As filed with the Securities and Exchange Commission on June 28,2011

Registration No.

 


UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

 Washington, D.C. 20549

  

FORM S-1

 

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

 

Autovative Products, Inc.

(Name of small business issuer in its charter)

 


Nevada

5013

20-2079514

(State or other JURISDICTION OF

INCORPORATION OR ORGANIZATION)

(Primary Standard Industrial

Classification Code Number)

(I.R.S. Employer Identification

Code Number)

 

502 N. Santa Fe Avenue, Ste. D

Vista, CA 92083

www.AutovativeProducts.com

760-732-5868

(Address and telephone number of registrant’s principal executive offices and principal place of business)

 

Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement becomes effective.

 

If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. x

 

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

 

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

 

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company.


Large accelerated Filer __

Accelerated Filer                  _


Non accelerated Filer   __

Smaller reporting Company X  


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CALCULATION OF REGISTRATION FEE


Title of securities to be registered

Amount to be registered

 

Proposed maximum offering price per

share (2)

 

Proposed maximum aggregate offering

price

 

Amount of registration fee (1)

 

 

 Common Stock  

 

1,385,977

$  1.00

$1,385,977

$ 160.91



PRELIMINARY PROSPECTUS SUBJECT TO COMPLETION DATED JUNE 28, 2011

 

The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with section 8(a) of the securities act of 1933 or until the registration statement shall become effective on such date as the commission, acting pursuant to said section 8(a), may determine.

 

The offering price has been estimated solely for the purpose of computing the amount of the registration fee in accordance with Rule 457(o). Our common stock is not traded on any national exchange and in accordance with Rule 457; the offering price was determined by the price shares were sold to our shareholders in a private placement memorandum. The selling shareholders may sell shares of our common stock at a fixed price of $ 1.00 per share until our common stock is quoted on the OTC Bulletin Board and thereafter at prevailing market prices or privately negotiated prices.   The fixed price of $1.00 has been determined as the selling price based upon the original purchase price paid by the selling shareholders of $0.35 plus an increase based on the fact the share will be liquid and registered.    There can be no assurance that a market maker will agree to file the necessary documents with the Financial Industry Regulatory Authority, which operates the OTC Electronic Bulletin Board, nor can there be any assurance that such an application for quotation will be approved.

 


  

2


  


PRELIMINARY PROSPECTUS

AUTOVATIVE PRODUCTS, INC

1,385,977 Shares of Common Stock

Price per share: $1.00

Total cash proceeds to the Company $0.

 

Through this prospectus, we are registering for resale 1,385,977 shares of common stock.  The Company is authorized to issue 25,000,000 shares of common stock, par value .001 per share. At the twelve months ended December 31, 2011 there were 8,535,977 shares of common stock issued and outstanding. 


On March 15, 2010 the Company initiated a Private Reg D 506 Offering for the sale of 500,000 shares of common stock at $.10 per share. The Company sold 223,000 shares of its common stock.  These shares were sold directly by the Company and the Company has received total proceeds from the Private Placement of $22,300 net of certain selling costs and adjustments for currency exchange rates.  


The selling shareholders named in this prospectus are offering all of the shares of common stock offered through this prospectus. The selling stockholders are selling shares of common stock covered by this prospectus for their own account.  There is no present public trading market for the Company's Common



Stock and the price at which the Shares are being offered bears no relationship to conventional criteria such as book value or earnings per share.  The Company  has determined the offering price based, primarily, on its projected operating results. There can be no assurance that the offering price bears any relation to the current fair market value of the Common Stock.

 

There is no trading market for our common stock.

 

 The sales price to the public is fixed at $1.00 per share until such time as the shares of common stock become traded on the Over The Counter Bulletin Board operated by NASDAQ. or another exchange. We intend to contact an authorized OTCBB market maker for sponsorship of our securities on the OTCBB, upon effectiveness of this registration statement, however, there is no guarantee our common stock will be accepted for quotation on the OTC Bulletin Board. If our common stock becomes quoted on the Over the Counter Bulletin Board or another exchange, then the sales price to the public will vary according to the selling decisions of each selling shareholder and the market for our stock at the time of resale

 

The purchase of our shares involves substantial risk. See “risk factors” beginning on page 9 for a discussion of risks to consider before purchasing our common stock.

 

You should rely only on the information contained in this prospectus. We have not, and the Selling Stockholders have not, authorized anyone to provide you with different information. If anyone provides you with different information, you should not rely on it. We are not making an offer to sell these securities in any jurisdiction where the offer or sale is not permitted. You should assume that the information contained in this prospectus is accurate only as of the date on the front cover of this prospectus. Our business, financial condition, results of operations and prospects may have changed since that date.

 

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of the prospectus. Any representation to the contrary is a criminal offense.

 

THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY NOT SELL OUR SHARES UNTIL THE REGISTRATION STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL OUR SHARES, AND IT IS NOT SOLICITING AN OFFER TO BUY OUR SHARES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.

 

PRELIMINARY PROSPECTUS SUBJECT TO COMPLETION DATED JUNE 28, 2011

 

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TABLE OF CONTENTS

 

  

PAGE

Prospectus Summary

5

Summary Financial Data

7

Risk Factors

8

Use of Proceeds

12

Determination of Offering Price

12

Dilution

12

Selling Security Holders

12

Plan of Distribution

14

Description of Securities to be Registered

15

Interests of Named Experts and Counsel

16

Description of Business

17

Special Note Regarding Forwarding Looking Statements

20

Directors, Executive Officers, Promoters And Control Persons

20

Legal Proceedings

22

Security Ownership of Certain Beneficial Owners and Management

22

Related Party Transactions

23

Disclosure Of Payment Of Services With Shares Of Common Stock

24

Disclosure Of Commission Position On Indemnification For Securities Act Liabilities

24

Report to Security Holders

24

Financial Statements

F1-F12

Management’s Discussion And Analysis Of Financial Condition And Results Of Operations

25

Signatures

32





  

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PROSPECTUS SUMMARY

 

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of the prospectus. Any representation to the contrary is a criminal offense.

 

You should read the following summary together with the more detailed information about our company and the common stock being registered in this offering and our financial statements and the notes to those statements included elsewhere in this prospectus. The selling stockholders are selling shares of common stock covered by this prospectus for their own account References in this prospectus to “we,” “our,” “us”, “Autovative” and the “Company” refer to AUTOVATIVE PRODUCTS, INC.

 

Organizational History

 

Autovative Products, Inc was incorporated in the state of Nevada on December 8, 2004. 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. The Company believes it will be able to successfully compete in the industry marketplace by controlling production costs, increasing sales through the trucking fleet industry and the retail markets; introduction of new product lines and by limiting its distribution expenses using, primarily, online marketing tools to promote its products and to further develop its digital strategies.

 

Introduction

 

Autovative Products, Inc. is an exclusive distributor of automotive specialty parts. We have developed and produced two products for both automobile and fleet uses. One product is the Portable Tow Truck, a traction aid which has been successful in helping drivers get their vehicles unstuck from snow, ice, mud and sand. The other product is the Overhead Door Saver, a heavy-duty spring device for use in fleets of trucks with overhead doors. It cushions the shock of constant door openings, and greatly reduces overhead door repairs. Currently the majority of our products sold are to Fedx (Federal Express) and UPS (United Postal Service) for use with their trucking fleets.


Company Assets

 

The Company’s principal assets (“Assets”) consist of cash and equipment. All of the Company’s income to date has been generated from sales of its Portable Tow Truck product to FedEx and UPS for use with their trucking fleets. It is management’s opinion that the assets its has, including cash, contracts, future revenue streams, rights and certain business concepts will adequately capitalize the Company for the next twelve (12) months.

 

Company Cash Flow

 

The Company has cash assets derived from its distribution of its products and a private placement of its stock.  Assuming the Company does not generate any income from its new products it still believes it will have sufficient cash to operate for the next twelve (12) months. For the last three fiscal years the Company had total Gross Revenues of $394,159. From its inception the Company’s primary business activity was to aid in the manufacturing process of its products and to create sales in the larger trucking fleets, complete a private placement of some of its common shares, establish its web site, progress sales of its products and conduct an audit and assist legal counsel and others in the preparation and drafting of this Registration Statement.  



 

5


 

Future Assets and Growth

 

We will continue to generate limited future income from our Assets, however, we cannot provide absolute assurances or estimates of these revenues. The Company had Net Losses for the last three fiscal year ends, and the Company anticipates it may operate at a deficit for its next fiscal year and may expend most of its available capital. The Company’s current cash on hand is, primarily, budgeted to cover the anticipated costs of its administrative overhead and costs associated with developing and operating the businesses going forward including costs for legal, accounting and Transfer Agent services. We believe that the Company will have sufficient capital to operate its businesses over the next twelve (12) months. There can be no assurances, however, that actual expenses incurred will not materially exceed our estimates or that cash flows from our existing Assets will be adequate to maintain our businesses. The Company cannot, at this time, accurately estimate its future monthly “burn rate” of its capital.

 

The automotive industry as a whole is an extremely competitive industry dominated by many very large, fully integrated conglomerates. However the specialty products with which the Company handles have less competition. The Company is building its business model cognizant of these market realities and management will be attempting to use and capitalize upon emerging technologies to deliver and market its products.

 

Our business model is predicated on the assumption that we can continue to generate multiple revenue streams from our current products and from products we intend to develop, produce and distribute over the next fiscal year and that we can, successfully, manage our costs by capitalizing on new and emerging digital technologies, business developments and our management. Although we generated Losses for the last three years of operation and anticipate we may lose money in the current fiscal year we believe that our Business Strategy combined with raising additional capital will place us in a position to increase our revenue streams. The Company may plan on filing for a Secondary offering of its stock in 2011 or 2012 to raise capital for its projects and Concepts which would result in further dilution to shareholders. At this time there is no plan in place to raise additional capital.

 

The Company’s primary manager, its CEO. Mr. Funderburk, has operated the Company for the last seven years but has no experience or expertise in operating a public company. Until such time as the Company is more established and capitalized, we will not be able to employ any personnel on a full time basis.

 

FOUNDING SHAREHOLDERS

 

The following individuals and entities are considered founding shareholders of our Company.

 

Class

Name

Shares

Percentage

Common

 David Funderburk  (1)

7,200,000

84%

 

 

 

 

 

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(1)  

Mr. David Funderburk, our sole officer and a director, is the operating manger of Autovative Products, Inc.

 

 

Terms of the Offering

 



The selling shareholders named in this prospectus are offering all of the shares of common stock offered through this prospectus. The selling stockholders are selling shares of common stock covered by this prospectus for their own account.

 

We will not receive any of the proceeds from the resale of these shares. The offering price of $1.00 was determined by the price shares were sold to our shareholders in a private placement memorandum plus an increase based on the fact the shares will be liquid and registered. $1.00 is a fixed price at which the selling security holders may sell their shares until our common stock is quoted on the OTC Bulletin Board or another Exchange, at which time the shares may be sold at prevailing market prices or privately negotiated prices. There can be no assurance that a market maker will agree to file the necessary documents with FINRA, which operates the OTC Electronic Bulletin Board, nor can there be any assurance that such an application for quotation will be approved. We have agreed to bear the expenses relating to the registration of the shares for the selling security holders.


SUMMARY FINANCIAL DATA

 

The following summary financial data should be read in conjunction with “Management’s Discussion and Analysis and Results of Operations” and the Financial Statements and Notes thereto, included elsewhere in this prospectus. The statement of operations and balance sheet data for the Years ended 2008, 2009 and 2010 are derived from our audited financial statements.

 


 

 

December 31,

2008

(Audited)

December 31, 2009

(Audited)

December 31, 2010

(Audited)

STATEMENT OF OPERATIONS

 

 

 

 

  Revenues

$

185,455

120,561

88,143

  Operating Expenses

 

199,858

122,125

135,388

 

 

 

 

 

Net Income

 

(14,403)

(1,565)

(47,245)

 

 

 

 

 

Weighted average number of

common shares outstanding for

the period

 



8,337,977



8,337,977



8,461,977

 

 

 

 

 

Net Income Per Share

 

(.002)

(.0002)

(.006)



 

 

December 31, 2009

(Audited)

December 31, 2010

(Audited)

BALANCE SHEET DATA

 

 

 

  Cash

$

15,618

1,042

  Total Assets

 

80,403

57,964

  Total Liabilities

 

-

-

  Stockholder’s Equity

 

80,403

57,964

 

  

¹ Derived from audited financial statements

 

 

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ABOUT THIS OFFERING


 Securities Being Offered

Up to 1,385,977 shares of common stock in Autovative Products, Inc.

  

  

Initial Offering Price

The selling shareholders may sell shares of our common stock at a fixed price of $ 1.00 per share until our common stock is quoted on the OTC Bulletin Board and thereafter at prevailing market prices or privately negotiated prices.  

  

  

Terms of the Offering

The selling shareholders will determine the terms relative to the sale of the common stock offered in this Prospectus.

  

  

Termination of the Offering

The offering will conclude when all of the 1,385,977 shares of common stock have been sold or at a time when the Company, in its sole discretion, decides to terminate the registration of the shares. The Company may decide to terminate the registration if it is no longer necessary due to the operation of the resale provisions of Rule 144 promulgated under the Securities Act of 1933. We may also terminate the offering for no given reason whatsoever.

 

  

  

Risk Factors

The securities offered hereby involve a high degree of risk and should not be purchased by investors who cannot afford the loss of their entire investment. See “Risk Factors.”

  

  

Common Stock Issued Before Offering

8,585,977 shares of our common stock are issued and outstanding as of the date of this prospectus.

  

  

Common Stock Issued After Offering

 

8,585,977 shares of common stock.

 

Use of Proceeds

We will not receive any proceeds from the sale of the common stock by the selling shareholders.

  

  


Description of Selling Stockholders

 

Through this prospectus, we are registering for resale 1,385,977 shares of common stock.  The Company is authorized to issue 25,000,000 shares of common stock, par value .001 per share. At the twelve months ended December 31, 2010 there were 8,585,977 shares of common stock issued and outstanding. 


On July 10, 2007 the Company issued 12,977 shares of restricted 144 stock for services rendered to the Company for marketing related services.


On July 10, 2008 the Company issued 1,125,000 shares of restricted 144 stock for services rendered to the Company for marketing and administrative and bookkeeping related services.


From March 15, 2010 to July 30, 2010 the Company issued 223,000 shares at a price of $.10 per share through a Reg D 506 Private Offering.


On December 29, 2010 the Company issued 25,000 shares of restricted 144 common stock per a contract with Direct Media Enterprises which were dividend to the shareholders of Direct Media Enterprises for



media advertising via Direct Media Enterprise’s kiosk technology. The stock was issued for initial video production services at a price of $.10 per share (services valued at $2,500.00).


The names and share amounts of the selling stockholders are set forth under “Selling Stockholders and Plan of Distribution” in this prospectus.  None of the selling stockholders are officers, directors or 10% or greater stockholders of our company nor are any affiliated or associated with any broker-dealers.




RISK FACTORS

 

YOU SHOULD CAREFULLY CONSIDER THE POSSIBILITY THAT YOUR ENTIRE INVESTMENT MAY BE LOST. AS SUCH, YOU ARE ENCOURAGED TO EVALUATE THE FOLLOWING RISK FACTORS AND ALL OTHER INFORMATION CONTAINED IN THIS PROSPECTUS BEFORE PURCHASING OUR COMMON STOCK. OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. ANY OF THE FOLLOWING RISKS COULD ADVERSELY AFFECT OUR BUSINESS, FINANCIAL CONDITION AND RESULTS OF OPERATIONS, AND COULD RESULT IN COMPLETE LOSS OF YOUR INVESTMENT.

 

WE HAVE A LIMITED OPERATING HISTORY THAT YOU CAN USE TO EVALUATE US, AND THE LIKELIHOOD OF OUR SUCCESS MUST BE CONSIDERED IN LIGHT OF THE PROBLEMS, EXPENSES, DIFFICULTIES, COMPLICATIONS AND DELAYS FREQUENTLY ENCOUNTERED BY A SMALL DEVELOPING COMPANY.

