Item 1.
Business.
Rocky Mountain Fudge Company, Inc. was established in 1990 to engage in the business of manufacturing and retailing fudge candy. 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. Most of our historically revenues have been realized during the Thanksgiving and Christmas periods.
In 2005, we began development of an Internet website for the promotion and sale of our products. During the past year, we began updating our website (www.greatestfudgeonearth.com) to accommodate online orders. It is our intention to develop the site to allow for minimal sales staff and minimal advertising expenses. We also plan to continue selling products at local retail outlets and in booths located at special events, fairs and festivals. However, if we are unable to increase revenues and attain profitability, management believes that it should explore alternative business plans.
During 2010, we began a search for business partners to whom we can sell our proprietary fudge recipe and production technique. Our intention is to sell the recipe for $5,000 to approximately 100 different entities, yielding a cash inflow of approximately $500,000. We would like to locate two or more entities in each of the fifty states, and will focus primarily on entities with existing industrial kitchen facilities, primarily in locations with high tourist traffic. We believe this to be a feasible strategy, given the fact that our proprietary fudge recipe and production process is fairly simple to undertake, and produces a far superior fudge product to the majority of what is currently on the market. This strategy would eliminate our obligations with respect to production and shipping of product. With the proceeds of the fudge recipe sale we will expand our fudge and brittle operations locally. As of the date hereof, we have not completed any sales of our proprietary recipe and there can be no assurance that we can successfully make such sales in the future.
Also during 2010, we began to explore and investigate potential business opportunities, particularly existing operating entities or start-ups, which we could acquire or merge with. Any such acquisition would most likely be facilitated with the issuance of common stock and could lead to a diversification of our business interests.
On May 21, 2010 we formed Eveps International, Inc., a Nevada company, as a wholly-owned subsidiary. We created the subsidiary to help facilitate any future acquisition or merger transactions with which we may become involved. On September 24, 2010, we changed the name of the subsidiary to Wireless Power Controls, Inc. (“Wireless”) in connection with a prospective business opportunity in the energy management industry that management has been investigating.
On November 3, 2010, we announced that WPC had been selected by privately held AIC Wireless of Sylvester, Georgia as a preferred installer. AIC Wireless manufactures wireless products that require substantial electrical, low voltage and wireless energy management systems. Once operational, we intend WPC to be a custom installer and service provider for wireless products for building automation systems to control and optimize energy consumption. Since being selected by AIC Wireless as a preferred installer, WPC has been working towards securing the necessary capital and equipment to begin operations. Currently, we anticipate that WPC will begin operations in the first half of 2011.
At December 31, 2010, we had $18,068, which we believe will satisfy our current cash demands. However, if our ongoing business does not provide sufficient revenues to maintain our business operations, we may need to seek additional financing. Any additional funding would most likely come from current directors or principal stockholders, although they are under no obligation to provide additional funding and there is no assurance outside funding will be available on terms acceptable to us, or at all.
We presently do not have any full time employees. We expect to add employees only if business warrants. Further, we believe that in the event increased business necessitates additional employees, we will be able to pay the added expenses of these employees from increased revenues.
Our plan of operations for the next twelve months will focus on completing development of our Internet website and locating business partners to whom we can sell our proprietary fudge recipe and production process. This 12-month plan of operations includes our goals of:
● increasing revenues from sales of candy products;
● expanding our marketing area to include communities outside the Salt Lake City metropolitan area;
● expanding the Internet business to be able to attract new customers, regardless of location, which will create an expanded mail order business;
● locating business partners to whom we can sell our fudge recipe and production process;
● locating existing operating entities with whom we can acquire or merge with in order to diversify and expand our business operations.
To achieve these goals we intend to exploit our Internet website to the extent possible and create new business by advertising, as funds permit. Management believes that these plans can be successfully implemented.
Products
All of our candy products have been developed from 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 facilities that provide 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.
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.
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, 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
We do not have full-time employees and will add employees only if business operations warrant such additions. Steven Moulton, our President and a director, devotes approximately 60 hours per month to the Company's business.
