UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
|X| QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the quarterly period ended: March 31, 2008
or
| | TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT OF 1934
For the transition period from ________________ to __________________
Commission File Number 333-148256
MUSKOKA FLOORING CORPORATION
(Exact name of business issuer as specified in its charter)
Delaware N/A
(State or other jurisdiction of incorporation (IRS Employer
or organization) Identification No.)
2711 Centerville Road, Suite 400 Wilmington, DE 19808
(Address of principal executive offices) (Zip Code)
(705) 794-9481
(Registrant's telephone number, including area code)
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 | | No |X|
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company.
Large accelerated filer [ ] Accelerated filer [ ]
Non-accelerated filer [ ] Smaller reporting company [X]
(Do not check if a smaller reporting company)
Indicate by check mark whether the registrant is a shell company (as defined in
rule 12b-2 of the Exchange Act).
Yes |X] No | |
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: As of March 31, 2008, the registrant
had 1,482,500 shares of common stock, $0.001 par value, issued and outstanding.
Transitional Small Business Disclosure Format (check one). Yes | | No |X|
TABLE OF CONTENTS
Page
Number
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements - Unaudited
Balance Sheets as of March 31, 2008 and December 31, 2007.................... 4
Statements of Operations for the three months
ended March 31, 2008; the three months ended March 31, 2007
cumulative results from inception (July 20, 2005) to March 31, 2008 ......... 5
Statement of Stockholders Equity (Deficit) cumulative from
inception (July 20, 2005) to March 31, 2008 ................................. 6
Statements of Cash Flows for the three months
ended March 31, 2008 and March 31, 2007; and cumulative
results from July 20, 2005 (date of inception) to March 31, 2008............. 7
Notes to Financial Statements for the three months
ended March 31, 2008......................................................... 8
Item 2. Management's Discussion and Analysis and Plan of Operation........... 11
Item 3. Controls and Procedures.............................................. 12
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.................................................... 14
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds ......... 14
Item 3. Defaults Upon Senior Securities ..................................... 14
Item 4. Submission of Matters to a Vote of Security Holders ................. 14
Item 5. Other Information ................................................... 14
Item 6. Exhibits ............................................................ 14
2
MUSKOKA FLOORING CORPORATION
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
MARCH 31, 2008
BALANCE SHEET
STATEMENTS OF OPERATIONS
STATEMENTS OF STOCKHOLDERS' EQUITY
STATEMENTS OF CASH FLOWS
NOTES TO FINANCIAL STATEMENTS
3
MUSKOKA FLOORING CORPORATION
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
March 31, 2008 December 31, 2007
(Audited)
_________________________________________________________________________________________________________________
ASSETS
CURRENT ASSETS
Cash $ 6,640 $ 7,293
Prepaid Expense - 950
____________________________________________
TOTAL CURRENT ASSETS
6,640 8,243
____________________________________________
TOTAL ASSETS $ 6,640 $ 8,243
============================================
LIABILITIES AND STOCKHOLDERS EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payable and accrued liabilities $ 9,322 $ 8,398
Due to related party 3,023 -
____________________________________________
TOTAL CURRENT LIABILITIES 12,345 8,398
____________________________________________
TOTAL CURRENT LIABILITIES $ 12,345 $ 8,398
____________________________________________
STOCKHOLDERS' EQUITY (DEFICIT )
Common stock (Note 3)
Authorized
75,000,000 shares of common stock, $0.0001 par value,
Issued and outstanding
1,482,500 shares of common stock 148 148
Additional paid in capital 29,327 29,327
Deficit accumulated during the development stage (35,180) (29,630)
____________________________________________
Total Equity (5,705) (155)
____________________________________________
TOTAL LIABILITIES & EQUITY $ 6,640 $ 8,243
============================================
The accompanying notes are an integral part of these financial statements
4
MUSKOKA FLOORING CORPORATION
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
(UNAUDITED)
Cumulative results
of operations from
July 20, 2005 (date
Three months Three months of inception) to
Ended Ended March 31, 2008
March 31, 2008 March 31, 2007
