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EX-31.1 - Bitzio, Inc. | v178444_ex31-1.htm |
EX-32.1 - Bitzio, Inc. | v178444_ex32-1.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: 000-51688
Rocky
Mountain Fudge Company, Inc.
(Exact
name of registrant as specified in its charter)
Nevada
|
16-1734022
|
(State
or other jurisdiction of
|
(I.R.S.
Employer
|
incorporation
or organization)
|
Identification
No.)
|
4596
Russell Street, Salt Lake City, Utah 84117
(Address
of principal executive offices) (Zip Code)
Registrant's
telephone number, including area code: (801) 230-1870
Securities
registered pursuant to Section 12(b) of the Act:
None
Securities
registered pursuant to Section 12(g) of the Act:
Common Stock, $0.001 par
value
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 ¨ No
x
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 if disclosure of
delinquent filers pursuant to Item 405 of Regulation S-K 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.
Large
accelerated filer
|
¨
|
Accelerated
filer
|
¨
|
Non-accelerated
filer
|
¨
|
Smaller
reporting company
|
x
|
(Do
not check if a smaller reporting
company)
|
Indicate by check mark whether the
registrant is a shell company (as defined in Rule 12b-2 of the Exchange
Act). Yes ¨ No
x
The aggregate market value of the
voting stock held by non-affiliates of the registrant based on the closing sales
price, or the average bid and asked price on such stock, as of June 30, 2009,
the last business day of the registrant’s most recently completed second
quarter, was $171,000_. Shares of the registrant’s common stock held
by each executive officer and director and by each entity or person that, to the
registrant’s knowledge, owned 10% or more of registrant’s outstanding common
stock as of June 30, 2009 have been excluded in that such persons may be deemed
to be affiliates of the registrant. This determination of affiliate
status is not necessarily a conclusive determination for other
purposes.
The number of shares of the
registrant’s common stock outstanding as of April 15, 2010 was
2,250,000.
DOCUMENTS
INCORPORATED BY REFERENCE
A
description of "Documents Incorporated by Reference" is contained in Part IV,
Item 15.
ROCKY
MOUNTAIN FUDGE COMPANY, INC.
TABLE
OF CONTENTS
Page
|
||
PART I
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||
Item
1.
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Business
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3
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Item
1A.
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Risk
Factors
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5
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Item
1B.
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Unresolved
Staff Comments
|
5
|
Item
2.
|
Properties
|
5
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Item
3.
|
Legal
Proceedings
|
6
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Item
4.
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(Removed
and Reserved)
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6
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PART II
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||
Item
5.
|
Market
for Registrant’s Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities
|
6
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Item
6.
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Selected
Financial Data
|
7
|
|
||
Item
7.
|
Management's
Discussion and Analysis of Financial Condition and Results of
Operations
|
7
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Item
7A.
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Quantitative
and Qualitative Disclosures About Market Risk
|
10
|
Item
8.
|
Financial
Statements and Supplementary Data
|
10
|
Item
9.
|
Changes
in and Disagreements with Accountants on Accounting and Financial
Disclosure
|
10
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Item
9A(T).
|
Controls
and Procedures
|
10
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Item
9B
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Other
Information
|
12
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PART III
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||
Item
10.
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Directors,
Executive Officers and Corporate Governance
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12
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Item
11.
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Executive
Compensation
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13
|
Item
12.
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Security
Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
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14
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Item
13.
|
Certain
Relationships and Related Transactions and Director
Independence
|
14
|
Item
14.
|
Principal
Accounting Fees and Services
|
14
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PART IV
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||
Item
15.
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Exhibits,
Financial Statement Schedules.
|
16
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Signatures
|
30
|
As used
in this report, unless otherwise indicated, “we”, “us”, “our”, “Rocky Mountain
Fudge” and the “company” refer to Rocky Mountain Fudge Company,
Inc.
PART
I
Item
1. Business.
Rocky Mountain Fudge Company, Inc. was
established in 1990 to engage in the business of manufacturing and retailing
fudge candy. In December 1998, we completed an initial public
offering of 50,000 shares of its common stock for the offering price of $1.00
per share, resulting in gross proceeds of $50,000. In 2005, we
effected a forward stock split of our issued and outstanding shares of common
stock on a five shares for one share basis. In January 2008, we
effected a reverse stock split of our outstanding shares on a one share for five
shares basis. As a result of these actions, we currently have
outstanding 2,250,000 shares of common stock.
Since inception, we have manufactured
and marketed candy products on a seasonal basis. Our principal product is fudge
candy, which is produced and sold to retail consumers in northern Utah and
surrounding areas. We also produce a brittle candy. All products are made using
proprietary recipes contributed by one of our
co-founders. Historically, we have used various facilities to produce
our candy products and sold products through retail booths that the company
would rent at various locations, such as established crafts boutiques, festivals
and fairs. Management estimates that approximately 90% of our
revenues historically have been realized during the Thanksgiving and Christmas
periods.
In 2005, we focused on developing an
Internet website to be used for the promotion and sale of our
products. Management’s intent was that the website would eventually
become our primary marketing focus, although we would continue selling products
at local retail outlets and in booths located at special events, fairs and
festivals. We experienced decreased sales during 2007 and 2008, which
we attributed to being unable to locate an adequate permanent location from
which to produce our candy products.
During 2010 we intend to search for a
joint venture candidate with whom we can contract to sub-lease
industrial-quality kitchen facilities for our fudge production
processes. Ideally, we would like to find a joint venture partner
that would accept a percentage of earnings as payment for the lease of the
kitchen facility. This would minimize the amount of up-front capital
required. In the alternative, we will attempt to locate a facility
with adequate space and kitchen equipment such that we can rent the facility on
a seasonal basis. If current available funds are not sufficient to complete the
facilities as desired, we may need to seek funds from our directors or principal
stockholders or from outside financing. We anticipate that any facility we
locate will also be able to accommodate the packaging of products.
We are in the early stages of updating
our website (www.greatestfudgeonearth.com)
so as to accommodate online orders. It is our hope that this process
will allow for minimal sales staff and minimal advertising
expenses. We will also continue selling products at local retail
outlets and in booths located at special events, fairs and
festivals. If we are unable to increase revenues and attain
profitability, it may become necessary for management to explore alternative
business plans.
During 2010, we will focus on
completing development of our Internet website and building a customer base for
our products. We also plan to:
● search for
adequate kitchen facilities or a joint venture candidate;
● increase
revenues from sales of candy products;
● expand
our marketing area to include communities outside the Salt Lake City
metropolitan area;
● expand
our Internet business to be able to attract new customers, regardless of
location, which will create an expanded mail order business;
● hire
additional employees and/or independent contractors if we are successful in
expanding our business and adequate funds are available; and
● attain
profitability.
-3-
Products
All of our candy products have been
developed by recipes contributed by our co-founder, Vallerie
Moulton. Presently, we offer fudge candy in the following varieties:
Plain, Walnut, Almond, Rocky Road, Caramel Swirl and Virginia
Cream. We also offer brittle candy in the following varieties:
Peanut, Pecan and Cashew. We will continue to use temporary
production facilities until such time as our business warrants expansion into
permanent facilities and necessary funds are available. If current
available funds are not sufficient to continue production, it may be necessary
for us to seek funds from our directors or principal stockholders or from
outside financing. We intend to continue to rent a facility with
adequate space and equipment to handle anticipated production needs, without
having to incur significant expense and capital expenditures. We also
intend to package products in the same facility as they are
produced.
Distribution
Historically, we have sold our products
by way of rented booths at various special functions, fairs and other events,
concentrating sales during the Thanksgiving and Christmas
seasons. Most sales have been made in face-to-face transactions at
one of our retail booths. To date, Internet sales have not been
successful, although we continue to explore ways to increase our Internet
business or possible alternative strategies.
Our fudge and other candies are
generally sold in pre-packaged, ½ pound plastic containers or wrapped in
airtight packages. In addition, our fudge is available in slices that
are cut in the size or weight that the customer orders. We sell our fudge at a
price of $13.00 per pound and brittle candy for $14.00 per pound, which price
includes sales tax for mail orders. We typically add a flat $7.70
shipping and handling fee to each order. Management believes that our candy is
priced competitively compared to other candy makers that charge between $8.50 to
$23.00 per pound for their products. Also, unlike some competitors, we do not
anticipate adjusting prices during holidays.
We intend to continue and expand
marketing and distribution efforts only if management determines to remain in
the candy business. Thus, any possible future expansion would be
dependent on the availability of adequate funds.
