UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTER ENDED MARCH 31, 2005
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 [33-22142]
MIDNIGHT HOLDINGS GROUP, INC.
f/k/a REDOX TECHNOLOGY CORPORATION
(Exact name of small business issuer as specified in its charter)
DELAWARE 55-0681106
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3872 ROCHESTER ROAD, TROY, MICHIGAN 48083
(Address of principal executive offices)
(248) 743-0154
(Issuer's telephone number)
Check whether the issuer (1) 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 [ ] 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 MARCH 31, 2005
Common Stock, $0.00005 par value 85,627,061
Transitional Small Business Disclosure Format (Check one): Yes [ ] No [ X ]
TABLE OF CONTENTS
HEADING PAGE
- ------- ----
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements..................................................................... 1
Balance Sheets - March 31, 2005 and December 31, 2004.............................. 1
Statements of Expenses - three months ended March 31, 2005 and 2004
and the period from inception on April 9, 1993 through March 31, 2005............... 2
Statements of Cash Flows - three months ended March 31, 2005 and 2004 and
the period from inception on April 9, 1993 through March 31, 2005................... 3
Notes to Financial Statements ...................................................... 5
Item 2. Management's Discussion and Analysis or Plan of Operations............................... 6
Item 3. Controls and Procedures.................................................................. 7
PART II. OTHER INFORMATION
Item 1. Legal Proceedings........................................................................ 8
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.............................. 8
Item 3. Defaults Upon Senior Securities.......................................................... 8
Item 4. Submission of Matters to a Vote of Securities Holders.................................... 8
Item 5. Other Information........................................................................ 8
Item 6. Exhibits and Reports on Form 8-K......................................................... 8
Signatures............................................................................... 9
PART I
ITEM 1. FINANCIAL STATEMENTS
MIDNIGHT HOLDINGS GROUP, INC.
f/k/a REDOX TECHNOLOGY CORPORATION
(A Development Stage Company)
BALANCE SHEET
(unaudited)
ASSETS March 31, December 31,
2005 2004
----------- -----------
Cash $ 183 $ 219
=========== ===========
LIABILITIES AND STOCKHOLDERS' DEFICIT
LIABILITIES
Accounts payable $ 240,477 $ 220,915
Accrued expenses 510,329 329,580
Due to related party 15,000 15,000
Convertible notes payable, net of unamortized discount
of $241,956 and $281,525 respectively 258,044 218,475
Derivative liabilities 396,980 228,350
Accrued debt non-compliance costs 863,636 214,285
----------- -----------
Total Liabilities 2,284,466 1,226,605
----------- -----------
Commitments and contingency -- --
STOCKHOLDERS' DEFICIT
Convertible Preferred stock, $.001 par, 10,000,000
shares authorized, none issued and outstanding -- --
Common stock, $.00005 par, 100,000,000,000 shares
authorized, 85,627,061 shares issued and outstanding 4,281 4,281
Additional paid in capital 6,211,784 6,211,784
Deficit accumulated during the development stage (8,500,348) (7,442,451)
----------- -----------
Total Stockholders' Deficit (2,284,283) (1,226,386)
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 183 $ 219
=========== ===========
MIDNIGHT HOLDINGS GROUP, INC.
f/k/a REDOX TECHNOLOGY CORPORATION
(A Development Stage Company)
STATEMENTS OF EXPENSES
Three Months Ended March 31, 2005, and 2004, and
the Period from April 9, 1993 (Inception) Through March 31, 2005
(unaudited)
Inception
Through
March 31,
2005 2004 2005
------------ ------------ ------------
General & administrative
- cash $ 200,347 $ 48,428 $ 2,503,586
- non-cash -- 464,468 4,225,233
- warrants -- -- 3,698
Impairment expense -- -- 161,923
Research & development -- -- 150,965
Interest expense 39,569 12,729 378,186
Depreciation -- -- 53,959
Loss on derivatives 168,630 -- 159,162
Debt non-compliance costs 649,351 -- 863,636
------------ ------------ ------------
Net loss $ (1,057,897) $ (525,625) $ (8,500,348)
============ ============ ============
Basic and diluted net loss
per common share $ (.01) $ (.01)
Weighted average common
shares outstanding 85,627,061 75,819,783
MIDNIGHT HOLDINGS GROUP, INC.
