UNITED STATES


SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549





FORM 10-K





þ  ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934





For the fiscal year ended March 31, 2011





o  TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT





For the transition period from:  ______________ to ______________





Commission file number: 000-53578





AMERICAN FIRST FINANCIAL, INC.(Name of small business issuer as specified in its charter)








Florida

59-3707569(State or other jurisdiction of incorporation or organization)

(IRS Employer Identification No.)











12900 Vonn Road Suite B102 Largo, Florida

33774(Address of principal executive offices)

(Zip Code)





Issuer’s telephone number: 727-595-0975





Securities registered under Section 12(g) of the Exchange Act: None





Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act  Yes o    Noþ





Check whether the Registrant is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act. o





Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.


Yes o  No þ





Indicate by check mark whether the Registrant has submitted electronically and posted on it corporate Web site, if any, every Interactive data file required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).     Yes o   No þ





Indicate by check mark if disclosure of delinquent filers in response to Item 405 of Regulation S-K is not contained in this form, and no disclosure will be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in part III of this Form 10-K or any amendment to this Form 10-K þ.





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





Large accelerated filer        ̈
Accelerated filer                       ̈Non-accelerated filer          ̈

(Do not check if a smaller reporting company)
Smaller reporting company    þ





Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).Yes o Noþ





The aggregate market value of the Common Stock held by non-affiliates of approximately 8,581,224 shares of Common Stock as of December 31, 2010 was approximately $386,155 based on a closing sales price of $.045 per share of Common Stock on December 31, 2010.





The number of shares outstanding of the issuer’s Common Stock, $.05 par value, as of June 30, 2011 was 24,982,205 shares.








AMERICAN FIRST FINANCIAL, INC.





Table of Contents





PART IItem 1. Business


3Item 1A. Risk Factors


6Item 2. Property


6Item 3. Legal Proceedings


7Item 4. (Removed and Reserved)PART IIItem 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities


7Item 6. Selected Financial Data


9Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations


9Item 7A. Quantitative and Qualitative Disclosures About Market Risk


9Item 8. Financial Statements and Supplementary Data


12Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosures


12Item 9B. Other Information


12PART IIIItem 10. Directors, Executive Officers and Corporate Governance


13Item 11. Executive Compensation


14Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters


15Item 13. Certain Relationships and Related Transactions, and Director Independence


15Item 14. Principal Accountant Fees and Services


15Item 15. Exhibits Financial Statement Schedules


16Signatures


19


2
  PART I





CAUTIONARY STATEMENT IDENTIFYING IMPORTANT FACTORS


THAT COULD CAUSE THE COMPANY’S ACTUAL RESULTS TO


DIFFER FROM THOSE PROJECTED IN FORWARD LOOKING STATEMENTS





Readers of this document and any document incorporated by reference herein are advised that this document and documents incorporated by reference into this document contain both statements of historical facts and forward looking statements.  Forward looking statements are subject to certain risks and uncertainties, which could cause actual results to differ materially for those indicated by the forward looking statements.  Examples of forward looking statements include, but are not limited to (i) projections of revenues, income or loss, earning or loss per share, capital expenditures, dividends, capital structure and other financial items, (ii) statements of the plans and objectives of the Company or its management or Board of Directors, including the introduction of new products, or estimates or predictions of actions by customers, suppliers, competitors or regulatory authorities, (iii) statements of future economic performance, and (iv) statements of assumptions underlying other statements and statements about the Company or its business.





This document and any documents incorporated by reference herein also identify important factors which could cause actual results to differ materially from those indicated by forward looking statements.  These risks and uncertainties include price competition, the decisions of customers, the actions of competitors, the effects of government regulation, possible delays in the introduction of new products and services, customer acceptance of products and services, the Company’s ability to secure debt and/or equity financing on reasonable terms, and other factors which are described herein and/or in documents incorporated by reference herein.





The cautionary statements made above and elsewhere by the Company should not be construed as exhaustive or as any admission regarding the adequacy of disclosures made by the Company.  Forward looking statements are beyond the ability of the Company to control and in many cases the Company cannot predict what factors would cause results to differ materially from those indicated by the forward looking statements.





Item 1.   Business





General





American First Financial, Inc. (“AFF”) is a Florida corporation formed in March, 2001.  As part of our recent financial statements our auditor has expressed an opinion that based on our financial condition at the time “there is substantial doubt about the company’s ability to continue as a going concern”. As of March 31, 2011, our current assets are $994 and our current liabilities are $78,201. We show a net loss for our current fiscal year of $46,490.





AFF is a specialty mortgage origination firm that deals in wholesale lending.  Wholesale lending is the taking of retail mortgage loan originations from mortgage brokers and getting them closed and funded for them, as opposed to dealing directly with the retail customer.  AFF’s operations have concentrated on non-conforming and sub-prime loans.





Non-conforming loans are loans that are credit worthy but, don’t meet other Fannie Mae or Freddie Mac requirements such as loan size, property type, or debt ratios below 45%,  Credit score requirements for non-conforming and conforming loans are both above 600. The current maximum loan to value (LTV) for a non-conforming loan is 80%.  It is 95% for conforming loans.  Sub-prime loans are loans to borrowers who would be considered poor credit risks, with credit scores below 600, a recent bankruptcy or loan default experience. Collateral requirements for all of the above mentioned loans are real property. On these types of loans most lenders won’t go above a seventy percent loan to value.





As of July 1, 2010 AFF now only deals with sub-prime loans because they have found they can be most competitive with that type of loan. AFF now takes a loan submission from an independent mortgage broker and reviews it only to validate that it is a loan that Global would consider and if it meets those guidelines then, it is sent on to Global for underwriting and funding. From that point on, Global deals directly with the originating broker and once the loan is funded, Global pays AFF a pre-determined referral fee. Global is a licensed mortgage lender with national approvals to originate and sell loans including direct approvals from FHA and VA and agreements to sell loans to major Fannie Mae and Freddie Mac lenders. Global is licensed in the states of Florida and Tennessee. In addition, the states of Alabama, Alaska, Colorado, Indiana, Montana, Nevada, Ohio, Oregon, South Carolina and Wyoming have no licensing requirements for a lender and Global is exempt from licensing in a number of other states due to their direct lender approvals with FHA and VA.


3


Through Global’s licensing, AFF is able to do loans in any of the above mentioned states but currently is concentrating marketing efforts only in the state of Florida because their experience has shown that the average loan size is larger than most other states.  Also, there are a lot of investment and second home loans that can be done in Florida and AFF still has availability of good loan products for those types of loans. They will expand into other states as their broker acquisition plan progresses.





Overall economic conditions have certainly contributed to the decline in income for AFF. The price of homes in Florida has dropped an average of 45% in the last two years. The value of mortgages has dropped respectively. The associated fees that make up our revenue have dropped accordingly. We will need to monitor these statistics in the future as our operations change and grow. Another large factor contributing to the decline in the mortgage business is the deletion of available mortgage products due to tightened credit markets.





AFF signed a “Net Branch Agreement” with Global Lending Group, Inc. in March 2002 that allows AFF to take loan originations from mortgage brokers and submit those loans to Global for underwriting and funding. The agreement allows AFF to act as a branch of Global’s and therefore AFF needs no licenses of its own.  There are no legal ramifications for AFF acting as a branch of Global’s except as required by the agreement. One hundred percent of our loan business is done through Global.  Global owns approximately 2% of the outstanding shares of AFF common stock.





AFF markets for loans to mortgage brokers by way of faxing out a product list once a month and belonging to an Internet mortgage referral service called “Lender Lab”. Brokers looking for a particular loan product can go to the “Lender Lab” website, put in the loan details and receive a list of the mortgage companies that would do that loan. This service is free to AFF. Loans are given to Global for underwriting and approval. When approved they are closed and funded in Global’s name. AFF assumes no risk. All loans are closed and funded through Global, with their funds or lines of credit or directly by their lender Investors. AFF has not directly purchased any loans within the last three years.





AFF markets non-conforming and sub-prime loan products to mortgage brokers and small lenders who are too small, or do not have the required net worth to get approval to submit loans directly to the major lenders.  Our business plan is to consult with or acquire small retail mortgage brokers and funnel their non-conforming and sub-prime loans to Global to utilize the available funding capacity.  We will utilize other lenders as appropriate for more conventional loans.  Global Lending has allocated at least $1,000,000 a month from its lines of credit for AFF loans if funded by Global. If the loans are funded directly by Global Investors, the funds are unlimited. AFF does not have any foreclosure or debt collecting responsibilities. Any such efforts would be undertaken by Global. Also AFF has no recourse provisions or responsibilities attached to any loans that they do through Global.





