SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Amendment No. 1 to
FORM 10-K
(Mark One)
| x | ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal year ended October 31, 2008
| o | TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from ___________ to ___________
Commission File No. 333-149235
MOONSHINE CREATIONS, INC.
(Name of small business issuer in its charter)
| NEVADA | 26-0745273 |
(State or other jurisdiction of incorporation or organization) | (IRS Employer Identification No.) |
160 Henry Martin Trail Statesville, NC | 28625 |
| (Address of principal executive offices) | (Zip Code) |
(704)-592-2622
(Registrant’s telephone number, including area code)
| Securities registered under Section 12(b) of the Exchange Act: | |
| Title of each class registered: | Name of each exchange on which registered: |
| None | None |
| Securities registered under Section 12(g) of the Exchange Act: | |
Common Stock, par value $.00001 (Title of class) | |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes xNo o
Indicate by check mark whether the registrant is a shell company as defined in Rule 12b-2 of the Exchange Act. Yes xNo o
Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-B not contained in this form, and no disclosure will be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer o Accelerated filer o
Non-accelerated filer o Smaller reporting company x
(Do not check if a smaller reporting company)
Revenues for year ended October 31, 2008: $0
Aggregate market value of the voting common stock held by non-affiliates of the registrant as of October 31, 2008, was: $0
Number of shares of the registrant’s common stock outstanding as of December 23, 2008 was: 5,635,500
Transitional Small Business Disclosure Format: Yes x No o
TABLE OF CONTENTS
PART I | ||
ITEM 1. | 1 | |
ITEM 2. | 2 | |
ITEM 3. | 2 | |
ITEM 4. | 3 | |
PART II | 3 | |
ITEM 5. | 3 | |
ITEM 6. | 3 | |
ITEM 7. | 3 | |
ITEM 7A. | 4 | |
ITEM 8. | F- | |
ITEM 9. | 5 | |
ITEM 9A. | 5 | |
PART III | 6 | |
ITEM 10. | 6 | |
ITEM 11. | 7 | |
ITEM 12. | 8 | |
ITEM 13. | 8 | |
ITEM 14. | 8 | |
PART IV | 9 | |
ITEM 15. | 9 | |
SIGNATURES | 10 |
PART I
General
We were formed in April 2007. Our plan is to create an online craft store which will focus on one of a kind craft items made in the southeast United States. We intend to contact artisans and display their items on our website; earning commissions on each sale for our services. We intend to provide marketing, payment services including taxation, as well as customer service in connection with each sale made on our website. Once a sale has been made we will notify the artisan of the sale and arrange for the shipping. Initially, the artists will be contacted and the website will be maintained by our President, Ms. Victoria Callanan. Ms. Callanan intends to hire additional assistants and representatives as our client base expands.
Marketing
We plan to utilize different channels for our marketing. We intend for our website to be promoted by web placement services for example, Google Adwords and www.1-2-3webposition.com. We also intend to promote our website by advertising in magazines such as Southern Living, Cottage Living, Cottage Home, Better Homes and Gardens and various other small regional publications. We also plan to set up booths at craft fairs and pass out information inviting guest to visit our website. We intend to further promote our website using a grass roots method by utilizing Craft Blogs, www.myspace.com, www.facebook.com, and www.bizfriends.com.
Website
Currently our website is being developed under the domain name moonshinecreationsinc.com. We believe the development cost of our site will be $15,000 and the cost for hosting will be $350 per month and we intend to use the proceeds from the offering which we completed in January 2008 to meet these costs. We intend for our website to use Flash and High resolution photos as well as possess the capability to show short videos of variously featured craft items. Our website will be updated on a daily basis to reflect current inventories.
On our website, all of the craft items will be broken down into different categories according to the craft medium. For example: pottery, glass, jewelry, home accessories, stationary, wood, leather, metal, outdoor items and other categories as well. The website will also have a shopping cart allowing customers to purchase more than one item at a time. All items will have descriptions and high resolution photos and certain designated items will have a short video. In addition, we also plan to have a section featuring different artist’s profile and their specialty items. Also, there will be a secure log-on section where artisans can access detailed information related to their craft.
Competition
Our business will put us in direct competition with craft fairs, existing craft websites, individual artisans who have websites and mega websites. There are many craft fairs in the southeast including but not limited to National Gospel & Harvest Celebration, North Carolina Seafood Festival, Red River Revel Arts Festival, The Cotton Pickin’ Fair, and Gasparilla. These fairs offer a variety of exhibitors depending on the individual fairs. Some of the existing craft websites are craftsfaironline.com, thecountrygallery.net, craftsolutions.com and indianchild.com. All of these websites provide a variety of services. In addition to the existing craft websites there are individual artisans that will have their own websites.
Our business office is located at Moonshine Creations, Inc., 160 Henry Martin Trail, Statesville, NC 28625.
We are not presently parties to any litigation, nor to our knowledge and belief is any litigation threatened or contemplated.
