UNITED
      STATES SECURITIES AND EXCHANGE COMMISSION


Washington,
      D.C. 20549




FORM
      10-KSB





(Mark
      One)


xAnnual
      Report Pursuant
      to Section 13 or 15(d) of The Securities Exchange Act of 1934 For the Fiscal
      Year Ended December 31, 2005





oTransition
      Report Pursuant to Section 13
      or 15(d) of The Securities Exchange Act of 1934





Commission
      File Number 000-51140





ROCKY
      MOUNTAIN FUDGE COMPANY, INC.


(Name
      of
      Small Business Issuer in its charter)





Nevada
            16-1734022(State
                or other jurisdiction of
            (I.R.S.
                Employerincorporation
                or organization)
            Identification
                No.)




4596
      Russell Street, Salt Lake City, Utah 84117


(Address
      of principal executive officers) (Zip Code)





Issuer's
      telephone number: (801) 230-1807





Securities
      to be registered under Section 12(b) of the Act:





Title
                of each class
            
            Name
                of each exchange on whichto
                be so registered
            
            each
                class is to be registeredN/A
            
            N/A





Securities
      registered pursuant to Section 12(b) of the Exchange Act: 
None





Securities
      registered pursuant to Section 12(g) of the Exchange Act: 
Common





Check
      whether the issuer (1) filed all reports required to be filed by Section 13
      or
      15(d) of the Exchange Act during the past 12 months (or for such shorter period
      that the registrant was required to file such reports), and (2) has been subject
      to such filing requirements for the past 90 days. Yes x No o





Check
      if
      there is no disclosure of delinquent filers in response to Item 405 of
      Regulation S-B contained in this form, and no disclosure will be contained,
      to
      the best of the Registrant's knowledge, in definitive proxy or information
      statements incorporated by reference in Part III of this Form 10-KSB or any
      amendment to this Form 10-KSB. x





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


Yes
o
      No x




State
      the
      issuer's revenues for its most recent fiscal year. $ 10,219





State
      the
      aggregate market value of the voting stock held by non-affiliates computed
      by
      reference to the price at which the stock was sold, or the average bid and
      ask
      prices of such stock as of a specified date within 60 days: $4,050,000 (Based
      on
      2,250,000 shares held by non-affiliates as the closing price of $1.80 on
      February 12, 2007)





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 February 12, 2007Common
                Stock, Par Value
            
            6,250,000
                shares, $.001 par value





DOCUMENTS
      INCORPORATED BY REFERENCE





A
      description of "Documents Incorporated by Reference" is contained in Part III, Item
      14.





Transitional
      Small Business Disclosure Format. Yes o No x











ROCKY
      MOUNTAIN FUDGE COMPANY, INC.





FORM
      10-KSB





TABLE
      OF
      CONTENTS




PAGE**PART
                I**Item
                1.
            
            Description
                of Business
            
            3Item
                2.
            
            Description
                of Property
            
            11Item
                3.
            
            Legal
                Proceedings
            
            11Item
                4.
            
            Submission
                of Matter to a Vote of Security Holders
            
            12**PART
                II**Item
                5.
            
            Market
                for Common Equity and Related Stockholder Matters
            
            12Item
                6.
            
            Management's
                Discussion and Analysis or Plan of Operation
            
            14Item
                7.
            
            Financial
                Statements
            
            19Item
                8.
            
            Changes
                in and Disagreements with Accountants on Accountingand
                Financial Disclosure
            
            19Item
                8A.
            
            Controls
                and Procedures
            
            19Item
                8B
            
            Other
                Information
            
            20**PART
                III**Item
                9.
            
            Directors,
                Executive Officers, Promoters and Control persons;Compliance
                with Section 16(a) of the Exchange Act
            
            20Item
                10.
            
            Executive
                Compensation
            
            22Item
                11.
            
            Security
                Ownership of Certain Beneficial Owners and Management and Related
                Stockholder Matters
            
            22Item
                12.
            
            Certain
                Relationships and Related Transactions and Director
                Independence
            
            23Item
                13.
            
            Exhibits
            
            23Item
                14.
            
            Principal
                Accountant Fees and Services
            
            23Signatures
            
            25




2




PART
      I





ITEM
      1.
      Description of Business





Business
      Development





History





Rocky
      Mountain Fudge Company, Inc. ("the Company") was incorporated in the State
      of
      Utah as Vallerie's Country Candy, Inc. on January 4, 1990, primarily to engage
      in the business of manufacturing and retailing fudge candy. Upon its
      incorporation, the Company issued an aggregate of 300,000 shares of common
      stock
      for cash consideration to its three initial directors (100,000 shares each).
      On
      August 10, 1990, the Company approved a forward stock split of its outstanding
      shares on a four shares for one share basis, resulting in 1.2 million shares
      outstanding, post-split.





On
      August
      10, 1990, the Company's Board of Directors and stockholders voted to increase
      the Company's authorized capital from 1 million to 10 million shares of common
      stock, while retaining the par value at $0.001 per share. The Company filed
      Articles of Amendment effecting this change on October 15, 1990. Subsequently
      on
      August 27, 1992, the Company changed its name to RV & S Enterprises and, on
      August 12, 1998, again change its name to Rocky Mountain Fudge Company, Inc.





In
      December 1998, the Company completed an initial public offering of 50,000 shares
      of its common stock for the offering price of $1.00 per share. As a result
      of
      this offering, the Company realized gross proceeds of $50,000





On
      September 27, 2005, the Company held a special meeting of stockholders to
      consider and act on the following proposals:




·
            to
                change the authorized capitalization to 50 million shares of common
                stock,
                par value $0.001 per share;





·
            to
                effect a forward split of the issued and outstanding shares of common
                stock on a 5 shares for 1 share basis; and





·
            to
                empower the Board of Directors to take the necessary corporate action
                to
                relocate the domicile of the Company from the State of Utah to the
                State
                of Nevada.





All
      of
      the above proposals were approved by the stockholders and the Company took
      the
      appropriate actions to facilitate each action. The forward stock split increased
      the issued and outstanding shares of common stock to 6.25 million shares In
      order to relocate the domicile of the Company, the Company created a new wholly
      owned subsidiary in the State of Nevada under the name of Rocky Mountain Fudge
      Company, Inc. The Nevada corporation has the same capitalization as the Company;
      50 million shares of common stock, par value $0.001 per share. The Company
      and
      the newly formed Nevada entity then executed an Agreement and Plan of Merger
      for
      the sole purpose of changing the Company's domicile to Nevada. As a result
      of
      the merger transaction, the Utah corporation was merged with and into the Nevada
      corporation, with the Nevada entity being the survivor. Each Company stockholder
      was entitled to exchange their shares of common stock in the Utah entity for
      the
      same number of shares in the Nevada entity, adjusted for the five for one
      forward stock split. Unless otherwise noted, all references hereafter to share
      amounts will be on a post-split basis.




3





Following
      the change of domicile, the Company incorporated a new wholly owned subsidiary
      in the State of Utah under the name of Wasatch Candy Company, Inc., d.b.a.
      Vallerie's Country Candy, into which the Company transferred certain cash and
      assets and through which the Company will operate its candy business.





Initial
      Public Offering





On
      October 1, 1998, the Company commenced an initial public offering of its common
      stock pursuant to an exemption from registration under the Securities Act of
      1933 (the "Securities Act") provided by Rule 504 of Regulation D promulgated
      thereunder. The offering was for 50,000 shares of common stock at the offering
      price of $1.00 per share. The Company sold a total of 50,000 shares to 31
      investors for gross proceeds of $50,000 and filed a final Form D with the SEC
      in
      December 1998. The 50,000 shares now represent 250,000 shares, post-split.





Registration
      Statement





In
      December 2005, the Company filed a registration statement on Form 10-SB in
      order
      to make information concerning itself more readily available to the public.
      Being a reporting company under the Securities Exchange Act of 1934, as amended
      ("Exchange Act"), enables the Company have its common stock traded in the public
      over-the-counter market. Also, being a reporting company will make information
      concerning the Company more accessible to its stockholders, prospective
      stockholders and the public trading market.





The
      Company's principal executive offices are located at 4596 Russell Street, Salt
      Lake City, Utah 84117 and its telephone number is (801) 230-1807.





Business
      Activities





Since
      its
      creation in 1990, the Company has manufactured and marketed its candy on a
      seasonal basis. The Company's principal product is fudge candy, which is
      produced and sold to retail consumers in northern Utah and surrounding areas.
      The Company also produces a brittle candy. All of the Company's products are
      made using proprietary recipes contributed to the Company by its Secretary,
      Vallerie Moulton. Historically, the Company has used various facilities to
      produce its candy.





In
      the
      past, the Company sold its products through retail booths that the Company
      would
      rent at various locations such as established crafts boutiques and at the
      Dickens Festival, which was held annually at the Salt Lake County fairgrounds
      for two weeks immediately following Thanksgiving. Typically, the Company would
      rent its booths for short periods of time, particularly at special events and
      during the holiday seasons. Management estimates that approximately 90% of
      the
      Company's revenues were historically realized during the Thanksgiving Christmas
      periods.





In
      2000,
      the Dickens Festival, which had been the highest grossing location for the
      Company's booths, ceased operations and demand for the Company's products
      severely decreased. Accordingly, shortly thereafter the Company curtailed most
      of its operations. However, in mid-2005, the Company decided to re-established
      its operations and prepared to once again manufacture and market its candy
      products. In the fourth quarter of 2005, the Company realized nominal revenues
      of $3,447 from candy sales to former customers in response to unsolicited
      requests. During this period the Company used temporary kitchen facilities
      to
      prepare its candy and shipped the finished product directly to customers via
      mail.





