` 
**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

 

**FORM 10-QSB**

 

(Mark One)

**[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**

For the quarterly period ended: March 31, 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, California

92203

(Address of principal executive offices)

(Zip Code)
  
(760) 772-1872

(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 (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 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 [   ]

 

**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 Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.

Yes [   ] No [   ]

 

**APPLICABLE ONLY TO CORPORATE ISSUERS:**

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as April 24, 2008: 5,230,000

 

 

 
 

**MIDNIGHT CANDLE COMPANY**

**(A Development Stage Company)**

 

 

**Table of Contents**

 
 
Page
  
PART I - FINANCIAL INFORMATION

3

     Unaudited Financial Statements

3

          CONDENSED BALANCE SHEET

4

          CONDENSED STATEMENT OF OPERATIONS

5
          CONDENSED STATEMENTS OF CASH FLOWS

6
          NOTES TO CONDENSED FINANCIAL STATEMENTS

7
     Management's Discussion and Plan of Operation

14

     Controls and Procedures

15

PART II - OTHER INFORMATION

16
     Exhibits and Reports on Form 8-K

16
SIGNATURES

17
 

 

 
 
-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)**

**CONDENSED BALANCE SHEET (UNAUDITED)**

**MARCH 31, 2008**

 

**ASSETS**
  
**2008**

Current Asset:
  
   Cash and cash equivalents

$

1,509

   Accounts receivable
 
122

   Inventory
 
437
   
      Total Current Assets
 
2,068
   
**TOTAL ASSET**

$

2,068
   
**LIABILITIES AND STOCKHOLDER’S (DEFICIT)**
     
**LIABILITY**
  
  Current Liabilities:
  
     Notes payable	- stockholder

$

15,000
   
         Total Current Liabilities
 
15,000
   
          **Total Liabilities**
 
15,000
   
**STOCKHOLDER’S (DEFICIT)**
  
    Common stock, $.001 Par Value, 100,000,000 shares authorized;
  
      5,230,000 shares issued and outstanding
 
5,230

   Additional paid-in capital
 
23,270

   Deficit accumulated during the development stage
 
(41,432)
   
           **Total Stockholder’s (Deficit)**
 
(12,932)
   
**TOTAL LIABILITIES AND STOCKHOLDER’S (DEFICIT)**

$

2,068

 

 

 

The accompanying notes are an integral part of these condensed financial statements.

 

 
 
-4-

 
**MIDNIGHT CANDLE COMPANY**

**(A DEVELOPMENT STAGE COMPANY)**

**CONDENSED STATEMENT OF OPERATIONS (UNAUDITED)**

**FOR THE THREE MONTHS ENDED MARCH 31, 2008 AND 2007**

**(WITH CUMULATIVE TOTALS SINCE INCEPTION)**

 
  
**Cumulative Totals**
  
**September 24, 2004 (inception)**
 
**2008**

**2007**

**through March 31, 2008**
       
**OPERATING REVENUES**
      
   Sales, net of allowance

$
-

$
-

$
464
       
Cost Of Sales
 
-
 
-
 
273

Freight in
 
-
 
-
 
95
       
**GROSS PROFIT**
 
-
 
-
 
96
       
**OPERATING EXPENSES**
      
   Professional fees
 
3,638
 
3,699
 
26,974

   General and administrative expenses
 
1,103
 
36
 
14,555

      **Total Operating Expenses**
 
4,741
 
3,735
 
41,529
       
**LOSS BEFORE OTHER EXPENSE**
 
(4,741)
 
(3,735)
 
(41,433)
       
**OTHER (INCOME) EXPENSE**
   
 
  
    Interest (income) expense
 
-
 
-
 
(1)

**       Total Other (Income) Expense**
 
-
 
-
 
(1)
       
**LOSS BEFORE PROVISION FOR INCOME TAXES**
 
(4,741)
 
(3,735)
 
(41,432)

    Provision for income taxes
 
-
 
-
 
-
       
**NET LOSS APPLICABLE TO COMMON SHARES**

$
(4,741)

$
(3,735)

$
(41,432)
       
**WEIGHTED AVERAGE COMMON SHARES**
      
**   OUTSTANDING**
 
5,230,000
 
5,230,000
         
**BASIC AND DILUTED LOSS PER COMMON SHARE**

$
(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 (UNAUDITED)**

**FOR THE THREE MONTHS ENDED MARCH 31, 2008 AND 2007**

**(WITH CUMULATIVE TOTALS SINCE INCEPTION)**

 
  
**Cumulative Totals**
  
**September 24, 2004 (inception)**
 
**2008**

**2007**

**through March 31, 2008**

**CASH FLOWS FROM OPERATING ACTIVITIES**
      
Net loss

$

(4,741)

$

(3,735)

$

(41,432)
       
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
 
-
 
-
 
(437)

    (Decrease) in accounts payable
 
-
 
(1,973)
 
-
       
**     **Total adjustments
 
-
 
(1,973)
 
(599)
       
       Net cash (used in) operating activities
 
(4,741)
 
(5,708)
 
(41,991)
       
