ý
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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or
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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MK AUTOMOTIVE, INC.
(Exact Name of Registrant as Specified in Its Charter)
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Nevada
(State or Other Jurisdiction of
Incorporation or Organization)
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43-1965656
(IRS Employer
Identification No.)
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5833 West Tropicana Avenue
Las Vegas, Nevada
(Address of principal executive offices)
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89103
(Zip Code)
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(702) 227-8324
(Registrant’s Telephone Number, Including Area Code)
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N/A
(Former Name, Former Address and Former Fiscal Year,
If Changed Since Last Report
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Large accelerated filer
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¨
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Accelerated filer
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¨
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Non-accelerated filer
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¨
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Smaller reporting company
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ý
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·
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the continued availability of key personnel
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·
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consumer acceptance of franchised operations in the automotive repair business
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·
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location and appearance of owned and franchised outlets
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·
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availability and cost of qualified automotive technicians
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·
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ability to attract and retain qualified technicians, managers and franchisees
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TABLE OF CONTENTS
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Page
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PART I
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Item 1.
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Financial Statements
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1
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Item 2.
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Management’s Discussion and Analysis of Financial Condition
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and Results of Operations
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5
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Item 3.
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Quantitative and Qualitative Disclosures about Market Risk
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7
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Item 4.
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Controls and Procedures
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7
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PART II
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Item 5.
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Other Information
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7
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Item 6.
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Exhibits
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7
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MK AUTOMOTIVE, INC.
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Balance Sheets
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Unaudited
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ASSETS
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September 30, 2011
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March 31, 2011
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||||||
Current assets:
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||||||||
Cash
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$ | 34,580 | $ | 80,260 | ||||
Accounts receivable
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50,069 | 56,913 | ||||||
Prepaid expenses and other current assets
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32,101 | 29,655 | ||||||
Total current assets
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116,750 | 166,828 | ||||||
Property and Equipment:
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||||||||
Building
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480,620 | 480,620 | ||||||
Furniture, fixtures, and equipment
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158,079 | 158,079 | ||||||
638,699 | 638,699 | |||||||
Less - accumulated depreciation
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(231,515 | ) | (223,629 | ) | ||||
407,184 | 415,070 | |||||||
Land
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919,380 | 919,380 | ||||||
Total property and equipment
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1,326,564 | 1,334,450 | ||||||
Goodwill
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1,228,379 | 1,228,379 | ||||||
Total Assets
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$ | 2,671,693 | $ | 2,729,657 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
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||||||||
Current liabilities:
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||||||||
Accounts payable - trade
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$ | 204,326 | $ | 198,233 | ||||
Accrued expenses and other current liabilities
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42,942 | 60,241 | ||||||
Accrued interest - related party
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240,808 | 223,766 | ||||||
Line of credit
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90,351 | 96,601 | ||||||
Payable to Related Party
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220,857 | 220,857 | ||||||
Current portion of long-term debt - third party
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639,051 | 612,145 | ||||||
Total current liabilities
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1,438,335 | 1,411,843 | ||||||
Long-term Liabilities
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||||||||
Long-term debt - third party, net of current portion
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1,197,607 | 1,227,863 | ||||||
Total Long-Term Liabilities
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1,197,607 | 1,227,863 | ||||||
Total Liabilities
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2,635,942 | 2,639,706 | ||||||
Stockholders' Deficit
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||||||||
Common stock, $0.001 par value, 50,000,000 shares authorized;
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31,139,145 and 30,414,145 shares issued and outstanding
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31,140 | 30,415 | ||||||
Additional paid in capital
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2,143,929 | 2,119,654 | ||||||
Accumulated deficit
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(2,139,318 | ) | (2,060,118 | ) | ||||
Total stockholders' equity
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35,751 | 89,951 | ||||||
Total Liabilities and Stockholders' Equity
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$ | 2,671,693 | $ | 2,729,657 |
The accompanying notes are an integral part of the unaudited financial statements
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MK AUTOMOTIVE, INC.