As of January 1, 2011, AFF added mortgage consulting operations to our business plan.  We have negotiated with independent retail mortgage brokers to help them package and present non-conforming and sub-prime loans to willing lenders.  We believe this will be an added dimension to our business model.





We have one office in Largo Florida.





Company History





American First Financial, Inc. (“AFF”) is a Florida corporation formed in March, 2001.





Competition





Our competitors include a number of large financial institutions. These financial institutions generally have significantly greater resources and access to capital than we do, resulting in a lower cost of funds and a greater ability to do “conforming loans”.  However, most of those financial institutions do not offer sub-prime loan products and even if they do, there is no price advantage to the borrower over what Global can offer. We compete by targeting our marketing to brokers who are either to small to have access to these institutions or are not aware of their existence. As explained above, a mortgage broker must meet certain net worth and experience requirements to be able to send loans directly to most lenders. These requirements vary by lender but most want at least a $25,000 net worth and a minimum of two years of experience as a licensed mortgage broker. Global has no such requirements and we market that advantage.





Employees





As of March 31, 2011, AFF had a staff of two people, including one in sales, marketing and administration, (Mr. Stirling) and one in processing, submissions and closings. Both employees work on a commission only basis. Currently Mr. Stirling is the only full time employee.


4
  Regulation





Our business is subject to extensive regulation by federal, state and local governmental authorities, including the Federal Trade Commission and the state agencies that license mortgage operations.  Mortgage originators must comply with a number of federal, state and local consumer protection laws, including, among others, the Gramm-Leach-Bliley Act, the Fair Debt Collection Practices Act, the Real Estate Settlement Procedures Act, the Truth in Lending Act, the Fair Credit Reporting Act and the Homeowners Protection Act. These statutes apply to debt collection, foreclosure and claims handling, investment of and interest payments on escrow balances and escrow payment features, and they mandate certain disclosures and notices to borrowers. These requirements can and do change as statutes and regulations are enacted, promulgated or amended.





SEC Reports Available on Website





The SEC maintains an Internet site (http://www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC.  The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330.








Item 1.A    Risk Factors





An investment in our common stock involves major risks. Before you invest in our common stock, you should be aware that there are various risks, including those described below.  You should carefully consider these risk factors together with all of the other information included in this Form 10-K before you decide to purchase shares of our common stock.





Purchase of our stock is a highly speculative and you could lose your entire investment.  We have recently been operating at a loss and you cannot assume that our plans and business prospects described herein will either materialize or prove successful.  Accordingly, you may lose all or a substantial part of your investment.  The purchase of our stock must be considered a highly speculative investment.





We can provide no assurances we will be able to continue as a going concern or raise additional financing in the future.The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business.  As shown in the accompanying financial statements, we have incurred recurring losses, and have negative working capital and a net capital deficiency at March 31, 2011.  These factors, among others, may indicate that we may be unable to continue as a going concern. The financial statements do not include any adjustments relating to the recoverability of assets and classification of liabilities that might be necessary should we be unable to continue as a going concern.  Our continuation as a going concern is dependent upon our ability to generate sufficient cash flow to meet our obligations on a timely basis and ultimately to attain profitability. The Company has a plan of financing to obtain cash to finance its operations through the sale of equity, debt borrowing and/or through the receipt of fees. We can provide no assurances that financing will be available to us on terms satisfactory to us, if at all, or that we will be able to continue as a going concern.  Further, we can provide no assurances that a mutually acceptable licensing agreement will be entered into on terms satisfactory to us, if at all. See “Notes to our Financial Statements.”





We have incurred net losses and our revenues are declining; failure to achieve significant revenues and profitability in the future would cause the market price for our common stock to decline further.  We have generated net losses in recent years. We have an accumulated retained deficit of $(1,293,575) and a shareholders’ equity of $(65,373) as of March 31, 2011. If we don’t immediately achieve significant revenues and profitability in the near future, the market price for our common stock could decline further.





If we are unable to compete effectively with our competitors, we will not be successful generating revenues or attaining profits.The mortgage brokerage industry is highly competitive. Our ability to generate revenues and profitability is directly related to our ability to compete with our competitors. Currently, we believe that we have a competitive advantage because of our unique technology, our product performance, product mix and price. We face competition in our markets from competing technologies and direct competition from additional companies that may enter this market with greater financial resources than we have.  If we are unable to compete effectively, we will not be successful in generating revenues or attaining profits.





Loss of key personnel could cause a major disruption in our day-to-day operations and we could lose our relationships with third-parties with whom we do business.Our future success depends in a significant part upon the continued service of our executive officer as key management personnel.  The loss of key personnel or the inability to hire or retain qualified replacement personnel could have cause a major disruption in our day-to-day operations and we could lose our relationships with third-parties with whom we do business, which could adversely affect our financial condition and results of operations.


5
 If future market acceptance of our products is poor, we will not be able to generate adequate sales to achieve profitable operations.  Our future is dependent upon the success of the current and future generations of one or more of the products we sell or propose to sell.  We have limited sales of any of our services.  If future market acceptance of our products is poor, we will not be able to generate adequate sales to achieve profitable operations.





We may not be able to successfully use or defend our intellectual property rights, which would prevent us from developing an advantage over our competitors.  We rely on a “Net Branch Agreement” with a lender which we believe gives us a competitive advantage over our competitors.  If a third party infringes on our agreement issued to us, we will bear the cost of enforcing the agreement. If we are not able to successfully use or defend our intellectual property rights, we may not be able to develop an advantage over our competitors.





We do not expect to be able to pay cash dividends in the foreseeable future, so you should not make an investment in our stock if you require dividend income.The payment of cash dividends, if any, in the future rests within the discretion of its Board of Directors and will depend, among other things, upon our earnings, our capital requirements and our financial condition, as well as other relevant factors. We have not paid or declared any cash dividends upon our Common Stock since our inception and by reason of our present financial status and our contemplated future financial requirements does not contemplate or anticipate making any cash distributions upon our Common Stock in the foreseeable future.





We have a limited market for our common stock which causes the market price to be volatile and to usually decline when there is more selling than buying on any given day.  Our common stock currently trades on the over the counter bulletin board under the symbol “AFRS.”  However, at most times in the past, our common stock has been thinly traded and as a result the market price usually declines when there is more selling than buying on any given day. As a result, the market price has been volatile, and the market price may decline immediately if you decide to place an order to sell your shares.





Future sales of common stock into the public market place will increase the public float and may adversely affect the market price.As of March 31, 2011, we have outstanding 24,982,205 shares of common stock, including an estimated 9.3 million outstanding shares held by non-affiliated persons. Holders of restrictive securities may also sell their restrictive shares pursuant to Rule 144. In general, under Rule 144 of the Securities Act of 1933, as amended, shares of our common stock beneficially owned by a person for at least six months (as defined in Rule 144) are eligible for resale under Rule 144, subject to the availability of current public information about us and, in the case of affiliated persons, subject to certain additional volume limitations, manner of sale provisions and notice provisions. Pursuant to Rule 144, non-affiliates may sell or otherwise transfer their restricted shares without compliance with current public information where the restricted securities have been held for at least one year pursuant to Rule 144(a). Future sales of common stock or the availability of common stock for sale may have an adverse effect on the market price of our thinly traded common stock, which in turn could adversely affect our ability to obtain future funding as well as create a potential market overhang.





“Penny Stock” regulations may adversely affect your ability to resell your stock in market transactions. The SEC has adopted penny stock regulations which apply to securities traded over-the-counter.  These regulations generally define penny stock to be any equity security that has a market price of less than $5.00 per share or an equity security of an issuer with net tangible assets of less than $5,000,000 as indicated in audited financial statements, if the corporation has been in continuous operations for less than three years. Subject to certain limited exceptions, the rules for any transaction involving a penny stock require the delivery, prior to the transaction, of a risk disclosure document prepared by the SEC that contains certain information describing the nature and level of risk associated with investments in the penny stock market.  The broker-dealer also must disclose the commissions payable to both the broker-dealer and the registered representative and current quotations for the securities.  Monthly account statements must be sent by the broker-dealer disclosing the estimated market value of each penny stock held in the account or indicating that the estimated market value cannot be determined because of the unavailability of firm quotes. In addition, the rules impose additional sales practice requirements on broker-dealers who sell such securities to persons other than established customers and institutional accredited investors (generally institutions with assets in excess of $5,000,000).  These practices require that, prior to the purchase, the broker-dealer determined that transactions in penny stocks were suitable for the purchaser and obtained the purchaser’s written consent to the transaction.