 

We were incorporated in Nevada on December 8, 2004. We have limited financial resources and only limited revenues to date. The likelihood of our success must be considered in light of the problems, expenses, difficulties, complications and delays frequently encountered by a small developing company starting a new business enterprise and the highly competitive environment in which we will operate. Since we have a limited operating history, we cannot assure you that our business will be profitable or that we will ever generate sufficient revenues to fully meet our expenses and totally support our anticipated activities.

 

 All of our capital and assets have been provided by or acquired from our principal shareholders and third parties and through a Private Placement of the shares being Registered as well as from sales of our Portable tow Truck Product. We estimate that we will have sufficient capital to operate for the next twelve (12) and sufficient capital to complete the unfinished motion picture we have acquired. We cannot assure you, however, that we will be able to sustain the business for the long term nor that we may not need to obtain additional capital in the future. We can also not assure you that we will be able to obtain any required financing on a timely basis, or if obtainable, that the terms will not materially dilute the equity of our current stockholders. If we are unable to obtain financing on a timely basis, we may have to significantly or entirely curtail our business objectives, which could result in our having to discontinue some of our operations and plans.

 

WE DEPEND HIGHLY ON OUR CURRENT PRESIDENT WHO HAS LIMITED EXPERIENCE IN RUNNING A PUBLIC COMPANY AND NO FORMAL EMPLOYMENT AGREEMENT.

 

We depend highly on David Funderburk, our President, Treasurer, and Director, who may be difficult to replace. David Funderburk who is also the Chief Executive Officer of Autovative Products, at this point, only devotes approximately 40% of his time per week to our business, has seven years of industry experience and has not previously headed a public Company. Our plan of operations is dependent upon the continuing support and business expertise of Mr.  Funderburk.


 LOSS OF OUR CEO COULD ADVERSLY AFFECT OUR BUSINESS

 

Loss of Mr.  Funderburk could slow the growth of our business, or it may cease to operate at all, which may result in the total loss of investor’s investments. Mr.  Funderburk is not, presently, receiving a salary



from the Company and it is unknown, at this time, if or when the Company may be able to compensate Mr.  Funderburk for his management services. The company does not anticipate Mr.  Funderburk receiving a salary in the foreseeable future.

 

OUR MANAGEMENT HAS LIMITED EXPERIENCE IN RUNNING A PUBLIC COMPANY

 

Mr.  Funderburk, has no experience in running a public company. He is vaguely familiar with the reporting requirements of the Securities and Exchange Commission. Mr. Funderburk will rely on the expertise of outside counsel and consultants to insure proper filing and the meeting of deadlines.

 

THERE ARE INCREASED COSTS AND REGULATIONS ASSOCIATED WITH OPERATING A PUBLIC COMPANY AND WITH ONLY ONE OFFICER AND DIRECTOR WE WILL HAVE LIMITED INTERNAL ACCOUNTING CONTROLS.

 

There are a number of expenses and costs associated with operating a public Company including filing expenses, transfer agent, stock issuance and maintenance costs, accounting, legal and auditing expenses that will materially increase the Company’s operating expenses and make it more difficult for the Company’s businesses to produce operating profits. Our CEO has no prior experience managing a public company. With only one officer and director there will be no internal oversight to the Company’s financial reporting, initially, except from the Company’s outside auditors.

 

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THERE IS NO ASSURANCE OF A PUBLIC MARKET OR THAT THE COMMON STOCK WILL EVER TRADE ON A RECOGNIZED EXCHANGE. THEREFORE, YOU MAY BE UNABLE TO LIQUIDATE YOUR INVESTMENT IN OUR STOCK.

 

There is no established public trading market for our common stock. Our shares are not and have not been listed or quoted on any exchange or quotation system. There can be no assurance that a market maker will agree to file the necessary documents with FINRA, which operates the OTC Electronic Bulletin Board, nor can there be any assurance that such an application for quotation will be approved or that a regular trading market will develop or that if developed, will be sustained. In the absence of a trading market, an investor may be unable to liquidate their investment.

 

SINCE A SINGLE STOCKHOLDER, UPON COMPLETION OF THE OFFERING WILL BENEFICIALLY OWN THE SIGNIFICANT MAJORITY OF OUR OUTSTANDING COMMON SHARES, THAT SINGLE STOCKHOLDER WILL RETAIN THE ABILITY TO POTENTIALLY CONTROL OUR MANAGEMENT AND THE OUTCOME OF CORPORATE ACTIONS REQUIRING STOCKHOLDER APPROVAL NOTWITHSTANDING THE OVERALL OPPOSITION OF OUR OTHER STOCKHOLDERS. THIS CONCENTRATION OF OWNERSHIP COULD DISCOURAGE OR PREVENT A POTENTIAL TAKEOVER OF OUR COMPANY THAT MIGHT NEGATIVELY IMPACT THE VALUE OF YOUR COMMON SHARES.

 

David Funderburk owns approximately 84% of our outstanding common shares and will continue to do so after the filing of this Registration Statement. As a consequence of his stock ownership position, Mr. Funderburk will retain the ability to elect a majority of our board of directors, and thereby control our management. David Funderburk also has the ability to control the outcome of corporate actions requiring stockholder approval, including mergers and other changes of corporate control, any private transactions, and other extraordinary transactions. The concentration of ownership by David Funderburk could discourage investments in our company, or prevent a potential takeover of our company which will have a negative impact on the value of our securities.

 

BECAUSE OF COMPETITIVE PRESSURES FROM COMPETITORS WITH MORE RESOURCES, AUTOVATIVE PRODUCTS MAY FAIL TO IMPLEMENT ITS BUSINESS MODEL PROFITABLY.



 

The automotive specialty product business is highly fragmented and extremely competitive. The market for customers is intensely competitive and such competition is expected to continue to increase (see “Competition”). We believe that our ability to compete depends upon many factors within and beyond our control, including the timing and market acceptance of new solutions and enhancements to existing businesses developed by us, our competitors, and their advisors.

 

WE ARE DEPENDENT ON THE POPULARITY OF PRODUCTS.

 

Our ability to generate revenue and be successful in implementing our business plan is dependent on our ability to develop, produce, acquire and distribute products that are popular with audiences and sold via distribution channels that are efficient and cost effective. There is no assurance that we can accomplish that goal. Further our major customers are FEDX and UPS, should we lose that customer base we would have lost our major revenue source.

 

WE MAY BE UNABLE TO COMPETE WITH LARGER OR MORE ESTABLISHED COMPANIES.

 

We face a large and growing number of competitors in the automotive specialty product industry. Many of these competitors have substantially greater financial, technical and marketing resources, larger customer bases, longer operating histories, greater name recognition, and more established relationships in the industry than does the Company. As a result, certain of these competitors may be in better positions to compete with us for product and audiences. We cannot be sure that we will be able to compete successfully with existing or new competitors.

 

WE MAY REQUIRE ADDITIONAL FINANCING IN ORDER TO IMPLEMENT OUR BUSINESS PLAN. IN THE EVENT WE ARE UNABLE TO ACQUIRE ADDITIONAL FINANCING, WE MAY NOT BE ABLE TO IMPLEMENT OUR BUSINESS PLAN RESULTING IN A LOSS OF REVENUES AND ULTIMATELY THE LOSS OF ANY SHAREHOLDER’S INVESTMENT.

 

Due to our limited operating history outside of two customers, FedEx and UPS, we will have to use all our existing resources to expand our business and develop our distribution channels.

 

Following this offering we may need to raise additional funds to expand our operations. We may raise additional funds through private placements, registered offerings, debt financing or other sources to maintain and expand our operations, although at this time there is no plan in effect to do so. Adequate funds for this purpose on terms favorable to us may not be available, and if available, on terms significantly more adverse to us than are manageable. Without new funding, we may be only partially successful or completely unsuccessful in implementing our business plan, and our stockholders will lose part or all of their investment.

 

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OUR PRODUCTS OR PROCESSES COULD GIVE RISE TO CLAIMS THAT OUR PRODUCTS INFRINGE ON THE RIGHTS OF OTHERS.

 

We are potentially subject to claims and litigation from third parties claiming that our products or processes infringe their patent or other proprietary rights. If any such actions are successful, in addition to any potential liability for damages, we could be required to obtain a license in order to continue to manufacture, use or sell the affected product or process. Litigation, which could result in substantial costs to us, may also be necessary to enforce our proprietary rights and/or to determine the scope and validity of the proprietary rights of others. Any intellectual property litigation would be costly and could divert the efforts and attention of our management and technical personnel, which could have a material adverse effect on our business, financial condition and results of operations. We cannot assure you that infringement claims will not be asserted in the future or that such assertions, if proven to be true, will not prevent us from selling our



products or materially and adversely affect our business, financial condition and results of operations. If any such claims are asserted against us, we may seek to enter into a royalty or licensing arrangement. We cannot assure you that a license will be available on commercially reasonable terms, or at all.

 

WE MAY BE SUBJECT TO CLAIMS OF TRADEMARK INFRINGEMENT, WHICH MAY HARM OUR BUSINESS.

 

The Company currently has not filed any trademarks or copyrights for its products. However we intend to file in the near future. We may be subject to legal proceedings alleging claims of trademark infringement in the future. If we must re-brand, it may result in significant marketing expenses and additional management time and resources, which may adversely affect our business.

 

Additionally, we cannot guarantee that our trademarks will be completely protected. This could cause harm to our brand and ultimately, to us. We could also spend additional time and resources fighting other entities that might infringe upon our trademarks.


We applied for patents and our patent application was declined, which may allow competitors to copy our designs for both the Portable Tow Truck and the Overhead Door Saver. Should a larger Company copy our designs, it is possible that they may be able to manufacture and sell the like kind products at a substantially lower cost than us.


WE MAY BE SUBJECT TO LAWSUITS FROM CUSTOMERS WHO ARE INJURED USING OUR PRODUCTS.


Although we have what we believe to be clear instructions on how to use our products, it is possible that a customer may get injured form using one of our products and subsequently file a lawsuit against the Company. If we are unable to settle such a lawsuit it could adversely affect our business and shareholders investment in the Company. We have no liability insurance in place at this time.

 

WE MAY BE UNABLE TO SCALE OUR OPERATIONS SUCCESSFULLY.

 

Our plan is to grow rapidly. Our growth will place significant demands on our management and technology development, as well as our financial, administrative and other resources. We cannot guarantee that any of the systems, procedures and controls we put in place will be adequate to support the commercialization of our operations. Our operating results will depend substantially on the ability of our officers and key employees to manage changing business conditions and to implement and improve our financial, administrative and other resources. If we are unable to respond to and manage changing business conditions, or the scale of our products, services and operations, then the quality of our services, our ability to retain key personnel and our business could be harmed.

 

MR.  FUNDERBURK HAS NO EXPERIENCE IN THE GROWTH AND EXPANSION OF A BUSINESS AND HE WILL BE RELIANT ON CONSULTANTS AND OTHERS WHO HAVE GREATER MANAGEMENT EXPERIENCE. THE LACK OF EXPERIENCE IN ALL OF THE BUSINESSES WE ARE ENTERING COULD IMPACT OUR RETURN ON INVESTMENT, IF ANY.

 

As a result of our reliance on Mr.  Funderburk and his lack of experience in Company expansion\growth, our investors are at risk in losing their entire investment. Mr.  Funderburk intends to hire personnel in the future who will have the experience required to manage our company, when the Company is sufficiently capitalized. Until such management is in place, we are reliant upon Mr. Funderburk to make the appropriate management decisions.

 

AS THERE IS NO PUBLIC MARKET FOR OUR COMMON SHARES, THEY ARE AN ILLIQUID INVESTMENT AND INVESTORS MAY NOT BE ABLE TO SELL THEIR SHARES.

 



No market currently exists for our securities and we cannot assure you that such a market will ever develop, or if developed, will be sustained.

 

Our common stock is not currently eligible for trading on any stock exchange and there can be no assurance that our common stock will be listed on any stock exchange in the future. We intend to apply for listing on the NASD OTC Bulletin Board trading system pursuant to Rule 15c2-11 of the Securities Exchange Act of 1934, but there can be no assurance we will obtain such a listing. The bulletin board tends to be highly illiquid, in part because there is no national quotation system by which potential investors can track the market price of shares except through information received or generated by a limited number of broker-dealers that make a market in particular stocks. There is a greater chance of market volatility for securities that trade on the bulletin board as opposed to a national exchange or quotation system. This volatility may be caused by a variety of factors, including: the lack of readily available price quotations; the absence of consistent administrative supervision of “bid” and “ask” quotations; lower trading volume; and general market conditions. If no market for our shares materializes, you may not be able to sell your shares or may have to sell your shares at a significantly lower price.

 

10


IF OUR SHARES OF COMMON STOCK ARE ACTIVELY TRADED ON A PUBLIC MARKET, THEY WILL IN ALL LIKELIHOOD BE PENNY STOCKS.

 

The Securities Enforcement and Penny Stock Reform Act of 1990 requires additional disclosure relating to the market for penny stocks in connection with trades in any stock defined as a penny stock. SEC regulations generally define a penny stock to be an equity security that has a market or exercise price of less than $5.00 per share, subject to certain exceptions. Such exceptions include any equity security listed on NASDAQ and any equity security issued by an issuer that has net tangible assets of at least $100,000, if that issuer has been in continuous operation for three years. Unless an exception is available, the regulations require delivery, prior to any transaction involving a penny stock, of a disclosure schedule explaining the penny stock market and the associated risks. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document that provides information about penny stocks and the nature and level of risks in the penny stock market. The broker-dealer must also provide the customer with current bid and offer quotations for the penny stock, details of the compensation of the broker-dealer and its salesperson in the transaction, and monthly account statements showing the market value of each penny stock held in the customer’s account. The bid and offer quotations and broker-dealer and salesperson compensation information must be given to the customer orally or in writing prior to effecting the transaction and must be given in writing before or with the customer’s confirmation. In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from such rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written agreement to the transaction. These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for securities that become subject to the penny stock rules. Since our securities are highly likely to be subject to the penny stock rules, should a public market ever develop, any market for our shares of common stock may not be liquid.

 

BECAUSE OUR SECURITIES MAY BE SUBJECT TO PENNY STOCK RULES, YOU MAY HAVE DIFFICULTY RESELLING YOUR SHARES.

 

Since our stock may be subject to penny stock rules, you may have difficulty reselling your shares. Penny stocks are covered by section 15(g) of the Securities Exchange Act of 1934 which imposes additional sales practice requirements on broker/dealers who sell the Company’s securities including the delivery of a standardized disclosure document; disclosure and confirmation of quotation prices; disclosure of compensation the broker/dealer receives; and, furnishing monthly account statements. For sales of our securities, the broker/dealer may be required to make a special suitability determination and receive from its customer a written agreement prior to making a sale. The imposition of the foregoing additional sales practices could adversely affect a shareholder’s ability to dispose of his stock.

 



THIS REGISRTATION STATEMENT CONTAINS FORWARD LOOKING STATEMENTS WHICH ARE SPECULATIVE IN NATURE.

 

This registration statement contains forward-looking statements. These statements relate to future events or our future financial performance. Forward looking statements are speculative and uncertain and not based on historical facts. Because forward-looking statements involve risks and uncertainties, there are important factors that could cause actual results to differ materially from those expressed or implied by these forward-looking statements, including those discussed under “Business Description” and “Corporate Background” Although the Company believes that the expectations reflected in the forward-looking statements are reasonable, future results, levels of activity, performance, or achievements cannot be guaranteed. The reader is advised to consult any further disclosures made on related subjects in our future SEC filings.

 

WE HAVE NOT PAID, AND DO NOT INTEND TO PAY, CASH DIVIDENDS IN THE FORESEEABLE FUTURE.

 

We have not paid any cash dividends on our common stock and do not intend to pay cash dividends in the foreseeable future. We intend to retain future earnings, if any, for reinvestment in the development and expansion of our business. Dividend payments in the future may also be limited by other loan agreements or covenants contained in other securities that we may issue. Any future determination to pay cash dividends will be at the discretion of our board of directors and depend on our financial condition, results of operations, capital and legal requirements and such other factors as our board of directors deems relevant.

