UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
DC 20549




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,
2009




o
            TRANSITION REPORT PURSUANT TO
      SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934




For the
transition period from 
to




Commission
File Number:  000-53643




Aurios
Inc.


(Exact
name of registrant as specified in its charter)




Arizona
                  86-1037558(State
      or other jurisdiction of incorporation or organization)
                  (I.R.S.
      Employer Identification
No.)




1741 W. University Drive, Suite
      146
                Tempe,
      AZ 85281(Address
      of principal executive offices)(602)
      426-1211(Registrant’s
      telephone number, including area code)________________________________________________________________(Former
      name, former address and former fiscal year, if changed since last
      report)




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 issuer was required to
file such reports), and (2) has been subject to such filing requirements for the
past 90 days.     x
Yes      ̈ No




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,” “non-accelerated filer,” and “a 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 ý No




Indicate
the number of shares outstanding of each of the issuer’s classes of common
stock, as of the latest practicable date:




Class
                  
                  Outstanding
      at November 12, 2009Common
      Stock, no par value
                  
                  2,370,000
  
  FORM
10-Q
 AURIOS
INC.
 SEPTEMBER
30, 2009
 TABLE
OF CONTENTS
 PART
      I – FINANCIAL INFORMATION
                                PageItem
      1.
                                Financial
      Statements.
                                1Item
      2.
                                Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations.
                                13Item
      3.
                                Quantitative
      and Qualitative Disclosures About Market Risk.
                                18Item
      4T.
                                Controls
      and Procedures.
                                18PART II – OTHER
  INFORMATIONItem
      1.
                                Legal
      Proceedings.
                                19Item
      1A.
                                Risk
      Factors.
                                19Item
      2.
                                Unregistered
      Sales of Equity Securities and Use of Proceeds.
                                19Item
      3.
                                Defaults
      Upon Senior Securities.
                                19Item
      4.
                                Submission
      of Matters to a Vote of Security Holders.
                                19Item
      5.
                                Other
      Information.
                                19Item
      6.
                                Exhibits.
                                19SignaturesExhibitsCertifications









PART
I - FINANCIAL INFORMATION





Item
1.      Financial Statements





Our
      unaudited condensed financial statements included in this Form 10-Q for
      the nine months ended September 30, 2009 are as
follows:Condensed
      Balance Sheets - As of September 30, 2009 (Unaudited) and December 31,
      2008.Condensed
      Statements of Operations (Unaudited) - Three and nine months ended
      September 30, 2009 and 2008.Condensed
      Statement of Changes in Stockholders’ Equity for the year ended
      December 31, 2008 and the nine months ended September 30, 2009
      (Unaudited).Condensed
      Statements of Cash Flows (Unaudited) for the nine months ended September
      30, 2009 and 2008.Notes
      to Condensed Financial
Statements.






These
unaudited condensed financial statements have been prepared in accordance with
accounting principles generally accepted in the United States of America for
interim financial information and the SEC instructions to Form
10-Q.  In the opinion of management, all adjustments considered
necessary for a fair presentation have been included.  Operating
results for the interim period ended September 30, 2009 are not necessarily
indicative of the results that can be expected for the full year.




1




AURIOS
INC.


CONDENSED
BALANCE SHEETS




(Unaudited)September
      30,
                  
                  
                  December
      31,2009
                  
                  
                  2008ASSETSCurrent
      Assets:Cash
                  
                  $
                  7,487
                  
                  
                  $
                  43,321Accounts
      receivable, net
                  
                  
                  7,020
                  
                  
                  
                  5,437Inventory
                  
                  
                  14,361
                  
                  
                  
                  16,605Total
      Assets
                  
                  $
                  28,868
                  
                  
                  $
                  65,363LIABILITIES
      AND STOCKHOLDERS' EQUITY/(DEFICIT)Current
      Liabilities:Accounts
      payable
                  
                  $
                  77,165
                  
                  
                  $
                  12,498Due
      to related party
                  
                  
                  1,413
                  
                  
                  
                  454Total
      Current Liabilities
                  
                  
                  78,578
                  
                  
                  
                  12,952Long-Term
      LiabilitiesAccrued
      interest
                  
                  
                  10,698
                  
                  
                  
                  7,580Note
      payable - related party
                  
                  
                  44,121
                  
                  
                  
                  44,121Total
      Liabilities
                  
                  
                  133,397
                  
                  
                  
                  64,653Stockholders'
      Equity/(Deficit):Convertible
      preferred stock - no par value; 10,000,000 shares
    authorized,460,000
      shares issued and outstanding at September 30, 2009and
      December 31, 2008
                  
                  
                  115,000
                  
                  
                  
                  115,000Common
      stock - no par value; 90,000,000 shares authorized,2,240,000
      shares issued and oustanding at September 30, 2009and
      at December 31, 2008
                  
                  
                  10,795
                  
                  
                  
                  10,795Accumulated
      deficit
                  
                  
                  (230,324
                  )
                  
                  
                  (125,085
                  )Total
      Stockholders' Equity/(Deficit)
                  
                  
                  (104,529
                  )
                  
                  
                  710Total
      Liabilities and Stockholders' Equity/(Deficit)
                  
                  $
                  28,868
                  
                  
                  $
                  65,363








The
Accompanying Notes are an Integral


Part of
the Condensed Financial Statements




2




AURIOS
INC.


CONDENSED
STATEMENTS OF OPERATIONS


(Unaudited)




Three
      Months Ended
                                          
                                          
                                          Nine
      Months EndedSeptember
      30,
                                          
                                          
                                          September
      30,2009
                                          
                                          
                                          2008
                                          
                                          
                                          2009
                                          
                                          
                                          2008Sales
                                          
                                          $
                                          9,059
                                          
                                          
                                          $
                                          3,127
                                          
                                          
                                          $
                                          26,665
                                          
                                          
                                          $
                                          10,194Cost
      of Sales
                                          
                                          
                                          4,852
                                          
                                          
                                          
                                          1,640
                                          
                                          
                                          
                                          15,013
                                          
                                          
                                          
                                          5,828Gross
      Profit
                                          
                                          
                                          4,207
                                          
                                          
                                          
                                          1,487
                                          
                                          
                                          
                                          11,652
                                          
                                          
                                          
                                          4,366General
      and Administrative Expenses
                                          
                                          
                                          35,857
                                          
                                          
                                          
                                          7,986
                                          
                                          
                                          
                                          113,728
                                          
                                          
                                          
                                          67,834Loss
      from Operations
                                          
                                          
                                          (31,650
                                          )
                                          