Our common stock will be subject to the penny stock regulations.  Compliance with the penny stock regulations by broker-dealers will likely result in price fluctuations and the lack of a liquid market for the common stock, and may make it difficult for you to resell your stock in market transactions.





Item 1.B.    Unresolved Staff Comments





We have no outstanding comments from the staff of the Security and Exchange Commission. .





Item 2.    Description of Property





Currently, we do not occupy any rental property.   Our office is temporarily being provided through property owned by the majority shareholder.





Our office is at the following address:





·
Address: 12900 Vonn Road Suite B102 Largo, FL 33774·
Size: 400 square feet·
Landlord: J. R. Stirling·
Term:  for as long as needed.·
Monthly Rent: $100 as a reimbursement of expenses.  This property is adequate for our current needs.





We do not intend to renovate, improve, or develop properties. Our policy with respect to investments in real estate mortgages is set forth in “Business,” above. Specifically, business assumes no credit risk, originating mortgages that are closed in the name of Global Lending Group, using their funds. Further, we do not intend to invest in securities of or interests in persons primarily engaged in real estate activities.


6


Item 3.   Legal Proceedings





From time to time the Company may be a party to litigation matters involving claims against the Company. During 2009, the Company was named as a defendant in a lawsuit for unsolicited advertisement. This lawsuit was settled for $500.





PART II





Item 5.   Market for Common Stock and Related Shareholder Matters





Market Information





Our common stock trades on the Pink Sheets under the trading symbol “AFRS.” The figures set forth below reflect the quarterly high and low bid information for shares of our common stock during the last two years, as reported by the Pink Sheets. These quotations reflect inter-dealer prices without retail markup, markdown, or commission, and may not represent actual transactions. Our stock commenced trading in April 2007. There is currently very little if any trading in our stock and there have been no public trades this year and only three trades in the last twelve months. There has been no public trading by any of our officers or directors. There has been some private placement shares sold to our officer’s directors, and non-related individuals in the last twelve months and those people understand that in our current position, they will have difficulty selling any of those shares and may be unable to sell them for prolonged periods. There has no public trading of shares by any of our officers, directors, or employees.





Quarter Ended

High


LowMarch 31, 2011


.045



.045December 31, 2010


.045



.045September 30, 2010


.045



.045June 30, 2010


.045



.045March 31, 2010


.045



.045December 31, 2009


.05



.045September 30, 2009


.05



.045June 30, 2009


.05



.045March 31, 2009


.05



.045





Penny Stock Considerations





Our shares are "penny stocks", as that term is generally defined in the Securities Exchange Act of 1934 to mean equity securities with a price of less than $5.00. Thus, our shares will be subject to rules that impose sales practice and disclosure requirements on broker-dealers who engage in certain transactions involving a penny stock.





Under the penny stock regulations, a broker-dealer selling a penny stock to anyone other than an established customer or accredited investor must make a special suitability determination regarding the purchaser and must receive the purchaser's written consent to the transaction prior to the sale, unless the broker-dealer is otherwise exempt. Generally, an individual with a net worth in excess of $1,000,000 or annual income exceeding $200,000 individually or $300,000 together with his or her spouse, is considered an accredited investor.


7


In addition, under the penny stock regulations, the broker-dealer is required to:





·
Deliver, prior to any transaction involving a penny stock, a disclosure schedule prepared by the Securities and Exchange Commission relating to the penny stock market, unless the broker-dealer or the transaction is otherwise exempt;·
Disclose commissions payable to the broker-dealer and our registered representatives and current bid and offer quotations for the securities;·
Send monthly statements disclosing recent price information pertaining to the penny stock held in a customer's account, the account's value, and information regarding the limited market in penny stocks; and·
Make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written agreement to the transaction, prior to conducting any penny stock transaction in the customer's account.





Because of these regulations, broker-dealers may encounter difficulties in their attempt to sell shares of our Common Stock, which may affect the ability of selling shareholders or other holders to sell their shares in the secondary market, and have the effect of reducing the level of trading activity in the secondary market. These additional sales practice and disclosure requirements could impede the sale of our securities. In addition, the liquidity for our securities may be decreased, with a corresponding decrease in the price of our securities. Our shares in all probability will be subject to such penny stock rules and our shareholders will, in all likelihood, find it difficult to sell their securities.





OTC Bulletin Board Qualification for Quotation





We intend to secure a qualification for our securities to be quoted on the OTC Bulletin Board once our registration statement is effective and the SEC staff has indicated they have no further comments. To have our shares of Common Stock qualified for quotation on the OTC Bulletin Board, a market maker must file an application on our behalf in order to make a market for our Common Stock. We have engaged in preliminary discussions with an NASD Market Maker to file our application on Form 211 with FINRA.  Based upon our counsel's prior experience, we anticipate that after this registration statement is declared effective, it will take approximately 2 - 8 weeks for FINRA to issue a trading symbol and allow sales of our Common Stock under Rule 144.





Sales of our Common Stock under Rule 144





There are 10,381,224 shares of our common stock held by non-affiliates, both employees and non-employees, and 14,600,981 shares held by affiliates Rule 144 of the Securities Act of 1933 defines as restricted securities.





In general, persons holding restricted securities, including affiliates, must hold their shares for a period of at least six months, may not sell more than one percent of the total issued and outstanding shares in any 90-day period, and must resell the shares in an unsolicited brokerage transaction at the market price. These restrictions do not apply to non-affiliates after a holding period of one year but continue to apply for affiliates regardless of their holding period. The availability for sale of substantial amounts of common stock under Rule 144 could reduce prevailing market prices for our securities. All 10,381,224 shares held by non-affiliates have been held for at least 6 months.





Holders





As of the date of this registration statement, we had approximately 336 shareholders of record of our Common Stock.





Dividends and Distributions





We have not declared any cash dividends on our Common Stock since our inception and do not anticipate paying such dividends in the foreseeable future. We plan to retain any future earnings for use in our business. Any decisions as to future payments of dividends will depend on our earnings and financial position and such other facts, as the Board of Directors deems relevant.





Reports to Shareholders





As a result of this offering, we will become subject to the information and reporting requirements of the Securities Exchange Act of 1934 and will file periodic reports, proxy statements, and other information with the Securities and Exchange Commission We will voluntarily send an annual report to shareholders containing audited financial statements.





Where You Can Find Additional Information





We have filed with the Securities and Exchange Commission a registration statement on Form 10. The registration statement and exhibits may be inspected, without charge, and copies may be obtained at prescribed rates, at the SEC's Public Reference Room at 100 F St., N.E., Washington, D.C. 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The registration statement and other information filed with the SEC are also available at the web site maintained by the SEC at http://www.sec.gov.


8


Sales of Unregistered Securities





During the fiscal year ended March 31, 2010, we sold a total of 1,800,000 shares of common stock for $22,500 cash to five individuals.





During the fiscal year ended March 31, 2011, we issued a total of 2,100,000 shares of common stock for services valued at $10,500.





We did not use a private placement memorandum for the following reasons:





We relied upon Section 4(2) of the Securities Act of 1933, as amended for the above issuances to US citizens or residents.





We believed that Section 4(2) of the Securities Act of 1933 was available because:





·
None of these issuances involved underwriters, underwriting discounts or commissions.·
Restrictive legends were and will be placed on all certificates issued as described above. (See below)·
The distribution did not involve general solicitation or advertising.·
The distributions were made only to investors who were sophisticated enough to evaluate the risks of the investment.





Prospective investors were invited to review at our offices at any reasonable hour, after reasonable advance notice, any materials available to us concerning our business. Prospective Investors were also invited to visit our offices.





The wording of the restrictive legend mentioned above is: “The shares represented by this certificate have not been registered under the Securities Act of 1933 as amended. The shares have been acquired for investment and may not be offered, sold or otherwise transferred in the absence of an effective registration statement with respect to the shares or an exemption from the registration requirements of said act that is then applicable to the shares, as to which a prior opinion of council may be required by the issuer or the transfer agent.”





Item 6.    Selected Financial Data





Not applicable.


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








Item 7a.  Quantitative And Qualitative Disclosure About Market Risk.





A smaller reporting company is not required to provide the information in this Item.