4





Also
      in
      the fourth quarter of 2005, the Company began preparing sales and promotional
      literature and price lists and commenced development of an Internet website
      to
      ultimately be used for the promotion and sale of its products. Management
      anticipates that the website will eventually become the Company's primary
      marketing focus. The Company is also in the process of making initial contacts
      with former customers and potential new customers and disseminating sales
      materials to promote its products. Management believes that a full marketing
      effort will not take place until the second quarter of 2006.





Products





All
      of
      the Company's candies have been developed by recipes contributed to the Company
      by its co-founder and Secretary, Vallerie Moulton. Ms. Moulton continues to
      oversee the production of the Company's various candy products. Presently,
      the
      Company offers its fudge candy in the following varieties: Plain, Walnut,
      Almond, Rocky Road, Caramel Swirl and Virginia Cream. The Company also offers
      its brittle candy in the following varieties: Peanut, Pecan and Cashew. Although
      the Company does not have any immediate definitive plans, it will continue
      to
      explore the possibilities of producing other varieties of its existing products
      or developing new candy products.





Distribution





Historically,
      the Company sold its products by way of rented booths at various special
      functions, fairs and other events, concentrating its sales during the
      Thanksgiving and Christmas seasons. Most of the Company's sales have been made
      in face-to-face transactions at one of its retail booths. However, management
      now intends to concentrate more on marketing its products through mail order
      and
      the Internet. Although the Company will continue to use direct, in-person sales,
      direct advertising and promotional flyers, it will emphasize sales over the
      Internet. To this end, the Company is developing a website that is expected
      to
      be operational in the first or second quarter of 2007. The Company's internet
      address is www.greatestfudgeonearth.com.





The
      Company believes that its Internet website will enhance and broaden the
      marketing of its products and increase the Company's visibility in the
      marketplace. Although the Company intends to continue using limited direct
      sale
      outlets, management believes that marketing its products on the Internet is
      more
      cost effective that direct sales. By focusing on Internet sales, the Company
      will save the cost of operating a store front business including rent and
      utility expenses and fixed costs associated with acquiring and maintaining
      fixtures. The Company intends to continue to use rented booths and kiosks at
      special events, however these fixtures can be rented for brief periods without
      ongoing fixed expenses.





Future
      sales via the Internet would most likely mean shipping the Company's products
      outside its local marketing area, which would entail special handling. The
      Company intends to heat shrink wrap its candy products in air tight packages
      prior to shipping in order to protect the products from warm weather and
      extended delivery periods. Management believes that this packaging will keep
      the
      products from melting for an extended time and assure delivery of a fresh
      product without using more extreme and costlier methods such as "cold packing."
      The Company adds the cost of shipping to the total price customers pay for
      products. By avoiding costly special handling when shipping its products, the
      Company will be able to charge its customers less for its candy that will enable
      the Company to be more competitive with other candy sellers.




5





The
      Company's fudge and other candies are generally sold in pre-packaged 1/2 pound
      plastic containers or wrapped in air tight packages. In addition, the Company
      makes its fudge available in slices that are cut in the size or weight that
      the
      customer orders. The Company sells its fudge at a price of $13.00 per pound
      and
      its brittle candy for $14.00 per pound, which price includes sales tax for
      mail
      orders. The Company adds a flat $7.70 shipping and handling fee to each order.
      Management believes that the Company's candy is priced competitively compared
      to
      other candy makers that charge between $8.50 to $23.00 per pound for their
      products. Also, unlike some competitors, the Company does not anticipate
      adjusting its prices during holidays.





The
      Company intends to expand its marketing and distribution of its candies as
      necessary funds are available and business warrants such expansion. However,
      as
      of the date hereof management has not yet developed a definitive marketing
      plan.
      The Company's current primary focus is to develop its Internet website to
      increase awareness and marketability of its products. Management also
      anticipates that during the first half of 2007, it will begin to use direct
      mailings and will also contact individual retailers that might be interested
      in
      carrying the Company's candy line, and wholesalers that might be interested
      in
      distributing the Company's products to their retailers.





New
      Products





The
      Company presently has no new products in development.





Competition





The
      candy
      and snack food industry is highly competitive, and is dominated by large
      national and international concerns such as Nabisco, Hershey Foods and Nestle.
      There will be literally hundreds of competitors existing in the Company's market
      at any given time. Due to this large and very fragmented market, in addition
      to
      the Company's status as a development stage company, management expects that
      the
      Company's competitive position in its industry will be extremely small. Even
      if
      the Company is successful in its business plans, this will remain the case.
      There can be no assurance that the Company will be able to compete successfully
      in its industry.





Sources
      and Raw Materials and Supplies





The
      raw
      materials used in the Company's products are very widely available from
      distributors and at the retail level. These materials include butter, sugar,
      walnuts and other nuts, marshmallows, spices and other condiments. The Company
      believes that it can readily purchase adequate supplies from local distributors
      or from large retail outlets such as Costco and Sam's Club. Management does
      not
      expect a scarcity of any ingredients to be a concern. Dependence on One or
      More
      Customers





In
      the
      past, the Company received approximately 60% of its yearly revenues from the
      now
      discontinued Dickens Festival. However, in the future the Company intends to
      concentrate on Internet marketing once its website is fully developed and
      operational. The Company will also continue to explore marketing possibilities
      through retail businesses, specialty boutiques, special events and festivals.
      Presently, the Company does not have a firm arrangement with any retail business
      or special event or festival. Because most of the Company's projected sales
      are
      expected to come from Internet orders and a variety of public retail outlets,
      management does not believe that the Company will be dependent on one or a
      small
      number of customers. There can be no assurance that the Company will be able
      to
      achieve or maintain a customer base that is diverse and large enough to avoid
      being dependent on a sole customer.





6




Patents





The
      Company does not presently have any patents, trademarks, licenses, franchises,
      concessions or royalty agreements and there are no plans to secure any such
      arrangements in the foreseeable future.





Governmental
      Regulations





The
      Company's operations and production of its candy are subject to U.S. Department
      of Agriculture ("USDA") regulations requiring labeling of ingredients on its
      candy containers. Management believes that it is in compliance with this
      regulation. The Company's manufacturing facilities are also subject to periodic
      USDA inspections for cleanliness and its scales, which are used for weighing
      quantities of product at retail, are subject to periodic testing by the Division
      of Weights and Measures of the Utah Department of Agriculture. With the
      exception of periodic inspections by the USDA for cleanliness of its kitchen,
      management believes that the Company does not have to comply with any specific
      environmental laws.





Research
      and Development





The
      Company does not conduct any research and development in connection with its
      business operations.





Employees





Currently,
      the Company has no full-time employees, but does use four part-time employees,
      three of which are also directors. The Company is currently paying its part-time
      employees at the rate of $10.00 per hour. Vallerie Moulton, the Company's
      secretary, devotes approximately 60 hours per month to the production of the
      Company's products. However, she may work more hours in the future as business
      demand for products increase and the Company has adequate funds to expand its
      operations and production of product. Steven Moulton, the Company's Vice
      President, devotes approximately 60 hours per month to the Company's business.





The
      Company does not have any employment contracts with its employees and none
      of
      the employees are members of any union, nor have they entered into any
      collective bargaining agreements. If the Company's operations reach a level
      that
      justifies expansion and if adequate funds are available, management will
      consider adding additional employees during the next year in order to
      accommodate the growth. The addition of any new employees will be contingent
      upon increased business warranting such additions and the availability of funds
      to pay for these new employees.





Facilities





The
      Company currently uses the personal residence of its President and Secretary
      as
      its principal executive offices. These facilities that are owned by the
      President and Secretary are provided to the Company at no charge. The Company
      also maintains a mail delivery location that is rented on a monthly basis and
      at
      which it receives correspondences and product orders. The address of this
      location is 4760 Highland Drive, #353, Salt Lake City Utah 84117. In the past
      the Company has leased various commercial kitchen locations for the production
      of its candies. Presently, management is attempting to locate a new commercial
      kitchen in Salt Lake City, Utah, in which to produce its candies in larger
      quantities. The Company intends to rent a facility that is fully equipped and
      will not require new or additional equipment. The Company's kitchen and
      production facilities are subject to periodic inspection by the United States
      Department of Agriculture for cleanliness





7




Industry
      Segments





No
      information is presented regarding industry segments. The Company is presently
      engaged in the production and marketing of candy products and has no current
      plans to participate in another business or industry. Reference is made to
      the
      statements of income included herein in response to Part F/S of this Form 10-KSB
      for a report of the Company's operating history for the past two fiscal years.





Risk
      Factors Related to the Company's Business





The
      Company is subject to certain substantial risks inherent in its business and
      set
      forth or referred to herein. Prospective investors in the Company's securities
      should carefully consider, among other potential risks, the following risk
      factors as well as all other information set forth or referred to herein before
      considering an investment in the Company's common stock. An investment in the
      Company's shares involves a high degree of risk. If any of the following events
      or outcomes actually occurs, business operating results and financial condition
      would likely suffer. As a result, if a trading market for the Company's shares
      develops, the trading price of its common stock could decline and you may lose
      all or part of the money you paid to purchase your shares.





The
      Company has a limited operating history and has not recorded operating profits
      since its inception. Continuing losses may exhaust capital resources and force
      the Company to discontinue operations.





Although
      the Company was incorporated in 1990, it has a limited and sporadic operating
      history and has incurred net losses since inception. The potential to generate
      profits from the Company's candy business depends on many factors, including
      the
      following:





·
            the
                ability to secure adequate funding to locate adequate kitchen and
                manufacturing facilities and to fund ongoing production of product;





·
            the
                size and timing of future customer orders, product delivery and customer
                acceptance, if required;





·
            the
                costs of maintaining and expanding operations; and





·
            the
                ability to attract and retain a qualified work force.