New
Products
We do not presently have any new
products in development.
Competition
The candy and snack food industry is
highly competitive and dominated by large national and international concerns,
such as Nabisco, Hershey Foods and Nestle. There are literally
hundreds of competitors existing in the candy market at any given
time. Due to this large and very fragmented market, in addition to
our status as a development stage company, management believes our competitive
position in its industry to be extremely small. Even if we are successful in our
future business plans, this will remain the case. There can be no assurance that
we will be able to compete successfully in this industry.
Sources
and Raw Materials and Supplies
The raw materials used in our products
are widely available from distributors and at the retail level. These materials
include butter, sugar, walnuts and other nuts, marshmallows, spices and other
condiments. Management believes that we can readily purchase adequate supplies
from local distributors or from large retail outlets. Management does
not expect a scarcity of any ingredients to be a concern.
Patents
and Copyrights
We do not presently have any patents,
trademarks, licenses, franchises, concessions or royalty agreements and there
are no plans to secure any such arrangements in the foreseeable
future.
-4-
Governmental
Regulations
Our operations and production of candy
are subject to U.S. Department of Agriculture ("USDA") regulations requiring
labeling of ingredients on its candy containers. Management believes
that we are in compliance with this regulation. Our manufacturing facilities are
also subject to periodic USDA inspections for cleanliness and scales, which are
used for weighing quantities of product at retail, and are subject to periodic
testing by the Division of Weights and Measures of the Utah Department of
Agriculture. With the exception of periodic inspections by the USDA
for cleanliness of facilities, management believes that we do not have to comply
with any specific environmental laws.
Research
and Development
We do not conduct any research and
development in connection with our business operations.
Employees
Currently, we have no full-time
employees, and will add employees only if our current business and operations
warrant such additions. Steven Moulton, our President and a director, devotes
approximately 60 hours per month to the Company's business.
In April 2007, two of our co-founders
and directors resigned. Ronald Moulton resigned as a director,
President and CEO and Vallerie Moulton as a director and
Secretary. Following their resignations, we entered into Consulting
Agreements with each of them for a term of three years. Under the
agreements, Mr. Moulton was to provide consulting services related to the
production and marketing of our products and act as an advisor to management. He
was to be compensated at the rate of $20.00 per hour for his services and
reimbursed for expenses related to his services. Mrs. Moulton was to
oversee production of products and consult with management in connection with
marketing and strategic planning. She was to be compensated at the
rate of $20.00 per hour for her services and reimbursed for expenses related to
her services. Both agreements were subsequently terminated without
any services being provided.
Presently, we use the services of both
Mr. and Mrs. Moulton on an as-needed basis. During 2009, their
services were contributed to the company and they did not receive any
compensation.
Except as disclosed above, we have not
entered into any other employment agreement with any officer, director or any
other person and no such agreements are anticipated in the immediate future. It
is intended that our directors will defer any compensation until such time as
business operations provide sufficient cash flow to provide for salaries. As of
the date hereof, no person has accrued any compensation.
Facilities
We currently use the personal residence
of our former President and Secretary as our principal executive offices. These
facilities that are owned by the former President and Secretary are provided at
no charge. We also maintain a mail delivery location that is rented
on a monthly basis for receiving correspondences and product orders. The address
of this location is 4760 Highland Drive, #353, Salt Lake City Utah
84117. In the past, we have leased various commercial kitchen
locations for the production of our candy products. We have been
unable to locate a suitable permanent location for our candy production
activities.
Industry
Segments
No information is presented regarding
industry segments. We are presently engaged in the production and marketing of
candy products and have no current plans to participate in another business or
industry. Reference is made to our financial statements and the statements of
income included in this Form 10-K for a report of our operating history for the
past two fiscal years.
Item
1A. Risk Factors.
This item is not required for a smaller
reporting company.
Item
1B. Unresolved Staff Comments.
This item is not required for a smaller
reporting company.
Item
2.
|
Description
of Property.
|
We do not presently own any
property.
-5-
Item
3.
|
Legal
Proceedings.
|
There are no material pending legal
proceedings to which the company or any subsidiary is a party, or to which any
property is subject and, to the best of our knowledge, no such action against us
is contemplated or threatened.
Item
4.
|
(Removed
and Reserved)
|
PART
II
Item
5.
|
Market
for Registrant’s Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities.
|
Our common shares are included on the
OTC Bulletin Board under the symbol ”RMFI” (symbol prior to January 21, 2008 was
“RMFD”), although currently there is not an active trading market for the shares
and there can be no assurance that any such market will ever develop or be
maintained. Set forth in the table below are the quarterly high and
low prices of our common stock as obtained from the OTC Bulletin Board for the
past two fiscal years and adjusted to reflect the one share for five shares
reverse stock split effected in January 2008.
High
|
Low
|
|||||||
2008
|
||||||||
First
Quarter
|
$ | 5.05 | $ | 2.00 | ||||
Second
Quarter
|
1.50 | 1.50 | ||||||
Third
Quarter
|
1.95 | 1.95 | ||||||
Fourth
Quarter
|
1.80 | 1.80 | ||||||
2009
|
||||||||
First
Quarter
|
$ | 1.80 | $ | 1.25 | ||||
Second
Quarter
|
1.25 | 0.38 | ||||||
Third
Quarter
|
0.80 | 0.38 | ||||||
Fourth
Quarter
|
1.10 | 0.80 |
The above over-the-counter market
quotations reflect inter-dealer prices, without retail mark-up, mark-down or
commission and may not necessarily represent actual
transactions. Because of the limited market for our common stock,
investors and prospective investors should not presume that the above quotations
represent the price at which our shares may be purchased or sold.
As of March 25, 2010, there
were approximately 60 holders of record of our common stock, which figure does
not take into account those shareholders whose certificates are held in the name
of broker-dealers or other nominee accounts.
The ability of individual stockholders
to trade their shares in a particular state may be subject to various rules and
regulations of that state. A number of states require that an issuer's
securities be registered in their state or appropriately exempted from
registration before the securities are permitted to trade in that state.
Presently, we have no plans to register our securities in any particular
state.
Penny
Stock Rule
It is unlikely that our securities will
be listed on any national or regional exchange or The Nasdaq Stock Market in the
foreseeable future. Therefore our shares most likely are subject to
the provisions of Section 15(g) and Rule 15g-9 of the Exchange Act, commonly
referred to as the "penny stock" rule. Section 15(g) sets
forth certain requirements for broker-dealer transactions in penny stocks and
Rule 15g-9(d)(1) incorporates the definition of penny stock as that used in
Rule 3a51-1 of the Exchange Act.
-6-
The SEC generally defines a penny stock
to be any equity security that has a market price less than $5.00 per share,
subject to certain exceptions. Rule 3a51-1 provides that any equity
security is considered to be a penny stock unless that security is:
|
●
|
registered
and traded on a national securities exchange meeting specified criteria
set by the SEC;
|
|
●
|
authorized
for quotation on The Nasdaq Stock
Market;
|
|
●
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issued
by a registered investment company;
|
|
●
|
excluded
from the definition on the basis of price (at least $5.00 per share) or
the issuer's net tangible assets;
or
|
|
●
|
exempted
from the definition by the SEC.
|
A broker-dealer who sells penny stocks
to a person other than an established customer or accredited investor is subject
to additional sales practice requirements. An accredited investor is
generally defined as a person with assets in excess of $1,000,000 or annual
income exceeding $200,000, or $300,000 together with
their spouse.
For transactions covered by these
rules, a broker-dealer must make a special suitability determination for the
purchase of such securities and must receive the purchaser's written consent to
the transaction prior to the purchase. Additionally, for any
transaction involving a penny stock, unless exempt, the rules require the
delivery, prior to the first transaction, of a risk disclosure document relating
to the penny stock market. A broker-dealer also must disclose the
commissions payable to both the broker-dealer and the registered representative
and current quotations for the securities. Finally, a monthly
statement must be sent to the client disclosing recent price information for the
penny stocks held in the account and information on the limited market in penny
stocks. Consequently, these rules may restrict the ability of
broker-dealers to trade and/or maintain a market in our common stock and may
affect the ability of stockholders to sell their shares.
These requirements may be considered
cumbersome by broker-dealers and could impact the willingness of a particular
broker-dealer to make a market in our shares, or they could affect the value at
which our shares trade. Classification of the shares as penny stocks increases
the risk of an investment in our shares.
