Nature Treat, Inc.
(A Development Stage Company)
Index to Financial Statements
Report of Independent Auditor's 1
Balance Sheet 2
Statement of Operations 3
Statement of Changes in Stockholders' Equity 4
Statement of Cash Flows 5
Notes to Financial Statements 6-10
INDEPENDENT AUDITOR'S REPORT
(LETTERHEAD)
Michael Johnson & CO., LLC
To the Board of Directors
Nature Treat, Inc.
Broussard, LA
We have audited the accompanying balance sheet of Nature Treat, Inc. a
development stage company, as of December 31, 1999, and the related statements
of operations, cash flows, and changes in stockholders' equity for the period,
September 24, 1999 (Inception) to December 31, 1999, then ended. 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.
Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financials statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financials statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluation the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Nature Treat, Inc. at December
31, 1999, and the results of its operations and its cash flows for the period,
September 24, 1999 (Inception) to December 31, 1999 then ended, in conformity
with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As described in Note 4 to the
financial statements, conditions exist which raise substantial doubt about
the Company's ability to continue as a going concern unless it is able to
generate sufficient cash flows to meet its obligations and sustain its
operations. The financial statements do not include any adjustments that
might result from the outcome of this uncertainty.
Michael Johnson & CO, LLC
/s/
Denver, Colorado
April 17, 2000
<TABLE>
NATURE TREAT, INC.
(A Development Stage Company)
Balance Sheet
December 31, 1999
<CAPTION>
ASSETS:
<S> <C>
Current Assets:
Cash $14,417
Accounts receivable 2,220
Inventory 12,337
Prepaid expenses 30,200
Total Current Assets 59,174
Property and Equipment:
Office furniture and equipment 38,275
Shop furniture and equipment 7,103
Vehicles 9,425
Leasehold improvements 15,500
Property and Equipment, net 70,303
Other Assets:
Patents and trademarks 155,316
Website development 48,500
Organization costs 200
Other Assets, net 204,016
TOTAL ASSETS $333,493
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current Liabilities:
Accounts payable 1,972
Short-term borrowings from shareholders 34,346
Total Current Liabilities 36,318
Stockholders' Equity:
Common stock, $.0001 par value, 50,000,000
shares authorized, 7,885,200 shares issued and
outstanding 788
Preferred stock, $.0001 par value, 5,000,000
shares authorized, none issued
Addition paid-in capital 550,450
Deficit accumulated during the development stage (254,063)
Total Stockholders' Equity 297,175
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY 333,493
</TABLE>
The accompanying notes are an integral part of these financial statements.
<TABLE>
NATURE TREAT, INC.
(A Development Stage Company)
Statement of Operations
For the Period September 24, 1999 (Inception) to December 31, 1999
<CAPTION>
September 24, 1999
(Inception) thru
December 31, 1999
<S> <C>
REVENUES: $ 2,567
OPERATING EXPENSES:
Sales and Marketing 60,059
General and Administrative 196,571
Total Operating Expenses 256,630
Net Loss from Operations (254,063)
Weighted average number of
shares outstanding 4,078,675
Net Loss Per Share (0.06)
</TABLE>
The accompanying notes are an integral part of these financial statements
<TABLE>
NATURES TREAT, INC.