__________________________________________________________________________________________________________
EXPENSES
Office and general $ 2,601 $ 71 $ 3,316
Exchange - (165) (155)
Professional fees 2,949 - 32,019
Provision for Income Taxes - - -
___________________________________________________________________
NET LOSS $ (5,550) $ 95 $ (35,180)
===================================================================
BASIC NET LOSS PER SHARE $ (0.01) $ (0.02) $ (0.03)
===================================================================
WEIGHTED AVERAGE
NUMBER OF COMMON 1,482,500 1,107,795 1,482,500
SHARES OUTSTANDING
===================================================================
The accompanying notes are an integral part of these financial statements
5
MUSKOKA FLOORING CORPORATION
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
FROM INCEPTION (JULY 20, 2005) TO MARCH 31, 2008
(UNAUDITED)
Deficit
Accumulated
Common Stock Additional Share During the
__________________________ Paid-in Subscription Development
Number of Amount Capital Receivable Stage Total
shares
________________________________________________________________________________________________________________________________
Balance, July 20, 2005 - $ - $ - $ - $ - $ -
_____________________________________________________________________________________
Net Loss, December 31, 2005 - - - - (977) (977)
Common stock issued for cash at $0.015 per 171,600 17 2,557 2,574
share
Balance, December 31, 2005 171,600 $ 17 $ 2,557 - (977) $ 1,597
_____________________________________________________________________________________
Net Loss, December 31, 2006 - - - - (13,196) (13,196)
Common stock issued for cash at $0.015 per
share 828,400 83 12,343 (2,557) 9,869
Common stock issued for cash at $0.030 per
share 482,500 48 14,427 (14,475) -
_____________________________________________________________________________________
Balance, December 31, 2006 1,482,500 $ 148 $ 29,327 $ (17,032) (14,173) $ (1,730)
_____________________________________________________________________________________
Net loss December 31, 2007 - - - - (15,457) (15,457)
Subscriptions received - - - 17,032 17,032
_____________________________________________________________________________________
Balance, December 31, 2007 1,482,500 $ 148 $ 29,327 $ - $ (29,630) $ (155)
_____________________________________________________________________________________
Net loss March 31, 2008 - - - - (5,550) (5,550)
_____________________________________________________________________________________
Balance, March 31, 2008 1,482,500 $ 148 $ 29,327 $ - $ (35,180) $ (5,705)
=====================================================================================
6
The accompanying notes are an integral part of these financial statements
MUSKOKA FLOORING CORPORATION
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
(UNAUDITED)
Cumulative
results of
operations from
Three months Three months inception (July
Ended Ended 20, 2005) to
March 31, 2008 March 31, 2007 March 31, 2008
______________________________________________________________________________________________________________________
OPERATING ACTIVITIES
Net loss $ (5,550) - $ (35,180)
Exchange Gain $ 95
Adjustment to reconcile net loss to net cash
used in operating activities
- accrued liabilities 923 - 9,321
- prepaid expense 950 - -
-shareholder loan 3,023 - 3,023
______________________________________________________________
NET CASH USED IN OPERATING (653) 95 (22,836)
ACTIVITIES
______________________________________________________________
INVESTING ACTIVITIES - - -
______________________________________________________________
FINANCING ACTIVITIES
Proceeds from sale of common stock - - 29,475
Subscription receivable - 12,375 -
Subscriptions received - - -
______________________________________________________________
NET CASH PROVIDED BY FINANCING - 12,375 29,475
ACTIVITIES
______________________________________________________________
NET INCREASE (DECREASE) IN CASH (653) 12,470 6,640
CASH, BEGINNING OF PERIOD 7,293 270 -
______________________________________________________________
CASH, END OF PERIOD $ 6,640 $ 12,740 $ 6,640
==============================================================
NON-CASH AVTIVITIES
Stock issued for services $ - $ - $ -
Stock issued for accounts payable $ - $ - $ -
Stock issued for notes payable $ - $ - $ -
Stock issued for convertible debentures and interest $ - $ - $ -
Convertible debentures issued for services $ - $ - $ -
Warrants issued $ - $ - $ -
Stock issued for penalty on default of convertible $ - $ - $ -
debenture
Note payable issued for finance charges $ - $ - $ -
Forgiveness of not payable and accrued interest $ - $ - $ -
Stock issued for investment. $ - $ - $ -
_____________________________________________________________
Supplemental cash flow information.