Recent
Sales of Unregistered Securities
On April 16, 2007, the board of
directors authorized the issuance of 1,000,000 shares (post-split) of our
authorized, but previously unissued common stock, to Steven D. Moulton, a
director. The shares were issued in consideration for services
provided to our company, for payments made on behalf of the company and for
$25,000 in cash advanced to the company. The shares were certificated
and issued to Mr. Moulton on April 19, 2007. The shares were issued
in a private transaction that is exempt from registration under the Securities
Act of 1933 pursuant to exemption provided by Section 4(2) of that
Act.
Dividends
Policy
We have never declared cash dividends
on our common stock, nor do we anticipate paying any dividends on our common
stock in the foreseeable future.
Item
6.
|
Selected
Financial Data.
|
This item is not required for a smaller
reporting company.
Item
7.
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations.
|
The following information should be
read in conjunction with the financial statements and notes thereto appearing
elsewhere in this Form 10-K.
-7-
We are a development stage company with
limited assets, operations and revenues. Ongoing operating expense,
including the costs associated with the preparation and filing of our periodic
reports with the SEC, have been paid for by advances from a
stockholder. It is anticipated that we will require approximately
$15,000 over the next 12 months to fund our operations and to maintain our
corporate viability. We believe that necessary funds will most likely
be provided by officers, directors or a stockholder in the immediate future.
However, unless we are able to generate sufficient revenues or obtain
significant outside financing, there is substantial doubt about our ability to
continue as a going concern.
Forward-Looking
and Cautionary Statements
This report contains forward-looking
statements relating to future events or our future financial
performance. In some cases, you can identify forward-looking
statements by terminology such as “may,” “will” “should," “expect," "intend,"
"plan," anticipate," "believe," "estimate," "predict," "potential," "continue,"
or similar terms, variations of such terms or the negative of such
terms. These statements are only predictions and involve known and
unknown risks, uncertainties and other factors. Although
forward-looking statements, and any assumptions upon which they are based, are
made in good faith and reflect our current judgment, actual results could differ
materially from those anticipated in such statements. Except as
required by applicable law, including the securities laws of the United States,
we do not intend to update any of the forward-looking statements to conform
these statements to actual results.
Results
of Operations
During the year ended December 31,
2009, we did not realize any revenues compared to $11,485 in revenues in
2008. This decrease was due to the Company electing to refrain from
producing fudge during the year, due primarily to our lack of suitable
industrial kitchen facilities. Cost of sales were $8,450 for 2008
compared to $0 for 2009 due to our lack of sales. General and
administrative expenses were $25,509 in
2009, a 30% decrease from $36,682 in 2008
due to a decrease in professional fees.
For 2009,
our net loss was $26,287, or $0.01 per
share, compared to $33,876 in 2008. The decrease is attributed
primarily to the decrease in cost of sales due to the lack of sales and the
lower general and administrative expenses in 2009.
Liquidity
and Capital Resources
The majority of our expenses incurred
during 2009 were paid by a stockholder. Because of our limited revenues and cash
reserves, we expect to continue to rely on our directors or a stockholder to pay
our expenses until such time we realize adequate revenues from the production
and sales of candy products. There is no assurance that we will be
able to generate adequate revenues in the immediate future to satisfy our cash
needs.
At December 31, 2009, we had total
current assets consisting of cash of $5,476
compared to $8,484 in cash at December 31, 2008. Current liabilities
increased from $2,641 at December 31, 2008 to $24,920 at December 31, 2009. This
increase is primarily due to the increase in notes payable – related party from
$2,413 at the 2008 year end to $22,413 at the 2009 year end, which reflects the
increased borrowing from a stockholder. Working capital at December
31, 2009 was a negative $19,444 compared to
a positive $5,843 at December 31, 2008, also reflecting the increase in notes
payable – related party. At December 31, 2009 we had total assets of
$5,476 and a stockholders’ deficit of $19,444, compared to total assets of $8,484 and a
stockholders' equity of $5,843 at December 31, 2008.
Cash
decreased from $8,484 at December 31, 2008 to $5,476, at December 31,
2009. Net cash used by operating activities was $23,008 for 2009
compared to net cash used by operating activities of $26,448 for 2008, which
primarily reflects $7,200 that was recognized in 2008 as services contributed by
officers and shareholders, compared to $1,000 in 2009. We also
realized $20,000 in 2009 from financing activities that represents monies
received under the terms of a related-party note payable, compared to $2,413 in
2008. In addition, $25,750 was contributed to the Company during the
year ended December 31, 2008.
If 2010 revenues do not provide
sufficient funds to continue operations, we will need to seek additional
financing, most likely from directors or a stockholder, although no one is under
any obligation to provide additional funding. Further, there can be
no assurance that outside funding would be available on terms acceptable to us,
or at all.
-8-
In the opinion of management, inflation
has not and will not have a material effect on our ongoing
operations.
Net
Operating Loss
We have accumulated approximately $166,951 of net operating loss carryforwards as
of December 31, 2009. This loss carry forward may be offset against taxable
income and income taxes in future years and expires in the year 2029. The use of these losses to reduce
future income taxes will depend on the generation of sufficient taxable income
prior to the expiration of the net operating loss carryforwards. In the event of
certain changes in control, there will be an annual limitation on the amount of
net operating loss carryforwards
that can
be used. No tax benefit has been reported in the financial statements
for the year ended December 31, 2009 because it has been fully offset by a
valuation reserve. The use of future tax benefit is undeterminable at this
time.
Recent
Accounting Pronouncements
In May 2009, the Financial Accounting
Standards Board (“FASB”)
issued SFAS 165 (ASC 855-10) entitled “Subsequent
Events”. Companies are now required to disclose the date
through which subsequent events have been evaluated by management. Public
entities (as defined) must conduct the evaluation as of the date the financial
statements are issued, and provide disclosure that such date was used for this
evaluation. SFAS 165 (ASC 855-10) provides that financial statements are
considered “issued” when they are widely distributed for general use and
reliance in a form and format that complies with GAAP. SFAS 165 (ASC 855-10) is
effective for interim and annual periods ending after June 15, 2009 and must be
applied prospectively. The adoption of SFAS 165 (ASC 855-10) did not have a
significant effect on our financial statements as of December 31,
2009.
In June 2009, the FASB issued FAS 166,
“Accounting for Transfers of
Financial Assets” an amendment of FAS 140. FAS 140 is intended to improve
the relevance, representational faithfulness, and comparability of the
information that a reporting entity provides in its financial statements 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, if any, in transferred financial assets. This statement must be
applied as of the beginning of each reporting entity’s first annual reporting
period that begins after November 15, 2009. We do not expect the
adoption of FAS 166 to have an impact on results of operations, financial
condition or cash flows.
In June 2009, the FASB issued FAS 167,
“Amendments to FASB
Interpretation No. 46(R) ”. FAS 167 is intended to (1) address the
effects on certain provisions of FASB Interpretation No. 46 (revised December
2003), Consolidation of
Variable Interest Entities, as a result of the elimination of the
qualifying special-purpose entity concept in FAS 166, and (2) constituent
concerns about the application of certain key provisions of Interpretation
46(R), including those in which the accounting and disclosures under the
Interpretation do not always provided timely and useful information about an
enterprise’s involvement in a variable interest entity. This statement must be
applied as of the beginning of each reporting entity’s first annual reporting
period that begins after November 15, 2009. We do not expect the
adoption of FAS 167 to have an impact on results of operations,
financial condition or cash flows.
In June 2009, the FASB issued SFAS 168,
The FASB Accounting Standards Codification and the Hierarchy of Generally
Accepted Accounting Principles. (“SFAS 168” or ASC 105-10) SFAS 168 (ASC 105-10)
establishes the Codification as the sole source of authoritative accounting
principles recognized by the FASB to be applied by all nongovernmental entities
in the preparation of financial statements in conformity with GAAP. SFAS 168
(ASC 105-10) was prospectively effective for financial statements issued for
fiscal years ending on or after September 15, 2009 and interim periods within
those fiscal years. The adoption of SFAS 168 (ASC 105-10) on July 1, 2009 did
not impact our results of operations or financial condition. The Codification
did not change GAAP, however, it did change the way GAAP is organized and
presented. As a result, these changes impact how companies reference GAAP in
their financial statements and in their significant accounting policies. We
implemented the Codification in this Report by providing references to the
Codification topics alongside references to the corresponding
standards. We do not expect the adoption of FAS 168 to
have an impact on results of operations, financial condition or cash
flows.
