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

FORM 10-Q

[X] Quarterly report pursuant section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended September 30, 2012

[ ] Transition report pursuant section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from ________________to ________________

Commission file number 333-175212

AUTOVATIVE PRODUCTS INC.
(Exact name of small business issuer as specified in its charter)

Nevada	26-4574088
(State of Incorporation)	(I.R.S. Employer Identification No.)

 

502 N. Santa Fe Avenue, Ste. D, Vista, CA 92083

Telephone 760-732-5868

(Address and telephone number of registrantÕs principal executive offices and principal place of business)

(Address and telephone number of Registrant's principal
executive offices and principal place of business)

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

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

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

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

Indicate the number of shares outstanding of each of the issuerÕs classes of common stock, as of the latest practicable date.

Class	Outstanding at September 30, 2012
Common Stock, $0.001 par value per share	8,585,977 shares

 

PART 1 – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

Our unaudited interim consolidated financial statements for the three month period ended September 30th 2012 form part of this quarterly report. They are stated in United States Dollars (US$) and are prepared in accordance with United States generally accepted accounting principles.

     AUTOVATIVE PRODUCTS INC.
(A Development Stage Company)

INTERIM FINANCIAL STATEMENTS
SEPTEMBER 30, 2012

(Unaudited – Prepared by Management)

PART 1: FINANCIAL INFORMATION

 

Item 1. Interim Balance Sheets	2
Interim Statements Of Operations	3
Interim Statements Of Cash Flows	4
Notes To Interim Financial Statements	5
Item 2. ManagementÕs Discussion And Analysis Of Financial Condition And Results Of Operations	13
Item 3. Quantitative And Qualitative Disclosures About Market Risk	16
Item 4. Controls And Procedures	16
Part II. Other Information	17
Item 1. Legal Proceedings	17
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	17
Item 3. Defaults Upon Senior Securities	17
Item 4. Mining Safety Disclosures	17
Item 5. Other Information	17
Item 6. Exhibits	17
Signatures	18

 

 

AUTOVATIVE PRODUCTS, INC

BALANCE SHEETS

(Unaudited)

 

									September 30, 2012		December 31, 2011
									(Unaudited)
Assets
Current Assets
Cash								$	9,909	$	28,343
Accounts Receivable									-		14,129
Total Current Assets									9,909		42,472
Fixed Assets
Intellectual Property									70,000		70,000
Furniture & Computer Equip.									30,000		30,000
Accumulated Amortization & Depreciation									(100,000)		(98,929)
Total Fixed Assets									-		1,071
Total Assets								$	9,909	$	43,543
Liabilities And Equity
Current Liabilities
Accounts Payable								$	2,528	$	-
Total Current Liabilities									2,528		-
Total Liabilities									2,528		-
Stockholders Equity
Common Stock $.001 Par Value 25,000,000 Shares Authorized 8,585,977 shares issued and outstanding									8,586		8,586
Paid in Capital									24,555		24,555
Retained Earnings									(25,760)		10,402
Total StockholdersÕ Equity									7,381		43,543
Total Liabilities And
StockholdersÕ Equity								$	9,909	$	43,543

See accompanying summary of accounting policies and notes to

financial statements

3

AUTOVATIVE PRODUCTS, INC

STATEMENTS OF OPERATIONS

(Unaudited)

 

                                                                                                Three Months Ended Sept 30                      Nine Months Ended Sept 30

					2012		2011		2012		2011
Revenue
Sales				$	2,412	$	12,780	$	26,253	$	95,639
Cost of Goods Sold					1,664		800		18,788		39,680
Gross Income				$	748		11,980		7,465		55,959
Ordinary Income\Expenses
Depreciation				$	-		1,000		1,071		3,000
Amortization					-		1,072		-		3,216
Commissions					-		316		6,715		14,514
Advertising and Marketing					-		8,500		9,000		23,700
General & Administrative					3		-		2,528		216
Professional Fees					1,400		1,000		24,313		6,995
Total Expenses				$	1,403		11,788		43,627		51,641
Net Income (Loss) Before Provision for Income Taxes				$	(655)		92		(36,162)		4,318
Provision for Income Taxes					-		-
Net Income (Loss)				$	(655)	$	92	$	(36,162)	$	4,318
Net Income (Loss) Per Share				$	-	$	-	$	-	$
Weighted Average Shares Outstanding					8,585,977		8,585,977		8,585,977		8,585,977

