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 quarterly period ended June 30, 2011
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE EXCHANGE ACT
For the transition period from ____________ to____________
Commission File No. 000-53390
MCT HOLDING CORPORATION
(Exact name of Registrant as specified in its charter)
| |
Nevada | 20-2543857 |
(State or Other Jurisdiction of | (I.R.S. Employer Identification No.) |
incorporation or organization) | |
3884 East North Little Cottonwood Rd.
Salt Lake City, Utah 84092
(Address of Principal Executive Offices)
(801) 580-4555
(Registrant’s telephone number, including area code)
N/A
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the Registrant has (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 (the “Exchange Act”) during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit and post such files). Yes [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 definition of “large accelerated filer,” “non-accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer [ ] Accelerated filer [ ] Non-accelerated filer [ ] Smaller reporting company [X]
1
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes [ ] No [ X]
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Indicate by check mark whether the Registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court.
Not applicable.
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the Registrant’s classes of common stock, as of the latest practicable date: August 5, 2011- 640,200 shares of common stock.
PART I
Item 1. Financial Statements
The Financial Statements of the Registrant required to be filed with this 10-Q Quarterly Report were prepared by management and commence below, together with related notes. In the opinion of management, the Financial Statements fairly present the financial condition of the Registrant.
MCT HOLDING CORPORATION
UNAUDITED CONDENSED
FINANCIAL STATEMENTS
JUNE 30, 2011
2
MCT HOLDING CORPORATION
CONTENTS
PAGE
—
Unaudited Condensed Balance Sheets,
June 30, 2011 and December 31, 2010
4
—
Unaudited Condensed Statements of Operations,
for the three and six months ended June 30, 2011 and 2010
5
—
Unaudited Condensed Statements of Cash Flows,
for the six months ended June 30, 2011 and 2010
6
—
Notes to Unaudited Condensed Financial Statements
7 - 12
3
MCT HOLDING CORPORATION
UNAUDITED CONDENSED BALANCE SHEETS
ASSETS
| | | | | |
| June 30, 2011 | | December 31, 2010 |
CURRENT ASSETS: | | (Unaudited) | | | |
Cash | $ | 164 | | $ | 780 |
Inventory | | 250 | | | - |
Total Current Assets | | 414 | | | 780 |
| | | | | |
PROPERTY AND EQUIPMENT, net | | - | | | 8,567 |
| | | | | |
OTHER ASSETS: | | | | | |
Rent Deposit | | 1,000 | | | 1,000 |
Total Other Assets | | 1,000 | | | 1,000 |
Total Assets | $ | 1,414 | | $ | 10,347 |
| | | | | |
LIABILITIES AND STOCKHOLDERS’ (DEFICIT) |
| | | | | |
CURRENT LIABILITIES: | | | | | |
Accounts payable | $ | 31,843 | | $ | 18,297 |
Accounts payable - related party | | 83,819 | | | 75,006 |
Accrued expenses | | 1,320 | | | 1,778 |
Interest payable - related party | | 132,241 | | | 120,281 |
Notes payable - related party | | 357,372 | | | 333,413 |
Total Current Liabilities | | 606,595 | | | 548,775 |
| | | | | |
STOCKHOLDERS’ (DEFICIT): | | | | | |
Preferred stock, $.001 par value 10,000,000 shares authorized, no shares issued and outstanding | |
- | | |
- |
Common Stock, $.001 par value, 100,000,000 shares authorized, 640,200 shares issued and outstanding | |
641 | | |
641 |
Capital in excess of par value | | (21,122) | | | (21,122) |
Retained Deficit | | (584,700) | | | (517,947) |
Total Stockholders’ (Deficit) | | (605,181) | | | (538,428) |
Total Liabilities and Stockholders’ (Deficit) | $ | 1,414 | | $ | 10,347 |
The accompanying notes are an integral part of these unaudited financial statements.
