Item 1: Business
Overview
Muskoka Flooring Corporation (“Muskoka” the “Company,” “we,” “us” or “our”) is a development stage company, incorporated on July 20, 2005, in the State of Delaware. We intend to enter into the business of importing hardwood flooring materials from around the world and reselling our products in the United States and Canada. Muskoka will not manufacture any equipment or goods, but will resell hardwood flooring and related products from various manufacturers through our proposed website.
We are a development stage company and have not generated any sales to date. Our product line has not been established nor do we have any flooring available for commercial sale. We plan to launch our products within the next twelve months and begin recognizing revenue from the sale and distribution of our flooring products thereafter.
The Company has not been involved in any bankruptcy, receivership or similar proceedings since its incorporation nor has it been involved in any reclassification, merger or consolidation. We have no plans to change our business activities.
Our Product
The products we intend to market are in the evaluations stage. Muskoka Flooring Corporation does not manufacture or design any products. Rather Muskoka plans to develop an on-line business selling hardwood flooring materials, wood accessories, protective coatings, application tools and brushes, protective clothing and safety equipment, as well as books and manuals on how to install and maintain hardwood floors through an Internet website. The website itself will be structured to host a comprehensive catalog from which consumers can shop for a variety of hardwood flooring products, materials, tools and accessories.
The types of hardwoods we offer will be sourced from all over the world and will include (but are not limited to) Bamboo (China), Sierra Madre Pine (Mexico), Hickory (United States), Rubberwood (Thailand), Brazilian Cherry (Brazil), Tigerwood (Brazil, Bolivia, Peru, Guatemala, and Mexico) and Cork (South America and Australia). Other hardwoods to be offered on our website include: (from Asia) Keruing, Meranti, Red Balau and Yellow Balau; (from South America) Eucalyptus, Spanish Cedar, Cumaru, Angelim Vermelho and Tatajuba.
The website will offer all the accessory wood pieces commonly required to complete a hardwood floor project such as corner pieces, trim and molding. The website will also offer protective coatings (both oil-based and water-based), application tools and brushes, protective clothing and safety equipment as well as books and manuals on how to install and maintain hardwood floors. As a benefit of purchasing materials from Muskoka, flooring contractors will have the option of listing their services and contact information on our website.
The Market
The U.S. wood flooring market has made significant inroads in the domestic floor coverings industry over the past two decades. The inroads were stimulated by growing consumer acceptance of high-end hard surface flooring, as well as more diverse offerings by wood flooring manufacturers. Manufacturers now offer a wide range of species, colors, and custom-type designs. The industry has also stimulated demand with easier and less costly to install products such as prefinished, engineered, and glue less wood floors. These new products and technologies have increased competitive pressures, especially from foreign-based manufacturers. Increasing demand from both the residential and non-residential construction market has resulted in growth for the wood flooring market. A decline in the popularity of more standard wood types such as oak is giving way to the increased popularity of other less traditional woods such as maple, cherry, and pecan. Other trends influencing the market included an increase in demand for rustic, wider planks, exotic woods, distressed wood floors, and even less conventional bamboo flooring.
Patents
Muskoka Flooring Corporation holds no patents.
Government Regulation and Supervision
We are subject to the laws and regulations of those jurisdictions in which we plan to sell our product, which are generally applicable to business operations, such as business licensing requirements, income taxes and payroll taxes. In general, the sale of our product is not subject to special regulatory and/or supervisory requirements.
Employees
We have no employees other than our officer and director.
Research and Development Expenditures
We have not incurred any research or development expenditures since our incorporation.
Item 1A.
Item 1A. Risk Factors
We are a smaller reporting company as defined in Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.
Item 1B.
Item 1B. Unresolved Staff Comments
We are a smaller reporting company as defined in Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.
Item 2.
Item 2. Properties
We do not own any real estate or other properties. The Company’s office is located at 1 Rue deHesse, 1204 Geneva, Switzerland. Our telephone number is +41 22 328 7588.
Item 3.