During 2010, we used the services of our two co-founders and directors, Ronald Moulton and Vallerie Moulton, on an as-needed basis. Mr. Moulton provides consulting services related to the production and marketing of our products and Mrs. Moulton oversees production of products and consult with management in connection with marketing and strategic planning. Each is to be compensated at the rate of $20.00 per hour and reimbursed for expenses related to their services. During 2010, their services were contributed to the company and they did not receive any compensation.
We do not have any 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.
Item 1A.
Risk Factors.
This item is not required for a smaller reporting company.
Item 1B.
Item 1B.
Unresolved Staff Comments.
This item is not required for a smaller reporting company.
Item 2.
Item 2.
Description of Property.
We do not presently own any property.
Item 3.
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.
Item 4.
(Removed and Reserved)
PART II
Item 5.
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”, although currently there is not an active trading market for the shares and there can be no assurance that any such market will 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.
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 February 28, 2011, there were approximately 65 holders of record of our common stock, which 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.
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;
●
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 May 10, 2010, our board of directors authorized the issuance of an aggregate of 6,000,000 shares of authorized, but previously unissued common stock. The securities were issued to two directors for an aggregate cash consideration of $50,000 and for the forgiveness of certain debts and obligations owed by the company valued at approximately $25,000.
The shares of common stock were issued in a private, isolated transaction to two persons familiar with the business of the company. In issuing the shares, the company relied on the exemption from registration under the Securities Act of 1933 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.
Item 6.
Selected Financial Data.
This item is not required for a smaller reporting company.
Item 7.
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.
We are a development stage company with limited assets, operations and revenues. Ongoing operating expense are paid with revenues, sale of common stock and advances from stockholders. 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 stockholders 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
We did not realize any revenues for the years ended December 31, 2010 and 2009, primarily due to our lack of suitable industrial kitchen facilities. General and administrative expenses were $37,226 in 2010, a 46% increase from $25,509 in 2009, attributed to an increase in professional fees. Our net loss for 2010 was $38,212, or $0.01 per share, compared to a net loss was $26,287, or $0.01 per share, in 2009. The increase is also attributed to higher general and administrative expenses in 2010.
In the opinion of management, inflation has not and will not have a material effect on our operations in the immediate future.
Liquidity and Capital Resources
Most of our expenses incurred during 2010 were paid advances or purchases of common stock by directors. Because of our lack of revenues and cash reserves, we expect to continue to rely on our directors or stockholders to pay our expenses until such time we realize adequate revenues from the production and sales of candy products or from other potential business enterprises. 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, 2010, we had total current assets consisting $18,176, mostly in cash, compared to $5,476 in cash at December 31, 2009. Current liabilities decreased from $24,920 at December 31, 2009 to $538 at December 31, 2010. This decrease is primarily attributed to exchange of notes payable - related party to common stock. Working capital at December 31, 2010 was $17,638 compared to a negative $19,444 at December 31, 2009, also reflecting the satisfaction of the notes payable - related party. At December 31, 2010 we had total assets of $19,882 and a stockholders’ equity of $19,344, compared to total assets of $5,476 and a stockholders' deficit of $19,444 at December 31, 2009.
Cash increased from $5,476 at December 31, 2009 to $18,068 at December 31, 2010. Net cash used by operating activities was $35,360 for 2010 compared to net cash used by operating activities of $3,008 for 2009, which primarily reflects the increased net loss for 2010. We realized $50,000 from financing activities in 2010 from the sale of common stock, compared to $-0- realized in 2009.
If we are unable to realized revenues in 2011 from business operations, we will need to seek additional financing, most likely from directors or stockholders, 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.
Net Operating Loss
We have accumulated approximately $222,106 of net operating loss carryforwards as of December 31, 2010. This loss carry forward may be offset against taxable income and income taxes in future years and expires in the year 2031. 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, 2010 because it has been fully offset by a valuation reserve. The use of future tax benefit is undeterminable at this time.
Recent Accounting Pronouncements
The following summary is of the most recent accounting pronouncements. Management has evaluated these pronouncements and their adoption has not had, or is not expected to have a material impact on the company’s financial position or statements.