 

11



USE OF PROCEEDS

 

The selling stockholders are selling shares of common stock covered by this prospectus for their own account. We will not receive any of the proceeds from the resale of these shares. We have agreed to bear the expenses relating to the registration of the shares for the selling security holders.

 

DETERMINATION OF OFFERING PRICE

 

Since our shares are not listed or quoted on any exchange or quotation system, the offering price of the shares of common stock was arbitrarily determined. The offering price was determined by the price shares were sold to our shareholders in our private placement pursuant to an exemption under Rule 144 of the Securities Act of 1933.

 

The offering price of the shares of our common stock has been determined arbitrarily by us and does not necessarily bear any relationship to our book value, assets, past operating results, financial condition or any other established criteria of value. The facts considered in determining the offering price were our financial condition and prospects, our limited operating history and the general condition of the securities market. Although our common stock is not listed on a public exchange, we will be filing to obtain a listing on the Over The Counter Bulletin Board (OTCBB) after the SEC declares this prospectus effective. In order to be quoted on the Bulletin Board, a market maker must file an application on our behalf in order to make a market for our common stock. There can be no assurance that a market maker will agree to file the necessary documents with FINRA, which operates the OTC Electronic Bulletin Board, nor can there be any assurance that such an application for quotation will be approved.

 

In addition, there is no assurance that our common stock will trade at market prices in excess of the initial public offering price as prices for the common stock in any public market which may develop will be determined in the marketplace and may be influenced by many factors, including the depth and liquidity.

 

DILUTION

 



The common stock to be sold by the selling shareholders is common stock that is currently issued. Accordingly, there will be no dilution to our existing shareholders.

 

 

SELLING SECURITY HOLDERS

 

The shares being offered for resale by the selling stockholders consist of the 1,385,977 shares of our common stock held by 60 shareholders of our common stock, 223,000 shares of which sold in our Private offering through July of 2010.

 

The following table sets forth the name of the selling stockholders, the number of shares of common stock beneficially owned by each of the selling stockholders as of December 31, 2010 and the number of shares of common stock being offered by the selling stockholders. The shares being offered hereby are being registered to permit public secondary trading, and the selling stockholders may offer all or part of the shares for resale from time to time. However, the selling stockholders are under no obligation to sell all or any portion of such shares nor are the selling stockholders obligated to sell any shares immediately upon effectiveness of this prospectus. All information with respect to share ownership has been furnished by the selling stockholders.

 

12


 




Name of Selling Stockholder

 

Shares of Common Stock Owned Prior to Offering

 

Shares of Common Stock to be Sold

 

Shares of Common Stock Owned After Offering

 

 

 

 

 

 

 

 Janice Douglas

 

15,000

 

15,000

 

0

 Peggy Bradley

 

10,000

 

10,000

 

0

 Katherine Bleuer

 

5,000

 

5,000

 

0

 John Brand

 

5,000

 

5,000

 

0

 Stephen Deckard

 

5,000

 

5,000

 

0

 Richard Hernandez

 

10,000

 

10,000

 

0

 Scott Fountain

 

5,000

 

5,000

 

0

Drew Fountain

 

5,000

 

5,000

 

0

Fremont James Bellinger

 

5,000

 

5,000

 

0

Darlene Newell

 

15,000

 

15,000

 

0

Leland Hertel

 

5,000

 

5,000

 

0

Karen Nelson

 

5,000

 

5,000

 

0

Robyn Johns

 

10,000

 

10,000

 

0

Sandra Jolicoeur

 

10,000

 

10,000

 

0

Yvonne Boggs

 

15,000

 

15,000

 

0

LaVonne Johnson

 

10,000

 

10,000

 

0

Jose Rios

 

8,000

 

8,000

 

0

Mercer Group

 

80,000

 

80,000

 

0

Hannah Grabowski

 

375,000

 

375,000

 

0

Brianna Stoecklein

 

400,000

 

400,000

 

0

Lannelle Cannon

 

150,000

 

150,000

 

0

Wayne Berian

 

150,000

 

150,000

 

0

Annette Mason

 

50,000

 

50,000

 

0

Stan Windhorn

 

500

 

500

 

0

Hans Johns

 

500

 

500

 

0

A. Healey Mendicino

 

500

 

500

 

0

Casey Johns

 

500

 

500

 

0

Samantha Johns

 

500

 

500

 

0

Chad Langner

 

500

 

500

 

0

David Moriyama

 

500

 

500

 

0

William Castleberry

 

500

 

500

 

0

Steve Lynch

 

2,977

 

2,977

 

0

Alan Austin

 

3,000

 

3,000

 

0

Kyle Grabowski

 

3,000

 

3,000

 

0

Jim Spexarth

 

1,000

 

1,000

 

0

Rene Solc

 

1,000

 

1,000

 

0

Dennis Brubaker

 

1,000

 

1,000

 

0

Andre Kovaltchouk

 

1,000

 

1,000

 

0

Dike Drummond

 

1,000

 

1,000

 

0

Dave Rubis

 

1,000

 

1,000

 

0

Bill Huff

 

1,000

 

1,000

 

0

Cabb Enterprises

 

1,000

 

1,000

 

0






Kevin Palumbos

 

1,000

 

1,000

 

0

 Earl Carlson

 

1,000

 

1,000

 

0

Sandra Epstein

 

1,000

 

1,000

 

0

L. Adamson

 

1,000

 

1,000

 

0

Thomas Nelson

 

1,000

 

1,000

 

0

Carl Ludwig

 

1,000

 

1,000

 

0

Kurt Baum

 

1,000

 

1,000

 

0

A. Khalil

 

1,000

 

1,000

 

0

John Gall

 

1,000

 

1,000

 

0

John Binder

 

1,000

 

1,000

 

0

John Scannapieco

 

1,000

 

1,000

 

0

Jack Thorpe

 

1,000

 

1,000

 

0

William Elkins

 

1,000

 

1,000

 

0

Hector Medina

 

1,000

 

1,000

 

0

Sheila Trebbin

 

1,000

 

1,000

 

0

Tracie Gressmen

 

1,000

 

1,000

 

0

Jim Wheeler

 

1,000

 

1,000

 

0

 

13


  

To our knowledge, none of the selling shareholders or their beneficial owners:

 

-

has had a material relationship with us other than as a shareholder at any time within the past three years; or

  

  

-

has ever been one of our officers or directors or an officer or director of our predecessors or affiliates

  

  

-

are broker-dealers or affiliated with broker-dealers.

 

PLAN OF DISTRIBUTION

 

The selling security holders may sell some or all of their shares at a fixed price of $1.00 per share until our shares are quoted on the OTC Bulletin Board and thereafter at prevailing market prices or privately negotiated prices. Prior to being quoted on the OTCBB, shareholders may sell their shares in private transactions to other individuals. Although our common stock is not listed on a public exchange, we will be filing to obtain a listing on the Over the Counter Bulletin Board (OTCBB) when this Registration Statement is declared effective by the SEC. In order to be quoted on the Bulletin Board, a market maker must file an application on our behalf in order to make a market for our common stock. There can be no assurance that a market maker will agree to file the necessary documents with FINRA, which operates the OTC Electronic Bulletin Board, nor can there be any assurance that such an application for quotation will be approved. There can be no assurance that a market maker will agree to file the necessary documents with FINRA, which operates the OTC Electronic Bulletin Board, nor can there be any assurance that such an application for quotation will be approved. However, sales by a selling security holder must be made at the fixed price of $1.00 until a market develops for the stock.

 

The Selling Stockholder and intermediaries through whom such securities are sold may be deemed "underwriters" within the meaning of the Securities Act  of 1933, as amended (the "Securities Act"), in which event profits, discounts or commissions received by such persons may be deemed to be underwriting commissions under the Securities Act.

          

All expenses of the registration of securities covered by this Prospectus are to be borne by the Company, except that the Selling Stockholder will pay any applicable underwriters' commissions, fees, discounts or



concessions or any other compensation due any underwriter, broker or dealer and expenses or transfer taxes.

 

Once a market has been developed for our common stock, the shares may be sold or distributed from time to time by the selling stockholders directly to one or more purchasers or through brokers or dealers who act solely as agents, at market prices prevailing at the time of sale, at prices related to such prevailing market prices, at negotiated prices or at fixed prices, which may be changed. The distribution of the shares may be effected in one or more of the following methods:

 

  

ordinary brokers transactions, which may include long or short sales,

  

  

  

  

transactions involving cross or block trades on any securities or market where our common stock is trading, market where our common stock is trading,

  

  

  

  

through direct sales to purchasers or sales effected through agents,

  

  

  

  

through transactions in options, swaps or other derivatives (whether exchange listed of otherwise), or exchange listed or otherwise), or

  

  

  

  

any combination of the foregoing.

 

14


 

In addition, the selling stockholders may enter into hedging transactions with broker-dealers who may engage in short sales, if short sales are permitted, of shares in the course of hedging the positions they assume with the selling stockholders. The selling stockholders may also enter into option or other transactions with broker-dealers that require the delivery by such broker-dealers of the shares, which shares may be resold thereafter pursuant to this prospectus.

 

Brokers, dealers, or agents participating in the distribution of the shares may receive compensation in the form of discounts, concessions or commissions from the selling stockholders and/or the purchasers of shares for whom such broker-dealers may act as agent or to whom they may sell as principal, or both (which compensation as to a particular broker-dealer may be in excess of customary commissions). Neither the selling stockholders nor we can presently estimate the amount of such compensation. We know of no existing arrangements between the selling stockholders and any other stockholder, broker, dealer or agent relating to the sale or distribution of the shares. We will not receive any proceeds from the sale of the shares of the selling security holders pursuant to this prospectus. We have agreed to bear the expenses of the registration of the shares, including legal and accounting fees, and such expenses are estimated to be approximately $16,760.91.

 

DESCRIPTION OF SECURITIES TO BE REGISTERED.

 

General

 

Our authorized capital stock consists of  25,000,000 Shares of common stock, $0.001 par value per Share. There are no provisions in our charter or by-laws that would delay, defer or prevent a change in our control.

 

Common Stock

 

We are authorized to issue 25,000,000 shares of common stock, $0.001 par value per share. Currently we have 8,585,977 common shares issued and outstanding.  We do not have any holding period requirements for our common stock.

 

The holders of our common stock have equal ratable rights to dividends from funds legally available if and when declared by our board of directors and are entitled to share ratably in all of our assets available for



distribution to holders of common stock upon liquidation, dissolution or winding up of our affairs. Our common stock does not provide the right to a preemptive, subscription or conversion rights and there are no redemption or sinking fund provisions or rights. Our common stock holders are entitled to one non-cumulative vote per share on all matters on which shareholders may vote.

 

We refer you to our Articles of Incorporation, Bylaws and the applicable statutes of the state of Nevada for a more complete description of the rights and liabilities of holders of our securities. All material terms of our common stock have been addressed in this section.

 

Holders of shares of our common stock do not have cumulative voting rights, which means that the holders of more than 50% of the outstanding shares, voting for the election of directors, can elect all of the directors to be elected, if they so choose, and, in that event, the holders of the remaining shares will not be able to elect any of our directors.

 

Dividends

 

We have not paid any cash dividends to shareholders. The declaration of any future cash dividends is at the discretion of our board of directors and depends upon our earnings, if any, our capital requirements and financial position, our general economic conditions, and other pertinent conditions. It is our present intention not to pay any cash dividends in the foreseeable future, but rather to reinvest earnings, if any, in our business operations.

 

Warrants

 

There are no outstanding warrants to purchase our securities.

 

Options

 

There are no options to purchase our securities outstanding.

 

15


 

No Public Market for Common Stock

 

There is presently no public market for our common stock. We anticipate applying for trading of our common stock on the over the counter bulletin board, maintained by the NASD, upon the effectiveness of the registration statement of which this prospectus forms a part.

 

          There are several requirements for listing our shares on the NASDAQ bulletin board, including:

 

          * we must make filings pursuant to Sections 13 and 15(d) of the Securities Exchange Act of 1934;

 

          * we must remain current in our filings;

 

          * we must find a member of FINRA to file a form 211 on our behalf. The information contained within form 211 includes comprehensive data about our company and our shares. Form 211 and our prospectus are filed with the NASD so that they can determine if there is sufficient publicly available information about us and whether our shares should be listed for trading.

 

We can provide no assurance that our shares will be traded on the bulletin board or, if traded, that a public market will materialize.

 

No Broker Is Being Utilized In This Offering

 



This offering is self-underwritten, which means that it does not involve the participation of an underwriter or broker, and as a result, no broker for the sale of our securities will be used. In the event a broker-dealer is retained by us to participate in the offering, we must file a post-effective amendment to the registration statement to disclose the arrangements with the broker-dealer, and that the broker-dealer will be acting as an underwriter and will be so named in the prospectus. Additionally, the NASD’S corporate finance department must issue a “no objection” position on the terms of the underwriting compensation before the broker-dealer may participate in the offering.

 

No Escrow of Proceeds

 

There will be no escrow of any of the proceeds of this offering since the Company has already received all proceeds from its Private Placement. Accordingly, we already have use of all funds we have raised. These funds shall be non-refundable to subscribers except as may be required by applicable law.

 

Penny Stock Reform Act of 1990

 

The Securities Enforcement and Penny Stock Reform Act of 1990 require additional disclosure for trades in any stock defined as a penny stock. The Securities and Exchange Commission has adopted regulations that generally define a penny stock to be any equity security that has a market price of less than $5.00 per share, subject to exceptions. Under this rule, broker/dealers who recommend these securities to persons other than established customers and accredited investors must make a special written suitability determination for the purchaser and receive the purchaser’s written agreement to a transaction before sale. Our shares will probably be subject to the Penny Stock Reform Act, thus potentially decreasing the ability to easily transfer our shares.

 

INTERESTS OF NAMED EXPERTS AND COUNSEL

 

No expert or counsel named in this prospectus as having prepared or certified any part of this prospectus or having given an opinion upon the validity of the securities being registered or upon other legal matters in connection with the registration or offering of the common stock was employed on a contingency basis, or had, or is to receive, in connection with the offering, a substantial interest, direct or indirect, in the registrant or any of its parents or subsidiaries. Nor was any such person connected with the registrant or any of its parents or subsidiaries as a promoter, managing or principal underwriter, voting trustee, director, officer, or employee.

 

The financial statements included in this prospectus and the registration statement have been audited by Malcolm Pollard, Inc., CPA, P.C., to the extent and for the period set forth in their report appearing elsewhere herein and in the registration statement, and are included in reliance upon such report given upon the authority of said firm as experts in auditing and accounting.


Brian R. Reiss, Attorney at Law, has rendered an opinion as to the validity of shares being registered and the corporate documents of the Company.

 

 

16


 

DESCRIPTION OF BUSINESS


Company Overview


Autovative Products, Inc. is an exclusive distributor of automotive parts. We have developed and produced two products for both automobile and fleet uses. One product is the Portable Tow Truck, a traction aid which has been successful in helping drivers get their vehicles unstuck from snow, ice, mud and sand. The other product is the Overhead Door Saver, a heavy-duty spring device for use in fleets of trucks with overhead doors. It cushions the shock of constant door openings, and greatly reduces overhead door repairs.




We were incorporated in Nevada on December 8, 2004. We have contracted for the manufacturing of both products listed above with OTW Enterprises LLC, located in Maryville, Tennessee. The first product, the Portable Tow Truck, has been marketed exclusively by us to the large fleet market for the past seven years, and has had continual sales to UPS (United Postal Service), FedEx (Federal Express) and others. The Overhead Door Saver has been successfully tested by UPS on some of its vehicles. At this time the Company awaits a contract with UPS, as they are considering installing it on all their vehicles with overhead doors. At this time we do not know with certainty whether they will or will not enter into a contractual arrangement with the Company. We intend to expand our marketing of the Portable Tow Truck to retail outlets worldwide, and expand the marketing of the Overhead Door Saver to companies with large truck fleets with overhead doors.