There
      can
      be no assurance that the Company will be able to achieve any of the foregoing
      factors or realize profitability in the immediate future or at any time.





The
      Company has limited assets and has not recorded revenues or an operating profit
      for several years; continuing losses may exhaust capital resources and force
      the
      Company to discontinue operations.





8




The
      Company currently has only limited cash assets and has not realized any
      significant revenues or an operating profit for several years. From its
      inception in January 1990 through December 31, 2006, the Company has incurred
      cumulative losses of approximately $86,979. There can be no assurance that
      the
      Company will produce any material revenues or achieve profitability in the
      immediate future or at any time for the Company or its stockholders or that
      any
      such business will operate on a profitable basis.





The
      Company's auditors have expressed a going concern opinion





The
      Company's independent auditors discuss in their report dated February 7, 2007
      included with the December 31, 2006 financial statements, the Company's ability
      to continue as a going concern. Their report states that "the Company has
      limited revenues and has sustained recent losses from operations. This raises
      substantial doubt about the Company's ability to continue as a going concern."
      Note 2 to the financial statements further states that "the ability of the
      Company to continue as a going concern is dependent on the Company obtaining
      adequate capital to fund operating losses until it becomes profitable. If the
      Company is unable to obtain adequate capital, it could be forced to cease
      operations." Please see Note 2 to the financial statements included herewith.





In
      order
      to continue business, the Company may have to secure additional capital.
      Additional required capital may not be available at attractive terms which
      would
      have a material negative effect on the company's business and operating results.





In
      the
      event the Company needs additional funds in order to continue or increase its
      current business operations, it may not be able to secure such funding. In
      the
      past the Company's has been dependent on the infusion of capital from directors
      and stockholders in order to continue its business. Currently, management
      estimates recurring annual total expenses to be approximately $15,000.
      Management further expects that general, administrative and other operating
      expenses will increase substantially as the Company accelerates efforts to
      expand its business and to satisfy increased reporting and stockholder
      communications obligations under the securities laws.





There
      can
      be no assurance that the Company will be able to obtain necessary funds required
      to continue operations, or that such funds will be available on favorable terms
      favorable, or at all. If the Company borrow funds it will have to pay interest
      and may also have to agree to restrictions that limit operating flexibility.
      In
      addition, the Company's cash requirements may vary materially from those now
      anticipated by management. These changes may be due to the results of business
      expansion, potential changes in capital and debt markets, terms on which
      financing can be obtained, competitive factors and other factors. If adequate
      funds are not available, the Company may be required to curtail operations
      which
      would have a negative effect on the Company's financial condition.





The
      Company may not be able to expand the market for its products, which could
      cause
      its business to fail.





It
      is
      management's intention to expand the products the Company offers and the area
      in
      which it markets products, but only as ongoing business conditions warrant
      and,
      if necessary, funds are available. The Company presently operates in a limited
      area in and around Salt Lake City, Utah. In order to expand the area in which
      the Company operates, it must expand its facilities, purchase additional
      equipment and retain additional personnel. Also, there can be no assurance
      that
      if the Company's does expand into new areas, that such expansion will be
      successful or that the business generated form the addition of markets will
      warrant the expenses necessary to facilitate the expansion. If the Company
      is
      unable to successfully expand its marketing area and products offered, its
      business may not be able to grow, or it may possibly decrease which will have
      a
      negative impact on future operations.





9




The
      industry in which the Company operates is highly competitive and could affect
      results of operations, which would make profitability even more difficult to
      achieve and sustain.





The
      candy
      and related products industry is highly competitive and is marked by easy entry
      and many competitors and potential competitors. In addition to several local
      competitors some of the national competitors include Nabisco, Hershey Foods
      and
      Nestle. Most existing and potential competitors have greater financial
      resources, larger market share and larger production capability, which may
      enable them to establish a stronger competitive position than the Company has,
      in part through greater marketing opportunities. If the Company fails to compete
      effectively with these businesses or to address competitive developments quickly
      and effectively, it will not be able to grow its business or remain a viable
      entity.




The
      Company's business could be adversely affected by any adverse economic
      developments in the candy and snack food industry and/or the economy in general.





The
      Company depends on the perceived ongoing demand for its candy products, which
      is
      subject to trends in discretionary spending by the consumer. Therefore, future
      business is susceptible to downturns in the candy industry and the economy
      in
      general. Any significant downturn in the market or in general economic
      conditions would likely hurt the Company's business.





Management
      Will Devote Only Minimal Time to the Company.





Presently,
      the Company's three directors have other full time obligations and will devote
      only such time to the Company as necessary. It is anticipated that the Company's
      Secretary and originator of the recipes for its products, Vallerie Moulton,
      spends approximately 60 hour per month to the business of the Company. Steven
      Moulton spends approximately 60 hours per month dealing with the administrative
      details of the Company's business and the balance of his time to conducting
      his
      own investment and consulting activities. Director Ronald Moulton will devote
      only such time to the Company as may be required as a member of the Board of
      Directors. Thus, because of their other time commitments, management anticipates
      that they will devote only a minimal amount of time to the Company, at least
      until such time as business warrants devoting more time.





Effective
      voting control of the Company is held by its three directors.





The
      Company's three directors own in the aggregate approximately 64% of the
      outstanding voting securities of the Company. No other person owns as much
      as of
      10% of the outstanding shares. Accordingly, the current directors will have
      the
      ability to elect all of the Company's directors, who in turn elect all executive
      officers, without regard to the votes of other stockholders.





10




Currently
      there is only a limited trading market for Company’s common stock





In
      June
      2006, the Company’s shares were accepted for listing on the OTC Bulletin Board
      under the symbol “RMFD” although currently there is not an active trading market
      for the shares and there can be no assurance that any such market will ever
      develop or be maintained. Any trading market for the common stock that may
      develop in the future will most likely be very volatile, and numerous factors
      beyond the control of the Company may have a significant effect on the market.
      Only companies that report their current financial information to the SEC may
      have their securities included on the OTC Bulletin Board. In the event that
      the
      Company loses this status as a "reporting issuer," any future quotation of
      its
      common stock on the OTC Bulletin Board may be jeopardized.





The
      so
      called "penny stock rule" could make it cumbersome for brokers and dealers
      to
      trade in the Company's common stock, making the market less liquid which could
      have a negative effect on the price of the shares .





In
      the
      event the Company's shares are ultimately quoted on the OTC Bulletin Board,
      it
      is most likely that trading of the Company's common stock will be subject to
      certain provisions of the Exchange Act, commonly referred to as the "penny
      stock" rule. A penny stock is generally defined to be any equity security that
      has a market price less than $5.00 per share, subject to certain exceptions.
      If
      the Company's stock is deemed to be a penny stock, trading will be subject
      to
      additional sales practice requirements on broker-dealers. These may require
      a
      broker-dealer to:





·
            make
                a special suitability determination for purchasers of the shares;





·
            receive
                the purchaser's written consent to the transaction prior to the purchase;
                and





·
            deliver
                to a prospective purchaser of the Company's shares prior to the first
                transaction, a risk disclosure document relating to the penny stock
                market.





Consequently,
      penny stock rules may restrict the ability of broker-dealers to trade and/or
      maintain a market in the Company's common stock. Also, prospective investors
      may
      not want to get involved with the additional administrative requirements, which
      may have a material adverse effect on the trading of the Company's shares.





The
      Company has never paid a dividend and does not intend to do so in the immediate
      future.





The
      Company has never paid cash dividends and has no plans to do so in the
      foreseeable future. Any future dividend policy will be determined by the
      Company's Board of Directors and will depend upon a number of factors, including
      the Company's financial condition and performance, cash needs and expansion
      plans, income tax consequences, and the restrictions that applicable laws and/or
      credit arrangements may impose.





ITEM
      2.
      Description of Property.





The
      Company does not presently own any property.





ITEM
      3.
      Legal Proceedings





There
      are
      presently no material pending legal proceedings to which the Company is a party
      or to which any of its property is subject and, to the best of its knowledge,
      no
      such actions against the Company are contemplated or threatened.





11




ITEM
      4.
      Submission of Matters to a Vote of Security Holders.





No
      matters were submitted to a vote of securities holders during the fourth quarter
      of the fiscal year ended December 31, 2006.





PART
      II





ITEM
      5.
      Market for Common Equity and Related Stockholder Matters





The
      Company’s shares are included on the OTC Bulletin Board under the symbol “RMFD”
although currently there is not an active trading market for the shares and
      there can be no assurance that any such market will ever develop or be
      maintained. Accordingly, no historical trading information is being included
      in
      this report.





The
      ability of individual stockholders to trade their shares in a particular state
      may be subject to various rules and regulations of that state. A number of
      states require that an issuer's securities be registered in their state or
      appropriately exempted from registration before the securities are permitted
      to
      trade in that state. Presently, the Company has no plans to register its
      securities in any particular state. Further, the Company's shares are subject
      to
      the provisions of Section 15(g) and Rule 15g-9 of the Exchange Act, commonly
      referred to as the "penny stock" rule. Section 15(g) sets forth certain
      requirements for transactions in penny stocks and Rule 15g-9(d)(1) incorporates
      the definition of penny stock as that used in Rule 3a51-1 of the Exchange Act.





The
      SEC
      generally defines penny stock to be any equity security that has a market price
      less than $5.00 per share, subject to certain exceptions. Rule 3a51-1 provides
      that any equity security is considered to be a penny stock unless that security
      is: registered and traded on a national securities exchange meeting specified
      criteria set by the SEC; authorized for quotation on The NASDAQ Stock Market;
      issued by a registered investment company; excluded from the definition on
      the
      basis of price (at least $5.00 per share) or the issuer's net tangible assets;
      or exempted from the definition by the SEC. Broker-dealers who sell penny stocks
      to persons other than established customers and accredited investors (generally
      persons with assets in excess of $1,000,000 or annual income exceeding $200,000,
      or $300,000 together with their spouse), are subject to additional sales
      practice requirements.





