UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
____________________________________________________________________________
(Mark one)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2006
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
EXCHANGE ACT OF 1934
For the transition period from ______ to _______
__________________________________________________________________________
Commission File Number: 0-31619
MILLENNIUM QUEST, INC.
______________________________________________________________
(Exact Name of small business issuer as specified in its charter)
Delaware 87-0445575
_______________________ _______________________
(State of Incorporation) (IRS Employer ID Number)
4089 Mount Olympus Way, Salt Lake City, Utah 84124
___________________________________________________
(Address of principal executive offices)
(801) 278-6990
_________________________
(Issuer's telephone number)
__________________________________________________________________________
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 such shorter
period that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
YES [X] NO [ ]
Indicate by check mark whether the registrant is a shell company (as defined
in Rule 12b-2 of the Exchange Act). YES [X] NO [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS:
State the number of shares outstanding of each of the issuer's classes of
common equity as of the latest practicable date: 2,261,643 shares of its
common stock, par value $0.001, as of the date of this report.
Transitional Small Business Format: Yes [ ] No [X]
MILLENNIUM QUEST, INC.
Form 10-QSB for the Quarter ended March 31, 2006
Table of Contents
Part I - Financial Information Page
Item 1. Financial Statements 3
Item 2. Management's Discussion and Analysis
or Plan of Operation 8
Item 3. Controls and Procedures 9
Part II - Other Information
Item 1. Legal Proceedings 10
Item 2 - Unregistered Sales of Equity Securities
and Use of Proceeds 10
Item 3. Defaults Upon Senior Securities 11
Item 4. Submission of Matters to a Vote of Security Holders 11
Item 5. Other Information 11
Item 6. Exhibits and Reports on Form 8-K 11
2
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
MILLENNIUM QUEST, INC.
[A Development Stage Company]
UNAUDITED CONDENSED BALANCE SHEETS
ASSETS
March 31, December 31,
2006 2005
------------- -------------
CURRENT ASSETS:
Cash $ 8,606 $ 1,083
------------- -------------
Total Current Assets 8,606 1,083
------------- -------------
$ 8,606 $ 1,083
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
Accounts payable $ 7,111 $ 15,338
Interest Payable - related party 226 -
Shareholder Loan 20,000 -
------------- -------------
Total Current Liabilities 27,337 15,338
------------- -------------
STOCKHOLDERS' EQUITY (DEFICIT):
Preferred stock, $.001 par value,
5,000,000 shares authorized,
no shares issued and outstanding - -
Common stock, $.001 par value,
20,000,000 shares authorized,
2,261,643 and 1,961,643 shares
issued and outstanding, respectively 2,262 1,962
Capital in excess of par value 163,788 161,088
Retained deficit (106,991) (106,991)
Deficit accumulated during the
development stage (77,790) (70,314)
------------- -------------
Total Stockholders' Equity (Deficit) (18,731) (14,255)
------------- -------------
$ 8,606 $ 1,083
============= =============
Note: The balance sheet at December 31, 2005 was taken from the audited
financial statements at that date and condensed.
The accompanying notes are an integral part of these
unaudited condensed financial statements.
3
MILLENNIUM QUEST, INC.
[A Development Stage Company]
UNAUDITED CONDENSED STATEMENTS OF OPERATIONS
From
For the Three Re-entering
Months Ended of Development
March 31, Stage on May 4
----------------------------- 1994 Through
2006 2005 March 31, 2006
-------------- -------------- ---------------
REVENUE $ - $ - $ -
OPERATING EXPENSES:
General and administrative 7,266 705 86,583
-------------- -------------- ---------------
LOSS BEFORE OTHER INCOME (EXPENSE) (7,266) (705) (86,583)
-------------- -------------- ---------------
OTHER INCOME (EXPENSE):
Interest Expense- related party (226) - (226)
Interest and other income 16 6 9,019
-------------- -------------- ---------------
Total Other Income (Expense) (210) 6 8,793
-------------- -------------- ---------------
LOSS BEFORE INCOME TAXES (7,476) (699) (77,790)
CURRENT TAX EXPENSE - - -
DEFERRED TAX EXPENSE - - -
-------------- -------------- ---------------
NET LOSS $ (7,476) $ (699) $ (77,790)
============== ============== ===============
BASIC LOSS PER SHARE $ (0.00) $ (0.00)
============== ==============
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING 2,101,643 1,961,643
============== ==============
The accompanying notes are an integral part of these
unaudited condensed financial statements.
4
MILLENNIUM QUEST, INC.