MCT HOLDING CORPORATION
UNAUDITED CONDENSED STATEMENTS OF OPERATIONS
| | | | | | | | | | | |
| For the Three Months Ended June 30, | | For the Six Months Ended June 30, |
| 2011 | | 2010 | | 2011 | | 2010 |
REVENUE | $ | 1,240 | | $ | - | | $ | 2,540 | | $ | - |
COST OF GOODS SOLD | | 500 | | | - | | | 500 | | | - |
| | | | | | | | | | | |
GROSS PROFIT | | 740 | | | - | | | 2,040 | | | - |
| | | | | | | | | | | |
EXPENSES: | | | | | | | | | | | |
General and Administrative | | 19,609 | | | - | | | 19,609 | | | - |
Total Expenses | | 19,609 | | | - | | | 19,609 | | | - |
INCOME (LOSS) FROM OPERATIONS | | (18,869) | | | - | | | (17,569) | | | - |
| | | | | | | | | | | |
OTHER INCOME (EXPENSE): | | | | | | | | | | | |
Interest income | | - | | | - | | | - | | | - |
Interest expense | | (6,158) | | | - | | | (6,158) | | | - |
Total Other Income (Expense) | | (6,158) | | | - | | | (6,158) | | | - |
| | | | | | | | | | | |
LOSS BEFORE INCOME TAXES | | (25,027) | | | - | | | (23,727) | | | - |
| | | | | | | | | | | |
CURRENT TAX EXPENSE | | - | | | - | | | - | | | - |
DEFERRED TAX EXPENSE | | - | | | - | | | - | | | - |
| | | | | | | | | | | |
LOSS FROM CONTINUING OPERATIONS | | (25,027) | | | - | | | (23,727) | | | - |
| | | | | | | | | | | |
DISCONTINUED OPERATIONS: | | | | | | | | | | | |
Loss from operations of discontinued Tanning Salon business (net $0 in income taxes) | | (5,007) | | | (20,053) | | | (35,052) | | | (48,350) |
Gain (loss) on disposal of discontinued operations (net of $0 in income taxes) | | (1,511) | | | - | | | (7,974) | | | - |
| | | | | | | | | | | |
LOSS FROM DISCONTINUED OPERATIONS | | (6,518) | | | (20,053) | | | (43,026) | | | (48,350) |
NET INCOME (LOSS) | $ | (31,545) | | $ | (20,053) | | $ | (66,753) | | $ | (48,350) |
| | | | | | | | | | | |
INCOME (LOSS) PER COMMON SHARE | | | | | | | | | | | |
Continuing operations | $ | (0.04) | | $ | (0.00) | | $ | (0.04) | | $ | (0.00) |
Operations of discontinued Tanning Salon business | $ | (0.01) | | $ | (0.03) | | $ | (0.05) | | $ | (0.08) |
Gain(loss) on disposal of discontinued operations | $ | (0.00) | | $ | (0.00) | | $ | (0.01) | | $ | (0.00) |
Net Loss per Share | $ | (0.05) | | $ | (0.03) | | $ | (0.10) | | $ | (0.08) |
The accompanying notes are an integral part of these unaudited financial statements.
MCT HOLDING CORPORATION
UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS
| | | | |
| For the Six Months Ended June 30, |
| 2011 | 2010 |
Cash Flows From Operating Activities: | | | | |
Net loss | $ | (66,753) | $ | (48,350) |
Adjustments to reconcile net loss to net cash Used by operating activities: | | | | |
Depreciation and amortization | | 593 | | 1,321 |
Changes in assets and liabilities: | | | | |
Loss on Disposal of Assets of discontinued operations | | 7,974 | | - |
(Increase) Decrease in inventory | | (250) | | - |
(Increase) Decrease in federal tax receivable | | - | | 25 |
(Increase) Decrease in prepaid taxes | | - | | 435 |
Increase (Decrease) in accounts payable | | 13,546 | | 3,634 |
Increase (Decrease) in accounts payable – related party | | 8,813 | | 4,207 |
Increase (Decrease) in accrued interest payable | | 11,960 | | 10,441 |
Increase (Decrease) in accrued expenses | | (458) | | 35 |
Net Cash Provided (Used) by Operating Activities | | (24,575) | | (28,252) |
| | | | |
Cash Flows From Investing Activities: | | | | |
Payments to purchase property and equipment | | - | | - |
Net Cash Provided (Used) by Investing Activities | | - | | - |
| | | | |
Cash Flows from Financing Activities: | | | | |
Proceeds from related party notes payable | | 23,959 | | 28,816 |
Net Cash Provided (Used) by Financing Activities | | 23,959 | | 28,816 |
| | | | |
Net Increase (Decrease) in Cash | | (616) | | 564 |
| | | | |
Cash at Beginning of Period | | 780 | | 390 |
Cash at End of Period | $ | 164 | $ | 954 |
| | | | |
Supplemental Disclosures of Cash Flow Information: | | | | |
Cash paid during the period for: | | | | |
Interest | $ | - | $ | - |
Income taxes | $ | - | $ | - |
Supplemental Schedule of Non-cash Investing and Financing Activities:
For the period ended June 30, 2011:
None
For the period ended June 30, 2010:
None
The accompanying notes are an integral part of these unaudited financial statements.
