UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10 Q
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2009
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from __________ to __________
Commission File Number 333-141676
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Aftermarket Enterprises, Inc.
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(Exact name of registrant as specified in its charter)
Nevada 20-5354797
------------------------------- ---------------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
933 S. 4th Street, Unit A, Grover Beach, CA 93433
-------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(805) 457-6999
----------------------------------------------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the 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 definitions of "large accelerated filer," "accelerated filer,"
and "smaller reporting company" in Rule 12b-2 of the Exchange Act.
Large Accelerated filer [ ] Accelerated filer [ ]
Non-accelerated filer [ ] 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 issuer's classes of
common equity, as of the latest practicable date.
2,776,996 shares of $0.001 par value common stock on November 12, 2009
----------------------------------------------------------------------
Part I - FINANCIAL INFORMATION
Item 1. Financial Statements
Aftermarket Enterprises, Inc.
FINANCIAL STATEMENTS
(UNAUDITED)
Sept 30, 2009
The financial statements included herein have been prepared by the
Company, without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted.
However, in the opinion of management, all adjustments (which include only
normal recurring accruals) necessary to present fairly the financial position
and results of operations for the periods presented have been made. These
financial statements should be read in conjunction with the accompanying
notes, and with the historical financial information of the Company.
2
AFTERMARKET ENTERPRISES, INC.
CONSOLIDATED BALANCE SHEETS
September 30,
2009 December 31,
(unaudited) 2008
------------- ------------
ASSETS
------
Current assets
Cash $ 4,339 $ 22,974
Other current assets - 1,042
------------- ------------
Total current assets 4,339 24,016
Website (net of amortization of $35,609
and $15,827 respectively) - 7,911
------------- ------------
Total assets $ 4,339 $ 31,927
============= ============
LIABILITIES
-----------
Current liabilities
Accounts payable $ 10,810 $ 14,086
Accrued liabilities 164 695
------------- ------------
Total current liabilities 10,974 14,781
------------- ------------
STOCKHOLDERS' EQUITY (DEFICIT)
------------------------------
Preferred Stock: ($0.001 par value, 10,000,000
shares authorized; no shares issued and
outstanding) - -
Common Stock: ($0.001 par value, 90,000,000
shares authorized; 2,776,996 issued and
outstanding) 2,777 2,777
Additional paid in capital 187,853 187,853
Accumulated deficit (197,265) (173,484)
------------- ------------
Total stockholders' equity (deficit) (6,635) 17,146
------------- ------------
Total liabilities and stockholders'
equity (deficit) $ 4,339 $ 31,927
============= ============
The accompanying notes are an integral part of these financial statements.
3
AFTERMARKET ENTERPRISES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
Three Months ended Nine Months ended
September 30, September 30,
-------------------------- -------------------------
2009 2008 2009 2008
------------ ------------ ------------ -----------
Revenues
Sales (net of returns)$ 21,963 30,949 70,381 118,440
Costs of goods sold 14,995 24,708 51,009 102,792
------------ ------------ ------------ -----------
Gross profit 6,968 6,241 19,372 15,648
------------ ------------ ------------ -----------
Expenses
Amortization expense 1,975 2,968 7,911 8,904
Credit card discounts 1,385 1,590 3,501 5,478
Payroll expenses - - - 6,695
Other general &
Administrative 5,203 19,221 16,158 42,166
Legal and professional
Fees 574 20,812 15,582 30,035
------------ ------------ ------------ -----------
9,137 44,591 43,152 93,278
------------ ------------ ------------ -----------
Loss from operations (2,169) (38,350) (23,780) (77,630)
Interest income - 39 - 51
Interest expense - (394) - (996)
Penalties and settlements - - - (424)
Provision for income taxes - - - -
------------ ------------ ------------ -----------
Net (loss) $ (2,169) $ (38,705) $ (23,780) $ (78,999)
============ ============ ============ ===========
Net (loss) per
common share $ (0.01) $ (0.01) $ (0.01) $ (.03)
============ ============ ============ ===========
Weighted average
number of common
shares outstanding 2,776,996 1,798,776 2,776,996 1,661,729
============ ============ ============ ===========
The accompanying notes are an integral part of these financial statements.
