UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(MARK ONE)

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

For the quarterly period ended March 31, 2012

OR

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

For the transition period from __________________ to __________________

Commission File No. 333-161052

FUEL DOCTOR HOLDINGS, INC.

(Exact name of registrant as specified in its charter)

Delaware	26-2274999
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)

23961 Craftsman Road Suite, LM

Calabasas, California  91302

(Address of principal executive offices, zip code)

(818)-224-5678

(Registrant’s telephone number, including area code)

SILVERHILL MANAGEMENT SERVICES, INC.

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the issuer (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   X  . No      .

Indicate by check mark whether the registrant has submitted electronically and posted on its 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   X  . No      .

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

Large accelerated filer	.	Accelerated filer	.
Non-accelerated filer	. (Do not check if a smaller reporting company)	Smaller reporting company	X .

Indicate by check mark whether the registrant is a shell company (as defined in Exchange Act Rule 12b-2 of the Exchange Act):   

Yes      . No   X  .

As of June 13, 2012, there were 14,352,363 shares of common stock, $0.001 par value per share, outstanding.

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FUEL DOCTOR HOLDINGS, INC.

QUARTERLY REPORT ON FORM 10-Q

FOR THE PERIOD ENDED MARCH 31, 2012

INDEX

 

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q of Fuel Doctor Holdings, Inc., a Delaware corporation (the “Company”), contains “forward-looking statements.”  In some cases, you can identify forward-looking statements by terminology such as “may”, “will”, “should”, “could”, “expects”, “plans”, “intends”, “anticipates”, “believes”, “estimates”, “predicts”, “potential” or “continue” or the negative of such terms and other comparable terminology.  These forward-looking statements include, without limitation, statements about our market opportunity, our strategies, competition, expected activities and expenditures as we pursue our business plan, and the adequacy of our available cash resources.  Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements.  Actual results may differ materially from the predictions discussed in these forward-looking statements.  The economic environment within which we operate could materially affect our actual results. Additional factors that could materially affect these forward-looking statements and/or predictions include, among other things: the Company’s need for and ability to obtain additional financing and the demand for the Company’s products, and other factors over which we have little or no control; and other factors discussed in the Company’s filings with the Securities and Exchange Commission (“SEC”).

We caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made.  We disclaim any obligation subsequently to revise any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events, except as required by law.

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PART I. FINANCIAL INFORMATION

ITEM 1:   FINANCIAL STATEMENTS.

FUEL DOCTOR HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF MARCH 31, 2012 (UNAUDITED) AND DECEMBER 31, 2011
				March 31, 2012			December 31, 2011
ASSETS
CURRENT ASSETS:
	Cash			$	1,038		$	495
	Accounts receivable, net of allowance				21,803			36,980
	Inventories				784,382			793,719
	Advance on inventory purchases				590,000			557,996
	Prepayments and other current assets				95,667			147,582
		Total Current Assets			1,492,890			1,536,772
OFFICE AND TRADESHOW EQUIPMENT:
	Office and tradeshow equipment				41,628			41,628
	Accumulated depreciation				(11,993)			(9,821)
		Office and tradeshow equipment, net			29,635			31,807
SECURITY DEPOSIT					5,434			5,434
			Total Assets	$	1,527,959		$	1,574,013
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
	Accounts payable			$	344,084		$	474,413
	Bank overdraft				-			29,962
	Accrued expenses and other current liabilities				107,845			60,907
	Credit cards payable				55,530			74,040
	Advance from related party				1,856			1,856
	Customer deposits				-			42,613
	Notes payable				-			26,000
	Notes payable - related parties				883,520			442,000
	Notes payable convertible into common shares				-			202,000
	Due to factor				14,678			30,750
		Total Current Liabilities			1,407,513			1,384,541
			Total Liabilities		1,407,513			1,384,541
COMMITMENTS AND CONTINGENCIES
FUEL DOCTOR HOLDINGS, INC. STOCKHOLDERS' EQUITY (DEFICIT):
	Preferred stock at $0.0001 par value: 43,000,000 shares authorized;      none issued or outstanding				-			-
	Common stock at $0.0001 par value: 215,000,000 shares authorized;      13,252,323 and 12,950,332 shares issued and outstanding, respectively				1,326			1,296
	Additional Paid in Capital				1,487,479			1,258,559
	Accumulated Deficit				(1,368,359)			(1,070,383)
		Total Shareholders' Equity (Deficit)			120,446			189,472
NONCONTROLLING INTEREST IN SUBSIDIARY					-			-
			Total Liabilities and Equity (Deficit)	$	1,527,959		$	1,574,013

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FUEL DOCTOR HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
FOR THE QUARTERS ENDED MARCH 31, 2012 AND MARCH 31, 2011
			March 31, 2012			March 31, 2011
NET REVENUES			$	221,415		$	344,007
COST OF GOODS SOLD
	Cost of goods sold			154,765			210,614
GROSS PROFIT				66,650			133,393
OPERATING EXPENSES:
	Advertising and promotion			395			349,681
	Other operating expenses			344,699			210,168
		Total operating expenses		345,094			559,849
LOSS FROM OPERATIONS				(278,444)			(426,456)
OTHER (INCOME) EXPENSE:
	Interest expense			19,532			3,043
	Other (income) expense			-			(6)
		Other (income) expense, net		19,532			3,037
NET LOSS			$	(297,976)		$	(429,493)
Basic and diluted loss per share			$	(0.02)		$	(0.05)
Weighted average common shares outstanding				12,987,739			8,000,000

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FUEL DOCTOR HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
FOR THE QUARTERS ENDED MARCH 31, 2012 AND MARCH 31, 2011
				March 31, 2012			March 31, 2011
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss				$	(297,976)		$	(429,493)
Adjustments to reconcile net loss to net cash used in operating activities
	Depreciation expense				2,172			331
	Amortization of discount on notes payable
	Interest on notes converted into equity				-			-
	Shares issued relating to service				-			-
	Changes in operating assets and liabilities:
		Accounts receivable			15,177			(50,410)
		Inventories			147,333			156,807
		Advance on purchases			(170,000)			-
		Prepayments and other current assets			51,915			-
		Accounts payable			(103,379)			(169,914)
		Customer deposits			(42,613)			-
		Accrued expenses and other current liabilities			28,428			(6,065)
NET CASH USED IN OPERATING ACTIVITIES					(368,943)			(498,744)
CASH FLOWS FROM INVESTING ACTIVITIES:
	Purchases of office equipment				-			(1,530)
NET CASH USED IN INVESTING ACTIVITIES					-			(1,530)
CASH FLOWS FROM FINANCING ACTIVITIES:
	Proceeds from factor				(16,072)			-
	Payment on note payable				(26,000)			-
	Proceeds from notes payable - related parties				441,520			-
	Advance from related party				-			(635)
	Bank Overdraught				(29,962)			-
	Proceeds from  note payable				-			565,000
NET CASH PROVIDED BY FINANCING ACTIVITIES					369,486			564,365
NET CHANGE IN CASH					543			64,091
Cash at beginning of period					495			11,882
Cash at end of period				$	1,038		$	75,973
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
	Interest paid			$	376		$	600
	Income taxes paid			$	1,600		$	-
NON CASH FINANCING AND INVESTING ACTIVITIES:
	Conversion of notes into common shares			$	202,000		$	-

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Fuel Doctor Holdings, Inc. (Formerly Silverhill Management Services, Inc.) and Subsidiaries

March 31, 2012 and 2011

Notes to the Consolidated Financial Statements

NOTE 1 - ORGANIZATION AND OPERATIONS

Fuel Doctor Holdings, Inc. (formerly Silverhill Management Services, Inc.)

Silverhill Management Services, Inc. was incorporated on March 25, 2008 under the laws of the State of Delaware. Silverhill planned to offer business support services to proprietors, entrepreneurs, and small business owners. On September 1, 2011, Silverhill amended its Articles of Incorporation, and changed its name to Fuel Doctor Holdings, Inc. (“Fuel Doctor” or the “Company”) to reflect the business of Fuel Doctor, LLC (“FDLLC”) and Subsidiary. The Company discontinued the development of its business support services upon the acquisition of FDLLC on August 24, 2011.