All products sold by the Company are drop shipped by the manufacturer in Maryville, TN to the customer.


Business Strategy


To date we have only attempted to sell our products to trucking fleets such as FedEx and UPS. We believe that with the past sales of our products to two large trucking fleets such as FedEx and UPS we should have an advantage to selling to additional trucking fleets as well as to the retail markets. However there is no assurance that will happen.


We intend to enter into alliances with other companies with innovative automobile products, especially focusing on products adapted to future trends in the automotive industry. Additionally, we intend to enter into alliances with companies that have domestic and international marketing and distribution outlets. We believe when this is successfully completed, it will provide profitability and self-sustaining growth. We plan to do this by:


Establishing manufacturing alliances with manufacturers, both domestically and abroad, to mass produce our products.


Developing a marketing and sales force to successfully market and sell our products both domestically and globally.


Establishing marketing alliances with companies with worldwide marketing outlets.


Establishing distribution outlets globally through alliances with companies with those locations established, including capability to establish more outlets.


Continuing to test and improve our products, including locating additional testing facilities.


Adding new product lines.


We are in process of developing the necessary creative and technical documentation to implement the above strategies. To accomplish these goals the Company will need to raise additional capital. At this time there are no definitive plans to raise additional capital.


Industry Overview


According to JD Power, there were a total of one billion light, medium and heavy duty vehicles registered worldwide in 2009. Approximately 259 million, or 25%, of these vehicles were registered in the United States. According to the AAIA, the overall size of the U.S. aftermarket was approximately $274 billion in 2009.

In general, aftermarket industry participants can be categorized into three major groups: (1) manufacturers of parts, (2) distributors of replacement parts (without manufacturing capabilities) and (3) installers, both



professional and DIY customers. Distributors purchase products from manufacturers and sell them to wholesale or retail operations, which in turn sell them to installers.

The distribution business is comprised of the (1) traditional, (2) retail and (3) OES channels. Typically, professional installers purchase their products through the traditional channel, and DIY customers purchase products through the retail channel. The traditional channel includes such well-known distributors as NAPA, CARQUEST, Federated, the Alliance, Uni-Select and ADN. Through a network of distribution centers, these distributors sell primarily to owned or affiliated stores, which in turn supply professional installers. The retail channel includes merchants such as AutoZone, O’Reilly Auto Parts and Canadian Tire. The OES channel consists primarily of vehicle manufacturers’ service departments at new vehicle dealerships.


There are numerous tire traction aid devices on the market, most of which are designed to go around the tires and be used continuously while driving in weak traction areas such as snow, ice, mud and sand. These types of devices are designed to prevent a vehicle from getting stuck, and are not designed to get a vehicle unstuck. There are some traction mat devices similar to our Portable Tow Truck, but to our knowledge none that have our cleat design. The major sales of these devices occur during the winter and rainy seasons, with less sales during the dry months.


To our knowledge there are no similar devices to our Overhead Door Saver currently on the market. Some fleet owners have attempted to place a door stop on the overhead door track in the hopes of reducing door repairs, but these have proven to be of little effect. To our knowledge the Overhead Door Saver is the only device that can successfully reduce overhead door repairs.


As we expand into other automotive products, we expect to enter the market with unique products, some of which will have no similar products currently in the marketplace.


Our Products and Technology


Portable Tow Truck


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 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 is manufactured from various steel parts. The mounting piece (which is bolted to the track of the overhead door) is 3” 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 ½” steel and has a 2”X2 ½” flat steel piece welded on one end. A 10” long engineered steel spring is placed over the rod and then inserted through the holes on the U support. A 2” 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.


Competition


Portable Tow Truck


There are other devices on the market designed to either assist drivers to prevent their vehicles from getting stuck in snow, ice, mud or sand, or to assist in extracting the vehicles when they get stuck. The Portable Tow Truck is designed to assist in the latter category. The devices designed to prevent vehicles from getting stuck must be applied around the tires prior to traveling in weak traction areas. Devices designed to extract vehicles when stuck are not put around the tires, but instead are placed on the ground directly in front of the rear (driving) tires and pushed down against the tires. This is the category of traction-aid product in which we would be in competition, and not the former category.


Overhead Door Saver


To our knowledge there is currently no other similar device on the market designed to reduce the repairs on overhead doors. Small rubber door stops have been used in attempts to reduce the overhead door repairs, but they have not proved effective.


Competitive Advantages


The Portable Tow Truck has several competitive advantages over other similar traction-aid devices on the market. Some of the devices designed to extract stuck vehicles are flat and some have ridges to assist with traction. To our knowledge the  Portable Tow Truck is the only traction-aid product on the market with many small sharp cleats on the top and bottom that both grab the tire and also dig into and hold on to the ground surface. This is a major advantage in providing a firm grip to the tire as well as the ground surface. The front cleats face the opposite direction, which further aids on the initial connection to the tire. Also, in the opinion of management, the Portable Tow Truck is the only traction-aid product on the market with small holes in front to enable it to be connected to the vehicle so it can be dragged to an area that is safe to stop.


Customers


Portable Tow Truck


Currently, and continuously for the past seven years, we have had sales of the Portable Tow Truck to UPS, FedEx and other fleet owners. These sales have averaged over 5,000 units per year, and those sales are expected to continue. We plan to mass market our product to retail and wholesale outlets throughout the U.S. and Canada, as well as globally. With that we hope to have customers worldwide.


Because we are considered a small vendor to FedEx, our sales to the FedEx trucking fleet are made through Johnson Industries, Inc. in Norcross, Georgia. Sales to UPS are made directly to UPS.


Overhead Door Saver


Our Overhead Door Saver has been successfully tested at UPS centers for a number of years, and has proven to reduce overhead door repairs by as much as 75%. Negotiations are underway to have the Overhead Door Saver installed on their entire fleet of trucks with overhead doors. Once that sale is completed, we plan to begin an intensive marketing and sales campaign to other fleet owners with trucks with overhead doors in the U.S., Canada and countries globally. However at this time we do not have a contract with any entity for the sale of our Overhead Door Saver and we do not know whether the Overhead Door Saver will be successfully sold to UPS or other trucking fleets.


Intellectual Property




We do not have patents on either the Portable Tow Truck or the Overhead Door Saver. We have applied for patents and have been denied patents for both products.


Government Regulations  


To our knowledge there are no current government regulations concerning or affecting either of our products.


Research and Development


Portable Tow Truck


Our research and development activities have been in the creation and testing of various materials to use in the molds, as well as development of the molds themselves. Live tests we conducted using both cars and trucks in snow, ice, mud and sand conditions, and modifications to the materials and to the mold design were made. After numerous tests, the current product emerged.


If our markets expand we intend to search for a manufacturer that will be more cost effective whether it be on or offshore.


Overhead Door Saver


Our research and development activities with this product began by creating a design that could be applied to the rails of overhead doors, without causing any conflicts with the use of the doors, or with the use of the cargo space. We then tested various sizes of steel materials and configurations, and finally tested a number of steel spring sizes. After being unsuccessful in procuring ready-made springs that would perform properly, we had special steel springs engineered to meet our specifications. Those springs were tested on various trucks, and have performed perfectly since our first tests almost ten years ago. None of our Overhead Door Savers that have been in use of the UPS trucks have broken or malfunctioned in that time period.


Employees


Our President and Chief Executive Officer, David Funderburk, has worked with the company on a commission only basis, based on sales made. We plan to hire additional employees and sales force on an as needed basis and as the Company’s growth expands in the areas of sales, administration and product assembly. As we further develop and market our products, we will need to hire additional employees.


Office and Facilities


Our executive offices are located at 502 N. Santa Fe Avenue, Ste. D, Vista, CA 92083. Our telephone number at that address is 760-732-5868, and our facsimile number is 760-301-0005. The manufacturing facilities are located in Maryville, TN, where we currently contract with independent laborers to produce, assemble and package our products.


 

Regulation

 

Our businesses could be regulated by governmental authorities in the jurisdictions in which we operate. Because of the possibility of international operations, we must comply with diverse and evolving regulations. Regulation relates to, among other things, management, licensing, foreign investment, use of confidential customer information and content. Our failure to comply with all applicable laws and regulations could result in, among other things, regulatory actions or legal proceedings against us, the imposition of fines, penalties or judgments against us or significant limitations on our activities. In addition, the regulatory environment in which we operate is subject to change. New or revised requirements



imposed by governmental authorities could have adverse effects on us, including increased costs of compliance. Changes in the regulation of our operations or changes in interpretations of existing regulations by courts or regulators or our inability to comply with current or future regulations could adversely affect us by reducing our revenues, increasing our operating expenses and exposing us to significant liabilities. Our business involves risks of liability associated with automotive specialty products, which could adversely affect our business, financial condition or results of operations. As a developer and distributor of automotive specialty products, we may face potential liability for any of:

 

  

defamation;·

  

invasion of privacy;·

  

copyright infringement;·

  

actions for royalties and accountings;·

  

trademark misappropriation;·

  

trade secret misappropriation;·

  

breach of contract;·

  

negligence; and/or·

  

other claims based on the nature and content of the materials distributed.

          

These types of claims have been brought, sometimes successfully, against merchandisers, online services and other developers and distributors of automotive products. We could also be exposed to liability in connection with material available through our Internet sites. 

19


 

Reports

 

As an issuer whose securities will be registered under section 12(g) of the Exchange Act, we will be required to file periodic reports with the SEC. The public may read and copy any materials that we file with the SEC at the SEC’s Public Reference Room at 100 F Street N.E., Washington, DC 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330 or 1- 202-942-8090. The SEC maintains an internet site that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC. The address of that site is http://www.sec.gov.

 

Bankruptcy or Receivership or Similar Proceedings


NONE

 

Legal Proceedings

 

Neither the Company nor any of its officers, directors or beneficial shareholders (greater than 10%) are involved in any litigation or legal proceedings involving the business of the Company.

 

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

 

Some of the statements under the “Prospectus Summary,” “Risk Factors,” “Management Discussion and Analysis”, “Business Description” and elsewhere in this prospectus constitute forward-looking statements. The “safe harbor” for forward-looking statements does not apply to this offering since it is an initial public offering of our securities. These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance, or achievements to be materially different from any future results, levels of activity, performance, or achievement expressed or implied by such forward-looking statements. Such factors include, among other things, those listed under “Risk Factors” and elsewhere in this prospectus.

 



In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “could,” “intend”, “expects,” “plan,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” or “continue” or the negative of such terms or other comparable terminology.

 

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance, or achievements. We are under no duty to update any of the forward-looking statements after the date of this prospectus.

 

DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS

 

Executive Officers and Directors

 

The following table and subsequent discussion contains the complete and accurate information concerning our directors and executive officers, their ages, term served and all of our officers and their positions, who will serve in the same capacity with us upon completion of the offering.

 

Name

  

Age

  

Term Served

  

Title / Position(s)

David Funderburk

  

64

  

Since inception

(December 8, 2004)

  

President/CEO, Secretary, Treasurer and Director

 

 

 

 

 

 

 

         

 There are no other persons nominated or chosen to become directors or executive officers nor do we have any employees other than above.

 

DAVID FUNDERBURK


David Funderburk, is the founder and  Director of Autovative Products, Inc.. Mr.  Funderburk has been the president and chief executive since its inception. Mr. Funderburk graduated from the University of San Diego with a Master’s Degree and began his business career analyzing and developing training programs for the U.S. Government. He then began building custom homes in San Diego County as a general contractor and owner of North County Domes, after which he became an independent real estate consultant and investor. Mr. Funderburk has served as a fiduciary and trustee for numerous trusts, and has served as an Officer of several non-public corporations. Since 1990 he has applied his study of contract and business law towards developing business strategies for clients. He is also a financial strategist and an independent business consultant as the Manager of Service International Limited Liability Company.

20


 

 Our directors will hold office until the next annual meeting of shareholders and the election and qualification of their successors. Directors receive no compensation for serving on the board of directors other than reimbursement of reasonable expenses incurred in attending meetings. Officers are appointed by the board of directors and serve at the discretion of the board.

 

No officer, director, or persons nominated for such positions and no promoters or significant employee of AUTOVATIVE PRODUCTS, INC. has been involved in legal proceedings that would be material to an evaluation of officers and directors.

 




Executive Compensation

 

        Summary Compensation Table

 

Name and Principal Position

Year 

  

Salary

($)

  

Bonus

($) 

  

Stock Awards

($)

  

Option Awards

($) 

  

Non-Equity Incentive Plan Compensation ($)

  

Non-Qualified Deferred Compensation Earnings

($) 

All Other Compensation

($) 

  

Totals

($)

  

  

  

  

 

  

  

  

 

  

  

  

 

  

  

  

  

 

  

David Funderburk, CEO, and Chairman of the Board of Directors

2004

  

$

0

  

0

  

  

7,200,000

Shares @ .001 per share

  

0

  

  

0

  

0

0

  

$

7,200.00

  

  

Option Grants Table. There were no individual grants of stock options to purchase our common stock made to the executive officer named in the Summary Compensation Table through December 31, 2010.

  

Compensation of Officers and Directors


We have not paid any salaries since the inception of the Company. We do not anticipate beginning to pay salaries until we have adequate funds to do so. There are no stock option plans, retirement, pension, or profit sharing plans for the benefit of our officer and director.


David Funderburk, has received compensation in the way of commissions on sales to date. He has also been compensated by the issuance of 7,200,000 shares of the Company’s stock in 2005.


Employment Agreements


We currently do not have any employment agreements in place with our officers or significant employees.

 

Indemnification of Directors and Officers

 

Except as permitted by the Nevada Revised Statutes, the Company’s Articles of Incorporation do not provide for any additional or different indemnification procedures. At present, there is no pending litigation or proceeding involving a director, officer or employee of the Company regarding which indemnification is sought, nor is the Company aware of any threatened litigation that may result in claims of indemnification. The Company has not obtained director’s and officer’s liability insurance, although the board of directors of the Company may determine to investigate and, possibly, acquire such insurance in the future.

 

21


Employment Agreements

 

We have not entered into any employment agreements with any of our employees, and employment arrangements are all subject at the discretion of our sole director, David Funderburk.

 

Conflict of Interest - Management’s Fiduciary Duties

 

Our directors and officers may become, in their individual capacity, officers, directors, controlling shareholders and/or partners of other entities engaged in a variety of businesses.

 



LEGAL PROCEEDINGS

 

We may from time to time be involved in routine legal matters incidental to our business; however, at this point in time we are currently not involved in any litigation, nor are we aware of any threatened or impending litigation.

 

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

 

The table below sets forth, as of December 31, 2010, certain information with respect to the beneficial ownership of the common stock of our Company by each person who we know to be beneficial owner of more than 5% of any class or series of our capital stock, each of the directors and executive officers individually, and all directors and executive officers as a group. Unless otherwise indicated, each person named in this table has sole voting and investment power with respect to the shares beneficially owned.

 

Title of Class

Name and Address of Beneficial Owner

Amount and Nature of Beneficial Ownership

Percent of Class

Common

David Funderburk – CEO and Operating Manager


7,200,000


84%

 

 

 

 

 

Transfer Agent

 

We have engaged Island Stock transfer to act as our stock registrar and transfer agent. Its address and telephone number is 100 Second Avenue S. Suite 705S, St. Petersburg, Fl 33701 Phone: (727) 289-0010 Fax: (727) 289-0069. Up until engaging our transfer agent, we have acted as our own transfer agent and registrar.

 

22


 

RELATED PARTY TRANSACTIONS

 

All transactions that are reportable pursuant to Item 404(d)(1) are disclosed in this section.         

 

Since inception, the following transactions were entered into:

 

The Company’s principal shareholder provides office space to the Company, on a month to month basis. The office space is not of material value to the Company and shall be available to the Company until such time as it needs and establishes its permanent office.

 

The Company has established its web site at: www.autovativeproducts.com.

