UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the Quarter Ended March 31, 2008
or
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 000-51140
ROCKY MOUNTAIN FUDGE COMPANY, INC.
(Exact name of registrant issuer as specified in its charter)
NEVADA | | 16-1734022 |
(State or other jurisdiction of | | (I.R.S. Employer |
incorporation or organization) | | Identification No.) |
4596 Russell Street, Salt Lake City, Utah 84117
(Address of principal executive offices)
(801) 230-1807
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the 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 o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company
Large accelerated filer | o | Accelerated filer | o |
Non-accelerated filer | o | Smaller reporting company | o |
(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). Yes o No x
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date.
Class | | Outstanding as of May 5, 2008 |
Common Stock, $.001 par value | | 2,250,000 |
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION |
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| Financial Statements | 3 |
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| Balance Sheets – March 31, 2008 (unaudited) and December 31, 2007 | 4 |
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| Statements of Operations – three months ended March 31, 2008 and 2007 (unaudited) | 5 |
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| Statements of Cash Flows - three months ended March 31, 2008 and 2007 (unaudited) | 6 |
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| Notes to Financial Statements | 7 |
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Item 2. | Management's Discussion and Analysis of Financial Condition and Results of Operations | 8 |
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Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 10 |
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Item 4(T). | Controls and Procedures | 11 |
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PART II - OTHER INFORMATION |
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Item 1. | Legal Proceedings | 11 |
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Item 1A. | Risk Factors | 11 |
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Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 11 |
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Item 3. | Defaults Upon Senior Securities | 11 |
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Item 4. | Submission of Matters to a Vote of Securities Holders | 11 |
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Item 5. | Other Information | 12 |
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Item 6. | Exhibits and Reports on Form 8-K | 12 |
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| Signatures | 13 |
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
The accompanying Balance Sheets of Rocky Mountain Fudge Company, Inc. at March 31, 2008 and December 31, 2007, related Statements of Operations for the three months ended March 31, 2008 and 2007, and Statements of Cash Flows for the three and nine months ended March 31, 2008 and 2007, have been prepared by management in conformity with United States generally accepted accounting principles. In the opinion of management, all adjustments considered necessary for a fair presentation of the results of operations and financial position have been included and all such adjustments are of a normal recurring nature. Operating results for the period ended March 31, 2008, are not necessarily indicative of the results that can be expected for the fiscal year ending December 31, 2008.
ROCKY MOUNTAIN FUDGE COMPANY, INC.
FINANCIAL STATEMENTS
March 31, 2008 and December 31, 2007
ROCKY MOUNTAIN FUDGE COMPANY, INC.
(A Development Stage Company)
Balance Sheets
ASSESTS | |
| | | | | |
| | March 31, | | December 31, | |
| | 2008 | | 2007 | |
| | (Unaudited) | | | |
| | | | | | | |
CURRENT ASSETS | | | | | | | |
| | | | | | | |
Cash | | $ | 1,675 | | $ | 6,769 | |
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Total Current Assets | | | 1,675 | | | 6,769 | |
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TOTAL ASSETS | | $ | 1,675 | | $ | 6,769 | |
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LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) |
| | | | | | | |
CURRENT LIABILITIES | | | | | | | |
| | | | | | | |
Accounts payable | | $ | - | | $ | - | |
Note payable - related party | | | 5,467 | | | - | |
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Total Current Liabilities | | | 5,467 | | | - | |
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STOCKHOLDERS' EQUITY (DEFICIT) | | | | | | | |
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Common stock; 50,000,000 shares authorized, at $0.001 par value, 2,250,000 shares issued and outstanding, respectively | | | 2,250 | | | 2,250 | |
Additional paid-in capital | | | 129,000 | | | 128,250 | |
Accumulated deficit | | | (135,042 | ) | | (123,731 | ) |
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Total Stockholders' Equity (Deficit) | | | (3,792 | ) | | 6,769 | |
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | | $ | 1,675 | | $ | 6,769 | |
The accompanying notes are an integral part of these financial statements.
ROCKY MOUNTAIN FUDGE COMPANY, INC.