Item 3. 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 issuer and no owner of record or beneficiary of more than 5% of the securities of the issuer, or any security holder is a party adverse to the small business issuer or has a material interest adverse to the small business issuer.
Item 4.
Item 4. Submission of Matters to a Vote of Security Holders
No matters were submitted to a vote of the Company's shareholders during the fiscal year ended December 31, 2008.
PART II
Item 5.
Item 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchase of Equity Securities
As of December 31, 2008 the Company had thirty-four (34) active shareholders of record. The company has not paid cash dividends and has no outstanding options.
Item 6.
Item 6. Selected Financial Data
We are a smaller reporting company as defined in Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.
Item 7.
Item 7. Management Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our financial statements and related notes included elsewhere in this report.
This annual report contains forward looking statements relating to our Company's future economic performance, plans and objectives of management for future operations, projections of revenue mix and other financial items that are based on the beliefs of, as well as assumptions made by and information currently known to, our management. The words "expects”, “intends”, “believes”, “anticipates”, “may”, “could”, “should" and similar expressions and variations thereof are intended to identify forward-looking statements. The cautionary statements set forth in this section are intended to emphasize that actual results may differ materially from those contained in any forward looking statement.
Our auditor’s report on our December 31, 2008 financial statements expresses an opinion that substantial doubt exists as to whether we can continue as an ongoing business. Subsequent to year-end, Wellgate, our principal stockholder, contributed to capital $10,000 to address this deficiency. The Company contemplates raising money through private placements during the 2009 fiscal year. We believe that if we do not raise additional capital over the next 12 months, we may be required to suspend or cease the implementation of our business plans. See “December 31, 2008 Audited Financial Statements - Auditors Report.”
As of December 31, 2008, Muskoka had $353 cash on hand and in the bank.
Management believes that if subsequent private placements are successful, we will be able to generate sales revenue within the following twelve months thereof. However, additional equity financing may not be available to us on acceptable terms or at all, and thus we could fail to satisfy our future cash requirements.
The Company did not generate any revenue during the fiscal year ended December 31, 2008.
Total expenses for the year ending December 31, 2008 were $18,131 resulting in an operating loss for the year of $18,131, compared to a loss of $15,458 for the year ended December 31, 2007. The operating loss for the period is a result of professional fees in the amount of $10,000 (compared to $15,425 in 2007) and office, general expenses in the amount of $8,063 (compared to $198 in 2007) and a foreign exchange losses of $69 (as opposed to a gain of $165 in 2007).
As of December 31, 2008 a former director has loaned $6,209 to the Company. Subsequent to year-end, he forgave the foregoing loan.
Plan of Operation
Over the next 12 months, we intend to become operational by completing the development of the website which is estimated this to cost approximately $4,500 and allocating approximately $1,000 towards the initial phases of our marketing plan.
We plan to establish purchasing agreements with various manufacturers and arrange for the importation and delivery of product on a per sale basis to avoid the cost of holding inventory. As purchasing agreements are established we will add their product lines to our website.
Once the website is completed we plan to implement a marketing campaign specifically directed at potential buyers in order to bring traffic to our website. We intend to engage a third party service provider who specializes in attracting traffic to websites. We expect the cost of this service to be between $200 and $300 per month for every 50,000 visitors.
We have also 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 contingencies.
Off Balance Sheet Arrangements
Our principal shareholder, Wellgate, has undertaken to provide the Company with operating capital to sustain our business over the next twelve months, as expenses are incurred, in the form of a non-secured loan. However, except for promissory notes evidencing shareholder loans, there is no contract in place or written agreement securing future financial arrangements.
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.
Item 7A.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk
We are a smaller reporting company as defined in Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.
Item 8.