Fuel Doctor, LLC and subsidiary

Fuel Doctor, LLC was organized on May 5, 2009 under the laws of the State of California. FDLLC engages in the design, marketing and distribution of auto accessories.

On November 16, 2010, FDLLC formed Fuel Doctor Fuel Stations, LLC (“Fuel Stations”) under the laws of the State of California, whereby the Company owns 60% of the equity interest.  Fuel Stations plans to operate businesses associated with the sale and distribution of a gasoline food and beverage market, and associated Fuel Doctor Products.  Fuel Stations is currently inactive.

Acquisition of Fuel Doctor, LLC and subsidiary recognized as a reverse acquisition

On August 24, 2011, the Company consummated an Agreement and Plan of Reorganization (the “Plan”) by and among the Company, Fuel Doctor, LLC, a California limited liability company, Emily Lussier, the Company’s controlling shareholder, and the members of FDLLC.  Pursuant to the Plan, (i) Emily Lussier surrendered 3,485,000 shares, representing her controlling interest in the Company and resigned as an officer and director; the Company (ii) effectuated a 4.3 for 1 (1:4.3) forward stock split and issued 2,399,100 shares of its common stock to its pre-merger shareholders to give effect to the stock split; (iii) acquired 100% of the membership interests of FDLLC for 8,500,000 common shares of the Company; and (iv) converted working capital advances of $867,500 at $1.00 per share for 867,500 shares of the Company’s common stock. Total number of common shares issued represents approximately 74.7% of the Company outstanding stock immediately post acquisition; FDLLC became a wholly owned subsidiary of the Company; and the managers of FDLLC were appointed as the Officers and Directors of the Company. The merger between the Company and FDLLC has been treated as a reverse acquisition with FDLLC deemed the accounting acquirer and the Company deemed the accounting acquiree. The reverse merger is deemed a capital transaction and the net assets of FDLLC (the accounting acquirer) are carried forward to the Company (the legal acquirer and the reporting entity) at their carrying value before the combination. The acquisition process utilizes the capital structure of the Company and the assets and liabilities of FDLLC which are recorded at historical cost.   

The Company applied paragraph 505-10-S99-3 of the FASB Accounting Standards Codification (formerly Topic 4B of the Staff Accounting Bulletins (“SAB”) (“SAB Topic 4B”) issued by the U.S. Securities and Exchange Commission (the “SEC”), by reclassifying the LLC’s owner capital account inclusive of capital contributions of $3,777,794 and an accumulated deficit of ($4,581,140) as of August 23, 2011 to additional paid-in capital.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation

The accompanying unaudited interim condensed consolidated financial statements for Fuel Doctor Holdings, Inc. (referred to herein as the “Company”, “Fuel Doctor”, “we”, “us” or “our”) and our subsidiaries have been prepared in accordance with the Securities and Exchange Commission (“SEC”) rules for interim financial information and do not include all information and notes required for complete financial statements. In our opinion, all adjustments, consisting of normal recurring adjustments, considered necessary for a fair presentation have been included. Interim results are not necessarily indicative of the results that may be expected for the entire fiscal year. The accompanying financial information should be read in conjunction with the financial statements and the notes thereto in our most recent Annual Report on Form 10-K, from which the December 31, 2011 balance sheet has been derived.

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Principles of consolidation

The consolidated financial statements include all accounts of the Company as of March 31, 2012, and for the period from August 24, 2011 (date of acquisition) through March 31, 2012; all accounts of the Fuel Doctor LLC as of March 31, 2012 and December 31, 2011, all accounts of Fuel Stations as of March 31, 2012 and December 31, 2011. All inter-company balances and transactions have been eliminated.

Use of estimates and assumptions

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.

The Company’s significant estimates and assumptions include the fair value of financial instruments; allowance for doubtful accounts; inventory valuation and obsolescence including values assigned and the market value of inventories; the carrying value, recoverability and impairment, if any, of long-lived assets, including the values assigned and the estimated useful lives of office equipment; interest rates, income tax rate, income tax provision and valuation allowance of deferred tax assets; and the assumption that the Company will continue as a going concern. These significant accounting estimates or assumptions bear the risk of change due to the fact that there are uncertainties attached to these estimates or assumptions, and certain estimates or assumptions are difficult to measure or value.

Management bases its estimates on historical experience and on various assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.

Management regularly reviews its estimates utilizing currently available information, changes in facts and circumstances, historical experience and reasonable assumptions. After such reviews, and if deemed appropriate, the estimates are adjusted accordingly.  Actual results could differ from the estimates.

Fair value of financial instruments  

The Company follows paragraph 825-10-50-10 of the FASB Accounting Standards Codification for disclosures about fair value of its financial instruments and paragraph 820-10-35-37 of the FASB Accounting Standards Codification (“Paragraph 820-10-35-37”) to measure the fair value of its financial instruments. Paragraph 820-10-35-37 establishes a framework for measuring fair value in U.S. GAAP, and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, paragraph 820-10-35-37 establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three broad levels.  The three levels of fair value hierarchy defined by paragraph 820-10-35-37 are described below:

Level 1

Quoted market prices available in active markets for identical assets or liabilities as of the reporting date.

Level 2

Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date.

Level 3

Pricing inputs that are generally unobservable inputs and not corroborated by market data.

Financial assets are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption or input is unobservable.

The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs.  If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument.

The carrying amounts of the Company’s financial assets and liabilities, such as cash, accounts receivable, advance on purchases, prepaid income taxes, accounts payable, credit cards payable, accrued expenses and other current liabilities approximate their fair values because of the short maturity of these instruments.

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Transactions involving related parties cannot be presumed to be carried out on an arm's-length basis, as the requisite conditions of competitive, free-market dealings may not exist. Representations about transactions with related parties, if made, shall not imply that the related party transactions were consummated on terms equivalent to those that prevail in arm's-length transactions unless such representations can be substantiated.

It is not however, practical to determine the fair value of advances from stockholders due to their related party nature.

Fair value of non-financial assets or liabilities measured on a recurring basis

The Company identifies potentially excess and slow-moving inventories by evaluating turn rates, inventory levels and other factors. Excess quantities are identified through evaluation of inventory aging, review of inventory turns and historical sales experiences. The Company provides lower of cost or market reserves for such identified excess and slow-moving inventories. The Company establishes a reserve for inventory shrinkage, if any, based on the historical results of physical inventory cycle counts.

Carrying value, recoverability and impairment of long-lived assets

The Company has adopted paragraph 360-10-35-17 of the FASB Accounting Standards Codification for its long-lived assets. The Company’s long-lived assets, which include office and tradeshow equipment, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

The Company assesses the recoverability of its long-lived assets by comparing the projected undiscounted net cash flows associated with the related long-lived asset or group of long-lived assets over their remaining estimated useful lives against their respective carrying amounts. Impairment, if any, is based on the excess of the carrying amount over the fair value of those assets. Fair value is generally determined using the asset’s expected future discounted cash flows or market value, if readily determinable. If long-lived assets are determined to be recoverable, but the newly determined remaining estimated useful lives are shorter than originally estimated, the net book values of the long-lived assets are depreciated over the newly determined remaining estimated useful lives.

The Company considers the following to be some examples of important indicators that may trigger an impairment review: (i) significant under-performance or losses of assets relative to expected historical or projected future operating results; (ii) significant changes in the manner or use of assets or in the Company’s overall strategy with respect to the manner or use of the acquired assets or changes in the Company’s overall business strategy; (iii) significant negative industry or economic trends; (iv) increased competitive pressures; and (v) regulatory changes.  The Company evaluates acquired assets for potential impairment indicators at least annually and more frequently upon the occurrence of such events.

The impairment charges, if any, is included in operating expenses in the accompanying consolidated statements of operations.

Cash equivalents

The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents.

