, the
     reorganization fair value of the Company was allocated to its assets and
     liabilities, its accumulated deficit was eliminated, and its new equity was
     issued according to the Plan as if it were a new reporting entity. The
     Company adopted the provisions of fresh-start accounting as of February 1,
     2005. In accordance with fresh-start accounting, all assets and liabilities
     were recorded at their respective fair market values upon emergence from
     Chapter 11 Reorganization. The Company reports the fair market value of its
     primary assets, the patents and intellectual property, at $0. All
     pre-petition liabilities discharged by the Plan are eliminated as of
     February 1, 2005. The Successor Company is deemed to have an inception date
     of February 1, 2005.


                                        9


<PAGE>

     SOP 90-7 requires an allocation of the reorganization equity value in
     conformity with procedures specified by APB 16, Business Combinations, as
     amended by SFAS 141, Business Combinations, for transactions reported on
     the basis of the purchase method. The excess of reorganization value over
     fair value of net assets ("goodwill") was $40,567 as of January 31, 2005.
     As a result of the confirmation and implementation of the Plan, as of the
     Effective Date the following are deemed to have occurred:

                  Transfer of Assets. All assets of the Company owned
         pre-petition or acquired during the Restructuring Proceedings are
         transferred to the reorganized Company free and clear of all liens,
         claims and interests of all creditors and interested parties. The
         reorganized Company is not liable for repayment of any claims except as
         set forth in the Plan. All other debts and liabilities are discharged.

                  Name Change. The reorganized Company has changed its name from
         "In Store Media Systems, Inc." to "AFG Enterprises USA, Inc."

                  Change in Capital Structure. All of the outstanding shares of
         capital stock were reverse split into an aggregate of 500,000 shares of
         Common Stock of the reorganized Company. The Company issued 4,500,000
         shares to creditors, comprised of 3,000,000 shares to Acclaim Financial
         Group Ventures II, LLC and NMPP, Inc. in satisfaction of their secured
         claims. NMPP, Inc. and Acclaim Financial Group Ventures II, LLC are
         related parties (referred to hereafter as "AFGVII"). During the
         quarter, the Company issued 4,772 additional shares of Common Stock in
         finalizing its obligations under the Plan of Reorganization. No
         options, warrants or other rights to acquire capital stock remain
         outstanding, other than the options to purchase 1,078,559 shares of
         Common Stock held by AFGVII at various prices, ranging from $0.001 to
         $0.03.

                  As a result of direct ownership or indirectly through
         affiliated companies, AFGVII controls approximately 63% of the stock in
         the Successor Company.


2.   Income taxes

     No provision for income taxes is required at September 30, 2005, because,
     in management's estimation, the Company will not recognize any taxable
     income through December 31, 2005 and realization of any deferred tax asset
     is unlikely. The Company's only material deferred tax item is its NOL which
     has been fully reserved for.


3.   Subsequent Events

     Changes in Management. On October 24, 2005, Stephen Peary and John B. Burns
     III announced their resignation from the Board of Directors. The Board of
     Directors of the Company is now comprised of three persons: Douglas
     B.Croxall, Erich Spangenberg and David Pridham.

     In October, the Company was informed that AFGVII is considering exercising
     its option to purchase 1,078,559 shares of Common Stock.




                                       10
<PAGE>

ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
       OF OPERATIONS

These discussions may contain forward-looking statements. A forward-looking
statement may contain words or phrases such as "will continue to be," "will be,"
"continue to," "expect to," "anticipates that," "to be," or "can impact."
Management cautions that forward-looking statements are subject to risks and
uncertainties that could cause the Company's actual results to differ materially
from those projected in forward-looking statements.

OVERVIEW

The Company has identified the accounting policies described below as critical
to its business operations and the understanding of the Company's results of
operations. The impact and any associated risks related to these policies on the
Company's business operations is discussed throughout this section where such
policies affect the Company's reported and expected financial results. The
preparation of this Quarterly Report requires the Company to make estimates and
assumptions that affect the reported amount of assets and liabilities of the
Company, revenues and expenses of the Company during the reporting period and
contingent assets and liabilities as of the date of the Company's financial
statements. There can be no assurance that the actual results will not differ
from those estimates.

The Company is a development stage company. The Company generated no revenues
from operations since February 1, 2005 (inception). Additionally, the Company
has incurred operating losses of $236,221 since inception through September 30,
2005.

At September 30, 2005, the Company had a stockholders' deficit of $231,216 which
reflects $5,005 of common stock less accumulated deficit of $236,221. The
accumulated deficit amount is primarily the result of costs and expenses of the
Bankruptcy and general and administrative expenses incurred since inception.

The Company is continuing to evaluate various strategic alternatives at this
time, including the following:

o Evaluating merger and other business combination transactions with companies
(without industry or sector limitations) that believe they would benefit from
being public;

o Evaluating acquisition and other business combination transactions with
companies (without industry or sector limitations) that the Company believes
would benefit from being public; and

o Continuing to evaluate alternatives for the Company's patent portfolio.

In the event that the Company is successful in consummating any such strategic
alternative, it is likely that the current shareholders of the Company would
experience significant dilution. If the strategic alternative is accompanied by
a financing, the current shareholders of the Company would experience even
greater dilution.

There can be no assurance that any potential strategic alternative (including
any merger or acquisition opportunity) will be consummated.

