Attached files
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X]QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended June 30, 2010
[ ]TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the transition period from [ ] to [ ]
Commission file number 000-29021
BLUE MOON INVESTMENTS
------------------------------------------------------
(Exact name of registrant as specified in its charter)
NEVADA 98-0210152
------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
SUITE 700, 1620 DICKSON AVENUE, KELOWNA, BRITISH COLUMBIA V1Y 9Y2
-----------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (250)868-8177
None
----------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
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 last 90 days.
Yes [X] No [ ]
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
definition of "large accelerated filer," "accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer [ ]
Accelerated filer [ ]
Non-accelerated filer [ ]
Smaller reporting company [X]
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act).
Yes [X] No [ ]
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant has filed all documents and reports required to be
filed by Sections 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court.
Yes [ ] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
500,000 common shares issued and outstanding as of August 6, 2010.
PART 1 - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
These financial statements have been prepared by Blue Moon Investments, Inc.
without audit, pursuant to the rules and regulations of the Securities and
Exchange Commission ("SEC"). Certain information and footnote disclosures
normally included in financial statements prepared in accordance with generally
accepted accounting principles have been omitted in accordance with such SEC
rules and regulations. In the opinion of management, the accompanying
statements contain all adjustments necessary to present fairly the financial
position of our company as of June 30, 2010, and our results of operations,
and our cash flows for the interim period ended June 30, 2010. The results
for these interim periods are not necessarily indicative of the results for the
entire year.
BLUE MOON INVESTMENTS, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
BALANCE SHEETS
As of As of
June 30 September 30,
2010 2009
(Unaudited) (Audited)
----------- -------------
ASSETS
CURRENT ASSETS
Cash $ 157 $ 382
----------- -------------
TOTAL CURRENT ASSETS 157 382
----------- -------------
TOTAL ASSETS $ 157 $ 382
=========== =============
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
Accounts payable and accrued liabilities $ 10,205 $ 6,821
Indebtedness to related parties 45,500 45,500
----------- -------------
TOTAL CURRENT LIABILITIES 55,705 52,321
----------- -------------
TOTAL LIABILITIES 55,705 52,321
=========== =============
STOCKHOLDERS' DEFICIT
Common stock, 100,000,000 shares authorized; $0.0001
Par value; 500,000 shares issued and outstanding 50 50
Additional paid-in capital 159,258 151,238
Accumulated deficit during development stage (214,856) (203,227)
----------- -------------
TOTAL STOCKHOLDERS' DEFICIT (55,548) (51,939)
----------- -------------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 157 $ 382
=========== =============
BLUE MOON INVESTMENTS, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
BALANCE SHEETS
From Inception
(September 19,
Three Months Three Months Nine Months Nine Months 1997)
Ended Ended Ended Ended Through
June 30 June 30 June 30 June 30, June 30
2010 2009 2010 2009 2010
(unaudited) (unaudited) (unaudited) (unaudited) (unaudited)
------------ ----------- ----------- ----------- --------------
REVENUES $ - $ - $ - $ - $ -
------------ ----------- ----------- ----------- --------------
EXPENSES
Selling, general and administrative expenses 2,643 2,529 8,906 14,466 171,953
Mineral property investigation - - - - 12,018
Offering costs - - - - 31,406
------------ ----------- ----------- ----------- --------------
TOTAL EXPENSES 2,643 2,529 8,906 14,466 215,377
------------ ----------- ----------- ----------- --------------
LOSS FROM OPERATIONS (2,643) (2,529) (8,906) (14,466) (215,377)
------------ ----------- ----------- ----------- --------------
OTHER INCOME/(EXPENSE)
Interest expense (907) (908) (2,723) (2,724) (9,677)
Gain on forgiveness of debt - - - - 10,198
------------ ----------- ----------- ----------- --------------
TOTAL OTHER INCOME/(EXPENSE) (907) (908) (2,723) (2,724) 521
------------ ----------- ----------- ----------- --------------
NET LOSS $ (3,550) $ (3,437) $ (11,629) $ (17,190) $ (214,856)
============ =========== =========== =========== ==============
NET LOSS PER COMMON SHARE,
BASIC $ (0.00) $ (0.01) $ (0.02) $ (0.03)
============ =========== =========== ===========
WEIGHTED AVERAGE NUMBER
OF COMMON SHARES OUTSTANDING,
BASIC 500,000 500,000 500,000 500,000
============ =========== =========== ===========
BLUE MOON INVESTMENTS, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
BALANCE SHEETS
Nine Months Nine Months From Inception
Ended Ended (September 19, 1997)
June 30 June 30 Through
2010 2009 June 30, 2010
(unaudited) (unaudited)
----------- ----------- ---------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(11,629) $(17,190) $(214,856)
Adjustments to reconcile net loss
to net cash used in operating activities:
Loss incurred on offering costs - - 31,406
Gain on forgiveness of debt - - (10,198)
CHANGES IN OPERATING ASSETS AND LIABILITIES
Increase in accounts payable and 3,384 2,958 20,403
--------- --------- ----------
accrued liabilities
Net cash used by operating activities (8,245) (14,232) (173,245)
--------- --------- ----------
CASH FLOWS PROVIDED BY FINANCING ACTIVITIES:
Bank overdraft - -
Common stock issued for services - - 50
Payments for deferred offering costs - - (31,406)
Proceeds from related party advances - - 103,500
Capital contributed by an affiliate 8,020 11,000 101,258
--------- --------- ----------
Net cash provided by financing activities 8,020 11,000 173,402
--------- --------- ----------
NET INCREASE (DECREASE) IN CASH (225) (3,232) 157
CASH, BEGINNING OF PERIOD 382 3,933 -
--------- --------- ----------
CASH, END OF PERIOD $ 157 $ 701 $ 157
========= ========= ==========
--------- --------- ----------
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid $ - $ - $ 8
========= ========= ==========
Income taxes paid $ - $ - $ -
========= ========= ==========
NON-CASH TRANSACTIONS:
Common stock issued for services $ - $ - $ 50
========= ========= ==========
BLUE MOON INVESTMENTS, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2010
NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS
Blue Moon Investments, Inc. (the "Company") was incorporated, under the laws of
Nevada on September 19, 1997 to engage in any lawful corporate undertaking,
including, but not limited to, selected mergers and acquisitions. The
Company's business plan is to evaluate, structure and complete a merger with,
or acquisition of, a privately owned corporation.
The Company has been in a development stage since its inception on September
19, 1997 under the provision of ASC Topic 915, "Accounting and Reporting for
Development Stage Enterprises" and has not realized any revenues from its
planned operations. A development stage enterprise is one in which planned
principal operations have not commenced or if its operations have commenced,
there has been no significant revenue there from. Development-stage companies
report cumulative costs from the enterprise's inception. The Company's year
end is September 30.
The accompanying unaudited Financial Statements of Blue Moon Investments Inc.
(the "Company") should be read in conjunction with the Company's most recent
filing of the Form 10-K which included the financial statements as of September
30, 2009. Significant accounting policies disclosed therein have not changed
except as noted below.
In the opinion of management, all adjustments necessary to present fairly the
financial position as of June 30, 2010 and the results of operations, and cash
flows presented herein have been included in the financial statements.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
This summary of significant accounting policies is presented to assist in
understanding the Company's financial statements. The financial statements and
notes are representations of the Company's management, which is responsible for
their integrity and objectivity. These accounting policies conform to
accounting principles generally accepted in the United States of America, and
have been consistently applied in the preparation of the financial statements.
Accounting Method
The Company's financial statements are prepared using the accrual basis of
accounting in accordance with accounting principles generally accepted in the
United States of America.
Basic and Diluted Net Loss per Share
Loss per share was computed by dividing the net loss by the weighted average
number of shares outstanding during the period. The weighted average number of
shares was calculated by taking the number of shares outstanding and weighting
them by the amount of time they were outstanding. At June 30, 2010 and 2009,
basic and diluted loss per share is the same, as there are no common stock
equivalents outstanding.
Cash and Cash Equivalents
The Company considers all highly liquid investments with an original maturity
of three months or less to be cash equivalents.
Concentration of Risk
The Company maintains its cash in primarily one business checking account, the
funds of which are insured by the Federal Deposit Insurance Corporation.
BLUE MOON INVESTMENTS, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2010
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Use of Estimates
The process of preparing financial statements in conformity with accounting
principles generally accepted in the United States of America requires the use
of estimates and assumptions regarding certain types of assets, liabilities,
revenues, and expenses. Such estimates primarily relate to unsettled
transactions and events as of the date of the financial statements.
Accordingly, upon settlement, actual results may differ from estimated amounts.
Fair Value of Financial Instruments
The Company's financial instruments as defined by ASC Topic 825, "Disclosures
about Fair Value of Financial Instruments," may include cash, receivables,
advances, accounts payable and accrued expenses. All such instruments are
accounted for on a historical cost basis, which, due to the short maturity of
these financial instruments, approximates fair value at June 30, 2010 and
September 30, 2009.
Going Concern
The accompanying financial statements have been prepared on a going concern
basis, which contemplates the realization of assets and the satisfaction of
liabilities in the normal course of business. As shown in the accompanying
financial statements, the Company has no revenues, minimal cash, and recurring
losses since inception of $(214,856). These factors, among others, may
indicate that the Company will be unable to continue as a going concern for a
reasonable period of time. The financial statements do not include any
adjustments relating to the recoverability and classification of liabilities
that might be necessary should the Company be unable to continue as a going
concern. Management's plans are to engage in evaluating, structuring, and
completing a merger with, or acquisition of, a privately owned corporation.