Accounts receivable and allowance for doubtful accounts

Accounts receivable are recorded at the invoiced amount, net of an allowance for doubtful accounts. The Company follows paragraph 310-10-50-9 of the FASB Accounting Standards Codification to estimate the allowance for doubtful accounts. The Company performs on-going credit evaluations of its customers and adjusts credit limits based upon payment history and the customer’s current credit worthiness, as determined by the review of their current credit information; and determines the allowance for doubtful accounts based on historical write-off experience, customer specific facts and economic conditions.

Outstanding account balances are reviewed individually for collectability.  The allowance for doubtful accounts is the Company’s best estimate of the amount of probable credit losses in the Company’s existing accounts receivable. Bad debt expense is included in general and administrative expenses, if any. Pursuant to paragraph 310-10-50-2 of the FASB Accounting Standards Codification account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. The Company has adopted paragraph 310-10-50-6 of the FASB Accounting Standards Codification and determine when receivables are past due or delinquent based on how recently payments have been received.

There was $0 allowance for doubtful accounts at March 31, 2012 and December 31, 2011.

The Company does not have any off-balance-sheet credit exposure to its customers.

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Advance on purchases

Advance on purchases primarily represent amounts paid to vendors for future delivery of products.  

Inventories

The Company values inventories, consisting of purchased goods for resale, at the lower of cost or market. Cost is determined using the fist in first out method. The Company reduces inventories for the diminution of value, resulting from product obsolescence, damage or other issues affecting marketability, equal to the difference between the cost of the inventory and its estimated market value. These markdowns are estimates, which could vary significantly from actual requirements if future economic conditions, customer demand or competition differ from expectations.

Office and tradeshow equipment

Office and trade show equipment is recorded at cost. Expenditures for major additions and betterments are capitalized.

Maintenance and repairs are charged to operations as incurred. Depreciation of office equipment is computed by the straight-line method (after taking into account their respective estimated residual values) over the assets estimated useful life of five (5) years. Upon sale or retirement of office equipment, the related cost and accumulated depreciation are removed from the accounts and any gain or loss is reflected in statements of operations.

Investments other

The Company follows Subtopic 325-20 of the FASB Accounting Standards Codification to account for its ownership interest in noncontrolled entities, particularly foreign. Under ASC 325-20, investments of this nature are initially recorded at cost. Income is recorded for dividends received that are distributed from net accumulated earnings of the investee subsequent to the date of investment. Dividends received in excess of earnings subsequent to the date of investment are considered a return of investment and are recorded as reductions in the cost of the investment. Investments are written down only when there is clear evidence that a decline in value that is other than temporary has occurred.  

Related parties

The Company follows subtopic 850-10 of the FASB Accounting Standards Codification for the identification of related parties and disclosure of related party transactions.

The financial statements shall include disclosures of material related party transactions, other than compensation arrangements, expense allowances, and other similar items in the ordinary course of business. However, disclosure of transactions that are eliminated in the preparation of consolidated or combined financial statements is not required in those statements. The disclosures shall include:  a) the nature of the relationship(s) involved)  description of the transactions, including transactions to which no amounts or nominal amounts were ascribed, for each of the periods for which income statements are presented, and such other information deemed necessary to an understanding of the effects of the transactions on the financial statements; c) the dollar amounts of transactions for each of the periods for which income statements are presented and the effects of any change in the method of establishing the terms from that was used in the preceding period; and d) amounts due from or to related parties as of the date of each balance sheet presented and, if not otherwise apparent, the terms and manner of settlement.

Commitments and contingencies

The Company follows subtopic 450-20 of the FASB Accounting Standards Codification to report accounting for contingencies. Certain conditions may exist as of the date the consolidated financial statements are issued, which may result in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur. The Company assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein.

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If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s consolidated financial statements.  If the assessment indicates that a potential material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, and an estimate of the range of possible losses, if determinable and material, would be disclosed.

Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed.  Management does not believe, based upon information available at this time, that these matters will have a material adverse effect on the Company’s consolidated financial position, results of operations or cash flows. However, there is no assurance that such matters will not materially and adversely affect the Company’s business, financial position, and results of operations or cash flows.

Non-controlling interest

The Company follows paragraph 810-10-65-1 of the FASB Accounting Standards Codification to report the non-controlling interest in Fuel Stations, its majority owned subsidiary in the consolidated balance sheets within the equity section, separately from the Company’s members’ equity.  Non-controlling interest represents the non-controlling interest holder’s proportionate share of the equity of the Company’s majority-owned subsidiary, Fuel Stations.  Non-controlling interest is adjusted for the non-controlling interest holder’s proportionate share of the earnings or losses and the non-controlling interest continues to be attributed its share of losses even if that attribution results in a deficit non-controlling interest balance. Fuel Stations was inactive at March 31, 2012.

Revenue recognition

The Company follows paragraph 605-10-S99-1 of the FASB Accounting Standards Codification for revenue recognition. The Company recognizes revenue when it is realized or realizable and earned. The Company considers revenue realized or realizable and earned when all of the following criteria are met: (i) persuasive evidence of an arrangement exists, (ii) the product has been shipped or the services have been rendered to the customer, (iii) the sales price is fixed or determinable, and (iv) collectability is reasonably assured.

The Company derives its revenues from sales contracts with customers with revenues being generated upon the shipment of goods. Persuasive evidence of an arrangement is demonstrated via sales invoice or contract; product delivery is evidenced by warehouse shipping log as well as third party shipping companies and title transfers upon shipment, based on free on board (“FOB”) warehouse terms; the sales price to the customer is fixed upon acceptance of the signed purchase order or contract and there is no separate sales rebate, discount, or volume incentive.

Shipping and handling costs

The Company accounts for shipping and handling fees in accordance with paragraphs 605-45-45-19 through 605-45-45-23 of the FASB Accounting Standards Codification. While amounts charged to customers for shipping products are included in revenues, the related costs are classified in cost of goods sold as incurred.

Advertising costs

Advertising costs are expensed as incurred.

Research and development

The Company follows paragraph 730-10-25-1 of the FASB Accounting Standards Codification and paragraph 730-20-25-11 of the FASB Accounting Standards Codification for research and development costs.

Research and development costs are charged to expense as incurred. Research and development costs consist primarily of remuneration for research and development staff, depreciation and maintenance expenses of research and development equipment, material and testing costs for research and development as well as research and development arrangements with unrelated third party research and development institutions.  The research and development arrangements usually involve one specific research and development project.

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Often times, the Company makes non-refundable advances upon signing of these arrangements. The Company adopted paragraph 730-20-25-13 and 730-20-35-1 of the FASB Accounting Standards Codification for these non-refundable advances.  Non-refundable advance payments for goods or services that will be used or rendered for future research and development activities are deferred and capitalized. Such amounts are recognized as an expense as the related goods are delivered or the related services are performed. The management continues to evaluate whether the Company expect the goods to be delivered or services to be rendered.  If the management does not expect the goods to be delivered or services to be rendered, the capitalized advance payment are charged to expense.

Income taxes

The Company accounts for income taxes under Section 740-10-30 of the FASB Accounting Standards Codification, which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns.  Under this method, deferred tax assets and liabilities are based on the differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse.  Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more likely than not that the assets will not be realized.  Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.  The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the Consolidated Statements of Income and Comprehensive Income in the period that includes the enactment date.

The Company adopted section 740-10-25 of the FASB Accounting Standards Codification (“Section 740-10-25”). Section 740-10-25 addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under Section 740-10-25, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position.

The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty (50) percent likelihood of being realized upon ultimate settlement.

Section 740-10-25 also provides guidance on de-recognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures.

The estimated future tax effects of temporary differences between the tax basis of assets and liabilities are reported in the accompanying consolidated balance sheets, as well as tax credit carry-backs and carry-forwards. The Company periodically reviews the recoverability of deferred tax assets recorded on its consolidated balance sheets and provides valuation allowances as management deems necessary.

