U. S. Securities and Exchange Commission
Washington, D. C. 20549
FORM 10-KSB
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2002
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _____________ to ____________
Commission File No. 333-60906
TWO MOONS KACHINAS CORP.
------------------------
(Name of Small Business Issuer in its Charter)
NEVADA 87-0656515
------ ----------
(State or Other Jurisdiction of (I.R.S. Employer)
incorporation or organization) Identification No.)
9005 Cobble Canyon Lane
Sandy, Utah 84093
-----------------
(Address of Principal Executive Offices)
Issuer's Telephone Number: (801) 942-0555
Securities Registered under Section 12(b) of the Exchange Act: None
Securities Registered under Section 12(g) of the Exchange Act: None
Check whether the Issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the Company was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
(1) Yes X No (2) Yes X No
--- --- --- ---
Check if there is no disclosure of delinquent files in response to Item
405 of Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of Company's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-KSB or any amendment to this Form 10-KSB. [ ]
State Issuer's revenues for its most recent fiscal year: December 31,
2002 - $7,676.
State the aggregate market value of the voting stock held by
non-affiliates computed by reference to the price at which the stock was sold,
or the average bid and asked prices of such stock, as of a specified date
within the past 60 days.
March 20, 2003 - $79,800. There are presently approximately 79,800
shares of common voting stock of the Registrant that are beneficially owned by
non-affiliated persons. There is a limited public market for the common
stock of the Registrant; this valuation is based upon the offering price of
the Registrant's common stock in its recent public offering pursuant to Form
SB-2 that was filed with the Securities and Exchange Commission on May 14,
2001, and which became effective on August 10, 2001. See Part III, Item 1.
(ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE PAST FIVE YEARS)
Check whether the Registrant has filed all documents and reports required
to be filed by Section 12,13, or 15(d) of the Exchange Act after the
distribution of securities under a plan confirmed by a court. Yes No
--- ---
Not applicable.
(APPLICABLE ONLY TO CORPORATE ISSUERS)
State the number of shares outstanding of each of the Issuer's classes of
common equity, as of the latest practicable date:
March 20, 2003; 579,800 shares.
DOCUMENTS INCORPORATED BY REFERENCE
A description of "Documents Incorporated by Reference" is contained
in Part III, Item I.
Transitional Small Business Issuer Format Yes X No
--- ---
PART I
Item 1. Description of Business.
------------------------
Business Development.
---------------------
Two Moons Kachinas Corp. (our "Company" or "Two Moons") was formed
on May 19, 2000, and has only recently begun intended operations. We were
organized for the purpose of marketing and selling Kachina dolls in the $6,000
to $8,000 price range. A Kachina doll is a carved wooden doll that resembles
a Kachina or benevolent spirit recognized by the Hopi Indians of the American
Southwest.
In May, 2000, 500,000 shares of its common stock were issued to
its two founders, directors and executive officers, 25,000 shares to each, in
consideration of the aggregate sum of $25,000, $12,500 from each.
On May 14, 2001, we filed an SB-2 Registration Statement with the
Securities and Exchange Commission to offer and sell 200,000 shares of our
common stock at an offering price of $1.00 per share. This Registration
Statement became effective on August 10, 2001, and we closed the offering
after the sale of 79,800 shares on or about November 8, 2001.
Business.
---------
Two Moons plans to market Hopi Kachina Dolls. Each Kachina doll
represents a different Kachina, or benevolent spirit, who lives among the Hopi
for a six month period each year, generally from February to July. The
Kachina tradition is a religious practice that is unique only to the Pueblo
tribes of Arizona and New Mexico, which include the Hopi.
The Pueblo Indians believe that there are more than 350 Kachinas, or
ancestral spirits, who act as intermediaries between God and man. These
spirits may be animals, plants or earth. Well-known Kachinas include Mongwu,
the Great Horned Owl Kachina; Kwahu, the Eagle Kachina; Hon, the Bear Kachina;
Patung, the Squash Kachina and Koyemsi, the Mudhead Kachina. Each tribe has
its own variations.
During religious ceremonies, male members of the tribe wear masks
and costumes representing a particular Kachina. During the ceremony the
tribes believe that the Kachina actually inhabits the participant's body. The
dolls were initially created by Hopi men and given to children of the tribal
villages during the ceremonial performances.
Kachina dolls are carved of dried cottonwood roots to represent the
men who dance in costume as Kachina spirits. Because it draws moisture and
life from the earth, the carvers believe that the cottonwood root has a
spiritual quality. The carvers take only roots that are found broken from the
tree; never from live trees.
Originally, Kachina dolls were carved with flint knives and sanded
and finished with pieces of sandstone. The dolls were then painted with
mineral paint and adorned with feathers, shells, fur or leather. Most dolls
were carved from several pieces of wood, with the head and limbs being glued
to the torso.
In recent years, the style of carving has evolved. Today's dolls
feature intricate detail and are made with wood burning instruments, Dremel
tools and other modern tools. A Dremel tool is an electric carving tool that
has a spinning tip onto which bits of different shapes and sizes can be added
for different effects. Since the federal government banned the use of
endangered species, feathers are now carved into the doll. Carvers make their
dolls out of one piece of cottonwood and often spend several months on a
single doll. It has been the experience of our President, David C. Merrell,
that as collectors have begun to realize the beauty of these creations, demand
and prices have increased.
The Kachina dolls that Two Moons plans to market are unique works of
collectable art. We plan to specialize in the higher end of the market, with
prices generally ranging from $6,000 to $8,000.
Principal Products or Services and their Markets.
-------------------------------------------------
Two Moons plans to market Hopi Kachina Dolls. There are over 350
varieties of Kachinas and our Company will specialize in dolls in the $6,000
to $8,000 price range. All Kachina dolls will be signed by the artist, and
will include the name of the Kachina and the village where the artist is from.
We have not conducted any studies of the size of the market for Kachina dolls.
However, based on the experience of our President, Mr. Merrell, we believe
that there is a large enough market for Kachinas in both the U.S. and Europe
for us to make regular sales.
Distribution Methods of our Products or Services.