These plans, if successful, will mitigate the factors which raise substantial
doubt about the Company's ability to continue as a going concern. The
Company's continuation as a going concern is dependent upon continuing capital
contributions from an affiliate to meet its obligations on a timely basis,
consummating a business combination with an operating company, and ultimately
attaining profitability. There is no assurance that the affiliate will
continue to provide capital to the Company or that the Company can identify a
target company and consummate a business combination. The financial statements
do not include any adjustments that might result from the outcome of this
uncertainty.
Provision for Taxes
Income taxes are provided based upon the liability method of accounting
pursuant to ASC Topic 740, "Accounting for Income Taxes". Under this approach,
deferred income taxes are recorded to reflect the tax consequences in future
years of differences between the tax basis of assets and liabilities and their
financial reporting amounts at each year-end. A valuation allowance is
recorded against the deferred tax asset if management does not believe the
Company has met the "more likely than not" standard imposed by ASC Topic 740 to
allow recognition of such an asset.
BLUE MOON INVESTMENTS, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 2010
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Recent Accounting Pronouncements
Accounting Standards Update ("ASU") ASU No. 2009-05 (ASC Topic 820), which
amends Fair Value Measurements and Disclosures - Overall, ASU No. 2009-13 (ASC
Topic 605), Multiple-Deliverable Revenue Arrangements, ASU No. 2009-14 (ASC
Topic 985), Certain Revenue Arrangements that include Software Elements, and
various other ASU's No. 2009-2 through ASU No. 2010-03 which contain technical
corrections to existing guidance or affect guidance to specialized industries
or entities were recently issued. These updates have no current applicability
to the Company or their effect on the financial statements would not have been
significant.
NOTE 3 - RELATED PARTY TRANSACTIONS
The Company maintains a mailing address at the offices of RD Capital, Inc. ("RD
Capital"), an affiliate under common control. At this time, the Company has no
need for an office.
RD Capital has assumed responsibility for funding the Company's limited
operations. The Company accounts for such proceeds as contributed capital or
as indebtedness to a related party. Through June 30, 2010, RD Capital has
contributed a total of $159,258 as compared to $151,238 as at September 30,
2009 on behalf of the stockholders, which is included in the accompanying
financial statements as "additional paid-in capital." During the periods ended
June 30, 2010 and June 30, 2009, RD Capital contributed an additional 8,020
and 11,000 to paid-in-capital. RD Capital does not expect to be repaid for
its capital contributions to the Company.
During the year ended September 30, 2007, indebtedness of $36,480 to RD Capital
was forgiven and reclassified as "paid-in capital."
NOTE 4 - LOAN PAYABLE
As of September 30, 2009, the Company owed $45,500 to LME Holdings Co., Ltd. No
additional loans were made during the period ended June 30, 2010. The loan
reflected in the financial statements is interest free, uncollateralized and
due on demand.
Per ASC Topic 835-30 "Interest on Receivables and Payable", an 8% interest rate
has been imputed on the non-interest bearing loan payable due to LME Holdings
Co., Ltd in the amount of $ 2,723 for the period ended June 30 2010. Accrued
interest as at June 30, 2010 is $9,631 as compared to $5,991 at June 30,
2009.
NOTE 5 - COMMON STOCK
On September 19, 1997, the Company issued 500,000 shares of common stock in
exchange for services. There have been no issuances of the Company's common
stock since then.
During the year ended September 30, 1999, an affiliate paid third party
expenses for $332 on behalf of the Company. These payments were recorded as
contributed capital.
During the year ended September 30, 2000, an affiliate paid third party
expenses for $6,897 on behalf of the Company. These payments were recorded as
contributed capital.
During the year ended September 30, 2001, an affiliate paid third party
expenses for $35,011 on behalf of the Company. These payments were recorded as
contributed capital.
During the year ended September 30, 2002, the Company reclassified $2,000 from
"additional paid-in capital" to "indebtedness to related party" to report
working capital advances received from RD Capital.
During the year ended September 30, 2007, RD Capital contributed an additional
$22,000. Additionally, $36,480 of the $48,000 of indebtness to RD Capital was
reclassified as "paid in capital", the balance of $11,520 was repaid in cash.
During the years ended September 30, 2009 and 2008, RD Capital contributed
$13,700 and $30,500, respectively. These funds were recorded as contributed
capital.
During the periods ended June 30, 2010 and June 30, 2009, RD Capital
contributed an additional $8,020 and $ 11,000 to paid-in-capital.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULT
OF OPERATIONS.
FORWARD-LOOKING STATEMENTS
This quarterly report contains forward-looking statements. These statements
relate to future events or our future financial performance. In some cases,
you can identify forward-looking statements by terminology such as "may",
"should", "expects", "plans", "anticipates", "believes", "estimates",
"predicts", "potential" or "continue" or the negative of these terms or other
comparable terminology. These statements are only predictions and involve
known and unknown risks, uncertainties and other factors that may cause our or
our industry's actual results, levels of activity, performance or achievements
to be materially different from any future results, levels of activity,
performance or achievements expressed or implied by these forward-looking
statements. Although we believe that the expectations reflected in the
forward-looking statements are reasonable, we cannot guarantee future results,
levels of activity, performance or achievements. Except as required by
applicable law, including the securities laws of the United States, we do not
intend to update any of the forward-looking statements to conform these
statements to actual results.