For
      transactions covered by these rules, broker-dealers must make a special
      suitability determination for the purchase of such securities and must have
      received the purchaser's written consent to the transaction prior to the
      purchase. Additionally, for any transaction involving a penny stock, unless
      exempt, the rules require the delivery, prior to the first transaction, of
      a
      risk disclosure document relating to the penny stock market. A broker-dealer
      also must disclose the commissions payable to both the broker-dealer and the
      registered representative, and current quotations for the securities. Finally,
      monthly statements must be sent to clients disclosing recent price information
      for the penny stocks held in the account and information on the limited market
      in penny stocks. Consequently, these rules may restrict the ability of
      broker-dealers to trade and/or maintain a market in the Company's common stock
      and may affect the ability of stockholders to sell their shares.





12




As
      of
      January 31, 2007, there were 58 holders of record of the Company's common stock,
      which does not account for stockholders whose shares may be held in a brokerage
      account or in other nominee name. Because there has been no established public
      trading market for the Company's securities, no trading history is presented
      herein.





The
      Company has not filed a registration statement under the Securities Act and
      all
      of its outstanding shares of common stock were issued pursuant to exemptions
      under that Act. In December 1990, the Company issued 6 million shares
      (post-split) of common stock to its officers and other individuals for cash.
      These share were deemed to be "restricted" securities as defined by the
      Securities Act. In December 1998, the Company completed an offering of 50,000
      shares (250,000 shares post-split) of common stock to a total of 31 investors
      for gross proceeds of $50,000. The offering was made pursuant to an exemption
      from registration under the Securities Act provided by Regulation D, Rule 504
      of
      the Securities Act. Sales were made pursuant to a Confidential Offering
      Memorandum and a Form D was filed with the SEC in December 1998 reporting the
      completion of the offering.





As
      provided by Rule 502(d) of Regulation D, securities acquired in transactions
      that satisfy the requirements set forth in Rule 504 are not subject to the
      resale limitations set forth in Rule 502(d). Accordingly, the 250,000 shares
      issued pursuant to the Regulation D offering in 1998 are deemed not to be
      "restricted" securities, unless held by an affiliate or control person of the
      Company. The balance of 6 million were initially considered restricted, unless
      sold or otherwise transferred pursuant to a registration statement under the
      Securities Act or pursuant to an appropriate exemption from registration.
      Presently, 4.8 million shares out of these 6 million shares remain as restricted
      securities. A total of 4 million of these restricted shares are held by
      affiliates or controlling stockholder of the Company and 800,000 restricted
      shares are held by nonaffiliates. Accordingly, the balance of 1.45 million
      shares are considered freely tradeable and may be sold, transferred or otherwise
      traded in the public market without restriction, unless held by an affiliate
      or
      controlling stockholder of the Company. Because all of the outstanding
      restricted shares have been issued and outstanding for more than two years,
      Rule
      144 of the Securities Act is available to the holders of these shares.





In
      general, under Rule 144 as currently in effect, a person (or persons whose
      shares are aggregated) who has beneficially owned restricted shares of the
      Company for at least one year, including any person who may be deemed to be
      an
      "affiliate" of the Company (as the term "affiliate" is defined under the
      Securities Act), is entitled to sell, within any three-month period, an amount
      of shares that does not exceed the greater of (i) the average weekly trading
      volume in the Company's common stock, as reported through the automated
      quotation system of a registered securities association, during the four
      calendar weeks preceding such sale or (ii) 1% of the shares then outstanding.
      In
      order for a stockholder to rely on Rule 144, the Company must have available
      adequate current public information with respect to itself. A person who is
      not
      deemed to be an "affiliate" of the Company and has not been an affiliate for
      the
      most recent three months, and who has held restricted shares for at least two
      years would be entitled to sell such shares without regard to the various resale
      limitations under Rule 144(k).





Under
      Rule 144(k), the requirements of paragraphs (c), (e), (f), and (h) of Rule
      144
      do not apply to restricted securities sold for the account of a person who
      is
      not an affiliate of an issuer at the time of the sale and has not been an
      affiliate during the preceding three months, provided the securities have been
      beneficially owned by the seller for a period of at least two years prior to
      their sale. For purposes of this report only, a controlling stockholder is
      considered to be a person owning ten percent (10%) or more of the Company's
      total outstanding shares, or is otherwise an affiliate of the Company. No
      individual person owning a portion of the 1.45 million shares considered to
      be
      not restricted owns more than ten percent (10%) of the Company's total
      outstanding shares.





13




All
      of
      the 4 million shares considered restricted securities and presently held by
      the
      three directors of the Company, are presently eligible for sale pursuant to
      the
      provisions of Rule 144, subject to the volume and other limitations set forth
      under Rule 144. Accordingly, assuming the conditions of Rule 144 are otherwise
      met, each of these individuals could sell up to 62,500 shares per three month
      period.





Dividend
      Policy





The
      Company has not declared or paid cash dividends or made distributions in the
      past, and the Company does not anticipate that it will pay cash dividends or
      make distributions in the foreseeable future. The Company currently intends
      to
      retain and invest future earnings to finance its operations.





ITEM
      6.
      Management's Discussion and Analysis or Plan of Operation





The
      following information should be read in conjunction with the financial
      statements and notes thereto appearing as Part F/S of this Form 10-SB.





The
      Company is considered a development stage company with minimal cash assets
      and
      with only limited operations and revenue. Ongoing operating expense, including
      the costs associated with the preparation and filing of its requisite reports
      with the SEC, have been paid for by advances from a stockholder of the Company.
      It is anticipated that the Company will require approximately $15,000 over
      the
      next 12 months to fund the Company's operations and to maintain the corporate
      viability of the Company. Management believes that necessary funds will most
      likely be provided by the Company's officers and directors in the immediate
      future. However, unless the Company is able to generate sufficient revenues
      from
      sales of its candy products, or is able to obtain significant outside financing,
      there is substantial doubt about its ability to continue as a going concern.





Results
      of Operations





The
      Company had $3,447 in revenues for the year ended December 31, 2005 and reported
      $10,219 revenues for the year ended December 31, 2006, the result of candy
      sales
      during the fourth quarter of 2006. The Company realized a net loss of $23,234
      during the year ended December 31, 2006, compared to a loss of $19,545 during
      the 2005 fiscal year. These results reflect the Company's increasing activity
      prior in 2006. The loss for 2005 is attributed primarily to legal and accounting
      expenses associated with the filing of the Company's registration statement
      with
      the SEC.





Liquidity
      and Capital Resources





The
      majority of the expenses incurred during 2006 were paid by a stockholder.
      Because the Company currently has only nominal revenues and limited cash
      reserves, it expects to continue to rely on the stockholder to pay its expenses
      until such time it realizes adequate revenues from the production and sales
      of
      its candy products. There is no assurance that the Company will be able to
      generate adequate revenues in the immediate future to satisfy its cash needs.





14




In
      the
      opinion of management, inflation has not and will not have a material effect
      on
      the ongoing operations of the Company.





Plan
      of
      Operation





During
      the next 12 months, the Company will actively pursue a new production facilities
      for its candy manufacturing business to enable it to market and sell its
      products. Because the Company lacks immediate necessary funds, it may be
      necessary for the officers and directors to either advance funds to the Company
      or to accrue expenses until such time as it can attain a meaningful level of
      production. Management intends to hold expenses to a minimum and to obtain
      services on a contingency basis when possible. Further, the Company's directors
      will defer any compensation until such time as business warrants the payment
      of
      such.





The
      Company's immediate plans call for locating and making operational a new
      commercial kitchen facility in which to produce its products. The Company
      intends to rent a facility that has adequate space and equipment to handle
      its
      anticipated production needs, without having to incur significant expense.
      It is
      anticipated that the facility will be able to accommodate the packaging of
      products.





The
      Company intends to focus its marketing efforts to the Internet and other
      advertising that will enhance mail orders. The Company intends to continue
      selling its products at local retail in booths located at special events, fairs
      and festivals, however, management believes the most potential for the Company's
      business will by the Internet.





As
      of
      December 31, 2006, the Company had $38,021 in cash. After paying certain costs
      and expenses related to restarting production and the associated professional
      fees, including the cost of preparing and filing its registration statement,
      management estimates that it will have sufficient funds to operate for the
      next
      six to twelve months. If business revenues do not provide enough funds to
      continue operations, it may be necessary for the Company to seek additional
      financing. This would most likely come from current directors, although the
      directors are under no obligation to provide additional funding and there is
      no
      assurance outside funding will be available on terms acceptable to the Company,
      or at all.





Management
      anticipates that its new kitchen facilities will be rented with equipment
      adequate to handle the Company's anticipated candy production. Therefore, it
      is
      not expected that the Company will have to make any significant capital
      expenditures for new equipment or other assets. If additional equipment does
      become necessary, the Company believes that it will have adequate cash on hand
      to acquire the equipment.





Currently,
      the Company uses four part-time employees, three of whom are directors.
      Management believes that these employees will be adequate for the foreseeable
      future, or until the Company's production reaches a level to justify additional
      employees. Further, the Company believes that in the event increased business
      necessitates additional employees, then the Company will be able to pay the
      added expenses of these employees from increased revenues.





