UNITED STATES


SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549





FORM 10-Q





(Mark One)[X]
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the quarterly period ended: September 30, 2009Or[  ]
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period from ____________ to _____________Commission File Number: 000-51842MIDNIGHT CANDLE COMPANY(Exact name of registrant as specified in its charter)Nevada
20-1763307(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)79013 Bayside Court, Indio, CA
92203(Address of principal executive offices)
(Zip Code)(760) 772-1872(Registrant's telephone number, including area code)_____________(Former name, former address and former fiscal year, if changed since last report)


Indicate by check mark whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.


Yes [X]   No [   ]





Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.:





Large accelerated filer  [   ]
Accelerated filer                   [   ]Non-accelerated filer    [   ]
(Do not check if a smaller reporting company)
Smaller reporting company  [X]





Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act)


Yes [  ]   No [ X ]





Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date:





Common Stock, $0.001 par value
156,900,000 shares(Class)
(Outstanding as at November 16, 2009)









MIDNIGHT CANDLE COMPANY








Table of Contents








PagePART I – FINANCIAL INFORMATION
3Unaudited Financial Statements
3CONDENSED BALANCE SHEETS (UNAUDITED)
4CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED)
5CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
6NOTES TO CONDENSED FINANCIAL STATEMENTS
7Management's Discussion and Analysis of Financial Condition and Plan of Operation
15Controls and Procedures
18PART II – OTHER INFORMATION
21Exhibits
21SIGNATURES
22



































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-K for the year ended December 31, 2008 previously filed with the Commission on March 31, 2009.












































3





MIDNIGHT CANDLE COMPANY


(A DEVELOPMENT STAGE COMPANY)


CONDENSED BALANCE SHEETS (UNAUDITED)





ASSETS

September 30,


December 31,2009


2008Current Assets:Cash and cash equivalents

$
60


$
272Accounts receivable


-



122Inventory


438



438Total Current Assets


498



832TOTAL ASSETS

$
498


$
832LIABILITIES AND STOCKHOLDERS’ (DEFICIT)LIABILITIESCurrent Liabilities:Accounts payable

$
875


$
1,110Note payable


9,647



3,532Notes payable – related party


15,000



15,000Total Current Liabilities


25,522



19,642Total Liabilities


25,522



19,642STOCKHOLDERS’ (DEFICIT)Common stock, $.001 Par Value, 200,000,000 shares authorized;156,900,000 shares issued and outstanding


156,900



156,900Additional paid-in capital


(128,400
)


(128,400
)Deficit accumulated during the development stage


(53,524
)


(47,310
)Total Stockholder’s (Deficit)


(25,024
)


(18,810
)TOTAL LIABILITIES AND STOCKHOLDER’S (DEFICIT)

$
498


$
832










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





4


MIDNIGHT CANDLE COMPANY


(A DEVELOPMENT STAGE COMPANY)


CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED)


FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2009 AND 2008


(WITH CUMULATIVE TOTALS SINCE INCEPTION)





Cumulative TotalsFor the Nine Months Ended


For the Three Months Ended


September 24, 2004September 30,


September 30,


(Inception) through2009


2008


2009


2008


September 30, 2009OPERATING REVENUESSales, net of allowance of $107

$
-


$
-


$
-


$
-


$
464Cost Of  Sales


-



-



-



-



273Freight in


-



-



-



-



95GROSS PROFIT


-



-



-



-



96OPERATING EXPENSESProfessional fees


4,672



7,372



850



2,200



36,897General and administrative expenses


1,524



1,641



168



211



16,724Total Operating Expenses


6,214



9,013



1,018



2,411



53,621LOSS BEFORE OTHER INCOME


(6,214
)


(9,013
)


(1,018
)


(2,411
)


(53,525
)OTHER (INCOME)Interest (income)


-



-



-



-



(1
)Total Other (Income)


-



-



-



-



(1
)LOSS BEFORE PROVISION FOR


(6,214
)


(9,013
)


(1,018
)


(2,411
)


(53,524
)INCOME TAXESProvision for income taxes


-



-



-



-



-NET (LOSS) APPLICABLE TOCOMMON SHARES

$
(6,214
)

$
(9,013
)

$
(1,018
)

$
(2,411
)

$
(53,524
)WEIGHTED AVERAGE COMMONSHARES OUTSTANDING


156,900,000



156,900,000



156,900,000



156,900,000NET LOSS PER BASIC AND DILUTEDCOMMON SHARES OUTSTANDING

$
(0.00
)

