DDYI Form 10-QSB 06/30/2005

10QSB 1 form10qsb.htm DDYI FORM 10-QSB 06/30/2005 DDYI Form 10-QSB 06/30/2005

U.S. Securities and Exchange Commission

Washington, D.C. 20549

FORM 10-QSB

[X]	Quarterly Report Under Section 13 or 15(d) of The Securities Exchange Act of 1934 for the Quarterly Period Ended June 30, 2005

[ ]	Transition Report Under Section 13 or 15(d) of The Securities Exchange Act of 1934 for the Transition Period from _______ to _______

Commission File Number: 000-17303

DARK DYNAMITE, INC.

(Exact name of small business issuer as specified in its charter)

Nevada	65-1021346
(State or other jurisdiction of	(IRS Employer Identification No.)
incorporation or organization)

63 West 100 South, 2nd FL Studio, Salt Lake City, Utah 84101

(Address of principal executive offices)

(801) 746-3435

(Issuer's telephone number)

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes [x]

No [ ]

Number of shares of common stock outstanding as of August 22, 2005: 1,860,839

Number of shares of preferred stock outstanding as of August 22, 2005: 5,000,000.

TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION



ITEM 1. FINANCIAL STATEMENTS	3

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION	12

ITEM 3 CONTROLS AND PROCEDURES	16

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS	17

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS	18

ITEM 5. OTHER INFORMATION	18

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K	18

SIGNATURES	19

INDEX TO EXHIBITS	20

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ITEM 1. FINANCIAL STATEMENTS

As used herein, the term “DDI”, or the “Company” refers to Dark Dynamite, Inc., a Nevada corporation, its subsidiary corporations and predecessors unless otherwise indicated. Unaudited, consolidated financial statements including a balance sheet for DDI for the period ended June 30, 2005, and statement of operations and statement of cash flows for the interim period up to date of such balance sheet and the comparable periods of the preceding year are attached hereto as Pages F-1 through F-14 and are incorporated herein by this reference.

THIS SPACE HAS BEEN INTENTIONALLY LEFT BLANK

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INDEX TO INTERIM FINANCIAL STATEMENTS

	Page

Consolidated Unaudited Condensed Balance Sheet June 30, 2005	F-5

Consolidated Unaudited Condensed Consolidated Statements of Operations - For the Three Months and Six Months Ended June 30, 2005 and 2004	F-6

Consolidated Statement of Stockholders Deficit - For the Six Months Ended June 30, 2004	F-7

Consolidated Statement of Stockholders Deficit - For the Six Months Ended June 30, 2005	F-8

Consolidated Unaudited Condensed Statements of Cash Flows - For the Six Months Ended June 30, 2005 and 2004	F-9

Notes to Unaudited Condensed Consolidated Financial Statements	F-10-11

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DARK DYNAMITE, INC. AND SUBSIDARY
(FKA NCI HOLDINGS, INC)
Consolidated Balance Sheets
As of June 30, 2005 and June 30, 2004


	June 30			June 30,
	2005			2004
	(Unaudited)

CURRENT ASSETS
Cash and cash equivalents	$	2,356		$	86,085
Accounts receivable		267			-
Inventory		37,965			1,000
Pre-paid Expenses		2,973			2,429
TOTAL CURRENT ASSETS		43,561			89,514

FIXED ASSETS
Furniture and fixtures		169,176			23,043
TOTAL FIXED ASSETS		169,176			23,043
Accumulated Depreciation		(19,372	)		(410	)
NET FIXED ASSETS		149,804			22,633

DEPOSITS
Deposits		1,798			-
TOTAL DEPOSITS		1,798			-

INTANGABLE ASSETS
Trademarks		1,380			1,005
TOTAL INTANGABLE ASSETS		1,380			1,005

TOTAL ASSETS	$	196,543			113,152


CURRENT LIABILITIES
Accounts payable	$	73,395		$	95,089
Note payable		9,261			1,103
Other payable and accrued expenses		293,290			-
TOTAL CURRENT LIABILITIES		375,946			96,192

STOCKHOLDERS' (DEFICIT)
Preferred Series A stock ($0.01 par value, 5,000,000 shares authorized; 5,000,000 shares issued and outstanding		50,000			125,486
Common stock $0.001 par value, 5,000,000 shares authorized; 1,860,839 and 101,472,675 shares outstanding at June 30, 2005 and June 30, 2004 respectively (post reverse splits through March 28, 2005)		186			101,473
Additional paid in capital		13,511,989			12,156,035
Stock Subscriptions Receivable		(20,659	)		(5,363	)
Retained (deficit)		(13,720,919	)		(12,360,671	)
TOTAL STOCKHOLDERS' (DEFICIT)		(179,403	)		16,960

