Montavo (MTVO) 10-Q 2009 Q2 Quarterly report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarter ended June 30, 2009

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

For the transition period from _____ to _____

Commission File Number:000-29397

MONTAVO, INC.

(Exact name of registrant as specified in its charter)

Delaware (State or other jurisdiction of incorporation or organization) 33-0619528 (IRS Employer Identification No.)

4957 Lakemont Blvd, Suite 239

Bellevue, Washington, 98006

(Address of principal executive offices)

(425) 747-5500

(Issuer's telephone number)

_______________________________N/A_________________________________

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yesx Noo

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).    YesoNox (Not required)

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 filero	Accelerated filero
Non-accelerated filero	Smaller reporting company x

(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YesoNox

Number of shares of common stock outstanding as of September 4, 2009: 39,364,075  shares.

TABLE OF CONTENTS TABLE OF CONTENTS

		Page
PART I - FINACIAL INFORMATION
Item 1.	Financial Statements	3
Item 2.	Management’s Discussion and Analysis or Financial Condition and Results of Operations	10
Item 3	Quantitative and Qualitative Disclosure About Market Risk	13
Item 4(T)	Controls and Procedures	13
PART II - OTHER INFORMATION
Item 1.	Legal Proceedings	14
Item 1A	Risk Factors	14
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	14
Item 3.	Defaults Upon Senior Securities	14
Item 4.	Submission of Matters to a Vote of Security Holders	14
Item 5.	Other Information	14
Item 6.	Exhibits	14

PART I

FINANCIAL INFORMATION

Item 1. Financial Statements.

MONTAVO, INC.
(A Development Stage Company)
CONSOLIDATED BALANCE SHEETS
(Unaudited)
			June 30,	December 31,
			2009	2008
		ASSETS
Current assets:
	Cash		$         286	$          2,406
Long-term assets
	Software developed for internal use		366,395	320,140
	Patent pending		43,615	36,963
		Total assets	$   410,296	$      359,509
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
	Accounts payable		$177,900	$      133,209
	Accounts payable - related party		211,152	241,828
	Accrued interest		2,244	756
	Shareholder advances		19,409	17,491
	Convertible debt - related party		25,000	25,000
		Total current liabilities	435,705	418,284
Commitments			-	-
Stockholders' deficit:
	Preferred stock, $.001 par value, 5,000,000 and 1,000,000 shares authorized,
		none issued and outstanding at June 30, 2009  and
		December 31, 2008, respectively	-	-
	Common stock, $.001 par value, 100,000,000 and 20,000,000 shares authorized,
		39,364,075 and 36,473,353  shares issued and outstanding at June 30, 2009 and December 31, 2008 respectively	39,365	36,474
	Additional paid in capital		2,017,862	1,516,364
	Deficit accumulated during the development stage		(2,082,636)	(1,611,613)
		Total stockholders' deficit	(25,409)	(58,775)
		Total liabilities and stockholders' deficit	$  410,296	$      359,509

MONTAVO, INC.
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF EXPENSES
(Unaudited)
						December 23, 2004
		Six months ended		Three months ended		(Inception) to
		June 30,		June 30,		June 30,
		2009	2008	2009	2008	2009
	Operating expenses	$         431,578	$          204,149	$           241,580	$             80,726	$             1,958,192
	Net loss from operations	(431,578)	(204,149)	(241,580)	(80,726)	(1,958,192)
	Other expense	(75)	-	-	-	(75)
	Interest expense	(39,370)	(14,108)	(38,208)	(8,312)	(124,369)
	Net loss	$       (471,023)	$        (218,257)	$         (279,788)	$           (89,038)	$            (2,082,636)
	Basic and diluted net loss per share	$             (0.01)	$              (0.03)	$               (0.01)	$               (0.01)	N/A
	Weighted average shares outstanding	37,499,308	7,697,033	38,383,971	8,000,000	N/A

