UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
______________________________________________________________________________
(Mark one)
[XX] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2005
[ ] 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 [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 March 31, 2005
Table of Contents
Part I - Financial Information Page
Item 1. Financial Statements 3
Item 2. Management's Discussion and Analysis or
Plan of Operation 10
Item 3. Controls and Procedures 11
Part II - Other Information
Item 1. Legal Proceedings 12
Item 2. Unregistered Sales of Equity Securities and
Use of Proceeds 12
Item 3. Defaults Upon Senior Securities 12
Item 4. Submission of Matters to a Vote of Security Holders 12
Item 5. Other Information 12
Item 6. Exhibits and Reports on Form 8-K 12
Signatures 13
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,
2005 2004
-------------- --------------
CURRENT ASSETS:
Cash $ 4,139 $ 9,936
-------------- --------------
Total Current Assets 4,139 9,936
-------------- --------------
$ 4,139 $ 9,936
============== ==============
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
Accounts payable $ 7,933 $ 13,031
-------------- --------------
Total Current Liabilities 7,933 13,031
-------------- --------------
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,
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 (59,853) (59,154)
-------------- --------------
Total Stockholders' Equity (Deficit) (3,794) (3,095)
-------------- --------------
$ 4,139 $ 9,936
============== ==============
Note: The balance sheet at December 31, 2004 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
2005 2004 March 31, 2005
-------------- -------------- ---------------
REVENUE $ - $ - $ -
OPERATING EXPENSES:
General and administrative 705 2,965 68,848
-------------- -------------- ---------------
LOSS BEFORE OTHER INCOME (705) (2,965) (68,848)
-------------- -------------- ---------------
OTHER INCOME:
Interest and other income 6 7 8,995
-------------- -------------- ---------------
Total Other Income 6 7 8,995
-------------- -------------- ---------------
LOSS BEFORE INCOME TAXES (699) (2,958) (59,853)
CURRENT TAX EXPENSE - - -
DEFERRED TAX EXPENSE - - -
-------------- -------------- ---------------
NET LOSS $ (699) $ (2,958) $ (59,853)
============== ============== ===============
LOSS PER COMMON SHARE $ (.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
For the Three Re-entering
Months Ended of Development
March 31, Stage on May 4
----------------------------- 1994 Through
2005 2004 March 31, 2005
-------------- -------------- ---------------
Cash Flows from Operating Activities:
Net loss $ (699) $ (2,958) $ (59,853)
Adjustments to reconcile net loss to
net cash used by operating activities:
Non-cash expenses - - 10,000
Changes in assets and liabilities:
Increase (decrease) in accounts payable (5,098) 2,965 7,933
-------------- -------------- ---------------
Net Cash Provided (Used) by
Operating Activities (5,797) 7 (41,920)
-------------- -------------- ---------------
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 (5,797) 7 (41,920)
Cash at Beginning of Period 9,936 12,116 46,059
-------------- -------------- ---------------
Cash at End of Period $ 4,139 $ 12,123 $ 4,139
============== ============== ===============
Supplemental Disclosures of Cash Flow information:
Cash paid during the period for:
Interest $ - $ - $ -
Income taxes $ - $ - $ -
Supplemental Schedule of Noncash Investing and Financing Activities:
For the three months ended March 31, 2005:
None
For the three months ended March 31, 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
March 31, 2005 and 2004 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, 2004 audited financial statements. The results of operations for
the periods ended March 31, 2005 and 2004 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.
6
MILLENNIUM QUEST, INC.