$
(0.00
)

$
(0.00
)

$
(0.00
)










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





5


MIDNIGHT CANDLE COMPANY


(A DEVELOPMENT STAGE COMPANY)


CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)


FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2009 AND 2008


(WITH CUMULATIVE TOTALS SINCE INCEPTION)





Cumulative TotalsSeptember 24, 2004(inception) through2009


2008


September 30, 2009CASH FLOWS FROM OPERATING ACTIVITIESNet loss

$
(6,214
)

$
(9,013
)

$
(53,524
)Adjustments to reconcile net loss to net cash(used in) operating activitiesBad debt expense


122



-



122Changes in assets and liabilities(Increase) in accounts receivable


-



-



(122
)(Increase) in inventory


-



-



(438
)Increase (decrease) in accounts payable


(235
)


1,875



875Total adjustments


(113
)


1,875



437Net cash (used in) operating activities


(6,327
)


(7,138
)


(53,087
)CASH FLOWS FROM FINANCING ACTIVITIESIssuance of common stock


-



-



28,500Proceeds from note payable


6,115



1,250



9,647Proceeds from note payable – related party


-



5,000



15,000Net cash provided by financing activities


6,115



6,250



53,147NET INCREASE (DECREASE) INCASH AND CASH EQUIVALENTS


(212
)


(888
)


60CASH AND CASH EQUIVALENTS –BEGINNING OF PERIOD


272



1,250



-CASH AND CASH EQUIVALENTS – END OF PERIOD

$
60


$
362


$
60SUPPLEMENTAL CASH FLOW INFORMATION:During the period, cash was paid for the following:Interest

$
-


$
-


$
-Income taxes

$
-


$
-


$
-SUPPLEMENTAL DISCLOSURE OF NON-CASHINFORMATION: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


SEPTEMBER 30, 2009 AND 2008


(UNAUDITED)





NOTE 1 -               ORGANIZATION AND BASIS OF PRESENTATION





The condensed unaudited interim financial statements included have been prepared by Midnight Candle Company (“the Company”) without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). The condensed financial statements and notes are presented as permitted on Form 10-Q
and do not contain information included in the Company’s annual statements and notes.  Certain information and footnote disclosures normally included in the financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted as allowed by such rules and regulations, and the Company believes that the disclosures are adequate to make the information presented not misleading. It is suggested that these condensed
financial statements be read in conjunction with the December 31, 2008 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.





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.











7


MIDNIGHT CANDLE COMPANY


(A DEVELOPMENT STAGE COMPANY)


NOTES TO CONDENSED FINANCIAL STATEMENTS (CONTINUED)


SEPTEMBER 30, 2009 AND 2008


(UNAUDITED)





NOTE 2 -               SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES


(CONTINUED)





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 $250,000.  At September 30, 2009 and 2008, there were no uninsured balances.





Concentrations of Risks: Cash Balances





The Company maintains its cash in institutions insured by the Federal Deposit Insurance Corporation (FDIC).  This government corporation insured balances up to $100,000 through October 13, 2008.  As of October 14, 2008 all non-interest bearing transaction deposit accounts at an FDIC-insured institution, including all
personal and business checking deposit accounts that do not earn interest, are fully insured for the entire amount in the deposit account.  This unlimited insurance coverage is temporary and will remain in effect for participating institutions until December 31, 2009.





All other deposit accounts at FDIC-insured institutions are insured up to at least $250,000 per depositor until December 31, 2009.  On January 1, 2010, FDIC deposit insurance for all deposit accounts, except for certain retirement accounts, will return to at least $100,000 per depositor.  Insurance coverage for certain
retirement accounts, which include all IRA deposit accounts, will remain at $250,000 per depositor.





Accounts Receivable





Accounts receivable are stated at the amount the Company expects to collect from outstanding balances and do not bear interest.  The Company provides for probable uncollectible amounts through an allowance for doubtful accounts, if an allowance is deemed necessary.  The allowance for doubtful accounts is the Company’s
best estimate of the amount of probable credit losses in the Company’s existing accounts receivable, however, changes in circumstances relating to accounts receivable may result in a requirement for additional allowances in the future.  On a periodic basis, management evaluates its accounts receivable and determines the requirement for an allowance for doubtful accounts based on its assessment of the current and collectible status of individual accounts with past due balances over 90 days.  Account
balances are charged against the allowance after all collection efforts have been exhausted and the potential for recovery is considered remote.  As of September 30, 2009, management determined that accounts receivable aged beyond 100 days to be uncollectible and, accordingly, wrote off $122 of uncollectible accounts receivable.