-9-
Item
7A. Quantitative and Qualitative
Disclosures About Market Risk.
This item is not required for a smaller
reporting company.
Item
8.
|
Financial
Statements and Supplementary Data.
|
Financial statements for the fiscal
years ended December 31, 2009 and 2008 have been examined to the extent
indicated in their reports by Pritchett, Siler & Hardy, P.C., independent
certified public accountants and have been prepared in accordance with
accounting principles generally accepted in the United States of America and
pursuant to regulations promulgated by the SEC. The aforementioned
financial statements are included herein under Item 15.
Item
9.
|
Changes
in and Disagreements with Accountants on Accounting and Financial
Disclosure.
|
On August
7, 2009, we dismissed Moore & Associates Chartered as our independent
registered public accountants. None of the reports of Moore &
Associates on our financial statements for either of the past two years
contained an adverse opinion or disclaimer of opinion, or was qualified or
modified as to uncertainty, audit scope or accounting
principles. During the two most recent fiscal years, there were no
disagreements with Moore and Associates, whether or not resolved, on any matter
of accounting principles or practices, financial statement
disclosure, or auditing scope or procedure, which, if not resolved to Moore and
Associates, Chartered's satisfaction, would have caused it to make reference to
the subject matter of the disagreement in connection with its report on the
registrant's financial statements.
On August
27, 2009, the PCAOB issued PCAOB Release No. 105-2009-006 revoking the
registration of Moore & Associates, Chartered and barring Michael J. Moore,
CPA, from being an associated person of a registered public accounting
firm. The PCAOB imposed these sanctions on the basis of its findings
concerning the alleged violations of Moore & Associates and Michael J. Moore
of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5
thereunder, PCAOB rules and auditing standards in auditing the financial
statements of three issuer clients from 2006 to 2008, PCAOB rules and quality
controls standards, and noncooperation with a Board investigation. A
copy of the PCAOB Release can be accessed at the PCAOB website at http://www.pcaobus.org.
On August
7, 2009, we engaged the accounting firm of Seale and Beers, CPAs as our new
independent registered public accounting firm. Our board of directors approved
the dismissal of Moore & Associates Chartered and the engagement of Seale
and Beers, CPAs. During the two most recent fiscal years and the
interim periods preceding the engagement, we did not consult Seale and Beers
regarding any of the matters set forth in Item 304(a)(2)(i) or (ii) of
Regulation S-B.
On
September 28, 2009, we dismissed Seale and Beers, CPAs as our independent
certifying accountants pursuant to the unanimous consent of our board of
directors. We initially retained Seale and Beers on August 7, 2009,
but the firm did not perform any auditing or accounting services nor has it
issued any audit or other reports on our financial
statements. Accordingly, since we retained Seale and Beers, we had no
disagreements with the firm, whether or not resolved, on any matter of
accounting principles or practices, financial statement disclosure, or auditing
scope or procedure, which, if not resolved to Seale and Beers’ satisfaction,
would have caused it to make reference to the subject matter of the disagreement
in connection with its report on our financial statements.
On September 28, 2009, we engaged
Pritchett, Siler & Hardy, P.C. as our new independent certifying
accountants. Our board of directors unanimously approved the
engagement of Pritchett, Siler & Hardy. During the two most
recent fiscal years and the interim periods preceding the engagement, we have
not consulted Pritchett, Siler & Hardy regarding any of the matters set
forth in Item 304(a)(2)(i) or (ii) of Regulation S-K.
Item
9A(T).
|
Controls
and Procedures.
|
Evaluation of Disclosures and
Procedures
As of the end of the period covered by
this annual report, our President, acting as both our chief executive officer
and principal accounting officer, carried out an evaluation of the effectiveness
of “disclosure controls and procedures,” as defined in the Securities
Exchange Act of 1934, Rules 13a-15(e) and 15-d-15(e). Based upon that
evaluation, it was concluded that as of December 31, 2009, our disclosure
controls and procedures are effective to ensure that information required to be
disclosed by us in the reports that we file or submit under the Exchange Act
is:
-10-
(i) recorded,
processed, summarized and reported, within the time periods specified in the
SEC's rules and forms; and
(ii) accumulated
and communicated to management, including our chief executive officer and
principal accounting officer, as appropriate, to allow timely decisions
regarding required disclosure.
Management’s Annual Report on Internal
Control Over Financial Reporting
Management is responsible for
establishing and maintaining adequate internal control over financial reporting
for our company. Our control system is designed to provide reasonable
assurance regarding the reliability of financial reporting and the preparation
of financial statements for external purposes in accordance with U.S. generally
accepted accounting principals. Our internal control over financial
reporting includes those policies and procedures that :
|
●
|
pertain
to the maintenance of records that, in reasonable detail, accurately and
fairly reflect the transactions and disposition of our
assets;
|
|
●
|
provide
reasonable assurance that the transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally
accepted accounting principles and that receipts and expenditures are
being made only with proper authorizations of management and directors;
and
|
|
●
|
provide
reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use or disposition of company assets that could
have a material effect on the financial
statements.
|
All internal control systems, no matter
how well designed, have inherent limitations. Therefore, even those
systems determined to be effective can provide only reasonable assurance with
respect to financial statement preparation and presentation. Because
of the inherent limitations of internal control, there is a risk that material
misstatements may not be prevented or detected on a timely basis by internal
control over financial reporting. However, these inherent limitations
are known features of the financial reporting process. Therefore, it
is possible to design into the process safeguards to reduce, though not
eliminate, this risk.
Because of inherent limitations,
internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness
to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate.
Management, including our President
acting as both chief executive officer and principal accounting officer,
assessed the effectiveness of our internal control over financial reporting as
of December 31, 2009. In making this assessment, management used the
criteria set forth by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO) in Internal
Control Over Financial Reporting – Guidance for Smaller Public
Companies. Based on our assessment and those criteria,
management concluded that during the period covered by this report, our internal
control and procedures over financial reporting was effective as of December 31,
2009.
This annual report does not include an
attestation report of our registered public accounting firm regarding internal
control over financial reporting. Management’s report was not subject
to attestation by our registered public accounting firm pursuant to temporary
rules of the Securities and Exchange Commission that permit us to provide only
management’s report in this annual report.
-11-
Changes in Internal Control over
Financial Reporting
During the period covered by this
report, there was no significant change in our internal controls over financial
reporting or in other factors that materially affected, or is reasonably likely
to materially affect, our internal controls over financial
reporting.
Item
9B.
|
Other
Information.
|
Not applicable.
PART
III
Item
10.
|
Directors,
Executive Officers and Corporate
Governance.
|
Our executive officers and directors
are as follows:
Name
|
Age
|
Position
|
||
Steven
D. Moulton
|
48
|
President,
Secretary / Treasurer and Director
|
||
Jacob
Colby
|
22
|
Director
|
||
Claudia
Moulton
|
48
|
Director
|
All
directors hold office until the next annual meeting of stockholders and until
their successors have been duly elected and qualified. There are no
agreements with respect to the election of directors. We have not
compensated directors for service on the board of directors or any committee
thereof, but directors are entitled to be reimbursed for expenses incurred for
attendance at meetings of the board and any committee of the
board. However, directors may defer their expenses and/or take
payment in shares of our common stock. As of the date hereof, no
director has accrued any expenses or compensation. Officers are
appointed annually by the board and each executive officer serves at the
discretion of the board. We do not have any standing committees.
No director, officer, affiliate or
promoter has, within the past five years, filed any bankruptcy petition, been
convicted in or been the subject of any pending criminal proceedings, or is any
such person the subject or any order, judgment, or decree involving the
violation of any state or federal securities laws.
Our current directors have other
employment and sources of income and will routinely devote only such time to our
business as deemed necessary. It is estimated that our President will
devote approximately 20 to 60 hours per month to corporate
activities.
Currently, there is no arrangement,
agreement or understanding between management and non-management stockholders
under which non-management stockholders may directly or indirectly participate
in or influence the management of our affairs. Present management openly accepts
and appreciates any input or suggestions from stockholders. However,
the board of directors is elected by the stockholders and the stockholders have
the ultimate say in who represents them on the board. There are no agreements or
understandings for any officer or director to resign at the request of another
person and no current offer or director is acting on behalf of, or will act at
the direction of any other person.
The business experience of the
directors listed above during the past five years is as follows:
Steven D.