FINANCIAL CONDITION

The Successor Company had $60,611 in total assets and $291,827 in total
liabilities at September 30, 2005, as compared to $58,764 and $616,324
(excluding $1,557,931 of pre-petition liabilities subject to compromise)at
December 31, 2004, respectively. Accounts payable at December 31, 2004 were
$53,049 as compared to $6,402 at September 30, 2005. Accrued expenses were
$2,455 at September 30, 2005 compared to $312,584 at December 31, 2004. Payroll
liabilities increased from $0 at December 31, 2004 to $4,306 at September 30,
2005. Notes payable to a related party increased from $87,100 at December 31,
2004 to $270,500 at September 30, 2005 and short term notes payable decreased
from $106,000 at December 31, 2004 to $0 at September 30, 2005. All pre-petition
liabilities of $1,557,931 at December 31, 2004 were eliminated as of January 31,
2005. As a result of these changes, the Company had a working capital deficit of
$271,788 at September 30, 2005, as compared to a working capital deficit of
$557,560 at December 31, 2004.


                                       11
<PAGE>


RESULTS OF OPERATIONS

The Company has incurred operating expenses of $221,079 from inception through
September 30, 2005. These expenses include general and administrative expenses,
primarily professional accounting fees and expenses related to completion of
current and prior year Annual Report on Form 10-KSB and Quarterly Reports on
Form 10 QSB to bring the Company current in its SEC filings and corporate staff
payroll and related payroll tax expense for the period.

QUARTER ENDED September 30, 2005, COMPARED TO QUARTER ENDED September 30, 2004

For the quarter ended September 30, 2005, the Company sustained net losses
before reorganization items of $47,787, as compared to net losses of $33,740 for
the quarter ended September 30, 2004. The increase was a result of increases in
general and administrative expenses, primarily accounting and legal fees and
payroll and related payroll expenses along with a decrease in interest expense.
General and administrative expenses increased by $9,746 in accounting and legal
fees in connection with bringing its SEC filings current and payroll and related
expenses increased by $25,836 over the previous quarter. As a result of the
confirmation and implementation of the Plan as of the effective date, the
Company eliminated certain indebtedness thus reducing interest expense by
$24,881 for the quarter ended September 30, 2005. Reorganization expenses for
the quarter ended September 30, 2005 were $45 as compared to $2,977 for the
quarter ended September 30, 2004.

LIQUIDITY AND CAPITAL RESOURCES

At September 30, 2005, the Company had $291,827 in current liabilities, of which
$270,500 was a note payable to a related party (AFGVII). The remaining portion
of the Company's current liabilities are primarily comprised of accounts payable
of $6,402, accrued interest expense of $8,164 and payroll liabilities of $4,306.
The Company relies on the availability of additional capital to satisfy all such
obligations.

The Company will require additional capital to implement its business
strategies.

The Company has limited access to additional sources of equity and debt
financing and it 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 as expected. The
Company is presently being funded by a loan agreement with AFGVII, a related
party. Such loan was established as part of the plan of reorganization and
allows the Company to borrow up to $2,000,000 subject to meeting certain terms
and conditions as established by AFGVII.

Since the end of fiscal year 2004 through September 30, 2005, the Company's cash
position has increased. At September 30, 2005, the Company had available cash of
$12,130, as compared to available cash of $6,809 at December 31, 2004. The
increase in cash is a result of the Company borrowing under its loan in order to
pay its operating expenses.

ITEM 3.  CONTROLS AND PROCEDURES

(a) Evaluation of Disclosure Controls and Procedures.


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<PAGE>

The Company's Chief Executive Officer and Chief Financial Officer have conducted
an evaluation of the Company's disclosure controls and procedures as of a date
(the "Evaluation Date") within 90 days before the filing of this quarterly
report. Based on their evaluation, the Company's Chief Executive Officer and
Chief Financial Officer have concluded that the Company's disclosure controls
and procedures are effective to ensure that information required to be disclosed
by the Company in reports that it files or submits under the Securities Exchange
Act of 1934 is recorded, processed, summarized and reported within the time
periods specified in the applicable Securities and Exchange Commission rules and
forms.

PART II - OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

The Company is not involved in any legal proceedings.

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

None other than the changes in the outstanding number of shares of common stock
effectuated by the Plan. See Note 1 above.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

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

None.

ITEM 5. OTHER INFORMATION

The trading symbol of the Company has been changed to AFGS.PK.

ITEM 6. EXHIBITS AND REPORTS

(a)      Exhibits

31.1     Certification of Principal Executive Officer pursuant to Rule 13a-14(a)
         or Rule 15d-14(a)

31.2     Certification of Principal Accounting Officer pursuant to Rule
         13a-14(a) or Rule 15d-14(a)


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<PAGE>




32.1     Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant
         To Section 906 of The Sarbanes-Oxley Act Of 2002

(b)      Report on Form 8-K
                  Current Report on Form 8-K filed on October 28, 2005.


                                   Signatures

     Pursuant to the requirements of the Securities Exchange Act of 1934, the
     Registrant has duly caused this report to be signed on its behalf by the
     undersigned thereunto duly authorized.

     Date: November 9, 2005                        AFG ENTERPRISES USA, INC.
                                                   (Registrant)
                                                   By:/s/Erich Spangenberg
                                                   -----------------------------
                                                   Erich Spangenberg, CEO

                                                   By:/s/ William P. Stelt
                                                   -----------------------------
                                                   William P. Stelt, CFO



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