-------------------------------------------------
Two Moons will market and distribute the Kachinas in two ways;
first, through its web site with multiple pictures and descriptions of each
piece, and second, by placing a few pieces at a time on an Internet auction
site such as E-bay or on consignment in retail speciality stores. We expect
that about 75% of sales will come from our web site, with the remaining 25%
coming from Internet auctions and consignment sales. Our two officers will
use computers at their home offices to monitor the corporate web site.
In December, 2001, our Company acquired its first inventory that can
be viewed on its new web site, www.twomoonskachinas.com, and entered into
consignment relationships with Crosby Collections in Park City, Utah, and
Payne Anthony's in Trolley Square in Salt Lake City, Utah. We attended in
early 2003 the Marin County American Indian Arts Show which was held on
February 21-23, 2003, and we are actively researching the availability of
similar events to showcase our products.
Competition.
------------
Our management believes that there is substantial competition for
the sale of Kachina dolls, but that most of the competition is for Kachinas
that sell for under $300. In Mr. Merrell's 10 years of experience as a
Kachina collector, he has found that most Kachinas are sold in the Southwest
in trading post stores to tourists. There are also many Internet web sites
and Internet auctions that offer Kachinas. Mr. Merrell believes that the
higher priced Kachinas that we will offer are primarily sold in art galleries.
We do not expect our competitive position within our industry to be
significant, either now or in the foreseeable future.
Sources and Availability of Raw Materials.
------------------------------------------
Two Moons plans to acquire Kachinas through the help of Indian
traders who have dealt with Hopi carvers for many years. Our officers
have contacts that will allow us to purchase Kachinas at below wholesale
prices. There are many Hopi Kachina carvers, but only a limited number who
produce the quality of Kachina that our Company plans to market. However, we
believe that our ability to purchase inventory will be limited more by lack of
funding than by the limited number of carvers. See the Risk Factor "Lack of
funding would limit our ability to buy inventory."
We do not currently have any binding contracts for the supply of
Kachinas.
Dependence On One or a Few Major Customers.
-------------------------------------------
We have not undertaken any studies of the size of the market for
Kachinas. However, we believe that there is a large enough market, both in
the U.S. and Europe, that we will not have one or a few major customers. We
expect our customers to be numerous, coming mainly from the Internet and from
around the world. We plan to sell and ship our products both domestically and
internationally.
Patents, Trademarks, Licenses, Franchises, Concessions, Royalty Agreements or
Labor Contracts.
----------------
We have obtained the domain name "twomoonskachinas.com."
Governmental Approval of Principal Products or Services.
--------------------------------------------------------
There are no laws pertaining the purchase or sale of Kachina Dolls.
Effects of Existing or Probable Governmental Regulations.
---------------------------------------------------------
Federal Legislation.
--------------------
It is federal crime for any person to offer, display for sell, or
sell any item in a way that falsely suggests that it is produced by Native
Americans. For a corporation, the first knowing violation may result in a
fine of up to $1,000,000, and for second violations, the fine may be as much
as $5,000,000. Federal law also permits the U. S. Attorney General and Native
American tribes to bring a civil action against any person who misrepresents
an item as being produced by a Native American. The court may award
injunctive relief, and the greater of: (i) treble damages; or (ii) $1000 for
each day on which the offer, display for sale, or sale continues. The court
may also award punitive damages and attorney's fees and costs of the lawsuit.
We will use our best efforts to make sure that we buy only Native American
goods. However, any violation of these statutes may significantly hurt our
operations. Other than any potential violation of these statutes, we do not
believe that existing governmental regulations will have any significant
effect on our business, other than the usual requirements for a business
license and payment of applicable taxes. Management is not aware of any
government restrictions on the export of cottonwood products.
Sarbanes-Oxley Act.
-------------------
On July 30, 2002, President Bush signed into law the Sarbanes-Oxley
Act of 2002 (the "Sarbanes-Oxley Act"). The Sarbanes-Oxley Act imposes a wide
variety of new regulatory requirements on publicly-held companies and their
insiders. Many of these requirements will affect us. For example:
* Our chief executive officer and chief financial officer must
now certify the accuracy of all of our periodic reports that contain financial
statements;
* Our periodic reports must disclose our conclusions about the
effectiveness of our disclosure controls and procedures; and
* We may not make any loan to any director or executive officer
and we may not materially modify any existing loans.
The Sarbanes-Oxley Act has required us to review our current
procedures and policies to determine whether they comply with the
Sarbanes-Oxley Act and the new regulations promulgated thereunder. We will
continue to monitor our compliance with all future regulations that are
adopted under the Sarbanes-Oxley Act and will take whatever actions are
necessary to ensure that we are in compliance.
Penny Stock.
------------
Our common stock is "penny stock" as defined in Rule 3a51-1 of the
Securities and Exchange Commission. Penny stocks are stocks:
* with a price of less than five dollars per share;
* that are not traded on a "recognized" national exchange;
* whose prices are not quoted on the NASDAQ automated quotation
system; or
* in issuers with net tangible assets less than $2,000,000, if
the issuer has been in continuous operation for at least three years, or
$5,000,000, if in continuous operation for less than three years, or with
average revenues of less than $6,000,000 for the last three years.
Section 15(g) of the Exchange Act and Rule 15g-2 of the Securities
and Exchange Commission require broker/dealers dealing in penny stocks to
provide potential investors with a document disclosing the risks of penny
stocks and to obtain a manually signed and dated written receipt of the
document before making any transaction in a penny stock for the investor's
account. You are urged to obtain and read this disclosure carefully before
purchasing any of our shares.
Rule 15g-9 of the Securities and Exchange Commission requires
broker/dealers in penny stocks to approve the account of any investor for
transactions in these stocks before selling any penny stock to that investor.
This procedure requires the broker/dealer to:
* get information about the investor's financial situation,
investment experience and investment goals;
* reasonably determine, based on that information, that
transactions in penny stocks are suitable for the investor and that the
investor can evaluate the risks of penny stock transactions;
* provide the investor with a written statement setting forth
the basis on which the broker/dealer made his or her determination; and
* receive a signed and dated copy of the statement from the
investor, confirming that it accurately reflects the investors' financial
situation, investment experience and investment goals.