Cash paid for:
Interest $ - $ - $ -
==================== ===================== =================
Income taxes $ - $ - $ -
==================== ===================== =================
The accompanying notes are an integral part of these financial statements
7
MUSKOKA FLOORING CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
MARCH 31, 2008
________________________________________________________________________________
NOTE 1 - NATURE OF OPERATIONS AND BASIS OF PRESENTATION
________________________________________________________________________________
Muskoka Flooring Corporation. (the "Company") is in the initial development
stage and was organized to engage in the business of selling a full line of
hardwood flooring products, materials, tools and accessories over the internet.
GOING CONCERN
The Company commenced operations on July 20, 2005 and has not realized revenues
since inception. The Company has a deficit accumulated to the period ended March
31, 2008 in the amount of $35,180. The ability of the Company to continue as a
going concern is dependent on raising capital to fund its business plan and
ultimately to attain profitable operations. Accordingly, these factors raise
substantial doubt as to the Company's ability to continue as a going concern.
The Company is funding its initial operations by way of Founders shares. As of
March 31, 2008 the Company had issued 1,000,000 founder shares at $0.015 per
share for net proceeds of $15,000 to the Company and issued 482,500 private
placement shares at $0.03 per share for net proceeds $14,475.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
________________________________________________________________________________
ORGANIZATION
The Company was incorporated on July 20, 2005 in the State of Delaware. The
fiscal year end of the Company is December 31.
BASIS OF PRESENTATION
These financial statements are presented in United States dollars and have been
prepared in accordance with United States generally accepted accounting
principals.
DEVELOPMENT STAGE COMPANY
The Company is considered to be in the development stage as defined in Statement
of Financial Accounting Standards No.7.
USE OF ESTIMATES AND ASSUMPTIONS
Preparation of the financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect certain reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the period. Accordingly,
actual results could differ from those estimates.
FINANCIAL INSTRUMENTS
All significant financial assets, financial liabilities and equity instruments
of the Company are either recognized or disclosed in the financial statements
together with other information relevant for making a reasonable assessment of
future cash flows, interest rate risk and credit risk. Where practical the fair
values of financial assets and financial liabilities have been determined and
disclosed; otherwise only available information pertinent to fair value has been
disclosed.
LOSS PER COMMON SHARE
Basic earnings(loss) per share includes no dilution and is computed by dividing
income (loss) available to common stockholders by the weighted average number of
common shares outstanding for the period. Dilutive earnings (loss) per share
reflect the potential dilution of securities that could share in the earnings of
the Company. Because the Company does not have any potential dilutive
securities, the accompanying presentation is only on the basic loss per share.
8
MUSKOKA FLOORING CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
MARCH 31, 2008
________________________________________________________________________________
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
________________________________________________________________________________
INCOME TAXES
The Company follows the liability method of accounting for income taxes. Under
this method, 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
balances and tax loss carry forwards. Deferred tax assets and liabilities are
measured using enacted or substantially enacted tax rates expected to apply to
the taxable income in the years in which those differences are expected to be
recovered or settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that includes the date
of enactment or substantive enactment. As at March 31, 2008 the Company had net
operating loss carry forwards, however, due to the uncertainty of realization,
the Company has provided a full valuation allowance for the deferred tax assets
resulting from the loss carry forwards.