Management makes judgments as to the interpretation of the tax laws that might be challenged upon an audit and cause changes to previous estimates of tax liability. In addition, the Company operates within multiple taxing jurisdictions and is subject to audit in these jurisdictions. In management’s opinion, adequate provisions for income taxes have been made for all years. If actual taxable income by tax jurisdiction varies from estimates, additional allowances or reversals of reserves may be necessary.

The Company had no material adjustments to its liabilities for unrecognized income tax benefits according to the provisions of Section 740-10-25.

Limitation on utilization of NOLs due to change in control

Pursuant to the Internal Revenue Code Section 382 (“Section 382”), certain ownership changes may subject the NOL’s to annual limitations which could reduce or defer the NOL.  Section 382 imposes limitations on a corporation’s ability to utilize NOLs if it experiences an “ownership change.” In general terms, an ownership change may result from transactions increasing the ownership of certain stockholders in the stock of a corporation by more than 50 percentage points over a three-year period.  In the event of an ownership change, utilization of the NOLs would be subject to an annual limitation under Section 382 determined by multiplying the value of its stock at the time of the ownership change by the applicable long-term tax-exempt rate. Any unused annual limitation may be carried over to later years. The imposition of this limitation on its ability to use the NOLs to offset future taxable income could cause the Company to pay U.S. federal income taxes earlier than if such limitation were not in effect and could cause such NOLs to expire unused, reducing or eliminating the benefit of such NOLs.

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Subsequent events

The Company follows the guidance in Section 855-10-50 of the FASB Accounting Standards Codification for the disclosure of subsequent events. The Company will evaluate subsequent events through the date when the financial statements were issued. Pursuant to ASU 2010-09 of the FASB Accounting Standards Codification, the Company as an SEC filer considers its financial statements issued when they are widely distributed to users, such as through filing them on EDGAR.

Recently issued accounting pronouncements

In May 2011, the Financial Accounting Standards Board (“FASB”) issued ASU 2011-04, Fair Value Measurement (“ASU 2011-04”), which amended ASC 820, Fair Value Measurements (“ASC 820”), providing a consistent definition and measurement of fair value, as well as similar disclosure requirements between U.S. GAAP and International Financial Reporting Standards. ASU 2011-04 changes certain fair value measurement principles, clarifies the application of existing fair value measurement and expands the disclosure requirements. ASU 2011-04 will be effective for us beginning January 1, 2012. The adoption of ASU 2011-04 did not have a material effect on our consolidated financial statements or disclosures.

In June 2011, the FASB issued ASU 2011-05, Presentation of Comprehensive Income (“ASU 2011-05”). ASU 2011-05 requires the presentation of comprehensive income in either (1) a continuous statement of comprehensive income or (2) two separate but consecutive statements. ASU 2011-05 will be effective for us beginning January 1, 2012. The adoption of ASU 2011-05 did not have a material effect on our consolidated financial statements or disclosures.

In September 2011, the FASB issued ASU 2011-08, Testing Goodwill for Impairment (“ASU 2011-08”), which amends the guidance in ASC 350-20, Intangibles—Goodwill and Other – Goodwill. ASU 2011-08 provides entities with the option of performing a qualitative assessment before calculating the fair value of the reporting unit when testing goodwill for impairment. If the fair value of the reporting unit is determined, based on qualitative factors, to be more likely than not less than the carrying amount of the reporting unit, the entities are required to perform a two-step goodwill impairment test. ASU 2011-08 will be effective for us beginning January 1, 2012. The adoption of ASU 2011-08 did not have a material effect on our consolidated financial statements or disclosures.

In December 2011, the FASB issued ASU No. 2011-11, "Disclosures about Offsetting Assets and Liabilities." The amendments in this update require enhanced disclosures around financial instruments and derivative instruments that are either (1) offset in accordance with either ASC 210-20-45 or ASC 815-10-45 or (2) subject to an enforceable master netting arrangement or similar agreement, irrespective of whether they are offset in accordance with either ASC 210-20-45 or ASC 815-10-45. An entity should provide the disclosures required by those amendments retrospectively for all comparative periods presented. The amendments are effective during interim and annual periods beginning after December 31, 2012. The Company does not expect this guidance to have any impact on its consolidated financial position, results of operations or cash flows.

Management does not believe that any other recently issued, but not yet effective accounting pronouncements, if adopted, would have a material effect on the accompanying financial statements.

NOTE 3 – GOING CONCERN

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern.

As reflected in the accompanying consolidated financial statements, the Company had an accumulated deficit at March 31, 2012, had a net loss and net cash used in operating activities for the year then ended.

While the Company is attempting to generate sufficient revenues, the Company’s cash position may not be sufficient to support the Company’s daily operations. Management intends to raise additional funds by way of a public or private offering.  Management believes that the actions presently being taken to further implement its business plan and generate sufficient revenues provide the opportunity for the Company to continue as a going concern.  While the Company believes in the viability of its strategy to generate sufficient revenues and in its ability to raise additional funds, there can be no assurances to that effect. The ability of the Company to continue as a going concern is dependent upon the Company’s ability to further implement its business plan, raise funds and generate sufficient revenues.  Should management fail to raise funds or generate sufficient revenue the Company may need to curtail their operations.

The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

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NOTE 4 – INVENTORIES

Inventories at March 31, 2012 and December  31, 2011 consisted of the following:

		March 31, 2012		December  31, 2011
Finished goods	$	784,382	$	793,719

At March 31, 2012 and December 31, 2011, approximately 82% and 73% respectively of our inventory respectively was held by our vendor, A to Z Innovations in Thailand.

Slow-moving or obsolescence markdowns

The Company recorded $0 of inventory obsolescence adjustments for the quarter ended March 31, 2012 or the year ended December 31, 2011.

Lower of cost or market adjustments

There was no lower of cost or market adjustments for the quarter ended March 31, 2012 or the year ended December 31, 2011.

NOTE 5 – OFFICE AND TRADESHOW EQUIPMENT

Office and tradeshow equipment, stated at cost, less accumulated depreciation at March 31, 2012 and December  31, 2011, consisted of the following:

	Estimated Useful		March 31,		December 31,
	Life (Years)		2012		2011
Office and tradeshow equipment	5	$	41,628	$	41,628
Less accumulated depreciation			-11,993		-9,821
		$	29,635	$	31,807

Depreciation expense for the period ended March 31, 2012 and March 31, 2011 was $2,172 and $331, respectively.  

NOTE 6 – NOTES PAYABLE

Notes Payable

For the year ended December 31, 2011 the Company had an outstanding Note Payable to an individual for $26,000 bearing interest at 4% per annum. This note had a due date of December 20, 2011 and was paid in full during the first quarter of 2012.

Related Parties Notes Payable

In November 2011 the Company entered into a $1,000,000 line of credit from an entity owned by two significant stockholders of the Company which bears interest at 10% and due April 1, 2012. Subsequent to year-end the maturity date on this note was extended to June 1, 2012. The outstanding balance was $883,520 and $442,000 respectively at March 31, 2012 and December 31, 2011.

NOTE 7 – DUE TO FACTOR

Due to factor

In May 2011, the Company entered into a one year factoring and security agreement with a factoring firm. Under the factoring agreement, the factor purchases the Company’s accounts at the its net face amount less an initial factoring fee; the factor advances 75 percent of the account balance to the Company, and the remaining amount will be withheld in a non-interest bearing Reserve Account. The factoring fee is computed as a percentage of the face amount of the accounts as follows: 1.5% fee for invoices paid within 30 days of the down payment date with an additional 1.0% for each 15 day period thereafter. Accounts purchased by the factor are with full recourse with the Company within 120 days from the invoices date. The factoring transaction is treated as a loan, with the receivables used as collateral.

For the quarter ended March 31,2012 and the year ended December 31, 2011, the Company paid $2,050 and $12,643 in aggregate as interest expense and fees to the factor, respectively.