Our unaudited financial statements are stated in United States Dollars (US$)
and are prepared in accordance with United States Generally Accepted Accounting
Principles. The following discussion should be read in conjunction with our
financial statements and the related notes that appear elsewhere in this
quarterly report. The following discussion contains forward-looking statements
that reflect our plans, estimates and beliefs. Our actual results could differ
materially from those discussed in the forward looking statements. Factors
that could cause or contribute to such differences include, but are not limited
to, those discussed below and elsewhere in this quarterly report.
In this quarterly report, unless otherwise specified, all dollar amounts are
expressed in United States dollars. All references to "US$" refer to United
States dollars and all references to "common stock" refer to the common shares
in our capital stock.
As used in this quarterly report, the terms "we", "us", "our", "our company"
and "Blue Moon" mean Blue Moon Investments, Inc., unless otherwise indicated.
General Overview
We were incorporated in the State of Nevada on September 19, 1997. We are a
"blank check" company, whose sole purpose at this time is to locate and
consummate a merger or acquisition with a private entity. The Board of
Directors has elected to commence implementation of our principal business
purpose. Other than issuing shares to our shareholders, we never commenced any
other operational activities.
The Securities and Exchange Commission defines a "blank check" company as "any
development stage company that is issuing a penny stock and that has no
specific business plan or purpose, or has indicated that its business plan is
to merge with an unidentified company or companies." Many states have enacted
statutes, rules and regulations limiting the sale of securities of "blank
check" companies in their respective jurisdictions. Management does not intend
to undertake any efforts to cause a market to develop in our securities, either
debt or equity, until we have successfully implemented our business plan. We
intend to comply with the periodic reporting requirements of the Securities
Exchange Act of 1934 for so long as it is subject to those requirements.
Each of our shareholders has executed and delivered a "lock-up" letter
agreement, affirming that they shall not sell their respective shares of common
stock until we have successfully consummated a merger or acquisition and we are
no longer classified as a "blank check" company. However, while management
believes that the procedures established to preclude any sale of our securities
prior to closing of a merger or acquisition will be sufficient, we cannot
assure you that the procedures established will unequivocally limit any
shareholder's ability to sell their respective securities before a closing.
Our principal business objective for the next 12 months and beyond such time
will be to achieve long-term growth potential through a combination with a
business rather than immediate, short-term earnings. We will not restrict our
potential candidate target companies to any specific business, industry or
geographical location and, thus, may acquire any type of business.
Plan of Operations
We currently do not engage in any business activities that provide cash flow.
We currently do not have sufficient funds to fund our ongoing operations and
execute our business plan of seeking a business combination.
During the next twelve months we anticipate incurring costs related to:
(i) filing of reports under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and
(ii) consummating an acquisition.
We believe we will be able to meet these costs through deferral of fees by
certain service providers and additional amounts, as necessary, to be loaned to
or invested in us by our stockholders, management or other investors.
We may consider a business which has recently commenced operations, is a
developing company in need of additional funds for expansion into new products
or markets, is seeking to develop a new product or service, or is an
established business which may be experiencing financial or operating
difficulties and is in need of additional capital. In the alternative, a
business combination may involve the acquisition of, or merger with, a company
which does not need substantial additional capital, but which desires to
establish a public trading market for its shares, while avoiding, among other
things, the time delays, significant expense, and loss of voting control which
may occur in a public offering.
Since our Registration Statement on Form 10-SB became effective, our officers
and directors have had limited contact or discussions with representatives of
other entities regarding a business combination with us. Any target business
that is selected may be a financially unstable company or an entity in its
early stages of development or growth, including entities without established
records of sales or earnings. In that event, we will be subject to numerous
risks inherent in the business and operations of financially unstable and early
stage or potential emerging growth companies. In addition, we may effect a
business combination with an entity in an industry characterized by a high
level of risk, and, although our management will endeavor to evaluate the risks
inherent in a particular target business, there can be no assurance that we
will properly ascertain or assess all significant risks.
We anticipate that the selection of a business combination will be complex and
extremely risky. Because of general economic conditions, rapid technological
advances being made in some industries and shortages of available capital, our
management believes that there are numerous firms seeking even the limited
additional capital which we will have and/or the perceived benefits of becoming
a publicly traded corporation. Such perceived benefits of becoming a publicly
traded corporation include, among other things, facilitating or improving the
terms on which additional equity financing may be obtained, providing liquidity
for the principals of and investors in a business, creating a means for
providing incentive stock options or similar benefits to key employees, and
offering greater flexibility in structuring acquisitions, joint ventures and
the like through the issuance of stock. Potentially available business
combinations may occur in many different industries and at various stages of
development, all of which will make the task of comparative investigation and
analysis of such business opportunities extremely difficult and complex.