STOCK-BASED COMPENSATION
SFAS No. 123 "ACCOUNTING FOR STOCK-BASED COMPENSATION"., as issued by the
Financial Accounting Standards Board ("FASB"), as amended by SFAS No.148
"ACCOUNTING FOR STOCK-BASED COMPENSATION-TRANSITION AND DISCLOSURE", encourages
the use of fair value based method of accounting for the stock-based employee
compensation. SFAS No. 123 allows entities to continue to apply the intrinsic
value method prescribed by Accounting Principles Board Opinion 25, "ACCOUNTING
FOR STOCK ISSUED TO EMPLOYEES" ("APB 25") and related interpretations and
provide pro forma disclosures of net income (loss) and earnings (loss) per
share. Under APB 25, compensation cost is measured based on the excess, if any,
of the quoted market price or the fair value of the company's stock at the grant
date (or a later date where the option has variable terms that depend on events
after the date of grant) over the amount an employee must pay to acquire the
stock. Compensation expense is recognized immediately for past services and
pro-rata for future services over the option-vesting period. SFAS 123 allows but
does not require that compensation cost resulting from the granting of stock
options be measured and reported currently in the income statement and allocated
over the remaining life of the option.
The Company has elected to follow APB 25 and provide the pro forma disclosures
required under SFAS 123 with respect to stock options granted to employees. The
Company will provide pro-forma information and expense information,
respectively, as required by SFAS No. 123 showing the results of applying the
fair value method using the Black-Scholes option pricing model.
The Company accounts for equity instruments issued in exchange for the receipt
of goods or services from other than employees in accordance with SFAS No. 123
and the conclusions reached by the Emerging Issues Task Force in Issue No.
96-18. Costs are measured at the estimated fair market value of the
consideration received or the estimated fair value of the equity instruments
issued, whichever is more reliably measurable. The value of equity instruments
issued for consideration other than employee services is determined on the
earliest of a performance commitment or completion of performance by the
provider of goods or services as defined by EITF 96-18.
The Company has also adopted the provisions of the FASB Interpretation No. 44,
ACCOUNTING OF CERTAIN TRANSACTIONS INVOLVING STOCK COMPENSATION-AN
INTERPRETATION OF APB OPINION NO. 25 ("Fin 44"), which provides guidance as to
certain applications of APB 25. Fin 44 is generally effective July 1, 2000 with
the exception of certain events occurring after December 15, 1998.
To March 31, 2008 the Company has not adopted a stock option plan and has not
granted any stock options. Accordingly no stock-based compensation has been
recorded to date.
9
MUSKOKA FLOORING CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
MARCH 31, 2008
________________________________________________________________________________
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
________________________________________________________________________________
RECENT ACCOUNTING PRONOUNCEMENTS
In February 2007, the FASB issued SFAS No. 159, "The Fair Value Option for
Financial Assets and Financial Liabilities". This Statement permits entities to
choose to measure many financial assets and financial liabilities at fair value.
Unrealized gains and losses on items for which the fair value option has been
elected are reported in earnings. SFAS No. 159 is effective for fiscal years
beginning after November 15, 2007.
In September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements"
("SFAS No. 157"). SFAS 155 establishes framework for measuring fair value and
expands disclosures about fair value measurements. The changes to current
practice resulting from the application of this statement relate to the
definition of fair value, the methods used to measure fair value, and the
expanded disclosures about fair value measurements. The statement is effective
for fiscal years beginning after November 15, 2007 and periods with those fiscal
years.
The Financial Accounting Standards Board has issued SFAS No. 155 "ACCOUNTING FOR
CERTAIN HYBRID FINANCIAL INSTRUMENTS AN AMENDMENT OF FASB STATEMENTS NO. 133 AND
140" and No. 156 "ACCOUNTING FOR SERVICING OF FINANCIAL ASSETS - AN AMENDMENT OF
FASB STATEMENT NO. 140", but they will not have a material effect in the
Company's results of operations or financial position.
The adoption of these new pronouncements is not expected to have a material
effect on the Company's financial position or results of operations.
NOTE 3- STOCKHOLDERS EQUITY
________________________________________________________________________________
The Company's capitalization is 75,000,000 common shares with a par value of
$0.0001 per share.