Compliance with these requirements may make it harder for our
stockholders to resell their shares.
Reporting Obligations.
----------------------
Section 14(a) of the Exchange Act requires all companies with
securities registered pursuant to Section 12(g) of the Exchange Act to comply
with the rules and regulations of the Securities and Exchange Commission
regarding proxy solicitations, as outlined in Regulation 14A. Matters
submitted to stockholders of our Company at a special or annual meeting
thereof or pursuant to a written consent will require our Company to provide
our stockholders with the information outlined in Schedules 14A or 14C of
Regulation 14; preliminary copies of this information must be submitted to the
Securities and Exchange Commission at least 10 days prior to the date that
definitive copies of this information are forwarded to our stockholders.
We are also required to file annual reports on Form 10-KSB and
quarterly reports on Form 10-QSB with the Securities Exchange Commission on a
regular basis, and will be required to timely disclose certain material
events (e.g., changes in corporate control; acquisitions or dispositions of a
significant amount of assets other than in the ordinary course of business;
and bankruptcy) in a current report on Form 8-K.
Small Business Issuer.
----------------------
The integrated disclosure system for small business issuers adopted
by the Securities and Exchange Commission in Release No. 34-30968 and
effective as of August 13, 1992, substantially modified the information and
financial requirements of a "Small Business Issuer," defined to be an issuer
that has revenues of less than $25,000,000; is a U.S. or Canadian issuer; is
not an investment company; and if a majority-owned subsidiary, the parent is
also a small business issuer; provided, however, an entity is not a small
business issuer if it has a public float (the aggregate market value of the
issuer's outstanding securities held by non-affiliates) of $25,000,000 or
more. We are deemed to be a "small business issuer."
The Securities and Exchange Commission, state securities commissions
and the North American Securities Administrators Association, Inc. ("NASAA")
have expressed an interest in adopting policies that will streamline the
registration process and make it easier for a small business issuer to have
access to the public capital markets.
Cost and Effect of Compliance with Environmental Laws.
------------------------------------------------------
Management does not believe that compliance with environmental laws
will require any of our resources.
Research and Development Expenses.
----------------------------------
There are no research and development requirements, other than
developing a market on the Internet.
Number of Employees.
--------------------
Management of Two Moons plan to work part time. If and when needed,
one full time employee will be hired. Initially, we believe that Messrs.
Merrell and Paul will spend about 15 hours per week and five hours per week,
respectively, on our operations.
Item 2. Description of Property.
------------------------
Two Moons does not currently own any property. Its executive office
is the home of David C. Merrell, its President, and is provided rent free. We
plan to use a third-party web hosting service to house and maintain our web
site.
Item 3. Legal Proceedings.
------------------
Two Moons is not a party to any pending legal proceeding. To the
knowledge of management, no federal, state or local governmental agency is
presently contemplating any proceeding against us. No director, executive
officer or affiliate of Two Moons or owner of record or beneficially of more
than five percent of our common stock is a party adverse to Two Moons or has a
material interest adverse to us in any proceeding.
Item 4. Submission of Matters to a Vote of Security Holders.
----------------------------------------------------
None; not applicable.
PART II
Item 5. Market for Common Equity and Related Stockholder Matters.
---------------------------------------------------------
Market Information.
-------------------
Pink Sheets LLC provided the following quotations. They do not
represent actual transactions and they do not reflect dealer markups,
markdowns or commissions.
STOCK QUOTATIONS
CLOSING BID
Quarter ended: High Low
-------------- ---- ---
September 24, 2002
Through
September 30, 2002 None None
December 31, 2002 0.05 0.05
Since September 24, 2002, our common stock has been quoted on the OTC
Bulletin Board of the National Association of Securities Dealers, Inc.
("NASD"). Our symbol is "TMOO." No assurance can be given that any market
for our Company's common stock will develop or be maintained. If a public
market ever develops in the future, the sale of "unregistered" and
"restricted" shares of common stock pursuant to Rule 144 of the Securities and
Exchange Commission by our current stockholders may have a substantial
negative impact on any such public market. Both David C. Merrell and R. Kip
Paul would be able to sell up to 5,798 of their 250,000 "unregistered" and
"restricted" shares in any three month period, beginning as early as May,
2001.
Two Moons will have to file quarterly and annual reports
with the Commission in order to have its securities quoted on the OTC Bulletin
Board. These reports must contain financial statements, with year-end
financial statements being audited. Management expects that the legal and
accounting fees required to prepare and file its periodic reports will total
approximately $10,000 per year.
There are no outstanding options, warrants or calls to purchase
any of our authorized shares.
Future sales of the 500,000 "unregistered" and "restricted" shares
of common stock owned by Messrs. Merrell and Paul may decrease the value of
our common stock in any public market that may develop for the common stock.
See "Security Ownership of Certain Beneficial Owners and Management."
Recent Sales of Unregistered Securities.
----------------------------------------
The following table provides information about all "unregistered"
and "restricted" securities that Two Moons has sold since inception,
and which were not registered under the Securities Act of 1933 Act, as amended
(the "Securities Act"):
Number
Date of Aggregate
Name of Owner Acquired Shares* Consideration
------------- -------- ------ ------------
David C. Merrell 5-19-00 250,000 $12,500
Common
R. Kip Paul 5-19-00 250,000 $12,500
Common
Management believes that Messrs. Merrell and Paul are "accredited
investors" as that term is defined under applicable federal and state
securities laws, rules and regulations, because they are directors and
executive officers of Two Moons. Management also believes that the
offer and sale of these shares of common stock were exempt from the
registration requirements of Section 5 of the Securities Act pursuant to
Section 4(2) thereof, Rule 506 of Regulation D promulgated thereunder by the
Securities and Exchange Commission and from similar states' securities laws,
rules and regulations covering the offer and sale of securities by available
state exemptions from such registration.
Holders.
--------
The number of record holders as of March 20, 2003, is 32, with
579,800 shares outstanding.
Dividends.
----------
Two Moons has not declared any cash dividends with respect to its
common stock, and does not intend to declare dividends in the foreseeable
future. There are no material restrictions limiting, or that are likely to
limit, our ability to pay dividends on our securities.
