SEFE, INC. - FORM 10-K - April 15, 2010

Attached files

file	filename
EX-32.1 - SEFE, INC.	midc_ex32.htm
EX-31.1 - SEFE, INC.	midc_ex31-1.htm
EX-31.2 - SEFE, INC.	midc_ex31-2.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)
[X]	Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

	For the Fiscal Year Ended December 31, 2009

[ ]	Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

	For the Transition Period from __________ to __________

Commission File Number: 000-51842

MIDNIGHT CANDLE COMPANY
(Name of small business issuer in its charter)

Nevada		20-1763307
(State or other jurisdiction of incorporation or organization)		(I.R.S. employer identification number)

79013 Bayside Court Indio, CA		92203
(Address of principal executive offices)		(Zip code)

Issuer’s telephone number: (760) 772-1872

Securities Registered Pursuant to Section 12(b) of the Act:

Title of each class		Name of each exchange on which registered
None		None



Securities Registered Pursuant to Section 12(g) of the Act:

None
(Title of class)

_______
(Title of class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes [ ] No [X]

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes [X] No [ ]

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if ay, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that ht registrant was required to submit and post such files). Yes [ ] No [X]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405) is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ]

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.:

Large accelerated filer [ ]	Accelerated filer [ ]
Non-accelerated filer [ ] (Do not check if a smaller reporting company)	Smaller reporting company [X]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes [ ] No [X]

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter. $23,000.

The number of shares outstanding of each of the issuer's classes of common equity, as of April 14, 2010 was 156,900,000.

DOCUMENTS INCORPORATED BY REFERENCE

If the following documents are incorporated by reference, briefly describe them and identify the part of the Form 10-KSB (e.g., Part I, Part II, etc.) into which the document is incorporated: (1) any annual report to security holders; (2) any proxy or information statement; and (3) any prospectus filed pursuant to Rule 424(b) or (c) of the Securities Act of 1933 ("Securities Act"). The listed documents should be clearly described for identification purposes (e.g., annual report to security holders for fiscal year ended December 24, 1990).

None.

Transitional Small Business Disclosure Format (Check one): Yes [ ] No [X]

MIDNIGHT CANDLE COMPANY

FORM 10-K

For the year ended December 31, 2009

TABLE OF CONTENTS

PART I	4
ITEM 1 - DESCRIPTION OF BUSINESS	4
ITEM 1A - RISK FACTORS	6
ITEM 1B - UNRESOLVED STAFF COMMENTS	8
ITEM 2 - PROPERTIES	8
ITEM 3 - LEGAL PROCEEDINGS	9
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS	9
PART II	9
ITEM 5 - MARKET FOR REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS MARKET INFORMATION FOR COMMON STOCK	9
ITEM 6 – SELECTED FINANCIAL DATA	10
ITEM 7 - MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	10
ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA	14
ITEM 9A(T) - CONTROLS AND PROCEDURES	32
OTHER INFORMATION	32
PART III	33
ITEM 10 - DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE	33
ITEM 11 - EXECUTIVE COMPENSATION	35
ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT	35
ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE	36
ITEM 14 - PRINCIPAL ACCOUNTING FEES AND SERVICES	36
ITEM 15 - EXHIBITS	36
SIGNATURES	37

FORWARD LOOKING STATEMENTS

This Annual Report contains forward-looking statements about our business, financial condition and prospects that reflect our management’s assumptions and beliefs based on information currently available. We can give no assurance that the expectations indicated by such forward-looking statements will be realized. If any of our assumptions should prove incorrect, or if any of the risks and uncertainties, underlying such expectations should materialize; our actual results may differ materially from those indicated by the forward-looking statements.

The key factors that are not within our control and that may have a direct bearing on operating results include, but are not limited to, acceptance of our services, our ability to expand its customer base, managements’ ability to raise capital in the future, the retention of key employees and changes in the regulation of our industry.

There may be other risks and circumstances that management may be unable to predict. When used in this Report, words such as, "believes," "expects," "intends," "plans," "anticipates," "estimates" and similar expressions are intended to identify and qualify forward-looking statements, although there may be certain forward-looking statements not accompanied by such expressions.

PART I

ITEM 1 - DESCRIPTION OF BUSINESS

Business Development and Summary

Midnight Candle Company was incorporated in the State of Nevada on September 24, 2004.

Our administrative office is located at 79013 Bayside Court, Indio, California 92203, telephone (760) 772-1872.

MCDL's fiscal year end is December 31.

Business of Issuer

Principal Products and Principal Markets

Our business objective is to market scented candles to consumers and businesses. However, it is the opinion of our management that our target market and likely purchaser of our products will primarily be female. They believe that women, as opposed to men, favor candles for their fragrance and decorative nature. As a result, we offer candles in a variety of sizes, styles, colors and fragrances. We do not manufacture any products. All products are purchased from third-party suppliers or manufacturers. The primary products we stock generally include the following candle types:

Jar Candles - scented candles in decorative glass jars,

Pillar Candles - tall upright candles and

Tea Lights - small candles contained in plastic or metallic cups.

Distribution Methods of the Products and Services

The Internet lends itself well to the distribution of candles and candle-related merchandise due to its ability to provide pictures, information and purchasing capabilities direct to the consumer. We have published a website at http://www.midnightcandleco.com, which serves as the sole method through which we market, sell and distribute the products we have for sale. The site, although published and fully functional, is minimalist in nature. We believe that to attract purchasers, we should make aesthetic changes to our website. However, as of December 31, 2009, we had insufficient cash on hand to pay for web development services. We believe that unless we are able to improve the “look and feel” of our Internet presence, we will be unable to attract purchasers.

We expect to use general parcel services as our distribution methods to fulfill customer orders. Such services include, without limitation, United Parcel Service, DHL and Federal Express.

Industry Background and Competition

We operate in the scented candle segment of the giftware industry. Significantly, all of our competitors have longer operating histories, and established manufacturing or supply chain systems, as well greater financial, management, sales, marketing and other resources than we do.

The candle market overall is highly fragmented. Competitors range from multi-national entities to retailers serving a limited geographical region. Premium market candle manufacturers include Colonial Candles, owned by Blyth Industries, Inc., which also owns PartyLite, and A.I. Root and Village Candle. Midnight Candle's retail store competitors include The White Barn Candle Company, which is owned by Limited Brands, Inc., as well as Wicks n' Sticks and Candleman. Other retail competition includes specialty candle stores, as well as gift retailers.

Midnight Candle Company competes generally for the disposable income of consumers with other producers in the giftware industry. The giftware industry is highly competitive with a large number of both large and small participants. The products we sell compete with other scented and unscented candle products and with other gifts within a comparable price range, like boxes of candy, flowers, wine, fine soap and related merchandise. Our competitors distribute their products through independent gift retailers, department stores, mass-market stores and mail order houses. We are a small company with limited capital resources, minimal saleable inventory and negative cash flows. As such, we currently compete unfavorably in the general marketplace. Unless we find a way to increase our revenue generating ability, we will not be able to continue as a going concern.

Sources and availability of raw materials and the names of principal suppliers

We do not procure any raw materials, nor do we produce any of the candles or candle-related products we sell. We have purchased our salable inventory from The Candle Factory and Discount Candle Shop. We have no other suppliers or distributors from which we expect to order additional inventory.

Need for Government Approval of Principal Products

While we believe we are and will be in substantial compliance with the laws and regulations which regulate our business, and that we possess all the licenses required in the conduct of our business, the failure to comply with any of those laws or regulations, or the imposition of new laws or regulations could negatively impact our proposed business.

Effect of Existing or Probable Governmental Regulations

We are not currently subject to direct federal, state or local regulation other than regulations applicable to businesses generally or directly applicable to retailing or electronic commerce. We do not currently provide individual personal information regarding our users to third parties and we currently do not identify registered users by age, nor do we expect to do so in the foreseeable future. The adoption of additional privacy or consumer protection laws could create uncertainty in Web usage and reduce the demand for our products and services or require us to redesign our web site.