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.





8


MIDNIGHT CANDLE COMPANY


(A DEVELOPMENT STAGE COMPANY)


NOTES TO CONDENSED FINANCIAL STATEMENTS (CONTINUED)


SEPTEMBER 30, 2009 AND 2008


(UNAUDITED)





NOTE 2 -               SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES


(CONTINUED)





Fair Value of Financial Instruments





The Company’s financial instruments are all carried at amounts that approximate their estimated fair value as of September 30, 2009 and 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 carry forwards 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.





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 157 did not have a material impact on the Company’s financial position or results of operations.





In February 2008, the Financial Accounting Standards Board issued Staff Position No. 157-2 (FSP 157-2), which delays the effective date of SFAS 157 for one year for all nonfinancial assets and liabilities, except those that are recognized or disclosed at fair value in the financial statements on a recurring basis. The Company does not
have nonfinancial assets and nonfinancial liabilities that are required to be measured at fair value on a recurring basis. Based on this guidance, the Company expects to adopt the provisions of SFAS 157 as related to nonfinancial assets and nonfinancial liabilities, effective January 1, 2009 and this adoption did not have a material impact on the Company’s financial statements.





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.








9


MIDNIGHT CANDLE COMPANY


(A DEVELOPMENT STAGE COMPANY)


NOTES TO CONDENSED FINANCIAL STATEMENTS (CONTINUED)


SEPTEMBER 30, 2009 AND 2008


(UNAUDITED)





NOTE 2 -               SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES


(CONTINUED)





Recent Accounting Pronouncements (Continued)





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. This pronouncement has no effect on Midnight Candle Company at this time.





In March 2008, the FASB issued SFAS No. 161, "Disclosures about Derivative Instruments and Hedging Activities: an amendment of FASB Statement No. 133" ("SFAS No. 161"). SFAS No. 161 changes the disclosure requirements for derivative instruments and hedging activities. The Company is reviewing the provisions of SFAS
No. 161, which is effective the first quarter of fiscal 2009. The adoption of this standard did not have a material impact on the Company’s financial statements.





In May 2008, the FASB issued SFAS No. 162, "The Hierarchy of Generally Accepted Accounting Principles" (SFAS No. 162). SFAS No. 162 identifies the sources of accounting principles and the framework for selecting principles used in the preparation of financial statements.  SFAS No. 162 is effective 60 days following the SEC’s
approval of the Public Company Accounting Oversight Board amendments to AU Section 411, "The Meaning of Present Fairly in Conformity with Generally Accepted Accounting Principles". The implementation of this standard will not have a material impact on Company’s financial statements.





In May of 2008 the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 163, “Accounting for Financial Guarantee Insurance – an interpretation of FASB Statement No. 60, Accounting and Reporting by Insurance Enterprises.  This statement requires that an insurance
enterprise recognize a claim liability prior to an event of default (insured event) when there is evidence that credit deterioration has occurred in an insured financial obligation.  This statement also clarifies how Statement 60 applies to financial guarantee insurance contracts.  This statement is effective for fiscal years beginning after December 15, 2008.  This statement has no effect on the Company’s financial reporting at this time.





In May of 2009, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 165, “Subsequent Events”. This Statement is intended to establish general standards of accounting for and disclosures of events that occur after the balance sheet date but before financial statements
are issued or are available to be issued.  It requires the disclosure of the date through which an entity has evaluated subsequent events and the basis for that date—that is, whether that date represents the date the financial statements were issued or were available to be issued.  This Statement is effective for interim and annual periods ending after June 15, 2009. The adoption of SFAS 165 will not have a material impact on its financial position or results of operations.