 

See accompanying summary of accounting policies and notes to

financial statements

4

 

AUTOVATIVE PRODUCTS, INC

STATEMENTS OF CASH FLOWS

(Unaudited)

 

                                                                                                Nine Months Ended September 30            

		2012		2011
Cash Flows from Operating Activities
Net (Loss)	$	(36,162)	$	(26,603)
Adjustments to Reconcile Net Income (Loss) To Net Cash Provided by (Used In) Operating Activities:
Amortization of Long Lived Asset		-		2,144
Depreciation Property and Equipment		1,071		2,000
Accounts Payable		2,528		-
Changes In Accounts Receivable		14,129		31,186
Net Cash Provided by (Used In) Operating Activities		(18,434)		8,727
Cash Flows From Investing Activities
Net Cash Provided by (Used In) Investing Activities		-		-
Cash Flows from Financing Activities
Sale of Capital Stock		-		-
Net Cash Provided by (Used In) Financing Activities		-		-
Increase (decrease) in Cash		(18,434)		8,727
Cash at Beginning of the Quarter		28,343		1,045
Cash at End of Quarter	$	9,909	$	9,772

 

See accompanying summary of accounting policies and notes to

financial statements

*For the Quarter at September 30, 2012 and 2011, there were no payments for interest or taxes.

 

5

 

AUTOVATIVE PRODUCTS INC.

NOTES TO THE FINANCIAL STATEMENTS

(Unaudited)

September 30, 2012 and 2011

 

 

NOTE 1 - SUMMARY OF ACCOUNTING POLICIES

 

A summary of the significant accounting policies applied in the preparation of the accompanying financial statements follows.

 

BUSINESS AND BASIS OF PRESENTATION

 

Autovative Products Inc. ("Company" or "Autovative Products") was formed on March 8, 2004 under the laws of the State of Nevada.

 

Autovative Products is a Specialty distribution company of fleet truck products. Currently the Company has exclusive distribution rights with both Federal Express (FedEx) and United Postal Service (UPS) for its Portable Tow Truck. The Company is currently in the process of marketing its Overhead Door Saver to both FedEx and UPS.

 

LIQUIDITY

 

As shown in the accompanying financial statements, the Company had a net loss of $655 for the quarter at September 30, 2012 and incurred net income of $92 for the quarter at September 30, 2011. At September 30, 2012 the Company's current assets were $9,909 and the total assets were $9.909 and its liabilities were $2,528.

 

ESTIMATES

 

The preparation of the financial statement in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.

 

It is managementÕs opinion that all adjustments necessary for a fair statement of the results of the interim periods have been made, and all adjustments are of a normal recurring nature, with the exception of the item noted in Note 2 to the Financial Statements.

 

REVENUE RECOGNITION

 

The Company recognizes revenue when earned in accordance with SEC Staff Accounting Bulletin No. 101, "Revenue Recognition in Financial Statements".

 

The SEC staff released Staff Accounting Bulletin (SAB) No. 101, Revenue Recognition. to make its interpretive guidance consistent with current accounting guidance, Also, SAB 101 incorporates portions of the Revenue Recognition in Financial Statements - Frequently Asked Questions and Answers document that the SEC staff considered relevant and rescinds the remainder. The company's revenue recognition policies are consistent with this guidance.

 

6

 

INCOME TAXES

 

We account for income taxes in accordance with FASB ASC 740, Income Taxes which requires the recognition of deferred tax liabilities and assets for the expected future tax consequences of events that have been included in the financial statement or tax returns. Under this method, deferred tax liabilities and assets are determined based on the difference between financial statements and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Temporary differences between taxable income reported for financial reporting purposes and income tax purposes are insignificant.

 

PROPERTY AND EQUIPMENT

 

Property and equipment are stated at cost less accumulated depreciation and amortization. Depreciation and amortization are computed using straight-line methods over the estimated useful lives of the assets, principally three to five years, or the term of the lease, if shorter, for leasehold improvements.

