EXHIBIT 99.2 - FINANCIAL STATEMENT - ELITE FITNESS SYSTEMS, INC.
Elite Fitness Systems, Inc
FINANCIAL STATEMENTS
December 31, 1998
<PAGE>
TABLE OF CONTENTS
-----------------
PAGE
INDEPENDENT AUDITORS' REPORT.....................F-1
BALANCE SHEET................................ F-2
STATEMENT OF OPERATIONS..........................F-3
STATEMENT OF STOCKHOLDERS' EQUITY................F-4
STATEMENT OF CASH FLOWS..........................F-5
NOTES TO FINANCIAL STATEMENTS....................F-6
<PAGE>
James E. Slayton, CPA
2858 WEST MARKET STREET
SUITE C
FAIRLAWN, OHIO 44333
1-330-864-3553
INDEPENDENT AUDITORS' REPORT
Board of Directors May 4, 2000
Elite Fitness Systems, Inc (the Company)
Las Vegas, Nevada 89102
I have audited the Balance Sheet of Elite Fitness Systems, Inc., as of
December 31, 1998, and the related Statements of Operations, Stockholders'
Equity and Cash Flows for the year ending December 31, 1998. These financial
statements are the responsibility of the Company's management. My
responsibility is to express an opinion on these financial statements based on
my audit.
I conducted my audit in accordance with generally accepted auditing standards.
Those standards require that I 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 statement presentation.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. I believe that my audit provides a
reasonable basis for my opinion.
In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Elite Fitness Systems, Inc., as of
December 31, 1998, and the results of its operations and cash flows for the
year ending December 31, 1998, in conformity with generally accepted accounting
principles.
James E. Slayton, CPA
Ohio License ID# 04-1-15582
F-1
<PAGE>
Elite Fitness Systems, Inc
BALANCE SHEET
AS AT
December 31, 1998
<TABLE>
<CAPTION>
BALANCE SHEET
December 31 1998
----------------
ASSETS
CURRENT ASSETS
<S> <C>
Cash 3,497.00
Accounts Receivable 32,698.00
Inventory 19,441.00
-----------
Total Current Assets 55,636.00
PROPERTY AND EQUIPMENT
Furniture & Equipment 4,143.00
-----------
Total Property and Equipment 4,143.00
OTHER ASSETS
Design and logo 6,083.00
Video Dubs 6,538.00
-----------
Total Other Assets 12,621.00
-----------
TOTAL ASSETS 72,400.00
===========
LIABILITIES & EQUITY
CURRENT LIABILITIES
Accounts Payable 0.00
----------
Total Current Liabilities 0.00
OTHER LIABILITIES
Due to Shareholder 0.00
----------
Total Other Liabilities 0.00
----------
Total Liabilities 0.00
EQUITY
Capital Stock 0.00
Additional Paid in Capital 0.00
Donated Capital 0.00
Retained Earnings or (Deficit
accumulated during development stage) 72,400.00
----------
Total Stockholders' Equity 72,400.00
TOTAL LIABILITIES & OWNER'S EQUITY 72,400.00
===========
</TABLE>
See accompanying notes to financial statements
F-2
<PAGE>
Elite Fitness Systems, Inc
STATEMENT OF OPERATIONS
FOR PERIOD
For the year ending December 31, 1998
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
December 31 1998
REVENUE
<S> <C>
Sales 152,939.00
COSTS AND EXPENSES
Selling, General and Administrative 78,676.00
Depreciation Expense 460.00
Amortization of Intangibles 1,403.00
-----------
Total Costs and Expenses 80,539.00
-----------
Net Ordinary Income or (Loss) 72,400.00
===========
Weighted average
number of common
shares outstanding 0
Net Loss
Per Share 0.000
</TABLE>
See accompanying notes to financial statements
F-3
<PAGE>
Elite Fitness Systems, Inc
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR PERIOD
For the year ending December 31, 1998
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
Deficit
Accumulated
Additional During Total
Common Stock paid-in Donated Development Stockholder's
Shares Amount Capital Capital Stage Equity
<S> <C> <C> <C> <C> <C> <C>
Net profit
January 1, 1998 to
December 31, 1998 72,400.00 72,400.00
---------------------------------------------------------------------
Balances as at
December 31, 1998 0 0.00 0.00 0.00 72,400.00 72,400.00
=====================================================================
</TABLE>
See accompanying notes to financial statements
F-4
<PAGE>
Elite Fitness Systems, Inc
STATEMENT OF CASH FLOWS
FOR PERIOD
Ending December 31, 1998
<TABLE>
<CAPTION>
STATEMENT OF CASH FLOWS
December 31 1998
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income or (loss) from operations 72,400.00
Adjustments to reconcile net
income to net cash provided
Depreciation Expense 460.00
Amortization of intangibles 1,402.00
Decrease (Increase) in current assets (52,139.00)
-----------
Net Cash provided by Operating Activities 22,124.00
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of Furniture and Equipment (4,603.00)
Purchase of Design and Logo (6,759.00)
Purchase of Video Dubs (7,265.00)
-----------
Net Cash used by investing activities (18,627.00)
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of Capital Stock 0.00
-----------
Net cash provided by financing activities 0.00
Balance at beginning of period 0.00
Net increase (decrease) in cash 3,497.00
Balance as at end of period 3,498.00
</TABLE>
See accompanying notes to financial statements
F-5
<PAGE>
Elite Fitness Systems, Inc
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - HISTORY AND ORGANIZATION OF THE COMPANY
The Company was organized November 7, 1997 (Date of Inception) under
the laws of the State of Nevada, Elite Fitness Systems, Inc. The Company
began operations in July of 1998.