Our
      plan
      of operations for the next twelve months will focus on completing development
      of
      our Internet website and building a customer base for our products. This 12
      month plan of operations includes our goals of


·
              increasing
                  revenues from sales of our candy products;


15




·
            expanding
                the Company's marketing area to include communities outside the Salt
                Lake
                City metropolitan area;





·
            expanding
                the Internet business to be able to attract new customers, regardless
                of
                location, which will create an expanded mail order business;





·
            hiring
                additional employees and/or independent contractors if the Company
                is
                successful in expanding its business and adequate funds are available;
                and





·
            attaining
                profitability.





To
      achieve these goals during the next twelve months, the Company intends to
      exploit its new website to the extent possible and create new business by
      advertising, as funds permit. Management believes that these plans can be
      successfully implemented.





Net
      Operating Loss





The
      Company has accumulated approximately $52,700 of net operating loss
      carryforwards as of December 31, 2006. This loss carry forward may be offset
      against taxable income and income taxes in future years and expires in the
      year
      2025. The use of these losses to reduce future income taxes will depend on
      the
      generation of sufficient taxable income prior to the expiration of the net
      operating loss carryforwards. In the event of certain changes in control, there
      will be an annual limitation on the amount of net operating loss carryforwards
      which can be used. No tax benefit has been reported in the financial statements
      for the year ended December 31, 2006 because it has been fully offset by a
      valuation reserve. The use of future tax benefit is undeterminable because
      the
      Company presently has no operations.





Recent
      Accounting Pronouncements





In
      January 2003, the Financial Accounting Standards Board, or FASB, issued
      Interpretation No. 46 ("FIN 46"), Consolidation of Variable Interest Entities,
      which addresses the consolidation of business enterprises (variable interest
      entities), to which the usual condition of consolidation, a controlling
      financial interest, does not apply. FIN 46 requires an entity to assess its
      business relationships to determine if they are variable interest entities.
      As
      defined in FIN 46, variable interests are contractual, ownership or other
      interests in an entity that change with changes in the entity's net asset value.
      Variable interests in an entity may arise from financial instruments, service
      contracts, guarantees, leases or other arrangements with the variable interest
      entity. An entity that will absorb a majority of the variable interest entity's
      expected losses or expected residual returns, as defined in FIN 46, is
      considered the primary beneficiary of the variable interest entity. The primary
      beneficiary must include the variable interest entity's assets, liabilities
      and
      results of operations in its consolidated financial statements. FIN 46 is
      immediately effective for all variable interest entities created after January
      31, 2003. For variable interest entities created prior to this date, the
      provisions of FIN 46 were originally required to be applied no later than the
      first quarter of Fiscal 2004. On October 8, 2003, the FASB issued FASB Staff
      Position (FSP) FIN 46-6, Effective Date of FASB Interpretation No. 46,
      Consolidation of Variable Interest Entities. The FSP provides a limited deferral
      (until the end of the second quarter of 2004) of the effective date of FIN
      46
      for certain interests of a public entity in a variable interest entity or a
      potential variable interest entity. Management will continue to evaluate FIN
      46,
      but due to the complex nature of the analysis required by FIN 46, management
      has
      not determined the impact on results of operations or financial position.





16




In
      April
      2003, the FASB issued Statement of Financial Accounting Standards (SFAS) SFAS
      No. 149, Amendment of Statement 133 on Derivative Instruments and Hedging
      Activities. SFAS No. 149 amends and clarifies accounting for derivative
      instruments, including certain derivative instruments embedded in other
      contracts, and for hedging activities under SFAS No. 133. In particular, this
      Statement clarifies under what circumstances a contract with an initial net
      investment meets the characteristic of a derivative and when a derivative
      contains a financing component that warrants special reporting in the statement
      of cash flows. The Company adopted this standard for contracts entered into
      or
      modified after June 30, 2003. The adoption of SFAS No. 149 did not have a
      material impact on the Company's consolidated results of operations or financial
      position.





In
      May
      2003, the FASB issued SFAS No. 150, Accounting for Certain Financial Instruments
      with Characteristics of both Liabilities and Equity. This Statement requires
      certain financial instruments that embody obligations of the issuer and have
      characteristics of both liabilities and equity to be classified as liabilities.
      The Company adopted this standard for financial instruments entered into or
      modified after May 31, 2003. The adoption of SFAS No. 150 did not have a
      material impact on the Company's consolidated results of operations or financial
      position.





On
      December 16, 2004 the FASB issued SFAS No. 123(R), Share-Based Payment, which
      is
      an amendment to SFAS No. 123, Accounting for Stock-Based Compensation. This
      new
      standard eliminates the ability to account for share-based compensation
      transactions using Accounting Principles Board ("APB") Opinion No. 25,
      Accounting for Stock Issued to Employees, and generally requires such
      transactions to be accounted for using a fair-value-based method and the
      resulting cost recognized in the financial statements. This new standard is
      effective for awards that are granted, modified or settled in cash in interim
      and annual periods beginning after June 15, 2005. In addition, this new standard
      will apply to unvested options granted prior to the effective date. Management
      will adopt this new standard effective for the fourth fiscal quarter of 2005,
      and has not yet determined what impact this standard will have on the Company's
      financial position or results of operations.





In
      November 2004, the FASB issued SFAS No. 151, Inventory Costs - an amendment
      of
      ARB No. 43, Chapter 4. This Statement amends the guidance in ARB No. 43, Chapter
      4, "Inventory Pricing," to clarify the accounting for abnormal amounts of idle
      facility expense, freight, handling costs, and wasted material (spoilage).
      Paragraph 5 of ARB 43, Chapter 4, previously stated that ". . . under some
      circumstances, items such as idle facility expense, excessive spoilage, double
      freight, and rehandling costs may be so abnormal as to require treatment as
      current period charges. . . ." This Statement requires that those items be
      recognized as current-period charges regardless of whether they meet the
      criterion of "so abnormal." In addition, this Statement requires that allocation
      of fixed production overheads to the costs of conversion be based on the normal
      capacity of the production facilities. This statement is effective for inventory
      costs incurred during fiscal years beginning after June 15, 2005. Management
      does not believe the adoption of this Statement will have any immediate material
      impact on the Company.





17




In
      December 2004, the FASB issued SFAS No. 152, Accounting for Real Estate
      Time-sharing Transactions, which amends FASB statement No. 66, Accounting for
      Sales of Real Estate, to reference the financial accounting and reporting
      guidance for real estate time-sharing transactions that is provided in AICPA
      Statement of Position (SOP) 04-2, Accounting for Real Estate Time-Sharing
      Transactions. This statement also amends FASB Statement No. 67, Accounting
      for
      Costs and Initial Rental Operations of Real Estate Projects, to state that
      the
      guidance for (a) incidental operations and (b) costs incurred to sell real
      estate projects does not apply to real estate time-sharing transactions. The
      accounting for those operations and costs is subject to the guidance in SOP
      04-2. This Statement is effective for financial statements for fiscal years
      beginning after June 15, 2005. Management believes the adoption of this
      Statement will have no impact on the financial statements of the Company.





In
      December 2004, the FASB issued SFAS No.153, Exchange of Nonmonetary Assets.
      This
      Statement addresses the measurement of exchanges of nonmonetary assets. The
      guidance in APB Opinion No. 29, Accounting for Nonmonetary Transactions, is
      based on the principle that exchanges of nonmonetary assets should be measured
      based on the fair value of the assets exchanged. The guidance in that Opinion,
      however, included certain exceptions to that principle. This Statement amends
      Opinion 29 to eliminate the exception for nonmonetary exchanges of similar
      productive assets and replaces it with a general exception for exchanges of
      nonmonetary assets that do not have commercial substance. A nonmonetrary
      exchange has commercial substance if the future cash flows of the entity are
      expected to change significantly as a result of the exchange. This Statement
      is
      effective for financial statements for fiscal years beginning after June 15,
      2005. Earlier application is permitted for nonmonetary asset exchanges incurred
      during fiscal years beginning after the date of this statement is issued.
      Management believes the adoption of this Statement will have no impact on the
      financial statements of the Company.





Forward
      Looking and Cautionary Statements





This
      report includes "forward-looking statements" that may relate to such matters
      as
      anticipated financial performance, future revenues or earnings, business
      prospects, projected ventures, new products and services, anticipated market
      performance and similar matters. When used in this report, the words "may,"
      "will," expect," anticipate," "continue," "estimate," "project," "intend,"
      and
      similar expressions are intended to identify forward-looking statements
      regarding events, conditions, and financial trends that may affect the Company's
      future plans of operations, business strategy, operating results, and financial
      position. The Company caution readers that a variety of factors could cause
      its
      actual results to differ materially from the anticipated results or other
      matters expressed in forward-looking statements. These risks and uncertainties,
      many of which are beyond the Company's control, include:





·
            the
                ability to maintain current business and, if feasible, expand the
                marketing of products;





·
            the
                ability to attract and retain new individual and retail customers;





·
            the
                sufficiency of existing capital resources and the ability to raise
                additional capital to fund cash requirements for future operations;





18




·
            uncertainties
                involved in the rate of growth of business and acceptance of the
                Company's
                products and;





·
            anticipated
                size or trends of the market segments in which the Company competes
                and
                the anticipated competition in those markets;





·
            future
                capital requirements and the Company's ability to satisfy its needs;





·
            general
                economic conditions.





Although
      management believes the expectations reflected in these forward-looking
      statements are reasonable, such expectations cannot guarantee future results,
      levels of activity, performance or achievements. Actual results may differ
      materially from those included within the forward-looking statements as a result
      of various factors. Cautionary statements in the risk factors section and
      elsewhere in this report identify important risks and uncertainties affecting
      the Company's future, which could cause actual results to differ materially
      from
      the forward-looking statements made herein.





ITEM
      7.
      Financial Statements.





