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 March 31, 2010
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from __________ to __________
Commission File Number 333-141676
Aftermarket Enterprises, Inc.
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(Exact name of registrant as specified in its charter)
Nevada 20-5354797
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(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
933 S. 4th Street, Unit A, Grover Beach, CA 93433
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(Address of principal executive offices) (Zip Code)
(805) 457-6999
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(Registrant's telephone number, including area code)
Indicate by check mark if the registrant is a well-known seasoned issuer, as
defined in Rule 405 of the Securities Act
Yes [ ] No [X]
Indicate by check mark if the registrant is not required to file reports
pursuant to Section 13 or 15(d) of the Act
Yes [X] No [ ]
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 has submitted electronically
and posted on its corporate website, if any, every Interactive Data File
required to be submitted and posted pursuant to Rule 405 of Regulation S-T
during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files).
Yes [ ] No [ ]
Indicate by check mark if disclosure of delinquent filers in response to Item
405 of Regulation S B is not contained herein, and not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10 KSB or any amendment to
this Form 10 KSB. [X]
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]
State the aggregate market value of the voting and non-voting common equity
held by non-affiliates computed by reference to the price at which the common
equity was last sold, or the average bid and asked prices of such common
equity, as of the last business day of the registrant's most recently
completed second fiscal quarter: The Registrant's shares trade on the OTCBB
with no bid or ask price. The shares trade very sporadically and the bid
price on any given day may not be indicative of the actual price a
stockholder could receive for their shares.
As of May 12, 2010, the Registrant had 2,776,996 shares of common stock
issued and outstanding.
Part I - FINANCIAL INFORMATION
Item 1. Financial Statements
Aftermarket Enterprises, Inc.
FINANCIAL STATEMENTS
(UNAUDITED)
March 31, 2010
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
March 31, 2010 December 31, 2009
ASSETS
Current Assets
Cash 6,612 6,771
Accounts Receivable 894 -
------------------------------------
Total Current Assets 6,612 6,771
------------------------------------
TOTAL ASSETS 7,506 6,771
------------------------------------
LIABILITIES
Current Liabilities
Accounts Payable 9,120 2,319
Accrued Liabilities 2,518 3,005
Loan Payable, Related Party 13,000 13,000
Sales tax payable 714 -
Deferred Revenue - 225
Total Current Liabilities 25,352 18,549
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 (208,476) (202,408)
Total Stockholder's Equity (Deficit) (17,846) (11,778)
Total Liabilities and Stockholders'
Equity (Deficit) 7,506 6,771
The accompanying notes are an integral part of these financial statements.
3
AFTERMARKET ENTERPRISES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
Three months ended Three months ended
March 31, 2010 March 31, 2009
Revenues
Sales (net of returns) 26,720 24,597
Cost of Goods Sold 18,945 15,099
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Gross Profit 7,775 9,498
Expenses
Amortization Expense 2,968
Credit Card Discount 1,215 1,088
Payroll Expense - -
Other General & Administrative 12,628 21,176
---------------------------------------
13,843 25,232
---------------------------------------
Loss from Operations (6,068) (15,734)
Other income/expense: - -
Interest Income - -
Interest Expense - -
Provision for State Taxes - -
---------------------------------------
Net (loss) (6,068) (15,734)
Net (loss) per common share (0.00) (0.01)
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Weighted average number of common
shares outstanding 2,776,996 2,776,996
---------------------------------------
The accompanying notes are an integral part of these financial statements.
4
AFTERMARKET ENTERPRISES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three months ended Three months ended
March 31, 2010 March 31, 2009
Operating Activities
Net loss $ (6,068) $ (15,734)
Prior period loss adjustment restated
Adjustment for items not involving cash:
Amortization expense 0 2,968
Deferred Revenue (225) 0
Shares for service 0 0
---------------------------------------
Change in non-cash working capital items: (6,293) (12,766)
(Increase) decrease in other current assets (894) 1042
Increase (decrease) in accounts payable 6,801 (5,559)
Increase (decrease) in accrued liabilities (487) 63
Increase (decrease) in sales tax payable 714
---------------------------------------
Cash provided by (used in)
operating activities (159) (17,220)
Investing Activities
None - -
Cash used in investing activities - -
Financing Activities
Proceeds from loan(s) payable -
related party 0 0
Proceeds from sale of common stock
Payment of loan(s) payable -
related party
Cash provided by financing activities 0 0
Increase (decrease) in cash position (159) (17,220)
Cash position at beginning of period 6,771 22,974
---------------------------------------
Cash position at end of period $ 6,612 $ 5,754
The accompanying notes are an integral part of these financial statements
5
Aftermarket Enterprises, Inc.