(A Development Stage Company)
Statements of Operations (Unaudited)
| | | | | | From Inception | |
| | For the Three | | on January 4, | |
| | Months Ended | | 1990 through | |
| | March 31, | | March 31, | |
| | 2008 | | 2007 | | 2008 | |
| | | | | | | |
REVENUES | | $ | - | | $ | - | | $ | 146,217 | |
| | | | | | | | | | |
COST OF SALES | | | - | | | - | | | 50,009 | |
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GROSS PROFIT | | | - | | | - | | | 96,208 | |
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EXPENSES | | | | | | | | | | |
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General and Administrative | | | 11,256 | | | 11,553 | | | 234,253 | |
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Total Expenses | | | 11,256 | | | 11,553 | | | 234,253 | |
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OPERATING LOSS | | | (11,256 | ) | | (11,553 | ) | | (138,045 | ) |
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OTHER INCOME (EXPENSES) | | | | | | | | | | |
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Interest income | | | - | | | - | | | 4,437 | |
Interest expense | | | (55 | ) | | (500 | ) | | (1,434 | ) |
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Total Other Income (Expense) | | | (55 | ) | | (500 | ) | | 3,003 | |
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NET LOSS | | $ | (11,311 | ) | $ | (12,053 | ) | $ | (135,042 | ) |
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BASIC LOSS PER SHARE | | $ | (0.01 | ) | $ | (0.01 | ) | | | |
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WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING | | | 2,250,000 | | | 2,250,000 | | | | |
The accompanying notes are an integral part of these financial statements.
ROCKY MOUNTAIN FUDGE COMPANY, INC.
(A Development Stage Company)
Statements of Cash Flows (Unaudited)
| | | | From Inception | |
| | For the Three | | on January 4, | |
| | Months Ended | | 1990 through | |
| | March 31, | | March 31, | |
| | 2008 | | 2007 | | 2008 | |
| | | | | | | |
CASH FLOWS FROM OPERATING ACTIVITIES | | | | | | | | | | |
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Net loss | | $ | (11,311 | ) | $ | (12,053 | ) | $ | (135,042 | ) |
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Adjustments to reconcile net loss to net cash used by operating activities: | | | | | | | | | | |
Services contributed by officers | | | 750 | | | 1,000 | | | 5,750 | |
Changes in operating assets and liabilities: | | | | | | | | | | |
Increase in accounts receivable | | | - | | | - | | | - | |
Increase in notes payable | | | - | | | 500 | | | 800 | |
Increase (decrease) in accounts payable | | | - | | | - | | | - | |
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Net Cash Used by Operating Activities | | | (10,561 | ) | | (10,553 | ) | | (128,492 | ) |
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CASH FLOWS FROM INVESTING ACTIVITIES | | | - | | | - | | | - | |
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CASH FLOWS FROM FINIANCING ACTIVITIES | | | | | | | | | | |
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Contributed capital | | | - | | | - | | | 57,400 | |
Cash received on note receivable - related | | | 5,467 | | | - | | | 30,967 | |
Sale of common stock for cash | | | - | | | - | | | 41,800 | |
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Net Cash Provided by Financing Activities | | | 5,467 | | | - | | | 130,167 | |
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NET DECREASE IN CASH | | | (5,094 | ) | | (10,553 | ) | | 1,675 | |
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CASH AT BEGINNING OF PERIOD | | | 6,769 | | | 38,021 | | | - | |
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CASH AT END OF PERIOD | | $ | 1,675 | | $ | 27,468 | | $ | 1,675 | |
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SUPPLIMENTAL DISCLOSURES OF CASH FLOW INFORMATION | | | | | | | | | | |
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CASH PAID FOR: | | | | | | | | | | |
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Interest | | $ | - | | $ | - | | $ | 79 | |
Income Taxes | | $ | - | | $ | - | | $ | - | |
The accompanying notes are an integral part of these financial statements.
ROCKY MOUNTAIN FUDGE COMPANY, INC.
(A Development Stage Company)
Notes to the Financial Statements
March 31, 2008 and December 31, 2007
NOTE 1 - CONDENSED FINANCIAL STATEMENTS
The accompanying financial statements have been prepared by the Company without audit. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations and cash flows at March 31, 2008 and 2007 and for all periods presented have been made.
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. It is suggested that these condensed financial statements be read in conjunction with the financial statements and notes thereto included in the Company's December 31, 2007 audited financial statements. The results of operations for the periods ended March 31, 2008 and 2007 are not necessarily indicative of the operating results for the full years.
NOTE 2 - GOING CONCERN
The Company's financial statements are prepared using accounting principles generally accepted in the United States of America applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has not yet established an ongoing source of revenues sufficient to cover its operating costs and allow it to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable. If the Company is unable to obtain adequate capital, it could be forced to cease operations.
In order to continue as a going concern, the Company will need, among other things, additional capital resources. Management's plans to obtain such resources for the Company include (1) obtaining capital from management and significant shareholders sufficient to meet its minimal operating expenses, and (2) seeking out and completing a merger with an existing operating company. However, management cannot provide any assurances that the Company will be successful in accomplishing any of its plans.