MCT HOLDING CORPORATION
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization - MCT Holding Corporation (“the Company”) was organized under the laws of the State of Nevada on November 10, 2004.
Two Suns L.L.C., (“Two Suns”) a Utah Limited Liability Company was organized on July 15, 2002. Two Suns operated a tanning salon in Salt Lake City, Utah, until March, 2011, when it changed the focus of its business to the sale of new and used tanning equipment.
On November 10, 2004, the Company entered into a merger transaction with Two Suns pursuant to a Plan of Merger signed November 8, 2004. The Company issued 600,000 shares of common stock for 100% of the members’ equity of Two Suns. Prior to the transaction, the Company had no operations. The merger with Two Suns has been accounted for as a recapitalization of the Company. The financial statements reflect the operations of Two Suns from July 15, 2002.
On March 8, 2011, the Company discontinued operating as a tanning salon, and started to operate with a focus on selling new and used tanning equipment.
The Company has, at the present time, not paid any dividends and any dividends that may be paid in the future will depend upon the financial requirements of the Company and other relevant factors.
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 June 30, 2011 and 2010 and for the six month periods then ended 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, 2010 audited financial statements. The results of operations for the periods ended June 30, 2011 and 2010 are not necessarily indicative of the operating results for the full year.
Advertising Costs - Advertising costs, except for costs associated with direct-response advertising, are charged to operations when incurred. The costs of direct-response advertising are capitalized and amortized over the period during which future benefits are expected to be received. During the six months ended June 30, 2011 and 2010, respectively, advertising costs amounted to $0 and $695.
Recently Enacted Accounting Standards – The FASB established the Accounting Standards Codification (“Codification” or “ASC”) as the source of authoritative accounting principles recognized by the FASB to be applied by nongovernmental entities in the preparation of financial statements in accordance with generally accepted accounting principles in the United States (“GAAP”). Rules and interpretive releases of the Securities and Exchange Commission (“SEC”) issued under authority of federal securities laws are also sources of GAAP for SEC registrants. Existing GAAP was not intended to be changed as a result of the Codification, and accordingly the change did not impact our financial statements. The ASC does change the way the guidance is organized and presented.
MCT HOLDING CORPORATION
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Continued]
Recently Enacted Accounting Standards (Continued) Accounting Standards Update (“ASU”) ASU No. through 2009-2 through ASU No. 2011-07 which contain technical corrections to existing guidance or affect guidance to specialized industries or entities were recently issued. These updates have no current applicability to the Company or their effect on the financial statements would not have been significant.
The Company has no tax positions at June 30, 2011 and December 31, 2010 for which the ultimate deductibility is highly certain but for which there is uncertainty about the timing of such deductibility.
The Company recognizes interest accrued related to unrecognized tax benefits in interest expense and penalties in operating expenses. During the period ended June 30, 2011 and 2010, the Company recognized no interest and penalties. The Company had no accruals for interest and penalties at June 30, 2011 and December 31, 2010.
Reclassification – The financial statements for periods prior to June 30, 2011 have been reclassified to conform to the headings and classifications used in the June 30, 2011 financial statements.
NOTE 2 - CAPITAL STOCK
Preferred Stock – The Company has authorized 10,000,000 shares of preferred stock, $.001 par value, with such rights, preferences and designations and to be issued in such series as determined by the Board of Directors. No shares are issued and outstanding at June 30, 2011 and December 31, 2010.