 

The Company has completed a Private Placement of 223,000 of its common shares to 14 individual shareholders, at a price of $.10 per share,  which provided $22,300 in cash to the Company as of December 31, 2010.

 

All current shareholders acquired their shares with the intent to hold the shares for investment purposes, and not with a view to further resale or distribution, except as permitted under exemptions from registration requirements under applicable securities laws. That means that they may not sell such securities unless they are either registered with the sec and comparable agencies in the states or other jurisdictions where the purchasers reside, or are exempted from registration. The most widely used exemption from registration requirements is provided by sec Rule 144, which requires a six month holding period prior to resale, and limits the quantities of securities that can be sold during any 90 day periods.

 

The certificate has been issued with a restrictive legend required with respect to issuance of securities pursuant to exemptions from registration requirements under the Securities Act and the recipient



acknowledged his understanding that the shares are restricted from resale unless they were either registered under the Securities Act and comparable state laws, or the transaction was effected in compliance with available exemptions from such registration requirements.

 

It is contemplated that we may enter into certain transactions with our sole director, David Funderburk, or affiliates which may involve conflicts of interest in that they will not be arms’ length transactions. We presently have no permanent office facilities but for the time being we will use as our business address the offices of Mr.  Funderburk the operating manager, on a rent free basis, until such time as our business operations may require more extensive facilities and we believe it an appropriate time to rent commercial office space. There is presently no formal written agreement for the use of such facilities, and no assurance that such facilities will be available to us on such a basis for any specific length of time.

 

All future transactions between us and our officers, directors or 5% shareholders, and their respective affiliates, will be on terms no less favorable than could be obtained from unaffiliated third parties and will be approved by a majority of any independent, disinterested directors.

 

There are currently no related party transactions between  Funderburk and the Company other than those disclosed herein. Further, the Company has not had any preliminary contact or discussions with Funderburk or affiliates and there are no present plans, proposals, arrangements or understandings with these companies to enter into any future transactions.

 

23



DISCLOSURE OF PAYMENT OF SERVICES WITH SHARES OF COMMON STOCK


The following were compensated with common stock issued at the par value of $.001 per share of the Company for services rendered; specifically bookkeeping and administrative services and marketing services:


Hannah Grabowski

375,000

Brianna Stoecklein

400,000

Lannelle Cannon

150,000

Wayne Berian

150,000

Annette Mason

50,000

Stan Windhorn

500

Hans Johns

500

A. Healey Mendicino

500

Casey Johns

500

Samantha Johns

500

Chad Langner

500

David Moriyama

500

William Castleberry

500

Steve Lynch

2,977

Alan Austin

3,000

Kyle Grabowski

3,000


DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES ACT LIABILITIES

 

Our certificate of incorporation contains provisions permitted under General Corporation Laws of Nevada relating to the liability of directors. The provisions eliminate a director’s liability to stockholders for monetary damages for a breach of fiduciary duty, except in circumstances involving wrongful acts, including the breach of a director’s duty of loyalty or acts or omissions, which involve intentional



misconduct, or a knowing violation of law. Our certificate of incorporation also contains provisions obligating us to indemnify our directors and officers to the fullest extent permitted by General Corporation Laws of Nevada. We believe that these provisions will assist us in attracting and retaining qualified individuals to serve as directors.

 

We are subject to the State of General Corporation Laws of Nevada. In general, the statute prohibits a publicly held Nevada corporation from engaging in a business combination with a person who is an interested stockholder for a period of three years after the date of the transaction in which that person became an interested stockholder, unless the business combination is approved in a prescribed manner. A business combination includes a merger, asset sale or other transaction resulting in a financial benefit to the interested stockholder. An interested stockholder is a person who, together with affiliates, owns, or, within three years prior to the proposed business combination, did own 15% or more of our voting stock. The statute could prohibit or delay mergers or other takeovers or change in control attempts and accordingly, may discourage attempts to acquire us.

 

As permitted by Nevada law, we intend to eliminate the personal liability of our directors for monetary damages for breach or alleged breach of their fiduciary duties as directors, subject to exceptions. In addition, our bylaws provide that we are required to indemnify our officers and directors, employees and agents under circumstances, including those circumstances in which indemnification would otherwise be discretionary, and we would be required to advance expenses to our officers and directors as incurred in proceedings against them for which they may be indemnified. The bylaws provide that we, among other things, will indemnify officers and directors, employees and agents against liabilities that may arise by reason of their status or service as directors, officers, or employees, other than liabilities arising from willful misconduct, and to advance their expenses incurred as a result of any proceeding against them as to which they could be indemnified. At present, we are not aware of any pending or threatened litigation or proceeding involving a director, officer, employee or agent of ours in which indemnification would be required or permitted. We believe that our charter provisions and indemnification agreements are necessary to attract and retain qualified persons as directors and officers.

 

We have agreed to the fullest extent permitted by applicable law, to indemnify all our officers and directors.

 

We undertake the following:

 

Insofar as indemnification for liabilities arising under the Securities Act of 1933 (the “Act”) may be permitted to our directors, officers and controlling persons pursuant to the foregoing provisions, or otherwise, we have been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable.

 

REPORTS TO SECURITY HOLDERS

 

AUTOVATIVE PRODUCTS, INC. is not a reporting issuer under the Securities Exchange Act of 1934. As a result of this offering, we will become subject to the informational requirements of the 1934 Act for a period of at least one fiscal year.

 

FINRA requires that all issuers maintaining quotations of their securities on the OTC Bulletin Board file periodic reports under the 1934 Act. In order to maintain such a quotation, we will have to register our securities under the 1934 Act on form 8-A or form 10.

 

We may cease filing periodic reports with the Securities and Exchange Commission if:


WE HAVE LESS THAN 300 STOCKHOLDERS OF RECORD; OR

WE HAVE LESS THAN 500, BUT MORE THAN 300, STOCKHOLDERS OF RECORD, AND OUR TOTAL ASSETS DID NOT EXCEED $10 MILLION ON THE LAST DAY OF EACH OF OUR THREE MOST RECENT FISCAL YEARS



Because of the requirement that we file periodic reports in order to have our common stock quoted on the OTC Bulletin Board, we do not intend to suspend our reporting obligations in the foreseeable future.

 

The public may read and copy any materials that we file with the Commission at the Commission’s Public Reference Room at 100 F St,, NE, Washington, D.C. 20549. The public may obtain information on the operation of the Public Reference Room by calling the Commission at 1-800-SEC-0330. The Commission maintains an Internet site that contains reports, proxy and information statements and other information regarding issuers that file electronically with the Commission. The address of that site is http://www.sec.gov.

 

We intend to furnish to our stockholders annual reports containing financial statements audited and reported upon by our independent accounting firm, and such other periodic reports as we may determine to be appropriate or as may be required by law.

          

24


 




AUDITED FINANCIAL STATEMENTS

AUTOVATIVE PRODUCTS, INC.

TABLE OF CONTENTS

 

December 31, 2010

 

Report of Registered Independent Accounting Firm

F-1-2

Financial Statements

  

Balance Sheet as of December 31, 2009 and December 31, 2010

F-3

Statement of Operations for the Years Ended December 31, 2008, 2009 and 2010

F-4

Statement of Stockholders’ Equity as of December 31, 2010

F-5

Statement of Cash Flows for the Years Ended December 31, 2008, 2009 and 2010

F-6

Notes to the Financial Statements

F-7 to F-12

 


  

  







MALCOLM L. POLLARD, Inc.              

                                                        4845 W. LAKE ROAD, # 119

                    ERIE, PA 16505                           

                              

 (814)838-8258

                              FAX (814) 838-8452     


Report of Independent Registered Public Accounting Firm


Board of Directors

Autovative Products, Inc.


We have audited the accompanying  balance sheets of Autovative Products, Inc

 as of December 31, 2010 and December 31, 2009, and the related consolidated statements of operations, changes in shareholders’ equity, and cash flows for the years then ended These financial statements are the responsibility of the Company’s management.  Our responsibility is to express an opinion on these financial statements based on our audits.


We conduct our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.  An audit includes examining on a test basis, evidence supporting the amounts and disclosures in the financial statements.  An audit also includes assessing the accounting principles used and significant estimates made by



management, as well as evaluating the overall financial statement presentation.  We believe that our audits provide a reasonable basis for our opinion.


The Company has not generated significant revenues or profits to date. This factor, among others, raises substantial doubt about its ability to continue as a going concern.  The Company’s continuation as a going concern depends upon its ability to generate sufficient cash flow to conduct its operations and its ability to obtain additional sources of capital and financing.  The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.


In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company at December  31, 2010 and December 31, 2009 and  the results of its operations, changes in shareholders’ equity,  and its cash flows for the years then  ended in conformity with U.S. generally accepted accounting standards.


Malcolm L. Pollard, Inc.

Erie, Pennsylvania

March 31, 2011

 



 MALCOLM L. POLLARD, Inc.              

                                                        4845 W. LAKE ROAD, # 119

                    ERIE, PA 16505                           

                              

 (814)838-8258

                              FAX (814838-8452     


Report of Independent Registered Public Accounting Firm


Board of Directors

Autovative Products, Inc.

Vista, California 92083


We have audited the accompanying balance sheets of Autovative Products, Inc. as of December 31, 2009 and December 31, 2008 and the related statements of operations, changes in shareholders’ equity, and cash flows for the years then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.


We conduct our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.  An audit includes examining on a test basis, evidence supporting the amounts and disclosures in the financial statements.  An audit also



includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We believe that our audits provide a reasonable basis for our opinion


The Company has not generated significant revenues or profits to date. This factor, among others, raises substantial doubt about its ability to continue as a going concern.  The Company’s continuation as a going concern depends upon its ability to generate sufficient cash flow to conduct its operations and its ability to obtain additional sources of capital and financing.  The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.


In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company at December 31, 2009  and December 31, 2008, the results of its operations, changes in shareholders’ equity, and its cash flows for the years then ended, in conformity with U.S. generally accepted accounting standards.


Malcolm L. Pollard, Inc.

Erie, Pennsylvania

June 6, 2011

F-2




AUTOVATIVE PRODUCTS, INC

BALANCE SHEET (Audited)

For the Year Ended December 31, 2010 and the Year Ended December 31, 2009


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2010

 

December 31, 2009

 

 

 

 

 

 

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

Current Assets

 

 

 

 

 

 

  Cash

 

 

$

1,042

$

15,618

  Accounts Receivable

 

 

420

 

0

Total Current Assets

 

 

1,462

 

15,618

 

 

 

 

 

 

Fixed Assets

 

 

 

 

 

  Equipment

 

 

70,000

 

70,000

  Furniture & Computer Equip.  

 

 

30,000

 

30,000

  Accumulated Depreciation

 

 

(43,498)

 

(35,212)

Total Fixed Assets

 

 

57,502

 

64,788

 

 

 

 

 

 

Total Assets  

 

 

57,964

 

80,403

 

 

 

 

 

 

Liabilities And Equity

 

 

 

 

 

 

 

 

 

 

 

Current Liabilities

 

 

 

 

 

  Accrued income tax payable

 

 

 

0

 

0

Total Current Liabilities

 

 

 

0

 

0

 

 

 

 

 

 

 

Total Liabilities

 

 

0

 

0

 

 

 

 

 

 

Stockholders Equity

 

 

 

 

 

 

 

 

 

 

 

 

Common Stock $.001 Par Value 25,000,000 Shares Authorized 8,585,977shares issued and outstanding

 

 

8,586

 

8,338

 

 

 

 

 

 

 

Paid in Capital

 

 

 

22,303

 

0

Accumulated (Deficit) Earnings

 

 

 

24,823

 

72,068

Total Stockholders Equity

 

57,964

 

80,403

 

 

 

 

 

 

 

Total Liabilities And

 

 

 

 

 

Stockholders Equity

 

$

57,964

$

80,406

 

 

 

 

 

 

 

See accompanying summary of accounting policies and notes to consolidated

financial statements

F-3



AUTOVATIVE PRODUCTS, INC

STATEMENT OF OPERATIONS (Audited)

For the Year Ended December 31, 2010, Year Ended December 31, 2009 and Year Ended December 31, 2008


 

 

 

December 31, 2010

 

December 31,

2009

December 31,

2008

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

Sales

 

$

88,143

$

120,561

185,455

 

 

 

 

 

 

 

Total Income

 

88,143

 

120,561

185,455

  

 

 

 

 

 

 

Ordinary Income\Expenses

 

 

 

 

 

  Depreciation

 

8,286

 

8,286

8,286

  Commissions

 

94,724

 

100,147

157,442

  Advertising and Marketing

 

26,310

 

0

18,250

  General & Admin

 

3,068

 

13,692

15,880

  Professional Fees

 

3,000

 

0

 

 

 

 

 

 

 

 

Total Expenses

 

135,388

 

122,125

199,858

 

 

 

 

 

 

 

Net Income Before Provision for Income Taxes

 

(47,245)

 

(1,565)


(14,403)

 

 

 

 

 

 

 

Other Income/Expense

 

 

 

 

 

 

 

0

 

-

 

Total Other Income

 

0

 

 

 

 

 

 

 

 

 

Provision for Income Taxes

 

0

 

0

 

 

 

 

 

 

 

Net Income

$

(47,245)

$

(1,565)

(14,403)

 

 

 

 

 

 

Net Earnings (Loss) Per Share

$

(.006)

$

(.0002)


(.002)

 

 

 

 

 

 

Shares Outstanding  

 

8,461,977

 

8,337,977

8,337,977


See accompanying summary of accounting policies and notes to consolidated

financial statements

F-4




AUTOVATIVE PRODUCTS, INC

STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY

(Audited)For the Year Ended December 31, 2010

 

 

Common Stock

 

 

 

 

 

 

 

 

 

Number of

 

 

 

 Additional

 

 Accumulated

 

 

Total

 

 

Shares

 

Amount

 

 Paid in Capital

 

 Deficit

 

 

 Equity

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common stock to founder for services in lieu of salary, February 23, 2005

 

200,000

 

200

 

0

 

0

 

 

200

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common stock for services rendered, March 15, 2005

 

1,125,000

 

1,125

 

 

 

 

 

 

1,125

 

 

 

 

 

 

 

 

 

 

 

 

Net Income (Deficit) Period (February 23, 2005-December 31, 2005

 

 

 

 

 

 

 

109,912

 

 

109,912

 

 

 

 

 

 

 

 

 

 

 

 

Balance December 31, 2005

 

1,325,000

 

1,325

 

 

 

109,912

 

 

11,237

 

 

 

 

 

 

 

 

 

 

 

 

Net Income (Deficit) Year Ended December 31, 2006

 

 

 

 

 

 

 

(15,485)

 

 

(15,485)

 

 

 

 

 

 

 

 

 

 

 

 

Balance December 31, 2006

 

1,325,000

 

1,325

 

 

 

94,427

 

 

95,752

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common stock to founder for services in lieu of salary, July 10, 2007

 

7,000,000

 

7,000

 

-

 

 

 

 

7,000

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common stock for marketing services, July 10, 2007

 

12,977

 

13

 

 

 

 

 

 

13

 

 

 

 

 

 

 

 

 

 

 

 

Net Income (Deficit) Year Ended December 31, 2007

 

 

 

 

 

 

 

(6,391)

 

 

(6,391)

 

 

 

 

 

 

 

 

 

 

 

 

Balance December 31, 2007

 

8,337,977

 

8,338

 

 

 

88,036

 

 

96,374

 

 

 

 

 

 

 

 

 

 

 

 

Net Income (Deficit) Year Ended December 31, 2008

 

 

 

 

 

 

 

(14,403)

 

 

(14,403)

 

 

 

 

 

 

 

 

 

 

 

 

Balance December 31, 2008

 

8,337,977

 

8,338

 

 

 

73,633

 

 

81,971

 

 

 

 

 

 

 

 

 

 

 

 

Net income for the period ended December 31, 2009

 

 

 

 

 

 

 

(1,565)

 

 

(1,565)

 

 

 

 

 

 

 

 

 

 

 

 

Balance, December 31, 2009 

 

8,337,977

 

8,338

 

 

 

72,068

 

 

80,406

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common stock, private placement, July 2010  

 

223,000

 

223

 

22,080

 

 

 

 

22,303

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common stock for Advertising services, November 24, 2010

 

25,000

 

25

 

2,475

 

 

 

 

2,500

 

 

 

 

 

 

 

 

 

 

 

 

Net income for the period ended December 31, 2010

 

 

 

 

 

 

 

(47,245)

 

 

(47,245)

 

 

 

 

 

 

 

 

 

 

 

 

Balance, December 31, 2010 

 

8,585,977

 

8,586

 

24,555

 

24,823

 

 

57,964






 

See accompanying summary of accounting policies and notes to consolidated

financial statements


F-5




AUTOVATIVE PRODUCTS, INC

STATEMENT OF CASH FLOW

(Audited)

For the Year Ended December 31, 2010, Year Ended December 31, 2009 and Year Ended December 31, 2008



 

 

December 31, 2010

 

December 31, 2009

 

December 31, 2008

 

 

 

 

 

 

 

Net Income

$

(47,245)

$

(1,565)

$

(14,403)

 

 

 

 

 

 

 

Adjustments to Reconcile Net Income (Loss) To Net Cash Used in Operating

Activities:

 

 

 

 

 

 

From Operations

 

 

 

 

 

 

  Depreciation

 

8,286

 

8,286

 

8,286

  Stock Issued for Services

 

2,500

 

 

 

 

  Accounts Receivable

 

(420)

 

0

 

0

 

 

 

 

 

 

 

Net Cash Provide by Operating Activities

 

(36,879)

 

6,721

 

(6,117)

 

 

 

 

 

 

 

Investing Activities

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Cash Provided by Investing Activity

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash Flow from Financing Activities

 

 

 

 

 

 

  Capital Stock

 

24,803

 

 

 

 

 

 

 

 

 

 

 

Net Cash Provided by Financing Activities

 

22,300

 

0

 

0

 

 

 

 

 

 

 

Increase (decrease) in Cash

 

(14,575)

 

6,721

 

(6,117)

 

 

 

 

 

 

 

Cash at Beginning

 

15,618

 

8,897

 

15,014

 

 

 

 

 

 

 

Cash at End

$

1,042

$

15,618

$

8,897


See accompanying summary of accounting policies and notes to consolidated

financial statements

*For the Year End 2008, 2009 and 2010, there were no payments for interest or taxes.


