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

_________________



FORM
10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934For the quarterly period ended: December 31, 2006



[
  ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period from ____________ to _____________



Commission
File No. 0-21279



|                                                          
|----------------------------------------------------------
|ABSOLUTE
    POTENTIAL, INC.                              
|(Exact
    Name of Registrant as Specified in Its Charter)



|                                                                                                                     |                                                                    |  |                                          | 
|-------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------ |  | ---------------------------------------- | 
|                                                                                                                     | Florida                                                            |  | 59-3223708                              
|                                                                                                                     | (State
    or other Jurisdiction of Incorporation or Organization) |  | (I.R.S.
    Employer Identification No.)
|                                                                                                                    
|141West
                                                           Jackson Blvd, Suite 2182, Chicago, Illinois 60604
|(Address
    of Principal Executive Offices)   
    (Zip Code)                                                      
|                                                                                                                    
|312-427-5457                                                                                                        
|(Registrant’s
    Telephone Number, Including Area Code)                                                            
|                                                                                                                    

Indicate
by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act
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.   Yes   £   No   [X]



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).Yes
£ No £



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

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

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



APPLICABLE
ONLY TO ISSUERS INVOLVED IN BANKRUPTCY

PROCEEDINGS
DURING THE PRECEDING FIVE YEARS:

















Indicate
by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the
Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.  Yes   [X]
No    £



As of December
20, 2011, 646,176 shares of the registrant’s common stock, par value of $0.0001, were outstanding.











TABLE
OF CONTENTS



|             |                                                                                          |    | Page
|------------ | ---------------------------------------------------------------------------------------- | -- | ----
|             | PART
    I                                                                               |    |     
|Item
    1.  | Financial
    Statements                                                                 |    | 2   
|Item
    2.  | Management’s
    Discussion and Analysis of Financial Condition and Results of Operation |    | 12  
|Item
    3.  | Quantitative
    and Qualitative Disclosures About Market Risk                           |    | 16  
|Item
    4   | Controls
    and Procedures                                                              |    | 16  
|             | PART
    II                                                                              |    |     
|Item
    1.  | Legal
    Proceedings                                                                    |    | 18  
|Item
    1A. | Risk
    Factors                                                                         |    | 18  
|Item
    2.  | Unregistered
    Sales of Equity Securities and Use of Proceeds                          |    | 18  
|Item
    3.  | Defaults
    Upon Senior Securities                                                      |    | 18  
|Item
    4.  | (Removed
    and Reserved)                                                               |    | 18  
|Item
    5.  | Other
    Information                                                                    |    | 18  
|Item
    6.  | Exhibits                                                                                 |    | 18  
|SIGNATURES   |                                                                                          | 18



















PART
I

Item
1. Financial Information





|Absolute
    Potential, Inc.                                             
|-------------------------------------------------------------------------
|Balance
    Sheet                                                        
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|Assets                                                                   
|Current assets:                                                          
|Cash                                                                     
|Total Assets                                                             
|                                                                         
|Liabilities
    and Stockholders' Deficit                                
|                                                                         
|Current liabilities                                                      
|Accounts payable                                                         
|Accrued payroll
    taxes                                                
|Total Current
    Liabilities                                            
|                                                                         
|Long-term
    advances from related party                                
|Total Liabilities                                                        
|                                                                         
|Commitments and Contingencies                                            
|                                                                         
|Stockholders' Deficit                                                    
|Preferred stock; $.001 par value,
    50,000,000 shares authorized;      
|no shares
    issued or outstanding                                      
|Common stock; $.0001 par value,
    150,000,000 shares authorized;       
|646,176 shares
    issued and outstanding                                
|Additional paid-in capital                                               
|Common stock payable                                                     
|Accumulated
    deficit                                                  
|Total Stockholder Deficit                                                
|                                                                         
|TOTAL
    LIABILITIES AND STOCKHOLDERS' DEFICIT                          
|                                                                         
|The accompanying notes are an integral part of these financial statements
|                                                                         



2











|Absolute Potential, Inc.                
|----------------------------------------
|Statements of Operations                
|                                        
|                                        
|                                        
|                                        
|                                        
|Operating revenues                      
|                                        
|Selling, general and administrative     
|                                        
|Net operating loss                      
|                                        
|Other income (expense)                  
|Interest expense                        
|                                        
|Net loss                                
|                                        
|Net loss per share - basic and diluted  
|                                        
|Weighted average number of common shares
|outstanding - basic and diluted         
|                                        
|                                        



The
accompanying notes are an integral part of these consolidated financial statements

3













|Absolute Potential, Inc.                              
|------------------------------------------------------
|Statement of Changes in Stockholders' Equity (Deficit)
|                                                      
|                                                      
|                                                      
|                                                      
|                                                      
|                                                      
|Balance, September 30, 2006                           
|                                                      
|Net loss                                              
|                                                      
|Balance, December 31, 2006 (unaudited)                
|                                                      





The
accompanying notes are an integral part of these financial statements.