 

IMPAIRMENT OF LONG-LIVED ASSETS

 

In September 2011, the FASB issued ASU 2011-08 Goodwill and Other (Topic 350) which amends the guidance on testing goodwill for impairment. Under the revised guidance, entities testing goodwill for impairment have the option of performing a qualitative assessment before calculating the fair value of the reporting unit (i.e., step 1 of the goodwill impairment test). If entities determine, on the basis of qualitative factors, that the fair value of the reporting unit is more likely than not less than the carrying amount, the two-step impairment test would be required. The ASU does not change how goodwill is calculated or assigned to reporting units, nor does it revise the requirement to test goodwill annually for impairment. In addition, the ASU does not amend the requirement to test goodwill for impairment between annual tests if events or circumstances warrant; however, it does revise the examples of events and circumstances that an entity should consider. The guidance is effective for annual and interim goodwill impairment tests performed for fiscal years beginning after March 15, 2011. The Statement requires that long-lived assets and certain identifiable intangibles held and used by the Company be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Events relating to recoverability may include significant unfavorable changes in business conditions, recurring losses, or a forecasted inability to achieve break-even operating results over an extended period. The Company uses an estimate of undiscounted future net cash flows of the assets over the remaining useful lives in determining whether the carrying value of the assets is recoverable. If the carrying values of the assets exceed the expected future cash flows of the assets, the Company recognizes an impairment loss equal to the difference between the carrying values of the assets and their estimated fair values. Impairment of long-lived assets is assessed at the lowest levels for which there are identifiable cash flows that are independent from other groups of assets. The evaluation of long-lived assets requires the Company to use estimates of future cash flows. However, actual cash flows may differ from the estimated future cash flows used in these impairment tests.

 

The company performed such an impairment review and determined that the future benefits from long-lived assets no longer exceed their carrying and a write down of the carrying value was necessary-(see ÒNOTE 2Ó).

 

COMPREHENSIVE INCOME

 

In September 2011, the FASB issued ASU 2011-5 Comprehensive Income (Topic 220) — Presentation of Comprehensive Income. The new guidance revises the manner in which entities present comprehensive income in their financial statements. ASU 2011-5 requires entities to report components of comprehensive income in either (1) a continuous statement of comprehensive income or (2) two separate but consecutive statements. The ASU does not change the items that must be reported in other comprehensive income. This guidance will require a change in the presentation of the financial statements and will require retrospective application. In March 2011, the FASB deferred certain provisions of the ASU that relate to presentation of reclassification adjustments. The guidance will not impact the Company's financial condition, results of operations or cash flow.

 

7

 

SEGMENT INFORMATION

 

The Financial Accounting Standards Board (FASB) released the 200 section of the Accounting Standards Codification for the purpose of discussing the broad topic of Presentation. Accounting Standards Codification 280 (ASC 280) was released to address the more specific topic of how businesses with multiple segments should report these. Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision maker, or decision making group, in making decisions how to allocate resources and assess performance. The information disclosed herein, materially represents all of the financial information related to the Company's principal operating segment.

 

EARNINGS PER SHARE

 

Earnings per share is calculated in accordance with the ASC Topic 260, ÒEarnings Per ShareÓ specifying the computation, presentation and disclosure requirements of earnings per share information. Basic earnings per share have been calculated based upon the weighted average number of common shares outstanding. Stock options and warrants have been excluded as common stock equivalents in the diluted earnings per share because they are either anti-dilutive, or their effect is not material.

 

CONCENTRATIONS OF CREDIT RISK

 

Financial instruments and related items, which potentially subject the Company to concentrations of credit risk, consist primarily of cash, cash equivalents and trade receivables. The Company places its cash and temporary cash investments with high credit quality institutions. At times, such investments may be in excess of the FDIC insurance limit.

 

ADVERTISING

 

The Company follows a policy of charging the costs of advertising to expenses incurred. The Company incurred no advertising expenses for the quarter at September 30, 2012 and $8,500 for the quarter at September 30, 2011.

 

NEW ACCOUNTING PRONOUNCEMENTS

 

In May 2011, the FASB issued ASU 2011-04 Fair Value Measurement (Topic 820). The ASU is the result of joint efforts by the FASB and International Accounting Standards Board (IASB) to develop a single, converged fair value framework. While the ASU is largely consistent with existing fair value measurement principles in U.S. GAAP, it expands existing disclosure requirements for fair value measurements and makes other amendments to eliminate unnecessary wording differences between U.S. GAAP and IFRSs. The amendments are effective for annual and interim goodwill impairment tests performed for fiscal years beginning after March 15, 2011. The impact of this standard has been taken into account as noted in NOTES 2, 3 and 4 of the CompanyÕs financial statements.