In January 2010, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update 2010-02, Consolidation (Topic 810): Accounting and Reporting for Decreases in Ownership of a Subsidiary. This amendment to Topic 810 clarifies, but does not change, the scope of current US GAAP. It clarifies the decrease in ownership provisions of Subtopic 810-10 and removes the potential conflict between guidance in that Subtopic and asset derecognition and gain or loss recognition guidance that may exist in other US GAAP. An entity will be required to follow the amended guidance beginning in the period that it first adopts FAS 160 (now included in Subtopic 810-10). For those entities that have already adopted FAS 160, the amendments are effective at the beginning of the first interim or annual reporting period ending on or after December 15, 2009. The amendments should be applied retrospectively to the first period that an entity adopted FAS 160.
In January 2010, the FASB issued Accounting Standards Update 2010-01, Equity (Topic 505): Accounting for Distributions to Shareholders with Components of Stock and Cash (A Consensus of the FASB Emerging Issues Task Force). This amendment to Topic 505 clarifies the stock portion of a distribution to shareholders that allows them to elect to receive cash or stock with a limit on the amount of cash that will be distributed is not a stock dividend for purposes of applying Topics 505 and 260. Effective for interim and annual periods ending on or after December 15, 2009, and would be applied on a retrospective basis.
In December 2009, the FASB issued Accounting Standards Update 2009-17, Consolidations (Topic 810): Improvements to Financial Reporting by Enterprises Involved with Variable Interest Entities. This Accounting Standards Update amends the FASB Accounting Standards Codification for Statement 167.
In December 2009, the FASB issued Accounting Standards Update 2009-16, Transfers and Servicing (Topic 860): Accounting for Transfers of Financial Assets. This Accounting Standards Update amends the FASB Accounting Standards Codification for Statement 166.
In October 2009, the FASB issued Accounting Standards Update 2009-15, Accounting for Own-Share Lending Arrangements in Contemplation of Convertible Debt Issuance or Other Financing. This Accounting Standards Update amends the FASB Accounting Standard Codification for EITF 09-1.
In October 2009, the FASB issued Accounting Standards Update 2009-14, Software (Topic 985): Certain Revenue Arrangements That Include Software Elements. This update changed the accounting model for revenue arrangements that include both tangible products and software elements. Effective prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010. Early adoption is permitted.
In October 2009, the FASB issued Accounting Standards Update 2009-13, Revenue Recognition (Topic 605): Multiple-Deliverable Revenue Arrangements. This update addressed the accounting for multiple-deliverable arrangements to enable vendors to account for products or services (deliverables) separately rather than a combined unit and will be separated in more circumstances that under existing US GAAP. This amendment has eliminated that residual method of allocation. Effective prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010. Early adoption is permitted.
In September 2009, the FASB issued Accounting Standards Update 2009-12, Fair Value Measurements and Disclosures (Topic 820): Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent). This update provides amendments to Topic 820 for the fair value measurement of investments in certain entities that calculate net asset value per share (or its equivalent). It is effective for interim and annual periods ending after December 15, 2009. Early application is permitted in financial statements for earlier interim and annual periods that have not been issued.
In July 2009, the FASB ratified the consensus reached by EITF (Emerging Issues Task Force) issued EITF No. 09-1, (ASC Topic 470) "Accounting for Own-Share Lending Arrangements in Contemplation of Convertible Debt Issuance" ("EITF 09-1"). The provisions of EITF 09-1, clarifies the accounting treatment and disclosure of share-lending arrangements that are classified as equity in the financial statements of the share lender. EITF 09-1 is effective for fiscal years that beginning on or after December 15, 2009 and requires retrospective application for all arrangements outstanding as of the beginning of fiscal years beginning on or after December 15, 2009. Share-lending arrangements that have been terminated as a result of counterparty default prior to December 15, 2009, but for which the entity has not reached a final settlement as of December 15, 2009 are within the scope. Effective for share-lending arrangements entered into on or after the beginning of the first reporting period that begins on or after June 15, 2009.
Item 7A.
Item 7A.
Quantitative and Qualitative Disclosures About Market Risk.
This item is not required for a smaller reporting company.
Item 8.
Item 8.
Financial Statements and Supplementary Data.