4
AFTERMARKET ENTERPRISES, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
(unaudited)
Total
Common Stock Additional Stockholders'
----------------- Paid-in Accumulated Equity
Shares Amount Capital Deficit (Deficit)
--------- ------ -------- ---------- ----------
December 31, 2007 1,592,452 1,592 $ 58,653 $ (66,417) $ (6,172)
--------- ------ -------- ---------- ----------
Stock issued for cash at
$.12 per share on
August 12, 2008 1,054,544 1,055 125,430 126,485
Stock issued for
consulting services at
$.03 per share on
October 1, 2008 130,000 130 3,770 3,900
Net loss for year - - - (107,067) (107,067)
--------- ------ -------- ---------- ----------
Balance,
December 31, 2008 2,776,996 $2,777 $187,853 (173,484) $ 17,146
--------- ------ -------- ---------- ----------
Net loss for year (23,780) (23,780)
========= ====== ======== ========== ==========
Balance,
September 30, 2009 2,776,996 $2,777 $187,853 $(197,264) $ (6,634)
========= ====== ======== ========== ==========
The accompanying notes are an integral part of these financial statements
5
AFTERMARKET ENTERPRISES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
Nine Months ended
September 30,
-------------------------
2009 2008
------------ -----------
OPERATING ACTIVITIES
Net loss $ (23,780) $ (78,999)
Adjustment for items not involving cash:
Amortization expense 7,911 8,903
Change in non-cash working capital items: (15,869) (70,096)
(Increase) decrease in other current assets 1,042 (1560)
Increase (decrease) in accounts payable (3,276) (4,112)
Increase (decrease) in accrued liabilities (531) (1,561)
------------ -----------
Cash provided by (used in) operating activities (18,634) (77,329)
INVESTING ACTIVITIES
None - -
------------ -----------
Cash used in investing activities - -
FINANCING ACTIVITIES
Proceeds from sale of common stock - 126,486
------------ -----------
Cash provided by financing activities
49,157
Increase (decrease) in cash position (18,634)
Cash position at beginning of period 22,974 549
------------ -----------
Cash position at end of period $ 4,339 $ 49,706
============ ===========
The accompanying notes are an integral part of these financial statements
6
Aftermarket Enterprises, Inc.
Notes to Consolidated Financial Statements
Sept 30, 2009
(unaudited)
NOTE 1 ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
This summary of significant accounting policies of Aftermarket Enterprises,
Inc. (the Company) is presented to assist in understanding the Company's
financial statements. These accounting policies conform to accounting
principles generally accepted in the United States of America and have been
consistently applied in the preparation of the accompanying consolidated
financial statements.
The accompanying financial statements have been prepared by the Company
without audit. In the opinion of management, all adjustments (which include
only normal recurring adjustments) necessary to present fairly the financial
position, results of operations and cash flows at September 30, 2009 and for
all periods presented have been made.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with accounting principles generally
accepted in the United States of America have been condensed or omitted. It
is suggested that these condensed financial statements be read in conjunction
with the financial statements and notes thereto included in the Company's
December 31, 2008 audited financial statements. The results of operations
for the periods ended September 30, 2009 and 2008, respectively, are not
necessarily indicative of the operating results for the full years.
Business Activity
Aftermarket Enterprises, Inc. (the Company) is a Nevada corporation organized
on August 4, 2006 to market and sell aftermarket automotive products through
the Internet. On May 12, 2004, Everything SUV, LLC was organized to sell
aftermarket automotive products for SUV's through the Internet. On July 24,
2006, all rights, titles and interests to any and all memberships and
ownership interests in Everything SUV, LLC were transferred to Aftermarket
Express, Inc. The Company acquired all the outstanding shares of common
stock of Aftermarket Express, Inc. on September 1, 2006 in a business
combination. The Company has elected a fiscal year end of December 31st.
All intercompany balances have been eliminated on consolidation.
Recently Issued Accounting Pronouncements
June 2009, the FASB issued SFAS No. 166, "Accounting for Transfers of
Financial Assets-an amendment of FASB Statement No. 140" ("SFAS 166"). The
provisions of SFAS 166, in part, amend the derecognition guidance in FASB
Statement No. 140, eliminate the exemption from consolidation for qualifying
special-purpose entities and require additional disclosures. SFAS 166 is
effective for financial asset transfers occurring after the beginning of an
entity's first fiscal year that begins after November 15, 2009. The Company
does not expect the provisions of SFAS 166 to have a material effect on the
financial position, results of operations or cash flows of the Company.
7
Aftermarket Enterprises, Inc.
Notes to Consolidated Financial Statements (Continued)
Sept 30, 2009
(unaudited)
NOTE 1 ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
In June 2009, the FASB issued SFAS No. 167, "Amendments to FASB
Interpretation No. 46(R) ("SFAS 167"). SFAS 167 amends the consolidation
guidance applicable to variable interest entities. The provisions of SFAS 167
significantly affect the overall consolidation analysis under FASB
Interpretation No. 46(R). SFAS 167 is effective as of the beginning of the
first fiscal year that begins after November 15, 2009. SFAS 167 will be
effective for the Company beginning in 2010. The Company does not expect the
provisions of SFAS 167 to have a material effect on the financial position,
results of operations or cash flows of the Company.