Item 6. Management's Discussion and Analysis or Plan of Operation.
----------------------------------------------------------
Plan of Operation.
------------------
Our plan of operation for the next 12 months is to begin sales of
Kachina dolls, both through our own web site and through Internet auction
sites and consignment to specialty stores.
At the time of our public offering, management estimated that we
will needed minimum cash resources of about $60,000 to begin material
operations. We determined that amount based on the following expected
expenses:
Costs of offering - $15,000;
Web design - $1,000;
Web maintenance - $1,500
Kachinas - $30,000;
Travel - $5,000;
Working Capital - $7,500.
Net proceeds of our public offering exceeded this amount by
approximately $10,000. We have not yet identified any other source of
funding, and we can not assure you that we will have any success in this
regard if additional resources are needed.
From our public offering proceeds, we hired a web site designer to
design our retail web site, which became operational in December, 2001. We
then purchased approximately 10 collector-quality Kachinas from jobbers, who
purchased Kachinas directly from the carvers, at below wholesale prices of
$1,200 to $1,800. In some cases, we will purchase Kachinas directly from
carvers in the $1,000 to $2,000 price range.
We have placed photographs of the Kachinas on our web site and, if
sales are slow after one month, we will put one or two Kachinas up for
auction, with a minimum bid price, on an Internet auction site. We also have
arrangements with two retail specialty stores, we attended the Marin County
American Indian Arts Show which was held on February 21-23, 2003, and are
actively researching the availability of similar events to showcase our
products.
As we sell Kachinas, we plan to use the proceeds to buy additional
Kachinas for resale. Our President provides us with rent-free office space,
and our management has verbally agreed not to accept any compensation until we
are operating profitably. Because of our low overhead, we believe that we can
finance our initial needs for at least 12 months from the minimum gross
proceeds of $60,000 that we realized from our public offering. Our officers
have contacts through which they can purchase Kachinas at below wholesale
prices. We plan to keep our expenses low and to keep our inventory rolling
over.
Our officers are well-informed about Kachinas and plan to stay up-
to-date on current trends through reading industry publications, visiting
trade shows and communicating with personal contacts.
Item 7. Financial Statements.
---------------------
Financial Statements for the year ended
December 31, 2002
Independent Auditors Report
Balance Sheet - December 31, 2002
Statements of Operations for the years ended
December 31, 2002 and 2001 and for the period from
inception on May 19, 2000 through December
31, 2002
Statement of Stockholders' Equity, from inception
on May 19, 2000 through December 31, 2002
Statements of Cash Flows, for the years ended
December 31, 2002 and 2001 and for the period from
inception on May 19, 2000 through December 31, 2002
Notes to Financial Statements
TWO MOONS KACHINAS, CORP.
[A Development Stage Company]
FINANCIAL STATEMENTS
DECEMBER 31, 2002
TWO MOONS KACHINAS, CORP.
[A Development Stage Company]
CONTENTS
PAGE
Independent Auditors' Report 1
Balance Sheet, December 31, 2002 2
Statements of Operations, for the years ended
December 31, 2002 and 2001 and for the period from
inception on May 19, 2000 through December 31,
2002 3
Statement of Stockholders' Equity, from
inception on May 19, 2000 through December 31,
2002 4
Statements of Cash Flows, for the years ended
December 31, 2002 and 2001 and for the period from
inception on May 19, 2000 through December 31,
2002 5
Notes to Financial Statements 6 - 10
INDEPENDENT AUDITORS' REPORT
Board of Directors
TWO MOONS KACHINAS, CORP.
Sandy, Utah
We have audited the accompanying balance sheet of Two Moons Kachinas, Corp. [a
development stage company] at December 31, 2002 and the related statements of
operations, stockholders' equity and cash flows for the years ended December
31, 2002 and 2001 and for the period from inception on May 19, 2000 through
December 31, 2002. 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 audit.
We conducted our audit in accordance with generally accepted auditing
standards in the United States of America. Those standards require that we
plan and perform the audit 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
audit provides a reasonable basis for our opinion.
In our opinion, the financial statements audited by us present fairly, in all
material respects, the financial position of Two Moons Kachinas, Corp. [a
development stage company] as of December 31, 2002 and the results of its
operations and its cash flows for the years ended December 31, 2002 and 2001
and for the period from inception on May 19, 2000 through December 31, 2002 in
conformity with generally accepted accounting principles 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 7 to the
financial statements, the Company was only recently formed and has not yet
been successful in establishing profitable operations. These factors raise
substantial doubt about its ability to continue as a going concern.
Management's plans in regards to these matters are also described in Note 7.
The financial statements do not include any adjustments that might result from
the outcome of these uncertainties.
/s/Pritchett, Siler & Hardy, P.C.
PRITCHETT, SILER & HARDY, P.C.
February 5, 2003
Salt Lake City, Utah
TWO MOONS KACHINAS, CORP.
[A Development Stage Company]
BALANCE SHEET
ASSETS
December 31,
2002
------------
CURRENT ASSETS:
Cash $ 12,701
Interest receivable 8
Inventory 53,000
Prepaid expense 17
-----------
Total Current Assets 65,726
PROPERTY AND EQUIPMENT, net 5,930
OTHER ASSETS:
Website development, net 178
-----------
$ 71,834
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 10,237
Advances from shareholder 5,320
-----------
Total Current Liabilities 15,557
-----------
STOCKHOLDERS' EQUITY:
Common stock, $.001 par value,
50,000,000 shares authorized,
579,800 shares issued and
outstanding 580
Capital in excess of par value 93,355
Deficit accumulated during the
development stage (37,658)
-----------
Total Stockholders' Equity 56,277
-----------
$ 71,834
===========
The accompanying notes are an integral part of this financial statement.
2
TWO MOONS KACHINAS, CORP.