Financial statements for the fiscal years ended December 31, 2010 and 2009 have been examined to the extent indicated in their reports by Sadler, Gibb and Associates, 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.
Item 9.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
On April 27, 2010, we dismissed the firm of Pritchett, Siler & Hardy, P.C., Certified Public Accountants (“Pritchett, Siler & Hardy”), as our independent certifying accountants pursuant to the unanimous consent of our Board of Directors. We initially retained Pritchett, Siler & Hardy on September 28, 2009, and the firm issued an audit report dated April 15, 2010 relating to our financial statements as of December 31, 2009. We have 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 Pritchett, Siler & Hardy’s 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 April 27, 2010, we engaged Sadler, Gibb and Associates, Certified Public Accountants (“Sadler, Gibb and Associates”), as our new independent certifying accountants. During the two most recent fiscal years and the interim periods preceding the engagement, we have not consulted Sadler, Gibb and Associates regarding any of the matters set forth in Item 304(a)(2)(i) or (ii) of Regulation S-B.
Item 9A(T).
Item 9A(T).
Controls and Procedures.
Evaluation of Disclosures and Procedures
As of the end of the period covered by this annual report, our chief executive officer, also acting as principal financial 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, 2010, our disclosure controls and procedures were ineffective to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is:
(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 financial 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.
Because of inherent limitations, internal control over financial reporting may not prevent or detect all 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 principal executive officer and principal financial officer, assessed the effectiveness of our internal control over financial reporting as of December 31, 2010. 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, our management concluded that our internal control over financial reporting was ineffective as of December 31, 2010.
Changes in Internal Control over Financial Reporting
Management has concluded that controls over both disclosure controls and financial reporting controls are ineffective due to material weaknesses in maintaining sufficient segregation of duties. Due our size and limited resources, we are unable at this time to implement and maintain proper segregation of duties.
There have been no significant changes in our internal controls over financial reporting or in other factors that could materially affect, or would be likely to materially affect, our internal controls over financial reporting subsequent to the date we carried out our evaluation.
Item 9B.
Item 9B.
Other Information.
Not applicable.
PART III
Item 10.
Item 10.
Directors, Executive Officers and Corporate Governance.
Our executive officers and directors are as follows:
Name
Age
Position
Steven D. Moulton
President, Secretary / Treasurer and Director
Jacob Colby
Director
On May 21, 2010, Claudia Moulton resigned as a director for personal reasons. As of the date hereof, no replacement has been made.
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 ten 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.
Jacob Colby, age 22, 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.
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 2008.
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.
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, 2010 and 2009. 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.
We have not entered into any 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.
Item 12.
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 February 28, 2011, 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.
* 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 8,250,000 shares of common stock outstanding on February 28, 2011.
Item 13.
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.
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, Pritchett, Siler & Hardy, P.C., for professional services rendered for the audit of our annual financial statements included in our annual report for the year ended December 31, 2009 and for the review of quarterly financial statements included in our quarterly reports during 2009, were $6,000.
Sadler, Gibb and Associates, our new auditors as of April 27, 2010, billed us $4,500 for the audit of our annual financial statements included in this annual report for the year ended December 31, 2010 and for the review of quarterly financial statements included in our quarterly reports during 2010.
Audit Related Fees
For the year ended December 31, 2010 and 2009, there were no fees billed for assurance and related services by our former or current auditors 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, 2010 and 2009, no fees were billed by our former or current auditors for tax compliance, tax advice and tax planning.
We do not use Sadler, Gibb and Associates 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 Sadler, Gibb and Associates to provide compliance outsourcing services.
The board of directors has considered the nature and amount of fees billed by Sadler, Gibb and Associates and believes that the provision of services for activities unrelated to the audit is compatible with maintaining Sadler, Gibb and Associates’ independence.
PART 1V
Item15.
Exhibits, Financial Statement Schedules
(a)
Exhibits
*
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
ROCKY MOUNTAIN FUDGE COMPANY, INC.
(A Development Stage Company)
FINANCIAL STATEMENTS
December 31, 2010
CONTENTS
SADLER, GIBB & ASSOCIATES, LLC
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors
Rocky Mountain Fudge Company, Inc.