Forward-Looking Statements





The following discussion of our financial condition and results of operations should be read in conjunction with the financial statements and the related notes thereto included elsewhere in this registration statement. This registration statement contains certain forward-looking statements and our future operating results could differ materially from those discussed herein. Certain statements contained in this discussion, including, without limitation, statements containing the words "believes", "anticipates," "expects" and the like, constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). However, as we will issue “penny stock,” as such term is defined in Rule 3a51-1 promulgated under the Exchange Act; we are ineligible to rely on these safe harbor provisions. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Given these uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements. We disclaim any obligation to update any such factors or to announce publicly the results of any revisions of the forward-looking statements contained herein to reflect future events or developments.


9
  Summary





As stated above, as a note to recent financial statements our auditor expressed an opinion that based on our financial condition, there was “substantial doubt about the company’s ability to continue as a going concern”. Management has been able to attract new investments and reduce our expense.  Current opinion of management is that AFF will continue as a going concern long enough to attract investor dollars and grow the mortgage business through acquisitions and consulting to the point of positive cash flow.  We currently do not have cash for acquisitions but, intend to use only stock for acquisitions. Management also believes that there will be a number of new loan products introduced in the next twelve months such as “stated income” loans coming back for self employed borrowers, which will significantly increase business. We intend to fill the two empty directors’ seats with individuals who will invest in the company and provide a new source of capital.  In the meantime, we have moved our office to a free rental space and have cut all other fixed overhead.  We have a number of investors that will buy private placement stock from us if necessary. Additionally, Mr. Stirling has agreed to accept personal responsibility and payment of any current outstanding corporate debts.





Results of Operations





The year ended March 31, 2011 and 2010





The following summary data is presented for the year ended March 31, 2011 and 2010:





For the Years Ended March 31,


2011



2010

% changeRevenues: Origination fees and points

$
2,076


$
18,142

-89%Revenues: Consulting fees

$
1,090


$
-

N/ACommissions and other direct costs


-



9,801

-100%Gross Margin


3,166



8.341

-62%Operating expenses:


49,656



63,204

-21%Net income (loss)

$
(46,490)


$
(54,863)

-15%





Revenues





For the years ended March 31, 2011 and 2010, revenues were $3,166 and $18,142, respectively.  Revenues in the current year decreased due to the continuing economic climate and continuing tight credit markets.  The Company also did not pursue loans or consulting work while waiting for the company’s registration to become effective.  During the fiscal year ended March 31, 2011, the Company placed 11 non-conforming loans with various lenders including Global.  Gross margin decreased in the current year, based on the decrease in volume.  Gross margin, as a percentage of sales, increased primarily due to reductions in earned commissions.





The recent trends in the mortgage business are towards lower numbers in all areas including number of loans, size of loans, gross margins and commissions thereby drastically reducing income for the above mentioned periods and for the foreseeable future.  The causes of these declines are a direct result of the following facts. First and foremost, is the decline in available mortgage products due to a great number of major lenders either going out of business or seriously curtailing their lending programs. Second the number and type of available mortgage products has been greatly reduced. Also, the credit requirements for borrowers have been vastly increased allowing less people to obtain loans and the loan sizes are generally smaller.  Finally, the reduction in real estate values nationally. On average, residential real estate values nationally have declined 35%. In Florida the decline approximates 45%. This of course, results in lower loan amounts which in turn results in less income per loan.





AFF plans to increase volume and income is through acquisitions of other originators, coupled with capitalizing on the trend for some lenders starting to introduce new loan products to the market. We also began to offer consulting services to non-affiliated brokers to help package and present non-confirming and sub-prime loans.  Fortunately there has been no decline in the ability of Global Lending to fund loans. The current funding dollar commitment to AFF (up to $1,000,000 a month), is more than adequate for a considerable increase in loan closings and Global is capable of increasing funding sources as needed.





As of December 31, 2010, the Company chose to stop brokering loans for un-affiliated agencies.  This service is reserved for agencies interested in joining AFF through acquisition or investment.  The Company is offering consulting services to un-affiliated mortgage brokers to help those agencies package and place loans.  Some exceptions to the brokering policy may occur.  As of January 1, 2011 the Company started recording consulting revenues.


10
 Operating Expenses





For the years ended March 31, 2011 and 2010 operating expenses were incurred in the amount of $49,656 and $63,204, respectively. The overall change was due to a decrease in the loss on sale of an investment property of $27,963 partially offset by an increase in stock based compensation of $10,500 and various minor changes in most other expense lines.  Operating expenses for the consulting services are not expected to increase over the current trend.





Net Loss





For the years ended March 31, 2011 and 2010 the Company incurred  net operating losses of $46,490 and $54,863, respectively. The change in the year earnings is primarily related to the decrease in expenses.


.


Liquidity and Capital Resources.





The following summary data is presented for the years ended March 31, 2011 and 2010:





2011


2010

% changeCurrent assets

$
994


$
1,343

-26%Total Assets


12,828



14,845

-14%Total current liabilities


78,201



64,228

-22%Total liabilities


78,201



64,228

-22%Total stockholders' equity


(65,373
)


(49,383
)
32%Working Capital


(77,207
)


(62,885
)
23%Net Cash (Used) Provided by Operating Activities

$
(16,282
)

$
(4,232
)
-51%





The current economic conditions have negatively affected our business model, but the Company is also not actively soliciting new loans or consulting work.. There is an abundance of demand for refinancing, however the credit markets do not offer the supply of loan products with which to fund these requests, therefore mortgage financing has decreased, as has our closings on mortgages. Additionally, there has been a decrease in the overall number of housing sales and real estate values further reducing the number of transactions requiring mortgage financing and the amounts of those mortgages. These factors have affected AFF as much as our lack of advertising.





Cash used in operations increased from the prior year, primarily due to an increase in legal and professional fees related to the public filings.  Our other cash requirements have decreased somewhat in recent periods.  Our regular reporting requirements incur reasonable costs and our attorney is charging very little. We have cut our fixed overhead to approximately $800 a month.  Our principle shareholder has agreed to assume personal responsibility for the repayment of any company debt and to personally fund any future expenses of the public filings as needed.





We were financing our operations primarily through operating activities. Those activities have not always been adequate for the cash requirements of the business.  From time to time it is necessary for the company to increase cash through the sale of stock through private investors or through temporary loans from and by the majority shareholder.  We believe we can currently satisfy our cash requirements for the next twelve months with our current cash and expected revenues from operations. We cannot assure investors that adequate revenues will be generated. Even without sufficient revenues, due to the current economic conditions, in the next twelve months, we anticipate that proceeds received from shareholder contributions, securities sales and or, the attainment of proceeds from temporary debt financing will enable AFF to continue with operations. We have not explored any temporary debt financing and do not anticipate the need to do so. As disclosed elsewhere in this filing, we have previously been able to sell stock in private offerings and believe we will be able to in the future if needed.





In an effort to sustain our liquidity, during the year ended March 31, 2010, we liquidated our investment of property located in South Carolina.   Due to market conditions, we liquidated this property at below cost, however, management considered the liquidation to be necessary for the purposes of cash flow.  The sale resulted in approximately $32,000 of operating cash after closing expenses. A portion of the proceeds paid older invoices associated with costs of professional and legal fees related to the public filings.





At March 31, 2011 the Company had minimal cash to meet current obligations.  The Company may rely upon the issuance of common stock and additional capital contributions from shareholders to fund any operating shortfall.





As reflected in the audited financial statements, as of March 31, 2011, we have an accumulated deficit of $(1,293,575) and negative working capital of $(77,207).  For the year ended March 31, 2011 we recorded negative cash used in operations in the amount of $(16,282).  These issues raise substantial doubt about its ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company's ability to increase revenues through acquisitions or advertising and or attain funding through additional share sales or debt.


11


Off-Balance Sheet Arrangements





Agreement from Mr. Stirling to personally assume corporate debt and to fund the future costs of public filings as needed.





Significant Accounting Policies and Recent Accounting Developments





For additional information regarding significant accounting policies and other recent accounting pronouncements, see Note 1 to our Interim Financial Statements and Note 1 to our Audited Financial Statements.





Recent Developments





Recently Issued Accounting Pronouncements





See Note 1 of the financial statements.





Item 8.   Financial Statements





The information required by Item 8 and an index thereto commence on page F-1, which follows the signature page at the end of this report..





Item 9.  Changes in and Disagreements with Accountants on Accounting and Financial Disclosure





There were no changes in, or disagreements with, accountants on accounting or financial disclosure as defined by Item 304 of Regulation S-K.





Item 9A.   Controls and Procedures





As required by Rule 13a-15 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), the Company carried out an evaluation of the effectiveness of the design and operation of the Company’s disclosure controls and procedures as of the end of the period covered by this report. This evaluation was carried out under the supervision and with the participation of the Company’s management, including the Company’s principal executive officer and the Company’s principal financial officer.