Moulton became a director and Vice President of the company in January
1990 and became President and Secretary in April 2007. From August
1999 to March 2004, he served as Secretary/Treasurer and a director of Draco,
Inc. and from September 2000 to the present, he has been Secretary/Treasurer of
Jump' Jax, Inc., a subsidiary of Draco that was spun out to stockholders in
December 2004 and was engaged in the childhood entertainment business of leasing
inflatable balloon bounce houses in Southern Utah. Mr. Moulton
graduated from Olympus High School in Salt Lake City, Utah in
1980. From 1984 to 1990, he served as a director and executive
officer of several publicly-held development stage companies including Safron,
Inc. (director and Vice President); Sagitta Ventures (director and President);
Jasmine Investments (director and President); Java, Inc. (Secretary/Treasurer
and director); and Onyx Holdings Corporation (director and President). From 1991
to 1994, Mr. Moulton was a director and President of Omni International
Corporation, which is currently known as "Beachport Entertainment
Corporation." From 1987 until 1991 he was President and director of
Icon Systems, Inc. and served as Secretary/Treasurer of the same company until
his resignation on December 24, 1998. From 1995 to July 1996, he served as
director and Vice President of Wasatch International Corporation, formerly Java,
Inc. From February 1996 until November, 1999 he served as the President and
director of InsiderStreet.com, formerly Sierra Holding Group, Inc. Also since
1998, Mr. Moulton has managed his personal real estate properties through Excel
Properties, LLC.
-12-
Jacob
Colby, age 21, graduated from Olympus High School in Salt Lake City,
Utah, in 2005. Mr. Colby worked for Excel Properties in Salt Lake
City doing property management from June of 2005 until January 2006. He also
worked at Hartvigsen School in Salt Lake City from January 2006 to June
2006. Mr. Colby spent two years in Switzerland doing Ecclesiastical
work and is currently enrolled as a student at Salt Lake Community
College. Mr. Colby is the stepson of the company’s President, Steven
D. Moulton, and is Claudia Moulton’s son.
Claudia
Moulton, age 48. Graduated from Highland High School in Salt Lake City,
Utah, in 1980. She received a B.S. in Elementary Education from the
University of Utah in 1987. Ms. Moulton was employed by Granite School District
in Salt Lake City as an Elementary Teacher from 1987 to 1999. In 1999, she left
her teaching position and has been a homemaker since that time. Ms.
Moulton is the wife of our President, Steven D. Moulton.
Compliance
With Section 16(a) of the Exchange Act
Section 16(a) of the Exchange Act
requires our directors and executive officers, and persons who own more than 10%
of our common stock, to file with the SEC initial reports of ownership and
reports of changes in ownership of our common stock and other equity
securities. Based on a review of filings made with the SEC, we
believe that the requisite reports have been filed during the fiscal year
2009.
Code
of Ethics
We currently do not have a code of
ethics. During the current fiscal year, we do intend to adopt a code
of ethics that applies to our principal executive officer, principal financial
officer, principal accounting officer or controller or persons performing
similar functions.
Item
11. Executive
Compensation.
We have not had a bonus, profit
sharing, or deferred compensation plan for the benefit of employees, officers or
directors. We have not paid any salaries or other compensation to
officers, directors or employees for the years ended December 31, 2009 and
2008. We expect that directors will defer any compensation until such
time as we realize sufficient revenues to pay such compensation. As
of the date hereof, no person has accrued any compensation.
On April 16, 2007, following the
resignations of Ronald Moulton as a director, President and CEO, and of Vallerie
Moulton as a director and Secretary, we entered into Consulting Agreements with
each person for a term of three years each. Under the agreements, Mr. Moulton
was to provide consulting services related to the production and marketing of
our products and act as an advisor to our management. He was to be compensated
at the rate of $20.00 per hour for his services and be reimbursed for expenses
related to his services. Mrs. Moulton was to oversee production of products
and consult with management in connection with marketing and strategic planning.
She was to be compensated at the rate of $20.00 per hour for her services and be
reimbursed for expenses related to her services. Both agreements were
subsequently terminated without any services being
provided. Presently, we use the services of both Mr. and Mrs. Moulton
on an as-needed basis. During 2009, their services were contributed
to the company and they did not receive any compensation.
Except as disclosed above, we have not
entered into any other employment agreement with any officer, director or any
other person and no such agreements are anticipated in the immediate future. It
is intended that directors will defer any compensation until such time as
business operations provide sufficient cash flow to provide for salaries. As of
the date hereof, no person has accrued any compensation.
-13-
Item
12.
|
Security
Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters.
|
The following table sets forth
information, to the best of our knowledge, as of April 14, 2010, with respect to
each person known by us to own beneficially more than 5% of the outstanding
common stock, each director and all directors and officers as a
group.
Name and Address
|
Amount and Nature of
|
Percent
|
||||||
of Beneficial Owner
|
Beneficial Ownership
|
of Class(1)
|
||||||
Directors and Officers
|
||||||||
Steven
Moulton *
|
1,200,000 | 53.3 | % | |||||
4706
South Highland Drive, # 353
|
||||||||
Salt
Lake City, Utah 84117
|
||||||||
5% Stockholders
|
||||||||
Ronald
Moulton
|
200,000 | 8.9 | % | |||||
4706
South Highland Drive, # 353
|
||||||||
Salt
Lake City, Utah 84117
|
||||||||
Vallerie
Moulton
|
400,000 | 17.8 | % | |||||
4706
South Highland Drive, # 353
|
||||||||
Salt
Lake City, Utah 84117
|
||||||||
All
directors and officers as
|
1,200,000 | 53.3 | % | |||||
a
group (3 persons)
|
* Director
and/or executive officer
Note:
|
Unless
otherwise indicated, we have been advised that each person above has sole
voting power over the shares indicated
above.
|
(1) Based
upon 2,250,000 shares of common stock outstanding on April 14,
2010.
Item
13. Certain Relationships and
Related Transactions, and Director Independence.
There have been no material
transactions during the past two fiscal years between our company and any
officer, director, nominee for election as director, or any stockholder owning
greater than five percent (5%) of our outstanding shares, nor any member of the
above referenced individuals' immediate families.
None of our directors are deemed to be
independent directors. We do not have a compensation, audit or
nominating committee, rather those functions are carried out by the board as a
whole.
Item
14.
|
Principal
Accounting Fees and Services.
|
We do not have an audit committee and
as a result our entire board of directors performs the duties of an audit
committee. Our board of directors will approve in advance the scope
and cost of the engagement of an auditor before the auditor renders audit and
non-audit services. As a result, we do not rely on pre-approval policies and
procedures.
Audit Fees
The aggregate fees billed by our former
independent auditors, Moore & Associates, Chartered, for professional
services rendered for the audit of our annual financial statements included in
our annual report for the year ended December 31, 2008 and for the review of
quarterly financial statements included in our quarterly reports during 2008,
were $5,500. Moore & Associates also billed $1,500 for the review
of our quarterly financial statements included in our quarterly reports during
2009. Our other former independent auditors Seal and Beers, CPAs did
not bill us for services in 2009.
Pritchett, Siler & Hardy, P.C., our new auditors as
of October 2009, billed us $1,500 for the review of quarterly financial
statements included in our quarterly report for September 30,
2009.
-14-
Audit Related Fees
For the year ended December 31, 2009
and 2008, there were no fees billed for assurance and related services by our
former auditors, Moore & Associates and Seale and Beers, or our current
auditors Pritchett, Siler & Hardy, relating to the performance of the audit
of our financial statements which are not reported under the caption "Audit
Fees" above.
Tax Fees
For the years ended December 31, 2009
and 2008, no fees were billed by our former auditors, Moore & Associates and
Seale and Beers, or our current auditors Pritchett, Siler & Hardy, for tax
compliance, tax advice and tax planning.
We do not use Pritchett, Siler &
Hardy for financial information system design and implementation. These
services, which include designing or implementing a system that aggregates
source data underlying the financial statements or generates information that is
significant to our financial statements, are provided internally or by other
service providers. We do not engage Pritchett, Siler & Hardy to provide
compliance outsourcing services.
The board of directors has considered
the nature and amount of fees billed by Pritchett, Siler & Hardy and
believes that the provision of services for activities unrelated to the audit is
compatible with maintaining Pritchett, Siler & Hardy’s
independence.