(A Development Stage Company)
We have audited the accompanying consolidated balance sheet of Rocky Mountain Fudge Company, Inc. as of December 31, 2010, and the related consolidated statements of operations, stockholders’ equity (deficit) and cash flows for the year then ended and for the period from inception on January 4, 1990 through December 31, 2010. 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 audits. The financial statements of Rocky Mountain Fudge Company, Inc. as of December 31, 2009, were audited by other auditors whose report dated April 15, 2010, expressed an unqualified opinion on those statements.
We conducted our audit 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 audits 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 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 audit provides a reasonable basis for our opinion.
In our opinion the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Rocky Mountain Fudge Company, Inc. as of December 31, 2010, and the results of their operations and their cash flows for the year then ended and for the period from inception on January 4, 1990 through December 31, 2010, in conformity with U.S. generally accepted accounting principles.
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the consolidated financial statements, the Company had accumulated losses of $222,106 as of December 31, 2010, which raises substantial doubt about its ability to continue as a going concern. Management’s plans concerning these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ Sadler, Gibb & Associates, LLC
Salt Lake City, UT
March 7, 2011
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 sheet of Rocky Mountain Fudge Company, Inc. [a development stage company] as of December 31, 2009 and the related statements of operations, stockholders' equity (deficit) and cash flows for the year ended 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 audit 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 the results of its operations and its cash flows for the year ended December 31, 2009 and 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
ROCKY MOUNTAIN FUDGE COMPANY, INC. AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Balance Sheets
The accompanying notes are an integral part of these consolidated financial statements.
ROCKY MOUNTAIN FUDGE COMPANY, INC. AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Statements of Operations
The accompanying notes are an integral part of these consolidated financial statements.
ROCKY MOUNTAIN FUDGE COMPANY, INC. AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Statements of Stockholders' Equity (Deficit)
The accompanying notes are an integral part of these consolidated financial statements.
ROCKY MOUNTAIN FUDGE COMPANY, INC. AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Statements of Stockholders' Equity (Deficit)
The accompanying notes are an integral part of these consolidated financial statements
ROCKY MOUNTAIN FUDGE COMPANY, INC. AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Statements of Cash Flows
The accompanying notes are an integral part of these consolidated financial statements.
ROCKY MOUNTAIN FUDGE COMPANY, INC. AND SUBSIDIARIES
(A Development Stage Company)
Notes to the Consolidated Financial Statements
December 31, 2010 and 2009
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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 Valerie’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. Valerie’s Country Candy, (“WCC”) into which the Company transferred certain cash and assets and through which the Company will operate its candy business.
On May 28, 2010 the Company formed Eveps International, Inc. (“Eveps”), a Nevada company, as a wholly-owned subsidiary. Eveps was formed with the intent to be utilized as a vehicle to facilitate any potential future merger transactions with existing operating entities. On September 24, 2010 the Company changed the corporate name of this entity from Eveps International, Inc. to Wireless Power Controls, Inc. (“Wireless”), which remains a wholly-owned subsidiary of the Company as of December 31, 2010.
The Company's financial statements are prepared using the accrual method of accounting. The Company has elected a December 31 year-end.
Revenue Recognition
Revenues from the sale of candy products are recognized upon delivery and acceptance by the customer, and when collectability is reasonably assured.
ROCKY MOUNTAIN FUDGE COMPANY, INC. AND SUBSIDIARIES
(A Development Stage Company)
Notes to the Consolidated Financial Statements
December 31, 2010 and 2009
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Basic Loss per Share
The computation of basic net income (loss) per share of common stock is based on the weighted average number of shares outstanding during the year. Diluted earnings per share is calculated by dividing the Company’s net income available to common shareholders by the diluted weighted average number of shares outstanding during the year. The diluted weighted average number of shares outstanding is the basic weighted number of shares adjusted for any potentially dilutive debt or equity securities. There are no such common stock equivalents outstanding as of December 31, 2010 and 2009.
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.