                                          
                                          (6,499
                                          )
                                          
                                          
                                          (102,076
                                          )
                                          
                                          
                                          (63,468
                                          )Other
      Expense
                                          
                                          
                                          45
                                          
                                          
                                          
                                          44
                                          
                                          
                                          
                                          45
                                          
                                          
                                          
                                          90Interest
      Expense
                                          
                                          
                                          985
                                          
                                          
                                          
                                          985
                                          
                                          
                                          
                                          3,118
                                          
                                          
                                          
                                          2,9551,030
                                          
                                          
                                          
                                          1,029
                                          
                                          
                                          
                                          3,163
                                          
                                          
                                          
                                          3,045Net
      Loss (Unaudited)
                                          
                                          $
                                          (32,680
                                          )
                                          
                                          $
                                          (7,528
                                          )
                                          
                                          $
                                          (105,239
                                          )
                                          
                                          $
                                          (66,513
                                          )Loss
      per share - basic and diluted
                                          
                                          $
                                          (0.01
                                          )
                                          
                                          $
                                          (0.00
                                          )
                                          
                                          $
                                          (0.05
                                          )
                                          
                                          $
                                          (0.03
                                          )Weighted
      average shares outstanding
                                          
                                          
                                          2,240,000
                                          
                                          
                                          
                                          2,240,000
                                          
                                          
                                          
                                          2,240,000
                                          
                                          
                                          
                                          2,240,000






The
Accompanying Notes are an Integral


Part of
the Condensed Financial Statements




3




AURIOS
INC.


CONDENSED
STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY


For
the year ended December 31, 2008 and the nine months ended September 30,
2009


(Unaudited)




TotalConvertible
                              
                              
                              
                              
                              
                              Stockholders'Common
      Stock
                              
                              
                              Preferred
      Stock
                              
                              
                              Accumulated
                              
                              
                              EquityShares
                              
                              
                              Amount
                              
                              
                              Shares
                              
                              
                              Amount
                              
                              
                              Deficit
                              
                              
                              (Deficit)Balance
      at December 31, 2007
                              
                              
                              2,240,000
                              
                              
                              $
                              10,795
                              
                              
                              
                              460,000
                              
                              
                              $
                              115,000
                              
                              
                              $
                              (41,658
                              )
                              
                              $
                              84,137Net
      loss for the year endedDecember
      31, 2008
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              (83,427
                              )
                              
                              
                              (83,427
                              )Balance
      at December 31, 2008
                              
                              
                              2,240,000
                              
                              
                              
                              10,795
                              
                              
                              
                              460,000
                              
                              
                              
                              115,000
                              
                              
                              
                              (125,085
                              )
                              
                              
                              710Net
      loss for the nine months endedSeptember
      30, 2009 (Unaudited)
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              
                              (105,239
                              )
                              
                              
                              (105,239
                              )Balance
      at September 30, 2009 (Unaudited)
                              
                              
                              2,240,000
                              
                              
                              $
                              10,795
                              
                              
                              
                              460,000
                              
                              
                              $
                              115,000
                              
                              
                              $
                              (230,324
                              )
                              
                              $
                              (104,529
                              )






The
Accompanying Notes are an Integral


Part of
the Condensed Financial Statements




4






AURIOS
INC.


CONDENSED
STATEMENTS OF CASH FLOWS


(Unaudited)




Nine
      Months EndedSeptember
      30,2009
                      
                      
                      2008Cash
      flows from operating activities:Net
      Loss
                      
                      $
                      (105,239
                      )
                      
                      $
                      (66,513
                      )Adjustments
      to reconcile net loss to net cashused
      by operating activities:Changes
      in Assets and Liabilities:Accounts
      receivable
                      
                      
                      (1,583
                      )
                      
                      
                      (1,150
                      )Inventory
                      
                      
                      2,244
                      
                      
                      
                      (2,339
                      )Accounts
      payable
                      
                      
                      64,667
                      
                      
                      
                      2,521Accrued
      interest-related party
                      
                      
                      3,118
                      
                      
                      
                      2,955Due
      to related party
                      
                      
                      959
                      
                      
                      
                      1,888Net
      cash used by operating activities
                      
                      
                      (35,834
                      )
                      
                      
                      (62,638
                      )Net
      change in cash and cash equivalents
                      
                      
                      (35,834
                      )
                      
                      
                      (62,638
                      )Cash
      and cash equivalents at beginning of period
                      
                      
                      43,321
                      
                      
                      
                      115,806Cash
      and cash equivalents at end of period
                      
                      $
                      7,487
                      
                      
                      $
                      53,168Supplemental
      Information:Interest
      paid
                      
                      $
                      -
                      
                      
                      $
                      -Income
      taxes paid
                      
                      $
                      -
                      
                      
                      $
                      -






The
Accompanying Notes are an Integral


Part of
the Condensed Financial Statements




5




AURIOS
INC.


NOTES
TO CONDENSED FINANCIAL STATEMENTS





Note
1
 Summary
of Significant Accounting Policies, Nature of Operations and Use of
Estimates







Presentation
of Interim Information:




The
accompanying unaudited condensed financial statements have been prepared in
accordance with accounting principles generally accepted in the United States of
America for interim financial information and with the instructions to Form 10-Q
for smaller reporting companies. Accordingly, they do not include all of the
information and footnotes required by accounting principles generally accepted
in the United States for complete financial statements and should be read in
conjunction with our Annual Report on the financial statements of Aurios Inc.
for the years ended December 31, 2008 and 2007 included in the Form S-1
Amendment No. 3 as filed with the SEC under the Securities Exchange Act of 1934,
as amended (the “Exchange Act”). Certain information and footnote disclosures
normally included in financial statements prepared in accordance with accounting
principles generally accepted in the United States of America have been
condensed or omitted, as permitted by the SEC, although we believe the
disclosures made are adequate to make the information presented not misleading.
Further, the condensed financial statements reflect, in the opinion of
management, all normal recurring adjustments necessary to fairly present our
financial position at September 30, 2009 and the results of our operations and
cash flows for the periods presented. The December 31, 2008 condensed balance
sheet data was derived from audited financial statements, but does not include
all disclosures required by accounting principles generally accepted in the
United States of America. The results of operations for the nine months ended
September 30, 2009 are not necessarily indicative of the results to be expected
for the full year.





