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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-Q
 
þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended: June 30, 2011
 
Or
 
o 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: 333-147629
 
MAJIC WHEELS CORP.
(Exact name of registrant as specified in its charter)
 
Delaware
 
98-0533882
(State or other jurisdiction
of incorporation or organization)
 
(I.R.S. Employer
Identification No.)

7908 Interstate Court, North Ft Myers, FL 33917
(Address of Principal Executive Office) (Zip Code)
 
239-567-4700
(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)
———————
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. þ Yes   o No
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405  of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).o Yes   o No
 
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 o Accelerated filer o
Non-accelerated filer o Smaller reporting company þ
(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).o Yes   þ No
 
As of January 26, 2012, 150,000,000 shares of common stock, par value $0.0001 per share, were outstanding.
 


 
 

 
 
TABLE OF CONTENTS
     
Page
 
PART I
Item 1
Financial Statements
    3  
Item 2
Management’s Discussion and Analysis of Financial Condition and Results of Operation
    15  
Item 3
Quantitative and Qualitative Disclosures About Market Risk
    18  
Item 4(T)
Controls and Procedures
    18  
           
PART II
           
Item 1
Legal Proceedings
    19  
Item 1A
Risk Factors
    19  
Item 2
Unregistered Sales of Equity Securities and Use of Proceeds
    19  
Item 3
Defaults Upon Senior Securities
    19  
Item 4
Submission of Matters to a Vote of Security Holders
    19  
Item 5
Other Information
    19  
Item 6
Exhibits
    20  
SIGNATURES
      21  

 
2

 
 
PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements
 
MAJIC WHEELS CORP.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
 
 
   
Unaudited
       
   
6/30/11
   
12/31/10
 
ASSETS
             
Current Assets:
           
Cash in bank
  $ -     $ -  
Total Assets
  $ -     $ -  
                 
LIABILITIES AND STOCKHOLDERS' (DEFICIT)
                 
Current Liabilities:
               
Accrued liabilities
  $ 489,224     $ 179,377  
Promissory notes
    242,937       189,340  
Derivative liability
    684,731       290,761  
Total current liabilities
    1,416,892       659,478  
                 
Convertible debt, net of unamortized discount of 112,331 and 114,400, respectively
    8,364       6,295  
Total liabilities
    1,425,256       665,773  
Commitments and Contingencies
               
Stockholders' (Deficit):
               
Common stock, par value $.0001 per share, 150,000,000 shares authorized, issued and outstanding as of June 30, 2011 and December 31, 2010
    15,000       15,000  
Additional paid-in capital
    223,281       223,281  
(Deficit) accumulated during the development stage
    (1,663,537 )     (904,054 )
Total stockholders' (deficit)
    (1,425,256 )     (665,773 )
Total Liabilities and Stockholders' (Deficit)
  $ -     $ -  
 
The accompanying notes are an integral part of these unaudited financial statements.
 
 
3

 
 
MAJIC WHEELS CORP.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2011 AND 2010 (Unaudited),
AND CUMULATIVE FROM INCEPTION (MARCH 15, 2007) THROUGH JUNE 30, 2011
 
   
Three Months Ended
   
Six Months Ended
   
Cumulative
 
   
June 30,
   
June 30,
   
From
 
   
2011
   
2010
   
2011
   
2010
   
Inception
 
                               
Expenses:
                             
General and administrative-
                             
Salaries & Benefits
  $ 105,834     $ 7,264     $ 210,505     $ 7,264     $ 486,216  
Professional fees
    48,626       24,375       95,348       32,603       335,010  
Impairment expense
    -       -       -       -       67,048  
Selling, general and administrative expenses
    15,966       24,097       25,708       27,116       153,935  
Total operating expenses
    170,426       55,736       331,561       66,983       1,042,209  
Loss from Operations
    (170,426 )     (55,736 )     (331,561 )     (66,983 )     (1,042,209 )
                                         
Other income (expense)
                                       
Interest expense
    (18,058 )     -       (33,952 )     -       (57,292 )
Loss on derivative liability
    (204,994 )     -       (393,970 )     -       (564,036 )
Net Loss
    (393,478 )     (55,736 )     (759,483 )     (66,983 )     (1,663,537 )
(Loss) Per Common Share:
                                       
(Loss) per common share - Basic and Diluted
  $ (0.00 )   $ (0.00 )   $ (0.00 )   $ (0.00 )        
Weighted Average Number of Common Shares Outstanding - Basic and Diluted
    150,000,000       100,000,000       150,000,000       100,000,000          
 
The accompanying notes are an integral part of these unaudited financial statements.
 