F-6



AUTOVATIVE PRODUCTS INC.

NOTES TO THE FINANCIAL STATEMENTS

For the Year Ended December 31, 2010 and the Year Ended December 31, 2009

And The Statement of Operations and Cash Flow for the Year ended December 31, 2008

(Audited)


NOTE A - 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 December 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 incurred a net loss of $ (47,245) for the year ended December 31, 2010 and a net loss of $(1,565) for the year ended December 31, 2009 and a net loss of $(14,403) for the year ended December 31, 2008. At the year ended December 31, 2010 the Company's current assets were $1,462 and the total assets were $57,964 and its liabilities were $0. The Company’s assets exceeded its liabilities by $57,964. At the year ended December 31, 2009 the Company's current assets were $15,618 and the total assets were $80,403 and its liabilities were $0. The Company’s assets exceeded its liabilities by $80,403. (see Note B).


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.


REVENUE RECOGNITION

 

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


On December 17, 2003, the SEC staff released Staff Accounting Bulletin (SAB) No. 104, Revenue Recognition. The staff updated and revised the existing revenue recognition in Topic 13, Revenue Recognition, to make its interpretive guidance consistent with current accounting guidance, principally EITF Issue No. 00-21, "Revenue Arrangements with Multiple Deliverables." Also, SAB 104 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; therefore, this guidance will not have an immediate impact on the company's consolidated financial statements.


CASH EQUIVALENTS




The Company considers cash on hand, deposits in banks, and short-term investments purchased with an original maturity date of three months or less to be cash and cash equivalents. The carrying amounts reflected in the balance sheets for cash and cash equivalents approximate the fair values due to short maturities of these instruments.

F-7


INCOME TAXES


The Company has adopted Financial Accounting Standard No. 109 (SFAS 109) 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


The Company has adopted Statement of Financial Accounting Standards No. 144 (SFAS 144). 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 evaluates the recoverability of long-lived assets based upon forecasted undercounted cash flows. Should impairment in value be indicated, the carrying value of intangible assets will be adjusted, based on estimates of future discounted cash flows resulting from the use and ultimate disposition of the asset. SFAS No. 144 also requires assets to be disposed of be reported at the lower of the carrying amount or the fair value less costs to sell.

 

COMPREHENSIVE INCOME


Statement of Financial Accounting Standards No. 130 ("SFAS 130"), "Reporting Comprehensive Income," establishes standards for reporting and displaying of comprehensive income, its components and accumulated balances. Comprehensive income is defined to include all changes in equity except those resulting from investments by owners and distributions to owners. Among other disclosures, SFAS 130 requires that all items that are required to be recognized under current accounting standards as components of comprehensive income be reported in a financial statement that is displayed with the same prominence as other financial statements. The Company does not have any items of comprehensive income in any of the periods presented.


SEGMENT INFORMATION


The Company adopted Statement of Financial Accounting Standards No. 131, Disclosures about Segments of an Enterprise and Related Information ("SFAS 131"). SFAS establishes standards for reporting information regarding operating segments in annual financial statements and requires selected information for those segments to be presented in interim financial reports issued to stockholders. SFAS 131 also establishes standards for related disclosures about products and services and geographic areas. 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.

 

F-8



EARNINGS PER SHARE


The Company has adopted Statement of Financial Accounting Standard No. 128, "Earnings Per Share," 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.


STOCK BASED COMPENSATION

The Company applies the intrinsic value-based method of accounting prescribed by Accounting Principles Board Opinion 25, "Accounting for Stock Issued to Employees", and related interpretations, in accounting for its stock option plans. As such, compensation expense would be recorded on the date of grant only if the current market price of the underlying stock exceeded the exercise price. Statement of Financial Accounting Standards (SFAS) No. 123, "Accounting for Stock-Based Compensation", established accounting and disclosure requirements using a fair value-based method of accounting for stock-based employee compensation plans. As allowed by SFAS No.123, the Company has elected to continue to apply the intrinsic value-based method of accounting described above, and has adopted the disclosure requirements of SFAS No. 123 which are included in Note 17. The Company has also adopted the annual disclosure provisions of SFAS No. 148 in its financial reports for the year ended December 31, 2009 and for the subsequent periods.


 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. The Company periodically reviews its trade receivables in determining its allowance for doubtful accounts. The allowance for doubtful accounts was $0 as of December 31, 2010.


ADVERTISING


The Company follows a policy of charging the costs of advertising to expenses incurred. The Company incurred advertising expenses totaling $44,560 during the respective years ended December 31, 2010, December 31, 2009and December 31, 2008.



F-9



NEW ACCOUNTING PRONOUNCEMENTS



In May 2009, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Codification Topic No. 855, Subsequent Events. This guidance establishes general standards of accounting for and, disclosure of, events that occur after the balance sheet date but before financial statements are issued or are available to be issued. It sets forth (i) the period after the balance sheet date during which



management of a reporting entity should evaluate events or transactions that may occur for potential recognition or disclosure in the financial statements, (ii) the circumstances under which an entity

should recognize events or transactions occurring after the balance sheet date in its financial statements and (iii) the disclosures that an entity should make about events or transactions that occurred after the balance sheet date. The guidance is effective for interim or annual financial periods ending after June 15, 2009 and was adopted with no material effect on the Company's statement of financial condition or results of operations.


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 168").  Under SFAS 168, the FASB Accounting Standards Codification (Codification) will become the sole source of authoritative U.S. GAAP to be applied by non-governmental entities.  SFAS 168 is effective for the financial statements issued for interim and annual periods ending after September 15, 2009.  The adoption will have no material impact on the Company’s financial statements but will require that interim and annual filings include references to the Codification.


In June 2009, the FASB issued Accounting Standards Codification Topic No. 105-10, The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles ("ASC 105-10"). This guidance establishes the FASB Accounting Standards Codification (the "Codification") as the source of authoritative accounting principles  recognized by the FASB to be applied by nongovernmental entities in  the preparation of financial statements in conformity with U.S. GAAP.  Rules and interpretive releases of the SEC under authority of federal  securities laws are also sources of authoritative U.S. GAAP for SEC  registrants. All guidance contained in the Codification carries an equal level of authority. The Codification superseded all existing

non-SEC accounting and reporting standards. All other non-grandfathered, non-SEC accounting literature not included in the Codification is non-authoritative. The FASB will not issue new standards in the form of Statements, FASB Staff Positions or Emerging Issues Task Force Abstracts. Instead, it will issue Accounting Standards Updates ("ASUs"). The FASB will not consider ASUs as authoritative in their own right. ASUs will serve only to update the Codification, provide background information about the guidance and provide the basis for conclusions on the change(s) in the Codification. References made to FASB guidance throughout this document have been updated for the Codification.


In October 2009, the FASB issued Accounting Standards Codification Topic No. 605, Multiple-Deliverable Revenue Arrangements. This guidance establishes a selling price hierarchy for determining the selling price of a deliverable and expands the disclosures required for multiple-deliverable revenue arrangements. This guidance is effective for revenue arrangements that are entered into or are materially modified in fiscal years beginning on or after June 15, 2010, with early adoption permitted. The Company is currently evaluating the impact of adopting this guidance on its results of operations and financial position.


NOTE B - PROPERTY AND EQUIPMENT


Property and equipment at December 31, 2010 consists of the following:


Property and Equipment

 

 

 

   Computers and and furniture

 

 

30,000

   Equipment

 

 

70,000

Property and Equipment

 

 

$ 100,000

Accumulated depreciation

 

 

(43,498)

Property and Equipment less depreciation

 

 

$ 56,502



F-10






NOTE C - INCOME TAXES


The Company has adopted Financial Accounting Standard No. 109 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 for both the year ended December 31, 2010 and December 31, 2009.


NOTE D - 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 includes 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 for the year ended December 31, 2010.


NOTE E - CAPITAL STOCK


CONVERTIBLE PREFERRED STOCK

 

The Company currently has not authorized any class of Preferred 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 the twelve months ended December 31, 2010. At the twelve months ended December 31, 2008 and December 31, 2009 there were 8,337,977 shares of common stock issued and outstanding. At the year ended December 31, 2010 there were 8,585,977 shares of common stock issued and outstanding. 


On February 23, 2005 the Company issued 200,000 shares of restricted 144 stock to its CEO and Director, David Funderburk at par value ($.001) for services rendered to the Company in lieu of salary.


On February 24, 2005 the Company issued 7,000,000 shares of restricted 144 stock to its CEO and Director, David Funderburk at par value ($.001) for services rendered to the Company in lieu of salary.


On July 10, 2007 the Company issued 12,977 shares of restricted 144 stock for services rendered to the Company for marketing related services.


On July 10, 2008 the Company issued 1,125,000 shares of restricted 144 stock for services rendered to the Company for marketing, administrative and bookkeeping related services.


From March 15, 2010 to July 30, 2010 the Company issued 223,000 shares at a price of $.10 per share through a Reg D 506 Private Offering.


On December 29, 2010 the Company issued 25,000 shares of restricted 144 common stock per a contract with Direct Media Enterprises which were dividend to the shareholders of Direct Media Enterprises for



media advertising via Direct Media Enterprise’s kiosk technology. The stock was issued for  initial video production services at a price of $.10 per share (services valued at $2,500.00).


F-11


NOTE F - COMMITMENTS AND CONTINGENCIES


LEASE COMMITMENTS


The Company does not lease any office space; it uses space provided by its Chief Executive Officer.


EMPLOYMENT AND CONSULTING AGREEMENTS


On December 29, 2004 the Company entered into an agreement with its Chief Executive Officer, David Funderburk, where he was compensated for services rendered by the issuance of 200,000 shares of the Company’s common stock on February 23, 2005 at the par value of $.001.


On February 24, 2005 the Company entered into an agreement with its Chief Executive Officer, David Funderburk, where he was compensated for services rendered by the issuance of 7,000,000 shares of the Company’s common stock on February 23, 2005 at the par value of $.001.


PURCHASE AGREEMENTS


On June 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.


 NOTE G - 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.

F-12



MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

GENERAL

 

We were incorporated in Nevada on December 8, 2004 and we have elected, for the purpose of filing our Registration Statement with the SEC and preparing our audit, December 31, 2010 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.

 

In the previous (3) years (2008-2010) of operation we had Gross revenues of $394,159, derived primarily from the distribution of the Portable Tow Truck units, and total Operating Expenses of $248,668. Net Losses for the three year period were ($63,213). It is the intention of the Company to continue to develop and distribute its products, however, there is no assurance the Company will continue to generate Net Income over the long term.

 

As of December 31, 2010 the Company had $1,042 of cash on hand, Total Assets of $57,964 and Total Current Liabilities of $0.


The Company believes that it has sufficient capital to operate over the next twelve (12) months.

 

Significant Accounting Policies and Estimates

 

Management’s Discussion and Analysis of Financial Condition and Results of Operations discusses the Company’s 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.

 

Revenue Recognition

 

Revenue consists of products sold.. We recognize revenue when products are sold.

 

Use of Estimates

 

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

 

Results of Operations

 

FOR THE YEARS ENDING DECEMBER 31, 2008, 2009 AND 2010.

 

For the previous (3) years (2008-2010) of operation we had Gross revenues of $394,159, derived primarily from the distribution of the Portable Tow Truck units, and total Operating Expenses of $248,668. Net



Losses were ($63,213). In 2008 we had Gross revenues of $185,455, derived primarily from the distribution of the Portable Tow Truck units, and total Operating Expenses of $199,858. Net Losses were ($14,403). In 2009 we had Gross revenues of $120,561, derived primarily from the distribution of the Portable Tow Truck units, and total Operating Expenses of $122,125. Net Losses were ($1,565). In 2010 we had Gross revenues of $88,143, derived primarily from the distribution of the Portable Tow Truck units, and total Operating Expenses of $135,388. Net Losses were ($47,245). It is the intention of the Company to continue to develop and distribute its products, however, there is no assurance the Company will be able to generate Net Income over the long term.

 

Liquidity and Capital Resources

 

As of the period ending December 31, 2010 the Company had cash on hand of $1.042, total Current Assets of $1,462, total Assets of $57,964, total Current Liabilities of $0 and total Stockholder’s Equity of $57,964. The Company’s cash was generated from revenue from its sales of its Portable Tow Truck units., and proceeds from a Private Placement of its shares. The Company believes it has sufficient cash resources available to fund its primary operation for the next twelve (12) months. The Company has no, current, off balance sheet arrangements and does not anticipate entering into any off balance sheet arrangements that are reasonably likely to have a current or future effect on our financial condition. The Company has no agreements in place with its shareholders, officer and director or with any third parties to fund operations beyond the end of the Company’s 2010-2011 fiscal year. The Company has not negotiated nor has available to it any other third party sources of liquidity.

 

Controls and Procedures

 

As required by SEC rules, we have evaluated the effectiveness of the design and operation of our disclosure controls and procedures at the end of our fiscal year. This evaluation was carried out under the supervision and with the participation of our principal manager who is both our Chief Executive Officer and our Chief Financial Officer.. Based upon this evaluation we have concluded that the design and operation of our disclosure controls and procedures are effective.


 

26



1,385,977 shares

AUTOVATIVE PRODUCTS, INC

Common stock

 

Prospectus

JUNE 28, 2011

 

AUTOVATIVE PRODUCTS, INC

502 N. Santa Fe Avenue, Ste. D

Vista, CA 92083

www.AutovativeProducts.com

760-732-5868


 

Until ___________________________, all dealers that effect transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers’ obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.

 

PART II - INFORMATION NOT REQUIRED IN PROSPECTUS

 

  

  






Item 24.

Indemnification of Directors and Officers.