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	196,543		$	113,152

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DARK DYNAMITE, INC. AND SUBSIDARY
(FKA NCI HOLDINGS, INC)
Consolidated Statements of Operations and
Other Comprehensive Income (Loss)
For The Three Months and Six Months Ended June 30, 2005 and 2004

	Three Months Ended June 30,						Six Months Ended June 30,
	2005			2004			2005			2004
	(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)

REVENUE
Sales	$	45,371		$	-		$	84,857		$	-
Consulting		-			-			-			-
TOTAL REVENUE		45,371			-			84,857			-

COST OF REVENUE
Cost of Sales		26,587			-			41,540			-
Coupons		375			-			1,820			-
Discounts		120			-			268			-
TOTAL COST OF REVENUE		27,082			-			43,628			-

GROSS PROFIT		18,289			-			41,229			-

EXPENSES
Selling, general and administrative		130,081			203,002			545,832			239,144
Selling, general and administrative From discontinued operations					-						-
TOTAL EXPENSES		130,081			203,002			545,832			239,144

OPERATING LOSS	$	(111,792	)	$	(203,002	)	$	(504,603	)	$	(239,144	)

OTHER INCOME (EXPENSE)
Interest expense		-			-			(4	)		-
Interest Income		-			-			7			-
Miscellaneous Income		(516	)		-			17,853			-
Gain on early forgiveness of accounts
payable to governmental authority					106,500						106,500
Gain (loss) from impairment of goodwill		-			-			-			(3,490,000	)
Gain / Loss on Securities		-			-			-			-
Loss on company stock		-			-			-			-
Income tax - state		-			-			-			-
TOTAL OTHER INCOME		(516	)		-			17,856			-

NET LOSS	$	(112,308	)	$	(96,502	)	$	(486,747	)	$	(3,622,644	)

Net loss per weighted average common shares outstanding	$	(0.0675	)	$	(0.0012	)	$	(0.2904	)	$	(0.0814	)
Weighted average shares outstanding - basic and diluted		1,663,061			80,575,083			1,675,838			44,505,346

(Weighted average shares outstanding have been adjusted retroactively
to reflect reverse stock split on March 28, 2005 for quarter ended
March 31, 2005 and November 17, 2004 and March 28, 2005 for quarter ended
March 31, 2004)

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DARK DYNAMITE, INC. AND SUBSIDARY
(FKA NCI HOLDINGS, INC)
STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
FOR THE SIX MONTHS ENDED JUNE 30, 2004


									Additional
									Paid-in		Retained
	Preferred Stock				Common Stock				Capital		Deficit
	Shares		Amount		Shares		Amount		Amount		Amount

Balances, January 1, 2004		1,254,857	$	125,486		2,419,775	$	2,420	$	8,427,800	$	(8,738,027	)

Common stock issuances for past services						5,444,300		5,444		24,698

Common stock issuances for acquisition						70,000,000		70,000		3,430,000

Common stock issuance to former officer						250,000		250

Issuance of options to former officer for services										9,808

Issuance of options to outside consultants										21,913

Issuance of common shares to outside consultants						23,358,600		23,359		241,816

Net loss for the period												(3,622,644	)

		1,254,857	$	125,486		101,472,675	$	101,473	$	12,156,035	$	(12,360,671	)

DARK DYNAMITE, INC. AND SUBSIDARY
(FKA NCI HOLDINGS, INC)
STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
FOR THE SIX MONTHS ENDED JUNE 30, 2005


									Additional		Stock
	Common Stock				Preferred Stock				Paid-in		Subscriptions			Retained
	Shares		Amount		Shares		Amount		Capital		Receivable			Deficit
Balances, January 1, 2005		52,339	$	5		5,000,000	$	50,000	$	13,174,084	$	(39,750	)	$	(13,234,323	)

Common stock issuances for past services (Unaudited)		279,500		28		-		-		58,268		-			-

Receipt of cash on subscriptions receivable (Unaudited)		-		-		-		-		-		34,441			-

Issue common stock for option exercise (Unaudited)		715,000		72		-		-		59,644		(350	)		-

Fair value of options issued for past services (Unaudited)		-		-		-		-		53,058		-			-

Intrinsic value of options issued to employees (Unaudited)		-		-		-		-		145,776		-			-

Proceeds from option stock applied to A/P - T Hall (Unaudited)		-		-		-		-		2,238		-			-

Issue common stock for option exercise, depository shares at Finance 500 as of March 31, 2005 (Unaudited)		614,000		61		-		-		14,939		(15,000	)		-