The Company has not issued any shares as of December 31, 1998.
NOTE 2 - ACCOUNTING POLICIES AND PROCEDURES
Accounting policies and procedures have not been determined except
as follows:
1. The Company uses the accrual method of accounting for revenue
recognition, recording revenues when an exchange has taken place and
collection is probable.
2. The cost of organization, was expensed in 1998.
3. Basic earnings per share is computed using the weighted average number of
shares of common stock outstanding.
4. The Company has not yet adopted any policy regarding payment of dividends.
No dividends have been paid since inception.
5. The cost of equipment is depreciated over the estimated useful life of the
equipment utilizing the straight line method of depreciation. There has been
no equipment through December 31, 1998.
6. The Company's Statement of Cash Flows is reported utilizing cash (currency
on hand and demand deposits) and cash equivalents (short-term, highly liquid
investments). The Company did not have any cash equivalents at the
balance sheet dates or during the period, November 7, 1997 (Date of Inception)
to December 31, 1998.
7. The Company has adopted FASB 109 and reports tax expense and deferrals as
incurred for each period an income statement is issued. There was zero
income tax expense for the year ended 1999.
8. The Company reports its property and equipment at historical costs. The
Company has adopted FASB 121 in the accounting for the impairment of Long-Lived
Assets. The Company evaluates whether a review of impairment for recoverable
Costs on long-lived assets, each operating period.
9. The Company amortizes its intangible assets on a straight line basis over
60 months. There was $1,403.00 in amortization recorded for the year ending
12/31/98.
NOTE 3 - RELATED PARTY TRANSACTION
The Company neither owns or leases any real or personal property. The officers
and directors of the Company are involved in other business activities and may,
in the future, become involved in other business opportunities. If a specific
business opportunity becomes available, such persons may face a conflict in
selecting between the Company and their other business interests. The Company
has not formulated a policy for the resolution of such conflicts.
F-6
<PAGE>
Elite Fitness Systems, Inc
NOTES TO FINANCIAL STATEMENTS
NOTES TO FINANCIAL STATEMENTS
NOTE 4 - WARRANTS AND OPTIONS
There are no warrants or options outstanding to acquire any additional shares
of common stock.
NOTE 5 - SUBSEQUENT EVENTS
The company was acquired by Nutek, Inc. on 04/07/1999 for 125,000 shares of
the Company's stock in exchange for the outstanding common stock of Elite
Fitness. The business combination has been accounted for under the pooling
of interest method.
F-7
<PAGE>
Elite Fitness Systems, Inc.
INTERIM
-------
FINANCIAL STATEMENTS
--------------------
March 31, 1999
<PAGE>
TABLE OF CONTENTS
-----------------
PAGE
BALANCE SHEET................................ F-1
STATEMENT OF OPERATIONS..........................F-2
STATEMENT OF CASH FLOWS..........................F-3
NOTES TO FINANCIAL STATEMENTS....................F-4-5
Elite Fitness Systems, Inc
BALANCE SHEET
AS AT
March 31, 1999
December 31, 1998
<TABLE>
<CAPTION>
BALANCE SHEET
March 31, 1999 December 31 1998
-------------- ----------------
ASSETS
<S> <C> <C>
CURRENT ASSETS
Cash 1,060.00 3,497.00
Accounts Receivable 0.00 32,698.00
Inventory 7,177.00 19,441.00
--------- ---------
Total Current Assets 8,237.00 55,636.00
PROPERTY AND EQUIPMENT
Furniture & Equipment 7,719.00 4,143.00
--------- ---------
Total Property and Equipment 7,719.00 4,143.00
OTHER ASSETS
Design and logo 5,746.00 6,083.00
Video Dubs 6,175.00 6,538.00
--------- ---------
Total Other Assets 11,921.00 12,621.00
--------- ---------
TOTAL ASSETS 27,877.00 72,400.00
========= =========
LIABILITIES & EQUITY
CURRENT LIABILITIES
Accounts Payable 0.00 0.00
--------- ----------
Total Current Liabilities 0.00 0.00
OTHER LIABILITIES
Due to Shareholder 0.00 0.00
--------- ----------
Total Other Liabilities 0.00 0.00
--------- ----------
Total Liabilities 0.00 0.00
EQUITY
Capital Stock 0.00 0.00
Additional Paid in Capital 0.00 0.00
Donated Capital 0.00 0.00
Retained Earnings or (Deficit
accumulated during development stage) 27,877.00 72,400.00
---------- ---------
Total Stockholders' Equity 27,877.00 72,400.00
TOTAL LIABILITIES & OWNER'S EQUITY 27,877.00 72,400.00
=========== =========
</TABLE>
See accompanying notes to financial statements
F-1
<PAGE>
Elite Fitness Systems, Inc
STATEMENT OF OPERATIONS
FOR PERIOD
For the three months ending
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
March 31 March 31
1999 1998
REVENUE
<S> <C> <C>
Sales 41,090.00 0.00
COSTS AND EXPENSES