-1-
None.
PART II
There is presently no public market for our shares of common stock. We anticipate applying for trading of our common stock on the Over the Counter Bulletin Board. However, we can provide any assurance that our shares of common stock will be traded on the Bulletin Board or, if traded, that a public market will materialize.
Holders of Our Common Stock
As of December 23, 2008, we had 40 shareholders of our common stock.
Stock Option Grants
To date, we have not granted any stock options.
Registration Rights
We have not granted registration rights to the selling shareholders or to any other persons.
Not applicable.
Plan of Operation
Moonshine Creations, Inc. was incorporated in the State of Nevada on April 10, 2007. Our plan is to create an online craft store. We will focus on one of a kind and unique craft items made in the southeast United States. Moonshine creations will locate and contact the artisans and explain the opportunity of displaying their items on our website. We will receive commissions for our website service. We will provide the marketing, receive payments, be responsible for the taxes and provide the customer service. We will then notify the artisan of the sale and arrange for the shipping. Initially, the artist will be contacted and the website will be maintained by our President, Ms. Victoria Callanan. Ms. Callanan intends to hire additional assistants and representatives as our client base expands.
Due to our inability to obtain adequate financing in our inability to sucessfully implement our business plan, we feel that it is necessary for us to cease operations and actively pursue a potential reverse merger candidate.
-2-
Results of Operation
We did not have any operating income from inception through October 31, 2008. For the year ended October 31, 2008, the company recognized a net loss of $65,979 and for the period from inception through October 31, 2008, the company recognized net loss of $73,619. Expenses for the year ended October 31, 2008 were comprised of $53,579 in administrative costs, $10,000 in salary, and $2,400 in rent.
Liquidity and Capital Resources
As of October 31, 2008, we had $106 in cash.
We believe we can not satisfy our cash requirements for the next twelve months with our current cash. If we are unable to satisfy our cash requirements we may be unable to proceed with our plan of operations. We do not anticipate the purchase or sale of any significant equipment. We also do not expect any significant additions to the number of employees. The foregoing represents our best estimate of our cash needs based on current planning and business conditions. In the event we are not successful in reaching our initial revenue targets, additional funds may be required, and we may not be able to proceed with our business plan for the development and marketing of our core services. Should this occur, we will suspend or cease operations.
We anticipate that depending on market conditions and our plan of operations, we may incur operating losses in the foreseeable future. Therefore, our auditors have raised substantial doubt about our ability to continue as a going concern.
We are still pursuing this plan but to date we have not been able to raise additional funds through either debt or equity offerings. Without this additional cash we have been unable to pursue our plan of operations and commence generating revenue. We believe that we may not be able to raise the necessary funds to continue to pursue our business operations. As a result of the foregoing, we have recently begun to explore our options regarding the development of a new business plan and direction. We are currently engaged in discussions with a company regarding the possibility of a reverse triangular merger (the “Merger”) involving our company. At this stage, no definitive terms have been agreed to, and neither party is currently bound to proceed with the Merger.
Critical Accounting Policies
Our financial statements and related public financial information are based on the application of accounting principles generally accepted in the United States (“GAAP”). GAAP requires the use of estimates; assumptions, judgments and subjective interpretations of accounting principles that have an impact on the assets, liabilities, revenues and expense amounts reported. These estimates can also affect supplemental information contained in our external disclosures including information regarding contingencies, risk and financial condition. We believe our use if estimates and underlying accounting assumptions adhere to GAAP and are consistently and conservatively applied. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ materially from these estimates under different assumptions or conditions. We continue to monitor significant estimates made during the preparation of our financial statements.
Recent Accounting Pronouncements
In December 2007, the Financial Accounting Standards Board (FASB) issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements – an amendment of ARB No. 51”. This statement improves the relevance, comparability, and transparency of the financial information that a reporting entity provides in its consolidated financial statements by establishing accounting and reporting standards that require; the ownership interests in subsidiaries held by parties other than the parent and the amount of consolidated net income attributable to the parent and to the noncontrolling interest be clearly identified and presented on the face of the consolidated statement of income, changes in a parent’s ownership interest while the parent retains its controlling financial interest in its subsidiary be accounted for consistently, when a subsidiary is deconsolidated, any retained noncontrolling equity investment in the former subsidiary be initially measured at fair value, entities provide sufficient disclosures that clearly identify and distinguish between the interests of the parent and the interests of the noncontrolling owners. SFAS No. 160 affects those entities that have an outstanding noncontrolling interest in one or more subsidiaries or that deconsolidate a subsidiary. SFAS No. 160 is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008. Early adoption is prohibited. The adoption of this statement is not expected to have a material effect on the Company's financial statements.