10


MIDNIGHT CANDLE COMPANY


(A DEVELOPMENT STAGE COMPANY)


NOTES TO CONDENSED FINANCIAL STATEMENTS (CONTINUED)


SEPTEMBER 30, 2009 AND 2008


(UNAUDITED)





NOTE 2 -               SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES


(CONTINUED)





Recent Accounting Pronouncements (Continued)





In June 2009, the FASB issued SFAS No. 166, “Accounting for Transfers of Financial Assets, an amendment of SFAS No. 140” (SFAS 166). SFAS 166 amends SFAS No. 140 to improve the relevance, representational faithfulness, and comparability of the information that a reporting entity provides
in its financial reports about a transfer of financial assets; the effects of a transfer on its financial position, financial performance, and cash flows; and a transferor’s continuing involvement in transferred financial assets. This Statement is effective as of the beginning of each reporting entity’s first annual reporting period that begins after November 15, 2009, for interim periods within that first annual reporting period, and for interim and annual reporting periods thereafter. Earlier
application is prohibited. The recognition and measurement provisions of this Statement shall be applied to transfers that occur on or after the effective date. The Company is currently assessing the impact of the adoption of SFAS 166.





In June 2009, the FASB issued SFAS No. 167, “Amendments to FASB Interpretation No. 46(R)” (SFAS 167). SFAS 167 amends certain requirements of FASB Interpretation No. 46 (revised December 2003), Consolidation of Variable Interest Entities, to improve financial reporting by enterprises involved with
variable interest entities and to provide more relevant and reliable information to users of financial statements. This Statement is effective as of the beginning of each reporting entity’s first annual reporting period that begins after November 15, 2009, for interim periods within that first annual reporting period, and for interim and annual reporting periods thereafter. Earlier application is prohibited. The Company is currently assessing the impact of the adoption of SFAS 167.





On June 2009, the FASB issued SFAS 168, “The FASB Accounting Standards Codification TM and the Hierarchy of Generally Accepted Accounting Principles—a replacement of FASB Statement No. 162” (“SFAS 168”). Under SFAS 168, the FASB Accounting Standards Codification will become the source of authoritative
U.S. generally accepted accounting principles (“GAAP”) recognized by the FASB to be applied by nongovernmental entities. On the effective date of this statement, the Codification will supersede all existing non-SEC accounting and reporting standards. This standard is effective for financial statements issued for interim and annual periods ending after September 15, 2009. The adoption of SFAS 168 will not have a material impact on its financial position or results of operations.














11


MIDNIGHT CANDLE COMPANY


(A DEVELOPMENT STAGE COMPANY)


NOTES TO CONDENSED FINANCIAL STATEMENTS (CONTINUED)


SEPTEMBER 30, 2009 AND 2008


(UNAUDITED)





NOTE 2 -               SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES


(CONTINUED)





Net (Loss) Per Share of Common Stock





The following table sets forth the computation of basic and diluted earnings per share for the six months ended September 30, 2009 and 2008:





2009


2008Net loss

$
(6,214
)

$
(9,013
)Weighted average common


156,900,000



156,900,000shares outstanding (Basic)Options


-



-Warrants


-



-Weighted average common sharesoutstanding (Diluted)


156,900,000



156,900,000





There are no common stock equivalents outstanding at September 30, 2009 and 2008.





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.





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 officer of the Company. They were all used for working capital needs.  As of August 12, 2009, we have reached an agreement with the holder of the $15,000 in notes payable to extend the due dates of such notes indefinitely, and for all balances to be due on demand.





NOTE 4 -
NOTE PAYABLE





Represents numerous unsecured loans aggregating $9,647 from a non-affiliated third-party that loans the Company money on an as-needed basis.  The notes are due on demand and bear no interest.





On August 19, 2009, the Company entered into a Revolving Line of Credit Promissory Note with a non-related, third party entity for a total of $30,000.  Any principal balance borrowed against the Note accrues interest at a rate of 10% per year.  The entire unpaid balance and interest accrued thereupon are due on December
31, 2011.





12


MIDNIGHT CANDLE COMPANY


(A DEVELOPMENT STAGE COMPANY)


NOTES TO CONDENSED FINANCIAL STATEMENTS (CONTINUED)


SEPTEMBER 30, 2009 AND 2008


(UNAUDITED)





NOTE 5 -               STOCKHOLDERS’ (DEFICIT)





On September 24, 2004 the Company was formed with one class of common stock, par value $.001. The Company is currently authorized to issue up to 200,000,000 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.





On October 15, 2008, the Company affected a forward split of the Company’s issued and outstanding common stock on a 30:1 basis and further amended the Company’s Articles of Incorporation which will increase the authorized capital stock of the Company from 100,000,000 shares with a par value of $0.001 per share to 200,000,000
shares of par value common stock. All shares have been retroactively restated to report this transaction.





