UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
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(Mark one)
[XX] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2004
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
EXCHANGE ACT OF 1934
For the transition period from _______ to ________
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Commission File Number: 0-31619
MILLENNIUM QUEST, INC.
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(Exact Name of small business issuer as specified in its charter)
Delaware 87-0445575
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(State of Incorporation) (IRS Employer ID Number)
4089 Mount Olympus Way, Salt Lake City, Utah 84124
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(Address of principal executive offices)
(801) 278-6990
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(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 [XX] NO [ ]
State the number of shares outstanding of each of the issuer's classes of
common equity as of the latest practicable date:
1,961,643 shares of its common stock, par value $0.001, as of the date of this
report.
Transitional Small Business Format: Yes [ ] No [XX]
MILLENNIUM QUEST, INC.
Form 10-QSB for the Quarter ended September 30, 2004
Table of Contents
Part I - Financial Information Page
Item 1. Financial Statements 3
Item 2. Management's Discussion and Analysis
or Plan of Operation 9
Item 3. Controls and Procedures 11
Part II - Other Information
Item 1. Legal Proceedings 11
Item 2. Changes in Securities 11
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
Signatures 12
2
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
MILLENNIUM QUEST, INC.
[A Development Stage Company]
UNAUDITED CONDENSED BALANCE SHEETS
ASSETS
September 30, December 31,
2004 2003
------------- -------------
CURRENT ASSETS:
Cash $ 10,945 $ 12,116
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Total Current Assets 10,945 12,116
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$ 10,945 $ 12,116
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 11,204 $ 6,041
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Total Current Liabilities 11,204 6,041
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STOCKHOLDERS' EQUITY:
Preferred stock, $.001 par value,
5,000,000 shares authorized,
no shares issued and outstanding - -
Common stock, $.001 par value,
20,000,000 shares authorized,
1,961,643 shares issued and
outstanding 1,962 1,962
Capital in excess of par value 161,088 161,088
Retained deficit (106,991) (106,991)
Deficit accumulated during the
development stage (56,318) (49,984)
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Total Stockholders' Equity (259) 6,075
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$ 10,945 $ 12,116
============= =============
Note: The balance sheet at December 31, 2003 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
Re-entering
For the Three For the Nine of Development
Months Ended Months Ended Stage on May 4,
September 30, September 30, 1994, Through
----------------------------- ---------------------------- September 30,
2004 2003 2004 2003 2004
-------------- -------------- ------------- -------------- ---------------
REVENUE $ - $ - $ - $ - $ -
OPERATING EXPENSES:
General and administrative 1,833 1,665 6,356 6,081 65,300
-------------- -------------- ------------- -------------- ---------------
LOSS FROM OPERATIONS (1,833) (1,665) (6,356) (6,081) (65,300)
-------------- -------------- ------------- -------------- ---------------
OTHER INCOME:
Interest and other income 8 8 22 29 8,982
-------------- -------------- ------------- -------------- ---------------
Total Other Income 8 8 22 29 8,982
-------------- -------------- ------------- -------------- ---------------
LOSS BEFORE INCOME TAXES (1,825) (1,657) (6,334) (6,052) (56,318)
CURRENT TAX EXPENSE - - - - -
DEFFERED TAX EXPENSE - - - - -
-------------- -------------- ------------- -------------- ---------------
NET LOSS $ (1,825) $ (1,657) $ (6,334) $ (6,052) $ (56,318)
============== ============== ============= ============== ===============
LOSS PER COMMON SHARE $ (.00) $ (.00) $ (.00) $ (.00) $ (.04)
============== ============== ============= ============== ===============
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
Re-entering
For the Nine of Development
Months Ended Stage on May 4,
September 30, 1994, Through
------------- ------------- September 30,
2004 2003 2004
------------- ------------- --------------
Cash Flows from Operating Activities:
Net Income (loss) $ (6,334) $ (6,052) $ (56,318)
Adjustments to reconcile net loss to net
cash used by operating activities:
Non-cash expenses - - 10,000
Changes in assets and liabilities:
Increase in accounts payable 5,163 2,998 11,204
------------- ------------- --------------
Net Cash Provided (Used) by
Operating Activities (1,171) (3,054) (35,114)
------------- ------------- --------------
Cash Flows from Investing Activities - - -
------------- ------------- --------------
Net Cash Provided by Investing Activities - - -
------------- ------------- --------------
Cash Flows from Financing Activities - - -
------------- ------------- --------------
Net Cash Provided by Financing Activities - - -
------------- ------------- --------------
Net Increase (Decrease) in Cash (1,171) (3,054) (35,114)
Cash at Beginning of Period 12,116 15,406 46,059
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Cash at End of Period $ 10,945 $ 12,352 $ 10,945
============= ============= ==============
Supplemental Disclosures of Cash Flow information:
Cash paid during the period for:
Interest $ - $ - $ -
Income taxes $ - $ - $ -
Supplemental Schedule of Noncash Investing and Financing Activities:
From the re-entering of development stage on May 4, 1994 through September 30, 2004:
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
Organization - Millennium Quest, Inc. ("the Company") was organized under the
laws of the State of Delaware on February 4, 1986 as Teracom, Inc. The name
was changed to Dix Hills Equities Group, Inc. in connection with an
acquisition of a subsidiary in December 1988. As a result of a class action
lawsuit and settlement agreement, a rescission of the acquisition was
completed during 1994. During April 2000, the name of the Company was changed
to Millennium Quest, Inc. The Company currently has no on-going operations
but is seeking potential business opportunities. As a result of the
rescission agreement the Company is considered to have re-entered into the
development stage on May 4, 1994 and is currently considered a development
stage company as defined in Statement of Financial Accounting Standards No. 7.