On December 8, 2005, the Company issued 171,600 common shares at $0.015 per
share to the Founding sole director and President of the Company for net cash
proceeds of $2,574 to the Company. On February 28, 2006 the Company issued
828,400 common shares at $0.015 to the succeeding and current sole director and
President for net cash proceeds of $12,426. The Company issued 482,500 shares at
$0.030 per share for net proceeds to the Company of $14,475. Total proceeds to
the Company of $29,475.
NOTE 4 - INCOME TAXES
________________________________________________________________________________
The Company has adopted the FASB No. 109 for reporting purposed. As of March 31,
2008 the Company had a net operating loss carry forwards of approximately
$35,180 that may be available to reduce future years' taxable income and will
expire beginning in 2026. Availability of loss usage is subject to change of
ownership limitations under Internal Revenue Code 382. Future tax benefits which
may arise as a result of these losses have not been recognized in these
financial statements, as their realization is determined not likely to occur and
accordingly, the Company has recorded a valuation allowance for the future tax
loss carryforwards.
NOTE 5 - RELATED PARTY TRANSACTIONS
________________________________________________________________________________
As of March 31, 2008 the Company received advances from a Director in the amount
of $3,023 to pay for general administration expenses. The amounts due to the
related party are unsecured and non-interest bearing with no set terms of
repayment
10
ITEM 2: MANAGEMENT DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
This section of this report includes a number of forward-looking statements that
reflect our current views with respect to future events and financial
performance. Forward looking statements are often identified by words like:
believe, expect, estimate, anticipate, intend, project and similar expressions
or words which, by their nature, refer to future events. You should not place
undue certainty on these forward-looking statements, which apply only as of the
date of this report. These forward looking statements are subject to certain
risks and uncertainties that could cause actual results to differ materially
from historical results or our predictions
Overview
Muskoka Flooring Corporation ("Muskoka") was organized on July 20, 2005. Muskoka
should be considered as a development stage corporation. Muskoka is in the
business of importing hardwood flooring materials from around the world and
reselling them in the United States and Canada. Muskoka will not manufacture any
equipment or goods, but will resell hardwood flooring products from various
manufacturers through it proposed website.
The Company did not generate any revenue during the quarter ended March 31,
2008.
Our auditors have issued a going concern opinion. This means that there is
substantial doubt that we can continue as an on-going business for the next
twelve months unless we obtain additional capital t pay our bills. This is
because we have not generated any revenues and no revenues are anticipated until
we begin operations. Our only other source of cash at this time is advances by
our director.
Total expenses for the quarter ending March 31, 2008 were $5,550 resulting in an
operating loss for the fiscal quarter of $5,550. The operating loss for the
period is a result of professional, office and general expenses.
Accounts payable for the quarter ended March 31, 2008 are $9,322.
As of March 31, 2008 the Director of the Company has advanced $3,023 to maintain
the company's operations. This amount is unsecured, non-interest bearing and
without specific terms of repayment.
As at the quarter ended March 31, 2008 the Company had $6,640 of cash.
On April 10, 2008 the Company filed a registration form S-1 with the SEC. The
form S-1 was deemed effective as of April 21, 2008 at 3:00PM Eastern Time.
Plan of Operation
We anticipate that our current cash and cash equivalents and cash generated from
operations will be insufficient to satisfy our liquidity requirements for the
next 12 months. We expect to incur development and administrative expenses as
well as professional fees as we initiate our business plan and other expenses
associated with maintaining our SEC filings.
Muskoka intends to sell a full line of hardwood flooring products, materials,
tools and accessories over the internet. Muskoka will not manufacture any
equipment or goods, but will resell hardwood flooring products from various
manufacturers through our website. Our plan is to offer for sale exotic hardwood
flooring materials imported from Asia, South America, and other regions of the
world, along with protective coatings, tools and accessories commonly used in
the installation and maintenance of hardwood floors. We plan to sell these
products via our website. Our plan of operation is to sell hardwood flooring
products and materials though an internet website (www.muskokaflooring.net).