 
4

 
 
MAJIC WHEELS CORP.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2011 AND 2010 (Unaudited)
AND CUMULATIVE FROM INCEPTION (MARCH 15, 2007) THROUGH JUNE 30, 2011
 
   
Six Months Ended
   
Cumulative
 
   
June 30,
   
From
 
   
2011
   
2010
   
Inception
 
                   
Operating Activities:
                 
Net (loss)
  $ (759,483 )   $ (66,983 )   $ (1,663,537 )
Adjustments to reconcile net (loss) to net cash (used in) operating activities:
                       
Amortization of debt discount
    2,069               8,364  
Loss on derivative
    393,970               564,036  
Changes in net liabilities-
                       
Accounts payable
    -       (3,600 )     -  
Accrued liabilities
    309,847       47,059       489,224  
Net Cash (Used in) Operating Activities
    (53,597 )     (23,524 )     (601,913 )
                         
Financing Activities:
                       
Net proceeds from issuance of common stock
    -       -       238,281  
Net proceeds from promissory notes
    53,597       -       242,937  
Net proceeds from related party debt
    -       23,000       120,695  
Net Cash Provided by Financing Activities
    53,597       23,000       601,913  
Net Increase (Decrease) in Cash
    -       (524 )     -  
Cash - Beginning of Period
    -       719       -  
Cash - End of Period
  $ -     $ 195     $ -  
                         
Supplemental Disclosure of Cash Flow Information:
                       
Cash paid during the period for:
                       
Interest
  $ -     $ -     $ -  
Income taxes
  $ -     $ -     $ -  
Non cash activities
                       
Discount on notes payable from derivative liability
  $ -     $ -     $ 120,695  
 
The accompanying notes are an integral part of these unaudited financial statements.
 
 
5

 
 
MAJIC WHEELS CORP.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2011 AND 2010
UNAUDITED

(1)       Summary of Significant Accounting Policies

Basis of Presentation and Organization

Majic Wheels Corp. (“Majic Wheels” or the “Company”) is a Delaware corporation in the development stage.  The Company was incorporated under the laws of the State of Delaware on March 15, 2007.  The business plan of the Company was to develop a radio-controlled toy vehicle utilizing a patent pertaining to unique adhesive wheels.  In July 2010, there was a change in control of the Company and its focus is now waste management.  The accompanying financial statements of Majic Wheels Corp. were prepared from the accounts of the Company under the accrual basis of accounting.

In addition, in 2007, Majic Wheels commenced a capital formation activity to affect a Registration Statement on Form S-1 with the Securities and Exchange Commission, and raise capital of up to $160,000 from a self-underwritten offering of 20,000,000 (post forward stock split) shares of newly issued common stock in the public markets.  The Registration Statement on Form S-1 was filed with the SEC on November 27, 2007, and declared effective on February 22, 2008.  On April 15, 2008, Majic Wheels completed an offering of its registered common stock.

Unaudited Interim Financial Statements

The interim financial statements of Majic Wheels as of June 30, 2011, and December 31, 2010, and for the three months and six months ended June 30, 2011, and 2010, and cumulative from inception, are unaudited. However, in the opinion of management, the interim financial statements include all adjustments, consisting only of normal recurring adjustments, necessary to present fairly the Company’s financial position as of June 30, 2011, and December 31, 2010, and the results of its operations and its cash flows for the three months and six months ended June 30, 2011, and 2010, and cumulative from inception. These results are not necessarily indicative of the results expected for the calendar year ending December 31, 2011. The accompanying financial statements and notes thereto do not reflect all disclosures required under accounting principles generally accepted in the United States of America. Refer to the Company’s audited financial statements as of December 31, 2010, filed with the SEC for additional information, including significant accounting policies.

Fair Value of Measurement

As defined in ASC 820 “Fair Value Measurements”, fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The Company utilizes market data or assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated, or generally unobservable. The Company classifies fair value balances based on the observability of those inputs. ASC 820 establishes a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurement) and the lowest priority to unobservable inputs (level 3 measurement).