Our
      financial statements as of and for the fiscal years ended December 31, 2006
      and
      2005 have been examined to the extent indicated in their report by Moore &
Associates, Chartered, independent certified public accountants, and have been
      prepared in accordance with generally accepted accounting principles and
      pursuant to Regulation S-B as promulgated by the SEC. The aforementioned
      financial statements are included herein starting with page F-1.





ITEM
      8.
      Changes in and Disagreements with Accountants on Accounting and Financial
      Disclosure.





This
      Item
      is not Applicable.





ITEM
      8A.
      Controls and Procedures.





As
      of the
      end of the period covered by this annual 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. In
      designing and evaluating the disclosure controls and procedures, management
      recognizes that there are inherent limitations to the effectiveness of any
      system of disclosure controls and procedures, including the possibility of
      human
      error and the circumvention or overriding of the controls and procedures.
      Accordingly, even effective disclosure controls and procedures can only provide
      reasonable assurance of achieving their desired control objectives.
      Additionally, in evaluating and implementing possible controls and procedures,
      management is required to apply its reasonable judgment.





19




Based
      upon the required evaluation, our chief executive officer and principal
      accounting officer concluded as of December 31, 2006, our disclosure controls
      and procedures are effective in timely alerting them to material information
      relating to the company required to be disclosed by us in the reports that
      we
      file or submit under the Exchange Act to be recorded, processed, summarized
      and
      reported within the time periods specified in the SEC’s rules and forms. There
      have been no significant changes in our internal controls over financial
      reporting or in other factors that could significantly affect internal controls
      over financial reporting subsequent to the date we carried out our evaluation.





ITEM
      8B.
      Other Information.





This
      Item
      is not Applicable.





PART
      III





ITEM
      9.
      Directors, Executive Officers, Promoters Control Persons and Corporate
      Governance; Compliance with Section 16(a) of the Exchange Act.





The
      executive officers and directors of the Company are as follows:





Name
            
            Age
            
            PositionRon
                Moulton
            
            71
            
            President,
                Chief Executive Officer and DirectorSteven
                D. Moulton
            
            44
            
            Vice
                President, Treasurer and DirectorVallerie
                Moulton
            
            67
            
            Secretary
                and Director








All
      directors hold office until the next annual meeting of stockholders and until
      their successors have been duly elected and qualified. There are no agreements
      with respect to the election of directors. The Company has not compensated
      its
      directors for service on the Board of Directors or any committee thereof, but
      directors are entitled to be reimbursed for expenses incurred for attendance
      at
      meetings of the Board and any committee of the Board. However, the directors
      may
      defer their expenses and/or take payment in shares of the Company's common
      stock. As of the date hereof, no director has accrued any expenses or
      compensation. Officers are appointed annually by the Board of Directors and
      each
      executive officer serves at the discretion of the Board. The Company does not
      have any standing committees.





No
      director, officer, affiliate or promoter of the Company has, within the past
      five years, filed any bankruptcy petition, been convicted in or been the subject
      of any pending criminal proceedings, or is any such person the subject or any
      order, judgment, or decree involving the violation of any state or federal
      securities laws.





All
      of
      the Company's present directors have other employment or sources of income
      and
      will routinely devote only such time to the Company necessary to maintain its
      viability. It is estimated that each director will devote approximately 20
      to 60
      hours per month to the Company's corporate activities.





20




Currently,
      there is no arrangement, agreement or understanding between the Company's
      management and non-management stockholders under which non-management
      stockholders may directly or indirectly participate in or influence the
      management of the Company's affairs. Present management openly accepts and
      appreciates any input or suggestions from the Company's stockholders. However,
      the Board of Directors is elected by the stockholders and the stockholders
      have
      the ultimate say in who represents them on the Board. There are no agreements
      or
      understandings for any officer or director of the Company to resign at the
      request of another person and none of the current offers or directors of the
      Company are acting on behalf of, or will act at the direction of any other
      person.





The
      business experience of each of the persons listed above during the past five
      years is as follows:





Ronald
      Moulton has been President and director of the Company since January 1990.
      Mr.
      Moulton, graduated from Olympus High School in Salt Lake City, Utah and attended
      Utah Technical College from 1959 to 1961 where he completed a course in Drafting
      Design & Technology. From 1968 to July 1997, Mr. Moulton was employed as an
      engineering department supervisor at Templeton Linke & Associates in Salt
      Lake City, Utah. He also worked as an Engineering Technician at the Kearns
      Improvement District from July 1997 to May 1998, and has been a consultant
      to
      the firm since that time..





Vallerie
      Moulton has been Secretary and director of the Company since January 1990.
      Ms.
      Moulton graduated from Granite High School and Ex-Cel-Cis Beauty College in
      Salt
      Lake City, Utah. She has also been employed at the Hotel Utah in Salt Lake
      City,
      Utah, and was an officer of Dynamic Video in Salt Lake City during the early
      1980's. Other than her role as a director and executive officer of the Company,
      Ms. Moulton has since been a homemaker. Steven D. Moulton became a director
      and
      Vice President of the Company in January 1990. From August 1999 to March 2004,
      he served as Secretary/Treasurer and a director of Draco, Inc. and from
      September 2000 to the present, he has been Secretary/Treasurer of Jump' Jax,
      Inc., a subsidiary of Draco that was spun out to stockholders in December 2004
      and is engaged in the childhood entertainment business of leasing inflatable
      balloon bounce houses in Southern Utah. Mr. Moulton graduated from Olympus
      High
      School in Salt Lake City, Utah in 1980. From 1984 to 1990, he served as a
      director and executive officer of several publicly-held development stage
      companies including Safron, Inc. (director and Vice President); Sagitta Ventures
      (director and President); Jasmine Investments (director and President); Java,
      Inc. (Secretary/Treasurer and director); and Onyx Holdings Corporation (director
      and President). From 1991 to 1994, Mr. Moulton was a director and President
      of
      Omni International Corporation, which is currently known as "Beachport
      Entertainment Corporation." From 1987 until 1991 he was President and director
      of Icon Systems, Inc. and served as Secretary/Treasurer of the same company
      until his resignation on December 24, 1998. From 1995 to July 1996, he served
      as
      director and Vice President of Wasatch International Corporation, formerly
      Java,
      Inc. From February 1996 until November, 1999 he served as the President and
      director of InsiderStreet.com, formerly Sierra Holding Group, Inc. Also since
      1998, Mr. Moulton has managed his personal real estate properties through Excel
      Properties, LLC.





Ronald
      Moulton and Vallerie Moulton are married and the parents of Steven Moulton.




21




ITEM
      10.
      Executive Compensation.





The
      Company has not had a bonus, profit sharing, or deferred compensation plan
      for
      the benefit of its employees, officers or directors. The Company has not paid
      any salaries or other compensation to its officers or directors for their
      service on the Board of Directors for the years ended December 31, 2006 and
      2005. Further, the Company has not entered into an employment agreement with
      any
      of its officers, directors or any other persons and no such agreements are
      anticipated in the immediate future. It is intended that the Company's directors
      will defer any compensation until such time as business operations provide
      sufficient cash flow to provide for salaries. As of the date hereof, no person
      has accrued any compensation.





ITEM
      11.
      Security Ownership of Certain Beneficial Owners and Management





The
      following table sets forth information, to the best of the Company's knowledge,
      as of December 31, 2006, with respect to each person known by the Company to
      own
      beneficially more than 5% of the outstanding common stock, each director and
      all
      directors and officers as a group.




Name
                and Address of Beneficial Owner
            
            Amount
                and Nature of Beneficial Ownership
            
            Percent
                of Class(1)Ronald
                Moulton *
            
            
            1,000,000
            
            
            16.0
            %4706
                South Highland Drive, #353
              Salt
                Lake City, UT 84117Vallerie
                Moulton *
            
            
            2,000,000
            
            
            32.0
            %4706
                South Highland Drive, #353
              Salt
                Lake City, UT 84117Steven
                Moulton
            
            
            1,000,000
            
            
            16.0
            %4706
                South Highland Drive, #353
              Salt
                Lake City, UT 84117Diane
                Moulton
            
            
            500,000
            
            
            8.0
            %1083
                East Luetta Drive # A
              Salt
                Lake City, UT 84124Traci
                Baird
            
            
            500,000
            
            
            8.0
            %1865
                Sycamore Lane
              Salt
                Lake City, UT 84117All
                directors and officers
            
            
            4,000,000
            
            
            64.0
            %a
                group (3 persons)





*
      Director and/or executive officer





Note:
            Unless
                otherwise indicated, the Company has been advised that each person
                above
                has sole voting power over the shares indicated above.





(1)
            Based
                upon 6,250,000 shares of common stock outstanding on December 31,
                2006.





22




ITEM
      12.
      Certain Relationships and Related Transactions and Director Independence.





There
      have been no material transactions during the past two fiscal years between
      the
      Company and any officer, director, nominee for election as director, or any
      stockholder owning greater than five percent (5%) of the Company's outstanding
      shares, nor any member of the above referenced individuals' immediate families.





None
      of
      the Company’s directors are deemed to be independent directors. The Company does
      not have a compensation, audit or nominating committee, rather those functions
      are carried out by the Board as a whole.




Item
      13.
      Exhibits




Exhibit
                  No.
              
              Exhibit
                  Name2.1*
              
              Agreement
                  and Plan of Merger (change of domicile)3.1*
              
              Articles
                  of Incorporation (Nevada)3.2*
              
              By-Laws
                  of Registrant4.1*
              
              Instrument
                  defining rights of holders (See Exhibit No. 3.1, Articles of
                  Incorporation)21.1*
              
              Subsidiaries31.1
              
              Certification
                  of C.E.O. Pursuant to Section 302 of the Sarbanes-Oxley Act of
                  200231.2
              
              Certification
                  of Principal Accounting Officer Pursuant to Section 302 of the
                  Sarbanes-Oxley Act of 200232.1
              
              Certification
                  of C.E.O. Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant
                  to
                  Section 906 of the Sarbanes-Oxley Act of 200232.2
              
              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





*
      Filed
      previously in the Form 10-SB filed December 19, 2005.