f/k/a REDOX TECHNOLOGY CORPORATION
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
Three Months Ended March 31, 2005, and 2004, and
the Period from April 9, 1993 (Inception) Through March 31, 2005
(unaudited) Inception
Through
March 31,
2005 2004 2005
----------- ----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(1,057,897) $ (525,625) $(8,500,348)
Adjustments to reconcile
net loss to cash used in
operating activities:
Stock issued for lawsuit -- -- 127,500
Stock issued for patent -- -- 1,500
Stock issued for services -- 464,468 3,896,568
Warrant expense -- -- 3,698
Depreciation -- -- 53,959
Impairment expense -- -- 161,923
Amortization of discount 39,569 -- 115,862
Loss on derivatives 168,630 -- 159,162
Change in:
Accounts payable 19,562 4,680 240,477
Accrued expenses 180,749 43,748 619,833
Debt non-compliance costs 649,351 -- 863,636
Accrued interest on note payable
to founder -- 12,729 196,570
----------- ----------- -----------
NET CASH USED IN OPERATING ACTIVITIES (36) -- (2,059,660)
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of fixed assets -- -- (65,882)
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Sales of common stock -- -- 120,350
Contributions to capital by founder -- -- 20,500
Proceeds from note payable to related party -- -- 1,589,875
Advances by related party -- -- 15,000
Net proceeds from note payable -- -- 380,000
----------- ----------- -----------
NET CASH PROVIDED BY FINANCING
ACTIVITIES -- -- 2,125,725
----------- ----------- -----------
NET CHANGE IN CASH (36) -- 183
CASH AT BEGINNING OF PERIOD 219 -- --
----------- ----------- -----------
CASH AT END OF PERIOD $ 183 $ -- $ 183
=========== =========== ===========
SUPPLEMENTAL DISCLOSURES:
Interest paid $ -- $ -- $ --
Income taxes paid -- -- --
NONCASH ACTIVITIES:
Paid in capital converted into
note to founder $ -- $ -- $ 1,591,831
Note to founder and accrued interest
exchanged for common stock -- -- 1,146,467
Stock for accrued expenses -- 43,749 43,749
Debt forgiven by founder -- 705,733 705,733
Discount on debt -- 380,000 380,000
Stock issued for licenses -- 150,000 150,000
MIDNIGHT HOLDINGS GROUP, INC.
f/k/a REDOX TECHNOLOGY CORPORATION
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
(unaudited)
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited interim financial statements of Midnight Holdings
Group, Inc. ("Midnight") (formerly Redox Technology Corporation ("Redox")), have
been prepared in accordance with accounting principles generally accepted in the
United States of America and the rules of the Securities and Exchange Commission
("SEC"), and should be read in conjunction with the audited financial statements
and notes thereto contained in Midnight's Annual Report filed with the SEC on
Form 10-KSB. In the opinion of management, all adjustments, consisting of normal
recurring adjustments, necessary for a fair presentation of financial position
and the results of operations for the interim periods presented have been
reflected herein. The results of operations for interim periods are not
necessarily indicative of the results to be expected for the full year. Notes to
the financial statements which would substantially duplicate the disclosure
contained in the audited financial statements for 2004 as reported in the 10-KSB
have been omitted.
Note 2 - CHANGES IN DERIVATIVES
Derivative Changes in Derivative
Liabilities Derivative Liabilities
12/31/04 Liabilities 3/31/05
----------- ----------- -----------
Net proceeds of the Notes $ 500,000 $ -- $ 500,000
Less: Unamortized discount (281,525) 39,569 (241,956)
----------- ----------- -----------
Carrying value of notes 218,475 39,569 258,044
Derivative liabilities 228,350 168,630 396,980
Accrued debt
non-compliance costs 214,285 649,351 863,636
----------- ----------- -----------
Book Value $ 661,110 $ 857,550 $ 1,518,660
=========== =========== ===========
NOTE 3 - LICENSE AGREEMENTS
During the three months ended March 31, 2005, Redox continued to accrue minimum
royalty fees under the Screen Media Technology AS and Haynes Enterprises, Inc.
license agreements. $125,000 of the $500,000 owed for 2005 was accrued at March
31, 2005.