Results of Operations
The following summary of our results of operations should be read in
conjunction with our financial statements for the quarter ended June 30, 2010
which are included herein.
Nine months summary ended June 30, 2010 and 2009
NINE MONTHS ENDED JUNE 30
2010 2009
--------- ---------
Revenues $ Nil $ -
Expenses $ 11,629 $ 17,190
Net Loss $(11,629) $(17,190)
Expenses
Our expenses consist of selling and general and administrative and interest
expenses. For the nine months ended June 30, 2010, total selling and
administrative expenses were $8,906 while they were $14,466 and interest
expenses were $2,723 and $2,724 for the nine months ended June 30, 2010 and
2009. The decrease in our total expenses is mainly due to a decrease in
selling, general and administrative expenses.
Revenues
We have not earned any revenues since our inception and we do not anticipate
earning revenues in the upcoming quarter.
Liquidity and Capital Resources
Working Capital
At AT
June 30, September 30,
2010 2009
-------- -------------
Current assets $ 157 $ 382
Current liabilities $55,705 $52,321
Working capital deficiency $55,548 $51,939
Cash Flows
June 30, June 30,
2010 2009
Net Cash Used by Operating Activities $(8,245) $(14,232)
Net Cash Used in Investing Activities $ Nil $ Nil
Net Cash Provided by Financing Activities $ 8,020 $ 11,000
Net decrease in cash during period $ (225) $ (3,232)
We had cash in the amount of $157 as of June 30, 2010 as compared to$382 as of
September 30, 2009. We had a working capital deficit of $ 55,548 as of June
30, 2010 compared to a working capital deficit of $51,939 as of September 30,
2009.
We have nominal assets and have generated no revenues since our inception. We
are dependent upon the receipt of capital investment or other financing to fund
our ongoing operations and to execute our business plan of seeking a
combination with a private operating company. If continued funding and capital
resources are unavailable at reasonable terms, we may not be able to implement
our plan of operations.
Product Research and Development
We do not anticipate that we will spend any significant monies on research and
development over the twelve month period ending June 30, 2011.
Purchase of Significant Equipment
We do not intend to purchase any significant equipment over the twelve month
period ending June 30, 2011.
Off-Balance Sheet Arrangements
As of June 30, 2010, we had no off-balance sheet arrangements, including any
outstanding derivative financial statements, off-balance sheet guarantees,
interest rate swap transactions or foreign currency contracts. Our company
does not engage in trading activities involving non-exchange traded contracts.
Employees
We currently have no employees, other than our executive officers and we do not
expect to hire any employees in the foreseeable future. We presently conduct
our business through agreements with consultants and arms-length third parties.
Going Concern
Due to the uncertainty of our ability to meet our current operating and capital
expenses, in their report on the annual financial statements for the year ended
September 30, 2009, our independent auditors included an explanatory paragraph
regarding concerns about our ability to continue as a going concern.
There is substantial doubt about our ability to continue as a going concern as
the continuation of our business is dependent upon our company locating and
consummating a merger or acquisition with a private entity and achieving a
profitable level of operation. The issuance of additional equity securities by
us could result in a significant dilution in the equity interests of our
current shareholders. Obtaining commercial loans, assuming those loans would
be available, will increase our liabilities and future cash commitments.
CRITICAL ACCOUNTING POLICIES
The discussion and analysis of our financial condition and results of
operations are based upon our financial statements, which have been prepared in
accordance with the accounting principles generally accepted in the United
States of America. Preparing financial statements requires management to make
estimates and assumptions that affect the reported amounts of assets,
liabilities, revenue, and expenses. These estimates and assumptions are
affected by management's application of accounting policies. We believe that
understanding the basis and nature of the estimates and assumptions involved
with the following aspects of our financial statements is critical to an
understanding of our financial statements.
Accounting Method
Our company's financial statements are prepared using the accrual basis of
accounting in accordance with accounting principles generally accepted in the
United States of America.
Basic and Diluted Net Loss per Share
Loss per share was computed by dividing the net loss by the weighted average
number of shares outstanding during the period. The weighted average number of
shares was calculated by taking the number of shares outstanding and weighting
them by the amount of time they were outstanding. At June 30, 2010 and 2009,
basic and diluted loss per share is the same, as there are no common stock
equivalents outstanding.
Cash and Cash Equivalents
Our company considers all highly liquid investments with an original maturity
of three months or less to be cash equivalents.
Concentration of Risk
Our company maintains its cash in primarily one business checking account, the
funds of which are insured by the Federal Deposit Insurance Corporation.
Use of Estimates
The process of preparing financial statements in conformity with accounting
principles generally accepted in the United States of America requires the use
of estimates and assumptions regarding certain types of assets, liabilities,
revenues, and expenses. Such estimates primarily relate to unsettled
transactions and events as of the date of the financial statements.