 

8

 

SEASONAL VARIATIONS

 

FASB issued ASC 270-10-45-11 which states that revenues of certain entities are subject to material seasonal variations. To avoid the possibility that interim results with material seasonal variations may be taken as fairly indicative of the estimated results for a full fiscal year, such entities shall disclose the seasonal nature of their activities, and consider supplementing their interim reports with information for 12-month periods ended at the interim date for the current and preceding years. The CompanyÕs business is seasonal; as it sells its Portable tow-truck mats almost exclusively to the UPS trucking fleet currently which is heavily used in winter conditions and substantially less in the spring through fall months; as can be seen in the following chart which depicts Sales and Expenses from 7-1-2010 to 6-30-2012 by quarter.

 

Quarter	Sales	Expenses
7-1-10 to 9-30-10	$ 7,831	$ 18,265
10-1-10 to 12-31-10	46,408	26,378
1-1-11 to 3-31-11	62,304	17,574
4-1-11 to 6-30-11	20,556	21,380
10-1-11 to 12-31-11	21,244	70,752
7-1-11 to 9-30-11	12,780	12,688
1-1-12 to 3-31-12	13,977	34,901
4-1-12 to 6-30-12	9,864	7,323
7-1-12 to 9-30-12	2,412	1,403

 

 

 

 

GOING CONCERN

 

The Company has had losses since its inception.  There is no assurance that we will become profitable in the future.

 

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern that contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. However, the ability of the Company to continue as a going concern on a longer-term basis will be dependent upon the ability to generate sufficient cash flow from operations to meet its obligations on a timely basis, the ability to successfully raise additional financing, and the ability to ultimately attain profitability.

 

NOTE 2 – CHANGE IN ACCOUNTING ESTIMATE

 

In 2011, the company elected to change its method of calculating depreciation and amortization to more appropriately reflect the nature of the assets. In 2005, assets were purchased for $100,000 and value was allocated as follows:

 

Equipment -       $70,000 with a useful life of 7 years and residual value of $40,000

Furniture -          $10,000 with a useful life of 5 years and residual value of $3,330

Computers -       $20,000 with a useful life of 5 years and residual value of $6,670

 

Management has determined that the following better represents the assets, their useful lives and residual values:

 

Intangibles (Intellectual Property) - $70,000 fully impaired in 2011.

Furniture -                                  $10,000 with a useful life of 7 years and no residual value.

Computers -                               $20,000 with a useful life of 3 years and no residual value.

 

Comparison of Depreciation and Amortization expense under the two principles:

 

	Expense	Accumulated Depreciation and Amortization
2011
Old estimate (including impairment expense):	$46,500	$90,000
New estimate (including impairment expense)	$52,179	$98,929

 

In 2011, the company recognized $3,247 of additional depreciation expense to reflect the depreciation of 3 year assets (computers) purchased in 2005.

 

9

 

Current and Future depreciation and amortization expense effects:

 

	2012	2013
Old Estimate:	$0	$0
New Estimate:	$1,071	$0

 

NOTE 3 – FIXED ASSETS

 

Property and Equipment at September 30, 2012 consists of the following:

 

Property and Equipment
Computers			$ 20,000
Furniture			10,000
Property and Equipment			$ 30,000
Accumulated Depreciation			(30,000)
Property and Equipment, net			$ 0

 

At the quarter March 31, 2012 the Company fully depreciated its computer and furniture.

 

Intangible Assets at September 30, 2012 consists of the following:

 

Intangible Assets
Intangible Assets Total			$ 70,000
Accumulated Amortization, subject to full impairment			(70,000)
Intangible Assets, net			$ 0

 

The CompanyÕs intellectual property consists of the industrial design for an Auto traction mold and Auto traction mat design which was acquired in 2005. The Company reclassified equipment as intellectual property at year end 2011 and after impairment analysis, considers it fully impaired. However, the mold design is still functional and the company may use it to produce molds in the future.