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
September 30, 2004 and 2003 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, 2003 audited financial statements. The results of operations for
the periods ended September 30, 2004 and 2003 are not necessarily indicative
of the operating results for the full year.
Cash and Cash Equivalents - The Company considers all highly liquid debt
investments purchased with a maturity of three months or less to be cash
equivalents.
Income Taxes -The Company accounts for income taxes in accordance with
Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes" which requires an asset/liability approach for the effect of income
taxes [See Note 4].
Loss Per Share - The computation of loss per share is based on the weighted
average number of shares outstanding during the period presented in accordance
with Statement of Financial Accounting Standards No. 128, "Earnings Per Share"
[See Note 6].
Accounting Estimates - The preparation of financial statements in conformity
with generally accepted accounting principles in the United States of America
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities, the disclosures of contingent assets and
liabilities at the date of the financial statements and the reported amount of
revenues and expenses during the reporting period. Actual results could
differ from those estimated.
Recently Enacted Accounting Standards - Statement of Financial Accounting
Standards ("SFAS") No. 149, "Amendment of Statement 133 on Derivative
Instruments and Hedging Activities", and SFAS No. 150, "Accounting for Certain
Financial Instruments with Characteristics of both Liabilities and Equity",
were recently issued. SFAS No. 149 and 150 have no current applicability to
the Company or their effect on the financial statements would not have been
significant.
6
MILLENNIUM QUEST, INC.
[A Development Stage Company]
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
NOTE 2 - CAPITAL STOCK
Preferred Stock - The Company has 5,000,000 shares of preferred stock
authorized, $.001 par value with such rights, preferences and designations and
to be issued in such series as determined by the Board of Directors. No
shares are issued and outstanding at September 30, 2004 and December 31, 2003.
Common Stock - On May 4, 1994, shareholders returned 4,778,360 shares of
common stock for cancellation due to the rescission of an acquisition that had
occurred in 1988. This resulted in a change in control of the Company and the
Company entered into a new development stage.
In February 1999, the Company issued 1,000,000 shares of its previously
authorized but unissued common stock for services rendered valued at $10,000
(or $.01 per share).
Reduction of Authorized Shares - In March 2000, the Company amended its
Certificate of Incorporation to reduce its number of authorized common shares
by 180,000,000 shares and its authorized preferred shares by 5,000,000. After
the amendment there were 20,000,000 common and 5,000,000 preferred shares
authorized.
NOTE 3 - RELATED PARTY TRANSACTIONS
Management Compensation - During the nine months ended September 30, 2004 and
2003, the Company did not pay any compensation to its officers or directors.
Office Space - The Company has not had a need to rent office space. An
officer/shareholder of the Company is allowing the Company to use his home as
a mailing address, as needed, at no expense to the Company.
NOTE 4 - INCOME TAXES
The Company accounts for income taxes in accordance with Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes". SFAS
No. 109 requires the Company to provide a net deferred tax asset/liability
equal to the expected future tax benefit/expense of temporary reporting
differences between book and tax accounting methods and any available
operating loss or tax credit carryforwards. At September 30, 2004, the
Company has available unused operating loss carryforwards of approximately
$143,000, which may be applied against future taxable income and which expire
in various years through 2024.
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 $21,000 and $20,500 as of September 30, 2004 and December 31,
2003, respectively, with an offsetting valuation allowance of the same amount,
resulting in a change in the valuation allowance of approximately $500 during
the nine months ended September 30, 2004.
7
MILLENNIUM QUEST, INC.
[A Development Stage Company]
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
NOTE 5 - 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 its inception and has no on-going
operations. 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. These
financial statements do not include any adjustments that might result from the
outcome of these uncertainties.