-15-
PART 1V
Item
15. Exhibits, Financial
Statement Schedules
|
(a)
|
Exhibits
|
Exhibit No.
|
Exhibit Name
|
||
3.1*
|
Certificate
of Incorporation
|
||
3.2*
|
By-Laws
|
||
4.1*
|
Instrument
defining rights of stockholders (See Exhibit No. 3.1, Certificate of
Incorporation)
|
||
10.1**
|
Consulting
Agreement with Ronald Moulton
|
||
10.2**
|
Consulting
Agreement with Vallerie Moulton
|
||
22.1
*
|
Subsidiaries
|
||
31.1
|
Certification
of C.E.O. and Principal Accounting Officer Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
|
||
32.1
|
Certification
of C.E.O. and Principal Accounting Officer Pursuant to 18 U.S.C. Section
1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002
|
|
*
|
Previously
filed as an Exhibit to the Form 10-SB filed December 19,
2005.
|
|
**
|
Filed
previously as exhibit to Form 8-K filed April 20,
2007
|
-16-
ROCKY
MOUNTAIN FUDGE COMPANY, INC.
(A
Development Stage Company)
FINANCIAL
STATEMENTS
December
31, 2009
CONTENTS
Report
of Independent Registered Public Accounting Firm
|
19
|
|
Balance
Sheets
|
20
|
|
Statements
of Operations
|
21
|
|
Statements
of Stockholders’ Equity (Deficit)
|
22
|
|
Statements
of Cash Flows
|
24
|
|
Notes
to the Financial Statements
|
25
|
REPORT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board of
Directors
Rocky
Mountain Fudge Company, Inc.
Salt Lake
City, Utah
We have
audited the accompanying balance sheets of Rocky Mountain Fudge Company, Inc.
[a development stage
company] as of December 31, 2009 and 2008 and the related statements of
operations, stockholders' equity (deficit) and cash flows for each of the years
in the two-year period ended December 31, 2009 and for the period from inception
on January 4, 1990 through December 31, 2009. Rocky Mountain Fudge Company,
Inc.’s management is responsible for these financial statements. Our
responsibility is to express an opinion on these 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 audit 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 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, 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 Rocky Mountain Fudge Company, Inc.
as of December 31, 2009 and 2008 and the results of its operations and its cash
flows for each of the years in the two-year period ended December 31, 2009 and
for the period from inception on January 4, 1990 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 Rocky Mountain
Fudge Company, Inc. will continue as a going concern. As discussed in Note 2 to
the financial statements, Rocky Mountain Fudge Company, Inc. has incurred losses
since its inception and has not yet established profitable
operations. These factors raise substantial doubt about the ability
of the Company to continue as a going concern. Management’s plans in
regards to these matters are also described in Note 2. The financial
statements do not include any adjustments that might result from the outcome of
these uncertainties.
PRITCHETT,
SILER & HARDY, P.C.
Salt Lake
City, Utah
April 15,
2010
-19-
ROCKY
MOUNTAIN FUDGE COMPANY, INC.
(A
Development Stage Company)
Consolidated
Balance Sheets
December 31,
|
||||||||
2009
|
2008
|
|||||||
ASSETS
|
||||||||
CURRENT
ASSETS
|
||||||||
Cash
|
$ | 5,476 | $ | 8,484 | ||||
Total
Current Assets
|
5,476 | 8,484 | ||||||
TOTAL
ASSETS
|
$ | 5,476 | $ | 8,484 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY
(DEFICIT)
|
||||||||
CURRENT
LIABILITIES
|
||||||||
Accounts
payable
|
$ | 1,500 | $ | - | ||||
Note
payable - related party
|
22,413 | 2,413 | ||||||
Accrued
interest payable - related party
|
1,007 | 228 | ||||||
Total
Current Liabilities
|
24,920 | 2,641 | ||||||
STOCKHOLDERS'
EQUITY (DEFICIT)
|
||||||||
Common
stock; 50,000,000 shares authorized, at $0.001 par value, 2,250,000 shares
issued and outstanding
|
2,250 | 2,250 | ||||||
Additional
paid-in capital
|
162,200 | 161,200 | ||||||
Deficit
accumulated during the development stage
|
(183,894 | ) | (157,607 | ) | ||||
Total
Stockholders' Equity (Deficit)
|
(19,444 | ) | 5,843 | |||||
TOTAL
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
|
$ | 5,476 | $ | 8,484 |
The
accompanying notes are an integral part of these consolidated financial
statements.
-20-
ROCKY
MOUNTAIN FUDGE COMPANY, INC.
(A
Development Stage Company)
Consolidated
Statements of Operations
From Inception
|
||||||||||||
on January 4,
|
||||||||||||
For the Years Ended
|
1990 through
|
|||||||||||
December 31,
|
December 31,
|
|||||||||||
2009
|
2008
|
2009
|
||||||||||
REVENUES
|
$ | - | $ | 11,485 | $ | 157,702 | ||||||
COST
OF SALES
|
- | 8,450 | 58,459 | |||||||||
GROSS
PROFIT (LOSS)
|
- | 3,035 | 99,243 | |||||||||
EXPENSES
|
||||||||||||
General
and Administrative
|
25,509 | 36,682 | 285,188 | |||||||||
Total
Expenses
|
25,509 | 36,682 | 285,188 | |||||||||
OPERATING
LOSS
|
(25,509 | ) | (33,647 | ) | (185,945 | ) | ||||||
OTHER
INCOME (EXPENSES)
|
||||||||||||
Interest
income
|
- | - | 4,437 | |||||||||
Interest
expense
|
(778 | ) | (229 | ) | (2,386 | ) | ||||||
Total
Other Income (Expenses)
|
(778 | ) | (229 | ) | 2,051 | |||||||
LOSS
BEFORE INCOME TAXES
|
(26,287 | ) | (33,876 | ) | (183,894 | ) | ||||||
PROVISION
FOR INCOME TAXES
|
- | - | - | |||||||||
NET
LOSS
|
$ | (26,287 | ) | $ | (33,876 | ) | $ | (183,894 | ) | |||
BASIC
LOSS PER SHARE
|
$ | (0.01 | ) | $ | (0.02 | ) | ||||||
WEIGHTED
AVERAGE NUMBER OF SHARES OUTSTANDING
|
2,250,000 | 2,250,000 |
The
accompanying notes are an integral part of these consolidated financial
statements.
-21-
ROCKY
MOUNTAIN FUDGE COMPANY, INC.
(A
Development Stage Company)
Consolidated
Statements of Stockholders' Equity (Deficit)
Deficit
|
||||||||||||||||||||
Accumulated
|
||||||||||||||||||||
Additional
|
During the
|
Total
|
||||||||||||||||||
Common Stock
|
Paid-In
|
Development
|
Stockholders'
|
|||||||||||||||||
Shares
|
Amount
|
Capital
|
Stage
|
Equity
|
||||||||||||||||
Balance
at inception of development stage on January 4, 1990
|
- | $ | - | $ | - | $ | - | $ | - | |||||||||||
Common
stock issued for cash at $0.001 per share on August 10,
1990
|
1,200,000 | 1,200 | - | - | 1,200 | |||||||||||||||
Services
contributed by shareholders
|
- | - | 2,400 | - | 2,400 | |||||||||||||||
Shares
cancelled as contributed capital by shareholders
|
(500,000 | ) | (500 | ) | 500 | - | - | |||||||||||||
Common
stock issued for cash at $0.0012 per share on December 15,
1998
|
500,000 | 500 | 100 | - | 600 | |||||||||||||||
Common
stock issued for cash at $1.00 per share
|
50,000 | 50 | 49,950 | - | 50,000 | |||||||||||||||
Stock
offering costs
|
- | - | (10,000 | ) | - | (10,000 | ) | |||||||||||||
Net
loss from inception of development stage through December 31,
2004
|
- | - | - | (44,200 | ) | (44,200 | ) | |||||||||||||
Balance,
December 31, 2004
|
1,250,000 | $ | 1,250 | $ | 42,950 | $ | (44,200 | ) | $ | - |
The
accompanying notes are an integral part of these consolidated financial
statements.
-22-
ROCKY
MOUNTAIN FUDGE COMPANY, INC.