Management believes it will satisfy its cash requirements of for the next six
months or until such a time additional funding is raised from financing
activities. Muskoka plans to satisfy our future cash requirements through
11
additional equity financing. This will be in the form of private placements of
common stock. There is no additional offering being planned at the present time.
There can be no assurance that Muskoka will be successful in raising additional
equity financing, and, thus, be able to satisfy our future cash requirements,
which primarily consist of working capital directed towards the development of
the website and marketing campaigns, as well as legal and accounting fees and
other expenses associated with maintaining our SEC filings. Muskoka depends upon
capital to be derived from future financing activities such as subsequent
offerings of our stock. There can be no assurance that Muskoka will be
successful in raising the capital the company requires. Management believes that
if subsequent private placements are successful, Muskoka will be able to
generate revenue from online sales of hardwood flooring goods and products and
achieve liquidity within the following twelve to fourteen months thereof.
However, investors should be aware that this is based upon speculation and there
can be no assurance that Muskoka will ever be able reach a level of
profitability.
As of the date of this registration statement Muskoka has not generated any
revenue through its proposed business. To date all proceeds received by Muskoka
were a result of the sale of its common stock.
Over the next 12 months, the following steps will need to be accomplished in
order for Muskoka to become fully operational:
* Complete the development of the website. Management has estimated this to
cost approximately $4,500.
* In addition, Muskoka plans to allocate approximately $1,000 towards the
initial phases of the marketing plan as described herein.
* Muskoka has allocated $4,000 towards administrative expenses, which
includes general fees to maintain the corporate status of the Company, Transfer
Agent fees, and telephone/postage/printing expenses, as well as any
deficiencies, if any, in the estimated expenses anticipated for completion of
this registration statement, and the completion of the website as described
herein.
Off Balance Sheet Arrangements
Our officer and director, Mr. Cotton has undertaken to provide the Company with
initial operating capital to sustain our business over the next twelve month
period, as the expenses are incurred, in the form of a non-secured loan.
However, there is no contract in place or written agreement securing this
agreement. Management believes if the Company cannot raise sufficient revenues
or maintain our reporting status with the SEC we will have to cease all efforts
directed towards the Company. As such, any investment previously made would be
lost in its entirety.
Other than the above described situation the Company does not have any
off-balance sheet arrangements that have or are reasonably likely to have a
current or future effect on the Company's financial condition, changes in
financial condition, revenues or expenses, results of operations, liquidity,
capital expenditures or capital resources that are material to investors. The
term "off-balance sheet arrangement" generally means any transaction, agreement
or other contractual arrangement to which an entity unconsolidated with the
Company is a party, under which the Company has (i) any obligation arising under
a guarantee contract, derivative instrument or variable interest; or (ii) a
retained or contingent interest in assets transferred to such entity or similar
arrangement that serves as credit, liquidity or market risk support for such
assets.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
ITEM 4. CONTROLS AND PROCEDURES
The management of the Company is responsible for establishing and maintaining
adequate internal control over financial reporting, as required by
Sarbanes-Oxley (SOX) Section 404 A. The Company's internal control over
financial reporting is a process designed under the supervision of the Company's
Chief Executive Officer and Chief Financial Officer to provide reasonable
assurance regarding the reliability of financial reporting and the preparation
of the Company's financial statements for external purposes in accordance with
U.S. generally accepted accounting principles.
As of March 31, 2008 management assessed the effectiveness of the Company's
internal control over financial reporting based on the criteria for effective
internal control over financial reporting established in SEC guidance on
conducting such assessments. Based on that evaluation, they concluded that,
during the period covered by this report, such internal controls and procedures
were not effective to detect the inappropriate application of US GAAP rules as
more fully described below. This was due to deficiencies that existed in the
design or operation of our internal control over financial reporting that
adversely affected our internal controls and that may be considered to be
material weaknesses.