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Unaudited Interim Statements of Operations
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For the Three and Six Months ended September 30, 2011 and 2010
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Three Months Ended September 30,
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Six Months Ended September 30,
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2011
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2010
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2011
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2010
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Net Sales
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$ | 943,338 | $ | 1,237,529 | $ | 1,879,706 | $ | 2,390,424 | ||||||||
Cost of Goods Sold
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840,148 | 1,056,681 | 1,660,447 | 1,953,280 | ||||||||||||
Gross Profit
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103,190 | 180,848 | 219,259 | 437,144 | ||||||||||||
Selling, general and administrative expenses
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Salaries, wages, and employee benefits
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31,429 | 32,964 | 62,083 | 58,977 | ||||||||||||
Advertising and marketing
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4,936 | 9,529 | 12,901 | 20,959 | ||||||||||||
Bank charges
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17,461 | 22,579 | 33,576 | 40,651 | ||||||||||||
Professional fees
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52,508 | 68,602 | 83,717 | 159,956 | ||||||||||||
Bad debt
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227 | 341 | 227 | 1,930 | ||||||||||||
106,561 | 134,015 | 192,504 | 282,473 | |||||||||||||
Income from Operations
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(3,371 | ) | 46,833 | 26,755 | 154,671 | |||||||||||
Other income (expense)
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Interest income
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- | 586 | - | 1,183 | ||||||||||||
Interest expense
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(51,855 | ) | (45,266 | ) | (105,955 | ) | (83,105 | ) | ||||||||
Total other expense
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(51,855 | ) | (44,680 | ) | (105,955 | ) | (81,922 | ) | ||||||||
Net (loss) Income
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(55,226 | ) | 2,153 | (79,200 | ) | 72,749 | ||||||||||
Basic and diluted earning per share
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(0.00 | ) | 0.00 | (0.00 | ) | 0.00 | ||||||||||
Weighted average shares outstanding
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31,139,145 | 29,847,100 | 30,922,752 | 29,847,100 |
The accompanying notes are an integral part of the unaudited financial statements
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MK AUTOMOTIVE, INC.
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Unaudited Interim Statements of Cash Flows
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For the Six Months ended September 30, 2011 and 2010
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2011
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2010
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Cash Flows from Operating Activities
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Net (loss) Income
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$ | (79,200 | ) | $ | 72,749 | |||
Adjustments to reconcile net loss to net cash from operating activities
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Stock-based compensation
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25,000 | 55,556 | ||||||
Depreciation
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7,886 | 8,042 | ||||||
Changes in operating assets and liabilities:
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Accounts receivable
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6,844 | (13,720 | ) | |||||
Prepaid expenses and other current assets
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(2,446 | ) | (7,658 | ) | ||||
Accounts payable - trade
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6,093 | 11,310 | ||||||
Accrued expenses and other current liabilities
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(257 | ) | (63,863 | ) | ||||
Net cash provided by operating activities
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(36,080 | ) | 62,416 | |||||
Cash Flows from Financing Activities
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Payment of advances from shareholders/related parties
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- | (18,300 | ) | |||||
Payments on line of credit, net
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(6,250 | ) | (6,774 | ) | ||||
Short-term or long-term borrowings
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79,800 | - | ||||||
Repayments of debt
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(83,150 | ) | (109,972 | ) | ||||
Net cash used in financing activities
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(9,600 | ) | (135,046 | ) | ||||
Net Increase (decrease) in cash
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(45,680 | ) | (72,630 | ) | ||||
Cash at Beginning of Period
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80,260 | 111,658 | ||||||
Cash at End of Period
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$ | 34,580 | $ | 39,028 | ||||
Supplemental Disclosure of Cash Flow Information
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Cash paid during the period for interest
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$ | 87,443 | $ | 68,684 | ||||
Income taxes paid
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- | - |
The accompanying notes are an integral part of the unaudited financial statements
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Exhibit No.