Common Stock – The Company has authorized 100,000,000 shares of common stock, $.001 par value. In November 2004, in connection with its merger with Two Suns, the Company issued 600,000 shares of its previously authorized but unissued common stock. The shares were issued for 100% of the members’ interest of Two Suns.
During 2006 the Company issued, through a private placement, 28,200 shares for cash of $47,000 or $1.67 per share.
During 2007 the Company issued, through a private placement, 12,000 shares for cash of $20,000 or $1.67 per share.
During 2008 the Company effected a three for one forward stock split making the total number of outstanding shares 640,200, at December 31, 2008. The financial statements have been restated for all periods presented, to reflect the stock split. The Company has 640,200 shares outstanding at June 30, 2011 and December 31, 2010.
MCT HOLDING CORPORATION
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
NOTE 3 - RELATED PARTY TRANSACTIONS
Management Compensation - The Company did not pay any compensation to its officers and directors during the periods ended June 30, 2011 and 2010.
Accounts Payable- The Company has outstanding debt owed to officers, directors, and stockholders of the Company or entities related to them. At June 30, 2011 the payable was $83,819 and $75,006 at December 31, 2010.
Notes Payable- The Company has issued several promissory notes to officers, directors and shareholders of the Company or entities related to them. The notes are unsecured, bear an interest rate of 7% per annum and are due and payable on demand. At June 30, 2011, the accrued interest associated with the various notes was $132,241 and $120,281 at December 31, 2010.
The Company has the following related party note payable obligations:
| | | | | |
| June 30, 2011 | | December 31, 2010 |
Related Party notes payable due on demand accruing interest at 7% per annum | $ | 357,372 | | $ | 333,413 |
Total | $ | 357,372 | | $ | 333,413 |
NOTE 4 - INCOME TAXES
The Company accounts for income taxes in accordance with ASC Topic No. 740. This standard requires the Company to provide a net deferred tax asset or liability equal to the expected future tax benefit or expense of temporary reporting differences between book and tax accounting and any available operating loss or tax credit carryforwards.
Deferred tax assets are comprised of the following:
| | | | | |
| | June 30 | | December 31 | |
| | 2011 | | 2010 | |
Deferred tax assets: | | | | | |
Depreciable assets | | $ (181) | | $ ( 47) | |
Net operating loss carryforward | | 59,676 | | 53,037 | |
Accounts Payable | | 47,975 | | 41,457 | |
Chartable Contribution Carryover | | 5 | | 5 | |
Less valuation allowance | | (107,475) | | (94,452) | |
| | $ 0 | | $ 0 | |
Recorded as follows: | | | | | |
Current asset | | $ 0 | | $ 0 | |
Current liability | | 0 | | 0 | |
| | | | | |
| | $ 0 | | $ 0 | |
MCT HOLDING CORPORATION
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
NOTE 4 - INCOME TAXES [Continued]
The Company has available at June 30, 2011, operating loss carryforwards of approximately $310,000, which may be applied against future taxable income and which expire in various years through 2031. All tax years starting with 2008 are open for examination.
The amount and ultimate realization of the benefits from the deferred tax assets for income tax purposes is dependent, in part, upon the tax laws in effect, the Company’s future earnings, and other future events, the effects of which cannot be determined. At June 30, 2011, the Company has recorded a valuation allowance of approximately $107,000 to fully offset the deferred tax asset. The change in the valuation allowance for the period ended June 30, 2011 is approximately $13,000.
The reconciliation of the provision (benefit) for income taxes computed at the U.S. federal statutory tax rate to the Company’s effective tax rate for the period ended June 30, 2011 and 2010 is as follows:
| | | | |
| | June |
| | 2010 | | 2009 |
| | | | |
Federal provision (benefit) at statutory rate | | 15.00% | | 15.00% |
State income tax net of federal tax benefit | | 4.25 | | 4.25 |
Other | | .26 | | .71 |
Change in valuation allowance | | (19.51) | | (19.96) |
| | | | |
Effective tax rate | | 0.00% | | 0.00% |
NOTE 5 - GOING CONCERN
The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplate continuation of the Company as a going concern. However, the Company has current liabilities in excess of current assets and has not yet been successful in establishing profitable operations. These factors raise substantial doubt about the ability of the Company to continue as a going concern. In this regard, management is proposing to raise any necessary additional funds not provided by operations through loans or through additional sales of its common stock. There is no assurance that the Company will be successful in raising this additional capital or in achieving profitable operations. The financial statements do not include any adjustments that might result from the outcome of these uncertainties.
