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AUTO TOOL TECHNOLOGIES INC. - FORM 10-Q - December 19, 2012
UNITED STATES FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2012 or [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______________ to _______________ Commission File Number 333-181259 AUTO TOOL TECHNOLOGIES INC.
(905) 430-6433 N/A Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Indicate by check mark whether the registrant has submitted
electronically and posted on its corporate Web site, if any, every Interactive
Data File required to be submitted and posted pursuant to Rule 405 of Regulation
S-T (§232.405 of this chapter) during the preceding 12 months (or for such
shorter period that the registrant was required to submit and post such
files). Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a small reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act.
Indicate by check mark whether the registrant is a shell
company (as defined in Rule 12b-2 of the Exchange Act APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
Check whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15(d) of the Exchange Act
after the distribution of securities under a plan confirmed by a
court. APPLICABLE ONLY TO CORPORATE ISSUERS Indicate the number of shares outstanding of each of the
issuers classes of common stock, as of the latest practicable date.
TABLE OF CONTENTS 2 PART I FINANCIAL INFORMATION Item 1. Financial Statements Our unaudited consolidated interim financial statements for the three and nine month periods ended September 30, 2012 and 2011 form part of this quarterly report. Unless otherwise specified our financial statements are expressed in United States Dollars (US$) and are prepared in accordance with United States generally accepted accounting principles. 3 Auto Tool Technologies Inc. September 30, 2012
4 Auto Tool Technologies Inc.
(The accompanying notes are an integral part of these unaudited consolidated financial statements) F-1 Auto Tool Technologies Inc.
(The accompanying notes are an integral part of these unaudited consolidated financial statements) F-2 Auto Tool Technologies Inc.
(The accompanying notes are an integral part of these unaudited consolidated financial statements) F-3 Auto Tool Technologies Inc.
F-4 Auto Tool Technologies Inc.
F-5 Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations Forward-Looking Statements This quarterly report contains forward-looking statements. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as may, should, expects, plans, anticipates, believes, estimates, predicts, potential or continue or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors that may cause our or our industrys actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results. Unless otherwise specified our financial statements are expressed in United States Dollars (US$) and are prepared in accordance with United States generally accepted accounting principles. In this quarterly report, unless otherwise specified, all dollar amounts are expressed in United States dollars and all references to common shares refer to the common shares in our capital stock. As used in this current report and unless otherwise indicated, the terms we, us, our and our company mean Auto Tool Technologies Inc., and our wholly-owned subsidiary, DSL Products Limited, an Ontario company, unless otherwise indicated. General Overview We were incorporated under the laws of the state of Nevada on May 10, 2011 and are engaged in the distribution of hand tools throughout Canada. Our fiscal year end is December 31. We have one subsidiary, DSL Products Limited, which we acquired via a share exchange on December 30, 2011 in exchange for 30,000,000 shares of our common stock, and which operates our hand tool distribution business. Our business offices are currently located at 101 ½ Mary Street West, Whitby, Ontario, Canada, L1N 2R4. The address of agent for service in Nevada and registered corporate office is c/o National Registered Agents, Inc. of Nevada, 100 East William Street, Suite 204, Carson City, NV, 89701. Our telephone number is (905) 430-6533. Our Current Business We import and market hand tools, automotive accessories, lawn and garden products, home products, accessories and attachments for power tools, plumbing products, consumer mechanics tools, cargo control systems and accessories and fasteners. These products are sold to professional end users, distributors, and consumers, and are primarily distributed through retailers (including auto parts stores, home centers, mass merchants, hardware stores, and retail lumber yards). Hand tools include measuring and levelling tools, hex key sets, hammers, demolition tools, knives and blades, screwdrivers, saws, chisels, clamps and clamping systems and consumer tackers. Automotive accessories include fuses and fuse sets, o-rings sets, specialty tools, tune-up kits, tire repair kits, electrical test kits, jumper cable sets, and mechanic gloves. Electric power tools equipment includes drill bits, grinders, various saws, polisher pads, routers bits, laser products. Lawn and garden products include work gloves, pruners, shears, and related accessories. Home products are comprised of cable ties, scissors, calculators, magnifying glasses, flexible flashlights, paint tools and cleaning brushes. Accessories and attachments for power tools include drill bits, hammer bits, router bits, hacksaws and blades, circular saw blades, jig and reciprocating saw blades, diamond blades, screwdriver bits and quick-change systems, and worksite tool belts and bags. Consumer mechanics tools include wrenches and sockets sets. Cargo control systems include ratchet tie-down straps, cambuckle sets, tow ropes, bungee cord sets and cargo nets. 5 Our products are sold throughout Canada. We have engaged the services of a national manufacturers agency who call on current and prospective customers. Our website is located at www.toolcachecanada.com.The sales agency is fully trained in product knowledge and our sales policies. We also sell our products via our website which has online ordering capability and is secure and individualized to the respective customer. Cash Requirements Based on our planned expenditures, we will require approximately $300,000 over the next 12 months, which will be funded from our operations. Off-Balance Sheet Arrangements We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to stockholders. Critical Accounting Policies Basis of Presentation and Principles of Consolidation The unaudited interim consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the Securities and Exchange Commission (SEC) instructions for companies filing Form 10-Q. In the