Notes to Consolidated Financial Statements
March 31, 2010
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.
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.
Cash and Cash Equivalents
The Company considers all highly-liquid instruments with a maturity of three
months or less to be cash equivalents. The Company had $6,612 in cash and
cash equivalents at March 31, 2010.
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.
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 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. Delivery to the customer is deemed to have occurred
when the product is shipped from the supplier.
Return/Refund Policy
Customers may return/exchange their merchandise within 30 days of the sale
unless the item is embroidered or otherwise customized, in which case all
sales are final. Return shipping charges are the responsibility of the
customer unless an error has been made on our part. The return of certain
items may incur a restocking fee. If so, the customer is made aware at the
time of the sale. Refunds for returned merchandise are processed promptly
upon confirmation of receipt of the returned merchandise in like-new
condition, less any applicable restocking and/or shipping charges. Our
revenues and costs of goods sold are reported without making an allowance for
returned merchandise due to the fact that our return rate is less than one
half of one percent of gross revenue.
Advertising
The Company expenses advertising costs as incurred. There were no
advertising costs incurred during the fiscal quarter ending March 31, 2010.
Shipping and Handling Costs
Shipping and handling costs are included in cost of sales.
6
Aftermarket Enterprises, Inc.
Notes to Consolidated Financial Statements
March 31, 2010
Earnings per share
The Company follows ASC Topic 260 to account for the earnings per share.
Basic earning per common share ("EPS") calculations are determined by
dividing net income by the weighted average number of shares of common stock
outstanding during the year. Diluted earning per common share calculations
are determined by dividing net income by the weighted average number of
common shares and dilutive common share equivalents outstanding. During
periods when common stock equivalents, if any, are anti-dilutive they are not
considered in the computation.
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.
NOTE 3 COMMITMENTS
None.
NOTE 4 RELATED PARTY TRANSACTIONS
As of March 31, 2010, the Company had received loans totaling $13,000 from
the Company's President, Adam Anthony. These loans are non-interest bearing
and are due upon demand.
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. If the item is not available for immediate shipment, electronic
communication is sent to the customer informing them of any delays.
The value of our website has been fully ammortized over time. The
ammortization schedule is as follows:
Year Initial Value Accumulated Ammortization
$ 35,610
2006 $ 3,957
2007 11,872
2008 11,872
2009 7,911
12/31/09 $ 35,610 $ 35,612*
*the discrepancy between initial value and Accumulated Ammortization is
attributable to rounding done for reporting purposes only.
NOTE 6 INCOME TAXES
The Company follows FASB ASB 740-10, "Income Taxes" for recording the
provision for income taxes. Deferred tax assets and liabilities are computed
based upon the difference between the financial statement and income tax
basis of assets and liabilities using the enacted marginal tax rate
applicable when the related asset or liability is expected to be realized or
settled. Deferred income tax expenses or benefits are based on the changes
in the asset or liability each
7
Aftermarket Enterprises, Inc.
Notes to Consolidated Financial Statements
March 31, 2010
period. If available evidence suggests that it is more likely than not that
some portion or all of the deferred tax assets will not be realized, a
valuation allowance is required to reduce the deferred tax assets to the
amount that is more likely than not to be realized. Future changes in such
valuation allowance are included in the provision for deferred income taxes
in the period of change.
Deferred income taxes may arise from temporary differences resulting from
income and expense items reported for financial accounting and tax purposes
in different periods. Deferred taxes are classified as current or non-
current, depending on the classification of assets and liabilities to which
they relate. Deferred taxes arising from temporary differences that are not
related to an asset or liability are classified as current or non-current
depending on the periods in which the temporary differences are expected to
reverse.
NOTE 7 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.
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 8 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, 2009, there were 2,776,996 shares of common stock issued
and outstanding.
As of March 31, 2010, there were 2,776,996 shares of common stock issued and
outstanding.
8
Aftermarket Enterprises, Inc.
Notes to Consolidated Financial Statements
March 31, 2010
NOTE 9 RECENT ACCOUNTING PRONOUNCEMENTS
Recently Issued Accounting Pronouncements
Below is a listing of the most recent accounting standards, the Company does
not expect that the adoption of any of these changes will have a material
impact on the Company's financial position, or statements.
Accounting Standards Update 2010-18-Receivables (Topic 310): Effect of a loan
modification when the loan is part of a pool that is accounted for as a
single asset-a consensus of the FASB emerging issues task force. Effective
for fiscal years on or after July 15, 2010.
Accounting Standards Update 2010-17 Revenue Recognition- Milestone Method
(Topic 605): Milestone Method of Revenue Recognition - a consensus of the
FASB emerging issues task force. Effective for fiscal years on or after
June 15, 2010.