[A Development Stage Company]
UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS
From
For the Three Re-entering
Months Ended of Development
March 31, Stage on May 4
----------------------------- 1994 Through
2006 2005 March 31, 2006
-------------- -------------- ---------------
Cash Flows from Operating Activities:
Net loss $ (7,476) $ (699) $ (77,790)
Adjustments to reconcile net loss to
net cash used by operating activities:
Non-cash expenses 3,000 - 13,000
Changes in assets and liabilities:
Increase (decrease) in accounts payable (8,227) (5,098) 7,111
Increase in interest payable - related party 226 - 226
-------------- -------------- ---------------
Net Cash Used by Operating Activities (12,477) (5,797) (57,453)
-------------- -------------- ---------------
Cash Flows from Investing Activities: - - -
-------------- -------------- ---------------
Net Cash Provided by Investing Activities - - -
-------------- -------------- ---------------
Cash Flows from Financing Activities:
Proceeds from shareholder loan 20,000 - 20,000
-------------- -------------- ---------------
Net Cash Provided by Financing Activities 20,000 - 20,000
-------------- -------------- ---------------
Net Increase (Decrease) in Cash 7,523 (5,797) (37,453)
Cash at Beginning of Period 1,083 9,936 46,059
-------------- -------------- ---------------
Cash at End of Period $ 8,606 $ 4,139 $ 8,606
============== ============== ===============
Supplemental Disclosures of Cash Flow information:
Cash paid during the period for:
Interest $ - $ - $ -
Income taxes $ - $ - $ -
Supplemental Schedule of Non-Cash Investing and Financing Activities:
For the three months ended March 31, 2006: None.
For the three months ended March 31, 2005: None.
The accompanying notes are an integral part of these
unaudited condensed financial statements.
5
MILLENNIUM QUEST, INC.
[A Development Stage Company]
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Condensed Financial Statements - The accompanying financial statements have
been prepared by the Company without audit. In the opinion of management, all
adjustments (which include only normal recurring adjustments) necessary to
present fairly the financial position, results of operations and cash flows at
March 31, 2006 and 2005 and for the periods then ended have been made.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles in the United States of America have been condensed or omitted. It
is suggested that these condensed financial statements be read in conjunction
with the financial statements and notes thereto included in the Company's
December 31, 2005 audited financial statements. The results of operations for
the periods ended March 31, 2006 and 2005 are not necessarily indicative of
the operating results for the full year.
NOTE 2 - GOING CONCERN
The accompanying financial statements have been prepared in conformity with
generally accepted accounting principles in the United States of America which
contemplate continuation of the Company as a going concern. However, the
Company has incurred losses since re-entering development stage and has no
on-going operations. Further, the Company has current liabilities in excess
of current assets. These factors raise substantial doubt about the ability of
the Company to continue as a going concern. In this regard, management is
proposing to raise additional funds through loans or through additional sales
of its common stock or through the acquisition of other companies. There is
no assurance that the Company will be successful in raising this additional
capital or in achieving profitable operations. These financial statements do
not include any adjustments that might result from the outcome of these
uncertainties.
NOTE 3 - INCOME TAXES
The amount of and ultimate realization of the benefits from the operating loss
carryforwards for income tax purposes is dependent, in part, upon the tax laws
in effect, the future earnings of the Company and other future events, the
effects of which cannot be determined. Because of the uncertainty surrounding
the realization of the loss carryforwards, the Company has established a
valuation allowance equal to the tax effect of the loss carryforwards and,
therefore, no deferred tax asset has been recognized in the financial
statements for the loss carryforwards. The net deferred tax assets are
approximately $26,000 and $24,300 as of March 31, 2006 and December 31, 2005,
respectively, with an offsetting valuation allowance of the same amount,
resulting in a change in the valuation allowance of approximately $1,700
during the quarter ended March 31, 2006.
6
MILLENNIUM QUEST, INC.
[A Development Stage Company]
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
NOTE 4 - RELATED PARTY TRANSACTIONS
On February 17, 2006, the board of directors approved the issuance of 150,000
shares of common stock each to Dimitri Cocorinis and Terry Cononelos, the
Company's officers, or a total of 300,000 shares of common stock. The
issuance of this stock was authorized in consideration of services rendered by
Messrs. Cocorinis and Cononelos to the Company. The transaction has been
valued at $3,000 ($0.01 per share).
On or about February 1, 2006, C&C Investment Partnership, a partnership owned
by Messrs. Cocorinis and Cononelos, loaned the Company the sum of $20,000, to
cover business operations and outstanding payables. The loan is repayable,
with interest at 7% per annum, on or before August 1, 2006 or the date on
which the Company enters into a merger, reorganization or acquisition
transaction, whichever occurs first. The Company does not have the funds to
repay the loan, and does not anticipate that funds will be available until
such time as the Company enters into a merger or acquisition transaction. The
board of directors of the Company consists of Messrs. Cocorinis and Cononelos,
so this transaction cannot be considered the result of arms' length
negotiations.