Based upon that evaluation, the principal executive officer and the principal financial officer concluded that the Company’s disclosure controls and procedures were not effective at March 31, 2010 to ensure that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms, but are being changed to allow timely filing in the future.





Management’s Annual Report on Internal Control Over Financial Reporting





The management of American First Financial, Inc. is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a - 15(f). Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on our evaluation under the framework in Internal Control - Integrated Framework, our management concluded that our internal control over financial reporting was not effective as of March 31, 2011.





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





Management’s Annual Report on Changes in Internal Controls





The Company is trying to enhance its internal controls over financial reporting, primarily by evaluating and enhancing process and control documentation.  Due to personnel limitations, the Company has hired a number of consultants to help prepare the required filings.  Management discusses with and discloses all matters with the consultants and the Company’s auditors.


12
  PART III





Item 10.   Directors, Executive Officers and Corporate Governance.





The board of directors elects our executive officers annually. A majority vote of the directors who are in office is required to fill vacancies. Each director shall be elected for the term of one year, and until his successor is elected and qualified, or until his earlier resignation or removal. Our directors and executive officer is as follows:





Name

Age

PositionJohn R. Stirling


71

President, Secretary and Director





John R. Stirling has been President, Secretary and Director since March 2001. He is currently the sole officer and director of the corporation. There are no legal issues involved in having only one officer and director.





The two other previous Directors, Toni Behr and William Blackshear did not wish to be re-elected due to personal and business obligations and a desire to allow some individuals to serve who might have a more direct relationship to AFF’s core business.





Family Relationships





There are no family relationships among our officers and directors.





Legal Proceedings










·
Any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time;·
Any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses);·
Being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities; and·
Being found by a court of competent jurisdiction (in a civil action), the Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated


.





Director Compensation





Name

Year

ended

March

31,

2011

Fees

earned

or paid

in cash

($)

Stock

awards

($)

Option

awards

($)

Non-equity

incentive plan

compensation

($)

Nonqualified

deferred

compensation

earnings

($)

All other

compensation

($)

Total

($)J. R. Stirling,


0

0


0

0


0

0


0

0





The Company has not:





·
established its own definition for determining whether its directors and nominees for directors are “independent” nor has it adopted any other standard of independence employed by any national securities exchange or inter-dealer quotation system, though our current director would not be deemed to be “independent” under any applicable definition given that he is an officer of the Company; nor·
established any committees of the board of directors.





Given the nature of the Company’s business, its limited stockholder base and the current composition of management, the board of directors does not believe that the Company requires any corporate governance committees at this time.


13
  Committees





We have no standing or nominating committees of the Board of Directors or committees performing similar functions. Except that as of the date hereof, the entire board serves as the Company’s audit committee.





Item 11.   Executive Compensation.





As sole director, sole officer and beneficial owner of over 48 percent of the outstanding stock, Mr. Stirling has absolute discretion to award himself compensation as there are not any written compensation polices.





Summary Compensation Table





The table below summarizes all compensation awarded to, earned by, or paid to our Principal Executive Officer.





Name
Title
Year

Commission

Bonus
Stock

awards
Option *

awards
Non

equity

Incentive

plan

compen-

sation
Non

qualified

deferred

compensation
All

other

Compensation

TotalJ. R. Stirling
President
2011

$
0

0


0
0
*21,200

$
21,2002010

$
9,801

0


0
0
*21,200

$
30,001





*Includes$20,000 annual compensation applied to subscription receivable and $1,200 in rents





Summary Equity Awards Table





The following table sets forth certain information for our executive officers concerning unexercised options, stock that has not vested, and equity incentive plan awards as of March 31, 2011.





Name

Number of

Securities

Underlying

Unexercised

Options

(#)

Exercisable

Number of

Securities

Underlying

Unexercised

Options

(#)

Unexercisable
Equity

Incentive

Plan

Awards:

Number of

Securities

Underlying

Unexercised

Unearned

Options (#)

Option

Exercise

Price

Option

Expiration

Date

Number

of Shares

or Units

of Stock

That

Have

Not

Vested

(#)

Market

Value of

Shares or

Units of

Stock

That

Have

Not

Vested

Equity

Incentive

Plan

Awards:

Number

Of

Unearned

Shares,

Units or

Other

Rights

That

Have Not

Vested

(#)

Equity

Incentive

Plan

Awards:

Market

or Payout

Value of

Unearned

Shares,

Units or

Other

Rights

That

Have Not

VestedJ. R. Stirling


0

0
0

$
0

None


0

$0


0

$0





Narrative disclosure to summary compensation and option tables





Mr. Stirling’s management agreement has been cancelled because the written agreement was not financially feasible for the corporation and we now have a verbal employment understanding with him, the principal provisions of which are as follows:





·
Term: Month to month. Currently, everything is at the sole discretion of Mr. Stirling. Once two new directors are appointed, a mutually agreed upon written employment agreement will be drawn.·
Compensation: Commissions at the discretion of the Company related to sales. Commissions are paid on a case by case basis to be determined solely by Mr. Stirling·
Termination: Sole discretion of Mr. Stirling





At no time during the last fiscal year with respect to any person listed in the Table above was there:





·
Anoutstanding option or other equity-based award re-priced or otherwise materially modified (such as by extension of exercise periods, the change of vesting or forfeiture conditions, the change or elimination of applicable performance criteria, or the change of the bases upon which returns are determined;·
Any waiver or modification of any specified performance target, goal or condition to payout with respect to any amount included in non-stock incentive plan compensation or payouts;·
Any option or equity grant;·
Any non-equity incentive plan award made to a named executive officer; or·
Any nonqualified deferred compensation plans including nonqualified defined contribution plans.





14





Item 12.     Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters





The following sets forth the number of shares of our $0.05par value common stock beneficially owned by (i) each person who, as of March 31, 2011, was known by us to own beneficially more than five percent (5%) of its common stock; (ii) our individual Director and (iii) our Officer and Director as a group. A total of 24,982,205common shares were issued and outstanding as of March 31, 2011.





Name and AddressBeneficialOwner

No. of

Shares

Owned


Percentage

of OwnershipMr. J. R. Stirling


16,600,981



50.4%William Blacksheer


2,000,000



8.0%All Officers andDirectors as a Group






58.4%(one person)





Item 13.    Certain Relationships, Related Transactions and Director Independence





Compliance with Section 16(a) of the Exchange Act





Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our officers and directors, and persons who own more than ten percent of a registered class of our equity securities, to file reports of ownership and changes in ownership with the Securities and Exchange Commission (the “Commission”).  Officers, directors and greater than ten percent stockholders are required by the Commission's regulations to furnish us with copies of all Section 16(a) forms they file. During fiscal 2010, our registration statement was not effective and none of our officers, directors or 10% or greater stockholders filed any forms to the best of our knowledge.





Board Members Who Are Deemed Independent





None





Item 14.    Principal Accountant Fees and Services





The financial statements of American First Financial, Inc. as of, and for the years ended, March 31, 2011 and 2010, appearing in this Form 10-K, were audited by Randall N Drake, CPA P.A. an independent registered public accounting firm, as stated in their report thereon, and are included in reliance upon such reports given on the authority of such firm as experts in accounting and auditing.





15





Audit Fees





The aggregate fees billed for professional services rendered by Randall N Drake, CPA P.A. for the 2010 audit of our annual financial statements and the reviews of the financial statements included in our quarterly reports on Form 10-Q for fiscal years 2011 and 2010 were $6,000 and $6,000, respectively.





Audit-Related Fees





There were no other fees billed by Randall N Drake, CPA P.A. during the last two fiscal years for assurance and related services that were reasonably related to the performance of the audit or review of the Company’s financial statements and not reported under “Audit Fees” above.





Tax Fees





There were no tax related fees billed by Randall N Drake, CPA P.A. during 2011 or 2010.





All Other Fees





There were no other fees billed by Randall N Drake, CPA P.A. during the last two fiscal years for products and services provided by Randall N Drake, CPA P.A.





Item 15.   Exhibits





The documents set forth below, numbered in accordance with Item 601 of Regulation S-K, are filed herewith or


incorporated herein by reference to the location indicated below.


Exhibit No.