[A Development Stage Company]
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Continued]
Recently Enacted Accounting Standards - Statement of Financial Accounting
Standards ("SFAS") No. 151, "Inventory Costs - an amendment of ARB No. 43,
Chapter 4", SFAS No. 152, "Accounting for Real Estate Time-Sharing
Transactions - an amendment of FASB Statements No. 66 and 67", SFAS No. 153,
"Exchanges of Nonmonetary Assets - an amendment of APB Opinion No. 29", SFAS
No. 123 (revised 2004), "Share-Based Payment", and SFAS No. 154, "Accounting
Changes and Error Corrections - a replacement of APB Opinion No. 20 and FASB
Statement No. 3", were recently issued. SFAS No. 151, 152, 153, 123 (revised
2004) and 154 have no current applicability to the Company or their effect on
the financial statements would not have been significant.
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 March 31, 2005 and December 31, 2004.
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 three months ended March 31, 2005 and
2004, 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.
7
MILLENNIUM QUEST, INC.
[A Development Stage Company]
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
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 March 31, 2005, the Company
has available unused operating loss carryforwards of approximately $146,300,
which may be applied against future taxable income and which expire in various
years through 2025. However, if certain substantial changes should occur in
the Company's ownership, there could be an annual limitation on the amount of
net operating loss carryforwards which can be utilized.
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 $21,900 and $21,800 as of March 31, 2005 and December 31, 2004,
respectively, with an offsetting valuation allowance of the same amount,
resulting in a change in the valuation allowance of approximately $100 during
the three months ended March 31, 2005.
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 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.
8
MILLENNIUM QUEST, INC.
[A Development Stage Company]
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
NOTE 6 - LOSS PER SHARE
The following data show the amounts used in computing loss per share for the
periods presented:
From
For the Three Re-entering
Months Ended of Development
March 31, Stage on May 4
----------------------------- 1994 Through
2005 2004 March 31, 2005
-------------- -------------- ---------------
Loss from continuing operations
available to common
shareholders (numerator) $ (699) $ (2,958) $ (59,853)
-------------- -------------- ---------------
Weighted average number of
common shares outstanding
used in loss per share for the
period (denominator) 1,961,643 1,961,643 1,520,629
-------------- -------------- ---------------
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.
9
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, 2005 and 2004
The Company has not been engaged in business operations, and has had no
revenue from operations for the three-month periods ended March 31, 2005 and
2004.
General and administrative expenses for the three-month periods ended
March 31, 2005 and 2004, consisted of general corporate administration, legal
and professional expenses, and accounting and auditing costs, in connection
with periodic reports. These expenses were $705 and $2,965 for the
three-month periods ended March 31, 2005 and 2004, 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, 2005 ($6) and 2004 ($7). Due to the foregoing factors, the Company
has realized a net loss of $699 for the three months ended March 31, 2005, as
compared to a net loss of $2,958 for the same period in 2004. The Company has
had a net loss from the reentering of development stage on May 4, 1994 through
March 31, 2005, of $59,853.
10
Liquidity and Capital Resources
The Company has not experienced a material change in financial condition
over the past year. At March 31, 2005 and December 31, 2004, 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 $3,794 as of March 31, 2005. 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
As of the end of the period covered by this report, an evaluation was
performed under the supervision and with the participation of the Company's
management, including the Chief Executive Officer and Chief Financial Officer
of the effectiveness of the design and operation of the Company's disclosure
controls and procedures. Based on that evaluation, the Company's management,
including the Chief Executive Officer and Chief Financial Officer, concluded
that the Company's disclosure controls and procedures were effective. There
have been no significant changes in the Company's internal controls or in
other factors that could significantly affect internal controls subsequent to
the date of the evaluation.
11
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings
None.
Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds
None.
Item 3 - Defaults on Senior Securities
None.
Item 4 - Submission of Matters to a Vote of Security Holders
During the quarter ended March 31, 2005, 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
------- --------------------------------------------------------------------
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.
12
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.
August 16, 2005 /s/ Dimitri Cocorinis
-------------------------------------------
Dimitri Cocorinis, Chief Executive Officer
MILLENNIUM QUEST, INC.
August 16, 2005 /s/ Terry Cononelos
-------------------------------------------
Terry Cononelos, Chief Financial Officer
13