Number of total employees and number of full time employees

Midnight Candle Company is currently in the development stage. During the development stage, we plan to rely exclusively on the services of our officers and sole director to set up our business operations. Our two officers are involved in MCDL business on a part-time basis only and are prepared to dedicate additional time, as needed. At this time, there are no other full- or part-time employees. We do not expect to hire any additional employees over the next 12 months.

Reports to Security Holders

We will furnish shareholders with annual financial reports certified by our independent registered public accountants.

We are a reporting issuer with the Securities and Exchange Commission. We file periodic reports, which are required in accordance with Section 15(d) of the Securities Act of 1933, with the Securities and Exchange Commission to maintain the fully reporting status.

The public may read and copy any materials we file with the SEC at the SEC's Public Reference Room at 100 F Street, N.E., Washington, D.C. 20002. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. Our SEC filings will be available on the SEC Internet site, located at http://www.sec.gov.

ITEM 1A - RISK FACTORS

Our officers and directors work for us on a part-time basis. As a result, we may be unable to develop our business and manage our public reporting requirements.

Our operations depend on the efforts of Helen Cary, our President, CEO and director, and Patrick Deparini, our Secretary and Treasurer. Both Mrs. Cary and Mr. Deparini are involved in other business opportunities and may face a conflict in selecting between MCDL and their other business interests. We have not formulated a policy for the resolution of such conflicts. If we lose either or both Mrs. Cary and Mr. Deparini to other pursuits without a sufficient warning we may, consequently, go out of business.

Investors may lose their entire investment if we are unable to continue as a going concern.

Midnight Candle Company was formed in September 2004. We have no demonstrable operations record, on which you can evaluate our business and prospects. Our prospects must be considered in light of the risks, uncertainties, expenses and difficulties frequently encountered by companies in their early stages of development. These risks include, without limitation, competition, the absence of ongoing revenue streams, inexperienced management and lack of brand recognition. Midnight Candle Company cannot guarantee that we will be successful in executing our proposed golf merchandising business. If we fail to implement and create a base of operations for our proposed business, we may be forced to cease operations, in which case investors may lose their entire investment.

We may not be able to attain profitability without additional funding, which may be unavailable.

We have limited capital resources. To date, we have not generated positive cash inflows from our operations. Unless we begin to generate sufficient revenues from our proposed business objective of selling a variety of golf merchandise to finance operations as a going concern, we may experience liquidity and solvency problems. Such liquidity and solvency problems may force us to go out of business if additional financing is not available. We have no intention of liquidating. In the event our cash resources are insufficient to continue operations, we intend to raise addition capital through offerings and sales of equity or debt securities. In the event we are unable to raise sufficient funds, we will be forced to go out of business and will be forced to liquidate. A possibility of such outcome presents a risk of complete loss of investment in our common stock.

Because of competitive pressures from competitors with more resources, Midnight Candle Company may fail to implement its business model profitably.

Midnight Candle Company operates in the candle business, which is a highly competitive market segment with relatively low barriers to entry. Our competitors include larger and more established companies. To the best of our management's knowledge, some of our competitors include Colonial Candles, owned by Blyth Industries, Inc. and A.I. Root and Village Candle. Generally, our actual and potential competitors have longer operating histories, significantly greater financial and marketing resources, as well as greater name recognition. Therefore, many of these competitors may be able to devote greater resources than MCDL to sales and marketing efforts, expanding their chain of distribution and hiring and retaining key employees. There can be no assurance that our current or potential competitors will not develop or offer comparable or superior products to those expected to be offered by us. Increased competition could result in lower than expected operating margins or loss of market share, any of which would materially and adversely affect our business, results of operation and financial condition.

Control by Current Management May Impede the Ability of Minority Shareholders to Exercise Control over Midnight Candle Company

Currently, the President and CEO directly owns or controls 150,000,000 shares of common stock in Midnight Candle Company, which is 96% of the common stock outstanding. As a result, the President and CEO of MCDL could exercise control over all matters requiring stockholder approval, including the election of directors and approval of significant corporate transactions. This concentration of ownership limits the power to exercise control by the minority shareholders.

Failure by us to respond to changes in consumer preferences could result in lack of sales revenues and may force us out of business.

Any change in the preferences of consumers that we fail to anticipate could reduce the demand for the candle-related products we provide. Decisions about our focus and the specific products we plan to carry in inventory often are made in advance of distribution, and thus, consumers acquiring them. Failure to anticipate and respond to changes in consumer preferences and demands could lead to, among other things, customer dissatisfaction, failure to attract demand for our products, excess or obsolete inventories and lower profit margins.

We may be unable to obtain sufficient quantities of quality merchandise on acceptable commercial terms because we do not have long-term distribution and manufacturing agreements.

We intend to rely primarily on product manufacturers and third-party distributors to supply the products we plan to offer. Our business would be seriously harmed if we were unable to develop and maintain relationships with suppliers and distributors that allow us to obtain sufficient quantities of quality merchandise on acceptable terms. Additionally, we may be unable to establish alternative sources of supply for our products to ensure delivery of merchandise in a timely and efficient manner or on terms acceptable to us. If we cannot obtain and stock our products at acceptable prices and on a timely basis, we may lose sales and our potential customers may take their purchases elsewhere. Further, an increase in supply costs could cause our operating losses to increase beyond current expectations.

Our revenue and gross margin could suffer if we fail to manage our inventory properly.

Our business depends on our ability to anticipate our needs for our products and suppliers’ ability to deliver sufficient quantities of products at reasonable prices on a timely basis. Given that we are in the development stage, we may be unable to accurately anticipate demand and manage inventory levels that could seriously harm us. If predicted demand is substantially greater than consumer purchases, there will be excess inventory. In order to secure inventory, we may make advance payments to suppliers, or we may enter into non-cancelable commitments with vendors. If we fail to anticipate customer demand properly, a temporary oversupply could result in excess or obsolete inventory, which could adversely affect our gross margin.

Our internal controls may be inadequate, which could cause our financial reporting to be unreliable and lead to misinformation being disseminated to the public.

Our management is responsible for establishing and maintaining adequate internal control over financial reporting. As defined in Exchange Act Rule 13a-15(f), internal control over financial reporting is a process designed by, or under the supervision of, the principal executive and principal financial officer and effected by the board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that: (i) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements. Our internal controls may be inadequate or ineffective, which could cause our financial reporting to be unreliable and lead to misinformation being disseminated to the public. Investors relying upon this misinformation may make an uninformed investment decision.

The costs and expenses of SEC reporting and compliance may inhibit our operations.

After the effectiveness of this registration statement, we will be subject to the reporting requirements of the Securities Exchange Act of 1934, as amended. The costs of complying with such requirements may be substantial. In the event we are unable to establish a base of operations that generates sufficient cash flows or cannot obtain additional equity or debt financing, the costs of maintaining our status as a reporting entity may inhibit out ability to continue our operations.

Because our common stock is deemed a low-priced “Penny” stock, an investment in our common stock should be considered high risk and subject to marketability restrictions.

Since our common stock is a penny stock, as defined in Rule 3a51-1 under the Securities Exchange Act, it will be more difficult for investors to liquidate their investment even if and when a market develops for the common stock. Until the trading price of the common stock rises above $5.00 per share, if ever, trading in the common stock is subject to the penny stock rules of the Securities Exchange Act specified in rules 15g-1 through 15g-10. Those rules require broker-dealers, before effecting transactions in any penny stock, to:

Deliver to the customer, and obtain a written receipt for, a disclosure document;

Disclose certain price information about the stock;

Disclose the amount of compensation received by the broker-dealer or any associated person of the broker-dealer;

Send monthly statements to customers with market and price information about the penny stock; and

In some circumstances, approve the purchaser’s account under certain standards and deliver written statements to the customer with information specified in the rules.