Nature
of Corporation




Aurios
Inc. (the “Company” or “we”) is a corporation which was duly formed and
organized under the laws of the State of Arizona on August 7,
2001.  Its principal business activity is the production, marketing
and distribution of vibration isolation products to the high-end audio and video
market.  The Company’s sales occur throughout the United States and in
certain foreign countries.  The Company is a former wholly-owned
subsidiary of True Gravity Enterprises Inc. (“TGE”). On December 31, 2007, one
of our principal shareholders, who is also a director and officer of the
Company, purchased all of the stock owned by TGE. Through June 30, 2007, TGE
paid all Company expenses including payroll and vendors.  It charged
the Company $1,500 per month as a rent and management fee.  Beginning
June 30, 2007, the Company began paying its vendors directly, but continued to
contract with TGE for rent and for services performed by
TGE.   TGE continues to charge the Company $1,500 per month for
rent and such services.




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 effect 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 revenues and expenses
during the reporting period. Actual results could differ from those
estimates.





Revenue
Recognition






The
Company derives its revenues primarily from the sale of vibration and motion
control devices through sales on the Company’s website and its distributors.
Revenues are recognized at the time the sale is completed and shipped. Once
shipped, title to the products, as well as the risks and rewards of ownership,
pass to the customers.





Cash
and Cash Equivalents





For
financial accounting purposes, cash and cash equivalents are considered to be
all highly liquid investments purchased with an initial maturity of three (3)
months or less.




6




AURIOS
INC.


NOTES
TO CONDENSED FINANCIAL STATEMENTS (Continued)







Note
1
 Summary
of Significant Accounting Policies, Nature of Operations and Use of Estimates
(Continued)





Accounts
Receivable




The
Company provides for potentially uncollectible accounts receivable by use of the
allowance method.  The allowance is provided based upon a review of
the individual accounts outstanding and the Company’s prior history of
uncollectible accounts receivable.  As of September 30, 2009 and
December 31, 2008 there was no provision for uncollectible trade accounts
receivable.  The Company does not accrue interest charges on
delinquent accounts receivable.  The accounts are generally
unsecured.





Inventory




Inventories
are stated at the lower of cost (first-in, first-out method) or market value. We
regularly assess inventory quantities on hand and record provisions for excess
and obsolete inventory based primarily on our estimated forecast of product
demand. Inventory consists primarily of components used in assembling vibration
control bearings.





Deferred
Income Taxes




Deferred
income taxes are provided on an asset and liability method, whereby deferred tax
assets and liabilities are recognized for deductible temporary differences and
operating loss carryforwards. Deferred tax assets are reduced by a valuation
allowance when it is more likely than not that the carryforwards will not be
utilized. Deferred tax assets and liabilities are adjusted for the effects of
changes in tax laws and rates on the date of enactment.




New
Accounting Pronouncements





In
June 2009, the FASB issued standards that establish the FASB Accounting
Standards Codification (ASC or Codification) as the source of authoritative GAAP
recognized by the FASB to be applied to nongovernmental entities and rules and
interpretive releases of the SEC as authoritative GAAP for SEC registrants. The
Codification will supersede all the existing non-SEC accounting and reporting
standards that existed at the ASC’s effective date. The FASB uses Accounting
Standards Updates (ASU) to amend the ASC. These standards are effective for
interim and annual periods ending after September 15, 2009





In
June 2009, the FASB issued a standard that requires an enterprise to
perform an analysis to determine whether the enterprise’s variable interest or
interests give it a controlling financial interest in a variable interest
entity. This standard is effective for annual reporting periods beginning after
November 15, 2009. We are currently evaluating its impact on our financial
position and results of operations and do not anticipate a material impact on
our financial position or results of operations.





In
May 2009, the FASB issued a standard that established 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.
This standard is effective for interim or annual financial periods ending after
June 15, 2009. The Company has evaluated subsequent events through November
16, 2009, which is the date the financial statements were issued.





In
April 2009, the FASB issued the following authoritative guidance intended
to provide additional application guidance and enhance disclosures regarding
fair value measurements and impairments of securities:




·
            Guidance
      determining fair value when volume and level of activity for assets or
      liabilities have significantly decreased and identifying transactions that
      are not orderly provides additional guidance for estimating fair value
      when volume and level of activity for assets or liabilities have decreased
      significantly.  This guidance also provides for identifying
      circumstances that indicate a transaction is not orderly.  These
      provisions are effective for the Company’s interim period ending on
      June 30, 2009 and did not affect the Company’s financial position and
      results of operations.




7




AURIOS
INC.


NOTES
TO CONDENSED FINANCIAL STATEMENTS (Continued)







Note
1
 Summary
of Significant Accounting Policies, Nature of Operations and Use of Estimates
(Continued)







New
Accounting Pronouncements (Continued)





·
            Guidance
      surrounding interim disclosures about fair value of financial instruments
      requires disclosures about fair value of financial instruments in interim
      reporting periods of publicly traded companies that were previously only
      required to be disclosed in annual financial statements.  The
      provisions of this disclosure-only guidance are effective for the
      Company’s interim period ending on June 30, 2009 and did not affect
      the Company’s financial position and results of
  operations.





·
            Guidance
      determining recognition and presentation of other-than-temporary
      impairments amends current other-than-temporary impairment guidance in
      GAAP for debt securities to make the guidance more operational and to
      improve the presentation and disclosure of other-than-temporary
      impairments on debt and equity securities in financial statements. 
      This guidance does not amend existing recognition and measurement guidance
      related to other-than-temporary impairments of equity securities. 
      The provisions of this guidance are effective for the Company’s interim
      period ending on June 30, 2009 and did not affect the Company’s
      financial position and results of
operations.





In
October 2009, the FASB issued ASU 2009-14, “Certain Revenue Arrangements That
Include Software Elements” (ASU 2009-14), which clarifies the guidance for
allocating and measuring revenue, including how to identify software that is out
of the scope. ASU 2009-14 amends accounting and reporting guidance for revenue
arrangements involving both tangible products and software that is “more than
incidental to the tangible product as a whole” and the hardware components will
also be outside of the scope of software revenue guidance and may result in more
revenue recognized at the time of the hardware sale. Additional disclosures will
discuss allocation of revenue to products and services and the significant
judgments applied in the revenue allocation method, including impacts on the
timing and amount of revenue recognition. ASU 2009-14 will be effective
prospectively for sales entered into or materially modified in fiscal years
beginning on or after June 15, 2010. The FASB permits early adoption of ASU
2009-14, applied retrospectively, to the beginning of the year of adoption. We
are currently evaluating the impact on our financial position and results of
operations and do not anticipate a material impact on our financial position or
results of operations.