Description

Location3.01

Articles of Incorporation

Filed with Form 10-12G, dated 8-11-20063.02

Bylaws

Filed with Form 10-12G, dated 8-11-20064.01

Form of common stock certificate

Filed with Form 10-12G, dated 8-11-20065.01

Attorney opinion letter

Filed with Form 10-12G, dated 8-11-200610.01

Employment Agreement – Mr. Stirling

Filed with Form 10-12G, dated 8-11-200610.02

Agreement with Global Lending Group

Filed with Form 10-12G, dated 8-11-200610.03

Note – Mrs Behr

Filed with Form 10-12G, dated 8-11-200631(a)

Rule 13a-14(a) Certification – Chief Executive and Chief Financial Officer *32(b)

Section 1350 Certification – Chief Executive and Chief Financial Officer *




101.DEF

XBRL Taxonomy Extension Definition Linkbase Document*101.INS

XBRL Instance Document*101SCH

XBRL Taxonomy Extension Schema Document*101.CAL

XBRL Taxonomy Extension Calculation Linkbase Document*101.LAB

XBRL Taxonomy Extension Label Linkbase Document*101.PRE

XBRL Taxonomy Extension Presentation Linkbase Document*101.DEF

XBRL Taxonomy Extension Definition Linkbase Document*




16





SIGNATURES





In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.





AMERICAN FIRST FINANCIAL, INC.Dated:   August 15, 2011By:
/s/  J. R. StirlingJ. R. Stirling,Chief Executive and Chief Financial Officer





17
  Financial Statements For The Years Ended March 31, 2011 and 2010








Randall N. Drake, C.P.A., P.A.


1981 Promenade Way


Clearwater, FL 33760


727.536.4863


Randall@RDrakeCPA.com








Report of Independent Registered Public Accounting Firm








Board of Directors


American First Financial, Inc.


Clearwater, Florida





We have audited the accompanying balance sheet of American First Financial, Inc. as of March 31, 2011 and 2010 and the related statements of operations, stockholders’ equity, and cash flows for the years ended March 31, 2011 and 2010. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.





We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required at this time, to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal controls over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provided a reasonable basis for our opinion.





In our opinion, based on our audit, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of March 31, 2011 and 2010 and the results of its operations and its cash flows for the years ended March 31, 2011 and 2010 in conformity with accounting principles generally accepted in the United States of America.





The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company incurred recurring net losses, resulting in negative cash flows and negative working capital. There are limited financial assets in which to satisfy any future cash requirements. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.








/s/ Randall N. Drake





Randall N. Drake, CPA, PA


Certified Public Accountants


Clearwater, Florida


August 11, 2011


F-1


American First Financial, Inc.Balance SheetMarch 31


March 31,2011


2010AssetsCurrent assetsCash

$
994


$
1,343Total current assets


994



1,343Property & equipment, net of accumulateddepreciation of  $9,839 and $8,171, respectively


1,834



3,502Loans to shareholders


-



-Investment in property


-



-Intangibles


10,000



10,000Total Assets

$
12,828


$
14,845Liabilities and Stockholders' EquityCurrent liabilitiesAccounts payable and accrued expenses

$
7,240


$
9,200Shareholder loans


70,961



55,028Notes payable, current


-



-Demand notes payable


-



-Total current liabilities


78,201



64,228Notes payable


-



-Total liabilities


78,201



64,228Stockholders' EquityRedeemable Convertible Preferred Stock:  $5 par5,000,000 shares authorized (Series A & B)0 and 0 Series B shares issued andoutstanding, respectively


-



-Common Stock, $.05 par value,  50,000,000 shares24,982,205 and 22,882,205 sharesissued and outstanding, respectively


1,249,110



1,144,110Additional paid-in capital


(908)



93,592Subscription receivable


(20,000)



(40,000)Accumulated Deficit


(1,293,575)



(1,247,085)Total stockholders' equity


(65,373)



(49,383)Total Liabilities and Stockholders' Equity

$
12,828


$
14,845





The notes are an integral part of these financial statements.


F-2


American First Financial, Inc.Statement of Operations(Unaudited)For the Year EndedMarch,312011



2010Origination Fees - Global

$
2,076


$
18,142Consulting fees


1,090



-Total revenue


3,166



18,142Commissions and closing costs


-



9,801Gross Margin


3,166



8,341Operating expenses:Selling


150



-General and administrative


29,513



29,935Professional expenses


3,950



3,428Compensation


3,875



-Depreciation


1,668



1,668Interest expenses


-



210Loss on sale of property


-



27,963Total operating expenses


49,656



63,204Net income  (loss)

$
(46,490)


$
(54,863)Earnings (loss) per share,primary and dilutive

$
(0.00)


$
(0.00)Weighted average shares outstandingprimary and dilutive


24,815,356



22,155,975





The notes are an integral part of these financial statements.


F-3


American First Financial, Inc.Statement of Stockholders' EquityAdditional








StockPaid in


Subscription


Accumulated


Holders'shares


$.05 par


Capital


Receivable


Deficit


EquityBalance March 31, 2009 as restated


21,082,205


$
1,054,110


$
161,092


$
(60,000
)

$
(1,192,222
)

$
(37,020
)Sale of stock


1,800,000



90,000



(67,500
)










22,500Officer comp - forgiveness of debt














20,000







20,000Net loss


















(54,863
)


(54,863
)Balance March 31, 2010


22,882,205


$
1,144,110


$
93,592


$
(40,000
)

$
(1,247,085
)

$
(49,383
)Stock issued for services


2,100,000



105,000



(94,500
)










10,500Officer comp - forgiveness of debt














20,000







20,000Net loss


















(46,490
)


(46,490
)Balance March 31, 2011


24,982,205


$
1,249,110


$
(908
)

$
(20,000
)

$
(1,293,575
)

$
(65,373
)


The notes are an integral part of these financial statements.





F-4





American First Financial, Inc.Statement of Cash FlowsFor the Year EndedMarch 31,2011


2010Cash Flows from Operating Activities:Net (loss) income

$
(46,490
)

$
(54,863
)Adjustment to reconcile Net Income to netcash provided by operations:Depreciation


1,668



1,668Loss on sale of property


-



27,963Compensation, forgiveness of shareholder loan


20,000



20,000Stock-based and non-cash compensation


10,500



-Changes in assets and liabilities:Accounts payable and accrued expenses


(1,960
)


1,000Net Cash (Used) Provided by Operating Activities


(16,282
)


(4,232
)Cash Flows from Investing Activities:Proceeds from sale of property


-



32,037Net Cash (Used) by Investing Activities


-



32,037Cash Flows from Financing Activities:Proceeds from issuance of common stock


-



22,500Net (loans to) repayment of stockholder loans


15,933



(49,999
)Net Cash (Used) Provided by Financing Activities


15,933



(27,499
)Net decrease in Cash


(349
)


306Cash at beginning of period


1,343



1,037Cash at end of period

$
994


$
(1,343
)Supplemental cash flow information:Interest paid

$
-


$
210Taxes paid

$
-


$
-Non-cash transactions:For the years ended March 31, 2011 and 2010, $20,000 of compensation was non-cashpayment reductions of shareholder loans.





The notes are an integral part of these financial statements.


F-5


American First Financial, Inc.


Notes to the Financial Statements


March 31, 2011 and 2010








Note 1   Organization, Business Operations and Summary of Significant Accounting Policies Organization and Business Operations





American First Financial, Inc. (“AFF”) is a Florida corporation formed in March, 2001. AFF is a specialty mortgage origination firm that deals in wholesale lending. Wholesale lending is the taking of retail mortgage loan originations from mortgage brokers and getting them closed and funded for them, as opposed to dealing directly with the retail customer.  AFF’S operations were primarily the acceptance of loan submissions from independent retail mortgage brokers and then presenting those loans to approved wholesale lenders.  AFF only acts as a broker agent.  As a broker agent, AFF does not assume any risk on its loans and receives a small fee based on the loan volume for each loan it places.  The lenders that accept the loans have no recourse against AFF.





Subsequent to December 31, 2010, the Company chose to stop brokering loans for un-affiliated agencies.  This service will be reserved for agencies interested in joining AFF through acquisition or investment.  The Company is offering consulting services to un-affiliated mortgage brokers to help those agencies package and place loans.  Some exceptions to the brokering policy may occur.





We have operated in several states but primarily present loans from the Florida market.  We have one office in Largo Florida.





Summary of Significant Accounting Policies





Basis of Presentation





The Company prepares its financial statements in conformity with generally accepted accounting principles in the United States of America. In the opinion of management, all adjustments consisting of normal recurring adjustments necessary for a fair statement of the financial position at March 31, 2011 and 2010, the result of operations and cash flows for the years then ended have been made.