Consequently, the penny stock rules may restrict the ability or willingness of broker-dealers to sell the common stock and may affect the ability of holders to sell their common stock in the secondary market and the price at which such holders can sell any such securities. These additional procedures could also limit our ability to raise additional capital in the future.

FINRA sales practice requirements may also limit a stockholder's ability to buy and sell our stock.

In addition to the “penny stock” rules described above, the Financial Industry Regulatory Authority (FINRA) has adopted rules that require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative low priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer's financial status, tax status, investment objectives and other information. Under interpretations of these rules, the FINRA believes that there is a high probability that speculative low priced securities will not be suitable for at least some customers. The FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may limit your ability! to buy and sell our stock and have an adverse effect on the market for our shares.

ITEM 1B - UNRESOLVED STAFF COMMENTS

None.

ITEM 2 - PROPERTIES

We use office space at 79013 Bayside Court, Indio, CA 92203. Ms. Helen C. Cary, the sole director and an officer, is providing the office space at no charge to us. We believe that this arrangement is suitable given that our current operations are primarily administrative. We also believe that we will not need to lease additional administrative offices for at least the next 12 months. There are currently no proposed programs for the renovation, improvement or development of the facilities we currently use.

Our management does not currently have policies regarding the acquisition or sale of real estate assets primarily for possible capital gain or primarily for income. We do not presently hold any investments or interests in real estate, investments in real estate mortgages or securities of or interests in persons primarily engaged in real estate activities.

ITEM 3 - LEGAL PROCEEDINGS

No Director, officer, significant employee, or consultant of Midnight Candle Company has been convicted in a criminal proceeding, exclusive of traffic violations.

No Director, officer, significant employee, or consultant of Midnight Candle Company has been permanently or temporarily enjoined, barred, suspended, or otherwise limited from involvement in any type of business, securities or banking activities.

No Director, officer, significant employee, or consultant of Midnight Candle Company has been convicted of violating a federal or state securities or commodities law.

Midnight Candle Company is not a party to any pending legal proceedings.

No director, officer, significant employee or consultant of Midnight Candle Company has had any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time.

ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

PART II

ITEM 5 - MARKET FOR REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS MARKET INFORMATION FOR COMMON STOCK

Market information

Our common equity is currently listed on the OTC Bulletin Board under the symbol "MCDL." As of December 31, 2009, no public market in our common stock had developed and there can be no assurance that a meaningful trading market will subsequently develop. We make no representation about the value of our common stock.

Holders

As of December 31, 2009, Midnight Candle Company has 156,900,000 shares of $0.001 par value common stock issued and outstanding held by 24 shareholders of record. Midnight Candle Company's Transfer Agent is: Holladay Stock Transfer, Inc., 2939 N. 67th Place, Suite C, Scottsdale, AZ 85251, and phone: (480) 481-3940, fax: (480) 481-3941.

Dividends

Midnight Candle Company has never declared or paid any cash dividends on its common stock. For the foreseeable future, Midnight Candle Company intends to retain any earnings to finance the development and expansion of its business, and it does not anticipate paying any cash dividends on its common stock. Any future determination to pay dividends will be at the discretion of the Board of Directors and will be dependent upon then existing conditions, including Midnight Candle Company’s financial condition and results of operations, capital requirements, contractual restrictions, business prospects and other factors that the board of directors considers relevant.

Recent Sales of Unregistered Securities

Sales conducted under an exemption from registration provided under Section 4(2).

In November 2004, Midnight Candle Company issued 150,000,000 (5,000,000 pre-split) shares of its Common Stock as founders' shares to Helen C. Cary, an officer and the sole director of MCDL, at par ($0.001 per share) for cash of $5,000.

We believe that the transaction delineated above is exempt from the registration provisions of Section 5 of the Securities Act as such exemption is provided under Section 4(2) because:

This issuance did not involve underwriters, underwriting discounts or commissions;

Restrictive legends are placed on all certificates issued;

The distribution did not involve general solicitation or advertising; and

The distribution was made only to insiders, accredited investors or investors who were sophisticated enough to evaluate the risks of the investment. All sophisticated investors were given access to all information about our business and the opportunity to ask questions and receive answers about our business from our management prior to making any investment decision.

Recent Private Placement

In June 2005, we completed an offering of our common stock to a group of private investors. We issued 6,900,000 (230,000 pre-split) shares of $0.001 par value common stock for cash at $0.10 per share. The offering (a) involved no general solicitation, (b) involved less than thirty-five non-accredited purchasers, and (c) relied on a detailed disclosure document to communicate to the investors all material facts about Midnight Candle Company, including an audited balance sheet and reviewed statements of income, changes in stockholders’ equity and cash flows. Thus, we believe that the offering was exempt from registration under Regulation D, Rule 505 of the Securities Act of 1933, as amended.

ITEM 6 – SELECTED FINANCIAL DATA

Not applicable

ITEM 7 - MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-Looking Statements

The statements contained in all parts of this document that are not historical facts are, or may be deemed to be, "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. Such forward-looking statements include, but are not limited to, those relating to the following: the Company's ability to secure necessary financing; expected growth; future operating expenses; future margins; fluctuations in interest rates; ability to continue to grow and implement growth, and regarding future growth, cash needs, operations, business plans and financial results and any other statements that are not historical facts.

When used in this document, the words "anticipate," "estimate," "expect," "may," "plans," "project," and similar expressions are intended to be among the statements that identify forward-looking statements. Midnight Candle’s results may differ significantly from the results discussed in the forward-looking statements. Such statements involve risks and uncertainties, including, but not limited to, those relating to costs, delays and difficulties related to the Company’s dependence on its ability to attract and retain skilled managers and other personnel; the uncertainty of the Company's ability to manage and continue its growth and implement its business strategy; its vulnerability to general economic conditions; accuracy of accounting and other estimates; the Company's future financial and operating results, cash needs and demand for services; and the Company's ability to maintain and comply with permits and licenses; as well as other risk factors described in this Annual Report. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual outcomes may vary materially from those projected.

Management’s Discussion and Analysis

We were incorporated in the State of Nevada on September 24, 2004. During the years ended December 31, 2009 and 2008, we did not generate any revenues, nor did we incur any cost of goods sold and shipping charges. Since our inception to December 31, 2009, we generated an aggregate of $571 in gross revenues from sales of our candles and had returns and allowances in the amount of $107, resulting in net revenues since inception of $464. After accounting for cost of sales in the amount of $273, and shipping costs of $95, we realized a gross profit of $96 from the period from our inception through December 31, 2009. We are unable to predict the stability of, and ability to continue to generate, ongoing revenues.

In the course of our operations, we incur operating expenses composed primarily of general and administrative costs and professional fees. General and administrative expenses are essentially the cost of doing business, and encompass, without limitation, the following: licenses; taxes; general office expenses, such as postage, supplies and printing; utilities; bank charges; website costs; and other miscellaneous expenditures not otherwise classified. Professional fees include: accounting fees charged related to quarterly reviews and annual audits; tax preparation fees for filing Federal and State income tax returns; transfer agent fees for printing certificates, annual account maintenance fees and obtaining various report, ledgers or lists for internal review or periodic financial statement preparation and confirmation; consulting costs for marketing and advertising, website development and maintenance, financial statement preparation and general business development; legal fees for legal work performed related to our general business or maintaining our public reporting status; and Edgarization fees for the submission of reports and information statements with the U.S. Securities and Exchange Commission.