7
Item 2 - Management's Discussion and Analysis or Plan of Operation
(1) Caution Regarding Forward-Looking Information
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 within the
meaning of Section 27a of the Securities Act of 1933 and Section 21e of the
Securities Exchange Act of 1934 regarding events, conditions, and financial
trends that may affect the Company's future plans of operations, business
strategy, operating results, and financial position. Persons reviewing this
report are cautioned that any forward-looking statements are not guarantees of
future performance and are subject to risks and uncertainties and that actual
results may differ materially from those included within the forward-looking
statements as a result of various factors.
(2) Plan of Operation
The Company's current operating plan is to (a) cover the administrative
and reporting requirements of a public company; and (b) search for, and
investigate, potential businesses, products, technologies and companies for
acquisition or merger. For the past several years, the Company has had no
active business operations, and has been seeking to acquire an interest in a
business with long-term growth potential. The Company currently has no
commitment or arrangement to participate in a business and cannot now predict
what type of business it may enter into or acquire. It is emphasized that the
business objectives discussed herein are extremely general and are not
intended to be restrictive on the discretion of the Company's management.
The Company is not aware of any trends that have or are reasonably likely to
have a material impact on its liquidity, net sales, revenues, or income from
continuing operations. There have been no events which have caused material
changes from period to period in one or more line items of the financial
statements or any seasonal aspects that have had a material effect on the
financial condition or results of operation.
Three-Month Periods Ended March 31, 2006 and 2005
The Company has not been engaged in business operations, and has had no
revenue from operations for the three-month periods ended March 31, 2006 and
2005.
General and administrative expenses for the three-month periods ended
March 31, 2006 and 2005, consisted of general corporate administration, legal
and professional expenses, and accounting and auditing costs, in connection
with periodic reports. These expenses were $7,266 and $705 for the
three-month periods ended March 31, 2006 and 2005, respectively.
The Company's cash is held in an interest-bearing checking account. As
a result, the Company had nominal interest income for the three-months ended
March 31, 2006 ($16) and 2005 ($6). Due to the foregoing factors, the Company
has realized a net loss of $7,476 for the three months ended March 31, 2006,
as compared to a net loss of $699 for the same period in 2005. The Company has
had a net loss from the reentering of development stage on May 4, 1994 through
March 31, 2006, of $77,790.
During the quarter ended March 31, 2006, an affiliate of the officers
loaned the Company the sum of $20,000 to cover current expenses.
8
Liquidity and Capital Resources
The Company has not experienced a material change in financial condition
over the past year, except for an increase in liabilities and a decrease in
stockholders' equity, as described herein. At March 31, 2006 and December 31,
2005, the Company had no working capital. Working capital as of both dates
consists of cash less accounts payable. The Company is dependent upon
management and/or significant shareholders to provide sufficient working
capital to preserve the integrity of the corporate entity during this phase.
It is the intent of management and significant shareholders to provide
sufficient working capital necessary to support and preserve the integrity of
the corporate entity.
Although the Company's assets consist of cash and cash equivalents, the
Company has no intent to become, or hold itself out to be, engaged primarily
in the business of investing, reinvesting, or trading in securities.
Accordingly, the Company does not anticipate being required to register
pursuant to the Investment Company Act of 1940, and expects to be limited in
its ability to invest in securities, other than cash equivalents and
government securities, in the aggregate amount of over 40% of its assets.
There can be no assurance that any investment made by the Company will not
result in losses.
The Company has had no business operations for several years, and has a
stockholders' deficit of $18,731 as of March 31, 2006, as compared to $14,255
at December 31, 2005. During the quarter, an affiliate of the officers loaned
the Company the sum of $20,000 to cover ongoing expenses. There are
insufficient funds to repay this obligation. Therefore, these factors raise
substantial doubt about the ability of the Company to continue as a going
concern. In this regard, in order to maintain operations, management would
need to raise additional funds through loans or through additional sales of
its common stock or through the acquisition of other companies. There is no
assurance that the Company will be successful in raising this additional
capital or in achieving profitable operations. The financial statements do
not include any adjustments that might result from the outcome of these
uncertainties.
Item 3 - Controls and Procedures
The Company does not maintain a formal or written set of disclosure
controls and procedures designed to ensure that information required to be
disclosed by the Company in reports that it files or submits under the
Securities Exchange Act of 1934 is recorded, processed, summarized and
reported within the time periods specified in Securities and Exchange
Commission rules and forms. Subsequent to the end of the quarter, the Company
has been in the process of establishing disclosure controls and procedures.
However, the Company's current informal disclosure controls and procedures
would not constitute effective internal control over financial reporting as of
March 31, 2006.