(A Development Stage Company)
Statement of Changes in Stockholders Equity
For the Period September 24, 1999 (Inception) to December 31, 1999
<CAPTION>
Deficit
Accumulated
Additional During the
Common Stock Paid-In Development
Shares Amount Capital Stage Totals
<S> <C> <C> <C> <C> <C>
Balance
September 24,1999 - $ - $ - $ - $ -
Stock issued to
founders-cash
and assets-
September 25, 1999 3,578,134 358 74,559 - 74,917
Stock issued for
assets-
September 25, 1999 1,666,666 167 166,499 - 166,666
Stock issued for
services-
September 26, 1999 100,000 10 9,990 - 10,000
Stock issued for
cash-
October 1, 1999 550,000 55 54,945 - 55,000
Stock issued for
services-
October 1, 1999 30,000 3 2,997 - 3,000
Stock issued for
cash-
October 10, 1999 50,000 5 - - 5
Stock issued for
assets-
October 10, 1999 10,000 1 999 - 1,000
Stock issued for
cash-
October 12, 1999 111,100 11 47,989 48,000
Stock issued for
services
October 15, 1999 275,000 27 27,473 - 27,500
Stock issued for
cash-
October 19, 1999 31,000 3 15,497 - 15,000
Stock issued for
services-
October 20, 1999 6,000 1 599 - 600
Stock issued for
services-
October 21, 1999 200,000 20 19,980 - 20,000
Stock issued for
cash-
November 1, 1999 3,300 - 1,650 - 1,650
Stock issued for
services-
November 10, 1999 175,000 18 17,482 - 17,500
Stock issued for
services
November 20, 1999 425,000 42 42,458 - 42,500
Stock issued for
assets
December 10, 1999 485,000 48 48,452 - 48,500
Stock issued for
services
December 12, 1999 139,000 14 13,886 - 13,900
Stock issued for
services
December 15, 1999 50,000 5 4,995 - 5,000
Net loss for
period - - - (254,063) (254,063)
Balance 7,885,200 788 550,450 (254,063) (297,175)
</TABLE>
The accompanying notes are an integral part of these financial statements.
<TABLE>
NATURE TREAT, INC.
(A Development Stage Company)
For the Period September24, 1999 (Inception) to December 31, 1999
Indirect Method
<CAPTION>
September 24, 1999
(Inception) thru
December 31,
1999
<S> <C>
Cash Flows From Operating Activities:
Net (Loss) $ (254,063)
Adjustments to reconcile net loss to net cash
used in operating activities:
Stock issued for services 143,220
Changes in assets and liabilities:
(Increase) in prepaid expenses (30,200)
Increase in accounts payables 1,972
Increase in short-term borrowings 34,347
36,319
Net Cash Used in Operating Activities (104,724)
Cash Flow From Investing Activities:
Purchase of equipment (1,372)
Net Cash Provided By Investing Activities (1,372)
Cash Flow From Financing Activities:
Issuance of common stock 120,513
Net Cash Provided By Financing Activities 120,513
Increase in Cash 14,417
Cash and Cash Equivalents - Beginning of period -
Cash and Cash Equivalents - End of period 14,417
Supplemental Cash Flow Information:
Interest paid $ -
Taxes paid $ -
</TABLE>
The accompanying notes are an integral part of these financial statements.
Nature Treat, Inc.
(A Development State Company)
Notes to Financial Statements
December 31, 1999
NOTE 1 - ORGANIZATION AND PRESENTATION:
Natures Treat, Inc. (the Company) was incorporated in the state of Delaware
on September 24, 1999. The Company primary business operations are the
distribution of environmentally friendly products that are used in
remediation projects to clean up contaminated ground sites or other such
facilities.
The Company's fiscal year end is December 31.
Development Stage Company
The Company has not earned significant revenue from limited operations.
Accordingly, the Company's activities have been accounted for as those of a
"Development Stage Enterprise" as set forth in Financial Accounting
Standards Board Statement No. 7 ("SFAS 7"). Among the disclosures
required by SFAS 7 are that the Company's financial statements be
identified as those of a development stage company, and that the statements
of operations, stockholders' equity (deficit) and cash flows disclose
activity since the date of the Company's inception.
Basis of Accounting
These financial statements are presented on the accrual method of
accounting in accordance with generally accepted accounting principles.
Significant principles followed by the Company and the methods of
applying those principles, which materially affect the determination of
financial position and cash flows, are summarized below:
Revenue Recognition
Product Sales are sale of on-line products and specialty items. Revenue
is recognized at the time of sale.
Cash and Cash Equivalents
The Company considers all highly liquid debt instruments, purchased with an
original maturity of three months or less, to be cash equivalents.