[A Development Stage Company]
STATEMENTS OF OPERATIONS
From Inception
For the On May 19,
Year Ended 2000 Through
December 31, December 31,
_________________
2002 2001 2002
_________ _______ _______________
REVENUE $ 7,676 $ - $ 7,676
COST OF GOODS SOLD 4,500 - 4,500
--------- ------- ---------------
GROSS PROFIT 3,176 - 3,176
OPERATING EXPENSES:
Selling 5,144 - 5,144
General and administrative 24,457 10,692 36,525
--------- ------- ---------------
Total Operating Expenses 29,601 10,692 41,669
LOSS FROM OPERATIONS (26,425)(10,692) (38,493)
--------- ------- ---------------
OTHER INCOME:
Interest income 150 225 835
--------- ------- ---------------
Total Other Income 150 225 835
--------- ------- ---------------
LOSS BEFORE INCOME TAXES (26,275)(10,467) (37,658)
CURRENT TAX EXPENSE - - -
DEFERRED TAX EXPENSE - - -
--------- ------- ---------------
NET LOSS $(26,275)$(10,467)$ (37,658)
========= ======= ===============
LOSS PER COMMON SHARE $ (.05)$ (.02)$ (.07)
========= ======= ===============
The accompanying notes are an integral part of these financial statements.
3
TWO MOONS KACHINAS, CORP.
[A Development Stage Company]
STATEMENT OF STOCKHOLDERS' EQUITY
FROM THE DATE OF INCEPTION ON MAY 19, 2000
THROUGH DECEMBER 31, 2002
Deficit
Accumulated
Preferred Stock Common Stock Capital in During the
--------------- ------------ Excess of Development
Shares Amount Shares Amount Par Value Stage
------- ------- ------- ------ ----------- ---------
BALANCE, May 19, 2000 - $ - - $ - $ - $ -
Issuance of 500,000 shares
of common stock for cash at
$.05 per share, May 2000 - - 500,000 500 24,500 -
Net loss for the period
ended December 31, 2000 - - - - - (916)
-------- ------- -------- ------ ---------- ---------
BALANCE, December 31,
2000 - - 500,000 500 24,500 (916)
Issuance of 79,800 shares
of common stock for cash
at $1.00 per share, net
of offering costs
of $10,865, November
2001 - - 79,800 80 68,855 -
Net loss for the year ended
December 31, 2001 - - - - - (10,467)
------ ------ ------- ------ -------- ---------
BALANCE, December 31,
2001 - - 579,800 $ 580 $ 93,355 $ (11,383)
Net loss for the year ended
December 31, 2002 - - - - - (26,275)
------ ------ ------- ------ -------- ---------
BALANCE, December 31, 2002 - $ - 579,800 $ 580 $ 93,355 $ (37,658)
====== ====== ======= ====== ======== =========
The accompanying notes are an integral part of this financial statement.
4
TWO MOONS KACHINAS, CORP.
[A Development Stage Company]
STATEMENTS OF CASH FLOWS
NET INCREASE (DECREASE) IN CASH
From Inception
For the On May 19,
Year Ended 2000 Through
December 31, December 31,
_________________
2002 2001 2002
_________ _______ _______________
Cash Flows From Operating Activities:
Net loss $ (26,275) $(10,467) $(37,658)
Adjustments to reconcile net loss to
net cash used by operating activities:
Depreciation and amortization 2,301 2,122 4,596
Changes in assets and liabilities:
(Increase) decrease in interest receivable 35 (20) (8)
(Increase) decrease in inventory 1,000 (54,000) (53,000)
(Increase) in prepaid expense (17) - (17)
Increase in accounts payable 9,544 693 10,237
---------- -------- --------
Net Cash Used by Operating
Activities (13,412) (61,672) (75,850)
---------- -------- --------
Cash Flows From Investing Activities:
Purchase of property and equipment - - (10,171)
Payments for website development - (533) (533)
---------- -------- --------
Net Cash Used by
Investing Activities - (533) (10,704)
---------- -------- --------
Cash Flows From Financing Activities:
Advances from shareholder 3,672 1,648 5,320
Proceeds from issuance of common stock - 79,800 104,800
Payments for stock offering costs - (10,865) (10,865)
---------- -------- --------
Net Cash Provided by Financing Activities 3,672 70,583 99,255
---------- -------- --------
Net Increase (Decrease) in Cash (9,740) 8,378 12,701
Cash at Beginning of Period 22,441 14,063 -
---------- -------- --------
Cash at End of Period $ 12,701 $ 22,441 $ 12,701
========== ======== ========
Supplemental Disclosures of Cash Flow Information:
Cash paid during the period for:
Interest $ - $ - $ -
Income taxes $ - $ - $ -
Supplemental Schedule of Noncash Investing and Financing Activities:
For the period from inception on May 19, 2000 through December 31, 2002:
None
The accompanying notes are an integral part of these financial statements.
5
TWO MOONS KACHINAS, CORP.
[A Development Stage Company]
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization - Two Moons Kachinas, Corp. ("the Company") was organized under
the laws of the State of Nevada on May 19, 2000. The Company sells Hopi
Kachina Dolls and related artwork. The Company has not yet generated
significant revenues from its planned principal operations and is considered a
development stage company as defined in Statement of Financial Accounting
Standards No. 7. The Company has, at the present time, not paid any dividends
and any dividends that may be paid in the future will depend upon the
financial requirements of the Company and other relevant factors.
Cash and Cash Equivalents - The Company considers all highly liquid debt
investments purchased with a maturity of three months or less to be cash
equivalents.
Accounts and Loans Receivable - The Company records accounts and loans
receivable at the lower of cost or fair value. The Company determines the
lower of cost or fair value of nonmortgage loans on an individual asset basis.
The Company recognizes interest income on an account receivable based on the
stated interest rate for past-due accounts over the period that the account is
past-due. The Company recognizes interest income on a loan receivable based
on the stated interest rate over the term of the loan. The Company
accumulates and defers fees and costs associated with establishing a
receivable to be amortized over the estimated life of the related receivable.
The Company estimates allowances for doubtful accounts and loan losses based
on the aged receivable balance and historical losses. The Company records
interest income on delinquent accounts and loans receivable only when payment
is received. The Company first applies payments received on delinquent
accounts and loans receivable to eliminate the outstanding principal. The
Company charges off uncollectible accounts and loans receivable when
management estimates no possibility of collecting the related receivable. The
Company considers accounts and loans receivable to be past-due or delinquent
based on contractual terms.