Accounting Standards Update 2010-16 Entertainment- Casinos (Topic 924):
Accruals for casino jackpot liabilities - a consensus of the FASB emerging
issues task force. Effective December 15, 2010.
Accounting Standards Update 2010-15 Financial Services-Insurance (Topic 994):
How investments held through separate accounts affect an insurer's
consolidation analysis of those investments- a consensus of the FASB Emerging
Issues Task Force. Effective December 15,2010.
Accounting Standards Update 2010-14 Accounting for Extractive Activities -
Oil & Gas- amendments to paragraph 932-10-S99-1(SEC update)
Accounting Standards Update 2010-13Compensation-Stock Compensation (Topic
718): Effect of Denominating the Exercise Price of a Share-Based Payment
Award in the Currency of the Market in Which the Underlying Equity Security
Trades-a consensus of the FASB Emerging Issues Task Force. Effective July 1,
2010.
Accounting Standards Update 2010-12Income Taxes (Topic 740): Accounting for
Certain Tax Effects of the 2010 Health Care Reform Acts (SEC Update).
Effective July 1, 2010.
Accounting Standards Update 2010-11Derivatives and Hedging (Topice 815):
Scope Exception Related to Embedded Credit Derivatives. Effective July 1,
2010.
Accounting Standards Update 2010-10 Consolidation (Topic 810): Amendments for
Certain Investement Funds. Effective July 1, 2010.
Accounting Standards Update 2010-09 Subsequent Events (topic 855): Amendments
to Certain Recognition and Disclosure Requirements. Effective July 1, 2010.
Accounting Standards Update 2010-08 Technical Corrections to Various Topics
Accounting Standards Update 2010-07 Not-for-Profit Entities (Topic 958): Not-
for-profit Entities: Mergers and Acquisitions. Effective July 1, 2010.
Accounting Standards Update 2010-06 Fair Value Measurements and Disclosures
(Topic 820): Improving Disclosures about Fair Value Measurements. Effective
July 1, 2010.
Accounting Standards Update 2010-05 Compensation-Stock Compensation
(Topic718):Escrowed share arrangements and the Presumption of Compensation
(SEC Update). Effective July 1, 2010.
9
Aftermarket Enterprises, Inc.
Notes to Consolidated Financial Statements
March 31, 2010
Accounting Standards Update 2010-04 (ASU 2010-04), Accounting for Various
Topics-Technical Corrections to SEC Paragraphs. Effective July 1, 2010.
Accounting Standards Update 2010-03 (ASU 2010-03), Extractive Activities-Oil
and Gas (Topic 932): Oil and Gas Reserve Estimation and Disclosures. (January
2010) Effective for annual reporting periods ending on or after December 31,
2009. Early adoption is not permitted.
Accounting Standards Update 2010-02, Consolidation (Topic 810): Accounting
and Reporting for Decreases in Ownership of a Subsidiary. (January 2010) For
those entities that have already adopted FAS 160, the amendments are
effective at the beginning of the first interim or annual reporting period
ending on or after December 15, 2009. The amendments should be applied
retrospectively to the first period that an entity adopted FAS 160.
Accounting Standards Update 2010-01, Equity (Topic 505): Accounting for
Distributions to Shareholders with Components of Stock and Cash (A Consensus
of the FASB Emerging Issues Task Force). (January 2010) Effective for interim
and annual periods ending on or after December 15, 2009, and would be applied
on a retrospective basis.
Accounting Standards Update 2009-17, Consolidations (Topic 810): Improvements
to Financial Reporting by Enterprises Involved with Variable Interest
Entities. This Accounting Standards Update amends the FASB Accounting
Standards Codification for Statement 167. (December 2009) (See FAS 167
effective date below)
Accounting Standards Update 2009-16, Transfers and Servicing (Topic 860):
Accounting for Transfers of Financial Assets. (December 2009) This Accounting
Standards Update amends the FASB Accounting Standards Codification for
Statement 166. (See FAS 166 effective date below)
Accounting Standards Update 2009-15, Accounting for Own-Share Lending
Arrangements in Contemplation of Convertible Debt Issuance or Other
Financing. (October 2009) This Accounting Standards Update amends the FASB
Accounting Standard Codification for EITF 09-1. (See EITF 09-1 effective
date below)
Accounting Standards Update 2009-14, Software (Topic 985): Certain Revenue
Arrangements That Include Software Elements. (October 2009) Effective
prospectively for revenue arrangements entered into or materially modified in
fiscal years beginning on or after June 15, 2010. Early adoption is
permitted.