NOTE 6 - LOSS PER SHARE
The following data show the amounts used in computing loss per share for the
periods presented:
From
Re-entering
of
Development
For the Three For the Nine Stage
Months Ended Months Ended on May 4,
September 30, September 30, 1994, Through
--------------------- ---------------------- September 30,
2004 2003 2004 2003 2004
---------- ---------- ----------- ---------- -------------
Loss from continuing
operations available
to common share
holders (numerator) $ (1,825) $ (1,657) $ (6,334) $ (6,052) $ (56,318)
---------- ---------- ----------- ---------- -------------
Weighted average
number of common
shares outstanding
used in loss per
share for the
period (denominator) 1,961,643 1,961,643 1,961,643 1,961,643 1,499,518
---------- ---------- ----------- ---------- -------------
Dilutive loss per share was not presented, as the Company had no common stock
equivalent shares for all periods presented that would affect the computation
of diluted loss per share.
8
Item 2 - Management's Discussion and Analysis or Plan of Operation
(1) Caution Regarding Forward-Looking Information and Risk Factors
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. These risks and uncertainties,
many of which are beyond our control, include (i) the sufficiency of existing
capital resources and the Company's ability to raise additional capital to
fund cash requirements for future operations; (ii) volatility of the stock
market; and (iii) general economic conditions. Although the Company believes
the expectations reflected in these forward-looking statements are reasonable,
such expectations may prove to be incorrect.
(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. At present, the Company has no understandings,
commitments or agreements with respect to the acquisition of any business,
product, technology or company, and there can be no assurance that the Company
will be able to identify any such business, product, technology or entity
suitable for an acquisition or reorganization transaction. Moreover, there
can be no assurance the Company will be successful in its efforts to enter
into or consummate an acquisition or reorganization transaction on terms
favorable or beneficial to the Company and its shareholders, or that it, or
its successor, will be able to effectively manage the business opportunity the
Company acquires or becomes engaged in.
(3) Results of Operations
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 and Nine Months Periods Ended September 30, 2004 and 2003
The Company had no revenue from continuing operations for the three and
nine months periods ended September 30, 2004 and 2003.
9
During the preceding year, the Company has been inactive except for
compliance with its reporting obligations and related activities, and,
therefore, it has not experienced any material changes in results of
operation. General and administrative expenses for the three-month periods
ended September 30, 2004 and 2003 were $1,833 and $1,665, respectively. For
the nine-month periods ended September 30, 2004 and 2003, general and
administrative expenses were $6,356 and $6,081, respectively. These expenses
consisted of general corporate administration, legal and professional
expenses, and accounting and auditing costs.
The Company's cash is invested in short-term, liquid cash equivalents.
As a result, the Company had interest income of $8 for the three-months ended
September 30, 2004, as compared to interest income of $8 for the same period
in 2003.
Due to the foregoing factors, the Company has realized a net loss of
$1,825 for the three months ended September 30, 2004, as compared to a net
loss of $1,657 for the three months ended September 30, 2003. The Company has
had a net loss from the reentering of development stage on May 4, 1994 through
September 30, 2004, of $56,318.
(4) Liquidity and Capital Resources
The Company has not experienced a material change in financial condition
over the past year. At September 30, 2004, the Company had no working
capital, as compared to $6,075, at December 31, 2003. 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 $259 as of September 30, 2004. 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.
10
Item 3 - Controls and Procedures
As of the end of the period covered by this report, based on an
evaluation of the Company's disclosure controls and procedures (as defined in
Rules 13a-15(e) and 15(d)-15(e) under the Securities Exchange Act of 1934)
each of the chief executive officer and the chief financial officer of the
Company has concluded that the Company's disclosure controls and procedures
are effective to ensure that information required to be disclosed by the
Company in its Exchange Act reports is recorded, processed, summarized and
reported within the applicable time periods specified by the SEC's rules and
forms.
There were no significant changes in the Company's internal controls or
in any other factors which could significantly affect those controls
subsequent to the date of the most recent evaluation of the Company's internal
controls by the Company, including any corrective actions with regard to any
significant deficiencies or material weaknesses.
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings
None.
Item 2 - Changes in Securities
None.
Item 3 - Defaults on Senior Securities
None.
Item 4 - Submission of Matters to a Vote of Security Holders
During the quarter ended September 30, 2004, 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
Exhibit Description
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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.
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.
November 17, 2004 /s/ Dimitri Cocorinis
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Dimitri Cocorinis, Chief Executive
Officer
MILLENNIUM QUEST, INC.
November 17, 2004 /s/ Terry Cononelos
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Terry Cononelos, Chief Financial Officer
12