In June 2009, the FASB issued SFAS No. 168, "The FASB Accounting Standards
Codification and the Hierarchy of Generally Accepted Accounting Principles -
a replacement of FASB Statement No. 162" ("SFAS No. 168"). Under SFAS No.
168 the "FASB Accounting Standards Codification" ("Codification") will become
the source of authoritative U. S. GAAP to be applied by nongovernmental
entities. Rules and interpretive releases of the Securities and Exchange
Commission ("SEC") under authority of federal securities laws are also
sources of authoritative GAAP for SEC registrants. SFAS No. 168 is effective
for financial statements issued for interim and annual periods ending after
September 15, 2009. On the effective date, the Codification will supersede
all then-existing non-SEC accounting and reporting standards. All other non-
grandfathered non-SEC accounting literature not included in the Codification
will become non-authoritative. SFAS No. 168 is effective for the Company's
interim quarterly period beginning July 1, 2009. The Company does not expect
the adoption of SFAS No. 168 to have an impact on the financial statements.
In June 2009, the Securities and Exchange Commission's Office of the Chief
Accountant and Division of Corporation Finance announced the release of Staff
Accounting Bulletin (SAB) No. 112. This staff accounting bulletin amends or
rescinds portions of the interpretive guidance included in the Staff
Accounting Bulletin Series in order to make the relevant interpretive
guidance consistent with current authoritative accounting and auditing
guidance and Securities and Exchange Commission rules and regulations.
Specifically, the staff is updating the Series in order to bring existing
guidance into conformity with recent pronouncements by the Financial
Accounting Standards Board, namely, Statement of Financial Accounting
Standards No. 141 (revised 2007), Business Combinations, and Statement of
Financial Accounting Standards No. 160, Non-controlling Interests in
Consolidated Financial Statements. The statements in staff accounting
bulletins are not rules or interpretations of the Commission, nor are they
published as bearing the Commission's official approval. They represent
interpretations and practices followed by the Division of Corporation Finance
and the Office of the Chief Accountant in administering the disclosure
requirements of the Federal securities laws.
8
Aftermarket Enterprises, Inc.
Notes to Consolidated Financial Statements (Continued)
Sept 30, 2009
(unaudited)
NOTE 1 ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
In April 2009, the FASB issued FSP No. FAS 107-1 and APB 28-1, Interim
Disclosures about Fair Value of Financial Instruments. This FSP amends FASB
Statement No. 107, Disclosures about Fair Value of Financial Instruments, to
require disclosures about fair value of financial instruments for interim
reporting periods of publicly traded companies as well as in annual financial
statements. This FSP also amends APB Opinion No. 28, Interim Financial
Reporting, to require those disclosures in summarized financial information
at interim reporting periods. This FSP shall be effective for interim
reporting periods ending after June 15, 2009. The Company does not have any
fair value of financial instruments to disclose.
In April 2009, the FASB issued FSP No. FAS 115-2 and FAS 124-2, Recognition
and Presentation of Other-Than-Temporary Impairments. This FSP amends the
other-than-temporary impairment guidance in U.S. GAAP for debt securities to
make the guidance more operational and to improve the presentation and
disclosure of other-than-temporary impairments on debt and equity securities
in the financial statements. The FSP does not amend existing recognition and
measurement guidance related to other-than-temporary impairments of equity
securities. The FSP shall be effective for interim and annual reporting
periods ending after June 15, 2009. The Company currently does not have any
financial assets that are other-than-temporarily impaired.
In April 2009, the FASB issued FSP No. FAS 141(R)-1, Accounting for Assets
Acquired and Liabilities Assumed in a Business Combination That Arise from
Contingencies, to address some of the application issues under SFAS 141(R).
The FSP deals with the initial recognition and measurement of an asset
acquired or a liability assumed in a business combination that arises from a
contingency provided the asset or liability's fair value on the date of
acquisition can be determined. When the fair value can-not be determined, the
FSP requires using the guidance under SFAS No. 5, Accounting for
Contingencies, and FASB Interpretation (FIN) No. 14, Reasonable Estimation of
the Amount of a Loss. This FSP was effective for assets or liabilities
arising from contingencies in business combinations for which the acquisition
date is on or after January 1, 2009. The adoption of this FSP has not had a
material impact on our financial position, results of operations, or cash
flows during the six months ended June 30, 2009.
9
Aftermarket Enterprises, Inc.