 

10

 

NOTE 4: PRIOR PERIOD ADJUSTMENTS AND RESTATEMENT OF REPORTED NET INCOME

 

The previously issued financial statements for 2010 have been restated. Sales invoiced prior to the end of the year and paid in early 2011 were not reflected on the 2010 financial statements as required by GAAP. The effect of the correction is as follows:

 

		As Previously Stated		As Corrected
Accounts Receivable:	$	420	$	31,186
Total Current Assets		1,462		32,321
Total Assets:		57,964		88,733
Accumulated Earnings:		24,823		55,592
Total Liabilities and Retained Earnings:		57,964		88,733
Sales:		88,143		118,909
Total Income		88,143		118,909
Net Income Before Provision for Income Taxes		(47,245)		(16,476)
Net Income		(47,245)		(16,476)
Net Income (Loss) Per Share		-		-

 

The opening balance for retained earnings has therefore been adjusted to $88,733.

 

NOTE 5 - INCOME TAXES

 

We account for income taxes in accordance with FASB ASC 740, Income Taxes which requires the recognition of deferred tax liabilities and assets for the expected future tax consequences of events that have been included in the financial statement or tax returns. Under this method, deferred tax liabilities and assets are determined based on the difference between financial statements and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Temporary differences between taxable income reported for financial reporting purposes and income tax purposes are insignificant.

 

The Company had a net loss carry forward from the years ending 2011, 2010, 2009 and 2008.

 

NOTE 6 - EARNINGS PER SHARE

 

Basic earnings per share is calculated using the weighted average number of common shares outstanding during each year. Diluted earnings per share include the net number of shares that would be issued upon the exercise of stock options using the treasury stock method. Options are not considered in loss years as they would be anti-dilutive. There are no shares with a dilutive impact at September 30, 2012 and 2011.

 

NOTE 7 - CAPITAL STOCK

 

COMMON STOCK

 

The Company is authorized to issue 25,000,000 shares of common stock, par value .001 per share. The company has 8,585,977 shares issued at September 30, 2012 and 2011.

 

 

In the quarter ended September 30, 2012 the Company issued no stock.

 

NOTE 8 - COMMITMENTS AND CONTINGENCIES

 

LEASE COMMITMENTS

 

The Company does not lease any office space; it uses space provided by its Chief Executive Officer free of charge to the Company.

11

 

PURCHASE AGREEMENTS

 

On September 11, 2005 the Company entered into a Marketing/Sales Contract with OTW Enterprises LLC. OTW Enterprises LLC is the manufacturer of the Portable Tow Truck and the Overhead Door Saver. The contract entitles the Company to exclusive marketing rights within the USA and Europe for the Portable Tow Truck and the Overhead Door Saver. The Company began marketing the products to UPS and Federal Express on January 15, 2005. This agreement was verbally amended in 2007 where we agreed to allow the Manufacturer of the Product to sell the Portable Tow Truck through its website to the retail markets.

 

 NOTE 9 - LITIGATION

 

In the ordinary course of business, we may be involved in legal proceedings from time to time. Although occasional adverse decisions or settlements may occur, we believe that the final disposition of such matters will not have material adverse effect on its financial position, results of operations or liquidity. We will seek to minimize disputes with our customers but recognize the inevitability of legal action in today's business environment as an unfortunate price of conducting business.

 

At this time there is no past or pending litigation.

 

NOTE 10 - SUBSEQUENT EVENTS

 

Subsequent events were evaluated by the Company through the date the financial statements were issued.  There were no other events that occurred subsequent to September 30, 2012 that would require recognition or disclosure in the CompanyÕs consolidated financial statements.

 

12

 

 

ITEM 2. MANAGEMENTÕS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

This quarterly report may contain certain 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. These include statements about our expectations, beliefs, intentions or strategies for the future, which we indicate by words or phrases such as "anticipate," "expect," "intend," "plan," "will," "we believe," "our company believes," "management believes" and similar language. These forward-looking statements are based on our current expectations and are subject to certain risks, uncertainties and assumptions, including those set forth in the following discussion. Our actual results may differ materially from results anticipated in these forward-looking statements. We base our forward-looking statements on information currently available to us, and we assume no obligation to update them. In addition, our historical financial performance is not necessarily indicative of the results that may be expected in the future and we believe that such comparisons cannot be relied upon as indicators of future performance. Other important factors that could cause actual results to differ materially include the following: business conditions, the price of precious metals, ability to attract and retain personnel; the price of the Company's stock; and the risk factors set forth from time to time in the Company's SEC reports, including but not limited to its annual report on Form 10-K; its quarterly reports on Forms 10-Q; and any reports on Form 8-K. In addition, the Company disclaims any obligation to update or correct any forward-looking statements in all the Company's annual reports and SEC filings to reflect events or circumstances after the date hereof.