See
      Item
      I above.





ITEM
      14.
      Principal Accountants Fees and Services.





We
      do not
      have an audit committee and as a result our entire board of directors performs
      the duties of an audit committee. Our board of directors will approve in advance
      the scope and cost of the engagement of an auditor before the auditor renders
      audit and non-audit services. As a result, we do not rely on pre-approval
      policies and procedures.





*Audit
      Fees*





The
      aggregate fees billed by our independent auditors, Moore & Associates,
      Chartered, for professional services rendered for the audit of our annual
      financial statements included in our Annual Reports on Form 10-KSB for the
      year ended December 31, 2006, and for the review of quarterly financial
      statements included in our Quarterly Reports on Form 10-QSB for the quarters
      ending March 31, June 30 and September 30, 2006, were $2,600 for 2006.





23




*Audit
      Related Fees*





** For
      the
      years ended December 31, 2006 and 2005, there were no fees billed for assurance
      and related services by Moore & Associate, Chartered relating to the
      performance of the audit of our financial statements which are not reported
      under the caption "Audit Fees" above.





*Tax
      Fees*





** For
      the
      years ended December 31, 2006 and 2005, fees billed by Moore & Associates,
      Chartered for tax compliance, tax advice and tax planning were $0 and $0,
      respectively.





We
      do not
      use Moore & Associates, Chartered for financial information system design
      and implementation. These services, which include designing or implementing
      a
      system that aggregates source data underlying the financial statements or
      generates information that is significant to our financial statements, are
      provided internally or by other service providers. We do not engage Moore &
Associates, Chartered to provide compliance outsourcing services.





The
      board
      of directors has considered the nature and amount of fees billed by Moore &
Associates, Chartered and believes that the provision of services for activities
      unrelated to the audit is compatible with maintaining Moore & Associates,
      Chartered's independence.




24




SIGNATURES





In
      accordance with Section 13 or 15(d) of the Exchange Act, the Registrant caused
      this report to be signed on its behalf by the undersigned, thereunto duly
      authorized.





**ROCKY
      MOUNTAIN FUDGE COMPANY, INC.**





BY:/S/ Ronald MoultonRonald
                Moulton,President
                and C.E.O.




Dated:
      February 12, 2006





In
      accordance with the Exchange Act, this report has been signed below by the
      following persons on behalf of the Registrant and in the capacities and on
      the
      dates indicated.





Signature
            
            Title
            
            Date/S/
                Ronald Moulton
            
            
            President,
                C.E.O. and Director
            
            February
                16, 2007Ronald
                Moulton/S/
                Steven D. Moulton
            
            
            Vice
                President Treasurer and
            
            February
                16, 2007Steven
                D. Moulton
            
            
            Director
                Principal Financial Officer/S/VALLERIE
                MOULTON
            
            
            Secretary
                and Director
            
            February
                16, 2007Vallerie
                Moulton




25




**ROCKY
      MOUNTAIN FUDGE COMPANY, INC.**


(A
      Development Stage Company)





FINANCIAL
      STATEMENTS





December
      31, 2006










**CONTENTS**


Report
                  of Independent Registered Public Accounting Firm
              F-3Balance
                  Sheet
              F-4Statements
                  of Operations
              F-5Statements
                  of Stockholders’ Equity (Deficit)
              F-6Statements
                  of Cash Flows
              F-7Notes
                  to the Financial Statements
              F-8





F-2




REPORT
      OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM




To
      the
      Shareholders and the Board of Directors


Rocky
      Mountain Fudge Company, Inc.


(A
      Development Stage Company)


Salt
      Lake
      City, Utah





We
      have
      audited the accompanying balance sheet of Rocky Mountain Fudge Company, Inc.
      (a
      development stage company)(“the Company”) as of December 31, 2006 and the
      related statements of operations, stockholders’ equity (deficit) and cash flows
      for the years ended December 31, 2006 and 2005. These statements are the
      responsibility of the Company’s management. Our responsibility is to express an
      opinion on these financial statements based on our audits.





We
      conducted our audits in accordance with standards of the Public Company
      Accounting Oversight Board (United States). Those standards require that we
      plan
      and perform the audits to obtain reasonable assurance about whether the
      financial statements are free of material misstatement. An audit includes
      examining, on a test basis, evidence supporting the amounts and disclosures
      in
      the financial statements. An audit also includes assessing the accounting
      principles used and significant estimates made by management, as well as
      evaluating the overall financial statement presentation. We believe that our
      audits provide a reasonable basis for our opinion.





In
      our
      opinion, the financial statements referred to above present fairly, in all
      material respects, the financial position of Rocky Mountain Fudge Company,
      Inc.
      (a development stage company) as of December 31, 2006 and the results of its
      operations and its cash flows for the years ended December 31, 2006 and 2005
      in
      conformity with generally accepted accounting principles.





The
      accompanying financial statements have been prepared assuming that the Company
      will continue as a going concern. As discussed in Note 2 to the financial
      statements, the Company has sustained recent losses from operations, has minimal
      operating revenue, and a stockholders’ deficit. These factors raise substantial
      doubt about the Company’s ability to continue as a going concern. Management’s
      plans in regard to these matters are also described in Note 2. The financial
      statements do not include any adjustments that might result from the outcome
      of
      this uncertainty.




Moore
      & Associates, LLP


Las
      Vegas, NV


January
      7, 2007




F-3




**ROCKY
        MOUNTAIN FUDGE COMPANY, INC.** (A
          Development Stage Company)
 Balance
        Sheets
  December
                  31,2006ASSETSCURRENT
                  ASSETSCash
              
              $
              38,021Total
                  Current Assets
              
              
              38,021TOTAL
                  ASSETS
              
              $
              38,021LIABILITIES
                  AND STOCKHOLDERS' EQUITY (DEFICIT)CURRENT
                  LIABILITIESAccounts
                  payable
              
              $
              -Note
                  payable - related party
              
              
              25,800Total
                  Current Liabilities
              
              
              25,800STOCKHOLDERS'
                  EQUITY (DEFICIT)Common
                  stock; 50,000,000 shares authorized,at
                  $0.001 par value, 6,250,000 shares issued andoutstanding,
                  respectively
              
              
              6,250Additional
                  paid-in capital
              
              
              92,950Accumulated
                  deficit
              
              
              (86,979
              )Total
                  Stockholders' Equity (Deficit)
              
              
              12,221TOTAL
                  LIABILITIES AND STOCKHOLDERS'EQUITY
                  (DEFICIT)
              
              $
              38,021
  T he
          accompanying notes are an integral part of these financial
          statements.


F-4




**ROCKY
      MOUNTAIN FUDGE COMPANY, INC.**


(A
      Development Stage Company) Statements
        of Operations (Unaudited)


From
                Inceptionon
                January 4,For
                the Years Ended
            
            1990
                throughDecember
                31,
            
            December
                31,2006
            
            2005
            
            2006REVENUES
            
            $
            10,219
            
            $
            3,447
            
            $
            146,054COST
                OF SALES
            
            
            3,500
            
            
            3,460
            
            
            48,209GROSS
                PROFIT (LOSS)
            
            
            6,719
            
            
            (13
            )
            
            97,845EXPENSESGeneral
                and Administrative
            
            
            29,153
            
            
            19,532
            
            
            188,382Total
                Expenses
            
            
            29,153
            
            
            19,532
            
            
            188,382OPERATING
                LOSS
            
            
            (22,434
            )
            
            (19,545
            )
            
            (90,537
            )OTHER
                INCOME (EXPENSES)Interest
                income
            
            
            -
            
            
            -
            
            
            4,437Interest
                expense
            
            
            (800
            )
            
            -
            
            
            (879
            )Total
                Other Income (Expenses)
            
            
            (800
            )
            
            -
            
            
            3,558NET
                LOSS
            
            $
            (23,234
            )
            $
            (19,545
            )
            $
            (86,979
            )BASIC
                LOSS PER SHARE
            
            $
            (0.00
            )
            $
            (0.00
            )WEIGHTED
                AVERAGE NUMBEROF
                SHARES OUTSTANDING
            
            
            6,250,000
            
            
            6,250,000




T he
      accompanying notes are an integral part of these financial
      statements.




F-5




**ROCKY
      MOUNTAIN FUDGE COMPANY, INC.**


(A
      Development Stage Company)


Statements
      of Stockholders' Equity (Deficit)


AdditionalCommon
                Stock
            
            Paid-In
            
            AccumulatedShares
            
            Amount
            
            Capital
            
            DeficitBalance,
                December 31, 2004
            
            
            6,250,000
            
            
            6,250
            
            
            37,950
            
            
            (44,200
            )Capital
                contributed byshareholder
            
            
            -
            
            
            -
            
            
            50,000
            
            
            -Net
                loss for the year endedDecember
                31, 2005
            
            
            -
            
            
            -
            
            
            -
            
            
            (19,545
            )Balance,
                December 31, 2005
            
            
            6,250,000
            
            
            6,250
            
            
            87,950
            
            
            (63,745
            )Services
                contributed byshareholders
            
            
            -
            
            
            -
            
            
            5,000
            
            
            -Net
                loss for the year endedDecember
                31, 2006
            
            
            -
            
            
            -
            
            
            -
            
            
            (23,234
            )Balance,
                December 31, 2006
            
            
            6,250,000
            
            $
            6,250
            
            $
            92,950
            
            $
            (86,979
            )




T he
        accompanying notes are an integral part of these financial
        statements.