Accordingly, upon settlement, actual results may differ from estimated amounts.
RECENT ACCOUNTING PRONOUNCEMENTS
Accounting Standards Update ("ASU") ASU No. 2009-05 (ASC Topic 820), which
amends Fair Value Measurements and Disclosures - Overall, ASU No. 2009-13 (ASC
Topic 605), Multiple-Deliverable Revenue Arrangements, ASU No. 2009-14 (ASC
Topic 985), Certain Revenue Arrangements that include Software Elements, and
various other ASU's No. 2009-2 through ASU No. 2010-03 which contain technical
corrections to existing guidance or affect guidance to specialized industries
or entities were recently issued. These updates have no current applicability
to our company or their effect on the financial statements would not have been
significant.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
As a "smaller reporting", we are not required to provide tabular disclosure
obligations.
ITEM 4. CONTROLS AND PROCEDURES.
We maintain disclosure controls and procedures that are designed to ensure that
information required to be disclosed in our reports filed under the Securities
Exchange Act of 1934, as amended, is recorded, processed, summarized and
reported within the time periods specified in the Securities and Exchange
Commission's rules and forms, and that such information is accumulated and
communicated to our management, including our president, chief executive
officer and chief financial officer (our principal executive officer, principal
financial officer and principle accounting officer) to allow for timely
decisions regarding required disclosure. In designing and evaluating our
disclosure controls and procedures, our management recognizes that any controls
and procedures, no matter how well designed and operated, can provide only
reasonable assurance of achieving the desired control objectives, and our
management is required to apply its judgment in evaluating the cost-benefit
relationship of possible controls and procedures.
As of June 30, 2010, the end of the period covered by this report, our
president, chief executive officer and chief financial officer (our principal
executive officer, principal financial officer and principle accounting
officer) carried out an evaluation of the effectiveness of the design and
operation of our disclosure controls and procedures. Based on the foregoing,
our president, chief executive officer and chief financial officer (our
principal executive officer, principal financial officer and principle
accounting officer) concluded that our disclosure controls and procedures were
not effective as of the end of the period covered by this quarterly report.
There have been no changes in our internal controls over financial reporting
that occurred during the quarter ended June 30, 2010 that have materially
affected, or are reasonably likely to materially affect, our internal controls
over financial reporting.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
We know of no material, existing or pending legal proceedings against our
company, nor are we involved as a plaintiff in any material proceeding or
pending litigation. There are no proceedings in which any of our directors,
officers or affiliates, or any registered or beneficial shareholder, is an
adverse party or has a material interest, adverse to our interest.
ITEM 1A. RISK FACTORS.
There may be conflicts of interest as a result of our management being involved
with other blank check shell companies.
Conflicts of interest create the risk that management may have an incentive to
act adversely to the interests of our company. Our management is currently
involved with other blank check shell companies, and in the pursuit of business
combinations, conflicts with such other blank check shell companies with which
it is, and may in the future become, affiliated, may arise. If we and the
other blank check shell companies that our management is affiliated with desire
to take advantage of the same opportunity, then those members of management
that are affiliated with both companies would abstain from voting upon the
opportunity. In the event of identical officers and directors, the officers
and directors will arbitrarily determine the company that will be entitled to
proceed with the proposed transaction.
We have incurred and may continue to incur losses.
Since September 19, 1997 (inception) through June 30, 2010, we have incurred
an accumulated deficit of $214,856. We expect that we will incur losses at
least until we complete a merger or other business combination with an
operating business and perhaps after such a combination as well. There can be
no assurance that we will complete a merger or other business combination with
an operating business or that we will ever be profitable.
We face a number of risks associated with potential acquisitions that could
harm our business, our strategy and our operating results in a material way.
We intend to use reasonable efforts to complete a merger or other business
combination with an operating business. Such combination will be accompanied
by risks commonly encountered in acquisitions, including, but not limited to,
difficulties in integrating the operations, technologies, products and
personnel of the acquired companies and insufficient revenues to offset
increased expenses associated with acquisitions. Failure to manage and
successfully integrate acquisitions we make could harm our business, our
strategy and our operating results in a material way.
There is competition for those private companies suitable for a merger
transaction of the type contemplated by management.
We are in a highly competitive market for a small number of business
opportunities which could reduce the likelihood of us consummating a successful
business combination. We are, and will continue to be, an insignificant
participant in the business of seeking mergers with, joint ventures with and
acquisitions of small private and public entities. A large number of
established and well-financed entities, including small public companies and
venture capital firms, are active in mergers and acquisitions of companies that
may be desirable target candidates for us. Nearly all these entities have
significantly greater financial resources, technical expertise and managerial
capabilities than we do; consequently, we will be at a competitive disadvantage
in identifying possible business opportunities and successfully completing a
business combination. These competitive factors may reduce the likelihood of
our identifying and consummating a successful business combination.