Notes to Consolidated Financial Statements (Continued)
Sept 30, 2009
(unaudited)
NOTE 1 ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
In April 2009, the FASB issued FSP No. FAS 157-4, "Determining Fair Value
When the Volume and Level of Activity for the Asset or Liability Have
Significantly Decreased and Identifying Transactions That Are Not Orderly"
("FSP FAS 157-4"). FSP FAS 157-4 provides guidance on estimating fair value
when market activity has decreased and on identifying transactions that are
not orderly. Additionally, entities are required to disclose in interim and
annual periods the inputs and valuation techniques used to measure fair
value. This FSP is effective for interim and annual periods ending after
June 15, 2009. The Company does not expect the adoption of FSP FAS 157-4
will have a material impact on its financial condition or results of
operation.
In October 2008, the FASB issued FSP No. FAS 157-3, "Determining the Fair
Value of a Financial Asset When the Market for That Asset is Not Active,"
("FSP FAS 157-3"), which clarifies application of SFAS 157 in a market that
is not active. FSP FAS 157-3 was effective upon issuance, including prior
periods for which financial statements have not been issued. The adoption of
FSP FAS 157-3 had no impact on the Company's results of operations, financial
condition or cash flows.
In December 2008, the FASB issued FSP No. FAS 140-4 and FIN 46(R)-8,
"Disclosures by Public Entities (Enterprises) about Transfers of Financial
Assets and Interests in Variable Interest Entities." This disclosure-only
FSP improves the transparency of transfers of financial assets and an
enterprise's involvement with variable interest entities, including
qualifying special-purpose entities. This FSP is effective for the first
reporting period (interim or annual) ending after December 15, 2008, with
earlier application encouraged. The Company adopted this FSP effective
January 1, 2009. The adoption of the FSP had no impact on the Company's
results of operations, financial condition or cash flows.
In December 2008, the FASB issued FSP No. FAS 132(R)-1, "Employers'
Disclosures about Postretirement Benefit Plan Assets" ("FSP FAS 132(R)-1").
FSP FAS 132(R)-1 requires additional fair value disclosures about employers'
pension and postretirement benefit plan assets consistent with guidance
contained in SFAS 157. Specifically, employers will be required to disclose
information about how investment allocation decisions are made, the fair
value of each major category of plan assets and information about the inputs
and valuation techniques used to develop the fair value measurements of plan
assets. This FSP is effective for fiscal years ending after December 15,
2009. The Company does not expect the adoption of FSP FAS 132(R)-1 will have
a material impact on its financial condition or results of operation.
10
Aftermarket Enterprises, Inc.
Notes to Consolidated Financial Statements (Continued)
Sept 30, 2009
(unaudited)
NOTE 1 ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
In September 2008, the FASB issued exposure drafts that eliminate qualifying
special purpose entities from the guidance of SFAS No. 140, "Accounting for
Transfers and Servicing of Financial Assets and Extinguishments of
Liabilities," and FASB Interpretation 46 (revised December 2003),
"Consolidation of Variable Interest Entities - an interpretation of ARB
No. 51," as well as other modifications. While the proposed revised
pronouncements have not been finalized and the proposals are subject to
further public comment, the Company anticipates the changes will not have a
significant impact on the Company's financial statements. The changes would
be effective March 1, 2010, on a prospective basis.
In June 2008, the FASB issued FASB Staff Position EITF 03-6-1, Determining
Whether Instruments Granted in Share-Based Payment Transactions Are
Participating Securities, ("FSP EITF 03-6-1"). FSP EITF 03-6-1 addresses
whether instruments granted in share-based payment transactions are
participating securities prior to vesting, and therefore need to be included
in the computation of earnings per share under the two-class method as
described in FASB Statement of Financial Accounting Standards No. 128,
"Earnings per Share." FSP EITF 03-6-1 is effective for financial statements
issued for fiscal years beginning on or after December 15, 2008 and earlier
adoption is prohibited. We are not required to adopt FSP EITF 03-6-1; neither
do we believe that FSP EITF 03-6-1 would have material effect on our
consolidated financial position and results of operations if adopted.
In May 2008, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 163, "Accounting for Financial Guarantee Insurance Contracts-and
interpretation of FASB Statement No. 60". SFAS No. 163 clarifies how
Statement 60 applies to financial guarantee insurance contracts, including
the recognition and measurement of premium revenue and claims liabilities.
This statement also requires expanded disclosures about financial guarantee
insurance contracts. SFAS No. 163 is effective for fiscal years beginning on
or after December 15, 2008, and interim periods within those years. SFAS No.
163 has no effect on the Company's financial position, statements of
operations, or cash flows at this time.
11
Aftermarket Enterprises, Inc.