MONTAVO, INC.
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT
For the Six Months Ended June 30, 2009
(Unaudited)
	Number of Common Shares Issued	M&B Comment	Common Stock at Par Value	Additional Paid-in Capital	Deficit accumulated during the development stage	Total
Balances, December 31, 2008	36,473,353		$    36,474	$          1,516,364	$   (1,611,613)	$        (58,775)
Shares issued for services in February	47,000		47	23,406		23,453
Shares issued for services in March	54,800		55	20,727		20,782
Shares issued for services in April	470,000		470	109,780		110,250
Shares issued for services in June	200,000		200	25,800		26,000
Shares issued for cash:
February	45,000		45	17,955		18,000
March	335,000		335	66,665		67,000
April	66,000		66	23,134		23,200
June	15,625		16	4,984		5,000
Shares issued to convert North Coast notes payable	91,281		91	18,119		18,210
Shares issued for conversion of debenture and accrued interest	232,683		233	23,035		23,268
Shares issued for conversion of accounts payable related party	1,333,333		1,333	98,667		100,000
Warrant expense	-		-	26,820		26,820
Shareholder contribution of capital	-		-	5,138		5,138
Imputed interest on shareholder advances	-		-	521		521
Beneficial conversion feature on notes payable	-		-	36,747		36,747
Net loss	-		-	-	(471,023)	(471,023)
Balances, June 30, 2009	39,364,075		$    39,365	$          2,017,862	$   (2,082,636)	$        (25,409)

MONTAVO, INC.
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
						December 23, 2004
				Six months ended		(Inception) to
				June 30,		June 30,
				2009	2008	2009
CASH FLOWS FROM OPERATING ACTIVITIES:
	Net loss			$   (471,023)	$       (218,257)	$              (2,082,636)
	Adjustments to reconcile net loss to net
		cash used in operating activities:
		Amortization of discount on notes payable		36,747	242	38,508
		Issuance of common stock for services		180,485	47,374	561,446
		Shares issued for modification debt terms		-	-	37,899
		Shares issued in excess of liabilities converted
			(accounted for as compensation)	-	-	84,700
		Shares issued for exercise of options by waiving				10,192
			exercise price (accounted for as compensation)	-	-
		Option and warrant expense		26,820	8,398	54,787
		Imputed interest		521	262	4,109
		Changes in:
			Accounts payable	(1,564)	(6,267)	58,841
			Accounts payable related party	69,324	71,868	410,638
			Accrued interest	1,756	11,531	46,345
		Net cash used in operating activities		(156,934)	(84,849)	(775,171)
CASH FLOWS FROM INVESTING ACTIVITIES
	Investment in patent			(6,652)	(13,989)	(43,615)
		Net cash used in investing activities		(6,652)	(13,989)	(43,615)
CASH FLOWS FROM FINANCING ACTIVITIES:
	Proceeds from sales of common stock			113,200	2,005	270,193
	Net shareholder advances			20,128	500	37,619
	Proceeds from notes payable			23,000	99,114	613,622
	Shareholder contribution to Paid in Capital			5,138	-	5,138
	Payments on notes payables			-	-	(107,500)
		Net cash provided by financing activities		161,466	101,619	819,072
NET CHANGE  IN CASH AND CASH EQUIVALENTS				(2,120)	2,781	286
CASH AND CASH EQUIVALENTS, beginning of period				2,406	112	-
CASH AND CASH EQUIVALENTS, end of period				$             286	$              2,893	$                            286
Supplemental cash flow disclosures:
	Cash paid for income taxes			$                  -	$                     -	$                                 -
	Cash paid for interest			-	-	-
Noncash investing and financing activities
	Seller financed software developed for internal use			46,255	571	366,395
	Shares retained by North Coast in reverse merger
		(net liabilities assumed by Montavo)		-	-	264,067
	Shares issued to convert North Coast notes payable,
		accrued interest		18,210	-	354,205
	Shares issued to convert Montavo notes payable,
		accrued interest and accounts payable		123,268	-	987,556
	Additional shares issued to Montavo shareholders
		to meet 60% threshold per merger agreement		-	-	10,090
	Beneficial conversion feature on notes payable			36,747	-	36,747

MONTAVO, INC.