Item 8. Financial Statements and Supplementary Data
MOORE & ASSOCIATES, CHARTERED
ACCOUNTANTS AND ADVISORS
PCAOB REGISTERED
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors
Muskoka Flooring Corporation
(A Development Stage Company)
We have audited the accompanying balance sheets of Muskoka Flooring Corporation (A Development Stage Company) as of December 31, 2008 and 2007, and the related statements of operations, stockholders’ equity (deficit) and cash flows for the years ended December 31, 2008 and 2007 and from inception on July 20, 2005 through December 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 conduct our audits in accordance with 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 Muskoka Flooring Corporation (A Development Stage Company) as of December 31, 2008 and 2007, and the related statements of operations, stockholders’ equity and cash flows for the years ended December 31, 2008 and 2007 and from inception on July 20, 2005 through December 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 3 to the financial statements, the Company has an accumulated deficit of $47,761, which raises substantial doubt about its ability to continue as a going concern. Management’s plans concerning these matters are also described in Note 3. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ Moore & Associates, Chartered
Moore & Associates, Chartered
Las Vegas, Nevada
March 26,
6490 West Desert Inn Rd, Las Vegas, NV 89146 (702) 253-7499 Fax (702) 253-7501
MUSKOKA FLOORING CORPORATION
(A Development Stage Company)
BALANCE SHEETS
The accompanying notes are an integral part of these financial statements
MUSKOKA FLOORING CORPORATION
(A Development Stage Company)
STATEMENTS OF OPERATIONS
The accompanying notes are an integral part of these financial statements
MUSKOKA FLOORING CORPORATION
(A Development Stage Company)
STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)
FROM INCEPTION (July 20, 2005) TO DECEMBER 31, 2008
The accompanying notes are an integral part of these financial statements
MUSKOKA FLOORING CORPORATION
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
NON-CASH AVTIVITIES
Supplemental cash flow information.
Cash paid for:
The accompanying notes are an integral part of these financial statements
MUSKOKA FLOORING CORPORATION
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 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.
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.
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 December 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.
MUSKOKA FLOORING CORPORATION
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2008
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
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 December 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.
Recent Accounting Pronouncements
In May 2008, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 163, “Accounting for Financial Guarantee Insurance Contracts-and interpretation of FASB Statement No. 60”. SFAS No. 163 clarifies how Statement 60 applies to financial guarantee insurance contracts, including the recognition and measurement of premium revenue and claims liabilities. This statement also requires expanded disclosures about financial guarantee insurance contracts. SFAS No. 163 is effective for fiscal years beginning on or after December 15, 2008, and interim periods within those years. SFAS No. 163 has no effect on the Company’s financial position, statements of operations, or cash flows at this time.
In May 2008, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 162, “The Hierarchy of Generally Accepted Accounting Principles”. SFAS No. 162 sets forth the level of authority to a given accounting pronouncement or document by category. Where there might be conflicting guidance between two categories, the more authoritative category will prevail. SFAS No. 162 will become effective 60 days after the SEC approves the PCAOB’s amendments to AU Section 411 of the AICPA Professional Standards. SFAS No. 162 has no effect on the Company’s financial position, statements of operations, or cash flows at this time.
MUSKOKA FLOORING CORPORATION
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2008
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
In March 2008, the Financial Accounting Standards Board, or FASB, issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities-an amendment of FASB Statement No. 133. This standard requires companies to provide enhanced disclosures about (a) how and why an entity uses derivative instruments, (b) how derivative instruments and related hedged items are accounted for under Statement 133 and its related interpretations, and (c) how derivative instruments and related hedged items affect an entity’s financial position, financial performance, and cash flows. This Statement is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008, with early application encouraged. The Company has not yet adopted the provisions of SFAS No. 161, but does not expect it to have a material impact on its consolidated financial position, results of operations or cash flows.