In March 2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities, an amendment of FASB Statement No. 133” (SFAS 161). This statement is intended to improve transparency in financial reporting by requiring enhanced disclosures of an entity’s derivative instruments and hedging activities and their effects on the entity’s financial position, financial performance, and cash flows. SFAS 161 applies to all derivative instruments within the scope of SFAS 133, “Accounting for Derivative Instruments and Hedging Activities” (SFAS 133) as well as related hedged items, bifurcated derivatives, and nonderivative instruments that are designated and qualify as hedging instruments. Entities with instruments subject to SFAS 161 must provide more robust qualitative disclosures and expanded quantitative disclosures. SFAS 161 is effective prospectively for financial statements issued for fiscal years and interim periods beginning after November 15, 2008, with early application permitted. We are currently evaluating the disclosure implications of this statement.
-3-
In May 2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted Accounting Principles.” SFAS No. 162 identifies the sources of accounting principles and provides entities with a framework for selecting the principles used in preparation of financial statements that are presented in conformity with GAAP. The current GAAP hierarchy has been criticized because it is directed to the auditor rather than the entity, it is complex, and it ranks FASB Statements of Financial Accounting Concepts, which are subject to the same level of due process as FASB Statements of Financial Accounting Standards, below industry practices that are widely recognized as generally accepted but that are not subject to due process. The Board believes the GAAP hierarchy should be directed to entities because it is the entity (not its auditors) that is responsible for selecting accounting principles for financial statements that are presented in conformity with GAAP. SFAS 162 is effective 60 days following the SEC’s approval of PCAOB Auditing Standard No. 6, Evaluating Consistency of Financial Statements (AS/6). The adoption of FASB 162 is not expected to have a material impact on the Company’s financial position.
In May 2008, the FASB issued SFAS No. 163, “Accounting for Financial Guarantee Insurance Contracts-an interpretation of FASB Statement No. 60.” Diversity exists in practice in accounting for financial guarantee insurance contracts by insurance enterprises under FASB Statement No. 60, Accounting and Reporting by Insurance Enterprises. This results in inconsistencies in the recognition and measurement of claim liabilities. This Statement requires that an insurance enterprise recognize a claim liability prior to an event of default (insured event) when there is evidence that credit deterioration has occurred in an insured financial obligation. This Statement requires expanded disclosures about financial guarantee insurance contracts. The accounting and disclosure requirements of the Statement will improve the quality of information provided to users of financial statements. SFAS 163 is effective for financial statements issued for fiscal years beginning after December 15, 2008, and interim periods within those fiscal years. The adoption of FASB 163 is not expected to have a material impact on the Company’s financial position.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements.
Market risk is the risk of loss from adverse changes in market prices and interest rates. We do not have substantial operations at this time so they are not susceptible to these market risks. If, however, they begin to generate substantial revenue, their operations will be materially impacted by interest rates and market prices.
-4-
MOONSHINE CREATIONS, INC.
(A DEVELOPMENT STAGE COMPANY)
CONTENTS
| PAGE | F-1 | REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM |
PAGE | F-2 | BALANCE SHEETS |
| PAGE | F-3 | STATEMENTS OF OPERATIONS |
| PAGE | F-4 | STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIENCY) |
| PAGE | F-5 | STATEMENTS OF CASH FLOWS |
| PAGES | F-6 - F-9 | NOTES TO FINANCIAL STATEMENTS. |
 | Webb & Company, P.A. |
| Certified Public Accountants |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors of:
Moonshine Creations, Inc.
(A Development Stage Company)
We have audited the accompanying balance sheets of Moonshine Creations, Inc. (A Development Stage Company) as of October 31, 2008 and 2007 and the related statements of operations, changes in stockholders' equity/deficiency and cash flows for the year then ended October 31, 2008 and the period from April 10, 2007 (inception) to October 31, 2007 and the period from April 10, 2007 (inception) to October 31, 2008. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly in all material respects, the financial position of Moonshine Creations, Inc. (A Development Stage Company) as of October 31, 2008 and 2007 and the results of its operations and its cash flows for the year then ended October 31, 2008 and the period from April 10, 2007 (inception) to October 31, 2007 and the period from April 10, 2007 (inception) to October 31, 2008 in conformity with accounting principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company is in the development stage with no revenue, used cash in operations of $56,439 for the year ended October 31, 2008, a working capital deficiency of $1,029 as of October 31, 2008, and a net loss since inception of $73,619. These factors raise substantial doubt about the Company's ability to continue as a going concern. Management's plans concerning these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ Webb & Company, P.A.
WEBB & COMPANY , P.A.