(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

(Unaudited)

NOTE 1 - BASIS OF PRESENTATION

The accompanying unaudited interim financial statements of Montavo, Inc. have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission, and should be read in conjunction with the audited financial statements and notes thereto contained in Montavo’s Form 10-K filed with the SEC.  In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein.  The results of operations for the interim periods are not necessarily indicative of the results to be expected for the full year.  Notes to the financial statements that would substantially duplicate the disclosures contained in the audited financial statements for fiscal 2008 as reported in the Form 10-K have been omitted.

NOTE 2 – GOING CONCERN

As shown in the accompanying consolidated financial statements, Montavo incurred net losses from operations and has an accumulated deficit and a working capital deficit as of June 30, 2009. These conditions raise substantial doubt as to Montavo’s ability to continue as a going concern. As of the date of this report, Montavo believes that it will not be able to fund its operations, working capital requirements, and debt service requirements through fiscal year 2009 through cash flows generated by operations. The financial statements do not include any adjustments that might be necessary if Montavo is unable to continue as a going concern.

NOTE 3 – CONVERTIBLE DEBENTURE

On January 16, 2009, Montavo entered into a convertible promissory note for $4,950 with a conversion rate of $.20 per share and a stated interest rate of 5%.  

On January 26, 2009, Montavo entered into a convertible promissory note for $5,062 with a conversion rate of $.20 per share and a stated interest rate of 5%.

On January 16, 2009, Montavo entered into a convertible promissory note for $5,000 with a conversion rate of $.20 per share and a stated interest rate of 7%.

Montavo analyzed the convertible notes for derivative accounting consideration under SFAS133 and EITF00-19. Montavo determined the embedded conversion option in the convertible notes met the criteria for classification in stockholders equity under SFAS 133 and EITF 00-19. Therefore, derivative accounting was not applicable.

Montavo incurred these debts with conversion features that provide for a rate of conversion that is below market value.  This feature requires recognition as a beneficial conversion feature pursuant to EITF Issues No.98-5 and 00-27, and accordingly, $13,747 was recorded as a discount on the debt to be amortized over the life of the notes but which was completely recognized upon conversion in the first quarter of 2009.

On April 6, 2009, Montavo issued a convertible debenture in the amount of $23,000, bearing interest at 7% per annum. The debenture is convertible into common shares of Montavo or any reorganized, combined or merged entity in which Montavo forms a part on May 30, 2009 at a rate of $.10 per share. 232,683 common shares were issued in April 2009 for conversion of this debenture and accrued interest.

Montavo analyzed the convertible note for derivative accounting consideration under SFAS133 and EITF00-19. Montavo determined the embedded conversion option in the convertible note met the criteria for classification in stockholders equity under SFAS 133 and EITF 00-19. Therefore, derivative accounting was not applicable.

Montavo incurred this debt with a conversion feature that provides for a rate of conversion that is below market value.  This feature requires recognition as a beneficial conversion feature pursuant to EITF Issues No.98-5 and 00-27, and accordingly, $23,000 was recorded as a discount on the debt to be amortized over the life of the notes but which was completely recognized upon conversion in the second quarter of 2009.

NOTE 4 – SIGNIFICANT AGREEMENTS

On January 15, 2009, Montavo executed a database license agreement to become effective April 15, 2009 and continue until April 15, 2011. In consideration for the grant of the license, Montavo shall pay the greater of royalties or annual minimum license fees of $100,000 for year one and $125,000 for year two, or royalties calculated at $.15 per user per month or calculated based on transaction volume.  The minimum fees are as follows for the first year:

·

$6,000 due on a monthly basis beginning April 15, 2009 to September 15, 2009

·

$9,000 due on or before October 15, 2009

·

$11,000 due on or before November 15, 2009 to March 15, 2010

·

$125,000 will be payable in equal monthly installments of $10,416.66 beginning April 15, 2010.  There is an option to renew for an additional two years.  