Adjust for error in Financial Statements at 12/31/2004 to bring into agreement with the books (Unaudited)															150

Common stock issued to WJREH (a Nexia Holdings company) for cash - restricted		200,000		20						3,982

Net consolidated loss for the six months ended June 30, 2005 (Unaudited)		-		-		-		-		-		-			(486,747	)
Balances, June 30, 2005		1,860,839	$	186		5,000,000	$	50,000	$	13,511,989	$	(20,659	)	$	(13,720,920	)

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DARK DYNAMITE, INC. AND SUBSIDARY
(FKA NCI HOLDINGS, INC)
STATEMENTS OF CASH FLOWS
For The Six Months Ended June 30, 2005 and 2004
	For The Six			For The Six
	Months Ended			Months Ended
	June 30,			June 30,
	2005			2004
	(Unaudited)			(Unaudited)

CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES:
Net loss	$	(486,747	)	$	(3,622,644	)
Adjustments to reconcile net loss to net cash (use in) operating activities:
Issuance of options for shares and services of outside consultants		-			311,430
Depreciation		13,061			410
Loss - Impairment of Goodwill		-			3,490,000
Issuance of options for services of former officer		-			9,808
Common stock issued for services		39,400			-
Intrinsic value of options issued to employees		153,276			-
Fair value of options issued to consultants		45,558			-
Common stock issued to apply on vendor Accounts Payable		21,134			-

(Increase) decrease in operating assets:
Accounts receivable		(267	)		-
Inventory		(16,268	)		-
Prepaid expenses		(768	)		(2,429	)
Deposit		(1,798	)		-
Increase (decrease) in operating liabilities:
Accounts payable and accrued expenses		(221,397	)		(87,795	)
Note payable		9,261			-
Other payable		293,290			-
Shareholder payable		-			1,103
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES		(152,265	)		99,883


CASH FLOWS FROM (USED IN) INVESTING ACTIVITIES:
Cash paid for trademarks		-			(1,005	)
Purchases of fixed assets		(15,087	)		(13,043	)
NET CASH (USED IN) INVESTING ACTIVITIES		(15,087	)		(14,048	)


CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES:
Common stock issuance to former officer		-			250
Receipt of stock subscriptions receivable		38,443			-
Common stock issuance for stock option exercise		59,366			-
NET CASH PROVIDED BY FINANCING ACTIVITIES		97,809			250

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		(69,543	)		86,085

CASH AND CASH EQUIVALENTS,
BEGINNING OF THE PERIOD		71,899			-

END OF THE PERIOD	$	2,356		$	86,085

SUPPLEMENTARY CASH FLOW INFORMATION OF NON-CASH FINANCING:
Common stock issued for purchase of fixed assets and inventory		-		$	10,000
Common stock issued for purchase of goodwill		-		$	3,490,000
Common stock issued for past services to pay down accounts payable		-		$	5,800
Common stock issued for services	$	334,084		$	-
Issuance of options for services of outside consultants		-		$	311,430
Issuance of options to former officer		-		$	9,808

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DARK DYNAMITE, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

AS OF JUNE 30, 2005

NOTE 1 - MANAGEMENT’S USE OF ESTIMATES

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

NOTE 2 - REVENUE RECOGNITION

Revenue for the operations is recognized when services are performed. Revenue for services is recognized when the services are rendered. Revenue for products is recognized when the retail products are sold.

NOTE 3 - LOSS PER SHARE

Loss per share is reported in accordance with Statement of Financial Accounting Standard (SFAS) No. 128. This statement required dual presentation of basic and diluted earnings (loss) with a reconciliation of the numerator and denominator of the loss per share computations. Basic earnings per share amounts are based n the weighted average shares of common outstanding. If applicable, diluted earnings per share would assume the conversion, exercise or issuance of all potential common stock instruments such as options, warrants and convertible securities, unless the effect is to reduce a loss or increase earnings per share. There were no adjustments required to net loss for the period presented in the computation of diluted loss per share.

NOTE 4 - COMMON STOCK

During the six months ended June 30, 2005, The Company issued 1,608,500 shares of its post reverse split common stock pursuant to the Company’s S-8 Registration Statement.

During the quarter ended June 30, 2005, the Company issued 200,000 shares of its post reverse split common stock pursuant to the Company’s 8-K Statement. The shares are restricted, and they were issued in a private transaction pursuant to Section 4(2) of the Securities Act of 1933.