 

GENERAL

 

We were incorporated in Nevada on December 8, 2004 and we have elected December 31 as our fiscal year end.

 

We were formed to develop businesses, assets and opportunities, some acquired and contributed from third parties and our founding shareholders, in the trucking/automobile special parts production and distribution industry and some related fields. We have been, initially, capitalized through the acquisition of Assets from our founding shareholder, outside producers, cash flows from the distribution of products and the proceeds from a Private Placement offering.

 

Products and Technology

 

Portable Tow Truck

 

The Portable Tow Truck was developed and is owned by OTW Enterprises LLC. We have contracted with OTW Enterprises LLC for the marketing and distribution rights. The Portable Tow Truck is made of rigid polypropylene. Each section (there are two sections, one for each rear tire) is 8 inches wide and 36 inches long, and weighs 2.5 pounds. They have two holes on the top portion to provide attachment to the vehicle, and are designed for easily handling and consume very little trunk space. They have been tested to perform at 40 degrees below zero, and are designed to last for a number of years, depending on how much they are used.

 

We have continued to have positive response from both FedEx and UPS regarding the Portable Tow Truck. We have no ongoing contract for the sale of the product to any Company, inclusive of FedEx and UPS yet both Companies combined make up 98% of our sales OF The Portable Tow Truck as they continue to return to purchase the Portable Tow Truck.

 

We believe that once we implement our business strategy as defined above we will be able to sell the product to additional large trucking fleets as well as automotive parts stores, and the larger retail outlets such as Wal-Mart, and Target. At this time we do not know how successful we might be at selling to other large trucking fleets or the retail markets.

 

Overhead Door Saver

 

The Overhead Door Saver was developed and is owned by OTW Enterprises LLC. We have contracted with OTW Enterprises LLC for the marketing and distribution rights. The Overhead Door Saver is manufactured from various steel parts. The mounting piece (which is bolted to the track of the overhead door) is 3Ó steel flat bar which has three holes punched in it, and then is bent into a U shape. The rod which goes through the U support is made from hot-rolled ½Ó steel and has a 2ÓX2 ½Ó flat steel piece welded on one end. A 10Ó long engineered steel spring is placed over the rod and then inserted through the holes on the U support. A 2Ó long engineered steel spring is placed on the back end of the rod, with a bolt behind it welded to the rod. The assembled unit is then painted and baked (plated) to prevent rust and to assure a long-lasting product. Left-hand and right-hand units are produced, and both units are then bolted to the overhead door track, one on each side.

 

We have yet to make sales of the Overhead Door Saver. The unit is currently in a test phase by UPS.

 

13

Results of Operations

Net Sales

For the three months ended September 30, 2012, the Company had $2,412 in sales compared to $12,870 for the corresponding period in 2011. For the nine months ended September 30, 2012, the Company had $26,253 in sales compared to $95,639 for the corresponding period in 2011. The decrease in sales resulted from a decrease in orders from both FEDX and UPS.

Gross Profit

Gross Income was $748 for the three months ending September 30, 2012 compared to $11,980 for the three month period ending September 30, 2011. Gross Income was $7,465 for the nine months ending September 30, 2012 compared to $55,959 for the nine month period ending September 30, 2011.

Selling, General and Administrative Expenses

For the three months ended September 30, 2012, the Company had office and general expenses of $3 and no commissions, and professional fees of $1,400. For the nine months ended September 30, 2012, the Company had office and general expenses of $2,528 and commissions of $6,715, and professional fees of $24,313.

For the corresponding period in 2011 the Company incurred no office and general expenses; marketing expenses of $8,500; commissions of $316 and $1,000 in professional fees. For the nine months ended September 30, 2011, the Company had office and general expenses of $216; marketing expenses of $23,700; commissions of $14,514 and $6,995 in professional fees.