For the year ended December 31, 2009, we incurred operating expenses in the amount of $6,592. In comparison, operating expenses in the year ended December 31, 2008 were $10,620. The components of the comparable periods are as follows:

					Change
	Year ended December 31,				2008 to 2009
Expense	2009		2008		($)			(%)

Accounting Fees	$	4,000	$	6,149	$	(2,149	)		(35	)%
Licenses, Permits, Taxes		-		175		(175	)		(100	)%
Office Expenses		1,524		1,556		(32	)		(2	)%
Professional Fees		946		2,740		(1,794	)		(65	%)
Uncollectible Accounts		122		-		122			-

Total Operating Expenses	$	6,592	$	10,620	$	(4,028	)		(38	)%

Overall expenses decreased by $4,028, or 38%, from the year ended December 31, 2008 to the most recent year ended December 31, 2009. We attribute the bulk of the decline to a reduction in professional and accounting fees. In the year ended December 31, 2008, we filed an uncommonly large number of documents via Edgar with the SEC, which we do not believe will be an ongoing occurrence. During the year ended December 31, 2009, we incurred uncollectible accounts expense in the amount of $122, which is related to the write off of accounts receivable considered to be significantly past due, and, therefore uncollectible. Furthermore, the variations in other expense categories are believed to be inaccurate indications of a long-term trend. We caution that, due to the minimal level of operating activities performed during the periods in question, a dramatic one-time spike or drop in any item could make period-to-period comparisons difficult or unreliable.

Aggregate operating expenses since our inception on September 24, 2004 to December 31, 2009 were $53,999, comprised, as follows:

	Inception to		% of
Expense	December 31, 2009		Expenses

Accounting Fees	$	27,214		50	%
Legal Fees		3,500		6	%
Office Expenses		9,499		18	%
Professional Fees		6,457		12	%
Licenses and Permits		5,028		9	%
Uncollectible Accounts		122		0	%
Website Development and Maintenance		2,179		4	%

Total Operating Expenses	$	53,999		100	%

Accounting-related expense is credited with 50% of aggregate operating expenses since our inception to December 31, 2009. These fees include auditing by our independent registered public accountants, bookkeeping, tax preparation and other accounting-specific consulting services. We expect to continue to incur general and administrative expenses for the foreseeable future, although we cannot estimate the extent of these costs.

We have experienced net losses in all periods since our inception. Our net loss for the year ended December 31, 2009 was $6,592. Comparatively, during the year ended December 31, 2008, our net loss totaled $10,620. Our net loss since the date of our inception through December 31, 2009 was $53,902. We anticipate incurring ongoing operating losses and cannot predict when, if at all, we may expect these losses to plateau or narrow.

Liquidity and Capital Resources

Our management believes that our cash on hand as of December 31, 2009 in the amount of $11 is not sufficient to maintain our current minimal level of operations for the next approximately 12 months. As of December 31, 2009, we owed $125 in accounts payable to vendors and service providers, as well as $25,726 in notes payable, of which $15,000 is to due to Ms. Helen Cary, an officer and director, the aggregate sum of which greatly exceeds our current assets.

On August 12, 2009, we have reached an agreement with the holder of the $15,000 in notes payable, Ms. Helen Cary, an officer and director, to extend the due dates of all such notes indefinitely, and for all balances to be due on demand and bear no interest. Ms. Cary received no beneficial terms in this transaction. Rather, we were the recipient of terms highly beneficial to us, as Ms. Cary did not and has not yet demanded any of the notes be repaid, nor is there any interest being charged or accrued on any of the notes.

On August 19, 2009, the Company entered into a Revolving Line of Credit Promissory Note with a non-related, third party entity for a total of $30,000. Any principal balance borrowed against the Note accrues interest at a rate of 10% per year. The entire unpaid balance and interest accrued thereupon are due on December 31, 2011. As of the date of this report, we have not drawn any funds on this line of credit.

Our management does not expect to incur research and development costs.

We do not have any off-balance sheet arrangements.

We currently do not own any significant plant or equipment that we would seek to sell in the near future.

We have not paid for expenses on behalf of any of our directors. Additionally, we believe that this fact shall not materially change.

Plan of Operation

We are a reseller of candles and candle-related merchandise. Since inception, we have financed cash flow requirements through the issuance of common stock and debt securities for cash. Initially, our plan for satisfying our cash requirements for the next twelve months was to be through the funds from our offerings of common stock for cash, in combination with third-party and related-party debt financing. Since our incorporation, we have raised a total of $28,500 through private sales of our common equity. We have also borrowed $10,726 in non-interest bearing, due on demand, notes payable from a third party. Our president and sole director, Ms. Cary, has loaned us an aggregate of $15,000 through December 31, 2009.

As of the date of this quarterly report, our management believes there exists opportunities to acquire inventory from wholesalers and liquidators at both a lower price point and more reasonable terms. In our observation, with no scientific data to support such, the economic downturn has forced numerous of our competitors and suppliers to reduce inventory or go out of business. From August 9-12, 2009, one of our officers attended the ASD/ASM Trade Show in Las Vegas, Nevada. At such event, in excess of 2,950 exhibitors were in attendance. Informal conversations with various wholesalers and manufacturers revealed a willingness to drop ship merchandise, provide more lenient credit terms, and allow for smaller minimum purchase orders. As a result, we believe we can enter the market and realize a higher profit margin than we had historically been able to. These factors bode well for our business.

As a result of attending the August 2009 trade show, we sought debt or equity financing with which to acquire inventory, and therefore take advantage of the opportunities at large. We were subsequently able to secure a revolving line of credit to borrow up to $30,000 from a non-related third party entity. While we believe these funds will be sufficient to execute our planned objectives, we will be required to repay any amount borrowed. Thus, we will be required to generate sufficient cash flow with which to satisfy any such obligation. If we are unable to do so, we will again be forced to seek further financing, which may be on terms unfavorable to us or not available at all.

With our access to the line of credit, we are finalizing the following strategic initiatives:

Acquire Inventory: At the August 2009 ASD/ASM trade show, the company obtained a directory containing hundreds of potential vendors, suppliers and/or manufacturers from which to purchase inventory. We have been actively parsing through the directory, contacting potential vendors, ascertaining purchase terms and obtaining product catalogs with price listings. We are in the process of identifying vendors with favorable terms. As of the date of this report, we have identified over 50 vendors that meet our criteria.

Our next step is to identify products within the vendors’ catalog of items that have the ability to generate both sales volume and gross profit margins of over 20%, which margin we believe will provide us with sufficient cash flows to satisfy any amounts borrowed against the line of credit. We have allocated up to $5,000 to be used for accumulating saleable inventory. Due to the number of vendors and the seemingly voluminous product catalog of each, our time horizon for purchasing inventory has been delayed. We expected to have a preliminary product mix by December 1, 2009. As of the date of this report, we are in the process of specifying which product lines we plan to carry and hope to begin ordering candles during the summer of 2010.

Redesign our website: We believe our previous website did not capture the attention and dollars of consumers. Resultantly, we have disabled the site in order that we may redesign it for a re-launch. Although the site is disabled, we still retain the domain www.midnightcandleco.com. We have identified two web design and consulting firms to redesign our web site and incorporate e-commerce capabilities. Our original goal was to have the site re-launched by November 30, 2009. However, we have not been able to engage a web designer that will construct a site to our specifications for $5,000 - $10,000, all inclusive of hosting, designing, publishing, e-commerce capabilities and periodic maintenance.

We are a web-based company and expect all of our sales to be generated through a website. Our website has been deactivated and we are currently attempting to design a new, more functional site. Without an active website, however, we are unable to realize any sales or conduct any marketing activities to generate brand awareness. We have limited resources and require additional financing to be able to redevelop our Internet site. In the event we are unable to raise sufficient funds, we will be unable to generate sales and may be forced to go out of business.

Design a Marketing and Advertising Program: Most web design and consulting firms provide web marketing services, which we fully intend to implement. As we have not yet hired such a firm, we are unsure what form(s) or marketing we will pursue. We have allocated $15,000 of our line of credit to pursue a web marketing and advertising program.