Use of Estimates





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





Financial Instruments





The Company’s balance sheets include the following financial instruments: cash, loans from shareholders, accounts payable, accrued expenses and note payable to stockholder. The carrying amounts of current assets and current liabilities approximate their fair value due to the relatively short period of time between the origination of these instruments and their expected realization. The carrying values of the note payable to stockholder approximates fair value based on borrowing rates currently available to the Company for instruments with similar terms and remaining maturities.





Fair Value Measurement





All financial and nonfinancial assets and liabilities were recognized or disclosed at fair value in the financial statements.  This value was evaluated on a recurring basis (at least annually).  Generally accepted accounting principles in the United States define fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on a measurement date. The accounting principles also established a fair value hierarchy which required an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.  Three levels of inputs were used to measure fair value.


Level 1: Quotes market prices in active markets for identical assets or liabilities.




Level 2: Observable market based inputs or unobservable inputs that were corroborated by market data.




Level 3: Unobservable inputs that were not corroborated by market data.


F-6


American First Financial, Inc.


Notes to the Financial Statements


March 31, 2011 and 2010





Cash and Cash Equivalents





The majority of cash is maintained with a major financial institution in the United States. Deposits with this bank may exceed the amount of insurance provided on such deposits. Generally, these deposits may be redeemed on demand and, therefore, bear minimal risk. The Company considers all highly liquid investments purchased with an original maturity of six months or less to be cash equivalents.





Revenue Recognition





AFF receives origination fees for the origination of loans and recognizes these when the earnings process has been completed and documented through filings with local governmental agencies, generally at closing. Some loan fees are received in the form of a discount or premium on loans sold; these are recognized as origination income when received.





AFF also receives consulting fees from independent mortgage brokers for helping to package and present non-conforming and sub-prime loans to willing lenders.  Our fees are negotiated in advance with the independent brokers and are recorded when the broker successfully submits a packaged loan to a lender.





Mortgages, Loan Loss Reserves and Capitalization





AFF does not hold mortgages for investment and thereby does not calculate loan loss reserves and is not subject to any minimum capital requirements by the State or any regulatory agency. AFF utilizes the licenses of Global Lending Group, a related party, for closing and funding any loans that need funding until their sale. These loans are the property of Global Lending Group at closing and as such, are not reflected on the financial statements of AFF.





Real Estate Owned





The Company currently owns no real estate.





At March 31, 2009 the Company held an investment property that was sold in July 2009.  The property was always marketed for sale, as our intentions were not long-term in nature.  Due to market conditions, we were forced to hold for a longer period; however the property was always actively listed with a local real estate agency. We no longer hold any property for investment and do not have any recourse to any mortgage loans, nor do we intend to have any recourse of future loans.





Periodically and at the time of the March 31, 2009 audited financial statements, we had a current appraisal of the holding value, based on the local real estate market.   The property was originally valued at our acquired cost, which was below the current market value; however, we did not receive any offers through 2007, whereby we did impair the property value by approximately 10%.   At the time we believed that the valuation was accurate and relied upon the local real estate valuations given by local real estate agents.  The subsequent sale was less than the carrying value, however, we believe that we accepted a below market offer for the purpose of cash flow and were not confident that the market would not deteriorate further, so the cash offer was accepted.





Mortgage Servicing





The company currently does no mortgage or loan servicing and does not intend to in the near future.





Property and equipment





Property and Equipment is stated at cost. Depreciation is computed by the straight-line method over estimated useful lives.  The carrying amount of all long-lived assets is evaluated periodically to determine if adjustment to the depreciation and amortization period or the unamortized balance is warranted. Based upon its most recent analysis, the Company believes that no impairment of property and equipment exists at March 31, 2011 and 2010.





Investment in Property and Other Long-Lived Assets





Long-lived assets such as property, equipment and identifiable intangibles are reviewed for impairment whenever facts and circumstances indicate that the carrying value may not be recoverable. When required impairment losses on assets to be held and used are recognized based on the fair value of the asset. The fair value is determined based on estimates of future cash flows, market value of similar assets, if available, or independent appraisals, if required. If the carrying amount of the long-lived asset is not recoverable from its undiscounted cash flows, an impairment loss is recognized for the difference between the carrying amount and fair value of the asset. When fair values are not available, the Company estimates fair value using the expected future cash flows discounted at a rate commensurate with the risk associated with the recovery of the assets. The Company did not recognize any impairment losses for any periods presented.


F-7
  American First Financial, Inc.


Notes to the Financial Statements


March 31, 2011 and 2010








Stock Options





The Company recognizes all share-based payments to employees, including grants of employee stock options to be recognized as compensation expense in the financial statements based on their fair values. That expense is recognized over the period during which an employee is required to provide services in exchange for the award, known as the requisite service period (usually the vesting period).





Advertising





The costs of advertising are expensed as incurred. Advertising expenses were $150 and $0 for the years ended March 31, 2011 and 2010, respectively. Advertising expenses are included in the Company’s selling operating expenses.





Income Taxes





The Company accounts for income taxes using the liability method. As such, deferred tax assets and liabilities are recorded based on the differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purpose, referred to as temporary differences. Deferred tax assets and liabilities at the end of each period are determined using the currently enacted tax rates applied to taxable income in the periods in which the deferred tax assets and liabilities are expected to be settled or realized.





Earnings (Loss) Per Share





Basic earnings (loss) per share calculations are determined by dividing net income (loss) by the weighted average number of shares outstanding during the year. Diluted earnings (loss) per share calculations are determined by dividing net income (loss) by the weighted average number of shares. As of March 31, 2011 and 2010, there were 2,300,000 options outstanding that were considered anti-dilutive.





Recently Issued Accounting Pronouncements





We have reviewed the FASB issued Accounting Standards Update (“ASU”) accounting pronouncements and interpretations thereof that have effectiveness dates during the periods reported and in future periods. The Company has carefully considered the new pronouncements that alter previous generally accepted accounting principles and does not believe that any new or modified principles will have a material impact on the corporation’s reported financial position or operations in the near term.  The applicability of any standard is subject to the formal review of our financial management and certain standards are under consideration.





Note 2     Going Concern





The accompanying audited financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which assumes the realization of assets and satisfaction of liabilities in the normal course of business, for the Company to continue as a going concern.





As shown in the accompanying financial statements, AFF  incurred operating loss for the years ended March 31, 2011 and 2010. Although the Company does not have a history of losses and maintains a positive net worth, there remains an accumulated deficit and a working capital deficit at March 31, 2010.  AFF  has limited financial resources with which to satisfy any future cash requirements and until such time as AFF  is able to raise additional capital or generate positive cash flow from operations, these conditions raise substantial doubt about the Company’s ability to continue as a going concern. AFF ’s ability to achieve and maintain profitability and positive cash flow is dependent upon AFF 's ability to generate mortgages and thereby origination fees at a rate sufficient to meet obligations and costs. Management plans to fund its future operations by obtaining additional financing and continuing to grow the mortgage origination base. However, there is no assurance that AFF  will be able to grow the business or to obtain additional financing from investors or private lenders and, if available, such financing may not be on commercial terms acceptable to AFF  or its shareholders. The key factors that are not within the Company's control and that may have a direct bearing on operating results include, but are not limited to, acceptance of the Company's business plan, the ability to raise capital in the future, the ability to expand its customer base, and the ability to hire key employees to provide services. There may be other risks and circumstances that management may be unable to predict.


F-8
  American First Financial, Inc.


Notes to the Financial Statements


March 31, 2011 and 2010





The financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the possible inability of the Company to continue as a going concern.





Note 3    Property and Equipment





Property and equipment, as of March 31, consist of:





2010


2010Equipment

$
11,673


$
11,673Less accumulated depreciation


9,839



8,171$
1,834


$
3,502





Depreciation of property and equipment was $1,668 and $1,668 for the years ended March 31, 2011 and 2010, respectively.





Note 4    Real Estate Owned





In 2005, the Company acquired a single family residence located in South Carolina upon a borrower’s default on a note AFF had sold to an affiliate with recourse.  AFF took back the note and the property when the borrower defaulted.  The property was recorded at the property’s net realizable fair value, which considered the property market value less expected costs to sell, at the time it was acquired.  The asset had a carrying value of $60,000 and was sold in July 2010 for net proceeds, after commission and closing costs, of $32,037 resulting in recognizing a loss of $27,963.  The net proceeds were received in cash.


The Company does not have any further exposure to loans with recourse, as it has discontinued the practice, due to the economic uncertainty and the inability to finance such defaults.