Certified Public Accountants
Boynton Beach, Florida
December 17, 2008
Telephone: (561) 752-1721 • Fax: (561) 734-8562
www.cpawebb.com
F-1
| Moonshine Creations, Inc. | ||||||||
| (A Development Stage Company) | ||||||||
| Balance Sheets | ||||||||
| ASSETS | ||||||||
| October 31, 2008 | October 31, 2007 | |||||||
| Current Assets | ||||||||
| Cash | $ | 106 | $ | 39,500 | ||||
| Prepaid expense | 3,260 | - | ||||||
| Total Assets | $ | 3,366 | $ | 39,500 | ||||
| LIABILITIES AND STOCKHOLDERS' EQUITY/(DEFICIENCY) | ||||||||
| Current Liabilities | ||||||||
| Accounts payable | $ | 400 | $ | - | ||||
| Note payable- related party | 3,995 | 1,000 | ||||||
| Total Liabilities | 4,395 | 1,000 | ||||||
| Commitments and Contingencies | - | - | ||||||
| Stockholders' Equity/(Deficiency) | ||||||||
| Preferred stock, $0.00001 par value, 10,000,000 shares authorized, | ||||||||
| none issued and outstanding | - | - | ||||||
| Common stock, $0.00001 par value, 100,000,000 shares authorized, | ||||||||
| 5,635,500 and 5,395,000 shares issued and outstanding, respectively | 56 | 54 | ||||||
| Additional paid-in capital | 72,584 | 46,136 | ||||||
| Subscriptions Receivable | (50 | ) | (50 | ) | ||||
| Deficit accumulated during development stage | (73,619 | ) | (7,640 | ) | ||||
| Total Stockholders' Equity/(Deficiency) | (1,029 | ) | 38,500 | |||||
| Total Liabilities and Stockholders' Equity/(Deficiency) | $ | 3,366 | $ | 39,500 | ||||
See accompanying notes to financial statements.
F-2
| Moonshine Creations, Inc. | ||||||||||||
| (A Development Stage Company) | ||||||||||||
| Statements of Operations | ||||||||||||
| For the Year | For the period from April 10, 2007 | For the period from April 10, 2007 | ||||||||||
Ended October 31, 2008 | (inception) to October 31, 2007 | (inception) to October 31, 2008 | ||||||||||
| Operating Expenses | ||||||||||||
| General and administrative | $ | 53,579 | $ | 1,000 | $ | 54,579 | ||||||
| Salary expense | 10,000 | 5,533 | 15,533 | |||||||||
| Rent | 2,400 | 1,107 | 3,507 | |||||||||
| Total Operating Expenses | 65,979 | 7,640 | 73,619 | |||||||||
| LOSS FROM OPERATIONS BEFORE INCOME TAXES | (65,979 | ) | (7,640 | ) | (73,619 | ) | ||||||
| Provision for Income Taxes | - | - | - | |||||||||
| NET LOSS | $ | (65,979 | ) | $ | (7,640 | ) | $ | (73,619 | ) | |||
| Net Loss Per Share - Basic and Diluted | $ | (0.01 | ) | $ | (0.00 | ) | ||||||
| Weighted average number of shares outstanding | ||||||||||||
| during the year/period - Basic and Diluted | 5,604,267 | 2,530,025 | ||||||||||
See accompanying notes to financial statements.
F-3
| Moonshine Creations, Inc. | ||||||||||||||||||||||||||||||||
| (A Development Stage Company) | ||||||||||||||||||||||||||||||||
| Statement of Changes in Stockholders' Equity(Deficiency) | ||||||||||||||||||||||||||||||||
| For the period from April 10, 2007 (Inception) to October 31, 2008 | ||||||||||||||||||||||||||||||||
| Deficit | ||||||||||||||||||||||||||||||||
| Preferred Stock | Common stock | Additional | accumulated during | Total Stockholder's | ||||||||||||||||||||||||||||
| paid-in | development | Subscription | Equity/ | |||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | capital | stage | Receivable | (Deficiency) | |||||||||||||||||||||||||
| Balance April 10, 2007 | - | $ | - | - | $ | - | $ | - | $ | - | $ | - | $ | - | ||||||||||||||||||
| Common stock issued for services to founder ($0.00001) | 5,000,000 | 50 | (50 | ) | - | |||||||||||||||||||||||||||
| Common stock issued for cash ($0.10/ per share) | 395,000 | 4 | 39,496 | 39,500 | ||||||||||||||||||||||||||||
| In kind contribution of services | 5,533 | 5,533 | ||||||||||||||||||||||||||||||
| In kind contribution of office space | 1,107 | 1,107 | ||||||||||||||||||||||||||||||
| Net loss for the period April 10, 2007 (inception) to October 31, 2007 | (7,640 | ) | (7,640 | ) | ||||||||||||||||||||||||||||
| Balance, October 31, 2007 | - | - | 5,395,000 | 54 | 46,136 | (7,640 | ) | (50 | ) | 38,500 | ||||||||||||||||||||||
| Common stock issued for cash ($0.10/ per share), net of offering costs of $10,000 | 240,500 | 2 | 14,048 | 14,050 | ||||||||||||||||||||||||||||
| In kind contribution of services | 10,000 | 10,000 | ||||||||||||||||||||||||||||||
| In kind contribution of office space | 2,400 | 2,400 | ||||||||||||||||||||||||||||||
| Net loss for the year ended October 31, 2008 | - | - | - | - | - | (65,979 | ) | - | (65,979 | ) | ||||||||||||||||||||||
| Balance, October 31, 2008 | - | $ | - | 5,635,500 | $ | 56 | $ | 72,584 | $ | (73,619 | ) | $ | (50 | ) | $ | (1,029 | ) | |||||||||||||||
See accompanying notes to financial statements.