NOTE 5 – EQUITY

On May 19, 2009 the Board of Directors of Montavo approved the 2009 Employee Stock Incentive Plan. Under the terms of the Plan, a total of 6,000,000 shares of common stock or

options to purchase common stock can be issued to compensate directors, employees and consultants of the Company for services rendered to the Company. The Company filed Form S-8 Registration Statement on June 12, 2009 registering the share of common stock approved to be awarded under the Plan.

Common Stock

In February 2009, 22,000 shares of common stock were issued for services. These shares have a fair value of $11,453, were non forfeitable and fully vested resulting in immediate expense.

On February 12, 2009, Montavo accepted a subscription for 45,000 common shares at $.40 per share for gross proceeds of $18,000.

On February 18, 2009, Montavo executed a six-month consulting agreement for public relations services. Under the terms of the agreement, the company will pay the consultants $5,000 per month for six months and issue 150,000 unregistered Montavo common shares. The contract was terminated after one month and the consultant returned the 150,000 unregistered shares already issued and accepted instead 25,000 unregistered common shares of Montavo for the one month of service provided. These shares have a fair value of $12,000 were non forfeitable and fully vested resulting in immediate expense.

On March 25, 2009, the lender agreed to waive interest and convert the principal balance of $15,012 related to the three convertible promissory notes in Note 3 at $.20 per share to 75,060 common shares.

On March 2, 2009, Montavo accepted a subscription for 300,000 common shares at $.20 per share for gross proceeds of $60,000.

On March 27, 2009, Montavo accepted a subscription for 35,000 common shares at $.20 per share for gross proceeds of $7,000.

In March 2009, 54,800 shares of common stock were issued for services. These shares have a fair value of $20,782, were non forfeitable and fully vested resulting in immediate expense.

On April 1, 2009, Montavo executed a consulting agreement for investor relations services. Under the terms of the agreement, the company agreed to issue to the consultants 325,000 common shares immediately and 162,500 performance-based common shares monthly for a period of four months. At management’s discretion, an additional 200,000 common shares may be issued as an incentive bonus.  The 325,000 shares issued on April 1 have a fair value of $81,250 and were non forfeitable and fully vested, resulting in immediate expense. As of June 30, 2009, no additional shares have been issued relating to this consulting agreement.

On April 3, 2009, Montavo accepted a subscription for 16,000 common shares at $.20 per share for gross proceeds of $3,200.

On April 15, 2009, the lender agreed to waive interest and convert the principal balance of $3,198 related to a related party note payable at $.20 per share to 16,221 common shares.

On April 24, 2009, Montavo accepted a subscription for 12,500 common shares at $.40 per share for gross proceeds of $5,000.

On April 24, 2009, Montavo accepted a subscription for 37,500 common shares at $.40 per share for gross proceeds of $15,000.

In April 2009, 145,000 shares of common stock were issued for services. These shares have a fair value of $29,000 were non forfeitable and fully vested resulting in immediate expense.

In April 2009, 232,683 shares of common stock were issued to convert principal and accrued interest on a convertible loan totaling $23,268.

On May 19, 2009, Montavo accepted a subscription for 1,333,333 common shares at $.08 per share from a related party vendor for a reduction of accounts payable of $100,000 owed to the related party.

On June 16, 2009, 200,000 shares of common stock were issued for services. These shares have a fair value of $26,000 were non forfeitable and fully vested resulting in immediate expense.

On June 23, 2009, Montavo accepted a subscription for 15,625 common shares at $.32 per share for gross proceeds of $5,000.

Options

There were no options granted during the six months ended June 30, 2009.  

Warrants

On January 26, 2009, Montavo executed a consulting agreement for broker relations services. Under the terms of the agreement, the company will pay the consultants $5,000 per month for three months from the date of execution of the agreement. Montavo further agreed to issue to the consultants 100,000 warrants with an exercise price of $.80 and 100,000 warrants with an exercise price of $1.00, exercisable for two years.

	Shares	Weighted Average Exercise Price
Outstanding, December 31, 2008	-	-
Granted	200,000	0.90
Exercised	-	-
Forfeited	-	-
Expired	-	-
Outstanding, June 30, 2009	200,000	0.90

Black-scholes was applied to value the warrants with a volatility of 162%, a discount rate range of .47%, and zero dividends. Montavo recognized $26,820 as warrant expense for the three months ended March 31, 2009.  The 200,000 shares fully vested as of March 31, 2009.