NOTE 5 - GOING CONCERN AND UNCERTAINTY

The Company has experienced losses every quarter from its inception. In addition, the Company has negative net working capital, negative book value and negative cash flow. These factors raise substantial doubt about the ability of the Company to continue as a going concern.

Management’s plans with regard to these matters include the following:

·	Obtain funding from new investors to alleviate the Company’s working capital deficiency.

·	Apply for a bank credit line and an SBA loan.

·	Implement plans to increase sales.

·	Management is reducing payroll and other incidental expenses.

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DARK DYNAMITE, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

AS OF JUNE 30, 2005

The outcome of management’s plans cannot be ascertained with any degree of certainty. The accompanying financial statements do not include any adjustments that might result from the outcome of these risks and uncertainties.

NOTE 6 - REVERSE STOCK SPLIT

A common stock reverse split of 1,000 for 1 was effective March 28, 2005. All common stock amounts in the accompanying financial statements, issued on or before the date of the reverse stock split, have been restated retroactively to reflect these capitalization changes.

NOTE 7 - SUBSEQUENT EVENTS

On August 1, 2005, the Company filed an information schedule with the Securities and Exchange Commission reporting that 99% of the authorized votes of the common and preferred stock of the Company had approved an amendment to the Articles of Incorporation of Dark Dynamite, Inc. to increase the number of authorized common shares, par value $0.0001, from five million (5,000,000) to one billion (1,000,000,000). The Certificate of Amendment to carry the authorized increase in the number of common shares has not yet been filed with the Nevada Secretary of State.

On August 15, 2005, the Company and its majority shareholder, Richard Surber, entered into a binding Letter of Intent (“LOI”) with Shanxi Kai Da Lv You Gu Wen You Xian Gong Si (“Kai Da”) a corporation formed according to the laws of the Peoples Republic of China. The LOI sets for the terms and conditions upon which control of the Company will be acquired by the shareholders of Kai Da through the purchase of 4,990,000 shares of the preferred stock of the Company from Surber or companies under his control.

The LOI sets forth the parties intention to complete a Plan of Exchange on or about August 29, 2005, at which time the shares of preferred stock will be deposited into escrow in exchange for a total cash payment of $495,000 and making Kai Da a wholly owned subsidiary of the Registrant. Final closing of the exchange is planned on or about the 28^th of September, 2005. At the conclusion of the planned exchange the shareholders of Kai Da would hold approximately 98% of the voting control of the Company.

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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION

As used in this Quarterly Report, the terms "we", "us", "our" and the "Company" mean Dark Dynamite Inc., (“DDI”) a Nevada corporation.

General

Dark Dynamite is a lifestyle company that produces clothing, candles, skateboards, and active wear. The mission of our business is to offer products designed with deliberateness and wild inspiration that indulge an individual’s innate drive to be unique. The overarching concept is to provide the consumer with an affordable alternative to “mass-market” offerings by extending a product that conveys a sense of eccentricity that stands apart in quality, style and price, from most of the homogenous fare being offered consumers by the mainstream apparel market.

The Jared Gold brand name contributes to financially sustaining the Black Chandelier collection, which in turn will allow for the diversification of further products associated with the Jared Gold name. Future collections to be released include The Genevieve (new name pending) which will feature, housewares, confections, and candles, Life-of-the-Knife (Black Chandelier Skate),skate and snowboard apparel), Black Chandelier 365 (T-Shirt-of-the-day available only by e-procurement), and Black Chandelier Tweens (teenplus sizes for girls). All of these products will strengthen and underscore the Company’s brand identity.

In addition to strengthening the brand name and capitalizing on the reputation of Jared Gold, the Company has established a global public relations network that focuses on establishing goodwill towards the Company within the apparel market. There is will be a corporate communications staff at the Company’s headquarters that will communicate with PR companies abroad as well as using contracts PR companies to and also receive market feedback so as to effectively implement appropriate marketing and distribution strategies. The ultimate objective is expanding our consumer base by targeting boutiques and higher-end department stores.

The Company currently operates retail stores in Salt Lake City, Utah and Seattle, Washington. There are plans to open other retail stores in select major metropolitan areas such as Los Angeles, California and New York City. The company is accordingly seeking additional funds to meet its needs over the next 12 months.

RESULTS OF OPERATIONS

Revenues

Gross revenues for the three-month and six-month periods ended June 30, 2005, were $45,371 and $84,857, respectively, as compared to $0 for the same periods ended June 30, 2004. The changes in 2005 revenues were due to the operations of the two retail outlets of the Company, both of which were operating since first quarter of 2005.