As of September 30, 2009, there have been no other issuances of common stock.





NOTE 6 -               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 September 30, 2009. The Company is currently in the development stage, and there is no guarantee whether the Company will be able to generate
enough revenue and/or raise capital to support current operations and generate anticipated sales. This raises substantial doubt about the Company’s ability to continue as a going concern.





Management believes that the Company’s capital requirements will depend on many factors including the success of the Company’s product development efforts. With the business plan being followed, Management believes along with working capital being raised that the operations and sales will make the Company a viable entity over
the next twelve months.





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.














13


MIDNIGHT CANDLE COMPANY


(A DEVELOPMENT STAGE COMPANY)


NOTES TO CONDENSED FINANCIAL STATEMENTS (CONTINUED)


SEPTEMBER 30, 2009 AND 2008


(UNAUDITED)





NOTE 7 -               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 September 30, 2009 and 2008, deferred tax assets consist of the following:





2009


2008Deferred tax assets

$
16,057


$
13,711Less:  valuation allowance


(16,057
)


(13,711
)Net deferred tax assets

$
-0-


$
-0-





At September 30, 2009 and 2008, the Company had accumulated deficits during the development stage of $53,524 and $45,703 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.






































14


Management's Discussion and Analysis of Financial Condition and Plan of Operation





Forward-Looking Statements





This Quarterly Report contains forward-looking statements about Midnight Candle Company’s business, financial condition and prospects that reflect management’s assumptions and beliefs based on information currently available.  We can give no assurance that the expectations indicated by such forward-looking statements will
be realized.  If any of our management’s assumptions should prove incorrect, or if any of the risks and uncertainties underlying such expectations should materialize, Midnight Candle’s actual results may differ materially from those indicated by the forward-looking statements.





The key factors that are not within our control and that may have a direct bearing on operating results include, but are not limited to, acceptance of our services, our ability to expand our customer base, managements’ ability to raise capital in the future, the retention of key employees and changes in the regulation of our industry.





There may be other risks and circumstances that management may be unable to predict.  When used in this Quarterly Report, words such as,  "believes,""expects," "intends,""plans,""anticipates,""estimates"and
similar expressions are intended to identify forward-looking statements, although there may be certain forward-looking statements not accompanied by such expressions.





Management’s Discussion





We were incorporated in the State of Nevada on September 24, 2004.  During the three and nine month periods ended September 30, 2009 and 2008, we did not generate any revenues, nor did we incur any cost of goods sold and shipping charges.  Since our inception to September 30, 2009, we generated an aggregate of $571
in gross revenues from sales of our candles and had returns and allowances in the amount of $107, resulting in net revenues since inception of $464.  After accounting for cost of sales in the amount of $307, adding a sales discount of $34 and shipping costs of $95, we realized a gross profit of $96 from the period from our inception through September 30, 2009.  We are unable to predict the stability of, and ability to continue to generate, ongoing revenues.





In the course of our operations, we incur operating expenses composed primarily of general and administrative costs and professional fees.  General and administrative expenses are essentially the cost of doing business, and encompass, without limitation, the following: licenses; taxes; general office expenses, such as postage,
supplies and printing; utilities; bank charges; website costs; and other miscellaneous expenditures not otherwise classified.  Professional fees include: accounting fees charged related to quarterly reviews and annual audits; tax preparation fees for filing Federal and State income tax returns; transfer agent fees for printing certificates, annual account maintenance fees and obtaining various report, ledgers or lists for internal review or periodic financial statement preparation and confirmation;
consulting costs for marketing and advertising, website development and maintenance, financial statement preparation and general business development; legal fees for legal work performed related to our general business or maintaining our public reporting status; and Edgarization fees for the submission of reports and information statements with the U.S. Securities and Exchange Commission.





For the three months ended September 30, 2009, we incurred operating expenses in the amount of $1,018.  In comparison, operating expenses in the three months ended September 30, 2008 were $2,411.  The components of the comparable periods are as follows:





ChangeThree months ended


2008 to 2009Expense

September 30, 2009


September 30, 2008


$



%Accounting Fees

$
750


$
1,250


$
(250
)


(40
)%Licenses, Permits, Taxes


-



175



(175
)


(100
)%Office Expenses


46



36



10



28
%Professional Fees


100



950



(850
)


(89
%)Uncollectible Accounts


122



-



122



-Total Operating Expenses

$
1,018


$
2,411


$
(1,393
)


(58
)%





15





Overall expenses decreased by 58% from the three months ended September 30, 2008 to the comparable period ended September 30, 2009.  We attribute the bulk of the decline to a reduction in professional fees.  During the three months ended September 30, 2009, we incurred uncollectible accounts expense in the amount of
$122, which is related to the write off of accounts receivable considered to be significantly past due, and, therefore uncollectible.  We do not anticipate continued reductions in operating expenses.