NOTE 6 – OPERATING LEASE
Rental Agreement - The Company entered into an office lease for 1,614 square feet that expires July 31, 2012. The lease provides for a five year renewal option. Rent expense for the six months ended June 30, 2011 and 2010 was $8,394 and $8,070, respectively. Monthly lease payments are as follows: 1-36 months $1,345, 37-48 months $1,399, 49-60 months $1,455.
The Company is currently in the process of terminating the lease.
MCT HOLDING CORPORATION
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
NOTE 7 - LOSS PER SHARE
The following data shows the amounts used in computing loss per share:
| | | | | | | | |
| | For the Three Months Ended | | For the Six Months Ended |
| | June 30, | | June 30, |
| | 2011 | | 2010 | | 2011 | | 2010 |
| | | | | | | | |
Loss from continuing operations (numerator) | | $ (25,027) | | $ 0 | | $ (23,727) | | $ 0 |
| | | | | | | | |
Loss from discontinued operations (numerator) | | $ (5,007) | | $ (20,053) | | $ (35,052) | | $ (48,350) |
| | | | | | | | |
Gain (Loss) on disposal of discontinued operations (numerator) | | $ (1,511) | | $ 0 | | $ (7,974) | | $ 0 |
| | | | | | | | |
Loss available to common shareholders (numerator) | | $ (31,545) | | $ (20,053) | | $ (66,753) | | $ (48,350) |
| | | | | | | | |
Weighted average number of common | | | | | | | | |
shares outstanding used in loss per | | | | | | | | |
share for the period (denominator) | | 640,200 | | 640,200 | | 640,200 | | 640,200 |
Dilutive loss per share was not presented, as the Company had no common stock equivalent shares for all periods presented that would affect the computation of diluted loss per share.
NOTE 8 – DISCONTINUED OPERATIONS
On March 8, 2011, the Company discontinued its tanning salon operations, and retained assets to restructure its operating business to the purchase and sale of tanning equipment. The Company decided to discontinue its tanning salon because of continuing losses, decreases in revenues and to pursue other opportunities. Operations of the tanning salon have been reclassified in the statements of operations for all periods presented. The following is a summary of the results of operations of the discontinued tanning salon business.
MCT HOLDING CORPORATION
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
NOTE 8 – DISCONTINUED OPERATIONS [Continued]
| | | | | | | | | | | |
| Three Months Ended June 30, | | Six Months Ended June 30, |
| 2011 | | 2010 | | 2011 | | 2010 |
Revenue | $ | 362 | | $ | 11,594 | | $ | 7,333 | | $ | 23,824 |
General and administrative | | (5,369) | | | (25,614) | | | (35,990) | | | (60,412) |
Depreciation Expense | | 0 | | | (661) | | | (593) | | | (1,321) |
Interest Expense | | 0 | | | (5,372) | | | (5,802) | | | (10,441) |
Gain(Loss) on Disposal of Assets of discontinued operations | | (1,511) | | | 0 | | | (7,974) | | | 0 |
Net income (loss) | $ | (6,518) | | $ | (20,053) | | $ | (43,026) | | $ | (48,350) |
NOTE 9 – INVENTORY
Inventories, consisting primarily of tanning beds and tanning equipment, are stated at the lower of cost or market, with cost determined using primarily specific identification.
On March 8, 2011, after discontinuing the tanning salon operations, the assets were moved into the Company’s new operation which consists of the sales of new and used tanning equipment. The equipment moved into inventory consisted of 8 tanning beds with a historical cost of $72,977 that have been fully depreciated.
On June 30, 2011, upon evaluating the assets moved into the Company’s inventory, the Company determined the items were unsellable and disposed of or sold all items, not mentioned in the following paragraph.
As of June 30, 2011, 1 tanning bed remained in inventory with a historical cost of $7,000 and net book value of zero, in addition to the purchase of a tanning booth for $250. As of December 31, 2010, the Company had no inventory.