Property and Equipment
Property and equipment is stated at cost. The cost of ordinary maintenance and
repairs is charged to operations while renewals and replacements are
capitalized. Depreciation is computed on the straight-line method over
the following estimated useful lives:
Manufacturing Equipment 5 years
Furniture & Equipment 5 years
Income Taxes:
The Company accounts for income taxes under SFAS NO. 109, which requires the
asset and liability approach to accounting for income taxes. Under this
method, deferred tax assets and liabilities are measured based on differences
between financial reporting and tax bases of assets and liabilities measured
using enacted tax rates and laws that are expected to be in effect when the
differences are expected to reverse.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Use of Estimates:
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and the
disclosure of contingent assets and liabilites at the date of the financial
statements and the reported amounts of revenue and expenses during the reporting
period. Actual results could differ from these estimates.
Inventories
Inventories are stated at cost, which is not in excess of market determined
using the first-in, first-out (FIFO) method.
Patents, Trademarks, and Licenses
The Company capitalizes certain legal costs and acquisition costs related to
patents, trademarks, and licenses. Accumulated costs are amortized over
the lesser of the legal lives or the estimated economic lives of the
proprietary rights, generally seven to ten years, using the straight-line
method and commencing at the time the patents are issued, trademarks are
registered or the license is acquired.
Net earning (loss) per share
Basic and diluted net loss per share information is presented under the
requirements of SFAS No. 128, Earnings per Share. Basic net loss per share
is computed by dividing net loss by the weighted average number of shares of
common stock outstanding for the period, less shares subject to repurchase.
Diluted net loss per share reflects the potential dilution of securities by
adding other common stock equivalents, including stock option, shares subject
to repurchase, warrants and convertible preferred stock, in the
weighted-average number of common shares outstanding for a period, if dilutive.
All potentially dilutive securities have been excluded from the computation,
as the effect in anti-dilutive.
Fair Value of Financial Instruments
The carrying amount of cash, accounts receivable, accounts payable and accrued
expenses are considered to be representative of their respective fair values
because of the short-term nature of these financial instruments. The carrying
amount of the notes payable are reasonable estimates of fair value as the
loans bear interest based on market rates currently available for debt with
similar terms.
NOTE 2 - INCOME TAXES
There has been no provision for U.S. federal, state, or foreign income taxes
for any period because the Company has incurred losses in all periods and for
all jurisdictions.
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components
of deferred tax assets are as follows:
<TABLE>
<S>
Deferred tax assets <C>
Net operating loss carryforwards $254,063
Valuation allowance for deferred tax assets (254,063)
Net deferred tax assets $ -
Realization of deferred tax assets is dependent upon future earnings, if any,
the timing and amount of which are uncertain. Accordingly, the net deferred
tax assets have been fully offset by a valuation allowance. As of
December 31, 1999, the Company had net operating loss carryforwards of
approximately $254,063 for federal income tax purposes. These carryforwards,
if not utilized to offset taxable income begin to expire in 2113. Utilization
of the net operating loss may be subject to substantial annual limitation
due to the ownership change limitations provided by the Internal Revenue Code
and similar state provisions. The annual limitation could result in the
expiration of the net operating loss before utilization.
NOTE 3 - RELATED PARTY TRANSACTIONS:
Short-term borrowings from shareholders
The chairman and president of the Company provided services and advanced cash
being issued to the chairman and president, which were still outstanding at
December 31, 1999. Notes payable to these officers are unsecured and bear
interest at 8%.
NOTE 4 - GOING CONCERN
The accompanying financial statements have been prepared in conformity with
generally accepted accounting principles, which contemplates continuation of
the Company as a going concern. The Company operations are in the development
stage and the Company has experienced significant losses from limited
start-up operations. As shown in the financial statements, the
Company incurred a net loss of $254,063 in 1999.
The future success of the Company is likely dependent on its ability to
attain additional capital to develop its proposed products and
ultimately, upon its ability to attain future profitable operations. There
can be no assurance that the Company will be successful in obtaining such
financing, or that it will attain positive cash flow from operations.
</TABLE>