In December 2007, the SEC issued Staff Accounting Bulletin (SAB) No. 110 regarding the use of a "simplified" method, as discussed in SAB No. 107 (SAB 107), in developing an estimate of expected term of "plain vanilla" share options in accordance with SFAS No. 123 (R), Share-Based Payment. In particular, the staff indicated in SAB 107 that it will accept a company's election to use the simplified method, regardless of whether the company has sufficient information to make more refined estimates of expected term. At the time SAB 107 was issued, the staff believed that more detailed external information about employee exercise behavior (e.g., employee exercise patterns by industry and/or other categories of companies) would, over time, become readily available to companies. Therefore, the staff stated in SAB 107 that it would not expect a company to use the simplified method for share option grants after December 31, 2007. The staff understands that such detailed information about employee exercise behavior may not be widely available by December 31, 2007. Accordingly, the staff will continue to accept, under certain circumstances, the use of the simplified method beyond December 31, 2007. The Company currently uses the simplified method for “plain vanilla” share options and warrants, and will assess the impact of SAB 110 for fiscal year 2009. It is not believed that this will have an impact on the Company’s consolidated financial position, results of operations or cash flows.
In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements-an amendment of ARB No. 51. This statement amends ARB 51 to establish accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. It clarifies that a noncontrolling interest in a subsidiary is an ownership interest in the consolidated entity that should be reported as equity in the consolidated financial statements. Before this statement was issued, limited guidance existed for reporting noncontrolling interests. As a result, considerable diversity in practice existed. So-called minority interests were reported in the consolidated statement of financial position as liabilities or in the mezzanine section between liabilities and equity. This statement improves comparability by eliminating that diversity. This statement is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008 (that is, January 1, 2009, for entities with calendar year-ends). Earlier adoption is prohibited. The effective date of this statement is the same as that of the related Statement 141 (revised 2007). The Company will adopt this Statement beginning March 1, 2009. It is not believed that this will have an impact on the Company’s consolidated financial position, results of operations or cash flows.
In December 2007, the FASB, issued FAS No. 141 (revised 2007), Business Combinations. This Statement replaces FASB Statement No. 141, Business Combinations, but retains the fundamental requirements in Statement 141. This Statement establishes principles and requirements for how the acquirer: (a) recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree; (b) recognizes and measures the goodwill acquired in the business combination or a gain from a bargain purchase; and (c) determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination. This statement applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. An entity may not apply it before that date. The effective date of this statement is the same as that of the related FASB Statement No. 160, Noncontrolling Interests in Consolidated Financial Statements. The Company will adopt this statement beginning March 1, 2009. It is not believed that this will have an impact on the Company’s consolidated financial position, results of operations or cash flows.
MUSKOKA FLOORING CORPORATION
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2008
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
In February 2007, the FASB, issued SFAS No. 159, The Fair Value Option for Financial Assets and Liabilities-Including an Amendment of FASB Statement No. 115. This standard permits an entity to choose to measure many financial instruments and certain other items at fair value. This option is available to all entities. Most of the provisions in FAS 159 are elective; however, an amendment to FAS 115 Accounting for Certain Investments in Debt and Equity Securities applies to all entities with available for sale or trading securities. Some requirements apply differently to entities that do not report net income. SFAS No. 159 is effective as of the beginning of an entities first fiscal year that begins after November 15, 2007. Early adoption is permitted as of the beginning of the previous fiscal year provided that the entity makes that choice in the first 120 days of that fiscal year and also elects to apply the provisions of SFAS No. 157 Fair Value Measurements. The Company will adopt SFAS No. 159 beginning March 1, 2008 and is currently evaluating the potential impact the adoption of this pronouncement will have on its consolidated financial statements.
In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements.This statement defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles (GAAP), and expands disclosures about fair value measurements. This statement applies under other accounting pronouncements that require or permit fair value measurements, the Board having previously concluded in those accounting pronouncements that fair value is the relevant measurement attribute. Accordingly, this statement does not require any new fair value measurements. However, for some entities, the application of this statement will change current practice. This statement is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. Earlier application is encouraged, provided that the reporting entity has not yet issued financial statements for that fiscal year, including financial statements for an interim period within that fiscal year. The Company will adopt this statement March 1, 2008, and it is not believed that this will have an impact on the Company’s consolidated financial position, results of operations or cash flows.
