UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 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:June 30, 2008 | |
Or | |
[ ] 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: 000-51842 | |
MIDNIGHT CANDLE COMPANY | |
(Exact name of registrant as specified in its charter) | |
Nevada | 20-1763307 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
79013 Bayside Court, Indio, CA | 92203 |
(Address of principal executive offices) | (Zip Code) |
(760) 772-1872 | |
(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 issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 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.
Yes [X] No [ ]
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.:
Large accelerated filer [ ] | Accelerated filer [ ] |
Non-accelerated filer [ ] (Do not check if a smaller reporting company) | Smaller reporting company [X] |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act)
Yes [ ] No [ X ]
Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date:
Common Stock, $0.001 par value | 5,230,000 shares |
(Class) | (Outstanding as at August 11, 2008) |
MIDNIGHT CANDLE COMPANY
(A Development Stage Company)
Table of Contents
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5 | |
6 | |
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Management's Discussion and Analysis of Financial Condition and Plan of Operation | 14 |
15 | |
17 | |
17 | |
17 | |
17 | |
18 |
2
PART I - FINANCIAL INFORMATION
Unaudited Financial Statements
The accompanying unaudited condensed financial statements have been prepared in accordance with generally accepted accounting principles for interim financial reporting and pursuant to the rules and regulations of the Securities and Exchange Commission ("Commission"). While these statements reflect all normal recurring adjustments which are, in the opinion of management, necessary for fair presentation of the results of the interim period, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. For further information, refer to the financial statements and footnotes thereto, which are included in the Company's Registration Statement on Form 10-KSB for the year ended December 31, 2007 previously filed with the Commission on March 20, 2008, and subsequent amendments made thereto.
3
MIDNIGHT CANDLE COMPANY
(A DEVELOPMENT STAGE COMPANY)
AS OF JUNE 30, 2008 (UNAUDITED) AND DECEMBER 31, 2007 (AUDITED)
ASSETS | June 30, | December 31, |
2008 | 2007 | |
(Unaudited) | (Audited) | |
Current Assets: | ||
Cash and cash equivalents | $398 | $1,250 |
Accounts receivable | 122 | 122 |
Inventory | 438 | 438 |
Total Current Assets | 958 | 1,810 |
TOTAL ASSETS | $958 | $1,810 |
LIABILITIES AND STOCKHOLDER’S (DEFICIT) | ||
LIABILITIES | ||
Current Liabilities: | ||
Accounts payable | $750 | $- |
Notes payable - related party | 15,000 | 10,000 |
Total Current Liabilities | 15,750 | 10,000 |
Total Liabilities | 15,750 | 10,000 |
STOCKHOLDER’S (DEFICIT) | ||
Common stock, $.001 Par Value, 100,000,000 shares authorized; | ||
5,230,000 shares issued and outstanding | 5,230 | 5,230 |
Additional paid-in capital | 23,270 | 23,270 |
Deficit accumulated during the development stage | (43,292) | (36,690) |
Total Stockholder’s (Deficit) | (14,792) | (8,190) |
TOTAL LIABILITIES AND STOCKHOLDER’S (DEFICIT) | $958 | $1,810 |
The accompanying notes are an integral part of these condensed financial statements.
4
MIDNIGHT CANDLE COMPANY
(A DEVELOPMENT STAGE COMPANY)
CONDENSED STATEMENTS OF OPERATIONS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2008 AND 2007
(WITH CUMULATIVE TOTALS SINCE INCEPTION)
Cumulative Totals | |||||
For the six months ended | For the three months ended | September 24, 2004 (Inception) | |||
June 30, 2008 | June 30, 2007 | June 30, 2008 | June 30, 2007 | through June 30, 2008 | |
OPERATING REVENUES | |||||
Sales, net of allowance | $- | $- | $- | $- | $464 |
Cost Of Sales | - | - | - | - | 273 |
Freight in | - | - | - | - | 95 |
GROSS PROFIT (LOSS) | - | - | - | - | 96 |
OPERATING EXPENSES | |||||
Professional fees | 5,172 | 5,005 | 1,534 | 1,306 | 28,507 |
General and administrative expenses | 1,430 | 405 | 327 | 369 | 14,882 |
Total Operating Expenses | 6,602 | 5,410 | 1,861 | 1,675 | 43,389 |
LOSS BEFORE OTHER EXPENSE | (6,602) | (5,410) | (1,861) | (1,675) | (43,293) |
OTHER (INCOME) EXPENSE | |||||
Interest (income) expense | - | - | - | - | (1) |
Total Other (Income) Expense | - | - | - | - | (1) |
LOSS BEFORE PROVISION FOR INCOME TAXES | (6,602) | (5,410) | (1,861) | (1,675) | (43,292) |
Provision for income taxes | - | - | - | - | - |
NET LOSS APPLICABLE TO COMMON SHARES | $(6,602) | $(5,410) | $(1,861) | $(1,675) | $(43,292) |
WEIGHTED AVERAGE COMMON SHARES | |||||
OUTSTANDING | 5,230,000 | 5,230,000 | 5,230,000 | 5,230,000 | |
NET LOSS PER BASIC COMMON SHARES OUTSTANDING | $(0.00) | $(0.00) | $(0.00) | $(0.00) | |
The accompanying notes are an integral part of these condensed financial statements.