F-4
| Moonshine Creations, Inc. | ||||||||||||
| (A Development Stage Company) | ||||||||||||
| Statements of Cash Flows | ||||||||||||
| For the Year | For the Period from April 10, 2007 | For the Period from April 10, 2007 | ||||||||||
Ended October 31, 2008 | (Inception) to October 31, 2007 | (Inception) to October 31, 2008 | ||||||||||
| Cash Flows Used in Operating Activities: | ||||||||||||
| Net Loss | $ | (65,979 | ) | $ | (7,640 | ) | $ | (73,619 | ) | |||
| Adjustments to reconcile net loss to net cash used in operations | ||||||||||||
| In-kind contribution of office expenses | 2,400 | 1,107 | 3,507 | |||||||||
| In-kind contribution of services | 10,000 | 5,533 | 15,533 | |||||||||
| Changes in operating assets and liabilities: | ||||||||||||
| Increase (Decrease) in prepaid expense | (3,260 | ) | (3,260 | ) | ||||||||
| Increase (Decrease) in accounts payable | 400 | 400 | ||||||||||
| Net Cash Used In Operating Activities | (56,439 | ) | (1,000 | ) | (57,439 | ) | ||||||
| Cash Flows From Financing Activities: | ||||||||||||
| Proceeds from issuance of common stock | 14,050 | 39,500 | 53,550 | |||||||||
| Proceeds from note payable- related party | 2,995 | 1,000 | 3,995 | |||||||||
| Net Cash Provided by Financing Activities | 17,045 | 40,500 | 57,545 | |||||||||
| Net Increase/(Decrease) in Cash | (39,394 | ) | 39,500 | 106 | ||||||||
| Cash at Beginning of Year/Period | 39,500 | - | - | |||||||||
| Cash at End of Year/Period | $ | 106 | $ | 39,500 | $ | 106 | ||||||
| Supplemental disclosure of cash flow information: | ||||||||||||
| Cash paid for interest | $ | - | $ | - | $ | - | ||||||
| Cash paid for taxes | $ | - | $ | - | $ | - | ||||||
See accompanying notes to financial statements.
F-5
MOONSHINE CREATIONS, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
AS OF OCTOBER 31, 2008 and 2007
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ORGANIZATION
(A) Organization
Moonshine Creations, Inc. (a development stage company) (the “Company”) was incorporated under the laws of the State of Nevada on April 10, 2007. The Company was organized to create an online craft store focusing on one of a kind and unique craft items made in the southeastern United States. Activities during the development stage include developing the business plan and raising capital.
(B) Use of Estimates
In preparing financial statements in conformity with generally accepted accounting principles, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the reported period. Actual results could differ from those estimates.
(C) Cash and Cash Equivalents
For purposes of the cash flow statements, the Company considers all highly liquid investments with original maturities of three months or less at the time of purchase to be cash equivalents.
F-6
MOONSHINE CREATIONS, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
AS OF OCTOBER 31, 2008 and 2007
(D) Income Taxes
The Company accounts for income taxes under the Statement of Financial Accounting Standards No. 109, “Accounting for Income Taxes” (“Statement 109”). Under Statement 109, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under Statement 109, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
As of October 31, 2008, the Company has a net operating loss carryforward of $54,579 available to offset future taxable income through 2028. The valuation allowance at October 31, 2008 was $21,042. The net change in valuation allowance for the period ended October 31, 2008 was an increase of $20,702.
(E) Loss Per Share
Basic and diluted net loss per common share is computed based upon the weighted average common shares outstanding as defined by Financial Accounting Standards No. 128, “Earnings Per Share.” As of October 31, 2008 and 2007, there were no common share equivalents outstanding.
(F) Business Segments
The Company operates in one segment and therefore segment information is not presented.
(G) Revenue Recognition
Revenue from support services is recognized when earned and realizable, which is when persuasive evidence of an arrangement exists, services, if requested by the customers, have been rendered and are determinable, and collectability is reasonably assured. Revenue from telephone support service contracts is recognized as the services are provided, determined on an hourly basis.
(H) Reclassification
Certain 2007 balances have been reclassified to conform with 2008 presentation.