In
October 2009, the FASB issued ASU 2009-13, “Multiple-Deliverable Revenue
Arrangements” (ASU 2009-13), which addresses how revenues should be allocated
among all products and services included in sales arrangements. It establishes a
selling price hierarchy for determining the selling price of each product or
service, with vendor-specific objective evidence (VSOE) at the highest level,
third-party evidence of VSOE at the intermediate level, and a best estimate at
the lowest level. It replaces “fair value” with “selling price” in revenue
allocation guidance. It also significantly expands the disclosure requirements
for such arrangements. ASU 2009-13 will be effective prospectively for sales
entered into or materially modified in fiscal years beginning on or after June
15, 2010. The FASB permits early adoption of ASU 2009-13, applied
retrospectively, to the beginning of the year of adoption. We are currently
evaluating the impact on our financial position and results of operations and do
not anticipate a material impact on our financial position or results of
operations.





In
September 2009, the FASB issued ASU 2009-12, “Investments in Certain Entities
That Calculate Net Asset Value per Share (or Its Equivalent)” (ASU 2009-12),
which provides guidance for an investor on using the net asset value per share
provided by an investee to estimate the fair value of an alternative investment
when the fair value for the primary investment is not readily determinable. It
affects certain investments that are required or permitted by GAAP to be
measured or disclosed at fair value on a recurring or nonrecurring basis. It
requires disclosures by major category of investment about certain attributes
(e.g., applicable redemption restrictions, unfunded commitments to the issuer of
the investments, and the investment strategies of that issuer). ASU 2009-12 will
be effective for interim and annual periods ending on or after December 15,
2009. We are currently evaluating the impact on our financial position and
results of operations and do not anticipate a material impact on our financial
position or results of operations.





In August
2009, the FASB issued ASU 200-5, “Measuring Liabilities at Fair Value” (ASU
2009-5), which amends existing GAAP for fair value measurement guidance by
clarifying the fair value measurement requirements for liabilities that lack a quoted
price in an active market.




8




AURIOS
INC.


NOTES
TO CONDENSED FINANCIAL STATEMENTS (Continued)





Note
1
 Summary
of Significant Accounting Policies, Nature of Operations and Use of Estimates
(Continued)








New
Accounting Pronouncements (Continued)





Per the
Codification, a valuation technique based on quoted market price for the
identical or similar liability when traded as an asset or another valuation
technique (e.g., an income or market approach) that is consistent with the
underlying principles of GAAP for fair value measurements would be appropriate.
ASU 2009-5 was effective August 2009, the issuance date, and had no material
impact on our financial position or results of operations.





Earnings
Per Share




The
earnings per share accounting guidance provides for the calculation of Basic and
Diluted earnings per share. Basic earnings per share includes no dilution and is
computed by dividing income available to common shareholders by the weighted
average number of common shares outstanding for the period. Diluted earnings per
share reflect the potential dilution of securities that could share in the
earnings of an entity.




As of
September 30, 2009 and 2008, there were 460,000 shares of Series A Convertible
Preferred Stock convertible into 1,150,000 common shares. These shares were not
included in the determination of diluted earnings per share as their effect was
anti-dilutive. Holders of shares of Series A Convertible Preferred Stock are
entitled to receive dividends as declared from time to time by the board of
directors. Since their issuance no dividends have been declared on the Series A
Convertible Preferred Stock.




On August
31, 2009, the Company approved a 2.5 for 1 stock split, which resulted in
2,240,000 shares of Common Stock outstanding, which has been reflected
retroactively for all periods presented.







Note
2
 Related
Party Transactions





The
Company had a balance due from (to) a related party, TGE, in the amount of $(45)
and $1,000 at September 30, 2009 and December 31, 2008, respectively. These are
considered short term in nature and non-interest bearing.




The
Company had a note payable to a related party, TGE, in the amount of $44,121 as
of September 30, 2009 and December 31, 2008, bearing interest at a rate of
8.25%. All outstanding principal and interest is due and payable on
December 15, 2010. As of September 30, 2009 and December 31, 2008,
there was accrued interest in the amount of $10,698 and $7,580,
respectively.




The
Company paid a fee of $1,500 per month to TGE to compensate it for
administrative expenses and the use of TGE’s facilities.





In July
2007 the Company entered into a non-exclusive License Agreement with a related
party, TGE, giving the Company rights in various patents, pending applications
for patents and trademarks in various countries of the world, including the
United States. The Company pays TGE five percent (5.0%) of worldwide net
sales of the licensed products. In October 2007, the License Agreement was
amended to state that the royalty would begin to accrue on January 1, 2008.
As of September 30, 2009 and December 31, 2008, the accrued royalty the
Company owed to TGE was $1,368 and $1,454, respectively.




TGE
shares the same management with the Company and both the Company and TGE have
the same majority owner.




During
the nine months ended September 30, 2009 and 2008, the Company paid $45,835 and
$30,315, respectively, in legal services to a firm in which a principal
stockholder of Aurios is a partner. He also performed or supervised the legal
services rendered by his law firm.




9





AURIOS
INC.


NOTES
TO CONDENSED FINANCIAL STATEMENTS (Continued)







Note
3
 Accounts
Receivable




Accounts
Receivable consists of:




(Unaudited)September
      30,
                        
                        
                        December
      31,2009
                        
                        
                        2008Accounts
      Receivable
                        
                        $
                        7,020
                        
                        
                        $
                        5,437Less:  Allowance
      for Doubtful Accounts
                        
                        
                        -
                        
                        
                        
                        -$
                        7,020
                        
                        
                        $
                        5,437





Note
4
 Concentration
of Credit Risk







The
Company maintains cash accounts at a financial institution. Deposits not to
exceed $250,000 are insured by the Federal Deposit Insurance Corporation. At
September 30, 2009 and December 31, 2008, the Company had no uninsured cash
and cash equivalents.





For the
period ended September 30, 2009 and the year ended December 31, 2008, the
Company had 84% and 58% of sales to three customers and two customers,
respectively. As of September 30, 2009
and December 31, 2008 receivables from these customers were $6,831 and $4,950,
respectively.







Note
5
 Stockholders’
Equity





Preferred
Stock:




On
September 27, 2007, the Company amended its Articles of Incorporation to
authorize the Company to issue up to 10,000,000 shares of no par value preferred
stock, with such rights, preferences, privileges and restrictions as determined
by its board of directors.