 
6

 
 
MAJIC WHEELS CORP.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2011 AND 2010
UNAUDITED
 
The three levels of the fair value hierarchy defined by ASC 820 are as follows:

Level 1 – Quoted prices are available in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis. Level 1 primarily consists of financial instruments such as exchange-traded derivatives, marketable securities and listed equities.

Level 2 – Pricing inputs are other than quoted prices in active markets included in level 1, which are either directly or indirectly observable as of the reported date. Level 2 includes those financial instruments that are valued using models or other valuation methodologies. These models are primarily industry-standard models that consider various assumptions, including quoted forward prices for commodities, time value, volatility factors, and current market and contractual prices for the underlying instruments, as well as other relevant economic measures. Substantially all of these assumptions are observable in the marketplace throughout the full term of the instrument, can be derived from observable data or are supported by observable levels at which transactions are executed in the marketplace. Instruments in this category generally include non-exchange-traded derivatives such as commodity swaps, interest rate swaps, options and collars.

Level 3 – Pricing inputs include significant inputs that are generally less observable from objective sources. These inputs may be used with internally developed methodologies that result in management’s best estimate of fair value.

The following table sets forth by level within the fair value hierarchy the Company’s financial assets and liabilities that were accounted for at fair value as of June 30, 2011. As required by ASC 820, financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement requires judgment, and may affect the valuation of fair value assets and liabilities and their placement within the fair value hierarchy levels.

   
Total
 
Quoted Prices in Active Markets for Identical Instruments Level 1
 
Significant Other Observable Inputs
Level 2
 
Significant Unobservable Inputs Level 3
 
Liabilities:
                 
Derivative liabilities
  $ 684,731           $ 684,731  

Estimates

The financial statements are prepared on the basis of accounting principles generally accepted in the United States of America.  The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of June 30, 2011 and December 31, 2010, and expenses for the three months and six months ended June 30, 2011 and 2010 and cumulative from inception.  Actual results could differ from those estimates made by management.

 
7

 
 
MAJIC WHEELS CORP.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2011 AND 2010
UNAUDITED
 
(2)       Development Stage Activities and Going Concern

The Company is currently in the development stage.

During the period from March 15, 2007, through December 31, 2010, the Company was incorporated, completed the Patent Licensing Agreement of a patent pertaining to a Climbing Device, completed a Marketing Rights Agreement for worldwide marketing rights pertaining to its product, issued common stock for stock subscription agreements, and commenced a capital formation activity to effect a Registration Statement on Form S-1 with the SEC to raise capital of up to $160,000 from a self-underwritten offering of 20,000,000 (post forward stock split) shares of newly issued common stock in the public markets. The Registration Statement on Form S-1 was filed with the SEC on November 27, 2007, and declared effective on February 22, 2008.  On April 15, 2008, Majic Wheels completed an offering of its registered common stock.  

On July 20, 2010, the Company sold an aggregate of 54,000,000 shares of Common Stock to Baja 4 X 4 Offroad & Fabrications, Inc. (“Baja”) for a total of $118,000 pursuant to an Agreement for the Purchase of Common Stock.  The shares represent approximately 36% of the total outstanding securities of the Company.   Two other shareholders sold 22,000,000 shares of our Common Stock to Baja.  As a result of the aforementioned stock purchases by Baja, control of the Company in the form of a total of 50.6% of the total issued and outstanding shares of common stock of the Company, which total 150,000,000 shares, was changed to Baja and the Company changed its business focus to waste management.  The Company intends to conduct additional capital formation activities through the issuance of its common stock and to commence operations.

While management of the Company believes that it will be successful in its capital formation and planned operating activities, there can be no assurance that the Company will be able to raise additional equity capital or that its new business focus of waste management will generate sufficient revenues to sustain the operations of the Company.

The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplate continuation of the Company as a going concern.  The Company has incurred an operating loss since inception, had negative working capital as of June 30, 2011 and December 31, 2010, and the cash resources of the Company were insufficient to meet its planned business objectives.  These and other factors raise substantial doubt about the Company’s ability to continue as a going concern.  The accompanying financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the possible inability of the Company to continue as a going concern.

 
8

 
 
MAJIC WHEELS CORP.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2011 AND 2010
UNAUDITED
 
(3)       Promissory Notes

In 2010, the Company issued three promissory notes to a third party as payment for reimbursement of expenses incurred on behalf of the Company in 2010 and one promissory note to the same third party as payment for accrued consulting fees.  The total of these notes was $189,340, the notes accrue interest at 20%, and all are payable on demand.

