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 June 30, 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 June 30, 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 10
Item 4. Submission of Matters to a Vote of Security Holders 10
Item 5. Other Information 10
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
June 30, December 31,
2006 2005
------------ ------------
CURRENT ASSETS:
Cash $ 6,102 $ 1,083
------------ ------------
Total Current Assets 6,102 1,083
------------ ------------
$ 6,102 $ 1,083
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
Accounts payable $ 19,972 $ 15,338
Interest Payable - related party 575 -
Shareholder Loan 20,000 -
------------ ------------
Total Current Liabilities 40,547 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 (93,504) (70,314)
------------ ------------
Total Stockholders' Equity (Deficit) (34,445) (14,255)
------------ ------------
$ 6,102 $ 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 Re-entering
For the Three For the Six of Development
Months Ended Months Ended Stage on May 4,
June 30, June 30, 1994 Through
--------------------------- --------------------------- June 30,
2006 2005 2006 2005 2006
------------- ------------- ------------- ------------- --------------
REVENUE $ - $ - $ - $ - $ -
OPERATING EXPENSES:
General and administrative 15,377 3,745 22,643 4,450 101,960
------------- ------------- ------------- ------------- --------------
LOSS BEFORE OTHER INCOME (EXPENSE) (15,377) (3,745) (22,643) (4,450) (101,960)
------------- ------------- ------------- ------------- --------------
OTHER INCOME (EXPENSE):
Interest Expense - related party (349) - (575) - (575)
Interest and other income 12 2 28 8 9,031
------------- ------------- ------------- ------------- --------------
Total Other Income (Expense) (337) 2 (547) 8 8,456
------------- ------------- ------------- ------------- --------------
LOSS BEFORE INCOME TAXES (15,714) (3,743) (23,190) (4,442) (93,504)
CURRENT TAX EXPENSE - - - - -
DEFERRED TAX EXPENSE - - - - -
------------- ------------- ------------- ------------- --------------
NET LOSS $ (15,714) $ (3,743) $ (23,190) $ (4,442) $ (93,504)
============= ============= ============= ============= ==============
BASIC LOSS PER SHARE $ (.01) $ (.00) $ (.01) $ (.00)
============= ============= ============= =============
WEIGHTED AVERAGE NUMBER
OF SHARES OUTSTANDING 2,261,643 1,961,643 2,182,085 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 Re-entering
For the Six of Development
Months Ended Stage on May 4,
June 30, 1994 Through
---------------------------- June 30,
2006 2005 2006
-------------- ------------- ---------------
Cash Flows from Operating Activities:
Net loss $ (23,190) $ (4,442) $ (93,504)
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 4,634 (1,647) 19,972
Increase in interest payable - related party 575 - 575
-------------- ------------- ---------------
Net Cash Used by Operating Activities (14,981) (6,089) (59,957)
-------------- ------------- ---------------
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 5,019 (6,089) (39,957)
Cash at Beginning of Period 1,083 9,936 46,059
-------------- ------------- ---------------
Cash at End of Period $ 6,102 $ 3,847 $ 6,102
============== ============= ===============
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 six months ended June 30, 2006: None.
For the six months ended June 30, 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
June 30, 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 June 30, 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 $29,500 and $24,300 as of June 30, 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 $5,200
during the six months ended June 30, 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 currently 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.
NOTE 5 - SUBSEQUENT EVENT
On August 11, 2006, C&C Investment Partnership agreed to extend the due date
on the $20,000 note referenced in Note 4 above, for an additional 120 days.
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 and Six Month Periods Ended June 30, 2006 and 2005
The Company has not been engaged in business operations, and has had no
revenue from operations for the three and six month periods ended June 30,
2006 and 2005.
General and administrative expenses for the three-month periods ended
June 30, 2006 and 2005, were $15,377 and $3,745, respectively. For the
six-month periods ended June 30, 2006 and 2005, general and administrative
expenses were $22,643 and $4,450, respectively. These expenses consisted
primarily of general corporate administration, legal and professional
expenses, and accounting and auditing costs, in connection with periodic
reports.
The Company's cash is held in an interest-bearing checking account. As
a result, the Company had nominal interest income for the six-months ended
June 30, 2006 ($28) and 2005 ($8). Due to the foregoing factors, the Company
has realized a net loss of $15,714 for the three months ended June 30, 2006,
as compared to a net loss of $3,743 for the same period in 2005. The Company
has had a net loss from the reentering of development stage on May 4, 1994
through June 30, 2006, of $93,504.
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 June 30, 2006 and December 31,
2005, the Company had no working capital. Working capital as of both dates
consists of cash less current liabilities. 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 $34,445 as of June 30, 2006, as compared to a deficit
of $14,255 at December 31, 2005. During the quarter ended March 31, 2006, 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. Since the end of the last fiscal year on December
31, 2005, 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 June 30, 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 has
implemented 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
None.
Item 3 - Defaults on Senior Securities
None.
Item 4 - Submission of Matters to a Vote of Security Holders
During the quarter ended June 30, 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.
10
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. None.
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 11, 2006 /s/ Dimitri Cocorinis
__________________________________________
Dimitri Cocorinis, Chief Executive Officer
MILLENNIUM QUEST, INC.
August 11, 2006 /s/ Terry Cononelos
___________________________________________
Terry Cononelos, Chief Financial Officer
11