4















|Absolute Potential, Inc.                           
|---------------------------------------------------
|Statements of Cash Flows                           
|                                                   
|                                                   
|                                                   
|                                                   
|Cash Flows from Operating Activities:              
|Net loss                                           
|Adjustment to reconcile net loss to net cash       
|Accounts payable                                   
|Accrued expenses                                   
|Net cash used in operating activities              
|                                                   
|Cash Flows from Financing Activities:              
|Proceeds from Long-Term Advances from Related Party
|Net cash provided by financing activities          
|                                                   
|NET INCREASE (DECREASE) IN CASH & CASH EQUIVALENTS 
|                                                   
|CASH & CASH EQUIVALENTS, BEGINNING BALANCE         
|                                                   
|CASH & CASH EQUIVALENTS, ENDING BALANCE            
|                                                   
|SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:  
|Interest paid                                      
|Income taxes paid                                  
|                                                   



The
accompanying notes are an integral part of these financial statements.



5











ABSOLUTE
POTENTIAL, INC.

NOTES
TO FINANCIAL STATEMENTS

DECEMBER
31, 2006

(UNAUDITED)



Note
1. Organization and Basis of Presentation



The unaudited
financial statements were prepared by Absolute Potential, Inc. (the "Company" or "Absolute"), pursuant to
the rules and regulations of the Securities Exchange Commission (“SEC”). The information furnished herein reflects
all adjustments (consisting of normal recurring accruals and adjustments) which are, in the opinion of management, necessary to
fairly present the operating results for the respective periods. Certain information and footnote disclosures normally present
in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America
(“US GAAP”) were omitted pursuant to such rules and regulations. These financial statements should be read in conjunction
with the audited financial statements and footnotes included in the Company’s Annual Report on Form 10-K. The results for
the three months ended December 31, 2006, are not necessarily indicative of the results to be expected for the year ending September
30, 2007.



Organization
and Line of Business



Absolute
Potential, Inc. is a Florida corporation that was incorporated on August 12, 1993. On July 31, 2003 the Company changed its name
to Absolute Waste Services, Inc., pending a merger described below. On June 15, 2005, the Company received the written consent
dated June 15, 2005, from the holders of approximately 90.9% of the outstanding voting stock approving an amendment to its Certificate
of Incorporation to change the Company's name to Absolute Potential, Inc. On October 24, 2005, the Company amended its Certificate
of Incorporation to reflect this name change. The Company has no current operations.



Merger
and Unwinding



On July
2, 2003, through a wholly owned subsidiary ("Merger Sub"), the Company entered into an Agreement and Plan of Merger
with Absolute Industries LLC ("Industries"), which was approved by the Boards of Directors of each entity. On August
23, 2003, Industries merged with and into Merger Sub with Merger Sub being the surviving entity (the "Merger"). Prior
to the Merger, the Company had 10,000,000 common shares outstanding that were approved for issuance under the Plan of Reorganization,
which was confirmed by the United States Bankruptcy Court for the Middle District of Florida in August, 2002.



In connection
with the Merger, an additional 100,000 shares of new restricted stock were issued. In accordance with the Merger Agreement, 100
percent of the equity interests of Industries were exchanged for 27,000,000 of the Company's Class A Convertible Preferred Stock.
Each share of Class A Convertible Preferred Stock is convertible into one share of common stock and is entitled to three votes.



In June
2004, the Board of Directors of the Company and the majority of the Company's shareholders, by written consent, determined that
as a result of breaches of the Merger Agreement, it was equitable and appropriate to unwind the effects of the Mergers for each
party to return to the other party the consideration received in connection with the Merger, and to release each other from all
claims relating to the Merger Agreement and the Merger. In connection with this transaction, all of the issued and outstanding
stock of the Merger Sub was transferred to the former members of Industries.



In August
2003, the board of directors amended the articles of incorporation to increase the authorized shares of voting common stock to
150,000,000 at $0.0001 par value and to authorize 50,000,000 shares of preferred stock at $0.001 par value, with rights and terms
to be determined by the board from time to time.



6



















ABSOLUTE
POTENTIAL, INC.

NOTES
TO FINANCIAL STATEMENTS

DECEMBER
31, 2006

(UNAUDITED)



Basis
of Presentation



The accompanying
financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America
(“US GAAP”).