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Losses

DDI recorded operating losses of $111,792 and $504,603 for the three-month and six-month periods ended June 30, 2005, respectively, compared to operating losses of $203,002 and $239,144 for the comparable periods ended June 30, 2004. The increase in operating losses resulted from the higher level of operations for the Company in the first half of 2005 as compared to the same period in 2004. The operating losses of $504,603 for the six months ended June 30, 2005 were due primarily to the account and audit fees of $25,907, legal fees of $55,710 and salaries and wages of $299,979.

DDI recorded net losses of $112,308, or $.0675 per common share outstanding, and $486,747, or $.2904 per common share outstanding, for the three months and six months ended June 30, 2005, respectively, as compared to net losses of $96,502 and $3,622,644 for the same periods ended June 30, 2004. The decrease in losses was attributable primarily to the loss from impairment of goodwill recorded in the first quarter of 2004 in the amount of $3,490,000 which was not repeated in 2005.

DDI does not expect to operate at a profit through fiscal 2005. Since DDI’s activities are dependent upon its ability to sell its products in the fashion and life style areas, future profitability or DDI’s ability to generate revenue and revenue growth tends to follow changes in the fashion market place. There can be no guarantee that profitability or revenue growth can be realized in the future.

Expenses

Selling, general and administrative expenses for the three months and six months ended June 30, 2005, were $130,081 and $545,832, respectively, compared to $203,002 and $239,144 for the same periods in 2004. The increase of $306,688 in expenses in the first half of 2005 was due primarily to the start up expenses of creating and marketing the product lines of the Company.

Capital Resources and Liquidity

On June 30, 2005, DDI had current assets of $43,561 and $196,543 in total assets. DDI had a net working capital deficit of $332,385 at June 30, 2005, as compared to a net working capital deficit of $6,678 at the same period ended June 30, 2004, an increase in the deficit of $325,707. The working capital deficit was due primarily to outstanding other payable and accrued expenses that were considered as current liabilities and the increase in those amounts during the first half of 2005 lead to the increase over the year end amount

Net cash used in operating activities was $152,265 for the six months ended June 30, 2005, compared to net cash provided by operating activities of $99,883 for the six months ended June 30, 2004. The increase in cash used in operations in the first half of 2005 reflected the increased operational level of the Company during the first six months of 2005 as compared to the prior year’s operations.

Net cash used in investing activities was $15,087 for the six months ended June 30, 2005, compared to net cash used in investing activities was $14,048 for the same period ended June 30, 2004. Cash flow used in investing activities in the first half of 2005 was due primarily to the purchase of fixed assets, the same as the previous year, except that there was $1,005 in cash paid for trademarks in 2004.

Cash from financing activities was $97,809 for the six months ended June 30, 2005, compared to cash flow from financing activities of $250 for the six months ended June 30, 2004. The bulk of these funds represent the receipt of stock subscriptions from the exercise of stock options by employees and consultants of the Company.

DDI is currently experiencing significant cash flow shortages. Current efforts to meet the cash flow needs of the operations of the Company are not sufficient at this time to meet the needs of the Company’s operations. To cover these ongoing shortages we may need to sell securities from time to time at a loss. We are looking at several options to improve this situation, including the private placement of DDI common stock or other avenues to obtain additional investments.

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Stock and Options To Employees and Contractors

During the quarter ended June 30, 2005, the board of directors of DDI has not issued any stock or options to employees of contractors of common stock registered under the Company's S-8 Registration Statement.

Off Balance Sheet Arrangements

We do not have any off-balance sheet financing arrangements

ABILITY TO CONTINUE AS A GOING CONCERN

As shown in the consolidated financial statements for the six months ended June 30, 2005, the Company had incurred recurring losses from operations, had a deficit book value, was the subject of numerous law suits, had all of its assets fully pledged, had a negative cash flow from operations that created substantial doubt as to whether the Company can continue as a going concern. The ability of the Company to continue as a going concern is dependent on resolving the business and liquidity problems, principally through developing operations, increasing revenues, and obtaining new capital through either debt or equity.

Forward Looking Statements

The information herein contains certain forward looking statements within the meaning of §27A of the Securities Act of 1933, as amended and § 21E of the Securities Exchange Act of 1934, as amended, which are intended to be covered by the safe harbors created thereby. Investors are cautioned that all forward looking statements involve risks and uncertainty, including without limitation, the ability of the Company to continue its current expansion strategy, changes in the fashion and clothing markets, labor and employee benefits, as well as general market conditions, competition and pricing. Although the Company believes that the assumptions underlying the forward looking statements contained herein are reasonable, any of the assumptions could be inaccurate, and therefore, there can be no assurance that the forward look statements included in this Form 10-QSB will prove to be accurate. In view of the significant uncertainties inherent in the forward looking statements included herein, the inclusion of such information should not be regarded as a representation by the company or any other person that the objectives and plans of the Company will be achieved.