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Description
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31.1*
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Certification of our Principal Executive Officer, under Section 302 of the Sarbanes-Oxley Act of 2002.
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31.2*
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Certification of our Principal Financial Officer, under Section 302 of the Sarbanes-Oxley Act of 2002.
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32.1*
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Certification under Section 906 of the Sarbanes-Oxley Act of 2002.
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Date: November 21, 2011
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MK AUTOMOTIVE, INC.
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By:
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/s/ Michael R. Murphy
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Michael R. Murphy
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President and Chief Executive Officer
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Number
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Description
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31.1
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Certification of our President and Chief Executive Officer, under Section 302 of the Sarbanes-Oxley Act of 2002.
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31.2
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Certification of our Principal Financial Officer, under Section 302 of the Sarbanes-Oxley Act of 2002.
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32.1
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Certification of our President and Principal Executive Officer and Principal Financial Officer, under Section 906 of the Sarbanes-Oxley Act of 2002.
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1.
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I have reviewed this Quarterly Report on Form 10-Q of MK Automotive, Inc., a Nevada corporation;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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5.
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The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
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Date: November 21, 2011
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/s/ Michael R. Murphy
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Michael R. Murphy
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President and Chief Executive Officer
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(Principal Executive Officer)
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1.
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I have reviewed this Quarterly Report on Form 10-Q of MK Automotive, Inc., a Nevada corporation;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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5.
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The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
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Date: November 21, 2011
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/s/ Tracy Maurstad
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Tracy Maurstad
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Treasurer and Chief Financial Officer
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(Principal Financial Officer)
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1.
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The Quarterly Report on Form 10-Q for the period ended September 30, 2011, filed by MK Automotive, Inc. on the date hereof fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as amended; and
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2.
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The information contained in the Quarterly Report on Form 10-Q for the period ended September 30, 2011, filed by MK Automotive, Inc. on the date hereof fairly presents, in all material respects, the financial condition and results of operations of the Registrant.
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/s/ Michael R. Murphy
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/s/ Tracy Maurstad
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Michael R. Murphy
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Tracy Maurstad
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President and Chief Executive Officer
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Treasurer and Chief Financial Officer
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(Principal Executive Officer)
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(Principal Financial Officer)
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Notes Payable: | 6 Months Ended |
---|---|
Sep. 30, 2011 | |
Notes Payable: |
Note 4. Notes
Payable: During the quarter, we entered into an additional
sale of $80,000 of future credit card receivables with our existing
factor. This is scheduled to be paid back over 10 months with six
daily payments per week of $385 per day, collateralized by $98,320
in credit card receivables. The note carries a nominal annual
interest rate of 53.6% and is classified as a current liability.
|
Stockholders' Equity: | 6 Months Ended |
---|---|
Sep. 30, 2011 | |
Stockholders' Equity: |
Note 3. Stockholders’ Equity:
During
the three months ended June 30, 2011, we issued 725,000 shares to
consultants, whose services were valued at $25,000. Due to the
light trading and high price volatility of our stock, management
determined that the fair value of the consulting services was more
reliably measurable than the fair value of the stock issued.
$20,000 of these services were classified as deferred offering
costs at June 30, 2011.
During
the three months ended September 30, 2011, there were no new shares
issued. We expensed the $20,000 deferred offering costs as our
intended private placement was not completed. We continue to pursue
additional capitalization of the company.
Three
employees had been granted 400,000 shares on November 16, 2010,
which were held in escrow during a vesting period and not
considered outstanding at March 31, 2011. The compensatory value of
this employee stock compensation was to have been recognized over
36 months starting June 1, 2011, based on a vesting schedule.
During May 2011, these three stock grants were cancelled prior to
any vesting.
On
July 9, 2010, the Company hired a consulting firm to perform
franchise sales and/or brokerage services over a one year
term. As part of the compensation, the company granted
warrants which vested based on the consultant’s performance.
The contract expired July 9, 2011 without any of these warrants
being vested. No stock compensation expense was ever recorded by
the Company related to this agreement.