For the six months ended June 30, 2011, the Company issued two promissory notes for $53,597 to a third party as payment for reimbursement of expenses incurred on behalf of the Company.  The notes accrue interest at 20% and are payable on demand.

 (4)      Convertible Debt and Derivative liability

In August 2010, the Company issued a $120,695 convertible debenture in settlement of a debt that was owed to a former related party that was assigned to a third party in July 2010.

The convertible debenture matures two years from the date of issuance and bears interest at a 20% rate per annum, is unsecured and is convertible into the Company’s common stock at any time at the holder’s option, into common stock at the conversion rate of 25% of the average of the five lowest trading days 30 days prior to notice of conversion.

The Company analyzed the conversion option for derivative accounting consideration under ASC 815-15 “Derivatives and Hedging” and determined that the instrument should be classified as a liability due to their being no explicit limit to the number of shares to be delivered upon settlement of the above conversion options. The accounting treatment of derivative financial instruments requires that the Company record fair value of the derivatives as of the inception date of the convertible promissory note and to fair value the instrument as of each subsequent balance sheet date or termination of the instrument with the change in fair value recorded to earnings.  At inception of the convertible promissory note, the Company determined a fair value of $857,254 of the embedded derivative.

The Company determined the fair value of the embedded debt derivative as of December 31, 2010 to be $290,761.

The Company revalued the embedded derivative as of June 30, 2011.  The fair value of the embedded derivative was determined using the Black Scholes Option Pricing Model based on the following assumptions:

Dividend yield:
    0 %
Volatility
    371.93 %
Risk free rate
    0.19 %

 
9

 
 
MAJIC WHEELS CORP.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2011 AND 2010
UNAUDITED
 
The Company determined the fair value of the embedded debt derivative as of June 30, 2011 to be $684,731.  The increase was charged to current period operations as a loss on derivative.

During the six months ended June 30, 2011, the Company amortized debt discount of $2,069 to current period operations as interest expense.

Summary of the convertible debenture at June 30, 2011 is as follows:

Convertible debenture
  $ 120,695  
Less unamortized debt discount
    (112,331 )
  Net
    8,364  
         
Current portion:
    -  
Long term portion:
  $ 8,364  

The following table summarizes the derivative liabilities included in the balance sheet:

Balance at December 31, 2010
  $ 290,761  
ASC 815-15 additions (convertible debt)
    -  
Change in fair value
    393,970  
Balance as of June 30, 2011
    684,731  
 
 
10

 
 
MAJIC WHEELS CORP.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2011 AND 2010
UNAUDITED
 
(5)       Restatements

The Company filed an Amended Form 10-K/A for the year ended December 31, 2009, which restated the financial statements for the years ended December 31, 2009 and December 31, 2008.  The Company’s management decided to write off the intangible assets related to patent rights and marketing rights.
 
In addition, the Company has included an addition to accrued liabilities as of June 30, 2010.  As a result of these adjustments, the Company’s loss from operations and net loss for the six months ended June 30, 2010 were understated by $44,260. In addition, the Company’s accumulated deficit was understated by $76,126, other assets were overstated by $27,678, and current liabilities were understated by 48,448, as of June 30, 2010.  There was no impact on the net decrease in cash for the six months ended June 30, 2010 or the balance of cash as of June 30, 2010.
 
The following table reconciles the Company’s June 30, 2010 balance sheet as previously reported to the restated amounts.
 
BALANCE SHEET
   
   
June 30, 2010
 
   
As Originally
         
As
 
   
Reported
   
Adjustments
   
Restated
 
ASSETS
                   
Current Assets:
                 
Cash in bank
  $ 195     $ -     $ 195  
Other Assets
    27,678       (27,678 )     -  
Total Assets
  $ 27,872     $ (27,678 )   $ 195  
                         
LIABILITIES AND STOCKHOLDERS' (DEFICIT)
                         
Current Liabilities:
                       
Accounts payable - trade
  $ 100     $ (100 )   $ -  
Accrued liabilities
    7,688       48,548       56,236  
Related party debt
    120,695       -       120,695  
Total current liabilities
    128,483       48,448       176,931  
                         
Total liabilities
    128,483       48,448       176,931  
Commitments and Contingencies
                       
Stockholders' (Deficit):
                       