Risk Factors

The success of our business depends in large part on our ability to identify fashion trends as well as to react to changing customer demand in a timely manner. Consequently, we depend in part upon the continuing favorable market response to the creative efforts of our purchasing, design and marketing teams’ ability to anticipate trends and fashions that will appeal to our consumer base.

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Failure on our part to anticipate, identify, and respond effectively to changing consumer demands and fashion trends will adversely affect our sales. If we are unable to obtain raw materials or find manufacturing facilities, our financial condition may be harmed. Outside of a small sample room, we do not own any manufacturing facilities, and therefore depend on a limited number of third parties to manufacture our products. We place all of our orders for production of merchandise and raw materials by purchase order and do not have any long-term contracts with any manufacturer or supplier. If we fail to obtain sufficient quantities of raw materials, it could have a harmful effect on the results of our operations. Furthermore, we may receive shipments of products from manufacturers that fail to conform to our quality control standards. In such events, unless we are able to obtain replacement products in a timely manner, we may lose sales. If we fail to maintain favorable relationships with these production facilities or fail to obtain an adequate supply of quality raw materials on commercially reasonable terms, it could harm our business and results of operations.

We will be dependent on third party manufacturers for production, and our sales may be negatively affected if the manufacturers do not perform acceptably, or if design changes are communicated after the production has begun. We will develop a significant portion of our merchandise in conjunction with third-party apparel manufacturers. In some cases, we select merchandise directly from these manufacturers’ lines. We do not have long-term contracts with any third party manufacturers and will purchase all of the merchandise from such manufacturers by purchase order. Furthermore, we may receive in the future, shipments of products from third-party apparel manufacturers that fail to conform to our quality control standards. In such events, unless we are able to obtain replacement products in a timely manner, we may lose sales. We cannot assure you that third party manufacturers (1) will not supply similar products to our competitors, (2) will not stop supplying products to us completely or, 3) will supply products that satisfy our quality control standards. In addition, certain of our third party manufacturers will store our raw materials. In the event our inventory was damaged or destroyed and we were unable to obtain replacement raw materials, our ability to generate earnings may be negatively impacted. In addition, if we decide to change a key element of the design after the manufacturing process has begun we may negatively impact the manufacturer's ability to deliver the products on a timely basis, which could impact our ability to generate earnings.

Our success depends on our ability to attract and retain key employees in order to support our existing business and future expansion. We are actively recruiting qualified candidates to fill key executive positions within the Company. There is substantial competition for experienced personnel, which we expect to continue. We will compete for experienced personnel with companies who have substantially greater financial resources than we do. If we fail to attract, motivate and retain qualified personnel, it could harm our business and limit our ability to expand. In addition, we depend upon the expertise and execution of our key employees, particularly Jared Gold, the founder, Chairman of the Board, and Chief Executive Officer of Dark Dynamite, Inc. We do not maintain insurance policies on any of our employees. If we lose the services of Mr. Gold, or any key officers or employees, it could harm our business and results of operations.

We face significant competition in the retail and apparel industry, which could harm our sales and profitability. The retail and apparel industries are highly competitive and are characterized by low barriers to entry. We expect competition in our markets to increase. The primary competitive factors in our markets are: brand name recognition, sourcing strategies, product styling, quality, presentation and pricing, timeliness of product development and delivery, customer service, and convenience. We compete with specialty store retailers, business to consumer websites, off-price retailers and direct marketers for, among other things, raw materials, market share, finished goods, sourcing and personnel. Because many of these competitors are larger and have substantially greater financial, distribution and marketing resources than we do, we may lack the resources to adequately compete with them. If we fail to compete in any way, it could harm our business, financial condition, and future results of operations.

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Purchases of the merchandise we sell are generally discretionary and are therefore particularly susceptible to economic slowdowns. If current economic conditions do not improve, our business, financial condition, and results of operations could be adversely affected. Consumers are generally more willing to make discretionary purchases, including purchases of fashion products and high-end home products, during periods in which favorable economic conditions prevail.

If we are not able to successfully protect our intellectual property, our ability to capitalize on the value of our brand name may be impaired. Even though we intend to take actions to establish, register and protect our trademarks and other proprietary rights, we cannot assure you that we will be successful, or that others will not imitate our products or infringe upon our intellectual property rights. In addition, we cannot assure you that others will not resist or seek to block the sale of our products as infringements of their trademark and proprietary rights. We are seeking to register our trademarks in targeted markets. In some of these markets, obstacles exist that may prevent us from obtaining a trademark for the Black Chandelier or Dark Dynamite names or related names. Furthermore, in some jurisdictions, despite successful registration of our trademarks, third parties may allege infringement and bring actions against us.