5
MIDNIGHT CANDLE COMPANY
(A DEVELOPMENT STAGE COMPANY)
CONDENSED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2008 AND 2007
(WITH CUMULATIVE TOTALS SINCE INCEPTION)
Cumulative Totals | |||
September 24, 2004 (inception) | |||
2008 | 2007 | through June 30, 2008 | |
CASH FLOWS FROM OPERATING ACTIVITIES | |||
Net loss | $(6,602) | $(5,410) | $(43,292) |
Adjustments to reconcile net loss to net cash | |||
(used in) operating activities | |||
Changes in assets and liabilities | |||
(Increase) in accounts receivable | - | - | (122) |
(Increase) in inventory | - | - | (438) |
Increase (decrease) in accounts payable | 750 | (1,973) | 750 |
Total adjustments | 750 | (1,973) | 190 |
Net cash (used in) operating activities | (5,852) | (7,383) | (43,102) |
CASH FLOWS FROM FINANCING ACTIVITIES | |||
Issuance of common stock | - | - | 28,500 |
Proceeds from note payable - related party | 5,000 | 10,000 | 15,000 |
Net cash provided by financing activities | 5,000 | 10,000 | 43,500 |
NET INCREASE (DECREASE) IN | |||
CASH AND CASH EQUIVALENTS | (852) | 2,617 | 398 |
CASH AND CASH EQUIVALENTS - | |||
BEGINNING OF PERIOD | 1,250 | 1,248 | - |
CASH AND CASH EQUIVALENTS - END OF PERIOD | 398 | $3,865 | 398 |
SUPPLEMENTAL CASH FLOW INFORMATION: | |||
During the period, cash was paid for the following: | |||
Interest | $- | $- | |
Income taxes | $- | $- | |
SUPPLEMENTAL DISCLOSURE OF NON-CASH | |||
INFORMATION: | |||
Forgiveness of note payable converted to equity | $- | $500 | |
The accompanying notes are an integral part of these condensed financial statements.
6
MIDNIGHT CANDLE COMPANY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2008 AND 2007
(UNAUDITED)
NOTE 1 -
ORGANIZATION AND BASIS OF PRESENTATION
The condensed unaudited interim financial statements included have been prepared by Midnight Candle Company (“the Company”) without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). The condensed financial statements and notes are presented as permitted on Form 10-Q and do not contain information included in the Company’s annual statements and notes. Certain information and footnote disclosures normally included in the financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted as allowed by such rules and regulations, and the Company believes that the disclosures are adequate to make the information presented not misleading. It is suggested that these condensed financial statements be read in conjunction with the December 31, 2007 audited financial statements and the accompanying no tes thereto. While management believes the procedures followed in preparing these condensed financial statements are reasonable, the accuracy of the amounts are is some respects dependent upon the facts that will exist, and procedures that will be accomplished by the Company later in the year.
The management of the Company believes that the accompanying unaudited condensed financial statements contain all adjustments (including normal recurring adjustments) necessary to present fairly the operations for the periods presented.
Midnight Candle Company (the “Company”) is a distributor of candles. The candles will be marketed in various sizes, shapes and fragrances. These customized candles will be distributed for home use and small business users. The Company does not plan to produce any candles and expects to purchase all of its saleable products from manufactures or enter into private-label relationships with manufactures to place our corporate name on select products. The Company intends to sell enough candles to support business stability and growth with a large portion being sold through the Company’s web-site.