Inventory - Inventory is carried at the lower of cost or market using the
first in, first out method. At December 31, 2002, inventory consists of
nineteen Kachina dolls and related artwork valued at $53,000.
Property and Equipment - Property and equipment are stated at cost.
Expenditures for repairs and maintenance are charged to operating expense as
incurred. Expenditures for additions and betterments that extend the useful
lives of property and equipment are capitalized, upon being placed in service.
When assets are sold or otherwise disposed of, the cost and related
accumulated depreciation or amortization is removed from the accounts and any
resulting gain or loss is included in operations. Depreciation is computed
using the straight-line method over the estimated useful lives of the assets
of five years.
6
TWO MOONS KACHINAS, CORP.
[A Development Stage Company]
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Continued]
Website Costs - The Company has adopted the provisions of Emerging Issues Task
Force 00-2, "Accounting for Web Site Development Costs." Costs incurred in
the planning stage of a website are expensed as research and development while
costs incurred in the development stage are capitalized and amortized over the
life of the asset, estimated to be two years. As of December 31, 2002 the
Company has capitalized a total of $533 of website costs. The Company did not
incur any planning costs and did not record any research and development costs
for the years ended December 31, 2002 and 2001.
Revenue Recognition - The Company recognizes revenue upon delivery of the
product. Revenue derived from sales through art dealers and galleries is
recorded net of any commissions to the dealers or galleries.
Advertising Costs - Advertising costs, except for costs associated with
direct-response advertising, are charged to operations when incurred. The
costs of direct-response advertising are capitalized and amortized over the
period during which future benefits are expected to be received.
Loss Per Share - The computation of loss per share is based on the weighted
average number of shares outstanding during the period presented in accordance
with Statement of Financial Accounting Standards No. 128, "Earnings Per
Share".
Accounting Estimates - The preparation of financial statements in conformity
with generally accepted accounting principles in the United States of America
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities, the disclosures of contingent assets and
liabilities at the date of the financial statements, and the reported amount
of revenues and expenses during the reported period. Actual results could
differ from those estimated.
Recently Enacted Accounting Standards - Statement of Financial Accounting
Standards ("SFAS") No. 141, "Business Combinations", SFAS No. 142, "Goodwill
and Other Intangible Assets", SFAS No. 143, "Accounting for Asset Retirement
Obligations", SFAS No. 144, "Accounting for the Impairment or Disposal of
Long-Lived Assets", SFAS No. 145, "Rescission of FASB Statements No. 4, 44,
and 64, Amendment of FASB Statement No. 13, and Technical Corrections", SFAS
No. 146, "Accounting for Costs Associated with Exit or Disposal Activities",
SFAS No. 147, "Acquisitions of Certain Financial Institutions - an Amendment
of FASB Statements No. 72 and 144 and FASB Interpretation No. 9", and SFAS No.
148, "Accounting for Stock-Based Compensation - Transition and Disclosure - an
Amendment of FASB Statement No. 123", were recently issued. SFAS No. 141,
142, 143, 144, 145, 146, 147 and 148 have no current applicability to the
Company or their effect on the financial statements would not have been
significant.
7
TWO MOONS KACHINAS, CORP.
[A Development Stage Company]
NOTES TO FINANCIAL STATEMENTS
NOTE 2 - PROPERTY AND EQUIPMENT
The following is a summary of property and equipment at cost, less accumulated
depreciation as of:
December 31,
2002
___________
Computer and office equipment $ 10,171
Less: accumulated depreciation (4,241)
___________
$ 5,930
===========
Depreciation expense for the years ended December 31, 2002 and 2001 amounted
to $2,034 and $2,034, respectively.
NOTE 3 - OTHER ASSETS
The following is a summary of other assets at cost, less accumulated
amortization as of:
December 31,
2002
___________
Website development $ 533
Less: accumulated amortization (355)
___________
$ 178
===========
Amortization expense for the years ended December 31, 2002 and 2001 amounted
to $267 and $88, respectively.
NOTE 4 - CAPITAL STOCK
Common Stock - During December 2000, in connection with its organization, the
Company issued 500,000 shares of its previously authorized, but unissued
common stock. The shares were issued for cash at $25,000 (or $.05 per share).
Public Stock Offering - During November 2001, the Company completed a public
stock offering of 79,800 shares of common stock for cash of $79,800 (or $1.00
per share). Stock offering costs of $10,865 were netted against the proceeds
as a reduction to capital in excess of par value. This offering was
registered with the Securities and Exchange Commission on Form SB-2.
8
TWO MOONS KACHINAS, CORP.
[A Development Stage Company]
NOTES TO FINANCIAL STATEMENTS
NOTE 5 - INCOME TAXES
The Company accounts for income taxes in accordance with Statement of
Financial Accounting Standards No. 109 "Accounting for Income Taxes". SFAS
No. 109 requires the Company to provide a net deferred tax asset/liability
equal to the expected future tax benefit/expense of temporary reporting
differences between book and tax accounting methods and any available
operating loss or tax credit carryforwards. The Company has available at
December 31, 2002, operating loss carryforwards of approximately $40,000,
which may be applied against future taxable income and which expires in
various years through 2022.
The amount of and ultimate realization of the benefits from the operating loss
carryforwards for income tax purposes is dependent, in part, upon the tax laws
in effect, the future earnings of the Company, and other future events, the
effects of which cannot be determined. Because of the uncertainty surrounding
the realization of the loss carryforwards, the Company has established a
valuation allowance equal to the tax effect of the loss carryforwards and,
therefore, no deferred tax asset has been recognized for the loss
carryforwards. The net deferred tax assets are approximately $6,000 and
$3,900 as of December 31, 2002 and 2001, respectively, with an offsetting
valuation allowance of the same amount. The change in the valuation allowance
for the year ended December 31, 2002 is approximately $2,100.
NOTE 6 - RELATED PARTY TRANSACTIONS
Management Compensation - The Company has not paid any compensation to any
officer or director of the Company.
Office Space - The Company has not had a need to rent office space. An
officer/shareholder of the Company is allowing the Company to use his offices
as a mailing address, as needed, at no expense to the Company.