(I) Recent Accounting Pronouncements
In December 2007, the Financial Accounting Standards Board (FASB) issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements – an amendment of ARB No. 51”. This statement improves the relevance, comparability, and transparency of the financial information that a reporting entity provides in its consolidated financial statements by establishing accounting and reporting standards that require; the ownership interests in subsidiaries held by parties other than the parent and the amount of consolidated net income attributable to the parent and to the noncontrolling interest be clearly identified and presented on the face of the consolidated statement of income, changes in a parent’s ownership interest while the parent retains its controlling financial interest in its subsidiary be accounted for consistently, when a subsidiary is deconsolidated, any retained noncontrolling equity investment in the former subsidiary be initially measured at fair value, entities provide sufficient disclosures that clearly identify and distinguish between the interests of the parent and the interests of the noncontrolling owners. SFAS No. 160 affects those entities that have an outstanding noncontrolling interest in one or more subsidiaries or that deconsolidate a subsidiary. SFAS No. 160 is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008. Early adoption is prohibited. The adoption of this statement is not expected to have a material effect on the Company's financial statements.
F-7
MOONSHINE CREATIONS, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
AS OF OCTOBER 31, 2008 and 2007
In March 2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities, an amendment of FASB Statement No. 133” (SFAS 161). This statement is intended to improve transparency in financial reporting by requiring enhanced disclosures of an entity’s derivative instruments and hedging activities and their effects on the entity’s financial position, financial performance, and cash flows. SFAS 161 applies to all derivative instruments within the scope of SFAS 133, “Accounting for Derivative Instruments and Hedging Activities” (SFAS 133) as well as related hedged items, bifurcated derivatives, and nonderivative instruments that are designated and qualify as hedging instruments. Entities with instruments subject to SFAS 161 must provide more robust qualitative disclosures and expanded quantitative disclosures. SFAS 161 is effective prospectively for financial statements issued for fiscal years and interim periods beginning after November 15, 2008, with early application permitted. We are currently evaluating the disclosure implications of this statement.
In May 2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted Accounting Principles.” SFAS No. 162 identifies the sources of accounting principles and provides entities with a framework for selecting the principles used in preparation of financial statements that are presented in conformity with GAAP. The current GAAP hierarchy has been criticized because it is directed to the auditor rather than the entity, it is complex, and it ranks FASB Statements of Financial Accounting Concepts, which are subject to the same level of due process as FASB Statements of Financial Accounting Standards, below industry practices that are widely recognized as generally accepted but that are not subject to due process. The Board believes the GAAP hierarchy should be directed to entities because it is the entity (not its auditors) that is responsible for selecting accounting principles for financial statements that are presented in conformity with GAAP. SFAS 162 is effective 60 days following the SEC’s approval of PCAOB Auditing Standard No. 6, Evaluating Consistency of Financial Statements (AS/6). The adoption of FASB 162 is not expected to have a material impact on the Company’s financial position.
In May 2008, the FASB issued SFAS No. 163, “Accounting for Financial Guarantee Insurance Contracts-an interpretation of FASB Statement No. 60.” Diversity exists in practice in accounting for financial guarantee insurance contracts by insurance enterprises under FASB Statement No. 60, Accounting and Reporting by Insurance Enterprises. This results in inconsistencies in the recognition and measurement of claim liabilities. This Statement requires that an insurance enterprise recognize a claim liability prior to an event of default (insured event) when there is evidence that credit deterioration has occurred in an insured financial obligation. This Statement requires expanded disclosures about financial guarantee insurance contracts. The accounting and disclosure requirements of the Statement will improve the quality of information provided to users of financial statements. SFAS 163 is effective for financial statements issued for fiscal years beginning after December 15, 2008, and interim periods within those fiscal years. The adoption of FASB 163 is not expected to have a material impact on the Company’s financial position.
NOTE 2 GOING CONCERN
As reflected in the accompanying financial statements, the Company is in the development stage with no revenue, used cash in operations for the year ended October 31, 2008 of $56,439, a working capital deficiency of $1,029 as of October 31, 2008, and a net loss since inception of $73,619. This raises substantial doubt about its ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company’s ability to raise additional capital and implement its business plan. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. In the event the Company cannot continue as a going concern, it may seek a potential take-over target and may enter into a reverse merger transaction.
NOTE 3 NOTE PAYABLE- RELATED PARTY
During 2007, a related party of the Company paid $1,000 of operating expenses on behalf of the Company.
During 2008, a related party of the Company paid an additional $2,995 of operating expenses on behalf of the Company. On October 31, 2008, the Company converted the total amount of $3,995 owed into a note payable The $3,995 includes the $1,000 from the prior year and the additional amount of $2,995 from the current year. Under the terms of the promissory note, the loan is non interest bearing and payable on demand. Upon demand, the Company has ten days to pay the amount before interest starts to accrue at a rate of 10% per annum. As of October 31, 2008, the note payable is $3,995 and is not default (See Note 5).
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MOONSHINE CREATIONS, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
AS OF OCTOBER 31, 2008 and 2007
NOTE 4 STOCKHOLDERS’ EQUITY
(A) Common Stock Issued for Cash
On July 25, 2007, the Company issued 5,000,000 shares of common stock to its founder for cash of $50 ($0.00001 per share) (See Note 5).