The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and eventually secure other sources of financing and attain profitable operations. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
The following information should be read in conjunction with the financial statements and notes thereto appearing elsewhere in this Form 10-Q.
Going Concern
Our independent auditors have indicated in a footnote to our financial statements that we have not yet established an ongoing source of revenues sufficient to cover operating costs and to allow us to continue as a going concern. Our ability to continue as a going concern is dependent on us securing and maintaining adequate capital to fund operating losses until we become profitable. If we are unable to increase revenues or secure adequate financing in the near future, allowing us to implement our business plan, our ability to continue as a going concern may be compromised, and we could be forced to cease operations.
Plan of Operation
During the next 12 months, we intend to develop new kitchen and production facilities for our candy manufacturing business. If our current available funds are not sufficient to complete the facilities as desired, it may be necessary for our directors to advance funds to us or to seek outside financing. We intend to rent a facility that has adequate space and equipment to handle anticipated production needs, without having to incur significant expense and capital expenditures. It is anticipated that the facility will be able to accommodate the packaging of products.
Management intends to hold expenses to a minimum and to obtain services on a contingency basis when possible. Further, our directors will defer any compensation until such time as business warrants the payment of such.
Management intends to focus marketing efforts to the Internet and other advertising that will enhance mail orders. We will continue selling our products at local retail outlets and in booths located at special events, fairs and festivals. However, management believes the most potential for our business will be the Internet.
As of March 31, 2008, we had $1,675 in cash. Management estimates that it will have sufficient funds to operate for the next three to six months. If revenues do not provide sufficient funds to continue operations, it may be necessary for us to seek additional financing. This would most likely come from current directors, although the directors are under no obligation to provide additional funding and there is no assurance outside funding will be available on terms acceptable to us, or at all.
Management anticipates that new facilities will be rented with equipment adequate to handle anticipated candy production. Therefore, it is not expected that we will have to make any significant capital expenditures for new equipment or other assets. If additional equipment does become necessary, we believe that we will have adequate cash on hand to acquire the equipment.
In April 2007, two directors resigned from the Board of Directors and entered into consulting contracts with the company. Under these agreements, the former directors will continue to provide services related to the production and marketing of products, but on a consulting basis rather than as directors. Management believes that this arrangement will be adequate for the foreseeable future, or until production reaches a level to justify additional employees. Further, we believe that if increased business necessitates additional employees, then we will be able to pay the added expenses of these employees from increased revenues.
Our plan of operations for the next 12 months will focus on completing development of our Internet website and building a customer base for our products. This 12-month plan of operations includes the goals of
o increasing revenues from sales of candy products;
o expanding our marketing area to include communities outside the Salt Lake City metropolitan area;
o expanding the Internet business to be able to attract new customers, regardless of location, which will create an expanded mail order business;
o hiring additional employees and/or independent contractors if we are successful in expanding our business and adequate funds are available; and
o attaining profitability.
To achieve these goals during the next 12 months, we intend to exploit our new website to the extent possible and create new business by advertising, as funds permit. Management believes that these plans can be successfully implemented.
Results of Operations
Three Months Ended March 31, 2008 Compared to Three Months Ended March 31, 2007
Revenues for the three-month period ended March 31, 2008 were $-0-, representing no change from the corresponding period ended March 31, 2007.
Total operating expenses for the first quarter of 2008 were $11,256, compared to $11,553 for the comparable period of 2007. The minor decrease in 2008 was due primarily to the increased expenses incurred in the 2007 period for legal and accounting fees relating to our December 31, 2006 audit and SEC filings, which were incurred in early 2007. This is also the primary reason for the smaller loss of $11,311 for the three month period ended March 31, 2008 compared to a loss of $12,053 during the comparable 2007 period.
Liquidity and Capital Resources
At March 31, 2008, we had cash on hand of $1,675 compared to $6,769 as of December 31, 2007. The decrease in cash is attributed primarily to our lack of revenues during the period, and our utilization of cash in satisfying our operating expenses.
We estimate our cash requirements for the next twelve months to be approximately $25,000. We do not feel that current cash on hand will be sufficient to satisfy our cash requirements and, if we are unable to develop and implement a profitable business plan, we will be required to seek additional avenues to obtain the necessary funds. We have no agreements with anyone to provide future capital for the Company. If our directors are unable to provide future funding, if the need arises, we may have to look at alternative sources of funding. We do not have any firm plans as to the source of this alternative funding and there is no assurance that such funds will be available or, that even if they are available, that they will be available on terms that will be acceptable to us. In the event we are unable to secure necessary future funding, we may have to curtail our business or cease operations completely.