 

          The statutes, charter provisions, bylaws, contracts or other arrangements under which controlling persons, directors or officers of the issuer are insured or indemnified in any manner against any liability which they may incur in such capacity are as follows:

 

                    Section 145 of the Nevada General Corporation Law provides that a corporation may indemnify directors and officers as well as other employees and individuals against expenses including attorneys’ fees, judgments, fines and amounts paid in settlement in connection with various actions, suits or proceedings, whether civil, criminal, administrative or investigative other than an action by or in the right of the corporation, a derivative action, if they acted in good faith and in a manner they reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, if they had no reasonable cause to believe their conduct was unlawful. A similar standard is applicable in the case of derivative actions, except that indemnification only extends to expenses including attorneys’ fees incurred in connection with the defense or settlement of such actions, and the statute requires court approval before there can be any indemnification where the person seeking indemnification has been found liable to the corporation. The statute provides that it is not exclusive of other indemnification that may be granted by a corporation’s certificate of incorporation, bylaws, agreement, a vote of stockholders or disinterested directors or otherwise.

 

          The Company’s Certificate of Incorporation provides that it will indemnify and hold harmless, to the fullest extent permitted by Section 145 of the Nevada General Corporation Law, as amended from time to time, each person that such section grants us the power to indemnify.

 

          The Nevada General Corporation Law permits a corporation to provide in its certificate of incorporation that a director of the corporation shall not be personally liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability for:

 

•   any breach of the director’s duty of loyalty to the corporation or its stockholders;

 

•   acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law;

 

•   payments of unlawful dividends or unlawful stock repurchases or redemptions; or

 

•   any transaction from which the director derived an improper personal benefit.

 

          The Company’s Certificate of Incorporation provides that, to the fullest extent permitted by applicable law, none of our directors will be personally liable to us or our stockholders for monetary damages for breach of fiduciary duty as a director. Any repeal or modification of this provision will be prospective only and will not adversely affect any limitation, right or protection of a director of our company existing at the time of such repeal or modification.

 

27


 

Item 25.    Other Expenses of Issuance and Distribution*


The following table sets forth all estimated costs and expenses, other than underwriting discounts, commissions and expense allowances, payable by the issuer in connection with the maximum offering for the securities included in this registration statement:

 

  

  

Amount

  

    SEC registration fee

  

$

160.91

  

    Printing and shipping expenses

  

  

100.00

  

    Legal fees and expenses

  

  

2,000.00

  






    Accounting fees and expenses

  

  

12,000.00

  

    Transfer agent and misc. expenses

  

  

2,500.00

  

  

  

  

  

  

    Total

  

$

16,760.91

  

 

*All amounts are estimates other than the Commission’s registration fee. We are paying all expenses of the offering listed above. No portion of these expenses will be borne by the selling shareholders. The selling shareholders, however, will pay any other expenses incurred in selling their common stock, including any brokerage commissions or costs of sale.

 

Item 26.  Recent Sales of Unregistered Securities


The Company is authorized to issue 25,000,000 shares of common stock, par value .001 per share. At the twelve months ended December 31, 2010 there were 8,585,977 shares of common stock issued and outstanding. 


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 the twelve months ended December 31, 2010. At the twelve months ended December 31, 2008 and December 31, 2009 there were 8,337,977 shares of common stock issued and outstanding. At the year ended December 31, 2010 there were 8,585,977 shares of common stock issued and outstanding. 


On February 23, 2005 the Company issued 200,000 shares of restricted 144 stock to its CEO and Director, David Funderburk at par value ($.001) for services rendered to the Company in lieu of salary.


On February 24, 2005 the Company issued 7,000,000 shares of restricted 144 stock to its CEO and Director, David Funderburk at par value ($.001) for services rendered to the Company in lieu of salary.


On July 10, 2007 the Company issued 12,977 shares of restricted 144 stock for services rendered to the Company for marketing related services.


On July 10, 2008 the Company issued 1,125,000 shares of restricted 144 stock for services rendered to the Company for marketing and bookkeeping related services.


From March 15, 2010 to July 30, 2010 the Company issued 223,000 shares at a price of $.10 per share through a Reg D 506 Private Offering.


On December 29, 2010 the Company issued 25,000 shares of restricted 144 common stock per a contract with Direct Media Enterprises which were dividend to the shareholders of Direct Media Enterprises for


These shares were issued in reliance on the exemption under Section 4(2) of the Securities Act of 1933, as amended (the “Act”). These shares of our common stock qualified for exemption under Section 4(2) of the Securities Act of 1933 since the issuance shares by us did not involve a public offering. The offering was not a “public offering” as defined in Section 4(2) due to the insubstantial number of persons involved in the deal, size of the offering, manner of the offering and number of shares offered. We did not undertake an offering in which we sold a high number of shares to a high number of investors. In addition, the shareholder had the necessary investment intent as required by Section 4(2) since she agreed to and received share certificates bearing a legend stating that such shares are restricted pursuant to Rule 144 of the 1933 Securities Act. This restriction ensures that these shares would not be immediately redistributed into the market and therefore not be part of a “public offering.” Based on an analysis of the above factors, we have met the requirements to qualify for exemption under Section 4(2) of the Securities Act of 1933 for this transaction.

 

28


 




As of December 31, 2010 we sold 223,000 shares of common stock to 14 investors, at a price per share of $0.10 per share for net proceeds of $22,300. The following sets forth the identity of the class of persons to whom we sold these shares and the amount of shares for each shareholder:

 

Shareholder

  

Shares

 Janice Douglas

 

15,000

 Peggy Bradley

 

10,000

 Katherine Bleuer

 

5,000

 John Brand

 

5,000

 Stephen Deckard

 

5,000

 Richard Hernandez

 

10,000

 Scott Fountain

 

5,000

Drew Fountain

 

5,000

Fremont James Bellinger

 

5,000

Darlene Newell

 

15,000

Leland Hertel

 

5,000

Karen Nelson

 

5,000

Robyn Johns

 

10,000

Sandra Jolicoeur

 

10,000

Yvonne Boggs

 

15,000

LaVonne Johnson

 

10,000

Jose Rios

 

8,000

Mercer Group

 

80,000

 

29


 

The Common Stock issued in our Private Offering was issued pursuant to Reg D of the Securities Act of 1933.

 

  

  

(A)

No general solicitation or advertising was conducted by us in connection with the offering of any of the Shares.

  

  

(B)

At the time of the offering we were not: (1) subject to the reporting requirements of Section 13 or 15 (d) of the Exchange Act; or (2) an “investment company” within the meaning of the federal securities laws.

  

  

(C)

Neither we, nor any of our predecessors, nor any of our directors, nor any beneficial owner of 10% or more of any class of our equity securities, nor any promoter currently connected with us in any capacity has been convicted within the past ten years of any felony in connection with the purchase or sale of any security.

  

  

(D)

The offers and sales of securities by us pursuant to the offerings were not attempts to evade any registration or resale requirements of the securities laws of the United States or any of its states.

  

  

(E)

None of the investors are affiliated with any of our directors, officers or promoters or any beneficial owner of 10% or more of our securities.

 

We have never utilized an underwriter for an offering of our securities. Other than the securities mentioned above, we have not issued or sold any securities.

 

Item 27.

Exhibits Index.

 

The following exhibits marked are filed with this Registration Statement:



 

Number

Exhibit Name

  

  

3.1

Certificate of Incorporation of the Company. *

3.2

By-Laws *

3.3

Articles of Incorporation*  

4.1

Form of Common Stock Certificate

5.1    

 Opinion of Brian R. Reiss, Attorney at Law regarding legality*

23.1

Consent of Malcolm Pollard, Inc., CPA, P.C.*

* Filed herewith

30


 

Item 28. Undertakings


The undersigned registrant undertakes:

 

(1) To file, during any period in which offer or sales are being made, a post-effective amendment to this registration statement:

 

I. To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933;

 

II. To reflect in the prospectus any facts or events arising after the effective date of the Registration Statement (or the most recent post effective amendment) which, individually or in the aggregate, represent a fundamental change in the information in the registration statement;

 

III. To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to the information in the Registration Statement.

 

(2) That, for the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of securities at that time shall be deemed to be the initial bona fide offering.

 

(3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.

 

(4) That, if the registrant is subject to Rule 430C, each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.

 

(5) That, for the purpose of determining liability of the registrant under the Securities Act of 1933 to any purchaser in the initial distribution of the securities: The undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:


i.  

Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424;






 

ii.  

Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant;

 

iii.  

The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and

 

iv.  

Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.

 

(6) The registrant shall request acceleration  pursuant to  Rule  461 under the Securities Act and there insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.


Subject to the terms and conditions of Section 15(d) of the Securities Exchange Act of 1934, the undersigned Registrant hereby undertakes to file with the Securities and Exchange Commission any supplementary and periodic information, documents, and reports as may be prescribed by any rule or regulation of the Commission heretofore or hereafter duly adopted pursuant to authority conferred to that section.

 

 

Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers, and controlling persons of the Registrant pursuant to our certificate of incorporation or provisions of Nevada law, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission the indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. If a claim for indemnification against liabilities (other than the payment by the Registrant) of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit, or proceeding is asserted by a director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of our counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether the indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of the issue.

 


31


 

 

 

SIGNATURES

 

          Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-1 and has duly caused this registration statement to be signed on our behalf by the undersigned, in the City of Carlsbad, CA., on June 28, 2011.

 



 

 

AUTOVATIVE PRODUCTS, INC

 

 

 

 

 

Dated: June 28, 2011

By:

/s/ David Funderburk

 

 

 

David Funderburk,

 

 

 

President, Chief Executive Officer, Secretary, Treasurer and Principal Financial Officer

 

 

 

 

 

 

In accordance with the requirements of the Securities Act of 1933, as amended, this registration statement has been signed by the following persons in the capacities and on the dates stated.

 

 

  

  

  

SIGNATURE

TITLE

DATE

  

  

  

/S/ David Funderburk

President, Treasurer,Secretary and Director

June 28, 2010

David Funderburk

  

  

  

  

  

  

32


  


SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

EXHIBITS

TO


REGISTRATION STATEMENT


ON FORM S-1


UNDER


THE SECURITIES ACT OF 1933

AUTOVATIVE PRODUCTS, INC



33





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MALCOLM L. POLLARD, INC

                                                        4845 W. LAKE ROAD, # 119

                    ERIE, PA 16505

                              

 (814)838-8258

                              FAX (814)838-8452     





June 26, 2011



To the Board of Directors

Autovative Products, Inc.



We hereby consent to the incorporation of our opinions dated March 31, 2011 and June 3, 2011 in the S1 of Autovative Products, Inc. for the years ended December 31, 2010, 2009, and 2008.


Very truly yours,

Malcolm L. Pollard, Inc.



Malcolm L Pollard, CPA
















BYLAWS

OF

Autovative Products, Inc.



ARTICLE I-OFFICES


The principal office of the Corporation shall be located at 2765 Wrondel Way, #1, Reno, Nevada 89502, and it may be changed from time to time by the Board of Directors.  The Corporation may also maintain offices at such other places within or without the United States as the Board of Directors may, from time to time determine.


ARTICLE II-MEETINGS OF STOCKHOLDERS


SECTION 1-ANNUAL MEETINGS:


The annual meeting of the stockholders of the Corporation shall be held within six (6) months after the close of the fiscal year of the Corporation, for the purposes of electing directors, and transacting such other business as may properly come before the meeting.


SECTION 2-SPECIAL MEETINGS:


Special meetings of the stockholders may be called at any time by the Board of Directors or by the President, and shall be called by the President or the Secretary at the written request of the holders of twenty-five percent (25%) of the shares then outstanding and entitled to vote thereat, or as otherwise required by law.


SECTION 3-PLACE OF MEETINGS:


All meetings of the stockholders shall be held at the principal office of the Corporation, or at such other places as shall be designated in the notices or waivers of notice of such meetings.


SECTION 4-NOTICE OF MEETINGS:


(a)

Except as otherwise provided by statute, written notice of each

meeting of stockholders, whether annual or special, stating the time when and place where it is to be held, shall be served either personally or by mail, not less than ten or more than sixty (60) days before the meeting, upon each stockholder of record entitled to vote at such meeting, and to any other stockholder to whom the giving of notice may be required by law.  Notice of a special meeting shall also state the purpose or purposes for which the meeting is called, and shall indicate that it is being issued by, or at the direction of, the person or persons calling the meeting.  If, at any meeting, action is proposed to be taken that would, if taken, entitle stockholders to receive payment for their shares pursuant to statute, the notice of such meeting shall include a statement of that purpose and to that effect.  If mailed, such notice shall be directed to each such stockholder at his address, as it appears on the records of the stockholders of the Corporation, unless he shall have previously filed with the Secretary of the Corporation a written request that notices intended for him be mailed to



1



some other address, in which case, it shall be mailed to the address designated in such request.


(b)

Notice of any meeting need not be given to any person who may

become a stockholder of record after the mailing of such notice and prior to the meeting, or to any stockholder who attends such meeting, in person or by proxy, or submits a signed waiver or notice either before or after such a meeting.  Notice of any adjourned meeting of stockholders need not be given unless otherwise required by statute.


SECTION 5-QUORUM:


(a)

Except as otherwise provided herein, or by statute, or in the

Certificate of Incorporation (such certificate and any amendments thereof being hereinafter collectively referred to as the “Certificate of Incorporation”), at all meetings of stockholders of the Corporation, the presence at the commencement of such meetings in person or by proxy of stockholders holding of record 90% of the total number of shares of the Corporation then issued and outstanding and entitled to vote, shall be necessary and sufficient to constitute a quorum for the transaction of any business.  The withdrawal of any stockholder after the commencement of a meeting shall have no effect of the existence of a quorum, after a quorum has been established at such meeting.


(b)

Despite the absence of a quorum at any annual or special meeting

of stockholders, the stockholders, by a majority of the votes cast by the holders of shares entitled to vote thereat, may adjourn the meeting.  At any such adjourned meeting at which a quorum is present, any business, may be transacted at the meeting as originally called if a quorum had been present.


SECTION 6-VOTING:


(a)

Except as otherwise provided by statute or by the Certificate of

Incorporation, any corporate action, other than the election of directors, to be taken by vote of the stockholders, shall be authorized by a majority of votes cast at a meeting of stockholders by the holders of shares entitled to vote thereat.


(b)

Except as otherwise provided by statute or by the Certificate of

Incorporation, at each meeting of stockholders, each holder of record of stock of the Corporation entitled to vote thereat, shall be entitled to one vote for each share of stock registered in his name on the books of the Corporation.


(c)

Each stockholder entitled to vote or to express consent or

dissent without a meeting, may do so by proxy: provided, however, that the instrument authorizing such proxy to act shall have been executed in writing by the stockholder himself or by his attorney-in-fact thereunto duly authorized in writing.  No Proxy shall be valid after the expiration of eleven (11) months from the date of its execution, unless the person executing it shall have specified therein the length of time it is to continue in force.  Such instrument shall be exhibited to the Secretary at the meeting and shall be filed with the minutes of the minutes.






2



(d)

Any action, except election of directors, which may be taken by a vote of stockholders at a meeting, may be taken without a meeting if authorized by a written consent of shareholders holding at least a majority of the voting power; provided that if a greater proportion of voting power is required by such action at such meeting, then such greater proportion of written consents shall be required.


ARTICLE III-BOARD OF DIRECTORS


SECTION 1-NUMBER, ELECTION AND TERM OF OFFICE:


(a)

The number of the directors of the Corporation shall be not less

than 1 nor more than 9, unless and until otherwise determined by vote of a majority of the entire Board of Directors.  The number of Directors shall not be less that three (3), unless all of the outstanding shares of stock are owned beneficially and of record by less than three (3) stockholders, in which event the number of directors shall not be less than the number of stockholders of the minimum permitted by statute.


(b)

Except as may otherwise be provided herein or in the Certificate

of Incorporation by way of cumulative voting rights the members of the Board of Directors of the Corporation, who need not be stockholders, shall be elected by a majority of the votes cast at a meeting of stockholders, by the holders of shares of stock present in person or by proxy, entitled to vote in the election.