**CASH FLOWS FROM FINANCING ACTIVITIES**
      
**   **Issuance of common stock
 
-
 
-
 
28,500

   Proceeds from notes payable	- stockholder
 
5,000
 
5,000
 
15,000
       
      Net cash provided by financing activities
 
5,000
 
5,000
 
43,500
       
**NET INCREASE (DECREASE) IN**
      
    **CASH AND CASH EQUIVALENTS**
 
259
 
(708)
 
1,509
       
**CASH AND CASH EQUIVALENTS -**
      
     **BEGINNING OF PERIOD**
 
1,250
 
1,248
 
-
       
**CASH AND CASH EQUIVALENTS - END OF PERIOD**

$

1,509

$

540

$

1509
       
**SUPPLEMENTAL CASH FLOW INFORMATION:**
      
   During the year and 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**

**MARCH 31, 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-QSB 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 notes 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)**

**MARCH 31, 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 March 31, 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)**

**MARCH 31, 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 March 31, 2008.

 

**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)**

**MARCH 31, 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 financial 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 interim 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)**

**MARCH 31, 2008 AND 2007**

**(UNAUDITED)**

 

 

**NOTE 2  -  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)**

 

**Recent Accounting Pronouncements**

 

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 activities.

 

**Net (Loss) Per Share of Common Stock**

 

The following table sets forth the computation of basic and diluted earnings per share for the three months ended March 31, 2008 and 2007:

 
 
**2008**
 
**2007**
    
Net loss

$      (4,741)
 
$      (3,735)
    
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 March 31, 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)**

**MARCH 31, 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, dueon 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 March 31, 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

 

 

 
 
-12-

 
**MIDNIGHT CANDLE COMPANY**

**(A DEVELOPMENT STAGE COMPANY)**

**NOTES TO CONDENSED FINANCIAL STATEMENTS (CONTINUED)**

**MARCH 31, 2008 AND 2007**

**(UNAUDITED)**

 

 

**NOTE 5  -  GOING CONCERN (CONTINUED)**

 

being raised that the operations and sales will make the Company a viable entity over the next twelve months.

 

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 March 31, 2008 and 2007, deferred tax assets consist of the following:

 
 
2008

2007

Deferred tax assets

$12,430

$10,064

Less:  valuation allowance

(12,430)

(10,064)

Net deferred tax assets

$        -0-

$      -0-

 

At March 31, 2008 and 2007, the Company had accumulated deficits during the development stage of $41,432 and $33,546 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 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, Alchemy’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*

 

We were incorporated in the State of Nevada on September 24, 2004.  During the three month periods ended March 31, 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 March 31, 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 March 31, 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 March 31, 2008, we incurred operating expenses in our continued pursuit of our candle business in the amount of $4,741, consisting of $3,638 in professional fees and general and administrative expenses in the amount of $1,103.  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.  Comparatively, our total expenses for the most recent quarter were 27% (or $1,006) higher than the three month period ended March 31, 2007, where our expenses totaled $3,735.  Our management believes this increase in aggregate expenses is due, in part, to the increased costs for professional services.  Total operating expenses since our inception on September 24, 2004 to March 31, 2008 were $41,433, of which $26,974 is attributable to professional fees and $14,555 in general and administrative expenses.  

 

Our net loss for the three months ended March 31, 2008 was $4,741, compared to $3,735 in the quarter ended March 31, 2007.  After accounting for interest income of $1, our net loss since the date of our inception through March 31, 2008 was $41,432.  We expect to incur ongoing losses for the foreseeable future and are unable to predict when, if at all, we will become profitable.  

 

Our management believes that our cash on hand as of March 31, 2008 in the amount of $1,509 is not sufficient to maintain our current minimal level of operations for the next approximately 12 months.  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 $10,000 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 name.  

 

 

-14-

 
However, as we have minimal existing inventory, in the amount of $437, 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 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 realization 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 officers and sole 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 officers’ and directors’ 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.

 

**Controls and Procedures**

 

We maintain a set of disclosure controls and procedures designed to ensure that information required to be disclosed 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.

 

Based upon their 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 are not effective to ensure that information required to be included in our periodic SEC filings is recorded, processed, summarized, and reported within the time periods specified in the SEC rules and forms.

 

Our board of directors was advised by Bagell, Josephs, Levine & Company, L.L.C., our independent registered public accounting firm, that during their performance of audit procedures for 2007 Bagell, Josephs, Levine & Company, L.L.C. identified a material weakness as defined in Public Company Accounting Oversight Board Standard No. 2 in our internal control over financial reporting.

 

This deficiency consisted primarily of inadequate staffing and supervision that could lead to the untimely identification and resolution of accounting and disclosure matters and failure to perform timely and effective reviews.  However, our size prevents us from being able to employ sufficient resources to enable us to have adequate segregation of duties within our internal control system.  Management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

 
 
-15-

 
 

**PART II - OTHER INFORMATION**

 

**Exhibits and Reports on Form 8-K**

 

**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.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
 
-16-

 
**SIGNATURES**

 

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 

May 1, 2008

Helen C. Cary

Chief Executive Officer
    
/s/Patrick Deparini

Secretary/Treasurer and

May 1, 2008

Patrick Deparini

Chief Financial Officer
    
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
 
-17-

`