Going
Concern



The accompanying
financial statements have been prepared on a going concern basis that contemplates the realization of assets and liabilities.
In the ordinary course of business, operating losses have been incurred each year since inception, resulting in an accumulated
deficit of $1,612,768 and negative working capital of $411,280 as of December 31, 2006, and total liabilities exceeding total
assets by $987,332 as of December 31, 2006. Currently, the Company has been provided working capital by a shareholder and is seeking
a merger with an operating company. However, these conditions raise substantial doubt about the Company's ability to continue
as a going concern. The financial statements of the Company do not include any adjustments relating to the recoverability of liabilities
that might be necessary should the Company be unable to continue as a going concern.



Note
2. Summary of Significant Accounting Policies



Use of
Estimates



The preparation
of financial statements in conformity with accounting principles generally accepted in the United States of America requires management
to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements, and the reported amounts of expenses during the reporting period. The
significant estimates made in the preparation of the Company’s financial statements relate to the determination of the valuation
allowance for the deferred tax benefit and accrued payroll taxes. The Company’s actual results could differ materially from
these estimates upon which the carrying values were based.



Cash
and Cash Equivalents



Cash and
cash equivalents include cash on hand, cash in time deposits and all highly liquid investments with original maturities of three
months or less.



Fair
Value Measurements



For certain
of the Company’s financial instruments, including cash and cash equivalents, accounts payable and accrued liabilities, the
carrying amounts approximate their fair values due to their short maturities.



Income
Taxes



The Company
accounts for income taxes in accordance with ASC Topic 740, “Income Taxes.” ASC 740 requires a company to use the
asset and liability method of accounting for income taxes, whereby deferred tax assets are recognized for deductible temporary
differences, and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences
between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance
when, in the opinion of management, it is more likely than not that some portion, or all of, the deferred tax assets will not
be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of
enactment.



7

















ABSOLUTE
POTENTIAL, INC.

NOTES
TO FINANCIAL STATEMENTS

DECEMBER
31, 2006

(UNAUDITED)







Under ASC
740, a tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be
sustained in a tax examination, with a tax examination being presumed to occur. The evaluation of a tax position is a two-step
process. The first step is to determine whether it is more-likely-than-not that a tax position will be sustained upon examination,
including the resolution of any related appeals or litigation based on the technical merits of that position. The second step
is to measure a tax position that meets the more-likely-than-not threshold to determine the amount of benefit to be recognized
in the financial statements. A tax position is measured at the largest amount of benefit that is greater than 50 percent likely
of being realized upon ultimate settlement. Tax positions that previously failed to meet the more-likely-than-not recognition
threshold should be recognized in the first subsequent period in which the threshold is met. Previously recognized tax positions
that no longer meet the more-likely-than-not criteria should be de-recognized in the first subsequent financial reporting period
in which the threshold is no longer met. Penalties and interest incurred related to underpayment of income tax are classified
as income tax expense in the year incurred.



The
last filing of corporate tax returns was September 30, 2001. Tax years that remain open and subject to audit by the IRS and
Florida include the years ended September 30, 2002 to 2010. No penalties or interest relating to income taxes have been
incurred during the three months ended December 31, 2006 and 2005. GAAP also provides guidance on
de-recognition, classification, interest and penalties, accounting in interim periods, disclosures and transition.



Basic
and Diluted Losses Per Share



Earnings
per share is calculated in accordance with the ASC Topic 260, “Earnings Per Share.” Basic earnings per share is calculated
dividing income available to common stockholders by the weighted average number of common shares outstanding. Diluted earnings
per share is based on the assumption that all dilutive convertible shares and stock options and warrants were converted or exercised.
Dilution is computed by applying the treasury stock method. Under this method, warrants and options are assumed to be exercised
at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase
common stock at the average market price during the period.Diluted EPS is not presented at December 31, 2006 and 2005
because it is anti-dilutive. As of December 31, 2006 and September 30, 2006, the number of potential dilutive shares related to
the long term advances from related party was 1,440,130 and 1,328,338, respectively.



Recent
Accounting Pronouncements



Fair
Value Measurements

In September
2006, FASB issued SFAS No. 157,“Fair Value Measurements,”whichestablishes a framework for
measuring fair value, and expands disclosures about fair value measurements required under the accounting pronouncements, but
does not change existing guidance as to whether or not an instrument is carried at fair value. Additionally, it establishes a
fair value hierarchy that prioritizes the information used to develop those assumptions. SFAS No. 157 is effective for financial
statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. Earlier application
is encouraged, provided that the reporting entity has not yet issued financial statements for fiscal year, including financial
statements for an interim period within the fiscal year. The company is still evaluating the effects of SFAS No. 157 on the Company's
financial statements.