In the nine month period ended September 30, 2009, our operating expenses amounted to $6,214, compared to $9,013 in the nine months period ended September 30, 2008.  The components of the comparable periods are as follows:





ChangeNine months ended


2008 to 2009Expense

September 30, 2009


September 30, 2008


$



%Accounting Fees

$
4,000


$
5,170


$
(1,170
)


(23
)%Office Expenses


503



612



(109
)


(18
)%Professional Fees


672



2,202



(1,530
)


(69
%)Licenses, Permits, Taxes


917



1,029



(112
)


(11
)%Uncollectible Accounts


122



-



122



-Total Operating Expenses

$
6,214


$
9,013


$
(2,799
)


(31
)%





Overall expenses decreased by 31% from the nine months ended September 30, 2008 to the comparable period ended September 30, 2009.  The $1,158, or 69%, decrease in Professional fees year-over-year was the largest contributing factor to the decrease in total expenses.  During the nine months ended September 30, 2008,
we filed an uncommonly large number of documents via Edgar with the SEC, which we do not believe will be an ongoing occurrence.  Therefore, professional fees of $672 incurred during the nine months ended September 30, 2009, while low, in our opinion, is a reliable indication of our base-line professional fees expense for a nine month period.  Furthermore, the variations in other expense categories are believed to be inaccurate indications of a long-term trend.  We caution that, due
to the minimal level of operating activities performed during the periods in question, a dramatic one-time spike or drop in any item could make period-to-period comparisons difficult or unreliable.





Aggregate operating expenses since our inception on September 24, 2004 to September 30, 2009 were $53,621, comprised, as follows:





Inception to


% ofExpense

September 30, 2009


ExpensesAccounting Fees

$
27,214



51
%Legal Fees


3,500



7
%Office Expenses


9,395



18
%Professional Fees


6,183



12
%Licenses and Permits


5,028



9
%Uncollectible Accounts


122


NILWebsite Development and Maintenance


2,179



4
%Total Operating Expenses

$
53,621



100.00
%





Accounting-related expense is credited with 51% of aggregate operating expenses since our inception to September 30, 2009.  These fees include auditing by our independent registered public accountants, bookkeeping, tax preparation and other accounting-specific consulting services.  We expect to continue to incur general
and administrative expenses for the foreseeable future, although we cannot estimate the extent of these costs.








16


We have experienced net losses in all periods since our inception.  Our net loss for the three months ended September 30, 2009 was $1,018.  Comparatively, during the three months ended September 30, 2008, our net loss totaled $2,411.  In the nine month periods ended September 30, 2009 and 2008, our net losses
amounted to $6,214 and $9,013, respectively.  Our net loss since the date of our inception through September 30, 2009 was $53,524, after taking into consideration $1 in interest income.  We anticipate incurring ongoing operating losses and cannot predict when, if at all, we may expect these losses to plateau or narrow.





Our management believes that our cash on hand as of September 30, 2009 in the amount of $60 is not sufficient to maintain our current minimal level of operations for the next approximately 12 months.  As of September 30, 2009, we owed $875 in accounts payable to vendors and service providers, as well as $24,647 in notes payable,
of which $15,000 is to due to Ms. Helen Cary, an officer and director, the aggregate sum of which greatly exceeds our current assets.





As of August 12, 2009, we have reached an agreement with the holder of the $15,000 in notes payable, Ms. Helen Cary, an officer and director, to extend the due dates of all such notes indefinitely, and for all balances to be due on demand and bear no interest.  Ms. Cary received no beneficial terms in this transaction.  Rather,
we were the recipient of terms highly beneficial to us, as Ms. Cary did not and has not yet demanded any of the notes be repaid, nor is there any interest being charged or accrued on any of the notes.