Series A
Convertible Preferred Stock:




On
December 14, 2007, the Company completed a private placement of Series A
Convertible Preferred Stock pursuant to the terms of a Private Placement
Memorandum with accredited investors. The Series A Convertible Preferred Stock
was issued at $0.25 per share. Each Series A Convertible Preferred Stock is
convertible into shares of the Company’s common stock at a price of $0.10 per
share after ninety (90) days from the date of issuance. The shares of
Series A Convertible Preferred Stock are redeemable, at the option of the
Company, on or after the second anniversary of the date of issuance, plus all
accrued but unpaid dividends, on the following basis: (i) $0.30 per share if
redeemed on or after the second anniversary of the date of issuance; (ii) $0.35
per share if redeemed on or after the third anniversary of the date of issuance;
and (iii) $0.40 per share if redeemed on or after the fourth anniversary of the
date of issuance. The Company committed to file a registration statement to
register the conversion shares under the Securities Act of 1933 (“the Securities
Act”), as amended, and all applicable state securities laws after the conclusion
of the offering of the shares of Series A Convertible Preferred Stock by the
Company. The Company filed such registration statement and it became effective
in May 2009.  The Company will keep it effective for the shorter of
one year or until the holders can make use of Rule 144 under the Securities
Act.




10




AURIOS
INC.


NOTES
TO CONDENSED FINANCIAL STATEMENTS (Continued)







Note
5
 Stockholders’
Equity (Continued)







Common
Stock:




On
September 27, 2007, the Company amended its Articles of Incorporation to
authorize the Company to issue up to 90,000,000 shares of no par value Common
Stock.




On August
31, 2009, the Company approved a 2.5 for 1 stock split, which resulted in
2,240,000 shares of Common Stock outstanding, which has been reflected
retroactively for all periods presented.




Additionally,
on August 31, 2009, the Company commenced a private placement of a minimum of
80,000 shares (“Minimum Offering”) and a maximum of 400,000 shares (“Maximum
Offering”) of its Common Stock to accredited investors at a price of $0.25 per
share. The private placement will continue until the earlier of the sale of
Maximum Offering or December 31, 2009. The Company may extend the offering
period beyond the foregoing date for up to an additional 90-day period. If the
Maximum Offering is sold, the Company may, for a 30-day period following the
sale of the Maximum Offering, sell up to an additional 80,000 shares at the
offering price.




Stock
Options:




The
Company, under its 2007 Stock Option Plan, is authorized to grant options for up
to 250,000 shares of common stock, no par value. Options may be granted as
incentive stock options or nonqualified stock options. Incentive stock options
shall not be granted at less than one hundred percent (100%) of the fair
market value of the common stock on the date of the grant, and have exercise
terms of up to ten years with vesting periods determined at the discretion of
the Company’s board of directors. As of September 30, 2009 no stock options had
been granted.







Note
6
 Income
Taxes







The
provisions for income tax expense consist of the following:


September
      30,Deferred:
                                                      
                                                      2009
                                                      
                                                      
                                                      2008Income
      tax benefit at statutory rates
                                                      
                                                      $
                                                      41,000
                                                      
                                                      
                                                      $
                                                      26,000Valuation
      allowance of net operating loss
                                                      
                                                      
                                                      (41,000
                                                      )
                                                      
                                                      
                                                      (26,000
                                                      )$
                                                      -
                                                      
                                                      
                                                      $
                                                      -


The
Company’s deferred tax asset consists of the following:




September
      30,2009
                            
                            
                            2008Deferred
      tax asset:Net
      operating loss carryforward
                            
                            $
                            77,800
                            
                            
                            $
                            29,800Less:
      Valuation allowance
                            
                            
                            (77,800
                            )
                            
                            
                            (29,800
                            )Net
      deferred tax asset
                            
                            $
                            -
                            
                            
                            $
                            -




During
the year ended December 31, 2006 and through June 30, 2007, the net
operating loss carryforward was consolidated by TGE pursuant to a tax sharing
agreement. No intercompany receivable was recorded due to the uncertainty of the
utilization of the net operating loss carryforward by TGE.




The loss
carryforwards, unless utilized, will expire from 2027 through 2029.




11




AURIOS
INC.


NOTES
TO CONDENSED FINANCIAL STATEMENTS (Continued)







Note
7
 Going
Concern







The
Company has incurred an accumulated deficit and has had negative cash flows from
its operations. Realization of the Company’s assets is dependent upon the
Company’s ability to meet its future financing requirements and the success of
future operations. These factors raise substantial doubt about the Company’s
ability to continue as a going concern. The financial statements do not include
any adjustments that might be necessary if the Company is unable to continue as
a going concern.




The
Company has no expansion plans that would require significant infusions of
capital into its operations; however, it expects that it will need additional
working capital in the next twelve months if it does not generate cash flow from
operations.  No assurances can be given that the Company will be able
to raise such additional capital, when needed or at all, or that such capital,
if available, will be on terms acceptable to the Company.  If the
Company is unable to raise additional funds, it could be required to either
substantially reduce or terminate its operations.




12




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




Forward-Looking
Statements




This
Report on Form 10-Q contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. The words “believe,” “expect,” “anticipate,” “intend,”
“estimate,” “may,” “should,” “could,” “will,” “plan,” “future,” “continue” and
other expressions that are predictions of or indicate future events and trends
and that do not relate to historical matters identify forward-looking
statements. These forward-looking statements are based largely on our
expectations or forecasts of future events, can be affected by inaccurate
assumptions, and are subject to various business risks and known and unknown
uncertainties, a number of which are beyond our control. Therefore, actual
results could differ materially from the forward-looking statements contained in
this document, and readers are cautioned not to place undue reliance on such
forward-looking statements. We undertake no obligation to publicly update or
revise any forward-looking statements, whether as a result of new information,
future events or otherwise. A wide variety of factors could cause or contribute
to such differences and could adversely impact revenues, profitability, cash
flows and capital needs. There can be no assurance that the forward-looking
statements contained in this document will, in fact, transpire or prove to be
accurate.




Factors
that could cause or contribute to our actual results to differ materially from
those discussed herein or for our stock price to be adversely affected include,
but are not limited to: (i) our history of declining operating results; (ii) our
auditors have expressed a going concern opinion; (iii) our ability to raise
additional working capital that we may require and, if available, that such
working capital will be on terms acceptable to us; (iv) our ability to implement
our business plan; (v) uncertainties regarding our ability to increase revenues
and penetrate our market; (vi) economic and general risks relating to business;
(vii) our ability to manage our costs of production; (viii) our ability to
protect our intellectual property through patents and other intellectual
property protection; (ix) our dependence on key personnel; (x) increased
competition or our failure to compete successfully; (xi) our ability to keep
pace with technological advancements in our industry; (xii) our ability to
comply with Sarbanes-Oxley Act of 2002 Section 404; (xiii) our nonpayment of
dividends and lack of plans to pay dividends in the future; (xiv) future sale of
a substantial number of shares of our common stock that could depress the
trading price of our common stock, if it trades, lower our value and make it
more difficult for us to raise capital; (xv) our additional securities available
for issuance, which, if issued, could adversely affect the rights of the holders
of our common stock; (xvi) our ability to have our common stock trade in a
public market; (xvii) the price of our stock, if it trades, is likely to be
highly volatile because of several factors, including a relatively limited
public float; and (xviii) indemnification of our officers and
directors.