Common stock, par value $.0001 per share, 150,000,000 shares authorized;  100,000,000 issued and outstanding as of June 30, 2010
    10,000       -       10,000  
Additional paid-in capital
    110,281       -       110,281  
(Deficit) accumulated during the development stage
    (220,892 )     (76,126 )     (297,018 )
Total stockholders' (deficit)
    (100,611 )     (76,126 )     (176,737 )
Total Liabilities and Stockholders' (Deficit)
  $ 27,872     $ (27,677 )   $ 195  

The following table reconciles the Company’s statement of operations for the six months ended June 30, 2010 as previously reported to the restated amounts:
 
 
11

 
 
MAJIC WHEELS CORP.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2011 AND 2010
UNAUDITED

STATEMENT OF OPERATIONS
   
   
Six Months Ended June 30, 2010
 
   
As Originally
         
As
 
   
Reported
   
Adjustments
   
Restated
 
                   
Expenses:
                 
General and administrative-
                 
Salaries & Benefits
  $ -     $ 7,264     $ 7,264  
Professional fees
    13,228       19,375       32,603  
Amortization expense
    6,376       (6,376 )     -  
Selling, general and administrative expenses
    5,307       21,819       27,116  
Total operating expenses
    24,911       42,072       66,983  
Loss from Operations
    (24,911 )     (42,072 )     (66,983 )
                         
Net Loss
    (24,911 )     (42,072 )     (66,983 )
(Loss) Per Common Share:
                       
(Loss) per common share - Basic and Diluted
  $ (0.00 )   $       $ (0.00 )
Weighted Average Number of Common Shares Outstanding - Basic and Diluted
    100,000,000       -       100,000,000  
 
The following table reconciles the Company’s statement of cash flows for the six months ended June 30, 2010 as previously reported to the restated amounts:
 
 
12

 
 
MAJIC WHEELS CORP.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2011 AND 2010
UNAUDITED
 
STATEMENT OF CASH FLOWS
 
   
Six Months Ended June 30, 2010
 
   
As Originally
         
As
 
   
Reported
   
Adjustments
   
Restated
 
Operating Activities:
                 
Net (loss)
  $ (24,911 )   $ (42,072 )   $ (66,983 )
Adjustments to reconcile net (loss) to net cash (used in) operating activities:
                       
Amortization
    6,376       (6,376 )        
Changes in net liabilities-
                       
Accounts payable
    (3,500 )     (100 )     (3,600 )
Accrued liabilities
    (1,490 )     48,548       47,058  
Net Cash (Used in) Operating Activities
    (23,525 )     1       (23,524 )
                         
Financing Activities:
                       
Net proceeds from related party debt
    23,000       -       23,000  
Net Cash Provided by Financing Activities
    23,000       -       23,000  
Net Increase (Decrease) in Cash
    (525 )     1       (524 )

 
13

 

MAJIC WHEELS CORP.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2011 AND 2010
UNAUDITED
 
Cash - Beginning of Period
    719             719  
Cash - End of Period
  $ 194     $ 1     $ 195  
                         
Supplemental Disclosure of Cash Flow Information:
                       
Cash paid during the period for:
                       
Interest
  $ -     $ -     $ -  
Income taxes
  $ -     $ -     $ -  

(6)       Subsequent Events

In the third quarter of 2011, the Company issued a promissory note for $26,697 to a third party as payment for reimbursement of expenses incurred on behalf of the Company. The note accrues interest at 20% and is payable on demand.

On November 16, 2011, the Company was approved the Certificate of Amendment to the Certificate of Incorporation of the Company, pursuant to which the Company increase the authorized capital of the Company to a total of 5,010,000,000 consisting of 5,000,000,000 shares of common stock with a par value of $0.0001 per share and 10,000,000 shares of preferred stock with a par value of $0.0001 per share. The stockholders actions are anticipated to be effective on or about December 14, 2011.
 
 
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PART I

Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operation

As used in this quarterly report on Form 10-Q (this “Report”), references to the “Company,” the “Registrant,” “we,” “our,” “us” or “Majic Wheels” refer to Majic Wheels Corp., unless the context otherwise indicates.

Forward-Looking Statements

The following discussion should be read in conjunction with our financial statements and related notes thereto, which are included elsewhere in this Form 10-Q (the “Report”). This Report contains forward-looking statements which relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential” or “continue” or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties, and other factors that may cause our or our industry’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements.