opinion of management, the unaudited interim consolidated financial statements have been prepared on the same basis as the annual consolidated financial statements and reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly the financial position as of September 30, 2012, and the results of operations and cash flows for the period then ended. The financial data and other information disclosed in the notes to the interim consolidated financial statements related to this period are unaudited. The results for the nine-month period ended September 30, 2012 are not necessarily indicative of the results to be expected for any subsequent quarter or the entire year ending December 31, 2012. The unaudited interim consolidated financial statements have been condensed pursuant to the Securities and Exchange Commission's rules and regulations and do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. Therefore, these unaudited interim consolidated financial statements should be read in conjunction with our companys annual audited consolidated financial statements and notes thereto for the year ended December 31, 2011, included in our companys Prospectus on Form 424B3 filed on November 19, 2012 with the SEC. These financial statements and related notes are expressed in US dollars. The consolidated financial statements include the accounts of our company and its wholly-owned subsidiary, DSL Products Limited. All inter-company accounts and transactions have been eliminated. Our companys fiscal year-end is December 31. The net assets and operations of DSL Products Limited are deemed to be the continuing entity for accounting purposes under the terms of the acquisition described in Note 3 of the December 31, 2011 financial statements included in our companys Prospectus on Form 424B3 filed on November 19, 2012 with the SEC. Accordingly, DSL Products Limited is deemed to have acquired the net assets and operations of Auto Tool Technologies Inc. on December 30, 2011. The comparative figures as of and for the three month and nine month periods ended September 30, 2011 are those of DSL Products Limited alone. Results of Operations Three Months Ended September 30, 2012 and September 30, 2011 The following summary of our results of operations should be read in conjunction with our financial statements for the quarter ended September 30, 2012, which are included herein. Our operating results for the three months ended September 30, 2012 and September 30, 2011 are summarized as follows: 6
Our financial statements report a net income of $3,726 for the three month period ended September 30, 2012 compared to a net loss of $16,668 for the three month period ended September 30, 2011. Our losses have decreased primarily as a result of increased gain on foreign exchange. Nine Months Ended September 30, 2012 and September 30, 2011 Our operating results for the nine months ended September 30, 2012 and September 30, 2011 are summarized as follows:
Our financial statements report a net income of $10,827 for the nine month period ended September 30, 2012 compared to a net loss of $14,120 for the nine month period ended September 30, 2011. Our losses have decreased primarily as a result of increased gain on foreign exchange. Liquidity and Financial Condition Working Capital
Our total current liabilities as of September 30, 2012 were $406,454 as compared to total current liabilities of $216,589 as of December 31, 2011. The decrease was primarily due to decreases in accounts payable, accrued liabilities and amounts due to related parties. 7
Operating Activities Net cash used by operating activities was $149,778 in the nine months ended September 30, 2012 compared with net cash used by operating activities of $190,736 in the nine months ended September 30, 2011. The decrease in use of cash of $40,958 in operating activities is mainly attributed to greater net income and inventories. Investing Activities Net cash provided by investing activities was $16,295 in the nine months ended September 30, 2012 compared to net cash used in investing activities of $67,880 in the nine months ended September 30, 2011. The increase in net cash provided by investing activities was due to a decrease in loans to related parties. Financing Activities Net cash provided by financing activities was $114,995 in the nine months ended September 30, 2012 compared to $231,274 provided by financing activities in the nine months ended September 30, 2011. The decrease in cash provided by financing activities was due to a decrease in our companys utilization of our operating line of credit. Item 3. Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, we are not required to provide the information required by this Item. Item 4. Controls and Procedures Managements Report on Disclosure Controls and Procedures We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms, and that such information is accumulated and communicated to our management, including our chief executive officer and chief financial officer (our principal executive officer, principal financial officer and principle accounting officer) to allow for timely decisions regarding required disclosure. As of the end of our quarter covered by this report, we carried out an evaluation, under the supervision and with the participation of our chief executive officer and chief financial officer (our principal executive officer, principal financial officer and principle accounting officer), of the effectiveness of the design and operation of our disclosure controls and procedures. Based on the foregoing, our chief executive officer and chief financial officer (our principal executive officer, principal financial officer and principle accounting officer) concluded that our disclosure controls and procedures were effective as of the end of the period covered by this quarterly report. 8 Changes in Internal Control over Financial Reporting There were no changes in our internal control over financial reporting during the quarterly period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. PART II OTHER INFORMATION Item 1. Legal Proceedings We know of no material, existing or pending legal proceedings against us, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which any of our directors, officers or affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our company. Item 2. Unregistered Sales of Equity Securities and Use of Proceeds None. Item 3. Defaults Upon Senior Securities None. Item 4. Mine Safety Disclosures Not applicable. Item 5. Other Information None. Item 6. Exhibits
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10 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
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