NOTE 3 - 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 December 31, 2008 in the amount of $47,761 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 December 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 4 - 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 5 - INCOME TAXES
The Company has adopted the FASB No. 109 for reporting purposed. As of December 31, 2008 the Company had a net operating loss carry forwards of approximately $47,761 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.
MUSKOKA FLOORING CORPORATION
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2008
NOTE 6 - RELATED PARTY TRANSACTIONS
As of December 31, 2008 the Company received advances from a Director in the amount of $6,209 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
NOTE 7 - PROPERTY AND EQUIPMENT
The company owns no property nor leases office space. The office space is donated by the director at no charge.
NOTE 8 - ADVERTISING
Advertising is expensed when incurred. There has been no advertising during the period.
NOTE 9 - CANADIAN BANK ACCOUNT
The Company has an account in US Funds that is located in a Canadian Bank and therefore not insured.
NOTE 10 - CHANGE OF MANAGEMENT
Effective November 26, 2008, Gordon Cotton resigned as a member of the Board of Directors, President and Chief Financial Officer and Treasurer. Also on that date Michel Marengere purchased 1,126,700 common shares and accepted an appointment by the Board of Directors to act as President and CEO, Principal Financial Officer, Secretary and Treasurer.
NOTE 11 - SUBSEQUENT EVENT
Pursuant to the agreement dated November 24, 2008, between WellGate International, Ltd. And Mr. Gord Cotton, Mr. Cotton agreed to discharge, or cause to be discharged, substantially all of the indebtedness of the Company prior to closing. As of December 31, 2008, a substantial portion of these liabilities remained outstanding. In accordance with the agreement, subsequent to year-end, Mr. Gord Cotton released the related party indebtedness reflected in the financial statements, and the principal third party creditors agreed similarly to issue credits, removing all but $500 of the liabilities reflected as of December 31, 2008. In addition, as of March 17, 2009, Wellgate made a contribution to the capital of the Company in the amount of $10,000 in the form of an 11% note due April 30, 2009. This was a voluntary contribution to the capital and was issued irrespective of any issue of shares to the Company.
Item 9.
Item 9. Changes and Disagreements with Accounts on Accounting and Financial Disclosure
Our auditors are the firm of Moore & Associates, Chartered, operating from their offices in Las Vegas, NV. There have not been any changes in or disagreements with our accountants on accounting, financial disclosure or any other matter.
Item 9A(T).
Item 10. Directors, Executive Officers and Corporate Governance
The name, address, age, and position of our present officer and director is set forth below:
Name and Address
Age
Position(s)
Michel L. Marengere
President, Secretary/ Treasurer, Chief Financial Officer
Wellgate International Ltd.
and Chairman of the Board of Directors.
1 Rue de Hesse
1204 Geneva Switzerland
The person named above has held his offices/positions since November 26, 2008 and is expected to hold his offices/positions at least until the next annual meeting of our stockholders. Directors receive no compensation for serving on the Board of Directors other than the reimbursement of reasonable expenses incurred.
Background of Officers and Directors
Mr. Marengere has held the position of Chief Financial Officer of Wellgate International Ltd., Geneva since 1990. During his career Mr. Marengere has acted has completed over 125 mergers and acquisitions, complex financial transactions, comprehensive corporate reorganizations, bankruptcy restructurings and multiple divestitures of non-core business and corporate assets. These transactions were completed in multiple industries, primarily in the financial, insurance engineering, construction, power plants, renewable energy, oil and gas wholesale food distribution and information technology sectors in North America, Western and Eastern Europe, Australia, New Zealand, Asia and South America.
Significant Employees
The Company does not, at present, have any employees other than the current officer and director. We have not entered into any employment agreements, as we currently do not have any employees other than the current officer and director.