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NOTE 8 – RELATED PARTY TRANSACTIONS

Related parties

Related parties with whom the Company had transactions are:

Mark Soffa	Significant Stockholder of the Company
Joel Gillis	Significant Stockholder of the Company
Ed Wishner	Significant Stockholder of the Company
Nationwide	An entity owned by two significant stockholders of the Company

Related Parties Notes Payable

The $1,000,000 line of credit is from Nationwide, an entity owned by Joel Gillis and Ed Wishner which bears interest at 10% and is due June 29, 2012.  As of March 31, 2012 and December 31, 2011, the Company borrowed $883,520 and $442,000 on the line of credit.

Advance from related party

Advance from related party at March 31, 2012 and December 31, 2011 represents the unpaid compensation of an officer of the Company.

NOTE 9 – STOCKHOLDERS’ DEFICIT

Shares authorized

Upon formation, the total number of shares of all classes of stock which the Company is authorized to issue is Sixty Million (60,000,000) shares of which Ten Million (10,000,000) shares shall be Preferred Stock, par value $.0001 per share, and  Fifty Million (50,000,000) shares shall be Common Stock, par value $.0001 per share.

On September 1, 2011, the Company filed a Certificate of Amendment of Certificate of Incorporation, and increased its total number of shares of all classes of stock which the Company is authorized to issue to Two Hundred Fifty Eight Million (258,000,000) shares inclusive of Forty Three Million (43,000,000) shares of Preferred Stock, par value $.0001 per share, and Two Hundred Fifteen Million (215,000,000) shares of Common Stock, par value $.0001 per share.

Common stock

On August 24, 2011, in connection with the closing of the Agreement and Plan of Reorganization, the Company (i) canceled 3,485,000 shares of its common stock, (ii) effectuated a 4.3 for 1 (1:4.3) forward stock split (“Forward Stock Split”) and issued 2,399,100 shares of its common stock to its pre-merger shareholders to give effect to the stock split; (iii) issued 8,500,000 shares of its common stock to the members of FDLLC in exchange for 100% of FDLLC membership interest, and (iv) issued 847,500 shares of its common stock to 25 shareholders for conversion of FDLLC working capital advances of $847,500 at $1.00 per share

All shares and per share amounts in the consolidated financial statements have been adjusted to give retroactive effect to the Forward Stock Split.

Additional paid-in capital

On August 24, 2011, as part of the reverse merger, the Company applied paragraph 505-10-S99-3 of the FASB Accounting Standards Codification (formerly Topic 4B of the Staff Accounting Bulletins (“SAB”) (“SAB Topic 4B”) issued by the U.S. Securities and Exchange Commission (the “SEC”), by reclassifying the LLC’s owner capital account inclusive of capital contribution of $3,777,794 and an accumulated deficit of ($4,581,140) as of August 23, 2011 to additional paid-in capital.

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NOTE 10 – COMMITMENTS AND CONTINGENCIES

Exclusive agency agreement

On August 15, 2009, the Company entered into an exclusive agency agreement (the “Exclusive Agency Agreement”) to distribute and market a fuel saving component, which reduces the utilization of gas known as “fuel doctor” (the “Product”) for the territories of the U.S. and Canada with A to Z Innovations, Limited (“Vendor”), the owner of the patent to the product.  On December 15, 2009, both parties amended the Exclusive Agency Agreement to set the minimum number of units requirement under the Exclusive Agency Agreement. On February 1, 2011, both parties amended the Exclusive Agency Agreement to expand the exclusive territories of distribution to worldwide from the U.S. and Canada. Pursuant to the terms of the amendment. On March 26, 2012, both parties amended the Exclusive Agency Agreement to reduce the minimum number of units requirement from 500,000 in the third year to 250,000; from 700,000 in the fourth year to 400,000; and from 1,000,000 to 600,000 in the fifth year.  In order for the Company to maintain its exclusive distribution right, the Company must purchase a minimum number of the product, FD-47, during the yearly periods as set forth below:

Year of Contract		Number of Units
First (12/15/2009-12/14/2010)		110,000
Second (12/15/2010-12/14/2011)		200,000
Third (12/15/2011-12/14/2012)		250,000
Fourth (12/15/2012-12/14/2013)		400,000
Fifth (12/15/2015-12/15/2014)		600,000

On March 26, 2012, the Company and Vendor amended the Exclusive Agency Agreement to reduce the minimum number of units requirement to be order from 500,000 in the third year to 250,000; from 700,000 in the fourth year to 400,000; and from 1,000,000 to 600,000 in the fifth year.

As of March 31, 2012 and December 31, 2011, the Company has ordered the second year’s 200,000 units and deposited $590,000 as of March 31, 2012 and $577,996 as of December 31, 2011with the Vendor.

On March 9, 2012, the Company and A to Z Innovations, Limited (“Vendor”), the 100% owner of the Fuel Doctor patent no. 022564/0718 (for the product the Company sells), entered into an Exclusive Agency (distribution) Agreement. This exclusive distribution agreement includes a provision that if the Company purchases it's product from any source other than Vendor, or if the Company files a prohibition order, that Vendor will have the right to purchase 25% of the shares of the Company for $1 per share.

Also on February of 2011, Vendor granted the Company exclusive rights to distribute the Fuel Doctor product worldwide.

The Exclusive Agency Agreement was originally granted to the Company’s CEO who assigned the agreement to the Company.  Prices are fixed for a period of twelve months, after which both parties may mutually agree on a price change.

Notes Payable convertible into common shares

During 2011, the Company borrowed $202,000 from an individual under convertible note agreements bearing interest ranging from 3% to 11% for the terms of the notes, which matured between March and June 2012. The notes were converted in the first quarter of 2012 at the option of the holder at a price of $1 per share.  However, after shares were issued in payment of these notes, the note holder is disputing the conversion.

Legal proceeding

From time to time, the Company is involved in various legal proceedings which arise in the ordinary course of business.  The outcome of legal proceedings and claims brought by and against the Company are subject to significant uncertainty.  Therefore, if one or more of the Company’s legal proceedings were resolved against the Company, the Company’s consolidated financial statements could be materially adversely affected.

On August 12, 2011, the Company was named as a party to a Class Action Complaint filed by Benjamin Anthony Perez (Benjamin Anthony Perez vs. Fuel Doctor, LLC) in the United States District Court for the Central District of California (Case No. SACV11-01204).  The plaintiff alleges that Fuel Doctor, LLC's product, the FD-47 did not work as advertised.  The management of the Company believes that this lawsuit is without merit and the Company will vigorously defend itself in this lawsuit. We don't believe the plaintiff will prevail, but the range of the loss cannot be determined should he prevail.

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On July 26, 2011, the Company was named as a party to a Class Action Complaint filed by Derrick McGinnis (Derrick McGinnis vs. Fuel Doctor, LLC) in the Los Angeles Superior Court (Case No. BC466191).  The plaintiff alleges that Fuel Doctor, LLC's product, the FD-47 did not work as advertised.  The management of the Company believes that this lawsuit is without merit and the Company will vigorously defend itself in this lawsuit. We don't believe the plaintiff will prevail, but the range of the loss cannot be determined should he prevail.

On February 9, 2012, the Company was named as a party to a lawsuit filed by Turn One Racing, LLC. (Turn One Racing, LLC v. Fuel Doctor) in the West District of Virginia (Civil Action No. 4:12-CV-00001-JLK).  The plaintiff alleges that Company failed to pay $215,082 of a NASCAR sponsorship agreement for the 2011 race season. The Company has engaged an attorney to counter sue the plaintiff for breach of contract  relating to a truck racing sponsorship agreement (Civil On January 11, 2012, Turn One Racing, LLC filed a complaint against the Company and No. 4:12-CV-00001-JLK).  Turn One Racing seeks $215,081.65 in damages plus interest. The Company has denied liability in its Answer and filed a Counterclaim against Turn One Racing for breach of contract and unjust enrichment.  This case is currently pending.

Operating lease

On April 19, 2011, the Company entered into a non-cancelable operating lease for approximate 5,188 square feet of office space, effective June 15, 2011 and expiring on June 30, 2014. Future minimum payments required under this non-cancelable lease are as follows:

Year Ended December 31:
2012 (remainder of year)	$	44,352
2013		59,136
2014		29,568
	$	133,056

Rent expense paid for the quarters ended March 31, 2012 and March 31, 2011 was $14,784 and $9,951, respectively.