We do not anticipate the need to hire additional full- or part- time employees over the next 12 months, as the services provided by our sole officer and director appear sufficient at this time. We believe that our operations are currently on a small scale that is manageable by two individuals. We plan to outsource the production of our products, thus our management’s responsibilities are mainly administrative.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements.

ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

MIDNIGHT CANDLE COMPANY

(A DEVELOPMENT STAGE COMPANY)

INDEX TO FINANCIAL STATEMENTS

DECEMBER 31, 2009 AND 2008

	Page(s)

Reports of Independent Registered Public Accounting Firms	1-2

Financial Statements:

Balance Sheets as of December 31, 2009 and 2008	3

Statements of Operations for the years ended December 31, 2009
and 2008 and for the period September 24, 2004
(Inception) through December 31, 2009 with
Cumulative Totals Since Inception	4

Statement of Changes in Stockholders’
(Deficit) for the Period September 24, 2004 (Inception)
through December 31, 2009	5

Statements of Cash Flows for the years ended December 31, 2009
and 2008 and for the Period September 24, 2004 (Inception)
through December 31, 2009 with Cumulative Totals Since Inception	6

Notes to the Financial Statements	7-15

Report Of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders of

Midnight Candle Company

We have audited the accompanying balance sheet of Midnight Candle Company, (a development stage company) as of December 31, 2009, and the related statements of operations, stockholders' deficit, and cash flows for the year ended December 31, 2009, and from September 24, 2004 (inception) through December 31, 2009. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with standards established by the Public Company Accounting Oversight Board (United States of America). Those standards require we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Midnight Candle Company as of December 31, 2009, and the results of its operations and its cash flows for the year ended December 31, 2009 and from September 24, 2004 (inception) through December 31, 2009, in conformity with accounting principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has incurred substantial accumulated deficits and operating losses. These issues lead to substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regards to these matters are also discussed in Note 2. The financial statements do not include any adjustments that might result from the outcome of these uncertainties.

/s/ Friedman LLP

Marlton, NJ

April 15, 2010

BAGELL, JOSEPHS, LEVINE & COMPANY, L.L.C.

Certified Public Accountants

406 Lippincott Drive

Suite J

Marlton, New Jersey 08053

(856) 355-5900 Fax (856) 396-0022

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholder

Midnight Candle Company

Indio, California

We have audited the accompanying balance sheets of Midnight Candle Company, a development stage company (the “Company”) as of December 31, 2008 and 2007, and the related statements of operations, changes in stockholder’s deficit, and cash flows for each of the years in the two-year period ended December 31, 2008 and the cumulative totals since the Company’s inception, September 24, 2004. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal controls over financial reporting. Our audit included consideration of internal controls over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Midnight Candle Company as of December 31, 2008 and 2007, and the results of its operations, and cash flows for each of the years in the two-year period ended December 31, 2008 and 2007 and cumulative totals since the Company’s inception, September 24, 2004, in conformity with accounting principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 7 to the financial statements, the Company has just begun operations, and is currently developing their business. They have incurred losses since inception and will be looking to raise capital over the next year to assist in funding their operations. These factors raise substantial doubt about its ability to continue as a going concern. Management’s operating and financing plans in regards to these matters are also discussed in Note 7. The financial statements do not include any adjustments that might result from the outcome of these uncertainties.

/s/Bagell Josephs Levine & Company, L.L.C.

Bagell Josephs Levine & Company, L.L.C.

Marlton, New Jersey

March 30, 2009

This report is a copy of the previously issued report.

The predecessor auditor has not reissued the report.

MIDNIGHT CANDLE COMPANY

(A DEVELOPMENT STAGE COMPANY)

BALANCE SHEETS

DECEMBER 31, 2009 AND 2008

ASSETS

	2009			2008

Current Assets:
Cash	$	11		$	272
Accounts receivable		-			122
Inventory		-			438

Total Current Assets		11			832

TOTAL ASSETS	$	11		$	832

LIABILITIES AND STOCKHOLDERS’ (DEFICIT)

LIABILITY
Current Liabilities:
Accounts payable	$	125		$	1,110
Notes payable		10,726			3,532
Notes payable – related party		15,000			15,000

Total Current Liabilities		25,851			19,642

Total Liabilities		25,851			19,642

STOCKHOLDERS’ (DEFICIT)
Common stock, $0.001 par value, 200,000,000 shares
authorized, 156,900,000 shares issued and outstanding		156,900			156,900
Additional paid-in capital		(128,400	)		(128,400	)
(Deficit) accumulated during development stage		(54,340	)		(47,310	)

Total Stockholders’ (Deficit)		(25,840	)		(18,810	)

TOTAL LIABILITIES AND STOCKHOLDERS’ (DEFICIT)	$	11		$	832

The accompanying notes are an integral part of these financial statements.

MIDNIGHT CANDLE COMPANY

(A DEVELOPMENT STAGE COMPANY)

STATEMENTS OF OPERATIONS

FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008

AND FOR THE PERIOD SEPTEMBER 24, 2004 (INCEPTION) THROUGH DECEMBER 31, 2009

(WITH CUMULATIVE TOTALS SINCE INCEPTION)

							Cumulative Totals
							September 24, 2004 (Inception)
	2009			2008			through December 31, 2009

OPERATING REVENUES
Sales, net of allowance	$	-		$	-		$	464

Cost of sales		-			-			273
Freight in		-			-			95

GROSS PROFIT		-			-			96

OPERATING EXPENSES
Professional fees		4,946			8,889			37,171
General and administrative expenses		1,646			1,731			16,828
Total Operating Expenses		6,592			10,620			53,999

LOSS BEFORE OTHER INCOME		(6,592	)		(10,620	)		(53,903	)

OTHER (INCOME) EXPENSE
Interest (income)		-			-			(1	)
Impairment expense		438			-			438
Total Other (Income) Expense		438			-			437

NET (LOSS) APPLICABLE TO COMMON SHARES	$	(7,030	)	$	(10,620	)	$	(54,340	)

WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING		156,900,000			156,900,000

LOSS PER BASIC COMMON SHARES OUTSTANDING	$	(0.00	)	$	(0.00	)

The accompanying notes are an integral part of these financial statements.

MIDNIGHT CANDLE COMPANY

(A DEVELOPMENT STAGE COMPANY)

STATEMENTS OF STOCKHOLDERS’ (DEFICIT)

FOR THE PERIOD SEPTEMBER 24, 2004 (INCEPTION)

THROUGH DECEMBER 31, 2009

								(Deficit)
								Accumulated
					Additional			During the
	Common Stock				Paid-in			Development
Description	Shares		Amount		Capital			Stage			Total

Balance, September 24, 2004		-	$	-	$	-		$	-		$	-

Issuances of shares for cash		150,000,000		150,000		(145,000	)		-			5,000

Net loss for the period September 24, 2004
(inception) through December 31, 2004		-		-		-			(5,113	)		(5,113	)

Balance, December 31, 2004		150,000,000		150,000		(145,000	)		(5,113	)		(113	)

Issuances of shares for cash		6,900,000		6,900		16,100			-			23,000

Forgiveness of note payable by officer		-		-		500			-			500

Net loss for the year ended December 31, 2005		-		-		-			(10,081	)		(10,081	)

Balance, December 31, 2005		156,900,000		156,900		(128,400	)		(15,194	)		13,306

Net loss for the year ended December 31, 2006		-		-		-			(14,617	)		(14,617	)

Balance, December 31, 2006		156,900,000		156,900		(128,400	)		(29,811	)		(1,311	)

Net loss for the year ended December 31, 2007		-		-		-			(6,879	)		(6,879	)

Balance, December 31, 2007		156,900,000		156,900		(128,400	)		(36,690	)		(8,190	)

Net loss for the year ended December 31, 2008		-		-		-			(10,620	)		(10,620	)

Balance, December 31, 2008		156,900,000		156,900		(128,400	)		(47,310	)		(18,810	)

Net loss for the year ended December 31, 2009		-		-		-			(7,030	)		(7,030	)

Balance, December 31, 2009		156,900,000	$	156,900	$	(128,400	)	$	(54,340	)	$	(25,840	)

The accompanying notes are an integral part of these financial statements.