During the period from April 10, 2007 (Inception) to October 31, 2008 the Company issued 635,500 shares of common stock for cash of $63,550 ($.10 per share) and paid offering costs of $10,000.
(B) In-kind Contribution of Services
During the period from April 10, 2007 (Inception) to October 31, 2008 the Company’s president contributed services and office space with a fair value of $15,533 and $3,507 respectively (See Note 5).
NOTE 5 RELATED PARTY TRANSACTIONS
The president of the Company received 5,000,000 shares of common stock for cash of $50 ($0.00001 per share) (See Note 4). The president has subsequently reimbursed $50 to the company (See Note 6).
During 2007, a related party of the Company paid $1,000 of operating expenses on behalf of the Company. During 2008, this amount was converted into a related party note payable (See Note 3)
During 2008, a related party of the Company loaned the Company $2,995 to pay for operating expenses on behalf of the Company. During 2008, this amount was converted into a related party note payable (See Note 3)
During the period from April 10, 2007 (Inception) to October 31, 2008 the Company’s president contributed services and office space with a fair value of $15,533 and $3,507 respectively (See Note 4).
NOTE 6 SUBSEQUENT EVENTS
On December 10, 2008, the Company received $50 from the collection of a subscription receivable (See Note 5).
In November 2008, a related party of the Company loaned the Company $400 to pay for operating expenses on behalf of the Company.
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Our accountant is Webb & Company. P.A, independent certified public accountants. We do not presently intend to change accountants. At no time have there been any disagreements with such accountants regarding any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure.
Evaluation of disclosure controls and procedures
Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) and Rule 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended (Exchange Act), as of October 31, 2008. Based on this evaluation, our principal executive officer and principal financial officers have concluded that our disclosure controls and procedures are not effective to ensure that information required to be disclosed by us in the reports we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission’s rules based on the material weakness described below:
| - | We failed to include the Management’s Report on Internal Control Over Financial Reporting in our Form 10-K filed on December 29, 2008. |
We are developing a plan to ensure that all information will be recorded, processed, summarized and reported accurately, and as of the date of this report, we have taken the following steps to address the above-referenced material weaknesses in our internal control over financial reporting:
| 1. | We have amended the Form 10-K to include the Management’s Report on Internal Controls Over Financial Reporting; |
| 2. | We will continue to educate our management personnel to comply with the disclosure requirements of Securities Exchange Act of 1934 and Regulation S-K; and |
| 3. | We will increase management oversight of accounting and reporting functions in the future. |
MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
Management of the Company is responsible for establishing and maintaining effective internal control over financial reporting as defined in Rule 13a-15(f) under the Exchange Act. The Company’s internal control over financial reporting is designed to provide reasonable assurance to the Company’s management and Board of Directors regarding the preparation and fair presentation of published financial statements in accordance with United State’s generally accepted accounting principles (US GAAP), including those policies and procedures that: (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company, (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with US GAAP and that receipts and expenditures are being made only in accordance with authorizations of management and directors of the company, and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Management conducted an evaluation of the effectiveness of internal control over financial reporting based on the framework in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Management’s assessment included an evaluation of the design of our internal control over financial reporting and testing of the operational effectiveness of our internal control over financial reporting. Based on this assessment, Management concluded the Company maintained effective internal control over financial reporting as of October 31, 2008.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.
This annual report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the Company to provide only management’s report in this Annual Report.
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PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS: COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
We have one Director and Officer as follows:
Name | Age | Positions and Offices Held |
| Victoria Callanan | 30 | Chairman, Chief Executive Officer, Principal Accounting Officer |
Victoria Callanan, 30, President. Ms. Callanan is our founder and has served as President, Chief Executive Officer and Chairman of our Board of Directors since inception in April 2007. Since 1997 Ms. Callanan has been involved in management and the day to day operations of a small business that she co-founded. Her responsibilities include management of 10 employees, meeting customers, payroll, bookkeeping, scheduling, website creation and various other duties in a small business. In the spring of 2006 Ms. Callanan opened a gift shop featuring items from North Carolina. In this company she is responsible for marketing, locating artisans, inventory, bookkeeping, paying vender’s commissions, paying sales tax and various other tasks. Her degree is from NCSU where she studied Textile Technology, receiving a bachelors of science in textile technology with a concentration in textile design and also completing a certificate in Fashion Design from California State University in Los Angeles.
Term of Office
Our directors are appointed for a one-year term to hold office until the next annual general meeting of our shareholders or until removed from office in accordance with our bylaws. Our officers are appointed by our board of directors and hold office until removed by the board.