Income Taxes
The Company provides for income taxes under ASC 740, Accounting for Income Taxes. ASC 740 requires the use of an asset and liability approach in accounting for income taxes. Deferred tax assets and liabilities are recorded based on the differences between the financial statement and tax bases of assets and liabilities and the tax rates in effect when these differences are expected to reverse. The Company’s predecessor operated as entity exempt from Federal and State income taxes.
ASC 740 requires the reduction of deferred tax assets by a valuation allowance if, based on the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.
ROCKY MOUNTAIN FUDGE COMPANY, INC. AND SUBSIDIARIES
(A Development Stage Company)
Notes to the Consolidated Financial Statements
December 31, 2010 and 2009
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Income Taxes (Continued)
The provision for income taxes differs from the amounts which would be provided by applying the statutory federal income tax rate of 39% to the net loss before provision for income taxes for the following reasons:
Net deferred tax assets consist of the following components as of:
Due to the change in ownership provisions of the Tax Reform Act of 1986, net operating loss carry forwards of $222,106 for federal income tax reporting purposes are subject to annual limitations. When a change in ownership occurs, net operating loss carry forwards may be limited as to use in future years.
Principles of Consolidation
The accompanying financial statements include the accounts of Rocky Mountain Fudge Company, Inc. and its wholly-owned subsidiaries, Wasatch Candy Company, Inc. and Wireless Power Controls, Inc. All inter-company transactions have been eliminated in the consolidation.
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, 2010 and 2009.
ROCKY MOUNTAIN FUDGE COMPANY, INC. AND SUBSIDIARIES
(A Development Stage Company)
Notes to the Consolidated Financial Statements
December 31, 2010 and 2009
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Stock-based Compensation
As of December 31, 2010, the Company has not issued any share-based payments to its employees.
The Company adopted 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 ASC 718.
Recent Accounting Pronouncements
Below is a listing of the most recent accounting pronouncements issued since through January 11, 2011. The Company has evaluated these pronouncements and their adoption has not had or is not expected to have a material impact on the Company’s financial position, or statements.
In January 2010, the FASB issued Accounting Standards Update 2010-02, Consolidation (Topic 810): Accounting and Reporting for Decreases in Ownership of a Subsidiary. This amendment to Topic 810 clarifies, but does not change, the scope of current US GAAP. It clarifies the decrease in ownership provisions of Subtopic 810-10 and removes the potential conflict between guidance in that Subtopic and asset derecognition and gain or loss recognition guidance that may exist in other US GAAP. An entity will be required to follow the amended guidance beginning in the period that it first adopts FAS 160 (now included in Subtopic 810-10). For those entities that have already adopted FAS 160, the amendments are effective at the beginning of the first interim or annual reporting period ending on or after December 15, 2009. The amendments should be applied retrospectively to the first period that an entity adopted FAS 160.
In January 2010, the FASB issued Accounting Standards Update 2010-01, Equity (Topic 505): Accounting for Distributions to Shareholders with Components of Stock and Cash (A Consensus of the FASB Emerging Issues Task Force). This amendment to Topic 505 clarifies the stock portion of a distribution to shareholders that allows them to elect to receive cash or stock with a limit on the amount of cash that will be distributed is not a stock dividend for purposes of applying Topics 505 and 260. Effective for interim and annual periods ending on or after December 15, 2009, and would be applied on a retrospective basis.
In December 2009, the FASB issued Accounting Standards Update 2009-17, Consolidations (Topic 810): Improvements to Financial Reporting by Enterprises Involved with Variable Interest Entities. This Accounting Standards Update amends the FASB Accounting Standards Codification for Statement 167.
ROCKY MOUNTAIN FUDGE COMPANY, INC. AND SUBSIDIARIES
(A Development Stage Company)
Notes to the Consolidated Financial Statements
December 31, 2010 and 2009
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Recent Accounting Pronouncements (Continued)
In December 2009, the FASB issued Accounting Standards Update 2009-16, Transfers and Servicing (Topic 860): Accounting for Transfers of Financial Assets. This Accounting Standards Update amends the FASB Accounting Standards Codification for Statement 166.
In October 2009, the FASB issued Accounting Standards Update 2009-15, Accounting for Own-Share Lending Arrangements in Contemplation of Convertible Debt Issuance or Other Financing. This Accounting Standards Update amends the FASB Accounting Standard Codification for EITF 09-1.