The matters involving internal controls and procedures that the Company's
management considered to be material weaknesses under the standards of the
Public Company Accounting Oversight Board were: (1) lack of a functioning audit
committee and lack of a majority of outside directors on the Company's board of
directors, resulting in ineffective oversight in the establishment and
monitoring of required internal controls and procedures; (2) inadequate
segregation of duties consistent with control objectives; (3) insufficient
written policies and procedures for accounting and financial reporting with
respect to the requirements and application of US GAAP and SEC disclosure
requirements; and (4) ineffective controls over period end financial disclosure
and reporting processes. The aforementioned material weaknesses were identified
by the Company's Chief Financial Officer in connection with the review of our
financial statements as of March 31, 2008 and communicated the matters to our
management.
Management believes that the material weaknesses set forth in items (2), (3) and
(4) above did not have an affect on the Company's financial results. However,
management believes that the lack of a functioning audit committee and lack of a
majority of outside directors on the Company's board of directors, resulting in
ineffective oversight in the establishment and monitoring of required internal
controls and procedures can result in the Company's determination to its
financial statements for the future years.
We are committed to improving our financial organization. As part of this
commitment, we will create a position to segregate duties consistent with
control objectives and will increase our personnel resources and technical
accounting expertise within the accounting function when funds are available to
the Company: i) Appointing one or more outside directors to our board of
directors who shall be appointed to the audit committee of the Company resulting
in a fully functioning audit committee who will undertake the oversight in the
establishment and monitoring of required internal controls and procedures; and
ii) Preparing and implementing sufficient written policies and checklists which
will set forth procedures for accounting and financial reporting with respect to
the requirements and application of US GAAP and SEC disclosure requirements.
Management believes that the appointment of one or more outside directors, who
shall be appointed to a fully functioning audit committee, will remedy the lack
of a functioning audit committee and a lack of a majority of outside directors
on the Company's Board. In addition, management believes that preparing and
implementing sufficient written policies and checklists will remedy the
following material weaknesses (i) insufficient written policies and procedures
for accounting and financial reporting with respect to the requirements and
application of US GAAP and SEC disclosure requirements; and (ii) ineffective
controls over period end financial close and reporting processes. Further,
management believes that the hiring of additional personnel who have the
technical expertise and knowledge will result proper segregation of duties and
provide more checks and balances within the department. Additional personnel
will also provide the cross training needed to support the Company if personnel
turn over issues within the department occur. This coupled with the appointment
of additional outside directors will greatly decrease any control and procedure
issues the company may encounter in the future.
We will continue to monitor and evaluate the effectiveness of our internal
controls and procedures and our internal controls over financial reporting on an
ongoing basis and are committed to taking further action and implementing
additional enhancements or improvements, as necessary and as funds allow.
13
Item 8b. Changes in Internal Controls
There have been no changes in our internal control over financial reporting
identified in connection with the evaluation required by paragraph (d) of Rules
13a-15 or 15d-15 under the Exchange Act that occurred during the small business
issuer's last fiscal quarter that has materially affected, or is reasonably
likely to materially affect, our internal control over financial reporting.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is not a party to any pending legal proceedings, and no such
proceedings are known to be contemplated.
No director, officer, or affiliate of the Company and no owner of record or
beneficial owner of more than 5.0% of the securities of the Company, or any
associate of any such director, officer or security holder is a party adverse to
the Company or has a material interest adverse to the Company in reference to
pending litigation.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS
3.1 Articles of Incorporation [1]
3.2 By-Laws [1]
31.1 Rule 13(a)-14(a)/15(d)-14(a) Certification of Chief Executive Officer
31.2 Rule 13(a)-14(a)/15(d)-14(a) Certification of Chief Financial Officer *
32.1 Section 1350 Certification of Chief Executive Officer
32.2 Section 1350 Certification of Chief Financial Officer **
[1] Filed previously with the Commission on December 21, 2007
* Included in Exhibit 31.1
** Included in Exhibit 32.1
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SIGNATURES
Pursuant to the requirements of the Exchange Act or 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.
Muskoka Flooring Corporation
BY: /s/ Gordon Cotton
_________________
Gordon Cotton
President, Secretary Treasurer, Principal Executive Officer,
Principal Financial Officer and sole Director
Dated: April 25, 2008
15