Audit Committee
We do not have a standing audit committee of the Board of Directors. Management has determined not to establish an audit committee at present because of our limited resources and limited operating activities do not warrant the formation of an audit committee or the expense of doing so. We do not have a financial expert serving on the Board of Directors or employed as an officer based on management’s belief that the cost of obtaining the services of a person who meets the criteria for a financial expert under Item 401(e) of Regulation S is beyond its limited financial resources and the financial skills of such an expert are simply not required or necessary for us to maintain effective internal controls and procedures for financial reporting in light of the limited scope and simplicity of accounting issues raised in its financial statements at this stage of its development.
Certain Legal Proceedings
No director, nominee for director, or executive officer of the Company has appeared as a party in any legal proceeding material to an evaluation of his ability or integrity during the past five years.
Compliance With Section 16(A) Of The Exchange Act.
Section 16(a) of the Exchange Act requires the Company’s officers and directors, and persons who beneficially own more than 10% of a registered class of the Company’s equity securities, to file reports of ownership and changes in ownership with the Securities and Exchange Commission and are required to furnish copies to the Company. To the best of the Company’s knowledge, any reports required to be filed were timely filed in fiscal year ended October 31, 2008.
Code of Ethics
The company has adopted a Code of Ethics applicable to its Chief Executive Officer and Chief Financial Officer. This Code of Ethics is filed herewith as an exhibit.
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Compensation of Executive Officers
The following summary compensation table sets forth all compensation awarded to, earned by, or paid to the named executive officers paid by us during the fiscal years ended October 31, 2008 and 2007 in all capacities for the accounts of our executives, including the Chief Executive Officer (CEO) and Chief Financial Officer (CFO):
SUMMARY COMPENSATION TABLE
Name and Principal Position | Year | Salary ($) | Bonus ($) | Stock Awards ($) | Option Awards ($) | Non-Equity Incentive Plan Compensation ($) | Non-Qualified Deferred Compensation Earnings ($) | All Other Compensation ($) | Totals ($) | ||||||||||||||||||||||||
Victoria Callanan Chairman, Chief Executive Officer and Chief Financial Officer | 2008 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||
| 2007 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||||||||||
Employment Agreements
We do not have any employment agreements in place with our sole officer and director.
Compensation of Directors
Directors do not receive any compensation for their services as directors. The Board of Directors has the authority to fix the compensation of directors. No amounts have been paid to, or accrued to, directors in such capacity.
The following table sets forth each person known by us to be the beneficial owner of five percent or more of the Company's Common Stock, all directors individually and all directors and officers of the Company as a group. Except as noted, each person has sole voting and investment power with respect to the shares shown.
Name and Address of Beneficial Owner | Amount of Beneficial Ownership | Percentage of Class |
Victoria Callanan 160 Henry Martin Trail Statesville, NC 28625 | 5,000,000 | 88.72% |
None
Audit Fees
For the Company’s fiscal years ended October 31, 2008 and 2007, we were billed approximately $10,434 and $0 for professional services rendered for the audit and review of our financial statements.
Audit Related Fees
There were no fees for audit related services for the years ended October 31, 2008 and 2007.
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Tax Fees
For the Company’s fiscal years ended October 31, 2008 and 2007, we were not billed for professional services rendered for tax compliance, tax advice, and tax planning.
All Other Fees
The Company did not incur any other fees related to services rendered by our principal accountant for the fiscal years ended October 31, 2008 and 2007.
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Effective May 6, 2003, the Securities and Exchange Commission adopted rules that require that before our auditor is engaged by us to render any auditing or permitted non-audit related service, the engagement be:
-approved by our audit committee; or
-entered into pursuant to pre-approval policies and procedures established by the audit committee, provided the policies and procedures are detailed as to the particular service, the audit committee is informed of each service, and such policies and procedures do not include delegation of the audit committee's responsibilities to management.
We do not have an audit committee. Our entire board of directors pre-approves all services provided by our independent auditors. The pre-approval process has just been implemented in response to the new rules. Therefore, our board of directors does not have records of what percentage of the above fees were pre-approved. However, all of the above services and fees were reviewed and approved by the entire board of directors either before or after the respective services were rendered.
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PART IV
a) Documents filed as part of this Annual Report
1. Consolidated Financial Statements
2. Financial Statement Schedules
3. Exhibits
| Exhibits # | Title |
| 14 | Code of Ethics |
| 31.1 | Certification of President, Chief Executive Officer, Chief Financial Officer, Chairman of the Board of Directors Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
| 32.1 | Certification of President, Chief Executive Officer, Chief Financial Officer, Chairman of the Board of Directors Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, there unto duly authorized.
| MOONSHINE CREATIONS, INC. | |
| By: | /s/Victoria Callanan |
Chairman of the Board of Directors, Chief Executive Officer, Chief Financial Officer, Controller, Principal Accounting Officer |
| Dated: | January 7, 2009 |
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
| Name | Title | Date | |
| /s/ Victoria Callanan | Chairman of the Board of Directors, Chief Executive Officer, | January 7, 2009 | |
| Victoria Callanan | Chief Financial Officer, Controller, Principal Accounting Officer |
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