7
MIDNIGHT CANDLE COMPANY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2008 AND 2007
(UNAUDITED)
NOTE 2 -
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Development Stage Company
The Company is considered to be in the development stage as defined in Statement of Financial Accounting Standards (SFAS) No. 7, “Accounting and Reporting by Development Stage Enterprises”. The Company has devoted substantially all of its efforts to business planning, research and development. Additionally, the Company has allocated a substantial portion of their time and investment in bringing their product to the market, and the raising of capital.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures 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.
Cash and Cash Equivalents
For financial statement presentation purposes, the Company considers short-term, highly liquid investments with original maturities of three months or less to be cash and cash equivalents.
The Company maintains cash and cash equivalent balances at a financial institution that is insured by the Federal Deposit Insurance Corporation up to $100,000. At June 30, 2008, there were no uninsured balances.
Accounts Receivable
The Company conducts business and extends credit based on an evaluation of its customers’ financial condition, generally without requiring collateral. Exposure to losses on receivables is expected to vary by customer due to the financial condition of each customer. The Company monitors exposure to credit losses and maintains allowances for anticipated losses considered necessary under the circumstances.
8
MIDNIGHT CANDLE COMPANY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2008 AND 2007
(UNAUDITED)
NOTE 2 -
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
Inventory
Inventory consists of merchandise held for sale in the ordinary course of business and are stated at the lower of cost or market, determined using the first-in, first-out (FIFO) method.
Revenue Recognition
The Company’s financial statements are prepared under the accrual method of accounting. Revenues will be recognized in the period the services are performed and costs are recorded in the period incurred rather than paid.
Fair Value of Financial Instruments
The Company’s financial instruments are all carried at amounts that approximate their estimated fair value as of June 30, 2008 and 2007.
Income Taxes
The provision for income taxes includes the tax effects of transactions reported in the financial statements. Deferred taxes would be recognized for differences between the basis for assets and liabilities for financial statement and income tax purposes. The major difference relate to the net operating loss carryforwards generated by sustaining deficits during the development stage.
Advertising Costs
Advertising and promotions costs are expensed as incurred. The Company incurred no such expenses since inception.
9
MIDNIGHT CANDLE COMPANY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2008 AND 2007
(UNAUDITED)
NOTE 2 -
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
Recent Accounting Pronouncements
In September 2006, the FASB issued FAS No. 157 “Fair Value Measurements”, which provides a definition of fair value, establishes a framework for measuring fair value and requires expanded disclosures about fair value measurements. SFAS No. 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007 and interim periods within those fiscal years. The provisions of SFAS No. 157 should be applied prospectively. The adoption of FAS No. 157 did not have a material impact on the Company’s financial position or results of operations.
In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Liabilities, including an amendment of FASB Statement No. 115” (“SFAS No. 159”). SFAS No. 159 permits entities to choose, at specified election dates, to measure many financial instruments and certain other items at fair value that are not currently required to be measured at fair value. Unrealized gains and losses shall be reported on items for which the fair value option has been elected in earnings at each subsequent reporting date. SFAS No. 159 is effective for fiscal years beginning after November 15, 2007. Early adoption is permitted as of the beginning of a fiscal year that begins on or before November 15, 2007, provided the entity also elects to apply the provisions of SFAS No. 157 “Fair Value Measurements” (“SFAS No. 157”). The adoption of FAS No. 159 did not have a material impact on the Company’s fin ancial position or results of operations.
In December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interest in Consolidated Financial Statements” (“SFAS No. 160”). SFAS No. 160, This Statement amends ARB 51 to establish accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. It clarifies that a noncontrolling interest in a subsidiary is an ownership interest in the consolidated entity that should be reported as equity in the consolidated financial statements. Before this Statement was issued, limited guidance existed for reporting noncontrolling interests. As a result, considerable diversity in practice existed. So-called minority interests were reported in the consolidated statement of financial position as liabilities or in the mezzanine section between liabilities and equity. This Statement improves comparability by eliminating that diversity. SFAS No. 160 is effective for fiscal years, and inte rim periods within those fiscal years, beginning on or after December 15, 2008. Earlier adoption is prohibited. The Company is currently assessing the impact that SFAS No. 160 will have on its financial statements.
10
MIDNIGHT CANDLE COMPANY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2008 AND 2007
(UNAUDITED)
NOTE 2 -
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
Recent Accounting Pronouncements (Continued)
In March 2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities,” (“SFAS No. 161”). SFAS No. 161 amends and expands the disclosure requirements of SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities.” SFAS No. 161 requires qualitative disclosures about objectives and strategies for using derivatives, quantitative disclosures about fair value amounts of gains and losses on derivative instruments and disclosures about credit-risk-related contingent features in derivative agreements. This statement is effective for financial statements issued for fiscal years beginning after November 15, 2008. The adoption of SFAS No. 161 is not anticipated to affect the Company’s financial condition and results of operations, but may require additional disclosures if we enter into derivative and hedging act ivities.