(c)

Each director shall hold office until the annual meeting of the

stockholders next succeeding his election, and until his successor is elected and qualified, or until his prior death, resignation or removal.


SECTION 2-DUTIES AND POWERS:


The Board of Directors shall be responsible for the control and management of the affairs, property and interests of the Corporation and may exercise all powers of the Corporation, except as are in the Certificate of Incorporation or by statute expressly conferred upon or reserved to the stockholders.


SECTION 3-ANNUAL AND REGULAR MEETINGS; NOTICE:


(a)

Regular annual meeting of the Board of Directors shall

be held immediately following the annual meeting of the stockholders, at the place of such annual meeting of stockholders.


(b)

The Board of Directors, from time to time, may provide

by resolution for the holding of other regular meetings of the Board of Directors, and may fix the time and place thereof.


(c)

Notice of any regular meeting of the Board of Directors shall not

be required to be required to be given and, if given, need not specify the purpose of the meeting; provided, however, that in case the Board of Directors shall fix or change the time or place of any regular meeting, notice of such action shall be given to each director who shall not have been present at the meeting at which such change was made within the time limited, and in the manner set forth in Paragraph (b) Section 4 of this



3



Article III, with respect to special meetings, unless such notice shall be waived in the manner set forth in Paragraph (c) of such Section 4.


SECTION 4-SPECIAL MEETING; NOTICE:


(a)

Special meetings of the Board of Directors shall be held whenever

called by the President of by one of the directors, at such time and place as may be specified in the respective notices or waivers of notice thereof.


(b)

Except as otherwise required by statute, notice of special

meetings shall be mailed directly to each director, addressed to him at his residence or usual place of business, at least four (4) days before the day on which the meeting is to be held, or shall be sent to him at such place by telegram, radio or cable, or shall be delivered to him personally or given to him orally, not later than the day before the day on which the meeting is to be held.  A notice, or waiver of notice except as required by Section 8 or this Article III, need not specify the purpose of the meeting.


(c)

Notice of any special meeting shall not be required to be given

to any director who shall attend such meeting without protesting prior thereto or at its commencement, the lack of notice to him or who submits a signed waiver of notice, whether before or after the meeting.  Notice of any adjourned meeting shall not be required to be given.


SECTION 5-CHAIRMAN:


At all meetings of the Board of Directors, the Chairman of the Board, if any and if present, shall preside.  If there shall be no Chairman, or he shall be absent, then the Vice Chairman shall preside, and in his absence, a Chairman chosen by the directors shall preside.


SECTION 6-QUORUM AND ADJOURNMENTS:


(a)

At all meetings of the Board of Directors, the presence of a

majority of the entire Board shall be necessary and sufficient to constitute a quorum for the transaction of business, except as otherwise provided by law, by the Certificate of Incorporation, or by these Bylaws.


(b)

A majority of the directors, present at the time and place of any

regular or special meeting, although less than a quorum, may adjourn the same from time to time without notice, until a quorum shall be present.


SECTION 7-MANNER OF ACTING:


(a)

At all meetings of the Board of Directors, each director present

shall have one vote, irrespective of the number of shares of stock, if any, which he may hold.


(b)

Except as otherwise provided by statute, by the Certificate of

Incorporation, or by these Bylaws, the action of a majority of the directors present at any meeting at which a quorum is present shall be the act of the Board of Directors.







4



(c)

Unless otherwise required by amendment to the Articles of

Incorporation or statue, any action required or permitted to be taken at any meeting of the Board of Directors or any Committee thereof may be taken without a meeting if a written consent thereto is signed by all the members of the Board or Committee.  Such written consent shall be filed with the minutes of the proceedings of the Board or Committee.


(d)

Unless otherwise prohibited by Amendments to the Articles of

Incorporation or statute, members of the Board of Directors or of any Committee of the Board of Directors may participate in a meeting of such Board or Committee by means of a conference telephone network or a similar communications method by which all persons participating in the meeting can hear each other.  Such participation is constituted presence of all of the participating persons at such meeting, and each person participating in the meeting shall sign the minutes thereof, which may be signed in counterparts.


SECTION 8-VACANCIES:


Any vacancy in the Board of Directors, occurring by reason of an increase in the number of directors, or by reason of the death, resignation, disqualification, removal (unless vacancy created by the removal of a director by the stockholders shall be filled by the stockholders at the meeting at which the removal was effected) or inability to act of any director, or otherwise, shall be filled for the unexpired portion of the term by a majority vote of the remaining directors, though less that a quorum, at any regular meeting or special meeting of the Board of Directors called for that purpose.


SECTION 9-RESIGNATION:


Any director may resign at any time by giving written notice to the Board of Directors, the President or the Secretary of the Corporation.  Unless otherwise specified in such written notice such resignation shall take effect upon receipt thereof by the Board of Directors or such officer, and the acceptance of such resignation shall not be necessary to make it effective.


SECTION 10-REMOVAL:


Any director may be removed with or without cause at any time by the affirmative vote of stockholders holding of record in the aggregate at least a majority of the outstanding shares of stock of the Corporation at a special meeting of the stockholders called for that purpose, and may be removed for cause by action of the Board.


SECTION 11-SALARY:


No stated salary shall be paid to directors, as such, for their services, but by resolution of the Board of Directors a fixed sum and expenses of attendance, if any, may be allowed for attendance at each regular or special meeting of the Board; provided, however, that nothing herein contained shall be construed to preclude any director from serving the Corporation in any other capacity and receiving compensation thereof.






5



SECTION 12-CONTRACTS:


(a)

No contract or other transaction between this Corporation and any

other corporation shall be impaired, affected or invalidated, nor shall any director be liable in any way by reason of the fact that one or more of the directors of this Corporation is or are interested in, or is a director or officer, or are directors or officers of such other corporations, provided that such facts are disclosed or made known to the Board of Directors, prior to their authorizing such transaction.


(b)

Any director, personally and individually, may be a party to or

may be interested in any contract or transaction of this Corporation, and no directors shall be liable in any way by reason of such interest, provided that the fact of such interest be disclosed or made known to the Board of Directors prior to their authorization of such contract or transaction by the vote (not counting the vote of any such Director) of a majority of a quorum, notwithstanding the presence of any such director at the meeting at which such action is taken.  Such director or directors may be counted in determining the presence of a quorum at such meeting.  This Section shall not be construed to impair, invalidate or in any way affect any contract or other transaction which would otherwise be valid under the law (common, statutory or otherwise) applicable thereto.


SECTION 13-COMMITTEES:


The Board of Directors, by resolution adopted by a majority of the entire Board, may from time to time designate from among its members an executive committee and such other committees, and alternate members thereof, as they may deem desirable, with such powers and authority (to the extent permitted by law) as may be provided in such resolution.  Each such committee shall serve at the pleasure of the Board.


ARTICLE IV-OFFICERS


SECTION 1-NUMBER, QUALIFICATIONS, ELECTION AND TERM OF OFFICE:


(a)

The officers of the Corporation shall consist of a President, a

Secretary, a Treasurer, or a President and Secretary-Treasurer, and such other officers, including a Chairman of the Board of Directors, and one or more Vice Presidents, as the Board of Directors may from time to time deem advisable.  Any officer other than the Chairman or Vice Chairman of the Board of Directors may be, but is not required to be a director of the Corporation.  Any two or more offices may be held by the same person.


(b)

The officers of the Corporation shall be elected by the Board of

Directors at the regular annual meeting of the Board following the annual meeting of stockholders.


(c)

Each officer shall hold office until the annual meeting of the

Board of Directors next succeeding his election, and until his successor shall have been elected and qualified or until his death, resignation or removal.







6



SECTION 2-RESIGNATION:


Any officer may resign at any time by giving written notice of such resignation to the Board of Directors, or to the President or the Secretary of the Corporation.  Unless otherwise specified in such written notice, such resignation shall take effect upon receipt thereof by the Board of Directors or by such officer, and the acceptance of such resignation shall not be necessary to make it effective.


SECTION 3-REMOVAL:


Any officer may be removed, either with or without cause, and a successor elected by a majority vote of the Board of Directors at any time.


SECTION 4-VACANCIES:


A vacancy in any office by reason of death, resignation, inability to act, disqualification or any other cause, may at any time be filled for the unexpired portion of the term by a majority vote of the Board of Directors.


SECTION 5-DUTIES OF OFFICERS:


Officers of the Corporation shall, unless otherwise provided by the Board of Directors, each have such powers and duties as generally pertain to their respective offices as well as such powers and duties as may be set forth in these Bylaws, or may from time to time be specifically conferred or imposed by the Board of Directors.  The President shall be the chief executive officer of the corporation.


SECTION 6-SURETIES AND BONDS:


In case the Board of Directors shall so require any officer, employee or agent of the Corporation shall execute to the Corporation a bond in such sum, and with such surety or sureties as the Board of Directors may direct, conditioned upon the faithful performance of his duties to the Corporation, including responsibility for negligence for the accounting for all property, funds or securities of the Corporation which may come into his hands.


SECTION 7-SHARES OF STOCK OF OTHER CORPORATIONS:


Whenever the Corporation is the holder of shares of stock of any other corporation, any right or power of the Corporation as such stockholder (including the attendance, acting and voting at stockholders’ meetings and execution of waivers, consents, proxies or other instruments) may be exercised on behalf of the Corporation by the President, any Vice President or such other person as the Board of Directors may authorize.


ARTICLE V-SHARES OF STOCK


SECTION 1-CERTIFICATE OF STOCK:


(a)

The certificates representing shares of the Corporation’s stock

shall be in such form as shall be adopted by the Board of Directors, and shall be numbered and registered in the order issued.  The certificates shall bear the following: the Corporate seal, the holder’s name, the number



7



of shares of stock and the signatures of: the President and the Secretary or Treasurer.


(b)

No certificate representing shares of stock shall be issued until

the full amount of consideration therefore has been paid, except as otherwise permitted by law.


(c)

To the extent permitted by law, the Board of Directors may

authorize the issuance of certificates for fractions of a share of stock which shall entitle the holder to exercise voting rights, receive dividends and participate in liquidating distributions, in proportion to the fractional holdings; or it may authorize the payment in cash of the fair value of fractions of a share of stock as of the time when those entitled to receive such fractions are determined; or it may authorize the issuance, subject to such conditions as may be permitted by law, or scrip in registered or bearer form over the signature of an officer or agent of the Corporation, exchangeable as therein provided for full shares of stock, but such scrip shall not entitle the holder to any rights of a stockholder, except as therein provided.


SECTION 2-LOST OR DESTROYED CERTIFICATES:


The holder of any certificate representing shares of stock of the Corporation shall immediately notify the Corporation of any loss or destruction of the certificate representing the same.  The Corporation may issue a new certificate in the place of any certificate theretofore issued by it, alleged to have been lost or destroyed.  On production of such evidence of loss or destruction as the Board of Directors in its discretion may require, the Board of Directors may, in its discretion, require the owner of the lost or destroyed certificate, or his legal representatives, to give the Corporation a bond in such sum as the Board may direct, and with such surety or sureties as may be satisfactory to the Board, to indemnify the corporation against any claims, loss, liability or damage it may suffer on account of the issuance of the new certificate.  A new certificate may be issued without requiring any such evidence or bond when, in the judgment of the Board of Directors, it is proper to do so.


SECTION 3-TRANSFER OF SHARES:


(a)

Transfer of shares of stock of the Corporation shall be made on the stock ledger of the Corporation only by the holder of record thereof, in person or by his duly authorized attorney, upon surrender for cancellation of the certificate or certificates representing such shares of stock with an assignment or power of transfer endorsed thereon or delivered therewith, duly executed, with such proof of the authenticity of the signature and of authority to transfer and of payment of taxes as the Corporation or its agents may require.


(b) The Corporation shall be entitled to treat the holder of record

of any share of shares of stock as the absolute owner thereof for all purposes and, accordingly, shall not be bound to recognize any legal, equitable or other claim to, or interest in, such share or shares of stock on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise expressly provided by law.





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SECTION 4-RECORD DATE:


In lieu of closing the stock ledger of the Corporation, the Board of Directors may fix, in advance, a date not exceeding sixty (60) days, nor less than ten (10) days, as the record date for the determination of stockholders entitled to receive notice of, or to vote at, any meeting of stockholders, or to consent to any proposal without a meeting, or for the purpose of determining stockholders entitled to receive payment of any dividends or allotment or any rights, or for the purpose of any other action.  If no record date is fixed, the record date for the determination of stockholders entitled to notice of, or to vote at, a meeting of stockholders shall be at the close of business of the day next preceding the day on which the notice is given, or, if no notice is given, the day preceding the day on which the meeting is held.  The record date for determining stockholders for any other purpose shall be at the close of business on the day on which the resolution of the directors relating thereto is adopted.  When a determination of stockholders of record entitled to notice of, or to vote at, any meeting of stockholders has been made, as provided for herein, such determination shall apply to any adjournment thereof, unless the directors fix a new record date for the adjourned meeting.


ARTICLE VI-DIVIDENDS


Subject to applicable law, dividends may be declared and paid out of any funds available therefor, as often, in such amount, and at such time or times as the Board of Directors may determine.


ARTICLE VII-FISCAL YEAR


The fiscal year of the Corporation shall be December, and may be changed by the Board of Directors from time to time subject to applicable law.


ARTICLE VIII-CORPORATE SEAL


The corporate seal shall be in such form as shall be approved from time to time by the Board of Directors.


ARTICLE IX-INDEMNITY


(a)

Any person made a party to any action, suit or proceeding, by

reason of the fact that he, his testator or interstate representative is or was a director, officer or employee of the Corporation or of any corporation in which he served as such at the request of the Corporation shall be indemnified by the Corporation against the reasonable expenses, including attorneys’ fees, actually and necessarily incurred by him in connection with the defense of such action, suit or proceedings, or in connection with any appeal therein, except in relation to matters as to which it shall be adjudged in such action, suit or proceeding or in connection with any appeal therein that such officer director or employee is liable for gross negligence or misconduct in the performance of his duties.







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(b)

The foregoing right of indemnification shall not be deemed

exclusive of any other rights to which any officer or director or employee may be entitled apart from the provisions of this section.


(c)

The amount of indemnity to which any officer or any director may

be entitled shall be fixed by the Board of Directors, except that in any case in which there is no disinterested majority of the Board available, the amount shall be fixed by arbitration pursuant to the then existing rules of the American Arbitration Association.


ARTICLE X-AMENDMENTS


SECTION 1-BY STOCKHOLDERS:


All bylaws of the Corporation shall be subject to alteration or repeal, and new bylaws may be made, by the affirmative vote of stockholders holding of record in the aggregate at least a majority of the outstanding shares of stock entitled to vote in the election of directors at any annual or special meeting of stockholders, provided that the notice or waiver of notice of such meeting shall have summarized or set forth in full therein, the proposed amendment.


SECTION 2-BY DIRECTORS:


The Board of Directors shall have power to make, adopt, alter, amend and repeal, from time to time, bylaws of the Corporation, provided, however, that the stockholders entitled to vote with respect there to as in this Article X above-provided may alter, amend or repeal bylaws made by the Board of Directors, except that the Board of Directors shall have no power to change the quorum for meetings of stockholders or of the Board of Directors or to change any provisions of the bylaws with respect to the removal of directors of the filling of vacancies in the Board resulting from the removal by the stockholders.  In any bylaw regulating an impending election of directors is adopted, amended or repealed by the Board of Directors, there shall be set forth in the notice of the next meeting of stockholders for the election of Directors, the bylaws so adopted, amended or repealed, together with a concise statement of the changes made.


CERTIFICATE OF PRESIDENT


THIS IS TO CERTIFY that I am the duly elected, qualified and acting President of Autovative Products, Inc. and that the above and foregoing bylaws constituting a true original copy were duly adopted as the bylaws of said Corporation.


IN WITNESS WHEREOF, I have hereunto set my hand.



___________/S/David Funderburk_____________ DATED:   12-20-2004

                PRESIDENT



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