F-6


**ROCKY
        MOUNTAIN FUDGE COMPANY, INC.**
 (A
        Development Stage Company)
 Statements
        of Cash Flows (Unaudited)
  From
                  Inceptionon
                  January 4,For
                  the years
                  Ended
              
              1990
                  throughDecember
                  31,
              
              December
                  31,2006
              
              2005
              
              2006CASH
                  FLOWS FROM OPERATING ACTIVITIESNet
                  loss
              
              $
              (23,234
              )
              $
              (19,545
              )
              $
              (86,979
              )Changes
                  in operating assets and liabilitiesIncrease
                  in accounts receivable
              
              
              52
              
              
              (52
              )
              
              -Increase
                  in notes payable
              
              
              800
              
              
              -
              
              
              800Increase
                  (decrease) in accounts payable
              
              
              (1,845
              )
              
              1,845
              
              
              -Net
                  Cash Used by Operating Activities
              
              
              (24,227
              )
              
              (17,752
              )
              
              (86,179
              )CASH
                  FLOWS FROM INVESTING ACTIVITIES
              
              
              -
              
              
              -
              
              
              -CASH
                  FLOWS FROM FINIANCING ACTIVITIESContributed
                  capital
              
              
              5,000
              
              
              50,000
              
              
              57,400Cash
                  received on note payable - related
              
              
              25,000
              
              
              -
              
              
              25,000Sale
                  of common stock for cash
              
              
              -
              
              
              -
              
              
              41,800Net
                  Cash Provided byFinancing
                  Activities
              
              
              30,000
              
              
              50,000
              
              
              124,200NET
                  DECREASE IN CASH
              
              
              5,773
              
              
              32,248
              
              
              38,021CASH
                  AT BEGINNING OF PERIOD
              
              
              32,248
              
              
              -
              
              
              -CASH
                  AT END OF PERIOD
              
              $
              38,021
              
              $
              32,248
              
              $
              38,021SUPPLIMENTAL
                  DISCLOSURES OFCASH
                  FLOW INFORMATIONCASH
                  PAID FOR:Interest
              
              $
              -
              
              $
              -
              
              $
              79Income
                  Taxes
              
              $
              -
              
              $
              -
              
              $
              -


The
        accompanying notes are an integral part of these financial
        statements.
  F-7
 **ROCKY
            MOUNTAIN FUDGE COMPANY, INC.**
 (A
            Development Stage Company)
 Notes
            to
            the Financial Statements
 December
            31, 2006 and 2005
 NOTE
          1 -
          ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
 a.
          Business and Organization
 
 Rocky
          Mountain Fudge Company, Inc. (The Company) was organized on January 4,
          1990,
          under the laws of the State of Utah to engage in the business of making
          and
          selling fudge candy (dba Vallerie's Country Candy, Inc.) Pursuant to Statement
          of Financial Accounting Standards No. 7, "Accounting and Reporting by
          Development Stage Enterprises," the Company is classified as a development
          stage
          company. On August 9, 1992, the Company changed its name to RV&S
          Enterprises, Inc. On July 28, 1998, the Company again changed its name
          to Rock
          Mountain Fudge Company, Inc. and commenced sales of candy products over
          the
          internet and through direct sales.
 
 In
          order
          to relocate the domicile of the Company, the Company created a new wholly
          owned
          subsidiary in the State of Nevada under the name of Rocky Mountain Fudge
          Company, Inc. The Nevada corporation has the same capitalization as the
          Company;
          50 million shares of common stock, par value $0.001 per share. The Company
          and
          the newly formed Nevada entity then executed an Agreement and Plan of Merger
          for
          the sole purpose of changing the Company's domicile to Nevada. As a result
          of
          the merger transaction, the Utah corporation was merged with and into the
          Nevada
          corporation, with the Nevada entity being the survivor. Each Company stockholder
          was entitled to exchange their shares of common stock in the Utah entity
          for the
          same number of shares in the Nevada entity, adjusted for the five for one
          forward stock split.
 
 Following
          the change of domicile, the Company incorporated a new wholly-owned subsidiary
          in the State of Utah under the name of Wasatch Candy Company, Inc., d.b.a.
          Vallerie's Country Candy, into which the Company transferred certain cash
          and
          assets and through which the Company will operate its candy
          business.
 
 The
          Company's financial statements are prepared using the accrual method of
          accounting. The Company has elected a December 31 year-end.
 
 b.
          Revenue Recognition
 
 Revenues
          from the sale of candy products are recognized upon delivery and acceptance
          by
          the customer.
 
 F-8
  **ROCKY
          MOUNTAIN FUDGE COMPANY, INC.**
 (A
          Development Stage Company)
 Notes
          to
          the Financial Statements
 December
          31, 2006 and 2005
  NOTE
          1 -
          ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
          (Continued)
 
 c.
          Basic
          Loss Per Share
  The
          computation of basic loss per share of common stock is based on the weighted
          average number of shares outstanding during the period.
  For
                      the Years EndedDecember
                      31,2006
                  
                  2005
                      .Loss
                      (numerator)
                  
                  $
                  (23,234
                  )
                  $
                  (19,545
                  )Shares
                      (denominator)
                  
                  
                  6,250,000
                  
                  
                  6,250,000Per
                      share amount
                  
                  $
                  (0.00
                  )
                  $
                  (0.00
                  )
  d.
          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 disclosure 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.
 
 e.
          Income
          Taxes
 
 Deferred
          taxes are provided on a liability method whereby deferred tax assets are
          recognized for deductible temporary differences and operating loss and
          tax
          credit carryforwards and deferred tax liabilities are recognized for taxable
          temporary differences. Temporary differences are the differences between
          the
          reported amounts of assets and liabilities and their tax bases. Deferred
          tax
          assets are reduced by a valuation allowance when, in the opinion of management,
          it is more likely than not that some portion or all of the deferred tax
          assets
          will to be realized. Deferred tax assets and liabilities are adjusted for
          the
          effects of changes in tax laws and rates on the date of enactment.
 
 Net
          deferred tax assets consist of the following components as of December
          31, 2006
          and 2005:
 2006
                  
                  2005Deferred
                      tax assets:NOL
                      carryover
                  
                  $
                  33,922
                  
                  $
                  24,861Valuation
                      allowance
                  
                  
                  (33,922
                  )
                  
                  (24,861
                  )Net
                      deferred tax asset
                  
                  $
                  —
                  
                  $
                  —
  F-9
 **ROCKY
            MOUNTAIN FUDGE COMPANY, INC.**
 (A
            Development Stage Company)
 Notes
            to
            the Financial Statements
 December
            31, 2006 and 2005
 NOTE
          1 -
          ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
          (Continued)
 
 e.
          Income
          Taxes (Continued)
  The
          income tax provision differs from the amount of income tax determined by
          applying the U.S. federal and state income tax rates of 39% to pretax income
          from continuing operations for the years ended December 31, 2006 and 2005
          due to
          the following:
 2006
                  
                  2005Book
                      Income
                  
                  $
                  (9,061
                  )
                  $
                  (7,623
                  )Valuation
                      allowance
                  
                  
                  9,061
                  
                  
                  7,623
  At
          December 31, 2006, the Company had net operating loss carryforwards of
          approximately $72,700 that may be offset against future taxable income
          through
          2025. No tax benefit has been reported in the December 31, 2005 financial
          statements since the potential tax benefit is offset by a valuation allowance
          of
          the same amount.
  Due
          to
          the change in ownership provisions of the Tax Reform Act of 1986, net operating
          loss carry forwards for Federal income tax reporting purposes are subject
          to
          annual limitations. Should change in ownership occur, net operating loss
          carryforwards may be limited as to use in future years.
 
 f.
          Principles of Consolidation
 
 The
          accompanying financial statements include the accounts of Rocky Mountain
          Fudge
          Company, Inc. and its wholly owned subsidiary, Wasatch Candy Company, Inc.
          All
          inter-company transactions have been eliminated in the
          consolidation.
 
 NOTE
          2 -
          GOING CONCERN
 
 The
          Company's financial statements are prepared using generally accepted accounting  principles
          in the United States of America applicable to a going concern which contemplates
          the realization
          of assets and liquidation of liabilities in the normal course of business.
          The  Company
          has not yet established an ongoing source of revenues sufficient to cover
          its operating
          costs and allow it to continue as a going concern. The ability of the Company
          to  continue
          as a going concern is dependent on the Company obtaining adequate capital
          to
          fund operating losses until it becomes profitable. If the Company is unable
          to
          obtain adequate capital, it could be forced to cease operations.
 
 In
          order
          to continue as a going concern, the Company will need, among other things,
          additional capital resources. Management's plans to obtain such resources
          for
          the Company include (1) obtaining capital from management and significant
          shareholders sufficient to meet its minimal operating expenses, and (2)
          seeking
          out and completing a merger with an existing operating company. However,
          management cannot provide any assurances that the Company will be successful
          in
          accomplishing any of its plans.
 
 F-10
  **ROCKY
          MOUNTAIN FUDGE COMPANY, INC.**
 (A
          Development Stage Company)
 Notes
          to
          the Financial Statements
 December
          31, 2006 and 2005
  NOTE
          2 -
          GOING CONCERN (Continued)
 
 The
          ability of the Company to continue as a going concern is dependent upon
          its
          ability to  successfully
          accomplish the plans described in the preceding paragraph and eventually
          secure
          other sources of financing and attain profitable operations. The accompanying
          financial statements do not include any adjustments that might be necessary
          if
          the Company is unable to continue as a going concern.
 
 F-11