At
September 30, 2011, we had 31,139,145 shares
outstanding.
|
Basis of Presentation and Use of Estimates | 6 Months Ended |
---|---|
Sep. 30, 2011 | |
Basis of Presentation and Use of Estimates |
Note 1. Basis of Presentation and Use of Estimates
The
accompanying unaudited interim financial statements of MK
Automotive, Inc. (“we”, “our” or the
“Company”) have been prepared in accordance with
accounting principles generally accepted in the United States of
America and the rules of the SEC and should be read in conjunction
with the audited consolidated financial statements and notes
thereto contained in our Annual Report on Form 10-K for the year
ended March 31, 2011 filed on June 27, 2011. In the
opinion of management, all adjustments, consisting of normal
recurring adjustments, necessary for a fair presentation of
financial position and the results of operations for the interim
periods presented have been reflected herein. The
results of operations for interim periods are not necessarily
indicative of the results to be expected for the full
year. Notes to the financial statements which would
substantially duplicate the disclosures contained in the audited
financial statements for the year ended March 31, 2010, as reported
in the Form 10-K have been omitted.
|
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Accounting Policies | 6 Months Ended |
---|---|
Sep. 30, 2011 | |
Accounting Policies | Note 2.
Accounting Policies: We have evaluated recent accounting
pronouncements and believe none will have a material effect on our
financial statements upon implementation. |
Balance Sheets (Parenthetical) (USD $) | Sep. 30, 2011 | Mar. 31, 2011 |
---|---|---|
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 50,000,000 | 50,000,000 |
Common stock, shares issued | 31,139,145 | 30,414,145 |
Common stock, shares outstanding | 31,139,145 | 30,414,145 |
Document and Entity Information | 6 Months Ended |
---|---|
Sep. 30, 2011 | |
Document Information [Line Items] | |
Document Type | 10-Q |
Amendment Flag | false |
Document Period End Date | Sep. 30, 2011 |
Document Fiscal Year Focus | 2011 |
Document Fiscal Period Focus | Q2 |
Trading Symbol | MKAU |
Entity Registrant Name | MK AUTOMOTIVE, INC. |
Entity Central Index Key | 0001486452 |
Current Fiscal Year End Date | --03-31 |
Entity Filer Category | Smaller Reporting Company |
Entity Common Stock, Shares Outstanding | 31,139,145 |
Statements of Operations (USD $) | 3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2011 | Sep. 30, 2010 | Sep. 30, 2011 | Sep. 30, 2010 | |
Net Sales | $ 943,338 | $ 1,237,529 | $ 1,879,706 | $ 2,390,424 |
Cost of Goods Sold | 840,148 | 1,056,681 | 1,660,447 | 1,953,280 |
Gross Profit | 103,190 | 180,848 | 219,259 | 437,144 |
Selling, general and administrative expenses | ||||
Salaries, wages, and employee benefits | 31,429 | 32,964 | 62,083 | 58,977 |
Advertising and marketing | 4,936 | 9,529 | 12,901 | 20,959 |
Bank charges | 17,461 | 22,579 | 33,576 | 40,651 |
Professional fees | 52,508 | 68,602 | 83,717 | 159,956 |
Bad debt | 227 | 341 | 227 | 1,930 |
Operating Expenses, Total | 106,561 | 134,015 | 192,504 | 282,473 |
Income from Operations | (3,371) | 46,833 | 26,755 | 154,671 |
Other income (expense) | ||||
Interest income | 586 | 1,183 | ||
Interest expense | (51,855) | (45,266) | (105,955) | (83,105) |
Total other expense | (51,855) | (44,680) | (105,955) | (81,922) |
Net (loss) Income | $ (55,226) | $ 2,153 | $ (79,200) | $ 72,749 |
Basic and diluted earning per share | $ 0.00 | $ 0.00 | $ 0.00 | $ 0.00 |
Weighted average shares outstanding | 31,139,145 | 29,847,100 | 30,922,752 | 29,847,100 |