Notes to Consolidated Financial Statements (Continued)
Sept 30, 2009
(unaudited)
NOTE 1 ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
In May 2008, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 162, "The Hierarchy of Generally Accepted Accounting Principles". SFAS
No. 162 sets forth the level of authority to a given accounting pronouncement
or document by category. Where there might be conflicting guidance between
two categories, the more authoritative category will prevail. SFAS No. 162
will become effective 60 days after the SEC approves the PCAOB's amendments
to AU Section 411 of the AICPA Professional Standards. SFAS No. 162 has no
effect on the Company's financial position, statements of operations, or cash
flows at this time.
In March 2008, the Financial Accounting Standards Board, or FASB, issued SFAS
No. 161, Disclosures about Derivative Instruments and Hedging Activities-an
amendment of FASB Statement No. 133. This standard requires companies to
provide enhanced disclosures about (a) how and why an entity uses derivative
instruments, (b) how derivative instruments and related hedged items are
accounted for under Statement 133 and its related interpretations, and (c)
how derivative instruments and related hedged items affect an entity's
financial position, financial performance, and cash flows. This Statement is
effective for financial statements issued for fiscal years and interim
periods beginning after November 15, 2008, with early application encouraged.
The Company has not yet adopted the provisions of SFAS No. 161, but does not
expect it to have a material impact on its consolidated financial position,
results of operations or cash flows.
Cash and Cash Equivalents
For the purpose of the statements of cash flows, the Company considers all
highly liquid debt instruments purchased with a maturity of three months or
less to be cash equivalents. The Company had $4,339.00 in cash or cash
equivalents at Sept 30, 2009.
Use of Estimates in the preparation of the financial statements
The preparation of the Company's 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 amounts
reported in these financial statements and accompanying notes. Actual results
could differ from those estimates.
12
Aftermarket Enterprises, Inc.
Notes to Consolidated Financial Statements (Continued)
Sept 30, 2009
(unaudited)
NOTE 1 ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
Revenue Recognition
The Company recognizes revenue from product sales when the following four
revenue recognition criteria are met: persuasive evidence of an arrangement
exists, delivery has occurred or services have been rendered, the selling
price is fixed or determinable, and collectability is reasonably assured.
Product sales and shipping revenues are recorded when the products are
shipped and title passes to customers. The customer's credit card is
authorized at the time the order is placed, thereby providing reasonable
assurance of collectability. The credit card is then charged for the amount
of the sale when the product is shipped from the supplier. Our agreement
with our suppliers is that all orders for products that are in stock are
shipped within 48 hours of receipt of the order by the supplier. We interact
telephonically and electronically with our suppliers on a daily basis and are
aware of when outstanding orders are shipped. Approximately 50% of our
suppliers notify us via email when orders have been shipped and, with rare
exceptions, all orders for merchandise that is in stock are shipped within 48
hours of the time of the order. If we are not notified electronically that
the order has been shipped, we confirm it telephonically prior to charging
the customers card. Delivery to the customer is deemed to have occurred when
the product is shipped from the supplier.
Advertising
The Company expenses advertising costs as incurred. There were no
advertising costs incurred during the quarter ending 9-30-09.
Shipping and Handling Revenue and Costs
Shipping and handling revenues average an amount equal to approximately 10%
of product sales and is included in our sales for the period.
Shipping and handling costs average an amount equal to approximately 10% of
product sales and are included in cost of sales.
NOTE 2 BUSINESS ACQUISITIONS
On September 1, 2006, we acquired Aftermarket Express, Inc. which is now our
wholly owned subsidiary. We purchased Aftermarket Express, Inc. from its
stockholders for $31,300 paid in the form of $21,300 in cash and $10,000,
interest free Promissory Note with a maturity date of November 29, 2006. The
Promissory Note was paid in full on November 2, 2006.
13
Aftermarket Enterprises, Inc.
Notes to Consolidated Financial Statements (Continued)
Sept 30, 2009
(unaudited)
NOTE 3 COMMITMENTS
None.
NOTE 4 RELATED PARTY TRANSACTIONS
None.
NOTE 5 WEBSITE
We receive all of our revenues through our website. Once the order is
received from the website, the customer's credit card is authorized for the
total cost of the sale, including shipping and handling. Upon successful
authorization of the credit card, the order is sent to the appropriate
supplier via email. Upon confirmation that the order has been shipped by the
supplier, the customer's credit card is charged for the full value of the
sale, including shipping and handling. Since we do not maintain an
inventory, credit cards are not charged until shipment to assure the
manufacture has the item in stock for immediate shipment. If the item is not
available for immediate shipment, electronic communication is sent to the
customer informing them of any delays and their order is cancelled or put on
hold depending upon their preference.