Net (Loss) Per Share of Common Stock
The following table sets forth the computation of basic and diluted earnings per share for the six months ended June 30, 2008 and 2007:
2008 | 2007 | ||
Net loss | $ (6,602) | $ (5,410) | |
Weighted average common | 5,230,000 | 5,230,000 | |
shares outstanding (Basic) | |||
Options | - | - | |
Warrants | - | - | |
Weighted average common shares | |||
outstanding (Diluted) | 5,230,000 | 5,230,000 |
There are no common stock equivalents outstanding at June 30, 2008 and 2007.
Historical net (loss) per common share is computed using the weighted average number of common shares outstanding. Diluted earnings per share (EPS) include additional dilution from common stock equivalents, such as stock issuable pursuant to the exercise of stock options and warrants.
11
MIDNIGHT CANDLE COMPANY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2008 AND 2007
(UNAUDITED)
NOTE 2 -
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
Net (Loss) Per Share of Common Stock
All dilutive securities were not included in the calculation of dilutive earnings per share because the effect would be anti-dilutive when the Company has incurred a loss from operations. The Company currently has no potentially dilutive securities outstanding.
NOTE 3 -
NOTES PAYABLE - RELATED PARTY
Represents three unsecured notes payable for $5,000 each to the stockholder, due on demand without interest. All were used for working capital needs.
NOTE 4 -
STOCKHOLDERS’ EQUITY
On September 24, 2004 the Company was formed with one class of common stock, par value $.001. The Company authorized 100,000,000 shares of common stock.
In November 2004, the Company issued 5,000,000 shares of stock to its officer for cash of $5,000.
In March and June 2005, the Company issued 230,000 shares (60,000 and 170,000 shares in March 2005 and June 2005, respectively) of common stock at $0.10 per share for $23,000. These shares were issued in accordance with a Private Placement Memorandum dated December 15, 2004.
In June 2005, a stockholder of the Company forgave a note payable to the Company for $500.
NOTE 5 -
GOING CONCERN
As shown in the accompanying financial statements, as is typical of companies going through the development stage, the Company incurred a net loss for the period September 24, 2004 (Inception) through June 30, 2008. The Company is currently in the development stage, and there is no guarantee whether the Company will be able to generate enough revenue and/or raise capital to support current operations and generate anticipated sales. This raises substantial doubt about the Company’s ability to continue as a going concern.
Management believes that the Company’s capital requirements will depend on many factors including the success of the Company’s product development efforts. With the business plan being followed, Management believes along with working capital being raised that the operations and sales will make the Company a viable entity over the next twelve months.
12
MIDNIGHT CANDLE COMPANY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2008 AND 2007
(UNAUDITED)
NOTE 5 -
GOING CONCERN (CONTINUED)
The financial statements do not include any adjustments relating to the recoverability or classification of recorded assets and liabilities that might result should the Company be unable to continue as a going concern.
NOTE 6 -
PROVISION FOR INCOME TAXES
Deferred income taxes will be determined using the liability method for the temporary differences between the financial reporting basis and income tax basis of the Company’s assets and liabilities. Deferred income taxes will be measured based on the tax rates expected to be in effect when the temporary differences are included in the Company’s tax return. Deferred tax assets and liabilities are recognized based on anticipated future tax consequences attributable to differences between financial statement carrying amounts of assets and liabilities and their respective tax bases.
At June 30, 2008 and 2007, deferred tax assets consist of the following:
2008 | 2007 | |
Deferred tax assets | $12,988 | $10,566 |
Less: valuation allowance | (12,988) | (10,566) |
Net deferred tax assets | $ -0- | $ -0- |
At June 30, 2008 and 2007, the Company had accumulated deficits during the development stage of $43,292 and $35,221 available to offset future taxable income through 2021. The Company established valuation allowances equal to the full amount of the deferred tax assets due to the uncertainty of the utilization of the operating losses in future periods.