8

















ABSOLUTE
POTENTIAL, INC.

NOTES
TO FINANCIAL STATEMENTS

DECEMBER
31, 2006

(UNAUDITED)





Business
Combinations - Revised



In December
2007, the FASB issued SFAS No. 141 (Revised 2007), “Business Combinations.” SFAS No. 141 (Revised 2007)
changes how a reporting enterprise accounts for the acquisition of a business. SFAS No. 141 (Revised 2007) requires an acquiring
entity to recognize all the assets acquired and liabilities assumed in a transaction at the acquisition-date fair value, with
limited exceptions, and applies to a wider range of transactions or events. SFAS No. 141 (Revised 2007) is effective for
fiscal years beginning on or after December 15, 2008 and early adoption and retrospective application is prohibited. The
company is still evaluating the effects of SFAS No. 141 (Revised 2007) on the Company's financial statements.



The Hierarchy
of GAAP



In May 2008,
FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted Accounting Principles.” SFAS 162 identifies the sources
of accounting principles and the framework for selecting the principles to be used in the preparation of financial statements
of nongovernmental entities that are presented in conformity with generally accepted accounting principles (“GAAP”)
in the United States (the “GAAP hierarchy”). The Company’s adoption of this revision did not have any impact
on the Company’s financial condition or results of operations.



Subsequent
Events



In May 2009,
the FASB issued SFAS No. 165, “Subsequent Events” (“ SFAS 165”) which was codified into ASC 855.  ASC
855 establishes principles and standards related to the accounting for and disclosure of events that occur after the balance sheet
date but before the financial statements are issued.  This position requires an entity to recognize, in the financial statements,
subsequent events that provide additional information regarding conditions that existed at the balance sheet date.  In addition,
ASC 855 requires companies to disclose the date through which the Company has evaluated subsequent events to be the date the financial
statements are issued. The Company’s adoption of ASU 855 did not have any impact on its financial condition or results of
operations.



FASB Accounting
Standards Codification, amends SFAS 162



On July
1, 2009, the Company adopted Accounting Standards Update (“ASU”) No. 2009-01, “Topic 105 - Generally Accepted
Accounting Principles - amendments based on Statement of Financial Accounting Standards No. 168, “The FASB Accounting Standards
CodificationTM and the Hierarchy of Generally Accepted Accounting Principles” (“ASU No. 2009-01”).  ASU
No. 2009-01 re-defines authoritative GAAP for nongovernmental entities to be only comprised of the FASB Accounting Standards CodificationTM
(“Codification”) and, for SEC registrants, guidance issued by the SEC.  The Codification is a reorganization
and compilation of all then-existing authoritative GAAP for nongovernmental entities, except for guidance issued by the SEC.  The
Codification is amended to effect non-SEC changes to authoritative GAAP.  Adoption of ASU No. 2009-01 only changed the
referencing convention of GAAP in Notes to the Financial Statements.



9

















ABSOLUTE
POTENTIAL, INC.

NOTES
TO FINANCIAL STATEMENTS

DECEMBER
31, 2006

(UNAUDITED)





Revenue
Recognition – Multiple Deliverable Revenue Arrangements



In October
2009, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) No. 2009-13
on Topic 605, Revenue Recognition—Multiple Deliverable Revenue Arrangements—a consensus of the FASB Emerging Issues
Task Force (“ASU 2009-13”) . The objective of ASU 2009-13 is to address the accounting for multiple-deliverable
arrangements to enable vendors to account for products or services (deliverables) separately rather than as a combined unit. Vendors
often provide multiple products or services to their customers. Those deliverables often are provided at different points in time
or over different time periods. ASU 2009-13 provides amendments to the criteria in Subtopic 605-25, Multiple-Element Arrangements(“Subtopic 605-25”) for separating consideration in multiple-deliverable arrangements. The amendments in ASU 2009-13
establish a selling price hierarchy for determining the selling price of a deliverable. The selling price used for each deliverable
will be based on vendor specific objective evidence if available, third-party evidence if vendor-specific objective evidence is
not available, or estimated selling price if neither vendor specific objective evidence nor third-party evidence is available.
The amendments in ASU 2009-13 also will replace the term fair value in the revenue allocation guidance with selling price to clarify
that the allocation of revenue is based on entity-specific assumptions rather than assumptions of a marketplace participant. ASU
2009-13 is effective for fiscal years beginning on or after June 15, 2010. Early adoption is permitted and can be applied
prospectively or retrospectively. The company is still evaluating the effects of ASU 2009-13 on the Company's financial statements.