For the three months ended September 30, 2012 as compared to the three months ended September 30, 2011; office and general expenses were the same; commissions decreased by $316; professional fees increased by $400 and marketing expenses decreased by $8,500; and for the nine months ended September 30, 2012 as compared to the same period 2011; office and general expenses increased by $2,312, professional fees increased by $17,318 (as a result of being a public Company and the associated costs), commissions decreased by $7,799 and marketing expenses decreased by $14,700. The Company continues to re-evaluate its marketing and advertising to market its Portable Tow Truck and Overhead Door Saver to different trucking fleets.

Accounts payable totaled $2,528, for cost of goods, and accounts receivable were $0 at September 30, 2012.

The CompanyÕs business is seasonal; as it sells its Portable tow-truck mats almost exclusively to the UPS trucking fleet currently which is heavily used in winter conditions and substantially less in the spring through fall months as can be seen in the following chart which depicts Sales and Expenses from 7-1-2010 to 9-30-2012 by quarter.

 

Quarter	Sales	Expenses
7-1-10 to 9-30-10	$ 7,831	$ 18,265
10-1-10 to 12-31-10	46,408	26,378
1-1-11 to 3-31-11	62,304	17,574
4-1-11 to 6-30-11	20,556	21,380
10-1-11 to 12-31-11	21,244	70,752
7-1-11 to 9-30-11	12,780	12,688
1-1-12 to 3-31-12	13,977	34,901
4-1-12 to 6-30-12	9,864	7,323
7-1-12 to 9-30-12	2,412	1,403

Net Loss

For the three months and nine months ended September 30, 2012 respectively the Company had a net loss of $655 or $(0.00) per share and a loss of (36,162) or $(0.00) per share, compared to the net profit for the corresponding three month and nine month period to September 30, 2011 of $92 or $(0.00) per share and a net profit of $4,318 or $0.00 per share.

Liquidity and Capital Resources

The Company had current assets including cash on hand of $9,909 as at September 30, 2012. The Company also had a net loss of $655 during the three months ended September 30, 2012 and a loss of ($36,162) for the nine months for the same period. For the three months ended September 30 the Company had current assets of $9,909 in 2012 and $42,765 in 2011. At three months ended September 30 2012 total assets declined by $32,586 as compared to the same period at September 30, 2011 primarily due to the full amortization and depreciation of the CompanyÕs assets at year end 2011 and the three months ended March 31, 2012. In addition the Company has an accounts payable of $2,528 at the three months ended September 30, 2012.

Management of the Company has determined that the CompanyÕs ability to continue as a going concern is dependent on raising additional capital and achieving increased sales of its Portable Tow Truck and it Overhead Door Saver.

Management can give no assurance that any increase in sales will occur in the future and if they do occur, may not be enough to cover the CompanyÕs operating expenses or any other costs. Should this be the case, we would be forced, unless sufficient working capital can be raised, to suspend operations and possibly liquidate the assets and wind up and dissolve the Company.

As of September 30, 2012 the Company had $9,909 of cash on hand, Total Assets of $9,909 and Total Current Liabilities of $2,528. The Company believes that it has sufficient capital to operate over the next twelve (12) months.

 

Significant Accounting Policies and Estimates

 

ManagementÕs Discussion and Analysis of Financial Condition and Results of Operations discusses the CompanyÕs consolidated financial statements which have been prepared in accordance with accounting principals generally accepted in the United States of America. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Management bases its estimates and judgments on historical experiences and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

 

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RECENT ACCOUNTING PRONOUNCEMENTS

 

Application of Critical Accounting Policies

 

Our financial statements and accompanying notes are prepared in accordance with generally accepted accounting principles in the United States. Preparing financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses. These estimates and assumptions are affected by managementÕs application of accounting policies. Critical accounting policies include revenue recognition, impairment of marketing rights and accounting for legal contingencies.

 

We recognize revenue in accordance with Staff Accounting Bulletin No. 114, ÒRevenue Recognition in Financial Statements.Ó Sales are recorded when products are shipped to customers. Provisions for discounts and rebates to customers, estimated returns and allowances and other adjustments are provided for in the same period the related sales are recorded.