(A
Development Stage Company)
Consolidated
Statements of Stockholders' Equity (Deficit)
Deficit
|
||||||||||||||||||||
Accumulated
|
||||||||||||||||||||
Additional
|
During the
|
Total
|
||||||||||||||||||
Common Stock
|
Paid-In
|
Development
|
Stockholders'
|
|||||||||||||||||
Shares
|
Amount
|
Capital
|
Stage
|
Equity
|
||||||||||||||||
Balance,
December 31, 2004
|
1,250,000 | $ | 1,250 | $ | 42,950 | $ | (44,200 | ) | $ | - | ||||||||||
Capital
contributed by shareholder
|
- | - | 50,000 | - | 50,000 | |||||||||||||||
Net loss for the year ended December 31, 2005
|
- | - | - | (19,545 | ) | (19,545 | ) | |||||||||||||
Balance, December 31, 2005
|
1,250,000 | 1,250 | 92,950 | (63,745 | ) | 30,455 | ||||||||||||||
Services contributed by shareholders
|
- | - | 5,000 | - | 5,000 | |||||||||||||||
Net loss for the year ended December 31, 2006
|
- | - | - | (23,234 | ) | (23,234 | ) | |||||||||||||
Balance, December 31, 2006
|
1,250,000 | 1,250 | 97,950 | (86,979 | ) | 12,221 | ||||||||||||||
Common shares issued for debt
|
1,000,000 | 1,000 | 25,300 | - | 26,300 | |||||||||||||||
Services contributed by shareholders
|
- | - | 5,000 | - | 5,000 | |||||||||||||||
Net loss for the year ended December 31, 2007
|
- | - | - | (36,752 | ) | (36,752 | ) | |||||||||||||
Balance, December 31, 2007
|
2,250,000 | 2,250 | 128,250 | (123,731 | ) | 6,769 | ||||||||||||||
Services contributed by shareholders
|
- | - | 7,200 | - | 7,200 | |||||||||||||||
Capital contributed by sharholder
|
- | - | 25,750 | - | 25,750 | |||||||||||||||
Net loss for the year ended December 31, 2008
|
- | - | - | (33,876 | ) | (33,876 | ) | |||||||||||||
Balance, December 31, 2008
|
2,250,000 | 2,250 | 161,200 | (157,607 | ) | 5,843 | ||||||||||||||
Services contributed by shareholders
|
- | - | 1,000 | - | 1,000 | |||||||||||||||
Net loss for the year ended December 31, 2009
|
- | - | - | (26,287 | ) | (26,287 | ) | |||||||||||||
Balance,
December 31, 2009
|
2,250,000 | $ | 2,250 | $ | 162,200 | $ | (183,894 | ) | $ | (19,444 | ) |
The
accompanying notes are an integral part of these consolidated financial
statements.
-23-
ROCKY
MOUNTAIN FUDGE COMPANY, INC.
(A
Development Stage Company)
Consolidated
Statements of Cash Flows
From Inception
|
||||||||||||
on January 4,
|
||||||||||||
For the Years Ended
|
1990 through
|
|||||||||||
December 31,
|
December 31,
|
|||||||||||
2009
|
2008
|
2009
|
||||||||||
OPERATING
ACTIVITIES
|
||||||||||||
Net
loss
|
$ | (26,287 | ) | $ | (33,876 | ) | $ | (183,894 | ) | |||
Adjustments
to reconcile net loss to net cash used by operating
activities:
|
||||||||||||
Services
contributed by officers and shareholders
|
1,000 | 7,200 | 13,200 | |||||||||
Changes
in operating assets and liabilities
|
||||||||||||
Increase
in accounts payable
|
1,500 | - | 1,500 | |||||||||
Increase
in accrued interest - related party
|
779 | 228 | 1,007 | |||||||||
Net
Cash Used in Operating Activities
|
(23,008 | ) | (26,448 | ) | (168,187 | ) | ||||||
INVESTING
ACTIVITIES
|
- | - | - | |||||||||
FINANCING
ACTIVITIES
|
||||||||||||
Contributed
capital
|
- | 25,750 | 83,150 | |||||||||
Cash
received on note payable - related
|
20,000 | 2,413 | 48,713 | |||||||||
Sale
of common stock for cash
|
- | - | 41,800 | |||||||||
Net
Cash Provided by Financing Activities
|
20,000 | 28,163 | 173,663 | |||||||||
NET
INCREASE (DECREASE) IN CASH
|
(3,008 | ) | 1,715 | 5,476 | ||||||||
CASH
AT BEGINNING OF PERIOD
|
8,484 | 6,769 | - | |||||||||
CASH
AT END OF PERIOD
|
$ | 5,476 | $ | 8,484 | $ | 5,476 | ||||||
SUPPLEMENTAL
DISCLOSURES OF CASH FLOW INFORMATION
|
||||||||||||
CASH
PAID FOR:
|
||||||||||||
Interest
|
$ | - | $ | - | $ | 79 | ||||||
Income
Taxes
|
$ | - | $ | - | $ | - |
The
accompanying notes are an integral part of these consolidated financial
statements.
-24-
ROCKY
MOUNTAIN FUDGE COMPANY, INC.
(A
Development Stage Company)
Notes to
the Consolidated Financial Statements
December
31, 2009 and 2008
NOTE 1
- ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
a.
Business and Organization
Rocky
Mountain Fudge Company, Inc. (The Company) was
organized on January 4, 1990, under the laws of the State
of Utah to engage in the business of making
and selling fudge candy (dba Vallerie's Country
Candy, Inc.) Pursuant to Statement of Accounting Standards
Codification (ASC) Topic 915, "Accounting and Reporting by Development Stage
Enterprises," the Company is classified as a development stage
company. On August 9, 1992, the Company changed its name to RV&S
Enterprises, Inc. On July 28, 1998, the Company again changed its name to Rocky
Mountain Fudge Company, Inc. and commenced sales of candy products over the
internet and through direct sales.
In order
to relocate its domicile, the Company created a new wholly-owned subsidiary in
the State of Nevada under the name of Rocky Mountain Fudge Company,
Inc. The Nevada corporation has the same capitalization as the
Company; 50 million shares of common stock, par value $0.001 per share. The
Company and the newly formed Nevada entity then executed an Agreement and Plan
of Merger for the sole purpose of changing the Company's domicile to Nevada. As
a result of the merger transaction, the Utah corporation was merged with and
into the Nevada corporation, with the Nevada entity being the
survivor. Each Company stockholder was entitled to exchange their
shares of common stock in the Utah entity for the same number of shares in the
Nevada entity, adjusted for the five-for-one forward stock-split.
Following
the change of domicile, the Company incorporated a new wholly-owned subsidiary
in the State of Utah under the name of Wasatch Candy Company, Inc., d.b.a.
Vallerie's Country Candy, into which the Company transferred certain cash and
assets and through which the Company will operate its candy
business.
The
Company's financial statements are prepared using the accrual method of
accounting. The Company has elected a December 31
year-end.
b.
Revenue Recognition
Revenues
from the sale of candy products are recognized upon delivery and acceptance by
the customer, and when collectability is reasonably assured.
c. Basic
Loss Per Share
The
computation of basic loss per share of common stock is based on the weighted
average number of shares outstanding during the period.
For
the Years Ended
|
||||||||
December 31,
|
||||||||
2009
|
2008
|
|||||||
Loss
(numerator)
|
$ | (26,286 | ) | $ | (33,876 | ) | ||
Shares
(denominator)
|
2,250,000 | 2,250,000 | ||||||
Per
share amount
|
$ | (0.01 | ) | $ | (0.02 | ) |
-25-
ROCKY
MOUNTAIN FUDGE COMPANY, INC.
(A
Development Stage Company)
Notes to
the Consolidated Financial Statements
December
31, 2009 and 2008
NOTE 1
- ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
d. 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 disclosure 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.
e. Income
Taxes
Deferred taxes are provided on a
liability method whereby deferred tax assets are recognized for deductible
temporary differences and operating loss and tax credit carryforwards and
deferred tax liabilities are recognized for taxable temporary
differences. Temporary differences are the differences between the
reported amounts of assets and liabilities and their tax
bases. Deferred tax assets are reduced by a
valuation allowance when, in the opinion of management, it
is more likely than not that some portion or all of the deferred tax
assets will not be realized. Deferred tax assets and liabilities are
adjusted for the effects of changes in tax laws and rates on the date of
enactment.