MIDNIGHT CANDLE COMPANY

(A DEVELOPMENT STAGE COMPANY)

STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008

AND FOR THE PERIOD SEPTEMBER 24, 2004 (INCEPTION) THROUGH DECEMBER 31, 2009

(WITH CUMULATIVE TOTALS SINCE INCEPTION)

							Cumulative Totals
							September 24, 2004 (Inception)
	2009			2008			through December 31, 2009

CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss)	$	(7,030	)	$	(10,620	)	$	(54,340	)

Adjustments to reconcile net (loss) to net cash
(used in) operating activities:
Impairment of inventory		438			-			438

Changes in assets and liabilities
Decrease in accounts receivable		122			-			-
(Increase) in inventory		-			-			(438	)
Increase (decrease) in accounts payable		(985	)		1,110			125

Total adjustments		(863	)		1,110			(313	)

Net cash (used in) operating activities		(7,455	)		(9,510	)		(54,215	)

CASH FLOWS FROM INVESTING ACTIVITIES
Issuance of common stock		-			-			28,500
Proceeds from note payable		7,194			3,532			10,726
Proceeds from note payable – related party		-			5,000			15,000

Net cash provided by financing activities		7,194			8,532			54,226

NET INCREASE (DECREASE) IN CASH		(261	)		(978	)		11

CASH – BEGINNING OF YEAR		272			1,250			-

CASH – END OF YEAR	$	11		$	272		$	11

SUPPLEMENTAL CASH FLOWS INFORMATION:
During the year and period, cash was paid for the following:
Interest	$	-		$	-		$	-
Income taxes	$	-		$	-		$	-

SUPPLEMENTAL DISCLOSURE OF NON-CASH
INFORMATION:

Note payable converted to equity	$	-		$	-		$	500
Write off inventory	$	438		$	-		$	438

The accompanying notes are an integral part of these financial statements.

MIDNIGHT CANDLE COMPANY

(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2009 and 2008

NOTE 1 - ORGANIZATION AND BASIS OF PRESENTATION

Midnight Candle Company (the “Company”) is a distributor of candles. The candles will be marketed in various sizes, shapes and fragrances. These customized candles will be distributed for home use and small business users. The Company does not plan to produce any candles and expects to purchase all of its saleable products from manufactures or enter into private-label relationships with manufactures to place our corporate name on select products. The Company intends to sell enough candles to support business stability and growth with a large portion being sold through the Company’s web site.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Development Stage Company

The Company is considered to be in the development stage as defined in FASB ASC 915-10-05, “Accounting and Reporting by Development Stage Enterprises”. The Company has devoted substantially all of its efforts to business planning, research and development. Additionally, the Company has allocated a substantial portion of their time and investment in bringing their product to the market, and the raising of capital.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Cash and Cash Equivalents

For financial statement presentation purposes, the Company considers short-term, highly liquid investments with original maturities of three months or less to be cash and cash equivalents. The Company had no cash equivalents at December 31, 2009 and 2008.

The Company maintains cash and cash equivalent balances at a financial institution that is insured by the Federal Deposit Insurance Corporation up to the federally insured limits. At December 31, 2009 and 2008, there were no uninsured balances.

MIDNIGHT CANDLE COMPANY

(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2009 and 2008

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Going Concern

As shown in the accompanying financial statements, as is typical of companies going through the development stage, the Company incurred losses since inception. The Company is currently in the development stage, and there is no guarantee whether the Company will be able to generate enough revenue and/or raise capital to support current operations and generate anticipated sales. This raises substantial doubt about the Company’s ability to continue as a going concern.

Management believes that the Company’s capital requirements will depend on many factors including the success of the Company’s product development efforts. With the business plan being followed, management believes along with working capital being raised that the operations and sales will make the Company a viable entity over the next twelve months.

The financial statements do not include any adjustments relating to the recoverability or classification of recorded assets and liabilities that might result should the Company be unable to continue as a going concern.

Accounts Receivable

Accounts receivable are stated at the amount the Company expects to collect from outstanding balances and do not bear interest. On a periodic basis, management evaluates its accounts receivable and determines the requirement for an allowance for doubtful accounts based on its assessment of the current and collectible status of individual accounts with past due balances over 90 days. As of December 31, 2009, management determined that accounts receivable aged beyond 100 days to be uncollectible and, accordingly, wrote off $122 of uncollectible accounts receivable.

Inventory

Inventory consists of merchandise held for sale in the ordinary course of business and are stated at the lower of cost or market, determined using the first in, first-out (FIFO) method.

Revenue Recognition

The Company’s financial statements are prepared under the accrual method of accounting. Revenues will be recognized in the period the services are performed and costs are recorded in the period incurred rather than paid.

Fair Value of Financial Instruments

The Company’s financial instruments are all carried at amounts that approximate their estimated fair value as of December 31, 2009 and 2008.

Income Taxes

The provision for income taxes includes the tax effects of transactions reported in the financial statements. Deferred taxes would be recognized for differences between the basis for assets and liabilities for financial statement and income tax purposes. The major difference relate to the net operating loss carry forwards generated by sustaining deficits during the development stage.

MIDNIGHT CANDLE COMPANY

(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2009 and 2008

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Recent Accounting Pronouncements

In May of 2009, the Financial Accounting Standards Board (FASB) issued FASB ASC 855, “Subsequent Events”. This Statement is intended to establish general standards of accounting for and disclosures of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. It requires the disclosure of the date through which an entity has evaluated subsequent events and the basis for that date—that is, whether that date represents the date the financial statements were issued or were available to be issued. This Statement is effective for interim and annual periods ending after June 15, 2009. The adoption of FASB ASC 855 will not have a material impact on its financial position or results of operations.

In June 2009, the FASB issued FASB ASC 810, “Accounting for Transfers of Financial Assets, an amendment of SFAS No. 140” (SFAS 166). ASC 810 amends SFAS No. 140 to improve the relevance, representational faithfulness, and comparability of the information that a reporting entity provides in its financial reports about a transfer of financial assets; the effects of a transfer on its financial position, financial performance, and cash flows; and a transferor’s continuing involvement in transferred financial assets. This Statement is effective as of the beginning of each reporting entity’s first annual reporting period that begins after November 15, 2009, for interim periods within that first annual reporting period, and for interim and annual reporting periods thereafter. Earlier application is prohibited. The recognition and measurement provisions of this Statement shall be applied to transfers that occur on or after the effective date. The Company is currently assessing the impact of the adoption of ASC 810.

In June 2009, the FASB issued FASB ASC 810, “Amendments to FASB Interpretation No. 46(R)” (SFAS 167). ASC 810 amends certain requirements of FASB Interpretation No. 46 (revised December 2003), Consolidation of Variable Interest Entities, to improve financial reporting by enterprises involved with variable interest entities and to provide more relevant and reliable information to users of financial statements. This Statement is effective as of the beginning of each reporting entity’s first annual reporting period that begins after November 15, 2009, for interim periods within that first annual reporting period, and for interim and annual reporting periods thereafter. Earlier application is prohibited. The Company is currently assessing the impact of the adoption of FASB ASC 810.