If an independent manufacturer violates labor or other laws, or is accused of violating any such laws, or if their labor practices diverge from those generally accepted as ethical, it could harm our business and brand image. While all manufacturers are contractually required to comply with such labor practices, we cannot control the actions or public perception of such manufacturers, nor can we assure that these manufacturers will conduct their businesses using ethical or legal labor practices. Apparel companies can be held jointly liable for the wrongdoings of the manufacturers of their products. While we do not control their employee's employment conditions or the manufacturer's business practices, and the manufacturers act in their own interest, they may act in a manner that results in a negative public perception of us and/or employee allegations or court determinations that we are jointly liable for such improper practices.

The issuance of additional shares under S-8 may impair the value of the Company’s stock because of significant dilution. The most significant risk relating to our business is the dilution of the Company’s common stock, as the Company at this time is relying heavily on the issuance of S-8 shares of its common stock to pay its advisors and employees.

ITEM 3. CONTROLS AND PROCEDURES

On June 30, 2005, DDI’s Chief Executive Officer and Chief Financial Officer made an evaluation of DDI’s disclosure controls and procedures. In that person's opinion, the disclosure controls and procedures are effective and adequate because the systems of controls and procedures are designed to assure, among other items, that 1) recorded transactions are valid; 2) valid transactions are recorded; and 3) transactions are recorded in the proper period in a timely manner to produce financial statements which present fairly the financial condition, results of operations and cash flows for the respective periods being presented. Moreover, the evaluation did not reveal any significant deficiencies or material weaknesses in DDI’s disclosure controls and procedures.

There have been no significant changes in DDI’s internal controls or in other factors that could significantly affect these controls since the last evaluation.

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PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Securities and Exchange Commission v. David M. Wolfson, et al. On October 16, 2004 a civil complaint was filed by the Securities and Exchange Commission in which Dark Dynamite, Inc. was named as a respondent. The Company’s former president Gino Carlucci was also named as a respondent. The suit was filed in the United States District Court for the District of Utah and bears the docket number 2:03CV00914DAK and the style of the case is: “Securities and Exchange Commission v. David M. Wolfson; NuWay Holdings, Inc., a Nevada corporation; Momentous Group, LLC, a Utah limited liability company; Leeward Consulting Group, LLC, a Utah limited liability company; Sukumo Limited, a company incorporated in the British Virgin Islands (a.k.a. Sukumo Group, Ltd., Fujiwara Group, First Chartered Capital Corporation, First Colonial Trust, First China Capital and International Investment Holding); Michael Sydney Newman (A.K.A. Marcus Wiseman); Stem Genetics, Inc., a Utah corporation; Howard H. Robertson; Gino Carlucci; G & G Capital, LLC an Arizona and Utah limited liability company; F10 Oil and Gas Properties, Inc.; Jon H. Marple; Mary E. Blake; Jon R. Marple; Grateful Internet Associates, LLC, a Colorado limited liability company; Diversified Financial Resources Corporation, a Delaware corporation; John Chapman; Valesc Holdings, Inc., a New Jersey corporation; Jeremy D. Kraus; Samuel Cohen; Dark Dynamite, Inc., a Nevada corporation. The complaint alleges that the Company failed to accurately and fully disclose the nature of its relationship to The Sukumo Group, Inc., including the failure of Sukumo to complete the purchase of the shares and alleges that Sukumo acted as a selling agent for NCIH. The complaint also faults The Sukumo Group Inc.’s actions with regard to the sale of common stock to off shore purchasers for failing to disclose the interest that Sukumo had in each sale, reporting that it was taking a 1-2% commission on the sale rather than keeping 70% or more of the proceeds of each transaction. The Company has agreed to terms of settlement with the SEC, subject to final approval by the full Commission, providing for a cash payment in the sum of $30,000 to the SEC and the entry of consent decree prohibiting any future violations of the securities laws and regulations. Additional financial information in support of the settlement has been requested by the SEC and is expected to be supplied shortly after the filing of this quarterly report.

Allen E. Weintraub vs. Dark Dynamite, Inc. f/k/a Vector Holdings Corporation, a Nevada Corporation, Jared D. Gold, Richard D. Surber and Greentree Financial Group, Inc., a Florida Corporation d/b/a Bongiovanni & Associates. This case was filed in the United States District Court, Southern District of Florida, and bears the Case No: 05-20384.