For a description of such risks and uncertainties, refer to our Annual Report on Form 10-K, filed with the Securities and Exchange Commission on September 22, 2011. While these forward-looking statements, and any assumptions upon which they are based, are made in good faith and reflect our current judgment regarding the direction of our business, actual results will almost always vary, sometimes materially, from any estimates, predictions, projections, assumptions or other future performance suggested herein. 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.

Overview and Plan of Operation

We were incorporated in Delaware on March 15, 2007, and we are a development stage company. We had intended to engage in the manufacturing and distribution of a radio-controlled toy vehicle using a patented technology that allowed the vehicle to climb inclined and vertical surfaces.  In July 2010, there was a change in control of the Company and its focus is now waste management.  To date, we have not generated any revenues and our operations have been limited to organizational and capital formation matters.

On June 20, 2007, we issued 80,000,000 (post forward stock split) shares of common stock valued at a price of $0.0001 per share for common stock subscriptions receivable of $800.  On September 28, 2007, we received $800 as full payment for the stock subscriptions receivable.

In addition, in 2007, we commenced a capital formation activity to effect a Registration Statement on Form S-1 with the SEC to raise capital of up to $160,000 from a self-underwritten offering of 20,000,000 (post forward stock split) shares of newly issued common stock in the public markets.  The Registration Statement on Form S-1 was filed with the SEC on November 27, 2007, and declared effective on February 22, 2008.  In March 2008, we commenced the offering of its registered securities.  In April 2008, we completed and closed the offering by selling a total of 20,000,000 (post forward stock split) registered shares of its common stock, par value of $0.0001 per share, at an offering price of $0.00825 per share, for total proceeds of $144,481, net of deferred offering costs of $20,000.

 
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On July 14, 2008, we declared a 5-for-1 forward stock split of our issued and outstanding common stock to the holders of record on that date.  Such forward stock split was effective as of July 15, 2008.  On March 2, 2009, we declared a 2-for-1 forward stock split of our issued and outstanding common stock to the holders of record on that date.  The accompanying audited financial statements and related notes thereto included in this Annual Report have been adjusted accordingly to reflect this forward stock split.

On July 20, 2010, we sold an aggregate of 54,000,000 shares of Common Stock to Baja 4 X 4 Offroad & Fabrications, Inc. (“Baja”) for a total of $118,000 pursuant to an Agreement for the Purchase of Common Stock.  The shares represent approximately 36% of the total outstanding securities of the Company.   The shares were sold without registration under Section 5 of the Securities Act of 1933 in reliance on the exemption from registration contained in Section 4(2) of the Securities Act.  Two other shareholders sold 22,000,000 shares of our Common Stock to Baja.  As a result of the aforementioned stock purchases by Baja, control of the Company in the form of a total of 50.6% of the total issued and outstanding shares of common stock of the Company, which total 150,000,000 shares, was changed to Baja.

We have never declared bankruptcy, have never been in receivership, and have never been involved in any legal action or proceedings. We have not made any significant purchase or sale of assets, nor has the Company been involved in any mergers, acquisitions or consolidations. We are not a blank check registrant as that term is defined in Rule 419(a)(2) of Regulation C of the Securities Act of 1933, because we have a specific business plan and purpose.

We plan to enter the waste management business and become the premier leader in the environmental safe junk removal, trash hauling, recycling, commercial and residential construction cleanup and demolition business.
 
Results of Operations
 
For the three months ended June 30, 2011 as compared to the three months ended June 30, 2010

The following discussion should be read in conjunction with the condensed financial statements and in conjunction with the Company's Form 10-K for the year ending December 31, 2010. Results for interim periods may not be indicative of results for the full year.

Revenues

The Company is in its development stage and did not generate any revenues for the three months ended June 30, 2011.

Total operating expenses

During the three months ended June 30, 2011 and 2010, total operating expenses were $170,426 and $55,736, respectively. The increase in the general and administrative expenses was primarily the result of officers’ compensation expense.

 
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Other expense

During the three months ended June 30, 2011 and 2010, total other expenses were $223,052 and $0, respectively.  The other expenses in 2011 were primarily related to the loss on derivative liability, which was not issued until the third quarter of 2010.

Net loss

During the three months ended June 30, 2011 and 2010, the net loss was $393,478 and $55,736 respectively.

For the six months ended June 30, 2011 as compared to the six months ended June 30, 2010

Revenues

The Company is in its development stage and did not generate any revenues for the six months ended June 30, 2011.