NOTE 4 - SUBSEQUENT EVENTS
On December 30, 2005, Redox signed a Share Exchange and Reorganization Agreement
with Midnight Auto Holdings, Inc. ("Midnight"), whereby Midnight shareholders
exchanged all of the outstanding and issued capital stock of Midnight for
374,144,130 shares of Redox common stock representing 80% of the outstanding
common stock of Redox after giving effect to the transaction. The transaction
was accounted for as a reverse acquisition. Redox changed its name to Midnight
Holdings Group, Inc., as a result of the merger.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
THIS QUARTERLY REPORT ON FORM 10-QSB AND THE DOCUMENTS INCORPORATED HEREIN
CONTAIN "FORWARD-LOOKING STATEMENTS" WITHIN THE MEANING OF THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995. SUCH FORWARD-LOOKING STATEMENTS
INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND OTHER FACTORS WHICH MAY CAUSE
THE ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS OF THE COMPANY, OR INDUSTRY
RESULTS, TO BE MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS, PERFORMANCE OR
ACHIEVEMENTS EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS. WHEN USED
IN THIS QUARTERLY REPORT, STATEMENTS THAT ARE NOT STATEMENTS OF CURRENT OR
HISTORICAL FACT MAY BE DEEMED TO BE FORWARD-LOOKING STATEMENTS. WITHOUT LIMITING
THE FOREGOING, THE WORDS "PLAN", "INTEND", "MAY," "WILL," "EXPECT," "BELIEVE",
"COULD," "ANTICIPATE," "ESTIMATE," OR "CONTINUE" OR SIMILAR EXPRESSIONS OR OTHER
VARIATIONS OR COMPARABLE TERMINOLOGY ARE INTENDED TO IDENTIFY SUCH
FORWARD-LOOKING STATEMENTS. READERS ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON
THESE FORWARD-LOOKING STATEMENTS, WHICH SPEAK ONLY AS OF THE DATE HEREOF. EXCEPT
AS REQUIRED BY LAW, THE COMPANY UNDERTAKES NO OBLIGATION TO UPDATE ANY
FORWARD-LOOKING STATEMENTS, WHETHER AS A RESULT OF NEW INFORMATION, FUTURE
EVENTS OR OTHERWISE.
ANY REFERENCE TO "REDOX", THE "COMPANY"," WE", "US", "OUR" OR THE "REGISTRANT"
REDOX TECHNOLOGY CORPORATION AND ITS SUBSIDIARIES AS OF MARCH 31, 2005. THE
FOLLOWING INFORMATION SHOULD BE READ IN CONJUNCTION WITH THE FINANCIAL
STATEMENTS AND NOTES THERETO APPEARING ELSEWHERE IN THIS FORM 10-QSB.
GENERAL
The Company is continuing its efforts to acquire a target business, including
identifying and evaluating prospective acquisition candidates, selecting the
target business and structuring, negotiating and consummating the business
combination. The Company has no particular acquisitions in mind and has not
entered into any negotiations regarding such acquisitions. None of the Company's
officers, directors, promoters or affiliates has engaged in any discussions with
any representative of any other company regarding the possibility of an
acquisition or merger between the Company and such other company as of the date
of this Form 10-QSB.
The Company has, and will continue to have, no capital with which to provide the
owners of the business opportunities with any significant cash or other assets.
However, management believes the Company will be able to offer owners of
acquisition candidates the opportunity to acquire a controlling ownership
interest in a publicly registered company without incurring the cost and time
required to conduct an initial public offering. The owners of business
opportunities will, however, incur significant legal and accounting costs in
connection with the acquisition of a business opportunity, including the costs
of preparing Form 8-Ks, 10-Ks or 10-KSBs, 10-Qs or 10-QSBs, agreements and
related reports and documents. The Securities Exchange Act of 1934, as amended
(the "Exchange Act") requires that any merger or acquisition candidate comply
with all applicable reporting requirements, which include providing audited
financial statements to be included within the numerous filings relevant to
complying with the Exchange Act.
The Company did not have any operating income for the three months ended March
31, 2005. For the three months ended March 31, 2005, the Company recognized a
net loss of $1,057,897 and for the period from inception through March 31, 2005,
the Company recognized a net less of $8,500,348.
LIQUIDITY AND CAPITAL RESOURCES
The Company is in the development stage. At March 31, 2005 the Company had no
capital resources and will rely upon the issuance of debt or equity to fund
administrative expenses pending acquisition of an operating company.