NOTE 10 – SUBSEQUENT EVENTS
The Company has evaluated subsequent events from the balance sheet date through the date the financial statements were issued, and determined there are no events to disclose except for the following paragraph.
In August 2011, the Company entered into an agreement to broker tanning beds. The agreement specified that the Company would receive 10% of revenues received for the sale of beds.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Forward-looking Statements
Statements made in this Quarterly Report which are not purely historical are forward-looking statements with respect to the goals, plan objectives, intentions, expectations, financial condition, results of operations, future performance and our business, including, without limitation, (i) our ability to raise capital, and (ii) statements preceded by, followed by or that include the words “may,” “would,” “could,” “should,” “expects,” “projects,” “anticipates,” “believes,” “estimates,” “plans,” “intends,” “targets” or similar expressions.
Forward-looking statements involve inherent risks and uncertainties, and important factors (many of which are beyond our control) that could cause actual results to differ materially from those set forth in the forward-looking statements, including the following, general economic or industry conditions, nationally and/or in the communities in which we may conduct business, changes in the interest rate environment, legislation or regulatory requirements, conditions of the securities markets, our ability to raise capital, changes in accounting principles, policies or guidelines, financial or political instability, acts of war or terrorism, other economic, competitive, governmental, regulatory and technical factors affecting our current or potential business and related matters.
Accordingly, results actually achieved may differ materially from expected results in these statements. Forward-looking statements speak only as of the date they are made. We do not undertake, and specifically disclaim, any obligation to update any forward-looking statements to reflect events or circumstances occurring after the date of such statements.
Plan of Operation
On March 8, 2011, our Board of Directors resolved to change the focus of our business operations from the operation of a tanning salon under the name “Malibu Club Tan” to the offer and sale of used tanning equipment, which would include the Company’s tanning equipment and used tanning equipment acquired from or sold as agent for other operating and closed tanning salons. We closed our present tanning operations on March 31, 2011. During this transition period, we have made an arrangement with an operating tanning salon, Heidi’s of Course LLC, whereby we will be paid a 25% referral commission on all tanning customers referred by us to this salon. No accounting of any such commissions has been made to us, but it is not expected that any such commissions paid or payable will be material. The Board primarily cited continuing losses and decreased revenues during the recent economic downturn for the change in direction. The Board believes there is a ready market for used tanning equipment; and further believes that other tanning salons that have closed and other currently operating tanning salons will provide an adequate source of supply of used tanning equipment to sell. We have created a website to commence our first marketing activities of used tanning equipment, MalibuTanningEquipment.yolasite.com, and we anticipate undertaking advertisements in local press or web outlets like The Nickel and Nickads.com, among other planned marketing activities. Our former tanning facilities located at 8675 South Highland Drive, Salt Lake City, Utah, 84093, are presently being used as a showroom for the sale of our tanning beds and for the storing of used tanning equipment we may acquire or broker for other tanning salons. This lease will expire July 31, 2012.
In August 2011, we entered into an agreement to broker tanning beds. The agreement specified that the Company would receive 10% of revenues received for the sale of beds.
Results of Operations
Three Months Ended June 30, 2011, Compared to Three Months Ended June 30, 2010.
We had $1,240 in revenue in the three months ended June 30, 2011, compared to $0 in revenue in the three months ended June 30, 2010. We had cost of goods sold of $500 for a gross profit of $740 for the three months ended June 30, 2011, compared to $0 in cost of goods sold and $0 for gross profit for the three months ended June 30, 2010. General and administrative expenses were $19,609 for the June 30, 2011 period, compared to $0 for the June 30, 2010, period. We had ($18,869) in loss from operations in the three months ended June 30, 2011, compared to $0 in the June 30, 2010, period. We had an interest expense of $6,158 for the quarter ended June 30, 2011, compared to $0 for the quarter ended June 30, 2010, for a loss from continuing operations of ($25,027) for the three months ended June 30, 2011 and $0 for the three months ended June 30, 2010. We had loss from discontinued operations of ($6,518) in the 2011 period compared to ($20,053) in the 2010 period. We had a net loss of ($31,545) for the June 30, 2011, period compared to a net loss of
($20,053) for the June 30, 2010, period. Comparisons between years are not meaningful as the 2010 amounts are shown as discontinued operations. See Note 8.