Summary of outstanding warrants as of June 30, 2009 follows:

Number of Common Stock Equivalents	Expiration Date	Remaining Contracted Life (Years)	Exercise Price
100,000	01/26/11	1.6	0.80
100,000	01/26/11	1.6	1.00
200,000

NOTE 6 – SUBSEQUENT EVENTS

Effective this quarter, the Company implemented SFAS No. 165, Subsequent Events (“SFAS 165”). This standard establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued. The adoption of SFAS 165 did not impact the Company’s financial position or results of operations. The Company evaluated all events or transactions that occurred after June 30, 2009 up through September 14, 2009, the date the Company issued these financial statements

PART II

OTHER INFORMATION

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

As used in this Form 10-Q, references to “Montavo,” “the Company,” “we,” “our” or “us” refer to Montavo, Inc. unless the context otherwise indicates.

Forward-Looking Statements

The following discussion should be read in conjunction with our financial statements, which are included elsewhere in this Quarterly Report on Form 10-Q (this “Report”). This Report contains forward-looking statements which relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential” or “continue” or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties, and other factors that may cause our or our industry’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements.

For a description of such risks and uncertainties refer to our Annual Report on Form 10-K, as filed with the Securities and Exchange Commission on April 15, 2009. While these forward-looking statements, and any assumptions upon which they are based, are made in good faith and reflect our current judgment regarding the direction of our business, actual results will almost always vary, sometimes materially, from any estimates, predictions, projections, assumptions or other future performance suggested herein. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform to actual results.

Overview

The Company was incorporated under the laws of the State of Delaware on April 20, 1994. From our incorporation and until December 13, 2004, we had no operating history other than organizational matters. On December 13, 2004, we acquired Trans Media Inc. ("Trans Media"), a Wyoming corporation, by acquiring all of its issued and outstanding shares from its shareholders pursuant to a Plan of Arrangement and Share Exchange Agreement, dated September 29, 2004, among our Company, Trans Media, and all the shareholders of Trans Media. Pursuant to such agreement, the shareholders of Trans Media exchanged all of their 10,720,000 shares of common stock of Trans Media for 10,720,000 shares of the Company's common stock, which represented 84.28% of the outstanding shares of the Company's common stock on a fully diluted basis. As a result of such share exchange, Trans Media became the wholly owned subsidiary of the Company. Such transaction was treated as a reverse merger of Trans Media, and Trans Media is the continuing entity for financial reporting purposes.

Trans Media was incorporated in the province of British Columbia on July 23, 2001, as 631411 B.C., LTD, and renamed Transworld Media, Inc. on October 28, 2002. It was reincorporated in Wyoming and renamed Trans Media, Inc. on November 18, 2004. Since October 2002, Trans Media has been engaged in the production and distribution of musical CD's and musical performances targeted to the South Asian immigrants residing in North America.

New Line of Business - Plan of Operation

In 2008, the Company decided to pursue a new, additional line of business in the mobile communications industry. While the Company intends to retain its current business plan and operations in the sale of musical CDs and offering musical performances, the Company also intends to also become a mobile enabler, by developing innovative applications and technologies that provide access to a permission-based mobile database which the Company is developing.

In furtherance of its efforts to enter the mobile communications industry, on May 7, 2008 the Company, its wholly owned subsidiary North Coast Acquisition Corp., a Delaware corporation (“Acquisition Corp.”), and Montavo, Inc., a privately-held Washington corporation (“Montavo”), executed an Agreement (the “Merger Agreement”). Pursuant to the terms of the Merger Agreement, on August 29, 2008, Acquisition Corp. was merged with and into Montavo, with Montavo being the surviving entity as a wholly owned subsidiary of the Registrant, and all of the issued and outstanding common stock of Montavo was exchanged for newly-issued, restricted shares of common stock of the Company.  The merger was accounted for as a reverse merger and recapitalization due to Montavo having control of the board of directors and control of management at the date of merger.