 

We evaluate our long-lived assets for financial impairment on a regular basis in accordance with ASU 2011-08 Goodwill and Other (Topic 350). In September 2011, the FASB issued ASU 2011-08 Goodwill and Other (Topic 350) which amends the guidance on testing goodwill for impairment. Under the revised guidance, entities testing goodwill for impairment have the option of performing a qualitative assessment before calculating the fair value of the reporting unit (i.e., step 1 of the goodwill impairment test). If entities determine, on the basis of qualitative factors, that the fair value of the reporting unit is more likely than not less than the carrying amount, the two-step impairment test would be required. The ASU does not change how goodwill is calculated or assigned to reporting units, nor does it revise the requirement to test goodwill annually for impairment. In addition, the ASU does not amend the requirement to test goodwill for impairment between annual tests if events or circumstances warrant; however, it does revise the examples of events and circumstances that an entity should consider. The guidance is effective for annual and interim goodwill impairment tests performed for fiscal years beginning after March 15, 2011 (See "NOTE 2" for Financial Statements).

 

New Accounting Pronouncements

 

In May 2011, the FASB issued ASU 2011-04 Fair Value Measurement (Topic 820). The ASU is the result of joint efforts by the FASB and International Accounting Standards Board (IASB) to develop a single, converged fair value framework. While the ASU is largely consistent with existing fair value measurement principles in U.S. GAAP, it expands existing disclosure requirements for fair value measurements and makes other amendments to eliminate unnecessary wording differences between U.S. GAAP and IFRSs. The amendments are effective for annual and interim goodwill impairment tests performed for fiscal years beginning after March 15, 2011. The impact of this standard has been taken into account as noted in NOTES 2, 3 and 4 of the CompanyÕs financial statements.

 

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Item 3. Quantitative and Qualitative Disclosures about Market Risk

Not applicable

Item 4. Controls and Procedures

   Controls And Procedures.

 

(a) Evaluation of Disclosure Controls and Procedures

 

At the end of the period covered by this Quarterly Report on Form 10-Q, our management, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the design and operation of our disclosure controls and procedures. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer believe that:

 

á	Our disclosure controls and procedures are designed to ensure that information required to be disclosed by us in the reports we file under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the SECÕs rules and forms; and

 

á

Our disclosure controls and procedures operate such that important information flows to appropriate collection and disclosure points in a timely manner and are effective to ensure that such information is accumulated and communicated to our management, and made known to our Chief Executive Officer and Chief Financial Officer, particularly during the period when this Annual Report was prepared, as appropriate to allow timely decisions regarding the required disclosure.

 

Autovative ProductÕs Chief Executive Officer and Chief Financial Officer have evaluated our disclosure controls and procedures and concluded that these controls and procedures were effective as of September 30, 2012.

 

(b) Management's Annual Report on Internal Control over Financial Reporting

 

The management of Autovative Products, Inc. is responsible for establishing and maintaining adequate internal control over financial reporting. Our internal control system was designed to provide reasonable assurance to our management and Board of Directors regarding the preparation and fair presentation of published financial statements.

 

All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

 

In making our assessment of internal control over financial reporting, management used the criteria issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control—Integrated Framework. Based on our assessment, we believe that, as of September 30, 2012, our internal control over financial reporting is effective at the reasonable assurance level based on those criteria.

 

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PART II - OTHER INFORMATION

Item 1. Legal Proceedings

None

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None

Item 3. Defaults upon Senior Securities

None.

Item 4. Mining Safety Disclosures

Item 5. Other Information

None.

Item 6. Exhibits

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

8-k        3/7/2012            Item 4.01.          Changes in registrant's certifying accountant.

 

8-k/A    3/12/12             Item 4.01.          Changes in registrant's certifying accountant.

 

8-k        10/22/12                        Item 4.01.          Changes in registrant's certifying accountant

 

(a) Financial Statement Schedules.

 

None.

 

(b) Exhibits

 

Number	Exhibit
31.1**	Certification of the Chief Executive Officer, as the principal executive officer and the principal financial officer, under 18 U.S.C. Section 1350, as adopted in accordance with section 302 of the Sarbanes-Oxley Act of 2002.
32.1**	Certification of the Chief Executive Officer, as the principal executive officer and the principal financial officer, under 18 U.S.C. Section 1350, as adopted in accordance with Section 906 of the Sarbanes-Oxley Act of 2002.

** Filed Herewith

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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.

 

	AUTOVATIVE PRODUCTS, INC
Dated: November 14, 2012.	By:	/s/ David Funderburk
		David Funderburk,
		President, Treasurer and Secretary (Principal Executive, Financial and Accounting Officer)

 

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