As used
in this Report, the terms “we,” “us,” “our,” and “Aurios” mean Aurios Inc.
unless otherwise indicated.




General




The
following discussion should be read in conjunction with our Financial Statements
and notes thereto. The following discussion contains forward-looking statements,
including, but not limited to, statements concerning our plans, anticipated
expenditures, the need for additional capital and other events and circumstances
described in terms of our expectations and intentions. You are urged to review
the information set forth under the captions for factors that may cause actual
events or results to differ materially from those discussed below.




Overview




We were
formed in August 2001 by our former parent, TGE. Our corporate offices are
located at 1741 W. University Drive, Suite 146, Tempe, Arizona 85281 and our
telephone number is (602) 426-1211.




We
produce, market and distribute vibration isolation products to the high-end
audio and video markets in the United States and in certain foreign countries.
Our products are the Classic MIB, the PRO MIB, the Isotone, a shelf product, and
Pivot Points, a spike mount product.




Our
vibration isolation products produce superior sound quality by sharpening, not
softening, the sound. TGE holds the patents respecting our products in the
United States and Taiwan.  TGE also holds a federally registered
trademark respecting the “Aurios” name used in connection with the products. TGE
has granted us a non-exclusive world-wide license to sell the products under the
patents and to use the Aurios trademark in connection with the products. The
license automatically renews every two years as long as we are in compliance
with its terms. We pay TGE a royalty of 5% of our net sales for the license. Our
minimum royalty payment under the license is $2,500 per year. We outsource the
manufacture of our products to several qualified machine shops in the Phoenix
metropolitan area.




13




For the Three Months Ended
September 30, 2009 and 2008




Results
From Operations




Revenues




Since our
inception, our activities have focused on product and market development with a
nominal level of operations. Revenues for the three months ended September 30,
2009 and September 30, 2008 were $9,059 and $3,127, respectively. Revenues
increased as a result of improved sales from our international
distributors.




For the
three months ended September 30, 2009, 75% and 12% of sales were made to
distributor Music Direct and Bernard Knoop, respectively. For the three months
ended September 30, 2008, 29% of sales were made to Music Direct. No other
customer accounted for more than 10% of sales in either period.




Cost
of Sales




The cost
of sales on units sold for the three months ended September 30, 2009 totaled
$4,852 (53.6% of revenues) compared to $1,640 (52.4% of revenues) for the three
months ended September 30, 2008. The cost of sales for the three months ended
September 30, 2009 were slightly higher on a percentage basis than for the same
period in 2008 due to an increase in the costs of parts.




Gross
Margin




Gross
margin for the three months ended September 30, 2009 was $4,207 (46.4% of
revenues) compared to $1,487 (47.6% of revenues) for the three months ended
September 30, 2008. The gross margin declined due to higher costs of goods
sold.




General
and Administrative Expenses




All
selling and operating expenses, as well as research and development expenses,
are incurred through a contractual relationship with TGE, which performs these
services under an administrative services agreement with us. These expenses were
$4,500 in the three months ended September 30, 2009 and 2008. In the three
months ended September 30, 2009, we had additional expenses consisting of legal
expenses of $22,922 and accounting expenses of $7,675, some of which were
related to preparing us to become publicly held. In the three months ended
September 30, 2008, we had legal expenses of $0 and accounting expenses of
$3,068, some of which were related to preparing us to become publicly
held.





Interest
Expense.
Interest expense was $985 for the three months ended September 30, 2009 and
2008.




Income
Tax Provision




We had
a potential tax provision benefit of approximately $13,000 and $3,000 for the
three months ended September 30, 2009 and 2008, respectively, arising from
losses generated during the aforementioned periods. We have fully
reserved against these benefits due to the uncertainty of their
realization.




Net
Loss




For the
reasons listed above, for the three months ended September 30, 2009 and 2008, we
recorded net loss of $32,680 and $7,528, respectively, an increase of our net
loss by $25,152.




Basic
and Diluted Loss per Share




The basic
and diluted loss per share were <$0.01> and <$0.05> for the three
months ended September 30, 2009 and 2008, respectively, for the reasons
previously noted.




14




For the Nine months ended
September 30, 2009 and 2008




Results
From Operations




Revenues




Since our
inception, our activities have focused on product and market development with a
nominal level of operations. Revenues for the nine months ended September 30,
2009 and September 30, 2008 were $26,665 and $10,194, respectively. Revenues
increased as a result of improved sales from our international
distributors.




For the
nine months ended September 30, 2009, 36%, 26% and 23% of sales were made
to distributors Roksan Trading Company, Music Direct and ECS, Ltd.,
respectively.  For the nine months ended September 30, 2008, 57% and
10% of sales were made to distributors Music Direct and Music Matters,
respectively. No other customer accounted for more than 10% of sales in either
period.




Cost
of Sales




The cost
of sales on units sold for the nine months ended September 30, 2009 totaled
$15,013 (56.3% of revenues) compared to $5,828 (57.2% of revenues) for the nine
months ended September 30, 2008. The cost of sales for the nine months
ended September 30, 2009 was lower on a percentage basis than for the same
period in 2008 due to increased sales and the cost of sales as a percentage of
revenues decreased due to higher volumes and greater efficiencies.




Gross
Margin




Gross
margin for the nine months ended September 30, 2009 was $11,652 (43.7% of
revenues) compared to $4,366 (42.8% of revenues) for the nine months ended
September 30, 2008.  This gross margin improved due to slightly lower
cost of sales.




General
and Administrative Expenses




All
selling and operating expenses, as well as research and development expenses,
are incurred through a contractual relationship with TGE, which performs these
services under an administrative services agreement with us. These expenses were
$13,500 in the nine months ended September 30, 2009 and 2008. In the nine months
ended September 30, 2009, we had legal expenses of $45,835 and accounting
expenses of $41,186, some of which were related to preparing us to become
publicly held. In the nine months ended September 30, 2008, we had legal
expenses of $30,315 and accounting expenses of $22,680, some of which were
related to preparing us to become publicly held.