Total operating expenses

During the six months ended June 30, 2011 and 2010, total operating expenses were $331,561 and $66,983, respectively. The increase in the general and administrative expenses was primarily the result of officers’ compensation expense.

Other expense

During the six months ended June 30, 2011 and 2010, total other expenses were $427,922 and $0, respectively.  The other expenses in 2011 were primarily related to the loss on derivative liability, which was not issued until the third quarter of 2010.

Net loss

During the six months ended June 30, 2011 and 2010, the net loss was $759,483 and $66,983 respectively.

Going Concern Consideration

The Company is a development stage company and has not commenced planned principal operations. The Company had no revenues and incurred a net loss of $759,483 for the six months ended June 30, 2011. These factors raise substantial doubt about the Company’s ability to continue as a going concern.

While management of the Company believes that it will be successful in its capital formation and planned operating activities, there can be no assurance that the Company will be able to raise additional equity capital, or be successful in the development of a waste management business that will generate sufficient revenues to sustain the operations of the Company.

 
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Liquidity and Capital Resources

As of June 30, 2011 and December 31, 2010, we had $0 in cash.  Our cumulative net loss since inception is $1,663,537, which is comprised entirely of general and administrative, research and development, and debt-related expenses.

The Company does not believe that its cash resources will be sufficient to fund its expenses over the next 12 months. There can be no assurance that additional capital will be available to the Company. The Company currently has no agreements, arrangements, or understandings with any person to obtain funds through bank loans, lines of credit, or any other sources. Since the Company has no such arrangements or plans currently in effect, its inability to raise funds for the above purposes will have a severe negative impact on its ability to remain a viable company.

Off Balance Sheet Arrangements

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources that are material to investors.

Item 3.  Quantitative and Qualitative Disclosures About Market Risk

A smaller reporting company, as defined by Item 10 of Regulation S-K, is not required to provide the information required by this item.

Item 4(T).  Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

As of the end of the period covered by this Report, we conducted an evaluation, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the 1934 Act). Based on this evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in reports that we file or submit under the 1934 Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms.

Changes In internal Control Over Financial Reporting.

There have been no changes in the Company’s internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Rule 240.15d-15 that occurred during the Company’s last fiscal quarter that has materially affected, or is reasonable likely to materially affect, the Company's internal control over financial reporting.

 
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PART II – OTHER INFORMATION

Item 1.  Legal Proceedings.

There are no pending legal proceedings to which the Company is a party or in which any Director, officer or affiliate of the Company, any owner of record or beneficially of more than 5% of any class of voting securities of the Company, or security holder is a party adverse to the Company or has a material interest adverse to the Company. The Company’s property is not the subject of any pending legal proceedings.

Item 1A.  Risk Factors

A smaller reporting company, as defined by Item 10 of Regulation S-K, is not required to provide the information required by this item.

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds.

None.

Purchases of equity securities by the issuer and affiliated purchasers

None.

Use of Proceeds

None

Item 3.  Defaults Upon Senior Securities.

None.

Item 4.  (Removed and Reserved).

Item 5.  Other Information.

None

 
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Item 6.  Exhibits
 
Exhibit No.   Description
     
31.1   Rule 13a-14(a)/15d14(a) Certifications of Denise S. Houghtaling, Chief Executive Officer, Chief Financial Officer and Director(attached hereto)
     
32.1   Section 1350 Certifications of Denise S. Houghtaling, Chief Executive Officer, Chief Financial Officer and Director(attached hereto)
 
101.INS 
 
XBRL Instance Document
     
101.SCH 
 
XBRL Taxonomy Extension Schema Document
     
101.CAL 
 
XBRL Taxonomy Extension Calculation Linkbase Document
     
101.DEF 
 
XBRL Taxonomy Extension Definition Linkbase Document
     
101.LAB 
 
XBRL Taxonomy Extension Label Linkbase Document
     
101.PRE 
 
XBRL Taxonomy Extension Presentation Linkbase Document
 
 
20

 
 
SIGNATURES

Pursuant to the requirements 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.
 
  MAJIC WHEELS CORP.  
       
Dated: January 26, 2012
By:
/s/ Denise S. Houghtaling  
    Name: Denise S. Houghtaling  
    Title: Chief Executive Officer, Chief Financial Officer and Director (Principal Executive, Financial and Accounting Officer)  
 
 
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