Advances from a shareholder - An officer/shareholder of the Company has made
advances to the Company and has directly paid expenses on behalf of the
Company. At December 31, 2002, the Company owed the shareholder $5,320. The
advances bear no interest and are due on demand.
NOTE 7 - GOING CONCERN
The accompanying financial statements have been prepared in conformity with
generally accepted accounting principles in the United States of America,
which contemplate continuation of the Company as a going concern. However,
the Company was recently formed and has not yet been successful in
establishing profitable operations. These factors raise substantial doubt
about the ability of the Company to continue as a going concern. In this
regard, management is proposing to raise any necessary additional funds not
provided by operations through loans or through additional sales of its common
stock. There is no assurance that the Company will be successful in raising
this additional capital or achieving profitable operations. The financial
statements do not include any adjustments that might result from the outcome
of these uncertainties.
9
TWO MOONS KACHINAS, CORP.
[A Development Stage Company]
NOTES TO FINANCIAL STATEMENTS
NOTE 8 - LOSS PER SHARE
The following data shows the amounts used in computing loss per share:
For the From Inception
Year Ended on May 19,
December 31, 2000 Through
__________________ December 31,
2002 2001 2002
__________________ ____________
Loss from continuing operations
available to common shareholders
(numerator) $(26,275) $(10,467) $ (37,658)
-------- -------- ------------
Weighted average number of
common shares outstanding
used in loss per share for the
period (denominator) 579,800 512,511 535,244
-------- -------- ------------
Dilutive loss per share was not presented, as the Company had no common stock
equivalent shares for all periods presented that would affect the computation
of diluted loss per share.
NOTE 9 - CONCENTRATIONS
Geographic Region - During the year ended December 31, 2002, all of the
Company's sales and operations were located in and around Salt Lake City, Utah
including all of the Company's inventory and property.
Significant Customers - During the year ended December 31, 2002, the Company
had only two customers that accounted for all of the Company's revenues. The
following table lists the percent of sales made to each customer that
accounted for 10% or more of total sales during the year ended December 31,
2002:
Customer A 43%
Customer B 57%
The loss of these significant customers could adversely affect the Company's
business and financial position.
10
Item 8. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
---------------------
There has been no change in our independent accounting firm since
our inception.
PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons;
Compliance with Section 16(a) of the Exchange Act.
--------------------------------------------------
Identification of Directors and Executive Officers.
---------------------------------------------------
The following table sets forth the names of all of our current directors
and executive officers. These persons will serve until the next annual
meeting of the stockholders or until their successors are elected or appointed
and qualified, or their prior resignations or terminations.
Date of Date of
Positions Election or Termination
Name Held Designation or Resignation
---- ---- ----------- --------------
David C. Merrell President 5/00 *
Director 5/00 *
R. Kip Paul Secretary/ 5/00 1/03
Treasurer 5/00 1/03
Director 5/00 1/03
* These persons presently serve in the capacities
indicated.
Term of Office.
---------------
The terms of office of the current directors shall continue until
the annual meeting of stockholders, which has been scheduled by the Board of
Directors to be held in May of each year. The annual meeting of the Board of
Directors immediately follows the annual meeting of stockholders, at which
executive officers for the coming year are elected.
Business Experience.
--------------------
David C. Merrell, Director and President. Mr. Merrell is 44 years
of age. Since 1989, he has been the owner of DCM Finance, a Salt Lake City
based finance company that makes and brokers real estate loans. Mr. Merrell
received his Bachelor of Science degree in Economics from the University of
Utah in 1981. He has been a Kachina collector for over 10 years.
R. Kip Paul, Director and Secretary/Treasurer. Mr. Paul is 44 years
old. Since 1982, he has been a commercial real estate broker with Colliers
Commerce in Salt Lake City. Mr. Paul is involved in real estate investment,
partnerships and private leasing.
Family Relationships.
---------------------
There are no family relationships between any of our directors or
executive officers.
Involvement in Certain Legal Proceedings.
-----------------------------------------
During the past five years, no present or former director,
executive officer or person nominated to become a director or an executive
officer of Two Moons:
(1) was a general partner or executive officer of any business
against which any bankruptcy petition was filed, either at the time of the
bankruptcy or two years prior to that time;
(2) was convicted in a criminal proceeding or named subject to a
pending criminal proceeding (excluding traffic violations and other minor
offenses);
(3) was subject to any order, judgment or decree, not subsequently
reversed, suspended or vacated, of any court of competent jurisdiction,
permanently or temporarily enjoining, barring, suspending or otherwise
limiting his involvement in any type of business, securities or banking
activities; or
(4) was found by a court of competent jurisdiction (in a civil
action), the Commission or the Commodity Futures Trading Commission to have
violated a federal or state securities or commodities law, and the judgment
has not been reversed, suspended or vacated.
Item 10. Executive Compensation.
-----------------------
Two Moons has not paid its directors or officers any compensation
since its inception. We do not have any employment agreements with our
officers. If we are able to establish profitable operations, we expect to pay
each of them $1,000 per month in compensation. The compensation may be
deferred and convertible to stock at the officers' option. We have not
created any arrangement in this regard; however, we will disclose the terms of
any such arrangement in future periodic report filings with the Securities and
Exchange Commission.
Termination of Employment and Change of Control Arrangements.
-------------------------------------------------------------
We have no special arrangements involving any change of control of
our company or termination of any director or executive officer.
Compliance with Section 16(a) of the Exchange Act.
--------------------------------------------------
We are not required to comply with Section 16(a) of the Exchange
Act.
Item 11. Security Ownership of Certain Beneficial Owners and Management.
---------------------------------------------------------------
The following tables set forth the share holdings of our directors
and executive officers and those persons who own more than five percent of our
common stock as of the date of the Report:
Number Percentage
Name and Address of Shares Beneficially Owned of Class
---------------- ---------------------------- --------
David C. Merrell 250,000 43.1%
9005 Cobble Canyon Lane
Sandy, Utah 84093
R. Kip Paul 250,000 43.1%
175 East 400 South, #700
Salt Lake City, Utah 84111
Daniel L. Ross 40,000 6.9%
------- -----
TOTALS 540,000 93.1%
Security Ownership of Management.