NOTE 6 GOING CONCERN
The Company's financial statements are prepared using generally accepted
accounting principles in the United States of America applicable to a going
concern which contemplates the realization of assets and liquidation of
liabilities in the normal course of business. The Company has not yet
established an ongoing source of revenues sufficient to cover its operating
costs and allow it to continue as a going concern. The ability of the
Company to continue as a going concern is dependent on the Company obtaining
adequate capital to fund operating losses until it becomes profitable. If
the Company is unable to obtain adequate capital, it could be forced to cease
operations.
In order to continue as a going concern, the Company will need, among other
things, additional capital resources. Management's plans to obtain such
resources for the Company include (1) obtaining capital from management and
significant shareholders sufficient to meet its minimal operating expenses,
and (2) seeking out and completing a merger with an existing operating
company. However, management cannot provide any assurances that the Company
will be successful in accomplishing any of its plans.
14
Aftermarket Enterprises, Inc.
Notes to Consolidated Financial Statements (Continued)
Sept 30, 2009
(unaudited)
NOTE 6 GOING CONCERN (Continued)
The ability of the Company to continue as a going concern is dependent upon
its ability to successfully accomplish the plans described in the preceding
paragraph and eventually secure other sources of financing and attain
profitable operations. The accompanying financial statements do not include
any adjustments that might be necessary if the Company is unable to continue
as a going concern.
NOTE 7 STOCKHOLDERS EQUITY
We have 100,000,000 shares of stock authorized for issuance, consisting of
10,000,000 preferred and 90,000,000 common.
Currently there are no shares of preferred stock issued or outstanding.
As of December 31, 2006, there were 1,100,000 shares of common stock issued
and outstanding.
During the fiscal year 2007, 492,452 shares of common stock were issued in
connection with the conversion of outstanding promissory notes into common
stock.
As of December 31, 2007, there were 1,592,452 shares of common stock issued
and outstanding.
During the fiscal year 2008, we issued 1,054,544 shares of common stock for
cash of $126,485 and 130,000 shares for consulting services valued at $3,900.
As of December 31, 2008, there were 2,776,996 shares of common stock issued
and outstanding.
As of Sept 30, 2009, there were 2,776,996 shares of common stock issued and
outstanding.
15
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Special Note Regarding Forward Looking Statements
This periodic report contains certain forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995 with respect
to the Plan of Operations provided below, including information regarding the
Company's financial condition, results of operations, business strategies,
operating efficiencies or synergies, competitive positions, growth
opportunities, and the plans and objectives of management. The statements
made as part of the Plan of Operations that are not historical facts are
hereby identified as "forward-looking statements."
Critical Accounting Policies and Estimates
The preparation of financial statements and related disclosures in conformity
with accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the amounts
reported in the unaudited Financial Statements and accompanying notes.
Management bases its estimates on historical experience and on various other
assumptions that are believed to be reasonable under the circumstances.
Actual results could differ from these estimates under different assumptions
or conditions. The Company believes there have been no significant changes
during the three month periods ended Sept 30, 2009, to the items disclosed as
significant accounting policies since the Company's last audited financial
statements for the year ended December 31, 2007.
The Company's accounting policies are more fully described in Note 1 of the
consolidated financial statements. As discussed in Note 1, the preparation
of financial statements and related disclosures in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions about the future events that
affect the amounts reported in the consolidated financial statements and the
accompanying notes. The Company believes that the following addresses the
Company's most critical accounting policies.
We recognize revenue in accordance with Securities and Exchange Commission
Staff Accounting Bulletin No. 104, "Revenue Recognition" ("SAB 104"). Under
SAB 104, revenue is recognized at the point of passage to the customer of
title and risk of loss, when there is persuasive evidence of an arrangement,
the sales price is determinable, and collection of the resulting receivable
is reasonably assured. We recognize revenue as services are provided.
Revenues are reflected net of coupon discounts.
We account for income taxes in accordance with Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes" ("SFAS No. 109).
Under SFAS No. 109, deferred tax assets and liabilities are measured using
enacted tax rates in effect for the year in which the differences are
expected to reverse. Deferred tax assets will be reflected on the balance
sheet when it is determined that it is more likely than not that the asset
will be realized. A valuation allowance has currently been recorded to
reduce our deferred tax asset to $0.