13
Management's Discussion and Analysis of Financial Condition and Plan of Operation
Forward-Looking Statements
This Quarterly Report contains forward-looking statements about Midnight Candle Company’s business, financial condition and prospects that reflect management’s assumptions and beliefs based on information currently available. We can give no assurance that the expectations indicated by such forward-looking statements will be realized. If any of our management’s assumptions should prove incorrect, or if any of the risks and uncertainties underlying such expectations should materialize, Midnight Candle’s actual results may differ materially from those indicated by the forward-looking statements.
The key factors that are not within our control and that may have a direct bearing on operating results include, but are not limited to, acceptance of our services, our ability to expand our customer base, managements’ ability to raise capital in the future, the retention of key employees and changes in the regulation of our industry.
There may be other risks and circumstances that management may be unable to predict. When used in this Quarterly Report, words such as, "believes," "expects," "intends," "plans," "anticipates," "estimates"and similar expressions are intended to identify forward-looking statements, although there may be certain forward-looking statements not accompanied by such expressions.
Management’s Discussion and Plan of Operation
We were incorporated in the State of Nevada on September 24, 2004. During the three and six month periods ended June 30, 2008 and 2007, we did not generate any revenues, nor did we incur any cost of goods sold and shipping charges. Since our inception to June 30, 2008, we generated $464 in revenues from sales of our candles. After accounting for cost of sales in the amount of $273 and shipping costs of $95, we realized a gross profit of $96 from the period from our inception through June 30, 2008. We do not have any long-term agreements to supply our candles to any one customer. As a result, we are unable to predict the stability of, and ability to continue to generate, ongoing revenues.
For the three months ended June 30, 2008, we incurred operating expenses in our continued pursuit of our candle business in the amount of $1,861, consisting of $1,534 in professional fees and general and administrative expenses in the amount of $327. Professional fees are primarily related to accounting, legal and other similar professional fees incurred as a cost of being a public reporting entity. General and administrative expenses primarily encompass the cost of general office expenses, such as postage, supplies and printing. During the comparable year ago three months ended June 30, 2007, total operating expenses were $1,675, of which $1,306 are attributable to professional fees and $369 to general and administrative expenses.
During the six month period ended June 30, 2008, our total expenses were $6,602, of which professional fees were $5,172 and $1,430 was general and administrative expenses. In contrast, during the six months ended June 30, 2007, total operating expenses were $5,410, consisting of $5,005 in professional fees and $405 in general and administrative costs. Total operating expenses since our inception on September 24, 2004 to June 30, 2008 were $43,389, of which $28,507 is attributable to professional fees and $14,882 in general and administrative expenses.
As a result of our lack of substantial revenues and incurring ongoing expenses related to the implementation of our business and maintaining our public report status, we have experienced net losses in all periods since our inception. Our net loss for the three months ended June 30, 2008 was $1,861, compared to $1,675 in the quarter ended June 30, 2007. After accounting for interest income of $1, out net loss since the date of our inception through June 30, 2008 was $43,292. We have no recurring or guaranteed source of revenues and cannot predict when, if ever, we will become profitable. We anticipate incurring ongoing operating losses and cannot predict when, if at all, we may expect these losses to plateau or narrow. There is significant uncertainty projecting future profitability due to our minimal operating history and lack of guaranteed ongoing revenue streams.
14
Our management believes that our cash on hand as of June 30, 2008 in the amount of $398 is not sufficient to maintain our current minimal level of operations for the next approximately 12 months. As such, we are in a precarious financial position and may be unable to maintain our operations through the fiscal year ended December 31, 2008, assuming our state of operations remain relatively stable, of which there can be no guarantee. Generating sales in the next 12 months is imperative for us to support our operations and to continue as a going concern. We believe that we will be required to generate a minimum of approximately $12,000 in revenues over the next 12 months in order for us to support ongoing operations. However, we cannot guarantee that we will generate such sales. We believe that to generate the minimum required amount of revenues to continue as a going concern, we must further our efforts to establish our brand n ame.
However, as we have minimal existing inventory, in the amount of $438, and inadequate capital to purchase additional inventory for sale, we do not expect to generate sufficient revenues to meet our expenses over the next 12 months, we believe we will need to raise additional capital by issuing capital stock or debt instruments in exchange for cash in order to continue as a going concern. Since our incorporation, we have raised a total of $28,500 through private sales of our common equity. Additionally, our president and sole director, Ms. Cary, has loaned us an aggregate of $15,000 through June 30, 2008 to sustain our minimal operations and meet financial obligations. We cannot assure you that any financing can be obtained or, if obtained, that it will be on reasonable terms. In the event we are unable to obtain further funding, we will be unable to conduct further operations and, consequently, go out of business. Without realizati on of additional capital, it would be unlikely for us to continue as a going concern.