On August 19, 2009, the Company entered into a Revolving Line of Credit Promissory Note with a non-related, third party entity for a total of $30,000.  Any principal balance borrowed against the Note accrues interest at a rate of 10% per year.  The entire unpaid balance and interest accrued thereupon are due on December
31, 2011.  As of the date of this report, we have not drawn any funds on this line of credit.





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 have not paid for expenses on behalf of any of our directors.  Additionally, we believe that this fact shall not materially change.





Plan of Operation





We are a reseller of candles and candle-related merchandise.  Since inception, we have financed cash flow requirements through the issuance of common stock and debt securities for cash.  Initially, our plan for satisfying our cash requirements for the next twelve months was to be through the funds from our offerings
of common stock for cash, in combination with third-party and related-party debt financing.  Since our incorporation, we have raised a total of $28,500 through private sales of our common equity.  We have also borrowed $9,647 in non-interest bearing, due on demand, notes payable from a third party.  Our president and sole director, Ms. Cary, has loaned us an aggregate of $15,000 through September 30, 2009.





As of the date of this quarterly report, our management believes there exists opportunities to acquire inventory from wholesalers and liquidators at both a lower price point and more reasonable terms.  In our observation, with no scientific data to support such, the economic downturn has forced numerous of our competitors and
suppliers to reduce inventory or go out of business.  From August 9-12, 2009, one of our officers attended the ASD/ASM Trade Show in Las Vegas, Nevada.  At such event, in excess of 2,950 exhibitors were in attendance.  Informal conversations with various wholesalers and manufacturers revealed a willingness to drop ship merchandise, provide more lenient credit terms, and allow for smaller minimum purchase orders.  As a result, we believe we can enter the market and realize
a higher profit margin than we had historically been able to.  These factors bode well for our business.





As a result of attending the August 2009 trade show, we sought debt or equity financing with which to acquire inventory, and therefore take advantage of the opportunities at large.  We were subsequently able to secure a revolving line of credit to borrow up to $30,000 from a non-related third party entity.  While we
believe these funds will be sufficient to execute our planned objectives, we will be required to repay any amount borrowed.  Thus, we will be required to generate sufficient cash flow with which to satisfy any such obligation.  If we are unable to do so, we will again be forced to seek further financing, which may be on terms unfavorable to us or not available at all.





17


With our access to the line of credit, we are finalizing the following strategic initiatives:





1.
Acquire Inventory:  At the August 2009 ASD/ASM trade show, the company obtained a directory containing hundreds of potential vendors, suppliers and/or manufacturers from which to purchase inventory.  We have been actively parsing through the directory, contacting potential vendors, ascertaining purchase terms and obtaining product catalogs
with price listings.  We are in the process of identifying vendors with favorable terms.  As of the date of this report, we have identified over 50 vendors that meet our criteria.





Our next step is to identify products within the vendors’ catalog of items that have the ability to generate both sales volume and gross profit margins of over 20%, which margin we believe will provide us with sufficient cash flows to satisfy any amounts borrowed against the line of credit.  We have allocated up to $5,000
to be used for accumulating saleable inventory.  Due to the number of vendors and the seemingly voluminous product catalog of each, our time horizon for purchasing inventory has been delayed.  We expected to have a preliminary product mix by November 1, 2009.  As of the date of this report, we are working to have a preliminary product mix structured by December 1, 2009, although there can be no guarantee of such.





2.
Redesign our website:  We believe our previous website did not capture the attention and dollars of consumers.  Resultantly, we have disabled the site in order that we may redesign it for a re-launch.  Although the site is disabled, we still retain the domain www.midnightcandleco.com.  We have identified two web design
and consulting firms to redesign our web site and incorporate e-commerce capabilities.  It remains our goal to have the site re-launched by November 30, 2009, although that target date depends primarily upon a web designer being able to complete and publish a new website by that date.  Our management has allocated $5,000 - $10,000 for the web site redesign project.





We are a web-based company and expect materially all of our sales to be generated through a website.  Our website has been deactivated and we are currently attempting to design a new, more functional site.  Without an active website, however, we are unable to realize any sales or conduct any marketing activities to
generate brand awareness.  We have limited resources and require additional financing to be able to redevelop our Internet site.  In the event we are unable to raise sufficient funds, we will be unable to generate sales and may be forced to go out of business.





3.
Design a Marketing and Advertising Program:  Most web design and consulting firms provide web marketing services, which we fully intend to implement.  As we have not yet hired such a firm, we are unsure what form(s) or marketing we will pursue.  We have allocated $15,000 of our line of credit to pursue a web marketing and advertising
program.