Future success is highly dependent on the ability of management to locate and
attract a suitable acquisition.
The nature of our operations is highly speculative, and there is a consequent
risk of loss of your investment. The success of our plan of operation will
depend to a great extent on the operations, financial condition and management
of the identified business opportunity. While management intends to seek
business combination(s) with entities having established operating histories,
we cannot assure you that we will be successful in locating candidates meeting
that criterion. In the event we complete a business combination, the success
of our operations may be dependent upon management of the successor firm or
venture partner firm and numerous other factors beyond our control.
Management intends to devote only a limited amount of time to seek a target
company which may adversely impact our ability to identify a suitable
acquisition candidate.
While seeking a business combination, management anticipates devoting very
limited time to our affairs. Our officers have not entered into written
employment agreements with us and are not expected to do so in the foreseeable
future. This limited commitment may adversely impact our ability to identify
and consummate a successful business combination.
There can be no assurance that we will successfully consummate a business
combination.
We can give no assurances that we will successfully identify and evaluate
suitable business opportunities or that we will conclude a business
combination. Management has not identified any particular industry or specific
business within an industry for evaluation. We cannot guarantee that we will
be able to negotiate a business combination on favorable terms.
The time and cost of preparing a private company to become a public reporting
company may preclude us from entering into a merger or acquisition with the
most attractive private companies.
Target companies that fail to comply with SEC reporting requirements may delay
or preclude acquisition. Sections 13 and 15(d) of the Exchange Act require
reporting companies to provide certain information about significant
acquisitions, including certified financial statements for the company
acquired, covering one, two, or three years, depending on the relative size of
the acquisition. The time and additional costs that may be incurred by some
target entities to prepare these statements may significantly delay or
essentially preclude consummation of an acquisition. Otherwise suitable
acquisition prospects that do not have or are unable to obtain the required
audited statements may be inappropriate for acquisition so long as the
reporting requirements of the Exchange Act are applicable.
Any potential acquisition or merger with a foreign company may subject us to
additional risks.
If we enter into a business combination with a foreign company, we will be
subject to the risks inherent in business operations outside of the United
States. These risks include, for example, currency fluctuations, regulatory
problems, punitive tariffs, unstable local tax policies, trade embargoes, risks
related to shipment of raw materials and finished goods across national borders
and cultural and language differences. Foreign economies may differ favorably
or unfavorably from the United States economy in growth of gross national
product, rate of inflation, market development, rate of savings, and capital
investment, resource self-sufficiency and balance of payments positions, and in
other respects.
We may be subject to certain tax consequences in our business, which may
increase our cost of doing business.
We may not be able to structure our acquisition to result in tax-free treatment
for the companies or their stockholders, which could deter third parties from
entering into certain business combinations with us or result in being taxed on
consideration received in a transaction. Currently, a transaction may be
structured so as to result in tax-free treatment to both companies, as
prescribed by various federal and state tax provisions. We intend to structure
any business combination so as to minimize the federal and state tax
consequences to both us and the target entity; however, we cannot guarantee
that the business combination will meet the statutory requirements of a tax-
free reorganization or that the parties will obtain the intended tax-free
treatment upon a transfer of stock or assets. A non-qualifying reorganization
could result in the imposition of both federal and state taxes that may have an
adverse effect on both parties to the transaction.
Our business will have no revenue unless and until we merge with or acquire an
operating business.
We are a development stage company and have had no revenue from operations. We
do not expect to realize any revenue unless and until we successfully merge
with or acquire an operating business.
Because we may seek to complete a business combination through a "reverse
merger", following such a transaction we may not be able to attract the
attention of major brokerage firms.
Additional risks may exist since we expect to assist a privately held business
to become public through a "reverse merger." Securities analysts of major
brokerage firms may not provide coverage of our company since there is no
incentive to brokerage firms to recommend the purchase of our common stock. No
assurance can be given that brokerage firms will want to conduct any secondary
offerings on behalf of our post-merger company in the future.
We cannot assure you that following a business combination with an operating
business, our common stock will be listed on NASDAQ or any other securities
exchange.
Following a business combination, we may seek the listing of Common Stock on
NASDAQ or the American Stock Exchange. However, we cannot assure you that
following such a transaction, we will be able to meet the initial listing
standards of either of those or any other stock exchange, or that we will be
able to maintain a listing of our common stock on either of those or any other
stock exchange. After completing a business combination, until the common
stock is listed on the NASDAQ or another stock exchange, we expect that our
common stock would be eligible to trade on the OTC Bulletin Board, another
over-the-counter quotation system, or on the "pink sheets," where our
stockholders may find it more difficult to dispose of shares or obtain accurate
quotations as to the market value of our common stock.
There is currently no trading market for our common stock, and the liquidity of
our shares of common stock is limited.