16
Plan of Operations
We operate an online store which sells Sport Utility Vehicle (SUV)
accessories. This store was obtained through the purchase of the website
www.everythingsuv.com and related business of Aftermarket Express, Inc. We
hoped to leverage this presence into additional aftermarket accessories
product lines, but our core business has been adversely affected by the
current economic recession and we have been unable to take steps to diversify
our activities. Currently, our product line continues to focus on the SUV
marketplace. We hope to be able to take the same concept and operational
processes and broaden it to serve the overall aftermarket accessory
marketplace in the future, but at present are focused on stabilizing and
strengthening our core business.
Since purchasing the business, we have implemented an outbound email follow
up activity to better communicate with our existing customers. The business
is wholly dependent on internet searches to locate our web site or from
repeat customers. Management believes with a more aggressive marketing
approach, our online presence can be expanded and sales can be increased.
In the past quarter, we have focused on increased website search engine
submissions, updating available product lines to address the most current
models and further optimizing our site in the interest of increasing website
traffic. We will continue these activities through the course of the next
quarter with aims at increasing overall revenue.
Results of Operations
We continued to lose money during the three months ended Sept 30, 2009, with
a net loss of $2,160 compared to a loss of $38,705 for the three months ended
Sept 30, 2008. For the nine months ended Sept 30, 2009, we had a net loss
of $23,780 compared to a net loss for the nine months ended Sept 30, 2008, of
$78,999. We had sales of $21,963 for the three months ended Sept 30, 2009
compared to sales of $30,949 for the three months ended Sept 30, 2008. For
the nine months ended Sept 30, 2009, we had sales of $70,381 compared to
sales for the nine months ended Sept 30, 2008, of $118,440. We believe sales
decreased due to the general economic conditions faced by consumers as the
economy faltered. Without additional revenue, we will continue to suffer
losses. We expect our legal and professional fees, which include our audit
and accounting fees, will continue for the foreseeable future and we expect
them to remain at current levels.
Revenues were generated through our web site purchased in September 2006. We
did not engage in any additional marketing or advertising as we focused on
revising our web site and marketing plan. We anticipate sales to continue to
be lower than last year, although we are taking steps to increase our website
traffic and sales.
17
Since we are not a manufacturer of the products we sell and we buy from
suppliers, our cost of goods sold is somewhat out of our hands and we have
limited markup capabilities if we want to stay price competitive. On all
products we carry, we perform a market analysis of the product and competing
product prices both online and in available stores. This analysis can
generally be performed online without much difficulty. Once a price point
for a product is determined, we try and set the price at a competitive level,
often matching competitor's prices or slightly reducing our price over a
competitor if possible. Since we typically have no inventory carrying cost,
we generally can be competitive on price point. Generally, our prices
reflect a gross margin of an average of 25% to 35%. If a product is widely
available at a price that forces us to sell it for less than a gross profit
of 30%, we will still offer the product for sale but only if there is minimal
customer service activity associated with the sale. As with most retail and
online stores, we have to minimize all other expenses in order to have a
chance to make a profit.
Liquidity and Capital Resources
As of Sept 30, 2009, we had working capital of ($6,635). It is possible that
we will need to raise additional capital to cover ongoing losses until we are
able to increase our sales. We have reduced expenses to the lowest possible
level and believe that we will be able to cover or nearly cover costs for the
next quarter. However, even with reducing expenses, we still face severe
challenges and may need additional capital if sales cannot be maintained or
grown at a level that allows us to pay for all expenses of operation as they
occur.
Our primary source of liquidity in the past has been cash provided by debt
instruments and operating activities. If our efforts to increase sales are
not successful, and if the reduction to expenses do not result in profits
from current sales levels, or if current sales levels unexpectedly drop, we
will have to obtain additional financing. Presently, we do not feel bank
financing is feasible and believe we would have to rely on loans from
existing stockholders and management or further equity offerings. At this
time there are no commitments from any parties to provide further financing.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements as of Sept 30, 2009.
18
Forward-looking Statements
The Private Securities Litigation Reform Act of 1995 (the "Act") provides a
safe harbor for forward-looking statements made by or on behalf of our
Company. Our Company and our representatives may from time to time make
written or oral statements that are "forward-looking," including statements
contained in this Quarterly Report and other filings with the Securities and
Exchange Commission and in reports to our Company's stockholders. Management
believes that all statements that express expectations and projections with
respect to future matters, as well as from developments beyond our Company's
control including changes in global economic conditions are forward-looking
statements within the meaning of the Act. These statements are made on the
basis of management's views and assumptions, as of the time the statements
are made, regarding future events and business performance. There can be no
assurance, however, that management's expectations will necessarily come to
pass. Factors that may affect forward- looking statements include a wide
range of factors that could materially affect future developments and
performance, including the following:
Changes in Company-wide strategies, which may result in changes in the types
or mix of businesses in which our Company is involved or chooses to invest;
changes in U.S., global or regional economic conditions, changes in U.S. and
global financial and equity markets, including significant interest rate
fluctuations, which may impede our Company's access to, or increase the cost
of, external financing for our operations and investments; increased
competitive pressures, both domestically and internationally, legal and
regulatory developments, such as regulatory actions affecting environmental
activities, the imposition by foreign countries of trade restrictions and
changes in international tax laws or currency controls; adverse weather
conditions or natural disasters, such as hurricanes and earthquakes, labor
disputes, which may lead to increased costs or disruption of operations.