NOTE 11 – CONCENTRATIONS AND CREDIT RISK

Customer and credit concentrations

Customer concentrations for the years ended March 31, 2012 and December 31, 2011 and credit concentrations at March 31, 2012 and December 31, 2011 are as follows:

	Net Sales For Quarter ended			Accounts Receivable at
	March 31,	December 31,		March 31,	December 31,
	2012	2011		2012	2011
Customer A – Fuel Doctor Auto Care – China	80.0%	-%		-%	-%
Customer B – Gulf Caravan Trading	-%	-%		17.1%	-%
Customer C - Heartland America	-%	46.2 %		79.5%	100%
Customer D - Advanced Auto Parts Inc.	-%	21.9%		-%	-%
Customer E - Canadian Tire Corporation	-%	23.1%		-%	-%
	80.0 %	91.2 %		96.6%	100.0%

A reduction in sales from or loss of such customers would have a material adverse effect on the Company’s results of operations and financial condition.

Vendors and Accounts Payable Concentrations

The Company purchases 100% of its inventory from A to Z Innovations, Limited, an entity in Hong Kong (see note 12). In accordance with the terms of the Exclusive Agency Agreement with A to Z innovations, Limited, the Company is required to make deposits on inventory at the time they make a purchase order. At March 31, 2012 and December 31, 2011, the advance on inventory purchase amounted to $590,000 and $557,996 respectively. Although we have not suffered losses on such advancement to Vendor, such balance is subject to credit risk should Vendor fail to honor their obligation to provide the Company with the inventory.

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Product Concentration

The Company owns the exclusive marketing and distribution right to the product it distributes and this product accounted for all of the sales for the quarter ended march 31, 2012 and the year ended December 31, 2011.

NOTE 12 – SUBSEQUENT EVENTS

Between April 1, 2012 and the issuing of these financial statements the Company has drawn down an additional $79,000 on the line of credit from an entity owned by two significant stockholders bring the borrowed amount to $962,520 of the $1,000,000 line; and has taken an additional $13,500 in short term loans from this entity which is expected to be paid back with one month.

The shareholders of A to Z have agreed to assign a 5% ownership of their company to Fuel Doctor under the form of 526 Class B Shares. As of June 12, 2012, they are in the process of preparing the share certificates.

On May 4, 2012 we signed a new Master Distribution Agreement with Boko Consulting, Inc.. The Agreement covers countries in the West Africa Region which are: Nigeria, Niger, Liberia, Mali, Guinea, Guinea Bissau, Gambia, Senegal, St. Helena, Mauritania, Burkina Faso, Benin, Togo, Ghana and Cape Verde.

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ITEM 2: MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

The following discussion and analysis should be read in conjunction with, and is qualified in its entirety by, our financial statements (and notes related thereto) and other more detailed financial information appearing elsewhere in this Quarterly Report on Form 10-Q. Consequently, you should read the following discussion and analysis of our financial condition and results of operations together with such financial statements and other financial data included elsewhere in this Quarterly Report on Form 10-Q. Some of the information contained in this discussion and analysis are set forth elsewhere in this prospectus, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties. You should review the “Risk Factors” section of our Annual Report on Form 10-K for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.

Statements in this section and elsewhere in this Form 10-Q that are not statements of historical or current fact constitute “forward-looking” statements.

OVERVIEW OF OUR PERFORMANCE AND OPERATIONS [CONFORM TO FINAL DISCLOSURE IN 10-K]

Our Business and Recent Developments

Fuel Doctor Holdings, Inc. (the “Company”, formerly Silverhill Management Services, Inc.) was incorporated in the State of Delaware on March 25, 2008 and established a fiscal year end of December 31.  On August 24, 2011 Silverhill Management Services, Inc.(SLHL) entered into an Agreement and Plan of Reorganization (the “Plan”) by and among SLHL, Fuel Doctor, LLC, a California limited liability company (“FDLLC”), Emily Lussier, SLHL’s controlling shareholder, and a certain member of FDLLC. At the completion of this merger, the company was renamed as Fuel Doctor Holdings, Inc.

The Company is the exclusive distributor for the United States and Canada of a fuel efficiency booster (the FD-47), which plugs into the lighter socket/power port of a vehicle and increases the vehicle's miles per gallon through the power conditioning of the vehicle's electrical systems.  The Company has also developed, and plans on continuing to develop, certain related products.  As a motor vehicle matures, the power systems tend to generate and experience more electrical noise or interference or (in other words) electrical “noise.” This electrical noise is a disturbance that affects an electrical circuit due to either electromagnetic conduction or electromagnetic radiation emitted from an external source.  The main contributors to this electrical noise in motor vehicles include fan motors, air conditioners, audio devices, lighting, weak grounds, and dirty/loose contacts.  This electrical noise can have many detrimental effects on a vehicle’s systems, and may interrupt, obstruct, or otherwise degrade or limit the effective performance and efficiency of an electrical circuit.  In a more extreme variation, electromagnetic interference is used for military applications, such as radio jamming.  

In recent years, automakers have moved to electronic engine controls (including throttles) and away from mechanical controls in an effort to meet tighter federal fuel and emissions regulations.  These electronic controls allow far more precise control of the engine operation and fuel use.  However, experts believe electrical signals from other onboard electronic components can impair the performance of the electronic engine controls.  Car manufacturers have for some time been incorporating technology for the filtering of the power systems throughout their vehicle.  However with time, tolerances change, noise levels increase, and connections weaken or loosen from vibrations.  As a result, the negative effects of electrical noise increase over time.  The Company believes that the result of this is a decline in fuel efficiency as a motor vehicle gets older.

The technology used by the FD-47 increases a vehicle’s miles per gallon (MPG) through power conditioning of the vehicle’s electrical systems.  Its technology is covered by pending patent application No. 12/426,294 to the United States Patent and Trademarks Office (Local patent) and application Number PCT/IL2009/001156 to the Patent Cooperation Treaty (PCT) (International Patent).  A to Z Innovations, a company incorporated under the law of Hong Kong, owns this technology. The shareholders of A to Z have agreed to assign a 5% ownership of their company to Fuel Doctor under the form of 526 Class B Shares. As of June 18, 2012, they are in the process of preparing the share certificates.

The FD-47 simply plugs into the lighter socket/power port and the power conditioning qualities of the FD-47 help reduce and remove electrical noise and restore a vehicle’s efficiency.  The FD-47 is designed for the automotive marketplace of vehicles that are 24 months old and older.  The FD-47 increases a vehicle’s miles per gallon (MPG) through power conditioning of the vehicle’s electrical systems.  Conditioned and clean power allows the vehicle’s engine control unit (ECU) (also known as power-train control module [PCM], or engine control module [ECM]), fuel injection and engine timing equipment to operate more efficiently.  The FD-47 helps to condition the power back to where it was when the vehicle was brand new.  

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Another benefit of the technology incorporated into the FD-47 is the positive environmental effects.  When a vehicle’s engine runs more efficiently, it will require less fuel, produce more power and have reduced exhaust emissions (namely, carbon dioxide or CO2). The carbon from the gasoline mixes with oxygen from the air.  Gasoline consists mostly of hydrocarbons, i.e. chains of carbon encircled by atoms of hydrogen.  When the hydrocarbons burn; they break apart and recombine with air. This reaction produces heat, as well as two chemical byproducts: water and carbon dioxide. Octane consists of eight atoms of carbon and 18 atoms of hydrogen, written as C8H18.  If the octane breaks down and mixes with enough oxygen (02), the results are atoms of carbon, hydrogen, and oxygen, making eight molecules of carbon dioxide (CO2) and nine molecules of water (H20). The eight molecules of CO2 weigh about three times more than the one molecule of octane that began this process.  For each gallon of gas burned by a vehicle, 19 pounds of carbon dioxide are released.  Management believes that as a result of reduced fuel consumption the vehicle’s exhaust emissions are less and less fuel consumed results in less exhaust emissions.  Although we have no quantitative data, we believe that a side benefit of the FD-47is that it helps to protect the environment.