---------------------------------
The following table sets forth the share holdings of our directors
and executive officers as of the date of this Report. Each of these persons
has sole investment and sole voting power over his shares.
Number Percentage
Name and Address of Shares Beneficially Owned of Class
---------------- ---------------------------- ----------
David C. Merrell 250,000 43.1%
9005 Cobble Canyon Lane
Sandy, Utah 84093
R. Kip Paul 250,000 43.1%
175 East 400 South, #700
Salt Lake City, Utah 84111
------- -----
All directors and executive
officers as a group
(2 persons) 500,000 86.2%
Changes in Control.
-------------------
To our knowledge, there are no present arrangements or pledges of
our securities that may result in a change in control of our company.
Item 12. Certain Relationships and Related Transactions.
-----------------------------------------------
Transactions with Management and Others.
----------------------------------------
During the past two years, there have been no material transactions,
series of similar transactions or currently proposed transactions, to which
our company or any of our subsidiaries was or is to be a party, in which the
amount involved exceeded $60,000 and in which any director or executive
officer, or any security holder who is known to us to own of record or
beneficially more than five percent of our common stock, or any member of the
immediate family of any of the foregoing persons, or any promoter or founder
had a material interest.
Certain Business Relationships.
-------------------------------
During the past two years, there have been no material transactions,
series of similar transactions or currently proposed transactions, to which
our company or any of our subsidiaries was or is to be a party, in which the
amount involved exceeded $60,000 and in which any director or executive
officer, or any security holder who is known to us to own of record or
beneficially more than five percent of our common stock, or any member of the
immediate family of any of the foregoing persons, or any promoter or founder
had a material interest.
Indebtedness of Management.
---------------------------
During the past two years, there have been no material transactions,
series of similar transactions or currently proposed transactions, to which
our company or any of our subsidiaries was or is to be a party, in which the
amount involved exceeded $60,000 and in which any director or executive
officer, or any security holder who is known to us to own of record or
beneficially more than five percent of our common stock, or any member of the
immediate family of any of the foregoing persons, or any promoter or founder
had a material interest.
Parents of the Issuer.
----------------------
Except and to the extent that Messrs. Merrell and Paul may be deemed
to be parents of our Company by virtue of their substantial stock ownership,
we have no parents.
Transactions with Promoters.
----------------------------
During the past two years, there have been no material transactions,
series of similar transactions or currently proposed transactions, to which
our company or any of our subsidiaries was or is to be a party, in which the
amount involved exceeded $60,000 and in which any director or executive
officer, or any security holder who is known to us to own of record or
beneficially more than five percent of our common stock, or any member of the
immediate family of any of the foregoing persons, or any promoter or founder
had a material interest.
Item 13. Exhibits and Reports on Form 8-K.
---------------------------------
Reports on Form 8-K
None.
Exhibits*
(i)
Where Incorporated
in this Report
--------------
Registration Statement on SB-2, as Parts I, II and III
amended.**
(ii)
Exhibit
Number Description
------ -----------
None.
* Summaries of all exhibits contained within this
Report are modified in their entirety by reference
to these Exhibits.
** These documents and related exhibits have been
previously filed with the Securities and Exchange
Commission and are incorporated herein by reference.
Item 14. Controls and Procedures.
---------------------------------
(a) Evaluation of Disclosure Controls and Procedures
Two Moon's President and Secretary/Treasurer have evaluated the
company's disclosure controls and procedures as of March 24, 2003, and they
concluded that these controls and procedures are effective.
(b) Changes in Internal Controls
There are no significant changes in internal controls or in other
factors that could significantly affect these controls subsequent to March 24,
2003.
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.
TWO MOONS KACHINAS CORP.
Date: 3/26/03 By/s/David C. Merrell
------------- -------------------------------------
David C. Merrell
President and Director
In accordance with the Exchange Act, this report has been signed below by
the following persons on behalf of the registrant and in the capacities and on
the dates indicated.
TWO MOONS KACHINAS CORP.
Date: 3/26/03 By/s/David C. Merrell
------------- -------------------------------------
David C. Merrell
President and Director
CERTIFICATION PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, David C. Merrell, President of Two Moons Kachinas Corp., Inc., (the
"Registrant") certify that:
1. I have reviewed this Annual Report on Form 10-KSB of the
Registrant;
2. Based on my knowledge, this Annual Report does not contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this Annual Report;
3. Based on my knowledge, the financial statements, and other
financial information included in this Annual Report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the Registrant as of, and for, the periods presented in this
Annual Report;
4. I am responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14)
for the Registrant and I have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the Registrant, including its
consolidated subsidiaries, is made known to me by others within
those entities, particularly during the period in which this
Annual Report is being prepared;
b) evaluated the effectiveness of the Registrant's disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this Annual Report (the "Evaluation Date"); and
c) presented in this Annual Report my conclusions about the
effectiveness of the disclosure controls and procedures based on
My evaluation as of the Evaluation Date;
5. I have disclosed, based on my most recent evaluation, to the
Registrant's auditors and the audit committee of Registrant's board of
directors (or persons performing the equivalent function);
a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the Registrant's
ability to record, process, summarize and report financial data
and have identified for the Registrant's auditors any material
weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the Registrant's
internal controls; and
6. I have indicated in this Annual Report whether or not there were
significant changes in internal controls or in other factors that could
significantly affect internal controls subsequent to the date of our most
recent evaluation, including any corrective actions with regard to significant
deficiencies and material weaknesses.
Dated: March 26, 2003 Signature: /s/David C. Merrell
David C. Merrell
President
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of Two Moons Kachinas, Corp. (the
"Registrant") on Form 10-KSB for the period ending December 31, 2002, as filed
with the Securities and Exchange Commission on the date hereof (the "Annual
Report"), I, David C. Merrell, President and director of the Registrant,
certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Annual Report fully complies with the requirements of Section
13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Annual Report fairly presents, in
all material respects, the financial condition and result of operations of the
Registrant.
/s/David C. Merrell
President
director
3/26/03