On June 2009, the FASB issued FASB ASC 105, “The FASB Accounting Standards Codification TM and the Hierarchy of Generally Accepted Accounting Principles—a replacement of FASB Statement No. 162” (“SFAS 168”). Under FASB ASC 105, the FASB Accounting Standards Codification will become the source of authoritative U.S. generally accepted accounting principles (“GAAP”) recognized by the FASB to be applied by nongovernmental entities. On the effective date of this statement, the Codification will supersede all existing non-SEC accounting and reporting standards. This standard is effective for financial statements issued for interim and annual periods ending after September 15, 2009. The adoption of ASC 105 will not have a material impact on its financial position or results of operations.

MIDNIGHT CANDLE COMPANY

(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2009 and 2008

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Net (Loss) Per Share of Common Stock

The following table sets forth the computation of basic and diluted earnings per share for the years ended December 31, 2009 and 2008:

	2009			2008
Net loss	$	(7,030	)	$	(10,620	)
Weighted average common shares outstanding (Basic)		156,900,000			156,900,000

Options		-			-
Warrants		-			-
Weighted average common shares outstanding (Diluted)		156,900,000			156,900,000

There are no common stock equivalents outstanding at December 31, 2009 and 2008.

Historical net (loss) per common share is computed using the weighted average number of common shares outstanding. Diluted earnings per share (EPS) include additional dilution from common stock equivalents, such as stock issuable pursuant to the exercise of stock options and warrants.

The Company currently has no potentially dilutive securities outstanding.

NOTE 3 - NOTES PAYABLE – RELATED PARTY

Represents three unsecured notes payable for $5,000 each to the officer of the Company. They were all used for working capital needs. There are no stated terms and the notes are due on demand.

NOTE 4 - NOTE PAYABLE

Represents numerous unsecured loans aggregating $10,726 from a non-affiliated third-party that loans the Company money on an as-needed basis. The notes are due on demand and bear no interest.

On August 19, 2009, the Company entered into a Revolving Line of Credit Promissory Note with a non-related, third party entity for a total of $30,000. Any principal balance borrowed against the Note accrues interest at a rate of 10% per year. The entire unpaid balance and interest accrued thereupon are due on December 31, 2011. The Company has not borrowed against this note and the balance due as of December 31, 2009 is $0.

MIDNIGHT CANDLE COMPANY

(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2009 and 2008

NOTE 5 - STOCKHOLDERS’ DEFICIT

On September 24, 2004 the Company was formed with one class of common stock, par value $.001. The Company had authorized 100,000,000 pre forward split shares of common stock.

In November 2004, the Company issued 5,000,000 pre forward split (150,000,000 post split) shares of stock to its officer for cash of $5,000.

In March and June 2005, the Company issued 6,900,000 post split shares (1,800,000 and 5,100,000 shares in March 2005 and June 2005, respectively) of common stock at $0.10 per share for $23,000. These shares were issued in accordance with a Private Placement Memorandum dated December 15, 2004.

In June 2005, a stockholder of the Company forgave a note payable to the Company for $500.

On October 15, 2008, the Company affected a forward split of the Company’s issued and outstanding common stock on a 30:1 basis and further amended the Company’s Articles of Incorporation, which increased the authorized capital stock of the Company from 100,000,000 to 200,000,000 shares of $0.001 par value common stock. All shares have been retroactively restated to report this transaction.

As of December 31, 2009, there were no additional issuances of common stock.

NOTE 6 - PROVISION FOR INCOME TAXES

Deferred income taxes will be determined using the liability method for the temporary differences between the financial reporting basis and income tax basis of the Company’s assets and liabilities. Deferred income taxes will be measured based on the tax rates expected to be in effect when the temporary differences are included in the Company’s tax return. Deferred tax assets and liabilities are recognized based on anticipated future tax consequences attributable to differences between financial statement carrying amounts of assets and liabilities and their respective tax bases.

At December 31, 2009 and 2008, deferred tax assets consist of the following:

	2009			2008
Deferred tax assets	$	18,476		$	16,057
Less: valuation allowance		(18,476	)		(16,057	)
Net deferred tax assets	$	-0-		$	-0-

At December 31, 2009 and 2008, the Company had accumulated deficits during the development stage of $54,340 and $47,310 available to offset future taxable income through 2029. The Company established valuation on allowances equal to the full amount of the deferred tax assets due to the uncertainty of the utilization of the operating losses in future periods.

ITEM 9A(T) - CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We maintain a set of disclosure controls and procedures designed to ensure that information we are required to disclose in reports filed under the Securities Exchange Act is recorded, processed, summarized and reported within the time periods specified by the SEC’s rules and forms. Disclosure controls are also designed with the objective of ensuring that this information is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure.

Based upon their evaluation as of the end of the period covered by this report, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures are not effective to ensure that information required to be included in our periodic SEC filings is recorded, processed, summarized, and reported within the time periods specified in the SEC rules and forms.

Our Board of Directors were advised by management’s performance of the evaluation of internal control over financial reporting identified a material weakness as defined in Public Company Accounting Oversight Board Standard No. 5 in the Company’s internal control over financial reporting.

This deficiency consisted primarily of inadequate staffing and supervision that could lead to the untimely identification and resolution of accounting and disclosure matters and failure to perform timely and effective reviews. However, the size of the Company prevents us from being able to employ sufficient resources to enable us to have adequate segregation of duties within our internal control system. Management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Management has taken all actions to ensure that the filing includes all required content and the financial statements presented conform to GAAP.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during our most recent fiscal quarter that have materially affected, or reasonably likely to materially affect, our internal control over financial reporting.

OTHER INFORMATION

None.

PART III

ITEM 10 - DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Midnight Candle Company's Directors are elected by the stockholders to a term of one (1) year and serve until their successors are elected and qualified. The officers are appointed by the Board of Directors to a term of one (1) year and serves until his/her successor is duly elected and qualified, or until he/she is removed from office. The Board of Directors has no nominating, auditing, or compensation committees.

The names and ages of our directors and executive officers and their positions are as follows:

Name	Age		Position

Helen C. Cary		53	President, CEO and Director

Patrick Deparini		35	Secretary and Treasurer

Helen C. Cary, President, Chief Executive Officer, and Director, attended Rio Salado Community College from 1992 to 1993 and the AWEE Women's Career Center from 1993 to 1994, where she received training in the area of advanced production techniques. Her work experience includes employment contracts with Armtek Defense Systems from 2002 to 2003 and SpeedFam-IPEC from 2000 to 2002. At both companies she was a production supervisor for Chemical Mechanical Planarizer Tool manufacture, where her duties included the power-up, debugging, calibrating and alignment of very sophisticated electronic gear. Since 2004, Ms. Cary has been employed at FX Currency Trading.

Patrick Deparini, Secretary/Treasurer, Chief Financial Officer, received a Bachelor of Science degree in Finance, with an emphasis on Managerial Finance, from the University of Nevada, Las Vegas. For the previous seven years, he has been an officer and director of Nascent Group, Inc., a company offering various document preparation and advisory services. His duties with Midnight Candle Company include oversight of all operational aspects from corporate governance to implementation of the Company’s business strategy.

Family Relationships

None.

Involvement on Certain Material Legal Proceedings During the Last Five Years

No director, officer, significant employee or consultant has been convicted in a criminal proceeding, exclusive of traffic violations.

No bankruptcy petitions have been filed by or against any business or property of any director, officer, significant employee or consultant of the Company nor has any bankruptcy petition been filed against a partnership or business association where these persons were general partners or executive officers.

No director, officer, significant employee or consultant has been permanently or temporarily enjoined, barred, suspended or otherwise limited from involvement in any type of business, securities or banking activities.

No director, officer or significant employee has been convicted of violating a federal or state securities or commodities law.

Audit Committee and Financial Expert

We do not have an Audit Committee. Our director performs some of the same functions of an Audit Committee, such as recommending a firm of independent certified public accountants to audit the annual financial statements; reviewing the independent auditor’s independence, the financial statements and their audit report; and reviewing management's administration of the system of internal accounting controls. The Company does not currently have a written audit committee charter or similar document.