Montavo is a Washington corporation formed on December 23, 2004, and has developed a mobile Location Based Services (LBS) marketing solution for wireless carriers, mobile handsets manufacturers, wireless carrier/device software aggregators, personal navigation device (PND’s) manufacturers, and vehicle manufacturers. Montavo has a patent pending filed for its “method and distribution system for location based wireless presentation of electronic coupons” technology.

Material Changes in Financial Condition

On June 30, 2009, we had $286  in cash, as compared to cash of $2,406 on December 31, 2008. Total assets on June 30, 2009, amounted to $410,296, an increase of approximately 14% as compared to total assets of $359,509 on December 31, 2008. The increase in total assets resulted primarily from investments in our software developed for internal use, from $320,140 on December 31, 2008, to $366,395 on June 30, 2009

Current liabilities increased by approximately 4%, from $418,284 on December 31, 2008 to $435,705 on June 30, 2009. The increase in current liabilities resulted primarily from an increase in accounts payable, from $133,209 on December 31, 2008, to $177,900 on June 30, 2009; a decrease in accounts payable related parties, from $241,828 on December 31, 2008, to $211,152 on June 30, 2009; and an increase in shareholder advances, from $17,491 on December 31, 2008, to $19,409 on June 30, 2009. The increased payables reflect extended payment terms negotiated with third party vendors, and shareholder loans and increased payables totaling $44,691 needed to meet ongoing cash requirements.

Additional paid in capital increased from $1,516,364 on December 31, 2008 to $2,017,862 on June 30, 2009, as a result of stock issued for cash, services, and debt conversion.

Material Changes in Results of Operations

We had no revenues in the three month period ended June 30, 2009. In the three month period ended June 30, 2009, we incurred a net loss of $279,788, as compared to a net loss of $89,038 in the three months period ended June 30, 2008. From December 23, 2004 (inception) to June 30, 2009, we incurred a net loss of $2,082,636. Operating expenses increased from $80,726 in the three months ended June 30, 2008 to $241,580 in the three months ended June 30, 2009. Interest expense increased from $8,312 in the three months ended June 30, 2008 to $38,208 in the three months ended June 30, 2009 as a result of the conversion of debt into common stock on August 29, 2008 in connection with the consummation of the transactions contemplated by the Merger Agreement. Basic and diluted net loss per share decreased to $0.01  in the six month period ended June 30, 2009, as compared to $0.03 in the three month period ended June 30, 2008.

Off Balance Sheet Arrangements

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources that are material to investors.

Going Concern Consideration

We are a development stage company with no operations and no revenues to date. Our independent auditors issued a going concern opinion, in their report dated April 14, 2009, with respect to our audited 2008 year-end financial statements. This means that our auditors believe there is substantial doubt that we can continue as an on-going business for the next 12 months. We do not anticipate that we will generate significant revenues until we have completed our business plan. Accordingly, we must raise additional capital from sources other than our operations in order to implement our business plan. Our 2008 year-end financial statements contain additional footnote disclosures describing the circumstances that lead to this disclosure by our independent auditors.

Item 3. Quantitative and Qualitative Disclosure About Market Risk.

Smaller reporting companies are not required to provide information in response to this Item.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

As required by Rules 13a-15(b) and 15d-15(b) of the Securities Exchange Act of 1934, we have evaluated, with the participation of our principal executive and financial officer, the effectiveness of our "disclosure controls and procedures" (as defined in the Securities Exchange Act of 1934 Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered by this Quarterly Report on Form 10-Q and have concluded that our disclosure controls and procedures are not effective to ensure that information required to be disclosed in the reports that we file or submit under the Securities Exchange Act of 1934 is accumulated and communicated to our management, including our principal executive and financial officers, as appropriate to allow timely decisions regarding required disclosure because of the identification of a material weakness in our internal control over financial reporting, which we view as an integral part of our disclosure controls and procedures. The material weakness relates to the  lack of segregation of duties in financial reporting, as our President/Treasurer performs all accounting functions with no oversight, as our company does not have an audit committee.  This weakness is due to the company’s lack of working capital to hire additional staff.  To remedy this material weakness, we intend to engage another accountant to assist with financial reporting as soon as our finances will allow.