Selling, General and Administrative 11,110.00 0.00
Depreciation Expense 230.00 0.00
Amortization of Intangibles 702.00 0.00
---------- --------
Total Costs and Expenses 12,042.00 0.00
---------- --------
Net Ordinary Income or (Loss) 29,048.00 0.00
========== ========
Weighted average
number of common
shares outstanding 0 0
Net Loss
Per Share 0.000 0.000
</TABLE>
See accompanying notes to financial statements
F-2
<PAGE>
Elite Fitness Systems, Inc
STATEMENT OF CASH FLOWS
FOR PERIOD
<TABLE>
<CAPTION>
STATEMENT OF CASH FLOWS
March 31, 1999 March 31 1998
-------------- -------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income or (loss) from operations 29,048.00 0.00
Adjustments to reconcile net
income to net cash provided
Depreciation Expense 230.00 0.00
Amortization of intangibles 1,404.00 0.00
Decrease (Increase) in current assets 44,962.00 0.00
----------- ----------
Net Cash provided by Operating Activities 75,644.00 0.00
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of Furniture and Equipment (4,510.00) 0.00
----------- ----------
Net Cash used by investing activities (4,510.00) 0.00
CASH FLOWS FROM FINANCING ACTIVITIES
Dividend paid to sole shareholder (73,571,00) 0.00
----------- ----------
Net cash provided by financing activities (73,571.00) 0.00
Balance at beginning of period 3,497.00 0.00
Net increase (decrease) in cash (2,437.00) 0.00
Balance as at end of period 1,060.00 0.00
</TABLE>
See accompanying notes to financial statements
F-3
<PAGE>
Elite Fitness Systems, Inc
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - HISTORY AND ORGANIZATION OF THE COMPANY
The Company was organized November 7, 1997 (Date of Inception) under
the laws of the State of Nevada, Elite Fitness Systems, Inc. The Company
began operations in July of 1998.
The Company has not issued any shares as of December 31, 1998.
NOTE 2 - ACCOUNTING POLICIES AND PROCEDURES
Accounting policies and procedures have not been determined except
as follows:
1. The Company uses the accrual method of accounting for revenue
recognition, recording revenues when an exchange has taken place and
collection is probable.
2. The cost of organization, was expensed in 1998.
3. Basic earnings per share is computed using the weighted average number of
shares of common stock outstanding.
4. The Company has not yet adopted any policy regarding payment of dividends.
No dividends have been paid since inception.
5. The cost of equipment is depreciated over the estimated useful life of
the equipment utilizing the straight line method of depreciation. There was
depreciation recorded in the amount of $230.00 the period ending, March 31,
1999.
6. The Company's Statement of Cash Flows is reported utilizing cash (currency
on hand and demand deposits) and cash equivalents (short-term, highly liquid
investments). The Company did not have any cash equivalents at the
balance sheet dates or during the period, November 7, 1997 (Date of Inception)
to March 31, 1998.
7. The Company has adopted FASB 109 and reports tax expense and deferrals as
incurred for each period an income statement is issued. There was zero income
tax expense for the year ended 1999.
8. The Company reports its property and equipment at historical costs. The
Company has adopted FASB 121 in the accounting for the impairment of Long-Lived
Assets. The Company evaluates whether a review of impairment for recoverable
Costs on long-lived assets, each operating period.
9. The Company amortizes its intangible assets on a straight line basis over
60 months. There was $702.00 in amortization recorded for the year ending
03/31/98.
NOTE 3 - RELATED PARTY TRANSACTION
The Company neither owns or leases any real or personal property. The officers
and directors of the Company are involved in other business activities and may,
in the future, become involved in other business opportunities. If a specific
business opportunity becomes available, such persons may face a conflict in
selecting between the Company and their other business interests. The Company
has not formulated a policy for the resolution of such conflicts.
F-4
<PAGE>
Elite Fitness Systems, Inc
NOTES TO FINANCIAL STATEMENTS
NOTES TO FINANCIAL STATEMENTS
NOTE 4 - WARRANTS AND OPTIONS
There are no warrants or options outstanding to acquire any additional shares
of common stock.
NOTE 5 - SUBSEQUENT EVENTS
The company was acquired by Nutek, Inc. on 04/07/1999 for 125,000 shares of
the Company's stock in exchange for the outstanding common stock of Elite
Fitness. The business combination has been accounted for under the pooling
of interest method.
NOTE 6 - DIVIDEND
The incorporator, officer and only shareholder when Elite Fitness was acquired
By Nutek, Inc. on 04/07/1999 took a dividend of $73,751.00 in March, 1999.
F-5