In October 2009, the FASB issued Accounting Standards Update 2009-14, Software (Topic 985): Certain Revenue Arrangements That Include Software Elements. This update changed the accounting model for revenue arrangements that include both tangible products and software elements. Effective prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010. Early adoption is permitted.
In October 2009, the FASB issued Accounting Standards Update 2009-13, Revenue Recognition (Topic 605): Multiple-Deliverable Revenue Arrangements. This update addressed the accounting for multiple-deliverable arrangements to enable vendors to account for products or services (deliverables) separately rather than a combined unit and will be separated in more circumstances that under existing US GAAP. This amendment has eliminated that residual method of allocation. Effective prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010. Early adoption is permitted.
In September 2009, the FASB issued Accounting Standards Update 2009-12, Fair Value Measurements and Disclosures (Topic 820): Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent). This update provides amendments to Topic 820 for the fair value measurement of investments in certain entities that calculate net asset value per share (or its equivalent). It is effective for interim and annual periods ending after December 15, 2009. Early application is permitted in financial statements for earlier interim and annual periods that have not been issued.
ROCKY MOUNTAIN FUDGE COMPANY, INC. AND SUBSIDIARIES
(A Development Stage Company)
Notes to the Consolidated Financial Statements
December 31, 2010 and 2009
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Recent Accounting Pronouncements (Continued)
In July 2009, the FASB ratified the consensus reached by EITF (Emerging Issues Task Force) issued EITF No. 09-1, (ASC Topic 470) "Accounting for Own-Share Lending Arrangements in Contemplation of Convertible Debt Issuance" ("EITF 09-1"). The provisions of EITF 09-1, clarifies the accounting treatment and disclosure of share-lending arrangements that are classified as equity in the financial statements of the share lender. An example of a share-lending arrangement is an agreement between the Company (share lender) and an investment bank (share borrower) which allows the investment bank to use the loaned shares to enter into equity derivative contracts with investors. EITF 09-1 is effective for fiscal years that beginning on or after December 15, 2009 and requires retrospective application for all arrangements outstanding as of the beginning of fiscal years beginning on or after December 15, 2009. Share-lending arrangements that have been terminated as a result of counterparty default prior to December 15, 2009, but for which the entity has not reached a final settlement as of December 15, 2009 are within the scope. Effective for share-lending arrangements entered into on or after the beginning of the first reporting period that begins on or after June 15, 2009.
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.
ROCKY MOUNTAIN FUDGE COMPANY, INC. AND SUBSIDIARIES
(A Development Stage Company)
Notes to the Consolidated Financial Statements
December 31, 2010 and 2009
NOTE 3 - COMMON STOCK
On May 10, 2010, the Company’s outstanding shareholder loan and related accrued interest, totaling $24,064, was satisfied through the issuance of 2,000,000 shares of the Company’s common stock at $0.0125 per share, valued at $25,000. This transaction resulted in a loss on extinguishment of debt in the amount of $936.
Also on May 10, 2010, the Company issued an additional 4,000,000 common shares for $50,000 cash at $0.0125 per share.
NOTE 4 -RELATED-PARTY TRANSACTIONS
The Company has recorded expenses paid on its behalf by shareholders as a related-party payable. During the year ended December 31, 2010, the balance of this payable totaling $24,064 was converted to 2,000,000 shares of the Company’s common stock. Subsequent to this transaction, the Company’s president paid $392 of expenses on behalf of the Company. This amount as been recorded on the balance sheet as a related-party note payable. The note is non-interest bearing and due and payable upon demand.
During the year ended December, 2010, the Company’s president performed services valued at $2,000 for the Company. These services have been recorded as a contribution to capital.
NOTE 5 - SUBSEQUENT EVENTS
In accordance with ASC 855-10, Company management reviewed all material events through the date of this report and there are no material subsequent events to report.
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: March 8, 2011
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
/S/ Steven D. Moulton
President, C.E.O. and director
March 8, 2011
Steven D. Moulton
Principal Financial Officer
Principal Accounting Officer
/S/ Jacob Colby
Director
March 8, 2011
Jacob Colby