We do not anticipate the need to hire additional full- or part- time employees over the next 12 months, as the services provided by our sole officer and director appear sufficient at this time.  We believe that our operations are currently on a small scale that is manageable by two individuals.  We plan to outsource
the production of our products, thus our management’s responsibilities are mainly administrative.





Controls and Procedures





Evaluation of Disclosure Controls and Procedures





We maintain a set of disclosure controls and procedures designed to ensure that information we are required to disclose in 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 were advised by Bagell, Josephs, Levine & Company, LLC, the Company’s independent registered public accounting firm, that during their performance of audit procedures for 2008 Bagell, Josephs, Levine & Company, LLC identified a material weakness as defined in Public Company Accounting Oversight Board
Standard No. 5 in the Company’s 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, the size of the Company 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.





18


Management’s Annual Report on Internal Control over Financial Reporting





Our management is responsible for establishing and maintaining adequate internal control over financial reporting.  Internal control over financial reporting is defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Securities Exchange Act of 1934 as a process designed by, or under the supervision of, the company’s
principal executive and principal financial officers and effected by the company’s board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America and includes those policies and procedures that:





1.
Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the company;





2.
Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and





3.
Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material effect on the financial statements.





Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.  Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies
or procedures may deteriorate.  All internal control systems, no matter how well designed, have inherent limitations.  Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.  Because of the inherent limitations of internal control, there is a risk that material misstatements may not be prevented or detected on a timely basis by internal control over financial reporting. However,
these inherent limitations are known features of the financial reporting process.  Therefore, it is possible to design into the process safeguards to reduce, though not eliminate, this risk.





As of September 30, 2009, management assessed the effectiveness of our internal control over financial reporting based on the criteria for effective internal control over financial reporting established in Internal Control--Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO") and
SEC guidance on conducting such assessments.  Based on that evaluation, they concluded that, during the period covered by this report, such internal controls and procedures were not effective to detect the inappropriate application of US GAAP rules as more fully described below.  This was due to deficiencies that existed in the design or operation of our internal controls over financial reporting that adversely affected our internal controls and that may be considered to be material weaknesses.





The matters involving internal controls and procedures that our management considered to be material weaknesses under the standards of the Public Company Accounting Oversight Board were: (1) lack of a functioning audit committee due to a lack of a majority of independent members and a lack of a majority of outside directors on our board
of directors, resulting in ineffective oversight in the establishment and monitoring of required internal controls and procedures; (2) inadequate segregation of duties consistent with control objectives; and (3) ineffective controls over period end financial disclosure and reporting processes.  The aforementioned material weaknesses were identified by our Chief Executive Officer in connection with the review of our financial statements as of September 30, 2009, and were deemed to have a material effect
on our financial statements and the reporting of such results.





Management’s Remediation Initiatives and Changes in internal controls over financial reporting





In an effort to remediate the identified material weaknesses and other deficiencies and enhance our internal controls, we had attempted to contract third-party accounting firms to assist with the evaluation, testing and changing of our current internal controls over financial reporting.  However, the cost of having an accounting
firm provide such services has proven prohibitive.  We have been attempting to establish effective internal controls through our interpretations of the various published doctrines; to date, however, our internal controls remain ineffective.





19


Management believes that the appointment of one or more outside directors, who shall be appointed to a fully functioning audit committee, will remedy the lack of a functioning audit committee and a lack of a majority of outside directors on our Board.  Management desires to identify and appoint additional persons to the board
of directors, as well as establish a functioning audit committee.





We have implemented procedures to segregate financial responsibilities between our two existing officers.  We now require that all transactions be authorized by one person and performed by a separate person.  However, since there are only two individuals, the amount of security afforded by this initiative is limited.














































20


PART II – OTHER INFORMATION





Exhibits





Exhibit Number
Name and/or Identification of Exhibit3
Articles of Incorporation & By-Laws(a) Articles of Incorporation filed September 24, 2004 *(b) By-Laws adopted September 27, 2004 *10
Line of Credit31
Rule 13a-14(a)/15d-14(a) Certifications32
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.










































21


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
November 16, 2009Helen C. Cary
Chief Executive Officer/s/Patrick Deparini
Secretary/Treasurer
November 16, 2009Patrick Deparini
Chief Financial Officer
































































22