Net
deferred tax assets consist of the following components as of December 31, 2009
and 2008:
2009
|
2008
|
|||||||
Deferred
tax assets:
|
||||||||
NOL
carryover
|
$ | 65,101 | $ | 54,849 | ||||
Valuation
allowance
|
(65,101 | ) | (54,849 | ) | ||||
Net
deferred tax asset
|
$ | — | $ | — |
The
income tax provision differs from the amount of income tax determined by
applying the U.S. federal and state income tax rates of 39% to pretax income
from continuing operations for the years ended December 31, 2009 and 2008 due to
the following:
2009
|
2008
|
|||||||
Book
Income
|
$ | (10,252 | ) | $ | (13,212 | ) | ||
Valuation
allowance
|
10,252 | 13,212 | ||||||
$ | - | $ | - |
At December 31, 2009, the Company had
net operating loss carryforwards of approximately $166,951 that may be offset against future
taxable income through 2029. No tax benefit
has been reported in the December 31, 2009 financial statements since the
potential tax benefit is offset by a valuation allowance of the same amount. Due
to the change in ownership provisions of the Tax Reform Act of 1986, net
operating loss carry forwards for Federal income tax reporting purposes are
subject to annual limitations. Should change in ownership occur, net
operating loss carryforwards may be limited as to use in future
years.
-26-
ROCKY
MOUNTAIN FUDGE COMPANY, INC.
(A
Development Stage Company)
Notes to
the Consolidated Financial Statements
December
31, 2009 and 2008
NOTE 1
- ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
f.
Principles of Consolidation
The accompanying financial statements
include the accounts of Rocky Mountain Fudge Company, Inc. and its wholly-owned
subsidiary, Wasatch Candy Company, Inc. All inter-company
transactions have been eliminated in the consolidation.
g.
Advertising Costs
The
Company’s policy regarding advertising is to expense advertising when incurred.
The Company had not incurred any advertising expense as of December 31, 2009 and
2008.
h.
Inventory
The
Company accounts for inventory of raw materials and finished goods on a cost
basis. The inventory is maintained on a first in- first out (FIFO)
basis. The Company’s inventory was $-0- as of December 31, 2009 and
2008.
i.
Stock-based Compensation
As of
December 31, 2009, the Company has not issued any share-based payments to its
employees.
The
Company adopted SFAS No. 123-R (ASC Topic
718) effective January 1, 2006 using the modified prospective
method. Under this transition method, stock compensation expense includes
compensation expense for all stock-based compensation awards granted on or after
January 1, 2006, based on the grant-date fair value estimated in accordance
with the provisions of SFAS No. 123-R.
j. Recent
Accounting Pronouncements
During
the year ended December 31, 2009, the Company adopted the following accounting
pronouncements:
In May
2009, the FASB issued FAS 165, “Subsequent Events” (ASC Topic 855). This pronouncement
establishes standards for accounting for and disclosing subsequent events
(events which occur after the balance sheet date but before financial statements
are issued or are available to be issued). FAS 165 requires an entity to
disclose the date subsequent events were evaluated and whether that evaluation
took place on the date financial statements were issued or were available to be
issued. It is effective for interim and annual periods ending after June 15,
2009. The adoption of FAS 165 did not have a material impact on the Company’s
financial condition or results of operation.
-27-
ROCKY
MOUNTAIN FUDGE COMPANY, INC.
(A
Development Stage Company)
Notes to
the Consolidated Financial Statements
December
31, 2009 and 2008
NOTE 1
- ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
j. Recent Accounting
Pronouncements
In June
2009, the FASB issued FAS 166, “Accounting for Transfers of Financial Assets” an
amendment of FAS 140 (ASC Topic 860). FAS
140 is intended to improve the relevance, representational faithfulness, and
comparability of the information that a reporting entity provides in its
financial statements 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, if any, in transferred financial assets.
This statement must be applied as of the beginning of each reporting entity’s
first annual reporting period that begins after November 15, 2009. The Company
does not expect the adoption of FAS 166 to have an impact on the Company’s
results of operations, financial condition or cash flows.
In June
2009, the FASB issued FAS 167, “Amendments to FASB Interpretation No. 46(R)”
(ASC Topic 810). FAS 167 is intended to (1)
address the effects on certain provisions of FASB Interpretation No. 46 (revised
December 2003), Consolidation
of Variable Interest Entities, as a result of the elimination of the
qualifying special-purpose entity concept in FAS 166, and (2) constituent
concerns about the application of certain key provisions of Interpretation
46(R), including those in which the accounting and disclosures under the
Interpretation do not always provided timely and useful information about an
enterprise’s involvement in a variable interest entity. This statement must be
applied as of the beginning of each reporting entity’s first annual
reporting period that begins after November 15, 2009. The Company
does not expect the adoption of FAS 167 to have an impact on the
Company’s results of operations, financial condition or cash flows.
In June
2009, the FASB issued FAS 168, “The FASB Accounting Standards Codification and
the Hierarchy of Generally Accepted Accounting Principles” (ASC Topic 105). FAS 168 will become the source
of authoritative U.S. generally accepted accounting principles (GAAP) recognized
by the FASB to be applied by nongovernmental entities. Rules and interpretive
releases of the Securities and Exchange Commission (SEC) under authority of
federal securities laws are also sources of authoritative GAAP for SEC
registrants. On the effective date of this Statement, the Codification will
supersede all then-existing non-SEC accounting and reporting standards. All
other nongrandfathered non-SEC accounting literature not included in the
Codification will become nonauthoritative. This statement is effective for
financial statements issued for interim and annual periods ending after
September 15, 2009.The Company does not expect the adoption of FAS 168 to have
an impact on the Company’s results of operations, financial condition or cash
flows.
-28-
ROCKY
MOUNTAIN FUDGE COMPANY, INC.
(A
Development Stage Company)
Notes to
the Consolidated Financial Statements
December
31, 2009 and 2008
NOTE 2 -
GOING CONCERN
The Company's financial statements are
prepared using accounting principles generally
accepted in the United States of America applicable to a going concern
which contemplates the realization of assets and liquidation of liabilities in
the normal course of business. The Company has not yet established an
ongoing source of revenues sufficient to cover its operating costs and allow it
to continue as a going concern. The ability of the Company to
continue as a going concern is dependent on the Company obtaining adequate
capital to fund operating losses until it becomes profitable. If the Company is
unable to obtain adequate capital, it could be forced to cease
operations.
In order to continue as a going
concern, the Company will need, among other things, additional capital
resources. Management's plans to obtain such resources for the Company include
(1) obtaining capital from management and significant shareholders sufficient to
meet its minimal operating expenses, and (2) seeking out and completing a merger
with an existing operating company. However, management cannot
provide any assurances that the Company will be successful in accomplishing any
of its plans.
The
ability of the Company to continue as a going concern is dependent upon its
ability to successfully accomplish the plans described in the preceding
paragraph and eventually secure other sources of financing and attain profitable
operations. The accompanying financial statements do not include any
adjustments that might be necessary if the Company is unable to continue as a
going concern.
NOTE 3 –
EQUITY TRANSACTIONS
As of
December 2007, the Board of Directors of the Company voted in favor of a
five-for-one reverse stock split of the Company’s common stock. The
reverse stock split became effective in February 2008. All references to common
stock presented within these financial statements have been retroactively
restated so as to reflect this reverse stock split as if it had occurred at
Company’s
inception.
NOTE 4 –
RELATED PARTY TRANSACTIONS
During
the year ended December 31, 2009, the Company received cash advances from an
officer and director totaling $20,000. The advances accrue interest at 10% per
annum, are unsecured and due upon demand. The Company owes $1,007 and $228 in accrued interest on the advances at
December 31, 2009 and 2008, respectively.
The
Company’s officers contribute their services without compensation. The Company
has recorded an expense of $1,000 and $32,950 for these services contributed to
the Company during the years ended December 31, 2009 and 2008,
respectively.
NOTE 5 –
SUBSEQUENT EVENTS
The Company has evaluated subsequent events from the
balance sheet date through the date the financial statements were issued and has
determined that there are no items to disclose.
-29-
SIGNATURES
Pursuant to the requirements of Section
13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Rocky
Mountain Fudge Company, Inc.
|
|||
By:
|
/S/ Steven D.
Moulton
|
||
Steven
D. Moulton
|
|||
President
and C.E.O.
|
|||
Principal
Financial Officer
|
|||
Principal
Accounting Officer
|
|||
Dated:
April 15, 2010
|
Pursuant to the requirements of the
Securities Exchange Act of 1934, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
Signature
|
Title
|
Date
|
||
April 15, 2010
|
||||
/S/ Steven D.
Moulton
|
President,
C.E.O. and director
|
|
||
Steven
D. Moulton
|
Principal
Financial Officer
|
|||
Principal
Accounting Officer
|
||||
April 15, 2010
|
||||
/S/ Jacob
Colby
|
Director
|
|||
Jacob
Colby
|
||||
April 15, 2010
|
||||
/S/
Claudia. Moulton
|
Director
|
|||
Claudia
Moulton
|
-30-