We have no financial expert. We believe the cost related to retaining a financial expert at this time is prohibitive. Further, because of our start-up operations, we believe the services of a financial expert are not warranted.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our directors and executive officers, and persons who beneficially own more than 10% of a registered class of our equity securities, to file reports of beneficial ownership and changes in beneficial ownership of our securities with the SEC on Forms 3 (Initial Statement of Beneficial Ownership), 4 (Statement of Changes of Beneficial Ownership of Securities) and 5 (Annual Statement of Beneficial Ownership of Securities). Directors, executive officers and beneficial owners of more than 10% of our Common Stock are required by SEC regulations to furnish us with copies of all Section 16(a) forms that they file. As a company with securities registered under Section 15(d) of the Exchange Act, our executive officers and directors, and persons who beneficially own more than ten percent of our common stock are not required to file Section 16(a) reports.

Code of Ethics

We have not adopted a Code of Business Conduct and Ethics that applies to our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions in that our sole officer and director serves in all the above capacities.

Corporate Governance

Nominating Committee

We do not have a Nominating Committee or Nominating Committee Charter. Our sole Director performs some of the functions associated with a Nominating Committee. We have elected not to have a Nominating Committee in that we are a development stage company.

Director Nomination Procedures

Nominees for Directors are identified and suggested by the members of the Board or management using their business networks. The Board has not retained any executive search firms or other third parties to identify or evaluate director candidates and does not intend to in the near future. In selecting a nominee for director, the Board or management considers the following criteria:

Whether the nominee has the personal attributes for successful service on the Board, such as demonstrated character and integrity; experience at a strategy/policy setting level; managerial experience dealing with complex problems; an ability to work effectively with others; and sufficient time to devote to our affairs;

Whether the nominee has been the chief executive officer or senior executive of a public company or a leader of a similar organization, including industry groups, universities or governmental organizations;

Whether the nominee, by virtue of particular experience, technical expertise or specialized skills or contacts relevant to our current or future business, will add specific value as a Board member; and

Whether there are any other factors related to the ability and willingness of a new nominee to serve, or an existing Board member to continue his service.

The Board or management has not established any specific minimum qualifications that a candidate for director must meet in order to be recommended for Board membership. Rather, the Board or management will evaluate the mix of skills and experience that the candidate offers, consider how a given candidate meets the Board’s current expectations with respect to each such criterion and make a determination regarding whether a candidate should be recommended to the stockholders for election as a Director. During 2008, we received no recommendation for Directors from our stockholders.

We will consider for inclusion in our nominations of new Board of Directors nominees proposed by stockholders who have held at least 1% of our outstanding voting securities for at least one year. Board candidates referred by such stockholders will be considered on the same basis as Board candidates referred from other sources. Any stockholder who wishes to recommend for our consideration a prospective nominee to serve on the Board of Directors may do so by giving the candidate’s name and qualifications in writing to our Secretary at the following address: 79013 Bayside Court, Indio, CA 92203.

ITEM 11 - EXECUTIVE COMPENSATION

Summary Compensation Table

The following table sets forth, for the last completed fiscal years ended December 31, 2009 and 2008 the cash compensation paid by the Company, as well as certain other compensation paid with respect to those years and months, to the Chief Executive Officer and, to the extent applicable, each of the three other most highly compensated executive officers of the Company in all capacities in which they served:

Summary Compensation Table

Name and Principal Position	Year	Salary ($)		Bonus ($)		Stock Awards ($)		Option Awards ($)		Non-Equity Incentive Plan Compen-sation ($)		Non-qualified Deferred Compen-sation Earnings ($)		All Other Compen-sation ($)		Total ($)

Helen C. Cary	2009		0		0		0		0		0		0		0		0
President	2008		0		0		0		0		0		0		0		0

Patrick Deparini	2009		0		0		0		0		0		0		0		0
Secretary and Treasurer	2008		0		0		0		0		0		0		0		0

Directors' Compensation

Our director is not entitled to receive compensation for services rendered to us, or for each meeting attended except for reimbursement of out-of-pocket expenses. We have no formal or informal arrangements or agreements to compensate our director for services she provides as a director of our company.

Employment Contracts and Officers' Compensation

Since our incorporation, we have not paid any compensation to our officers, directors and employees. We do not have employment agreements. Any future compensation to be paid will be determined by our Board of Directors, and an employment agreement will be executed. We do not currently have plans to pay any compensation until such time as we are cash flow positive.

Stock Option Plan And Other Long-term Incentive Plan

We currently do not have existing or proposed option/SAR grants.

ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Security Ownership of Certain Beneficial Owners and Management

The following table sets forth certain information as of the date of this offering with respect to the beneficial ownership of Midnight Candle Company’s common stock by all persons known by Midnight Candle to be beneficial owners of more than 5% of any such outstanding classes, and by each director and executive officer, and by all officers and directors as a group. Unless otherwise specified, the named beneficial owner has, to our knowledge, either sole or majority voting and investment power.

Title Of Class	Name, Title and Address of Beneficial Owner of Shares(1)	Amount of Beneficial Ownership(2)		Percent of Class

Common	Helen C. Cary, President and CEO		150,000,000		95.6	%

	All Directors and Officers as a group (1 person)		150,000,000		95.6	%

Notes:

The address for Helen C. Cary is c/o Midnight Candle Company, 79013 Bayside Court, Indio, CA 92203.

As used in this table, “beneficial ownership” means the sole or shared power to vote, or to direct the voting of, a security, or the sole or share investment power with respect to a security (i.e., the power to dispose of, or to direct the disposition of a security).

ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

In November 2004, Midnight Candle Company issued 150,000,000 shares of its $0.001 par value common stock as founder's shares to Helen C. Cary, an officer and the sole director of Midnight Candle Company, for total cash in the amount of $5,000.

Midnight Candle Company does not lease or rent any property. Ms. Cary, President, provides office space and services at 79013 Bayside Court, Indio, California, 99203, without charge.

Director Independence

The Board of Directors has concluded that our sole director, Helen C. Cary, is not independent in accordance with the director independence standards.

ITEM 14 - PRINCIPAL ACCOUNTING FEES AND SERVICES

The following table sets forth fees billed to us by our independent auditors for the years ended 2009 and 2008 for (i) services rendered for the audit of our annual financial statements and the review of our quarterly financial statements, (ii) services rendered that are reasonably related to the performance of the audit or review of our financial statements that are not reported as Audit Fees, and (iii) services rendered in connection with tax preparation, compliance, advice and assistance.

SERVICES	2009		2008

Audit fees	$	5,399	$	5,399
Audit-related fees		-		-
Tax fees		300		300
All other fees

Total fees	$	5,699	$	5,699

ITEM 15 - EXHIBITS

Exhibit Number	Name and/or Identification of Exhibit

3	Articles of Incorporation & By-Laws

	(a) Articles of Incorporation (1)

	(b) By-Laws (1)

31	Rule 13a-14(a)/15d-14(a) Certifications

32	Certification under Section 906 of the Sarbanes-Oxley Act (18 U.S.C. Section 1350)

(1)

Incorporated by reference to the Registration Statement on Form SB-2, as amended, previously filed with the SEC.

SIGNATURES

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

MIDNIGHT CANDLE COMPANY

(Registrant)

By: /s/ Helen C. Cary, President & CEO

In accordance with the requirements of the Securities Act of 1933, this Registration Statement was signed by the following persons in the capacities and on the dates stated:

Signature	Title	Date

/s/ Helen C. Cary	Chief Executive Officer and	April 14, 2010
Helen C. Cary	President

/s/ Patrick Deparini	Chief Financial Officer	April 14, 2010
Patrick Deparini

/s/ Patrick Deparini	Principal Accounting Officer	April 14, 2010
Patrick Deparini

SEFE, INC. - FORM 10-K - April 15, 2010

Attached files

SEFE, INC. Reports