The Company will carry out its plan of business as discussed above. The Company
cannot predict to what extent its liquidity and capital resources will be
diminished prior to the consummation of a business combination or whether its
capital will be further depleted by operating losses (if any) of the business
entity which the Company may eventually acquire.
RESULTS OF OPERATIONS
During the three months ended March 31, 2005, the Company has engaged in no
significant operations other than administrative activities. No revenue was
received by the Company during this period.
For the current fiscal year, the Company anticipates incurring a loss as a
result of administrative expenses, and expenses associated with locating and
evaluating acquisition candidates. The Company anticipates that until a business
combination is competed with an acquisition candidate, it will not generate
revenues other than interest income, and may continue to operate at a loss after
completing a business combination, depending on the performance o the acquired
business.
NEED FOR ADDITIONAL FINANCING
The Company believes that it will have to raise funds from a private offering of
debt or equity securities in order to accomplish the goal of completing a
combination. There is no assurance, however, that the Company will obtain such
funding
CRITICAL ACCOUNTING POLICIES
Our financial statements and related public financial information are based on
the application of accounting principles generally accepted in the United States
("GAAP"). GAAP requires the use of estimates; assumptions, judgments and
subjective interpretations of accounting principles that have an impact on the
assets, liabilities, revenue and expense amounts reported. These estimates can
also affect supplemental information contained in our external disclosures
including information regarding contingencies, risk and financial condition. We
believe our use if estimates and underlying accounting assumptions adhere to
GAAP and are consistently and conservatively applied. We base our estimates on
historical experience and on various other assumptions that we believe to be
reasonable under the circumstances. Actual results may differ materially from
these estimates under different assumptions or conditions. We continue to
monitor significant estimates made during the preparation of our financial
statements.
Our financial statements include substantial non-operating gains or losses
resulting from required quarterly reevaulation under GAAP of our outstanding
derivative instruments. Generally accepted accounting principles in the United
States requires that we report the value of certain derivative instruments we
have issued as current liabilities on our balance sheet and report changes in
the value of these derivatives as non-operating gains or losses on our statement
of operations. The value of the derivatives is required to be recalculated (and
resulting non-operating gains or losses reflected in our statement of operations
and resulting adjustments to the associated liability amounts reflected on our
balance sheet) on a quarterly basis, and is based on the market value of our
common stock. Due to the nature of the required calculations and the large
number of shares of our common stock involved in such calculations, changes in
our common stock price may result in significant changes in the value of the
derivatives and resulting gains and losses on our statement of operations.
ITEM 3. CONTROLS AND PROCEDURES.
As of the end of the period covered by this 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 as defined in Rules 13a-15(e) and 15d-15(e) of the Securities
Exchange Act of 1934. Based upon that evaluation, our chief executive officer
and principal financial officer concluded that our disclosure controls and
procedures were not effective to enable us to record, process, summarize and
report information required to be included in our periodic filings with the
Securities and Exchange Commission within the required time period and in that
some of the accounting entries relating to debt and equity instruments required
adjustment upon review by our independent auditors. We intend to take measures
to remedy this situation by increasing the accounting staff, engaging
independent auditors to provide us with accounting advice and implementing
internal procedures including the distribution of documents. These deficiencies
have been reported to our Board of Directors and we intend to improve and
strengthen our controls and procedures.
PART II
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 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
Exhibit 31.1 Certification of Chief Executive Officer Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002
Exhibit 31.2 Certification of Principal Accounting Officer
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
Exhibit 32.1 Certification of Chief Executive Officer Pursuant to
18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
Exhibit 32.2 Certification of Principal Accounting Officer
Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906
of the Sarbanes-Oxley Act of 2002
(b) Reports on Form 8-K
None.
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of
1934, the Registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
MIDNIGHT HOLDINGS GROUP, INC.
f/k/a REDOX TECHNOLOGY CORPORATION
Date: June 28, 2006 By: /s/ Nicholas A. Cocco
-------------------------------
Nicholas A. Cocco
President, Chief Executive
Officer and Director
Date: June 28, 2006 By: /s/ Richard Kohl
----------------------------------
Richard Kohl
Executive Vice President,
Secretary, Chief Financial
Officer
(Principal Accounting Officer)