Family Relations
There are no family relationships among the Directors and Officers of Muskoka Flooring Corporation
Involvement in Legal Proceedings
No executive Officer or Director of the Company has been convicted in any criminal proceeding (excluding traffic violations) or is the subject of a criminal proceeding that is currently pending. No executive Officer or Director of the Company is the subject of any pending legal proceedings. No Executive Officer or Director of the Company is involved in any bankruptcy petition by or against any business in which they are a general partner or executive officer at this time or within two years of any involvement as a general partner, executive officer or Director of any business.
Audit Committee
We do not have a separately-designated standing audit committee. The entire Board of Directors performs the functions of an audit committee, but no written charter governs the actions of the Board when performing the functions of what would generally be performed by an audit committee. The Board approves the selection of our independent accountants.
Code of Ethics
As of December 31, 2008, we had not adopted a Code of Ethics for Financial Executives, which would include our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions.
Item 11.
Item 11. Executive Compensation.
Our current executive officer and director has not and does not receive any compensation and has not received any restricted shares awards, options or any other payouts. As such, we have not included a Summary Compensation Table.
There are no current employment agreements between the Company and its executive officer and director. Our executive officer and director has agreed to work without remuneration until such time as we receive revenues that are sufficiently necessary to provide proper salaries to the officer and compensate the director for participation. Our executive officer and director has the responsibility of determining the timing of remuneration programs for key personnel based upon such factors as positive cash flow, shares sales, product sales, estimated cash expenditures, accounts receivable, accounts payable, notes payable, and a cash balances. At this time, management cannot accurately estimate when sufficient revenues will occur to implement this compensation, or the exact amount of compensation.
There are no annuity, pension or retirement benefits proposed to be paid to officers, directors or employees of the corporation in the event of retirement at normal retirement date pursuant to any presently existing plan provided or contributed to by Company.
Item 12.
Item 12. Security Ownership of Certain Beneficial Owners and Management and related Stockholder Matters
The following table sets forth, as of December 31, 2008, certain information as to shares of our common stock owned by (i) each person known by us to beneficially own more than 5% of our outstanding common stock, (ii) each of our directors, and (iii) all of our executive officers and directors as a group:
Title of Class
Name and Address of Beneficial Owner
Amount and Nature of Beneficial Owner
Percent of Class
Common Stock
Michael L. Marengere
Wellgate International Ltd.
1 Rue de Hesse
1204 Geneva Switzerland
1,126,700
76%
All Officers and Directors as a Group (1 person)
1,126,700
76%
(1)
Mr. Marengere is the sole director and shareholder of Wellgate International, Ltd. As such, he is deemed to beneficially own shares of record held by Wellgate.
Item 13.
Item 13. Certain Relationships and Related Transactions, and Director Independence
Other than the promissory note in the amount of $10,000 referred to above from Wellgate to the Company, there are no contemplated transactions that the Company may enter into with our officers, directors or affiliates. If any such transactions are contemplated we will file such disclosure in a timely manner with the Commission on the proper form making such transaction available for the public to view.
The Company has no formal written employment agreement or other contracts with our current officer and there is no assurance that the services to be provided by him will be available for any specific length of time in the future. He anticipates devoting at a minimum of ten to fifteen percent of his available time to the Company’s affairs. The amounts of compensation and other terms of any full time employment arrangements would be determined, if and when, such arrangements become necessary.
Item 14.
Item 14. Principal Accountant Fees and Services.
During the fiscal year ended December 31, 2008 we incurred approximately $3,500 in fees to our principal independent accountants for professional services rendered in connection with the audit of financial statements for the fiscal year ended December 31, 2008. For review of our financial statements for the quarters ended March 31, 2008, June 30, 2008 and October 31, 2008 we incurred approximately $4,500 in fees to our principal independent accountants for professional services.
During the fiscal year ended December 31, 2008, we did not incur any other fees for professional services rendered by our principal independent accountants for all other non-audit services which may include, but not limited to, tax related services, actuarial services or valuation services.
PART IV
ITEM 15.
ITEM 15. EXHIBITS
23.1 Consent of Moore & Associates, Chartered
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 **
* Included in Exhibit 31.1
** Included in Exhibit 32.1
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Dated: March 27, 2009