Fair Value
Measurements and Disclosure – Overall



On December
15, 2009, the FASB issued ASU No. 2010-06 Fair Value Measurements and Disclosures Topic 820 “Improving Disclosures about
Fair Value Measurements”.  This ASU requires some new disclosures and clarifies some existing disclosure requirements
about fair value measurement as set forth in Codification Subtopic 820-10. The FASB’s objective is to improve these disclosures
and, thus, increase the transparency in financial reporting.  The company is still evaluating the effects of ASU No.
2010-06 on the Company's financial statements.



Compensation,
Stock Compensation



In April
2010, the FASB issued ASU 2010-13, Compensation—Stock Compensation Topic 718, “Effect of Denominating the Exercise
Price of a Share-Based Payment Award in the Currency of the Market in Which the Underlying Equity Security Trades.” ASU
2010-13 provides amendments to Topic 718 to clarify that an employee share-based payment award with an exercise price denominated
in currency of a market in which a substantial porting of the entity’s equity securities trades should not be considered
to contain a condition that is not a market, performance, or service condition. Therefore, an entity would not classify such an
award as a liability if it otherwise qualifies as equity. The amendments in this Update are effective for fiscal years, and interim
periods within those fiscal years, beginning on or after December 15, 2010. The company is still evaluating the effects of ASU
2010-13 on the Company's financial statements.



Management
does not believe that any other recently issued, but not yet effective accounting pronouncements, if adopted, would have a material
effect on the accompanying financial statements.



10



















ABSOLUTE
POTENTIAL, INC.

NOTES
TO FINANCIAL STATEMENTS

DECEMBER
31, 2006

(UNAUDITED)





Note
3. Related Party Transactions



During the
three months ended December 31, 2006, Augustine Fund, L.P., the major shareholder and funding source for the company, funded the
operations of the company in the additional amount of $44,717.



The outstanding
balances of these advances were $576,052 and $531,335 at December 31, 2006 and September 30, 2006, respectively. These advances
are unsecured and have no repayment terms. The advances are convertible into shares of common stock. As of December 31, 2006 and
September 30, 2006, the number of potential shares related to the long term advances from related party was 1,440,130 and 1,328,338,
respectively.



Note
4. Shareholders’ Equity



As of December
31, 2006, the Company had 275 record holders our common stock and 646,176 shares of common stock outstanding. There were no recorded
equity transactions for the three months ended December 31, 2006.



Note
5. Subsequent Events



On October
17, 2011, the Commission sent a written communication requesting that the Company be deregistered. The Company has hired a third
party legal counsel to respond to the Commission’s request for deregistration hoping to continue as a registered filer.
On November 18, 2011 a preliminary hearing was held and the Company was granted a continuance until January 9, 2012 at which time
the judge will make a final ruling as to whether the Company’s stock will be deregistered or not.





11

















Item
2. Management’s Discussion and Analysis of Financial Condition and Results of Operation



Plan
of Operation--Introduction



We were
incorporated in Florida in August 1993. In November 2001, we filed a voluntary petition for reorganization under Chapter 11 of
the U. S. Bankruptcy Code with the U.S. Bankruptcy Court. On August 30, 2002, the United States Bankruptcy Court for the Middle
District of Florida, Tampa Division, Case No. 01-20854-8G1 issued an order confirming our Plan of Reorganization under Chapter
11 of the Bankruptcy Code, dated as of February 25, 2002 (the "Plan"). Although the Plan became effective on August
30, 2002 and we commenced implementation of the Plan on that date, distributions of common stock to our pre-bankruptcy creditors
did not occur until July 31, 2003.



In July
2003, we changed our name to Absolute Waste Services, Inc. On August 23, 2003, we entered into an Agreement and Plan of Merger
(the "Merger Agreement") with Absolute Industries, LLC, a Texas limited liability company, pursuant to which Absolute
Industries, LLC merged into our newly formed wholly owned subsidiary (the "Merger Sub"), with the Merger Sub being the
surviving entity and succeeding to the business operations of Absolute Industries, LLC (the "Merger"). In June 2004,
we and the former members of Absolute Industries, LLC agreed to unwind the effects of the Merger, for each party to return to
the other party the consideration received in connection with the Merger, and to release each other from all claims relating to
the Merger Agreement and the Merger. In connection with this transaction, all of the issued and outstanding stock of the Merger
Sub was transferred to the former members of Absolute Industries, LLC.