Shares of our common stock are not registered under the securities laws of any
state or other jurisdiction, and accordingly there is no public trading market
for our common stock. Further, no public trading market is expected to develop
in the foreseeable future unless and until we complete a business combination
with an operating business and our company thereafter files a registration
statement under the Securities Act of 1933, as amended (the "Securities Act").
Therefore, outstanding shares of our common stock cannot be offered, sold,
pledged or otherwise transferred unless subsequently registered pursuant to, or
exempt from registration under, the Securities Act and any other applicable
federal or state securities laws or regulations. Shares of our common stock
cannot be sold under the exemptions from registration provided by Rule 144
under of the Securities Act ("Rule 144").
Compliance with the criteria for securing exemptions under federal securities
laws and the securities laws of the various states is extremely complex,
especially in respect of those exemptions affording flexibility and the
elimination of trading restrictions in respect of securities received in exempt
transactions and subsequently disposed of without registration under the
Securities Act or state securities laws.
There are issues impacting liquidity of our securities with respect to the
SEC's review of a future resale registration statement.
Since shares of our common stock issued prior to a business combination or
reverse merger cannot currently, nor will they for a considerable period of
time after we complete a business combination, be available to be offered,
sold, pledged or otherwise transferred without being registered pursuant to the
Securities Act, we will likely file a resale registration statement on Form S-
1, or some other available form, to register for resale such shares of our
common stock. We cannot control this future registration process in all
respects as some matters are outside our control. Even if we are successful in
causing the effectiveness of the resale registration statement, there can be no
assurances that the occurrence of subsequent events may not preclude our
ability to maintain the effectiveness of the registration statement. Any of
the foregoing items could have adverse effects on the liquidity of our shares
of common stock.
In addition, the SEC has recently disclosed that it has developed internal
informal guidelines concerning the use of a resale registration statement to
register the securities issued to certain investors in private investment in
public equity (PIPE) transactions, where the issuer has a market capitalization
of less than $75 million and, in general, does not qualify to file a
Registration Statement on Form S-3 to register its securities. The SEC has
taken the position that these smaller issuers may not be able to rely on Rule
415 under the Securities Act ("Rule 415"), which generally permits the offer
and sale of securities on a continued or delayed basis over a period of time,
but instead would require that the issuer offer and sell such securities in a
direct or "primary" public offering, at a fixed price, if the facts and
circumstances are such that the SEC believes the investors seeking to have
their shares registered are underwriters and/or affiliates of the issuer. It
appears that the SEC in most cases will permit a registration for resale of up
to one third of the total number of shares of common stock then currently owned
by persons who are not affiliates of such issuer and, in some cases, a larger
percentage depending on the facts and circumstances. Staff members also have
indicated that an issuer in most cases will have to wait until the later of
nine months after effectiveness of the first registration or such time as
substantially all securities registered in the first registration are sold
before filing a subsequent registration on behalf of the same investors.
Since, following a reverse merger or business combination, we may have little
or no tradable shares of common stock, it is unclear as to how many, if any,
shares of our common stock the SEC will permit us to register for resale, but
SEC staff members have indicated a willingness to consider a higher percentage
in connection with registrations following reverse mergers with shell companies
such as our company. The SEC may require as a condition to the declaration of
effectiveness of a resale registration statement that we reduce or "cut back"
the number of shares of common stock to be registered in such registration
statement. The result of the foregoing is that a stockholder's liquidity in
our common stock may be adversely affected in the event the SEC requires a cut
back of the securities as a condition to allow us to rely on Rule 415 with
respect to a resale registration statement, or, if the SEC requires us to file
a primary registration statement.
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.
Exhibits required by Item 601 of Regulation S-K
EXHIBIT DESCRIPTION
NUMBER
(3) ARTICLES OF INCORPORATION AND BYLAWS
3.1 Articles of Incorporation (incorporated by reference from our Registration Statement on Form 10-SB filed on January 19,
2000).
3.2 Amendment to Articles of Incorporation (incorporated by reference from our Registration Statement on Form 10-SB filed on
January 19, 2000).
3.3 By-laws (incorporated by reference from our Registration Statement on Form 10-SB filed on January 19, 2001).
(4) INSTRUMENTS DEFINING RIGHTS OF SECURITY HOLDERS, INCLUDING DEBENTURES
4.1 Specimen Informational Statement (incorporated by reference from our Registration Statement on Form 10-SB filed on January
19, 2000).
(31) SECTION 302 CERTIFICATIONS
31.1* Section 302 Certification of David Ward
(32) SECTION 906 CERTIFICATION
32.1* Section 906 Certification of David Ward
(99) ADDITIONAL EXHIBITS
99.1 Form of Lockup Agreement (incorporated by reference from our Registration Statement on Form 10-SB filed on January 19,
2000).
* filed herewith
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
BLUE MOON INVESTMENTS, INC.
/s/ David Ward
---------------
President, Chief Executive Officer, Chief Financial Officer
and Director
(Principal Executive Officer, Principal Financial Officer
and Principal Accounting Officer)
Date: August 16, 2010