This list of factors that may affect future performance and the accuracy of
forward-looking statements is illustrative, but by no means exhaustive.
Accordingly, all forward-looking statements should be evaluated with the
understanding of their inherent uncertainty.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
NA-Smaller Reporting Company
19
Item 4T. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our President and CFO, evaluated
the effectiveness of our disclosure controls and procedures as of the end of
the period covered by this report. Based on that evaluation, our President
and CFO concluded that our disclosure controls and procedures as of the end
of the period covered by this report were effective such that the information
required to be disclosed by us in reports filed under the Exchange Act is (i)
recorded, processed, summarized and reported within the time periods
specified in the SEC's rules and forms and (ii) accumulated and communicated
to our management, including our President and CFO, as appropriate to allow
timely decisions regarding disclosure. A controls system cannot provide
absolute assurance, however, that the objectives of the controls system are
met, and no evaluation of controls can provide absolute assurance that all
control issues and instances of fraud, if any, within a company have been
detected.
Management's Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate
internal control over financial reporting (as defined in Rule 13a-15(f) under
the Exchange Act). Our internal control over financial reporting is a process
designed to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external
purposes in accordance with accounting principles generally accepted in the
United States.
Because of its inherent limitations, internal control over financial
reporting may not prevent or detect misstatements. Therefore, even those
systems determined to be effective can provide only reasonable assurance of
achieving their control objectives.
Our management, with the participation of the President and CFO, evaluated
the effectiveness of our internal control over financial reporting as of Sept
30, 2009. Based on this evaluation, our management, with the participation
of the President and CFO, concluded that, as of Sept 30, 2009, our internal
control over financial reporting was effective. Given we have only one
officer that serves as President and CFO, our controls are limited by the
lack of personnel and segregation of duties. As we grow our business we will
be actively looking at how to segregate our duties to provide better
controls.
Changes in internal control over financial reporting
There have been no changes in internal control over financial reporting.
20
PART II OTHER INFORMATION
ITEM 1. Legal Proceedings
None
ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds
Recent Sales of Unregistered Securities
We have not sold any restricted securities during the three months ended
Sept 30, 2009.
Use of Proceeds of Registered Securities
On April 15, 2008, the SEC declared our registration statement effective,
file no. 333-141676. On August 11, 2008, we closed our offering under the
registration statement having sold 1,054,545 shares of our common stock for
gross proceeds of $126,545. Cost of the offering was $60 leaving net
proceeds of $126,485. No commissions were paid to anyone. No officer or
director received any of the proceeds of the offering. We have used the
proceeds of the offering to repay $21,995 in indebtedness and $51,632 of
accounts payable. The balance of the proceeds have been used to purchase
equipment and software and for marketing.
Purchases of Equity Securities by Us and Affiliated Purchasers
During the three months ended Sept 30, 2009, we have not purchased any equity
securities nor have any officers or directors of the Company.
ITEM 3. Defaults Upon Senior Securities
We are not aware of any defaults upon senior securities.
ITEM 4. Submission of Matters to a Vote of Security Holders
No matters were submitted to a vote of security holders during the quarter
ended Sept 30, 2009.
ITEM 5. Other Information.
None
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ITEM 6. Exhibits
(a) Exhibits.
The following exhibits are filed herewith or are incorporated by reference to
exhibits previously filed.
Exhibit # Title of Document Location
--------- ----------------- --------
3 (i) Articles of Incorporation Incorporated by reference*
3 (ii) Bylaws Incorporated by reference*
4 Specimen Stock Certificate Incorporated by reference*
31 Rule 13a-14(a)/15d-14a (a) This filing
Certification - CEO & CFO
32 Section 1350 Certification - This filing
CEO & CFO
______________
*Incorporated by reference from the original filing of Aftermarket
Enterprises, Inc.'s registration statement on Form SB-2, file number
333-141676, filed on March 30, 2007.
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.
Aftermarket Enterprises, Inc.
-----------------------------
(Registrant)
Date: November 12, 2009 By: /s/ Adam Anthony
-------------------------
Adam Anthony
CEO, Principal Accounting
Officer and Director
22