During the course of the Company's preparation of its December 2005 and
March 2006 financial statements, including the audit of the year end financial
statements by the Company's independent public accounting firm, certain
material weaknesses in the Company's internal control over financial reporting
were identified. These material weaknesses were (1) the delay in recording
financial transactions, which could result in inadvertent errors or omissions,
(2) the lack of an organized system of document review, signing, retaining
copies, and orderly filing, (3) the lack of a significant segregation of
duties or review of financial transactions and (4) the lack of documentation
of controls and accounting procedures.
9
The material weaknesses described above are the direct result of a lack
of resources and accounting personnel. The Company's chief executive officer
had the primary responsibility for receipts and disbursements, and for the
preparation of financial statements and filing of periodic reports and other
filings. Because of limited resources, the Company was impaired in its
ability to segregate duties and to ensure consistently complete and accurate
financial reporting. Notwithstanding these limitations, management is in the
process of implementing a system that requires the involvement of both
officers in reviewing, recording, authorizing, processing and monitoring
transactions, the engagement of accounting assistance when necessary; and the
establishment of such additional accounting controls and systems as may be
appropriate.
There were no changes in the Company's disclosure controls and
procedures that occurred during the most recent fiscal quarter that have
materially affected, or are reasonably likely to materially affect, the
Company's internal control over financial reporting. Subsequent to the date
of the evaluation, there have been no significant changes in the Company's
disclosure controls and procedures that could significantly affect the
Company's internal control over financial reporting, other than the planned
corrective actions discussed above.
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings
None.
Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds
On February 17, 2006, the board of directors approved the issuance of
a total of 150,000 shares of restricted common stock each to Dimitri Cocorinis
and Terry Cononelos, the Company's officers, or a total of 300,000 shares of
restricted common stock. The issuance of this stock was authorized in
consideration of services rendered by Messrs. Cocorinis and Cononelos to the
Company over the past several months, and in facilitating a loan to the
Company through an affiliate of the officers.
On or about February 1, 2006, C&C Investment Partnership, a
partnership owned by Messrs. Cocorinis and Cononelos, loaned the Company the
sum of $20,000, to cover business operations and outstanding payables. The
loan is repayable, with interest at 7% per annum, on or before August 1, 2006
or the date on which the Company enters into a merger, reorganization or
acquisition transaction, whichever occurs first. (See Item 6(b) below). The
Company does not have the funds to repay the loan, and does not anticipate
that funds will be available until such time as the Company enters into a
merger or acquisition transaction. The board authorized the issuance of the
common stock described above, as a means of compensating the officers for
services to the Company, and for the risks attendant the loan described above.
The board of directors of the Company consists of Messrs. Cocorinis and
Cononelos, so this transaction cannot be considered the result of arms' length
negotiations.
The shares of common stock issued in the transaction described above,
are "restricted securities" within the meaning of the Securities Act of 1933,
as amended, and were issued in reliance upon the exemption set forth under
Section 4(2) of the Securities Act of 1933, as amended, for "transactions not
involving a public offering," as well as similar state securities exemptions.
Each of the officers, who are also principal shareholders of the Company, have
acknowledged that the shares of common stock issued in this transaction are
"restricted
10
securities" under the Securities Act of 1933, as amended; his intention that
the purchase was for investment purposes; and that the shares cannot be resold
in the absence of a registration or an applicable exemption from registration.
Item 3 - Defaults on Senior Securities
None.
Item 4 - Submission of Matters to a Vote of Security Holders
During the quarter ended March 31, 2006, the Company held no
regularly scheduled, called or special meetings of shareholders during the
reporting period, nor were any matters submitted to a vote of this Company's
security holders.
Item 5 - Other Information
None.
Item 6 - Exhibits and Reports on Form 8-K
(a) Exhibits.
Exhibit Description
_______ __________________________________________________________________
31.1 Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of
2002*
31.2 Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of
2002*
32.1 Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002**
* Included herein pursuant to Item 601(b) 31 of Regulation SB.
** Included herein pursuant to Item 601(b) 32 of Regulation SB.
(b) Reports on Form 8-K. On February 21, 2006, the Company filed a
Current Report on Form 8 reporting the issuance of a total of 150,000 shares
of restricted common stock each to Dimitri Cocorinis and Terry Cononelos, the
Company's officers, or a total of 300,000 shares of restricted common stock.
The issuance of this stock was authorized in consideration of services
rendered by Messrs. Cocorinis and Cononelos to the Company over the past
several months, and in facilitating a loan to the Company through an affiliate
of the officers.
11
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
MILLENNIUM QUEST, INC.
May 16, 2006 /s/ Dimitri Cocorinis
__________________________________
Dimitri Cocorinis,
Chief Executive Officer
MILLENNIUM QUEST, INC.
May 16, 2006 /s/ Terry Cononelos
___________________________________
Terry Cononelos,
Chief Financial Officer
12