Fuel Doctor Holdings, Inc. expended a substantial amount of our capital in order to Brand our name which was essential to promote our product and expand our visibility in the marketplace. This was accomplished through TV and radio advertising in addition to our NASCAR sponsorships.

As a result of this campaign, FD was able achieve its goal of Brand awareness in the public domain as reflected by reports and evaluations issued from Joyce Julius and Associates.

The NASCAR racing programs enabled Fuel Doctor to gain Brand awareness through an 87 million person fan base. The cost of those programs for 2011 was est. at $1.1 million dollars. We have eliminated any and all contractual obligations with NASCAR sponsorships in 2012.

The NASCAR campaign in 2010 and 2011, in our opinion, resulted in millions of dollars worth of media exposure for the Fuel Doctor Brand name and helped in securing contracts with and purchase orders from major retailers including Best Buy, Advance Auto Parts and JC Whitney.

In 2012, the company was able to reduce monthly overhead by way of decreasing Officers’ salaries for a total of $0 during Q1. We continue to examine overhead expenses and seek additional reductions in 2012. Specifically, the company will seek additional reductions in the following areas: consulting, engineering, legal, and warehousing expenses.

We have also been able to reduce cost of goods sold, including unit price, packaging, and fulfillment, and will continue to negotiate these costs as our volume increases as well as renegotiating sales representative contracts and lowering sales commissions.

Our objective with these cost reductions should assist in an increase sales volume while continuing to maintain acceptable profit margins.

We have been able to re-negotiate more favorable terms on our international contract. This will give us greater flexibility in negotiating new International Master Distribution Agreements worldwide. In the first quarter of 2012 we have opened new Master Distributors in China, South America, the Middle East and Europe and will continue to explore additional agreements globally.

Results of Operations for the three months ended March 31, 2012 and March 31, 2011

Revenue

Revenue for the three months ended March 31, 2012 was $221,415, a decrease of $122,592 or 35.6% from $344,007 for the comparable period in 2011. This decrease was primarily attributable to a reduction in domestic US sales with the launch of international sales making the difference.  

Cost of goods sold and gross profit

Cost of goods sold for the three months ended March 31, 2012 was $154,765, a decrease of $55,849 or 26.5% from $210,614 for the comparable period in 2011. This decrease was primarily attributable to the reduction in net revenues overall.  

Gross profit for three months ended March 31, 2012 was $66,650, an decrease of $66,743 or 50% from $133,393 for the comparable period in 2011. This decrease was primarily attributable to a reduction in margins.  The gross profit margin for the three months ended March 31, 2012 also decreased to 30% from 40% for the comparable period in 2011. The decrease was primarily attributable to a reduction of margins with international Master Distributors versus direct retail.

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Operating Expenses

Operating expenses for the three months ended March 31, 2012 was $345,094, consisting of  $395 advertising and promotion and $344,699 of other operating expenses, a decrease of $214,755 or 38.3% from $559,849, primarily consisting of  $349,681 advertising and promotion for the comparable period in 2011. This decrease was primarily attributable to a substantial reduction in advertising and promotion.  

Loss from Operations

Loss before income tax for the three months ended March 31, 2012 was $(278,444), a decrease of $148,012 or 34.7% compared to a loss of $(426,456) for the comparable year in 2011. The decrease was attributable to a reduction in in advertising and general overhead expenses. 

Other Income

Other income expense for the three months ended March 31, 2012 was $(19,532), consisting of interest charges, an increase of $16,489 or 542% from $(3043), consisting of interest charges for the comparable period in 2011. This increase was primarily attributable to borrowing costs on our Promissory Note.  

Net loss

Net loss for the three months ended March 31, 2012 was $(297,976), a decrease of $(131,517) or 30.6% from $(429,493) for the comparable period in 2011. This decrease was primarily attributable to a reduction in overhead and advertising expenses.  

Liquidity and Capital Resources

Cash and Cash Equivalents

Our cash and cash equivalents as at the beginning of the three months ended March 31, 2012 was $495 and increased to $1,038 by the end of the period, an increase of $543 or 52.3%. The increase was mainly due to a reduction in overhead.  The net change in cash and cash equivalents represented an increase of $64,091 or 539% from $11,882 for the comparable period in 2011. This increase was primarily attributable to the proceeds from issuance of common stock.

Net cash used in operating activities

Net cash outflow from operating activities was $(368,943) for the three months ended March 31, 2012, a decrease of $(129,801) or 26% from $(498,744) for the comparable period in 2011. This decrease was primarily attributable to an increase in accounts receivable and a reduction in accounts payable.  

Net cash used in investing activities

Net cash used in investing activities was $0 for the three months ended March 31, 2012, an decrease of $(1,530) or 1,530% from $1,530 for the comparable period in 2011. This decrease was primarily attributable to office equipment expenses.  

Net cash provided by financing activities

Net cash provided by financing activities was $369,486 for the three months ended March 31, 2012, compared to a net cash inflow of $(564,365) for the three months ended March 31, 2012, a decrease of $194,879 or 35%. The net cash inflow from financing activities primarily attributed to $565,000 proceeds received from the issuance of common stock during the three month period ended March 31,2011 vs. $441,250 of proceeds received from the related party revolving line of credit in the three month period ending March 31, 2012.

We are not aware of any trends, events or uncertainties that have or are reasonably likely to have a material impact on our short-term or long-term liquidity.   

Inflation

We believe that inflation has not had a material or significant impact on our revenue or our results of operations.  

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Working Capital

Our working capital was $85,377 and $152,231 as of March 31, 2012 and December 31, 2011, respectively.

Our consolidated financial statements have been prepared assuming we will continue as a going concern. We have experienced a net loss of ($297,976) for the three months ended March 31, 2012. We have experienced net losses of ($2,691,124) and ($2,485,136) for the years ended December 31, 2011 and 2010, respectively. Those factors raise substantial doubt about our ability to continue as a going concern. Our financial statements do not include any adjustment that might result from the outcome of this uncertainty. Assurances cannot be given that adequate financing can be obtained to meet our capital needs. If we are unable to generate profits and are unable to continue to obtain financing to meet our working capital requirements, we will have to sharply curtail our business or cease operations altogether. Our continuation as a going concern is dependent upon our ability to generate sufficient cash flow to meet our obligations on a timely basis, to obtain additional financing and, ultimately, to attain profitability.

At March 31, 2012 and December 31, 2011, we had an accumulated deficit of $(1,368,359) and  $(1,070,383), respectively, and it is likely that we will incur additional losses in the future. While we have funded our operations since inception from operations and through private placements of equity securities and bridge loans, there can be no assurance that adequate financing will continue to be available to us and, if available, on terms that are favorable to us.

We believe that we will require additional financing to carry out our intended objectives during the next twelve months. There can be no assurance, however, that such financing will be available or, if it is available, that we will be able to structure such financing on terms acceptable to us and that it will be sufficient to fund our cash requirements until we can reach a level of profitable operations and positive cash flows. If we are unable to obtain the financing necessary to support our operations, we may be unable to continue as a going concern. We currently have no firm commitments for any additional capital.

A downturn in the United States stock and debt markets could make it more difficult to obtain financing through the issuance of equity or debt securities. Even if we are able to raise the funds required, it is possible that we could incur unexpected costs and expenses, fail to collect significant amounts owed to us, or experience unexpected cash requirements that would force us to seek alternative financing. Further, if we issue additional equity or debt securities, stockholders may experience additional dilution or the new equity securities may have rights, preferences or privileges senior to those of existing holders of our shares of common stock or the debt securities may cause us to be subject to restrictive covenants. Even if we are able to raise the funds required, it is possible that we could incur unexpected costs and expenses, fail to collect significant amounts owed to us, or experience unexpected cash requirements that would force us to seek additional financing. If additional financing is not available or is not available on acceptable terms, we will have to curtail our operations.