At March 31, 2008, we had total assets of $1,675 and stockholders' deficit of $3,792, compared to total assets of $6,769 and a total stockholders' equity of $6,769 at December 31, 2007.
Net Operating Loss
We have accumulated approximately $124,000 of net operating loss carryforwards through December 31, 2007, which may be offset against taxable income and income taxes in future years. The use of these losses to reduce future income taxes will depend on the generation of sufficient taxable income prior to the expiration of the net operating loss carryforwards. The carry-forwards expire in the year 2027. In the event of certain changes in control, there will be an annual limitation on the amount of net operating loss carryforwards which can be used. No tax benefit has been reported in the financial statements for the year ended December 31, 2007 because there is a 50% or greater chance that the carryforward will not be used. Accordingly, the potential tax benefit of the loss carryforward is offset by a valuation allowance of the same amount.
Forward Looking and Cautionary Statements
This report includes "forward-looking statements" that may relate to such matters as anticipated financial performance, future revenues or earnings, business prospects, projected ventures, new products and services, anticipated market performance and similar matters. When used in this report, the words "may," "will," expect," anticipate," "continue," "estimate," "project," "intend," and similar expressions are intended to identify forward-looking statements regarding events, conditions, and financial trends that may affect our future plans of operations, business strategy, operating results, and financial position. We caution readers that a variety of factors could cause actual results to differ materially from the anticipated results or other matters expressed in forward-looking statements.
These risks and uncertainties, many of which are beyond our control, include:
o the ability to maintain current business and, if feasible, expand the marketing of products;
o the ability to attract and retain new individual and retail customers;
o the sufficiency of existing capital resources and the ability to raise additional capital to fund cash requirements for future operations;
o uncertainties involved in the rate of growth of business and acceptance of our products;
o anticipated size or trends of the market segments in which we compete and the anticipated competition in those markets;
o future capital requirements and our ability to satisfy our needs; and
o general economic conditions.
Although management believes the expectations reflected in these forward-looking statements are reasonable, such expectations cannot guarantee future results, levels of activity, performance or achievements. Actual results may differ materially from those included within the forward-looking statements as a result of various factors. Cautionary statements in the risk factors section and elsewhere in this report identify important risks and uncertainties affecting our future, which could cause actual results to differ materially from the forward-looking statements made herein.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
This Item is not required for a smaller reporting company.
Item 4(T). Controls and Procedures
Evaluation of Disclosure Controls and Procedures. Disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) are designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms. Disclosure and control procedures are also designed to ensure that such information is accumulated and communicated to management, including the chief executive officer and principal accounting officer, to allow timely decisions regarding required disclosures.
As of the end of the period covered by this quarterly report, we carried out an evaluation, under the supervision and with the participation of management, including our chief executive officer and principal accounting officer, of the effectiveness of the design and operation of our disclosure controls and procedures. In designing and evaluating the disclosure controls and procedures, management recognizes that there are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their desired control objectives. Additionally, in evaluating and implementing possible controls and procedures, management is required to apply its reasonable judgment. Based on the evaluation described above, our management, including our principal executive officer and principal accounting officer, have concluded that, as of March 31, 2008, our disclosure controls and procedures were effective.
Changes in Internal Control Over Financial Reporting. Management has evaluated whether any change in our internal control over financial reporting occurred during the first quarter of fiscal 2008. Based on its evaluation, management, including the chief executive officer and principal accounting officer, has concluded that there has been no change in our internal control over financial reporting during the first quarter of fiscal 2008 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
There are no material pending legal proceedings to which we are a party or to which any of our property is subject and, to the best of our knowledge, no such actions against us are contemplated or threatened.
Item 1A. Risk Factors
This Item is not required for a smaller reporting company.
Item 2. Unregistered Sales or Equity Securities and Use of Proceeds
This Item is not applicable.
Item 3. Defaults Upon Senior Securities
This Item is not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
This item is not applicable.
Item 5. Other Information
This Item is not applicable.
Item 6. Exhibits
(a) Exhibits:
Exhibit 31 | Certification of Chief Executive Officer and Principal Accounting Officer |
| Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
| |
Exhibit 32 | Certification of Chief Executive Officer and Principal Accounting Officer |
| Pursuant to 18 U.S.C. Section 13 50, as adopted pursuant to Section 906 of |
| the Sarbanes-Oxley Act of 2002. |
[SIGNATURES FOLLOW ON NEXT PAGE.]
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.
| ROCKY MOUNTAIN FUDGE COMPANY, INC. |
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Date: May 5, 2008 | | By: /S/ Steven D. Moulton |
| | Steven D. Moulton, |
| | President and Director |
| | Principal Accounting Officer |