Prior to
the Merger, we had no material assets, liabilities or business operations. In substance, we were a publicly held shell corporation
whose sole business activity was the search for a suitable business opportunity. Because the effects of the Merger have been unwound,
and because we no longer have any ownership interest in Merger Sub and therefore no longer engage in the type of business previously
engaged in by the Merger Sub, this Report on Form 10-Q will treat us as a publicly held shell.



We are a
company that is intended to serve as a vehicle for the acquisition of a target business which we believe has significant growth
potential. We are not presently engaged in, and we will not engage in, any substantive commercial business for an indefinite period
of time. While we may seek to effect business combinations with more than one target business, we will probably have the ability,
as a result of our limited resources, to effect only a single business combination.



Current
Trends



As a result
of the recent declines in the United States equity markets, many privately held companies have been shut off from the public marketplace.
Additionally, as the economy has slowed, many companies are attempting to divest non-core assets and divisions. Due to these factors,
we believe that there are substantial opportunities to effect attractive acquisitions and that, as a public entity, we are well
positioned to identify target acquisitions and to effect a business combination to take advantage of these current trends.



Effecting
a Business Combination



General



A business
combination may involve the acquisition of, or merger with, a company that does not need substantial additional capital but that
desires to establish a public trading market for its shares, while avoiding what it may deem to be adverse consequences of undertaking
a public offering itself. These include time delays, significant expense, loss of voting control and compliance with various federal
and state securities laws. In the alternative, a business combination may involve a company which may be financially unstable
or in its early stages of development or growth.



12

















No Target
Business or Target Industry Identified



Our efforts
in identifying a prospective target business will not be limited to a particular industry and we may ultimately acquire a business
in any industry we deem appropriate. To date, we have not selected any target business on which to concentrate our search for
a business combination. While we intend to focus on target businesses in the United States, we are not limited to those entities
and may consummate a business combination with a target business outside of the United States. Accordingly, there is no basis
to evaluate the possible merits or risks of the target business or the particular industry in which we may ultimately operate.
To the extent we effect a business combination with a financially unstable company or an entity in its early stage of development
or growth, including entities without established records of sales or earnings, we may be affected by numerous risks inherent
in the business and operations of financially unstable and early stage or potential emerging growth companies. In addition, to
the extent that we effect a business combination with an entity in an industry characterized by a high level of risk, we may be
affected by the currently unascertainable risks of that industry. An extremely high level of risk frequently characterizes many
industries which experience rapid growth. In addition, although our management will endeavor to evaluate the risks inherent in
a particular industry or target business, there can be no assurance that we will properly ascertain or assess all significant
risk factors.



Sources
of Target Businesses



We anticipate
that target business candidates will be brought to our attention from various unaffiliated sources, including securities broker-dealers,
investment bankers, venture capitalists, bankers and other members of the financial community, who may present solicited or unsolicited
proposals. Our sole executive officer and his affiliates may also bring to our attention target business candidates. While we
do not presently anticipate engaging the services of professional firms that specialize in business acquisitions on any formal
basis, we may engage these firms in the future, in which event we may pay a finder's fee or other compensation. We do not currently
intend to pay our existing officer or our shareholders or any entity with which they are affiliated any finder's fee or other
compensation for services rendered to us prior to or in connection with the consummation of a business combination.



Selection
of a Target Business and Structuring of a Business Combination



Although
the fair market value of our target business must comply with statutory financial parameters, we will have virtually unrestricted
flexibility in identifying and selecting a prospective target business. In evaluating a prospective target business, we will consider,
among other factors, the following:



•       
financial condition and results of operation;

•        growth potential;

•        experience and skill of management and availability of additional

•        personnel;

•        capital requirements;

•        competitive position;

•      stage
of development of the target business's products, processes or services;

•       
degree of current or potential market acceptance of the target business's products, processes or services;

•       
 proprietary features and degree of intellectual property or other protection of the target business's products,   processes or services;

•       
regulatory environment of the industry; and

•       
costs associated with effecting the business combination.



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These criteria
are not intended to be exhaustive. Any evaluation relating to the merits of a particular business combination will be based, to
the extent relevant, on the above factors as well as other considerations deemed relevant by our management in effecting a business
combination consistent with our business objective. In evaluating a prospective target business, we plan to conduct an extensive
due diligence review which will encompass, among other things, meetings with incumbent management and inspection of facilities,
as well as review of financial and other information which will be made available to us.



We will
endeavor to structure a business combination so as to achieve the most favorable tax treatment to us, the target business and
both companies' shareholders. There can be no assurances, however, that the Internal Revenue Service or appropriate state tax
authority will agree with our tax treatment of the business combination.