If our expenses are greater than anticipated or if we do not generate sufficient cash flow to support our operations over the next twelve months, we may need to raise additional capital by issuing capital stock in exchange for cash in order to continue as a going concern. There are no formal or informal agreements to attain such financing from Ms. Cary, or any other party. If we are unable to generate sufficient cash flows or raise additional capital to sustain our operations, we may be unable to continue as a going concern. We can not assure you that any financing can be obtained or, if obtained, that it will be on reasonable terms. Without realization of additional capital, it would be unlikely for us to continue as a going concern. As such, our independent auditors have expressed substantial doubt about our ability to continue as a going concern in the independent auditors’ report to the financial statements included in this quarterly statement. If our business fails, our investors may face a complete loss of their investment.
Our management does not expect to incur research and development costs.
We do not have any off-balance sheet arrangements.
We currently do not own any significant plant or equipment that we would seek to sell in the near future.
We do not anticipate the need to hire additional full- or part- time employees over the next 12 months, as the services provided by our sole officer and director appear sufficient at this time. We believe that our operations are currently on a small scale that is manageable by two individuals. We plan to outsource the production of our products, thus our management’s responsibilities are mainly administrative.
We have not paid for expenses on behalf of any of our directors. Additionally, we believe that this fact shall not materially change.
We have no plans to perform any product research and development in the near term. We do not manufacture any products. There are no expected purchases of plant or significant equipment. Also, there are no plans to hire additional personnel in the near term.
Evaluation of Disclosure Controls and Procedures
We maintain a set of disclosure controls and procedures designed to ensure that information required to be disclosed by us in our reports filed under the Securities Exchange Act, is recorded, processed, summarized and reported within the time periods specified by the SEC’s rules and forms. Disclosure controls are also designed with the objective of ensuring that this information is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure.
15
Based on an evaluation as of the end of the period covered by this report, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, (the “Exchange Act”)) were effective to provide reasonable assurance that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosures.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting that occurred during our most recent fiscal quarter that have materially affected, or reasonably likely to materially affect, our internal control over financial reporting.
16
Submission of Matters to a Vote of Security Holders
We originally reported that on May 14, 2008, our controlling shareholder and sole director approved the following actions:
1.
A forward split of our Common Stock on the basis of thirty (30) “new”, post-split, shares for each one (1) “old”, pre-split, share issued and outstanding;
2.
An amendment to our Articles of Incorporation to implement an increase in our authorized capital stock from: 100,000,000 shares of Common Stock, par value $0.001 per share, to: 200,000,000 shares, par value $0.001 per share
3.
Further amend our Articles of Incorporation to included opting out of various provisions of the Nevada Revised Statutes restricting control share acquisition and interested shareholder transactions with us to which we might otherwise be subject.
The proposed amendments were originally slated to be effective May 29, 2008. However, on June 30, 2008, we filed an amended Information Statement on Schedule 14C, removing the proposal to amend our Articles of Incorporation opting out of various NRS provisions. Furthermore, we are currently in the review process with the Securities Exchange Commission and the effectiveness of the proposals and record date for the stock split have not been defined and will not be set unless and until we reach a no-comment stage with the SEC regarding our Schedule 14C.
Exhibit Number | Name and/or Identification of Exhibit |
3 | Articles of Incorporation & By-Laws |
(a) Articles of Incorporation filed September 24, 2004 * | |
(b) By-Laws adopted September 27, 2004 * | |
31 | Rule 13a-14(a)/15d-14(a) Certifications |
32 | Certification under Section 906 of the Sarbanes-Oxley Act (18 U.S.C. Section 1350) |
* Incorporated by reference herein filed as exhibits to the Company’s Registration Statement on SB-2 previously filed with the SEC on September 21, 2005, and subsequent amendments made thereto. | |
Date Filed | Item Numbers |
May 21, 2008 | Items 3.03, 5.03 and 9.01 |
17
Pursuant to the requirements of the Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
MIDNIGHT CANDLE COMPANY | ||
(Registrant) | ||
Signature | Title | Date |
/s/ Helen C. Cary | President and | August 14, 2008 |
Helen C. Cary | Chief Executive Officer | |
/s/Patrick Deparini | Secretary/Treasurer | August 14, 2008 |
Patrick Deparini | Chief Financial Officer | |
18