Interest
Expense. Interest expense was $3,118 and $2,955 for the nine months ended
September 30, 2009 and 2008, respectively.




Income
Tax Provision




The
Company had a potential tax provision benefit of approximately $41,000 and
$26,000 for the nine months ended September 30, 2009 and 2008, respectively,
arising from losses generated during the aforementioned periods. The Company has
fully reserved against these benefits due to the uncertainty of their
realization.




Net
Loss




For the
reasons listed above, for the nine months ended September 30, 2009 and 2008, we
recorded net loss of $105,239 and $66,513, respectively, an increase of our net
loss by $38,726.




Basic
and Diluted Loss per Share




The basic
and diluted loss per share were <$0.05> and <$0.03> for the nine
months ended September 30, 2009 and 2008, respectively, for the reasons
previously noted.




15




Liquidity
and Capital Resources




Our
auditors have rendered a going concern opinion. We provided for our cash
requirements in the first three quarters of 2009 with the capital we raised in
2007 through the sale of Preferred Stock in a private placement, yielding
$115,000 in gross proceeds. Because our revenues and cash flow have not
increased enough to provide sufficient working capital, we needed to raise
capital through the sale of our equity securities.  To that end, we
commenced a private placement of a minimum of 80,000 shares (“Minimum Offering”)
and a maximum of 400,000 shares (“Maximum Offering”) of our Common Stock to
accredited investors at a price of $0.25 per share. The private placement
will continue until the earlier of the sale of Maximum Offering or December 31,
2009. The Company may extend the offering period beyond the foregoing date for
up to an additional 90-day period. If the Maximum Offering is sold, the Company
may for a 30-day period following the sale of the Maximum Offering, sell up to
an additional 80,000 shares at the offering price.  As of November 12,
2009, we have sold 130,000 shares, for gross proceeds of $32,500.




We plan
to use the proceeds from this private placement to expand our promotion and
marketing activities, including for product introduction, and to provide
working capital.  If the proceeds from our private placement and cash
flow from our operations are not sufficient to meet our working capital needs,
we will need to raise capital through the sale of our debt
securities.  We have no commitments to obtain debt financing and there
can be no assurance that we will be able to obtain the necessary funds or obtain
them on terms favorable to us.  Any future financing may be on terms
that substantially dilute the ownership interests of present shareholders. If we
are unable to raise sufficient additional capital as necessary, we may have to
suspend or contract operations or cease operations entirely.




We do not
anticipate we will have any large capital requirements over the next twelve
months. In addition, we have relationships with third parties who will
manufacture small quantities of our products quickly and charge us the same
lower prices as we would be charged for larger orders, particularly in the
current economic environment. Accordingly, we believe we can continue to place
smaller orders with a number of such manufacturers at favorable prices and will
not have to allocate our working capital to the cost of surplus inventory. We
work with five manufacturers.




As of
September 30, 2009, we had working capital of ($49,710) and long-term debt of
$54,819.




Capital
Commitments




We had no
material commitments for capital expenditures.




Off-Balance
Sheet Arrangements




There
were no off-balance sheet arrangements as of September 30, 2009 and September
30, 2008.




Critical
Accounting Policies and Estimates




Our
financial statements are prepared in accordance with U.S. Generally Accepted
Accounting Principles. Preparation of the statements in accordance with these
principles requires that we make estimates, using available data and our
judgment, for such things as valuing assets, accruing liabilities and estimating
expenses. The following is a discussion of what we feel is the most critical
estimate that we must make when preparing our financial statements.




Recoverability of
Inventory. We assume that our inventory can be sold for at least its
carrying cost.




Changes
in and Disagreements with Accountants on Accounting and Financial
Disclosure




There are
no such disagreements or changes.




Recent
Accounting Pronouncements




In
June 2009, the FASB issued standards that establish the FASB Accounting
Standards Codification (ASC or Codification) as the source of authoritative GAAP
recognized by the FASB to be applied to nongovernmental entities and rules and
interpretive releases of the SEC as authoritative GAAP for SEC registrants. The
Codification will supersede all the existing non-SEC accounting and reporting
standards that existed at the ASC’s effective date. The FASB uses Accounting
Standards Updates (ASU) to amend the ASC. These standards are effective for
interim and annual periods ending after September 15, 2009




16




In
June 2009, the FASB issued a standard that requires an enterprise to
perform an analysis to determine whether the enterprise’s variable interest or
interests give it a controlling financial interest in a variable interest
entity. This standard is effective for annual reporting periods beginning after
November 15, 2009. We are currently evaluating its impact on our financial
position and results of operations and do not anticipate a material impact on
our financial position or results of operations.





In
May 2009, the FASB issued a standard that established 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.
This standard is effective for interim or annual financial periods ending after
June 15, 2009. The Company has evaluated subsequent events through November
16, 2009, which is the date the financial statements were issued.





In
April 2009, the FASB issued the following authoritative guidance intended
to provide additional application guidance and enhance disclosures regarding
fair value measurements and impairments of securities:




·
            Guidance
      determining fair value when volume and level of activity for assets or
      liabilities have significantly decreased and identifying transactions that
      are not orderly provides additional guidance for estimating fair value
      when volume and level of activity for assets or liabilities have decreased
      significantly.  This guidance also provides for identifying
      circumstances that indicate a transaction is not orderly.  These
      provisions are effective for the Company’s interim period ending on
      June 30, 2009 and did not affect the Company’s financial position and
      results of operations.





·
            Guidance
      surrounding interim disclosures about fair value of financial instruments
      requires disclosures about fair value of financial instruments in interim
      reporting periods of publicly traded companies that were previously only
      required to be disclosed in annual financial statements.  The
      provisions of this disclosure-only guidance are effective for the
      Company’s interim period ending on June 30, 2009 and did not affect
      the Company’s financial position and results of
  operations.





·
            Guidance
      determining recognition and presentation of other-than-temporary
      impairments amends current other-than-temporary impairment guidance in
      GAAP for debt securities to make the guidance more operational and to
      improve the presentation and disclosure of other-than-temporary
      impairments on debt and equity securities in financial statements. 
      This guidance does not amend existing recognition and measurement guidance
      related to other-than-temporary impairments of equity securities. 
      The provisions of this guidance are effective for the Company’s interim
      period ending on June 30, 2009 and did not affect the Company’s
      financial position and results of
operations.