The time
and costs required to select and evaluate a target business and to structure and complete the business combination cannot presently
be ascertained with any degree of certainty. Any costs incurred with respect to the identification and evaluation of a prospective
target business with which a business combination is not ultimately completed will result in a loss to us and reduce the amount
of capital available to otherwise complete a business combination.



Fair
Market Value of Target Business



We anticipate
that the initial target business that we acquire will have a fair market value equal to at least 80% of our net assets at the
time of such acquisition. The fair market value of such business will be determined by our Board of Directors based upon standards
generally accepted by the financial community, such as actual and potential sales, earnings and cash flow and book value. If our
board is not able to independently determine that the target business has a sufficient fair market value, we may obtain an opinion
from an unaffiliated, independent investment banking firm which is a member of the National Association of Securities Dealers,
Inc. with respect to the satisfaction of such criteria. Since any opinion, if obtained, would merely state that fair market value
meets the 80% of net assets threshold, it is not anticipated that copies of such opinion would be distributed to our shareholders,
although copies will be provided to shareholders who request it.



Rights
of Dissenting Shareholders



A business
combination may require the approval of the holders of the outstanding shares of both participating companies. Shareholders who
vote against a business combination in certain instances may be entitled to dissent and to obtain payment for their shares. The
requirement of approval of our shareholders in any business combination may be limited to those transactions identified as a merger
or a consolidation. We may enter into a business combination that would not require the approval of our shareholders, in which
case our shareholders may not be entitled to dissent and obtain payment for their shares. Accordingly, unless the acquisition
requires shareholder approval, we will not provide shareholders with a disclosure document containing audited or unaudited financial
statements prior to such acquisition.



Prior to
any business combination for which shareholder approval is required, we intend to provide our shareholders disclosure documentation
concerning the business opportunity or target company and its business. Such disclosure will in all likelihood be in the form
of a proxy statement which will be distributed to shareholders at least 20 days prior to any shareholder's meeting.



14

















Competition



In identifying,
evaluating and selecting a target business, we expect to encounter intense competition from other entities having a business objective
similar to ours. Many of these entities are well established and have extensive experience identifying and effecting business
combinations directly or through affiliates. Many of these competitors possess greater technical, human and other resources than
us and our financial resources will be relatively limited when contrasted with those of many of these competitors. While we believe
there are numerous potential target businesses that we could acquire, our ability to compete in acquiring certain sizable target
businesses will be limited by our available financial resources. This inherent competitive limitation gives others an advantage
in pursuing the acquisition of a target business. Further, if we need to seek shareholder approval of a business combination,
that may delay the completion of a transaction.



Any of these
obligations may place us at a competitive disadvantage in successfully negotiating a business combination. Our management believes,
however, that our status as a public entity and potential access to the United States public equity markets may give us a competitive
advantage over privately-held entities having a similar business objective as us in acquiring a target business with significant
growth potential on favorable terms.



Results
of Operations



Three
Months Ended December 31, 2006 compared to Three Months Ended December 31, 2005





|                                    |  | Three
    Months Ended December 31, |         |      |  |       
|----------------------------------- |  | ----------------------------------- | ------- | ---- |  | ------
|                                    |  | 2006                                |         | 2005 |  | Change
|                                    |  |                                     |         |      |  |       
|Operating revenues                  |  | $                                   | —       |      |  | $     
|                                    |  |                                     |         |      |  |       
|Selling, general and administrative |  |                                     | 31,681  |      |  |       
|                                    |  |                                     |         |      |  |       
|Interest expense                    |  |                                     | —       |      |  |       
|                                    |  |                                     |         |      |  |       
|Net loss                            |  | $                                   | (31,681 | )    |  | $     
|                                    |  |                                     |         |      |  |       









Selling,
General and Administrative: Selling, general and administrative expenses were $31,681 for the three months ended December
31, 2006, a decrease of $85,357 or 73%, compared to $117,038 for the three months ended December 31, 2005. The decrease was due
to a significant decrease in operations.



Liquidity
and Capital Resources



We do not
have sufficient funds to engage in significant operating activities. Our future operating activities are expected to be funded
by loans from a major shareholder. However, none of our shareholders has any obligation to provide such loans to us.



As of December
31, 2006, we have accounts payable of $125,236, a payroll tax obligation of $287,215 and a shareholder advance of $576,052. We
do not have sufficient cash reserves to satisfy these amounts. We anticipate that we will need to borrow funds from a major shareholder
in order to satisfy these obligations. However, none of our shareholders has any obligation to provide such loans to us.