Note 5   Options





Option awards under the employee incentive stock option plan (“EISOP”) provide that the strike price shall not be less than the fair market value of the common stock on the date of grant and that no portion of any option award may be exercised beyond ten years from that date. Options granted under the EISOP, in prior years, were issued for past performance and therefore vest immediately at the date the options were granted.





A summary of the activity of the Company’s options for the years ended March 31, 2011 and 2010 is as follows:





Weighted Average

RemainingOptions


Options


Intrinsic


Exercise

ContractualOutstanding


Vested


Value


Price

TermOptions, March 31, 2009


2,300,000



2,300,000


$



$Granted


––



––Exercised


––



––Forfeited


––



––Options, March 31, 2010


2,300,000



2,300,000Granted


––



––Exercised


––



––Forfeited


––



––Options, March 31, 2011


2,300,000



2,300,000



0.00



.05

5.25 years


F-9
  American First Financial, Inc.


Notes to the Financial Statements


March 31, 2011 and 2010








The following table summarizes information regarding options outstanding at March 31, 2011:





Weighted Average:Dividend yield


0.0%Risk-free interest rate


1.39%Expected life in years


3.0Expected price volatility


10.0%





All options were fully vested as of March 31, 2011 and 2010.   No additional expense has been recorded regarding these options and no additional options have been issued. There were no options exercised during the years ended March 31, 2011 and 2010.





Note 6   Income Taxes





The Company has not recognized any deferred tax assets in association with capital losses incurred from marketable equity securities transactions, due to tax limitations and uncertainties concerning its ability to generate taxable income in future periods. The tax benefit for the periods presented is offset by a valuation allowance (100%) established against deferred tax assets arising from the securities capital losses and other temporary differences, the realization of which could not be considered more likely than not. In future periods, tax benefits and related deferred tax assets will be recognized when management considers realization of such amounts to be more likely than not.





The income tax benefits and deferred tax assets as of March 31, 2011 and 2010 are as follows:





2011


2010Income tax provision (benefit) at statutory rate

$
(5,400)


$
(11,900)State income tax expense (benefit), net of federal benefit


(500)



(1,200)Subtotal


(5,900)



(13,100)Change in allowance


5,900



13,100Deferred Tax Asset

$
––


$
––Net deferred tax assets and liabilities were comprised of the following:Net Operating Losses

$
(175,500)


$
(169,500)Stock-based Compensation


(45,000)



(41,100)Non-cash officer compensation


(16,400)



(8,900)(236,900)



(219,500)Less reserve for allowance


236,900



219,500Deferred Tax Asset

$
––


$
––





As of March 31, 2011, Management has determined that the Company has net long-term capital losses of approximately $405,000 and unused net operating loss carryforwards of approximately $230,000 which begins to expire in 2028.  Differences in financial statement accumulated deficit and taxable losses resulting in net operating losses are due to permanent non-deductible stock transactions.





Note 7    Equity





The company has two classifications of stock:





Preferred Stock





Preferred Stock includes 5,000,000 shares authorized at a par value of $0.05.  Preferred Stock has been issued as Series A and Series B Preferred Stock. Preferred Stock has liquidation and dividend rights over Common Stock, which is not in excess of its par value. The Series B Preferred Stock was issued with conversion rights without a mandatory redemption feature. Each share of Series B Preferred Stock is convertible into 100 shares of common.  There was no beneficial conversion features to the Series B Preferred Stock and therefore, no valuation adjustment was considered to be required. Each share of Preferred Stock is entitled to 100 common share equivalent votes. There were 8,000 shares of preferred series B issued to four individuals in 2003.


F-10





American First Financial, Inc.


Notes to the Financial Statements


March 31, 2011 and 2010








During the year ended March 31, 2008 two shareholders elected to convert 4,000 shares of the outstanding Series B Preferred Stock to common shares. During the year ended March 31, 2010  one shareholder elected to cancel 2,000 outstanding Preferred Shares.  These were retired and treated as additional contribution to capital.  The remaining preferred stock shareholder elected to convert 2,000 shares to common stock. There are currently no outstanding shares of preferred stock.





Common Stock





Common Stock includes 50,000,000 shares authorized at a par value of $0.05. The holders of Common Stock and the equivalent Preferred Stock, voting together, shall appoint the members of the Board of the Directors. Each share of Common Stock is entitled to one vote.





During the fiscal year ended March 31, 2010, we sold a total of 1,550,000 shares of common stock for $20,000 cash to five individuals, most of whom were former directors or officers.  We also issued 3,827,500 shares for services, 5,000,000 shares in exchange for a subscription receivable from our major shareholder and 500,000 for licensing rights with Global Lending Group.  All the shares issued were common stock. In addition, one shareholder elected to cancel 2,000 shares of preferred stock and another elected to convert 2,000 shares of preferred stock to 200,000 shares of common stock at par value.





During the fiscal ended March 31, 2010, we sold 1,800,000 shares for $22,500.  The per share prices were determined by negotiations between Mr. Stirling and the other party depending on the reason for the sale, the number of shares being purchased and the need for the funds.





In 2006 the Company issued option awards under the employee incentive stock option plan (“EISOP”) to Officers and Directors.   Options granted under the EISOP, in prior years, were issued for past performance and therefore vest immediately at the date the options were granted.  A total 2,300,000 options were issued with a strike price of $.05 expiring in ten years from issue date (expires June 2016).





Note 8    Earnings per Share





Due to the net operating loss, all options and conversions are considered anti-dilutive and therefore only basic calculation is provided. Basic weighted average per share excludes items that would have been included in the fully-diluted weighted average shares. Shares that would be included would be, if exercised, options held by Officers and Directors (2,300,000 common share equivalents).





Note 9    Related Party Transactions





The Company had Shareholder loans from Mr. Stirling, President, in the amount of $70,961 and $55,028 as of March 31, 2011 and 2010, respectively. These loans are short-term in nature and are net of a loan payable to him listed below. These loans are not supported by any executed loan documents and any interest charges were considered to be immaterial and were not recorded.





During the year ended March 31, 2010 a note payable to Mr Stirling in the amount of $50,000 was off-set against the amounts loaned to Mr. Stirling. This cancellation of receivables and debt was a non-cash transaction. The remaining change in shareholder loans was due to amounts that were advanced by Mr. Stirling to fund operations or expenses paid on behalf of the Company by Mr. Stirling.





In 2008 Mr. Stirling was offered shares of common stock under a subscription receivable in the amount of $100,000. This loan is listed as a contra-equity account and is being amortized into income over five years. Interest charges on this loan were considered to be immaterial and were not recorded. . Officer compensation in the amount of $20,000 was recorded for the years ended March 31, 2011 and 2010.  The stock was issued during the fiscal year ended March 31, 2010.  The balance of the subscription receivable at March 31, 2011 and 2010 was $20,000 and $40,000 respectively.





During the year ended March 31, 2010, Mr. Stirling received 1,000,000 shares for services in the amount of $7,500.





Commissions in the amount of $9,801 and $17,550 for the years ended March 31, 2011 and 2010, respectively, paid were paid to Mr. Stirling as the main mortgage broker.





Rent expense paid to Mr. Stirling for the years ended March 31, 2011 and 2010 were $1,200 and $1,200, respectively.





The total amounts paid to Mr. Stirling for the years ended March 31, 2011 and 2010 were $31,001 and $46,250, or 42% and 33% of the total expenses, respectively.





F-11





American First Financial, Inc.


Notes to the Financial Statements


March 31, 2011 and 2010





Global Lending Group Inc was considered a related party through minor stock ownership and a heavy concentration of revenue. AFF utilizes the licenses of Global Lending Group for loan origination and funding through a “Net Branch Agreement” dated from 2002. At funding the loans become the property of Global Lending Group.  At the time of granting of the stock Global had approximately 4% ownership. Currently, their ownership approximates 2%.  All of the revenue recorded during the periods shown were received from Global Lending Group, Inc.





Note 10     Commitments and Contingencies





The Company has limited needs for office space and subleases office space on a month to month arrangement from the president. The Company has not entered into any lease arrangement plan.  In lieu of rent, the Company agreed to pay $100 per month to reimburse for expenses.  Rent expense was $1,200 and $1,200 for the years ended March 31, 2011 and 2010, respectively.





From time to time the Company may be a party to litigation matters involving claims against the Company. Currently the Company has been named as a defendant in a lawsuit for unsolicited advertisement. Management does not believe the merits of the claim of $500 with possible treble damages assessment up to $1,500. Due to the uncertainty of outcome, the Company has not accrued any potential liability. The Company does not believe this matter or any other unasserted claims that may exist would have a materially adverse effect on the Company’s financial position or results of operations.


F-12