Accounting Standards Update 2009-13, Revenue Recognition (Topic 605):
Multiple-Deliverable Revenue Arrangements. (October 2009) Effective
prospectively for revenue arrangements entered into or materially modified in
fiscal years beginning on or after June 15, 2010. Early adoption is
permitted.
Accounting Standards Update 2009-12, Fair Value Measurements and Disclosures
(Topic 820): Investments in Certain Entities That Calculate Net Asset Value
per Share (or Its Equivalent). (September 2009) It is effective for interim
and annual periods ending after December 15, 2009. Early application is
permitted in financial statements for earlier interim and annual periods that
have not been issued.
EITF No. 09-1, (ASC Topic 470) "Accounting for Own-Share Lending Arrangements
in Contemplation of Convertible Debt Issuance" ("EITF 09-1"). (July 2009).
Effective for fiscal years that beginning on or after December 15, 2009 and
requires retrospective application for all arrangements outstanding as of the
beginning of fiscal years beginning on or after December 15, 2009. Effective
for share-lending arrangements entered into on or after the beginning of the
first reporting period that begins on or after June 15, 2009.
SFAS No. 168 (ASC Topic 105), "The FASB Accounting Standards Codification and
the Hierarchy of Generally Accepted Accounting Principles - a replacement of
FASB Statement No. 162" ("SFAS No. 168").
10
Aftermarket Enterprises, Inc.
Notes to Consolidated Financial Statements
March 31, 2010
(June 2009) Effective for financial statements issued for interim and annual
periods ending after September 15, 2009. SFAS No. 168 is effective for the
Company's interim quarterly period beginning July 1, 2009.
SFAS No. 167 (ASC Topic 810), "Amendments to FASB Interpretation No. 46(R)
("SFAS 167"). (June 2009) 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.
SFAS No. 166, (ASC Topic 860) "Accounting for Transfers of Financial Assets-
an amendment of FASB Statement No. 140" ("SFAS 166"). (June 2009) Effective
for financial asset transfers occurring after the beginning of an entity's
first fiscal year that begins after November 15, 2009.
SFAS No. 164, (ASC Topic 810) "Not-for-Profit Entities: Mergers and
Acquisitions - including an amendment of FASB Statement No. 142" ("SFAS
164"). (April 2009) Effective for mergers occurring on or after the beginning
of an initial reporting period beginning on or after December 15, 2009 and
acquisitions occurring on or after the beginning of the first annual
reporting period beginning on or after December 15, 2009.
Staff Accounting Bulletin (SAB) No. 112. (June 2009)
NOTE 10 SUBSEQUENT EVENTS
The Company has evaluated subsequent events from the balance sheet date
through May 12, 2010 and determined there are no items to disclose.
11
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 March 31, 2010, to the items disclosed
as significant accounting policies since the Company's last audited financial
statements for the year ended December 31, 2009.
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.
12
Plan of Operations
We have an established web store presence and supplier relationships in the
aftermarket SUV accessories marketplace. This presence was obtained through
the purchase of the website and related business of Aftermarket Express, Inc.
Currently, our product line focuses on the SUV marketplace.
To expand our concept, we will need to create a broader web presence and may
set up additional "web stores" to focus on the different segments in the
aftermarket accessories marketplace. Additionally, we will have to establish
new supplier relationships to be able to offer a broader product line. We
believe the aftermarket accessories marketplace can be served through an
online presence. To this end, we purchased the website and related business
of Aftermarket Express, Inc. Through this purchase, we were able to obtain
an instant online presence and revenue stream. Although this revenue stream
is currently not profitable, management believes with minor changes, the
current operations can become profitable. This will require additional
marketing efforts. Management believes with a more aggressive marketing
approach, our online presence can be expanded and sales can be increased.
Results of Operations
We continued to lose money during the three months ended March 31, 2010, with
a net loss of $6,068 compared to a loss of $15,734 for the three months ended
March 31, 2009. We had sales of $26,720 for the three months ended March 31,
2010 compared to sales of $24,597 for the three months ended March 31, 2009.
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.
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.
13
Liquidity and Capital Resources
As of March 31, 2010, we had working capital deficit of $17,846. 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 March 31, 2010.
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.
14
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
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
March 31, 2010. Based on this evaluation, our management, with the
participation of the President and CFO, concluded that, as of March 31, 2010,
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.
15
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
March 31, 2010.
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 were used to purchase
equipment and software and for marketing.
Purchases of Equity Securities by Us and Affiliated Purchasers
During the three months ended March 31, 2010, 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. Removed and Reserved
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: May 12, 2010 By: /s/ Adam Anthony
------------ ---------------------------------------
Adam Anthony, CEO, Principal Accounting
Officer and Director
17