Changes in Internal Controls over Financial Reporting

There have been no changes in our internal controls over financial reporting during the period covered by this Quarterly Report on Form 10-Q that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II

OTHER INFORMATION

Item 1. Legal Proceedings.

There are no pending legal proceedings to which the Company is a party or in which any director, officer or affiliate of the Company, any owner of record or beneficially of more than 5% of any class of voting securities of the Company, or security holder is a party adverse to the Company or has a material interest adverse to the Company. The Company’s property is not the subject of any pending legal proceedings.

Item 1A. Risk Factors.

Smaller reporting companies are not required to provide information in response to this Item.

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

 In February 2009, 22,000 shares of common stock were issued for services. These shares have a fair value of $11,453.

On February 12, 2009, Montavo accepted a subscription for 45,000 common shares at $.40 per share for gross proceeds of $18,000.

On February 18, 2009, Montavo executed a six-month consulting agreement for public relations services. Under the terms of the agreement, the company will pay the consultants $5,000 per month for six months and issue 150,000 unregistered Montavo common shares. The contract was terminated after one month and the consultant returned the 150,000 unregistered shares already issued and accepted instead 25,000 unregistered common shares of Montavo for the one month of service provided. These shares have a fair value of $12,000.

On March 25, 2009, the lender agreed to waive interest and convert the principal balance of $15,012 related to the three convertible promissory notes in Note 3 at $.20 per share to 75,060 common shares.

On March 2, 2009, Montavo accepted a subscription for 300,000 common shares at $.20 per share for gross proceeds of $60,000.

On March 27, 2009, Montavo accepted a subscription for 35,000 common shares at $.20 per share for gross proceeds of $7,000.

In March 2009, 54,800 shares of common stock were issued for services. These shares have a fair value of $20,782.

On April 1, 2009, Montavo executed a consulting agreement for investor relations services. Under the terms of the agreement, the company agreed to issue to the consultants 325,000 common shares immediately and 162,500 performance-based common shares monthly for a period of four months. At management’s discretion, an additional 200,000 common shares may be issued as an incentive bonus.  The 325,000 shares issued on April 1 have a fair value of $81,250.

On April 3, 2009, Montavo accepted a subscription for 16,000 common shares at $.20 per share for gross proceeds of $3,200.

On April 15, 2009, the lender agreed to waive interest and convert the principal balance of $3,198 related to a related party note payable at $.20 per share to 16,221 common shares.

 On April 24, 2009, Montavo accepted a subscription for 12,500 common shares at $.40 per share for gross proceeds of $5,000.

On April 24, 2009, Montavo accepted a subscription for 37,500 common shares at $.40 per share for gross proceeds of $15,000.

In April 2009, 145,000 shares of common stock were issued for services. These shares have a fair value of $29,000.

In June 2009, 200,000 shares of common stock were issued for services. These shares have a fair value of $26,000

On May 19, 2009, Montavo accepted a subscription for 1,333,333 common shares at $.08 per share from a related party vendor for reduction of accounts payable owed to the related party of $100,000.

On June 23, 2009, Montavo accepted a subscription for 15,625 common shares at $.32 per share for gross proceeds of $5,000.

Item 3. Defaults Upon Senior Securities.

None.

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

There was no matter submitted to a vote of security holders during the fiscal quarter ended June 30, 2009.

Item 5. Other Information.

None.

Item 6. Exhibits

Exhibit No.	Description
31.1	Rule 13a-14(a)/15d14(a) Certification
31.2	Certification pursuant to section 302 of the Sarbanes-Oxley Act of 2002
32.1	Section 1350 Certification

SIGNATURES

In accordance with to requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	MONTAVO, INC.
Date: September 14, 2009	By:	/s/ Brook Lang
		Name: Brook Lang
		Title:  Chief Executive Officer