Capital Resources  

On November 15, 2011, the Company issued a revolving credit secured promissory note to Nationwide Automated Systems, Inc., an entity controlled by two of our shareholders, for an aggregate principal amount of up to $1,000,000 (the “Note”).  The Note matures on earlier of (i) June 29, 2012 and (i) the date on which an event of default occurs under the Note (the “Maturity Date”) and bears interest at a rate of 10% per annum.  The Company is not required to make any payments until the Maturity Date. The Note is secured by substantially all of the assets of the Company in accordance with the terms of a security agreement entered into between the parties. As of March 31, 2012, the aggregate principal and accrued and unpaid interest that is due and payable under the Note is $906,005.

Off-Balance Sheet Arrangements

We have not entered into any transactions with unconsolidated entities in which we have financial guarantees, subordinated retained interests, derivative instruments or other contingent arrangements that expose us to material continuing risks, contingent liabilities or any other obligations under a variable interest in an unconsolidated entity that provides us with financing, liquidity, market risk or credit risk support.

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Critical Accounting Policies

Revenue recognition

The Company follows paragraph 605-10-S99-1 of the FASB Accounting Standards Codification for revenue recognition. The Company recognizes revenue when it is realized or realizable and earned. The Company considers revenue realized or realizable and earned when all of the following criteria are met: (i) persuasive evidence of an arrangement exists, (ii) the product has been shipped or the services have been rendered to the customer, (iii) the sales price is fixed or determinable, and (iv) collectability is reasonably assured.

The Company derives its revenues from sales contracts with customers with revenues being generated upon the shipment of goods. Persuasive evidence of an arrangement is demonstrated via sales invoice or contract; product delivery is evidenced by warehouse shipping log as well as third party shipping companies and title transfers upon shipment, based on free on board (“FOB”) warehouse terms; the sales price to the customer is fixed upon acceptance of the signed purchase order or contract and there is no separate sales rebate, discount, or volume incentive.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

 

As a smaller reporting company (as defined in Rule 12b-2 of the Exchange Act), we are not required to provide the information called for by this Item 3.

ITEM 4. CONTROLS AND PROCEDURES.

Evaluation of Disclosure Controls and Procedures.

We carried out an evaluation, under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Disclosure controls and procedures include, without limitation, means controls and other procedures that are designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is (i) recorded, processed, summarized and reported, within the time periods specified in the Commission's rules and forms and (ii) accumulated and communicated to the issuer's management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Based on this evaluation, because of the Company’s limited resources and limited number of employees, management concluded that our disclosure controls and procedures were ineffective as of March 31, 2012.

Management has identified control deficiencies regarding inadequate accounting resources, the lack of segregation of duties and the need for a stronger internal control environment. Management of the Company believes that these material weaknesses are due to the small size of the Company’s accounting staff.  The small size of the Company’s accounting staff may prevent adequate controls in the future due to the cost/benefit of such remediation.  

To mitigate the current limited resources and limited employees, we rely heavily on direct management oversight of transactions, along with the use of external legal and accounting professionals. As we grow, we expect to increase our number of employees, which will enable us to implement adequate segregation of duties within the internal control framework.

These control deficiencies could result in a misstatement of account balances that would result in a reasonable possibility that a material misstatement to our consolidated financial statements may not be prevented or detected on a timely basis. In light of this material weakness, we performed additional analyses and procedures in order to conclude that our consolidated financial statements for the quarter ended March 31, 2012 included in this Quarterly Report on Form 10-Q were fairly stated in accordance with US GAAP. Accordingly, management believes that despite our material weaknesses, our consolidated financial statements for the quarter ended March 31, 2012 are fairly stated, in all material respects, in accordance with US GAAP.

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Limitations on Effectiveness of Controls and Procedures

Our management, including our principal executive officer and principal financial officer, does not expect that our disclosure controls and procedures or our internal controls will prevent all errors and all fraud. Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include, but are not limited to, the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

Changes in Internal Control over Financial Reporting

No changes in the Company's internal control over financial reporting have come to management's attention during the Company's last fiscal quarter that have materially affected, or are likely to materially affect, the Company's internal control over financial reporting.

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PART II.  OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS.

From time to time, we may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business.

We are not currently a party to any material legal proceedings except as described below.

On February 9, 2012, the Company received a summons stating that on January 11, 2012, Turn One Racing LLC (“Plaintiff”) filed a complaint (the “Complaint”) in the United States District Court for the Western District of Virginia (the “Court”), Civil No. 4:12-CV-0001-JLK, alleging breach of contract under the Sponsorship Agreement, dated March 29, 2011, by and between the Fuel Doctor LLC, the Company’s wholly-owned subsidiary and Plaintiff (the “Agreement”).   Plaintiff is seeking, among other things, damages of at least $215,081.65 with interest accruing at the federal judgment rate form the date of judgment.  While the Company intends to commence negotiations with Plaintiff concerning the Agreement and the Complaint, there can be no assurance that the Company and Plaintiff will come to any agreement and/or settlement with respect to the litigation and/or the Agreement.  Even if we succeed in defending against the litigation, we are likely to incur substantial costs and our management's attention will be diverted from our operations.

 On March 6, 2012, the Company and its wholly owned subsidiary Fuel Doctor, LLC filed a complaint against Touchstone Advisors, LLC (“Touchstone”) in Los Angeles Superior Court related to Touchstone’s failure, among other things, to provide promised capital in a merger and reorganization (Case No. BC479694).  In its operative complaint, the Company has asserted causes of action for breach of contract, breach of the implied covenant of good faith and fair dealing, breach of fiduciary duty, violation of the registration requirements of California securities law, unjust enrichment, and a common count to recover securities delivered by mistake. The Company is seeking rescission of a transfer of the Company’s securities to Touchstone, damages of at least $100,000, treble damages, disgorgement, punitive damages, attorneys’ fees and costs of suit, and interest.  This case is currently pending.

On August 12, 2011, the Company was named as a party to a Class Action Complaint filed by Benjamin Anthony Perez (Benjamin Anthony Perez  vs. Fuel Doctor, LLC) in the United States District Court for the Central District of California (Case No. SACV11-01204).  The plaintiff alleges that Fuel Doctor, LLC's product, the FD-47 did not work as advertised.  The management of the Company believes that this lawsuit is without merit and the Company will vigorously defend itself in this lawsuit. Even if we succeed in defending against the litigation, we are likely to incur substantial costs and our management's attention will be diverted from our operations.

On July 26, 2011, the Company was named as a party to a Class Action Complaint filed by Derrick McGinnis (Derrick McGinnis vs. Fuel Doctor, LLC) in the Los Angeles Superior Court (Case No. BC466191).  The plaintiff alleges that Fuel Doctor, LLC's product, the FD-47 did not work as advertised.  The management of the Company believes that this lawsuit is without merit and the Company will vigorously defend itself in this lawsuit. Even if we succeed in defending against the litigation, we are likely to incur substantial costs and our management's attention will be diverted from our operations.

ITEM 1A.  RISK FACTORS

 

As a smaller reporting company (as defined in Rule 12b-2 of the Exchange Act), we are not required to provide the information called for by this Item 1A.

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

None.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM 4.  MINE SAFETY DISCLOSURES.

Not applicable.

ITEM 5.  OTHER INFORMATION.

None.

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ITEM 6.  EXHIBITS.

Exhibit Number		Description
31.1		Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2		Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1		Certification of Principal Executive Officer and Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
EX-101.INS		XBRL Instance Document*
EX-101.SCH		XBRL Taxonomy Extension Schema Document*
EX-101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document*
EX-101.DEF		XBRL Taxonomy Extension Definition Linkbase Document*
EX-101.LAB		XBRL Taxonomy Extension Labels Linkbase Document*
EX-101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document*

* The XBRL related information in Exhibit 101 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liability of that section and shall not be incorporated by reference into any filing or other document pursuant to the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing or document.

SIGNATURES

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

	FUEL DOCTOR HOLDINGS, INC.
Date:  June 18, 2012	By:	/s/ Mark Soffa
		Name: Mark Soffa
		Title: President and Chief Executive Officer

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