15

















Critical
Accounting Policies



Our financial
statements have been prepared in accordance with accounting policies generally accepted in the United States. The preparation
of these financial statements requires us to make estimates and assumptions that affect the assets and liabilities at the date
of the financial statements and the reported amounts of revenues and expenses during the reporting period. We believe the following
critical accounting policies require significant judgments, estimates and assumptions used in the preparation of the financial
statements.



We issue
stock in lieu of cash for certain transactions. The fair value of our common stock, which is based on comparable cash purchases
or the value of services, whichever is more readily determinable, is used to value the transaction.



Deferred
tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial
statements carrying amounts of existing assets and liabilities and their respective income tax bases. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences
are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized
as income in the period that included the enactment date. A valuation allowance is recorded for the portion of the deferred tax
asset that we do not believe is recoverable.



Material
Off-Balance Sheet Arrangements



We have
no material off-balance sheet arrangements.



Item
3. Quantitative and Qualitative Disclosures About Market Risk



Not applicable
to smaller reporting companies.



Item
4. Controls and Procedures



Disclosure
Controls and Procedures



Disclosure
controls and procedures are designed to ensure that information required to be disclosed in the reports filed or submitted under
the Exchange Act is recorded, processed, summarized and reported, within the time period specified in the Commission's rules and
forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information
required to be disclosed in the reports filed under the Exchange Act is accumulated and communicated to management, as appropriate,
to allow timely decisions regarding required disclosure. Our current principal executive officer, who is also our principal financial
officer, evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report
pursuant to Rule 15d-15(b) promulgated under the Exchange Act. Based upon that evaluation, our principal executive and financial
officer has concluded that our disclosure controls and procedures were not effective in alerting management in a timely fashion
to all material information required to be included in our periodic filings with the Commission, which has contributed to significant
delays in filing our periodic reports.



Based on
this evaluation, our principal executive officer and principal financial officer will accelerate plans to implement additional
financial reporting controls and procedures to ensure that information in reports that we file or submit under the Exchange Act
are recorded, processed, summarized and reported within the time periods specified in Commission rules and forms. Furthermore,
when and if we acquire an operating business, management will implement operating controls and procedures to ensure timely disclosure.



16

















A control
system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system's
objectives will be met. Further, the design of a control system must reflect the fact that there are resource constraints, and
the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems,
no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, with the company
have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, that breakdowns
can occur because of simple errors or mistakes, and that controls can be circumvented by the acts of individuals or groups. Because
of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.



Changes
in Internal Controls Over Financial Reporting



There were
no significant changes in our internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) that
occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect,
our internal controls over financial reporting.





17













PART
II



Item
1. Legal Proceedings



In 2005
the Commission notified us that it is considering initiating administrative proceedings to have our common stock deregistered.
We promptly submitted a written response to the Commission's notice and engaged in discussions with the Commission regarding this
notice. On October 17, 2011 the Commission sent a written communication requesting that the Company be deregistered. The company
has hired a third party legal counsel to respond to the Commission’s request for deregistration hoping to continue as a
registered filer. On November 18, 2011 a preliminary hearing was held and the company was granted a continuance until January
9, 2012 at which time the judge will make a final ruling as to whether the Company’s stock will be deregistered or not.



In the ordinary
course of our business, we may at times be subject to various legal proceedings. However, except as set forth above, we are not
party to, and are not aware of, pending or threatened litigation that we currently anticipate would have a material adverse effect
on our business or operations.



Item
1A. Risk Factors



There are
no material changes from the risk factors previously disclosed in Item 1A “Risk Factors” of our Annual Report on Form
10-K for the year ended September 30, 2006.



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



None.



Item
3. Defaults Upon Senior Securities



None.



Item
4. (Removed and Reserved)



Item
5. Other Information



None.



Item
6. Exhibits



(a)(1)
Exhibits



The exhibits
required by this item and included in this report or incorporated herein by reference are as follows:



Exhibit
31.1 - Certification of CEO/CFO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002



Exhibit
32.1 - Certification of CEO/CFO pursuant to Section 906 of the Sarbanes-Oxley Act of 2002





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SIGNATURES



Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.



ABSOLUTE
POTENTIAL, INC.

(Registrant)



|By:  /s/ 
    Thomas F. Duszynski          |  | Date: 
    December 20, 2011
|------------------------------------------ |  | ----------------------------
|Thomas F. Duszynski                        |  |                             
|Chief Executive Officer,                   |  |                             
|Chief Financial Officer and Director       |  |                             
|(Principal Executive Officer and           |  |                             
|Principal Financial and Accounting Officer |  |                             





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