Allen E. Weintraub sold control of the Corporation to Diversified Holdings, Inc., and thereafter, falsely claimed he had a secured interest in the unissued stock of the Company, arising out of contractual obligations pursuant to the Stock Exchange Agreement whereby he transferred control. This Complaint is based upon fraudulent documents that Mr. Weintraub alleges create additional debts and obligations which have been made the subject of both this case and the following litigation pending in the state of Utah. This case also raises the same issues filed in a prior state suit in Florida that was dismissed by Mr. Weintraub immediately prior to a hearing on the Company’s motion to dismiss the claims. Plaintiffs have filed a Motion to Dismiss this suit. A hearing date on the Motion is pending.

Dark Dynamite, Inc., a Nevada corporation, and Diversified Holdings, Inc.(“DHI”), a Utah corporation vs. Allen E. Weintraub, an individual, and Miami Venture Capital, Inc., a Florida corporation. This case was filed in the Third District Court of Salt Lake County, Utah, and bears the Case Number: 050905249 The Company has filed suit against Mr. Weintraub for breach of contract with respect to matters incidental to the sale of Dark Dynamite, including fraud for failure to disclose numerous liabilities of the Company prior to its sale to DHI, and his tortuous interference in the Company’s business operations. The Company also is seeking an injunction against Weintraub and all related entities in an effort to put a stop to this tortuous interference and claims based upon his fraudulent actions.

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ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

Subsequent Event:

On July 22, 2005 200,000 restricted shares of the Company’s common stock was issued to Diversified Holdings I, Inc. in exchange for a cash investment of $4,002. The shares were issued in a private transaction pursuant to Section 4(2) of the Securities Act of 1933. Richard Surber is the President of Diversified Holdings I, Inc. he is the holder or beneficial owner of 5,000,000 shares of the Company’s preferred stock.

ITEM 5. OTHER INFORMATION

During the quarter ended June 30, 2005 the company has not issued any shares or options to purchase shares pursuant to its’ S-8 Registration Statement to any person.

Subsequent Events

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(1)	Exhibits: Exhibits required to be attached by Item 601 of Regulation S-B are listed in the Index to Exhibits Beginning on page 8 of this Form 10-QSB, which is incorporated herein by reference.

Reports on Form 8-K filed subsequent to the end of the quarter

(1)

On July 29, 2005 the Company filed an 8-K report under Item 3.02, Unregistered Sales of Equity Securities reporting that the company had issued 200,000 restricted shares of the Company’s common stock to Diversified Holdings I, Inc. in exchange for a cash investment in the sum of $4,002. The restricted shares were issued in a private transaction pursuant to Section 4(2) of the Securities Act of 1933.

(2)	On August 17, 2005, the Company filed an 8-K report under Item 1.01, Entry into a Material Definitive Agreement reporting that the Company and its majority shareholder had entered into a binding Letter of Intent to transfer 4,990,000 shares of the Company’s preferred stock.

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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, there unto duly authorized.

DARK DYNAMITE, INC.

Date: August 22, 2005 /s/ Jared Gold

Jared Gold

CEO, CFO and Director

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INDEX TO EXHIBITS

Exhibit Page

No.	No.	Description
3(i)	*	Articles of Incorporation of the Company as amended and bylaws are herein incorporated by reference from the Company’s Form S-3 filed December 22, 1995.
3(i)	*	Articles of Incorporation of the Company as amended and incorporated by reference from the Company’s Form 8-K filed May 7, 2004.
3(i)	*	Articles of Incorporation of the Company as amended and incorporated by reference from the Company’s Schedule 14C filed May 27, 2004.
Material Contracts
10 (x)	*	Commercial Lease
10(xi)	*	Sales Agreement between Black Chandelier and Belle Sales dated March 11, 2005, for the Los Angeles showroom market, participation fee is $300 per month. Incorporated by reference from the 10-KSB of DDI for the period ended December 31, 2004.
10(xii)	*	Letter of Agreement between Dark Dynamite and MAO Public Relations dated April 1, 2005. Monthly compensation fee is $1,200. Incorporated by reference from the 10-KSB of DDI for the period ended December 31, 2004.
10(xiii)	15	Letter of Intent, Dated August 15, 2005 between Dark Dynamite, Inc. Richard Surber, Shanxi Kai Da Lv You Gu Wen You Xian Gong Si, Xian Yan Ke and Wei Ping Lei for the sale of 4,990,000 shares of the preferred stock of Dark Dynamite, Inc.
31.1	16	Certification of Chief Executive Officer and Chief Financial Officer.
32.1	17	Statement required by 18 U.S.C. Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002.