Six Months Ended June 30, 2011, Compared to Six Months Ended June 30, 2010.
We had $2,540 in revenue in the three months ended June 30, 2011, compared to $0 in revenue in the three months ended June 30, 2010. We had cost of goods sold of $500 for a gross profit of $2,040 for the six months ended June 30, 2011, compared to $0 in cost of goods sold and $0 for gross profit for the six months ended June 30, 2010. General and administrative expenses were $19,609 for the June 30, 2011 period, compared to $0 for the June 30, 2010, period. We had ($17,569) in loss from operations in the six months ended June 30, 2011, compared to $0 in the June 30, 2010, period. We had an interest expense of $6,158 for the quarter ended June 30, 2011, compared to $0 for the quarter ended June 30, 2010, for a loss from continuing operations of ($23,727) for the six months ended June 30, 2011 and $0 for the six months ended June 30, 2010. We had loss from discontinued operations of ($43,026) in the 2011 period compared to ($48,350) in the 2010 period. We had a net loss of ($66,753) for the June 30, 2011, period compared to a net loss of ($48,350) for the June 30, 2010, period. Comparisons between years are not meaningful as the 2010 amounts are shown as discontinued operations. See Note 8.
Liquidity
We have limited cash or cash equivalents on hand. As of June 30, 2011, we had $164 in cash. If additional funds are required, such funds may be advanced by management or stockholders as loans to us. During the three months ended June 30, 2011, cumulative accounts payable to a principal stockholder amounted to $83,819. We have notes payable in the aggregate amount of $357,372 outstanding as of June 30, 2011, which are unsecured, bear interest at 7% per annum and are due on demand.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Not required.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our chief executive officer and chief financial officer, evaluated the effectiveness of our disclosure controls and procedures as defined in Rule 13a-15(e) under the Exchange Act as of the end of the period covered by this Quarterly Report on Form 10-Q. In designing and evaluating the disclosure controls and procedures, our management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs. The design of any disclosure controls and procedures also is based in part upon certain assumptions about the likelihood of future events and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.
Based on that evaluation, our chief executive officer and chief financial officer concluded that, as of June 30, 2011, our disclosure controls and procedures were, subject to the limitations noted above, effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules, regulations and forms, and that such 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.
Changes in Internal Control over Financial Reporting
Our management, with the participation of the chief executive officer and chief financial officer, has concluded there were no significant changes in our internal controls over financial reporting that occurred during our last quarter 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.
None; not applicable.
Item 1A. Risk Factors.
Not required.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
None; not applicable.
Item 3. Defaults Upon Senior Securities.
None; not applicable.
Item 4. (Removed and Reserved).
Item 5. Other Information.
None; not applicable.
Item 6. Exhibits.
Exhibit No. Identification of Exhibit
| |
31.1
31.2
32 | Certification Pursuant to Section 302 of the Sarbanes-Oxley Act provided by David C. Merrell, President, and Director. Certification Pursuant to Section 302 of the Sarbanes-Oxley Act provided by Lindsey Hailstone, Secretary, Treasurer and director Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 provided by David C. Merrell, President and director and Lindsey Hailstone, Secretary, Treasurer and director |
101.INS | XBRL Instance Document* |
101.PRE. | XBRL Taxonomy Extension Presentation Linkbase* |
101.LAB | XBRL Taxonomy Extension Label Linkbase* |
101.DEF | XBRL Taxonomy Extension Definition Linkbase* |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase* |
101.SCH | XBRL Taxonomy Extension Schema* |
*Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed “furnished” and not “filed” or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, or deemed “furnished” and not “filed” for purposes of Section 18 of the Securities and Exchange Act of 1934, and otherwise is not subject to liability under these sections.
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
MCT HOLDING CORPORATION
| | | | |
Date: | August 9, 2011 | | By: | /s/David C. Merrell |
| | | | President, and Director |
| | | | |
Date: | August 9, 2011 | | By: | /s/Lindsey Hailstone |
| | | | Secretary, Treasurer and Director |