In
October 2009, the FASB issued ASU 2009-14, “Certain Revenue Arrangements That
Include Software Elements” (ASU 2009-14), which clarifies the guidance for
allocating and measuring revenue, including how to identify software that is out
of the scope. ASU 2009-14 amends accounting and reporting guidance for revenue
arrangements involving both tangible products and software that is “more than
incidental to the tangible product as a whole” and the hardware components will
also be outside of the scope of software revenue guidance and may result in more
revenue recognized at the time of the hardware sale. Additional disclosures will
discuss allocation of revenue to products and services and the significant
judgments applied in the revenue allocation method, including impacts on the
timing and amount of revenue recognition. ASU 2009-14 will be effective
prospectively for sales entered into or materially modified in fiscal years
beginning on or after June 15, 2010. The FASB permits early adoption of ASU
2009-14, applied retrospectively, to the beginning of the year of adoption. We
are currently evaluating the impact on our financial position and results of
operations and do not anticipate a material impact on our financial position or
results of operations.





In
October 2009, the FASB issued ASU 2009-13, “Multiple-Deliverable Revenue
Arrangements” (ASU 2009-13), which addresses how revenues should be allocated
among all products and services included in sales arrangements. It establishes a
selling price hierarchy for determining the selling price of each product or
service, with vendor-specific objective evidence (VSOE) at the highest level,
third-party evidence of VSOE at the intermediate level, and a best estimate at
the lowest level. It replaces “fair value” with “selling price” in revenue
allocation guidance. It also significantly expands the disclosure requirements
for such arrangements. ASU 2009-13 will be effective prospectively for sales
entered into or materially modified in fiscal years beginning on or after June
15, 2010. The FASB permits early adoption of ASU 2009-13, applied
retrospectively, to the beginning of the year of adoption. We are currently
evaluating the impact on our financial position and results of operations and do
not anticipate a material impact on our financial position or results of
operations.




17




In
September 209, the FASB issued ASU 2009-12, “Investments in Certain Entities
That Calculate Net Asset Value per Share (or Its Equivalent)” (ASU 2009-12),
which provides guidance for an investor on using the net asset value per share
provided by an investee to estimate the fair value of an alternative investment
when the fair value for the primary investment is not readily determinable. It
affects certain investments that are required or permitted by GAAP to be
measured or disclosed at fair value on a recurring or nonrecurring basis. It
requires disclosures by major category of investment about certain attributes
(e.g., applicable redemption restrictions, unfunded commitments to the issuer of
the investments, and the investment strategies of that issuer). ASU 2009-12 will
be effective for interim and annual periods ending on or after December 15,
2009. We are currently evaluating the impact on our financial position and
results of operations and do not anticipate a material impact on our financial
position or results of operations.





In August
2009, the FASB issued ASU 200-5, “Measuring Liabilities at Fair Value” (ASU
2009-5), which amends existing GAAP for fair value measurement guidance by
clarifying the fair value measurement requirements for liabilities that lack a
quoted price in an active market. Per the Codification, a valuation technique
based on quoted market price for the identical or similar liability when traded
as an asset or another valuation technique (e.g., an income or market approach)
that is consistent with the underlying principles of GAAP for fair value
measurements would be appropriate. ASU 2009-5 was effective August 2009, the
issuance date, and had no material impact on our financial position or results
of operations.





Item
3.   Quantitative and Qualitative Disclosures About Market
Risk




A smaller
reporting company is not required to provide the information required by this
Item.




Item
4T.  Controls and Procedures




Evaluation
of Disclosure Controls and Procedures




We
carried out an evaluation of the effectiveness of the design and operation of
our disclosure controls and procedures (as defined in Exchange Act Rules
13a-15(e) and 15d-15(e)) as of September 30, 2009.  This evaluation
was carried out under the supervision and with the participation of our
President, Chief Executive Officer and Chief Financial Officer, Paul
Attaway.  Based upon that evaluation, he has concluded that, as of
September 30, 2009, our disclosure controls and procedures are
effective.




Disclosure
controls and procedures are controls and other procedures that are designed to
ensure that information required to be disclosed in our reports filed or
submitted under the Exchange Act are recorded, processed, summarized and
reported, within the time periods specified in the SEC’s rules and
forms.  Disclosure controls and procedures include, without
limitation, controls and procedures designed to ensure that information required
to be disclosed in our reports filed under the Exchange Act is accumulated and
communicated to management, including our Chief Executive Officer and Chief
Financial Officer, to allow timely decisions regarding required
disclosure.




Limitations
on the Effectiveness of Internal Controls




Our
management does not expect that our disclosure controls and procedures or our
internal control over financial reporting will necessarily prevent all fraud and
material error.  Our disclosure controls and procedures are designed
to provide reasonable assurance of achieving our objectives and our Chief
Executive Officer and Chief Financial Officer concluded that our disclosure
controls and procedures are effective at that reasonable assurance
level.  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.  A control system, no matter how
well conceived and operated, can provide only reasonable, not absolute,
assurance that the objectives of the control system are met.  Because
of the inherent limitations in all control systems, no evaluation of controls
can provide absolute assurance that all control issues, if any, within a company
have been detected.  Such limitations include the fact that human
judgment in decision-making can be faulty and that breakdowns in internal
control can occur because of human failures, such as simple errors or mistakes
or intentional circumvention of the established process.




Changes
in Internal Control Over Financial Reporting




There
have been no changes in our internal controls over financial reporting during
the quarter ended September 30, 2009 that have materially affected or are
reasonably likely to materially affect such controls.




18




PART
II – OTHER INFORMATION




Item
1.      Legal Proceedings.




We are
not a party to any pending legal proceeding.  We are not aware of any
pending legal proceeding to which any of our officers, directors, or any
beneficial holders of five percent or more of our voting securities are adverse
to us or have a material interest adverse to us.




Item
1A.   Risk Factors.




A smaller
reporting company is not required to provide the information required by this
Item.




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




None.




Item
3.      Defaults upon Senior Securities.




None.




Item
4.      Submission of Matters to a Vote of
Security Holders.




None.




Item
5.      Other Information




None.




Item
6.      Exhibits.




Exhibit
                        Number
                      
                      Description of Exhibit31.1
                      
                      Certification of Chief Executive Officer pursuant
      to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the
      Sarbanes-Oxley Act of 200231.2
                      
                      Certification of Chief Financial Officer pursuant
      to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the
      Sarbanes-Oxley Act of 200232.1
                      
                      Certification of Chief Executive Officer and Chief
      Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant
      to Section 906 of the Sarbanes-Oxley Act of
  2002




19




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.





Aurios
      Inc.Date:
                  November
      16, 2009By:          /s/ Paul
      Attaway
                    Paul Attaway
                    Title:      President,
      Chief Executive Officer, Chief
                    Financial Officer and
      Director