<PAGE>
EXHIBIT 99.2
QUALTON HOTELS & RESORTS CORPORATION
CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 2000
(UNAUDITED)
<TABLE>
<S> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 60,366
Accounts receivable 5,425,407
Inventories 369,918
Other current assets 256,199
------------
Total Current Assets 6,111,890
------------
Property and equipment, net 11,727
------------
Other assets 69,239
------------
$ 6,192,856
============
LIABILITIES AND STOCKHOLDERS' (DEFICIT)
Current Liabilities:
Accounts payable and accrued expenses $ 3,060,636
Taxes payable 3,074,232
Due to affiliated companies 344,838
------------
Total Current Liabilities 6,479,706
------------
Long-term liabilities:
Advance deposits 725,817
Other 30,065
Stockholders' (deficit)
Capital stock 123,778
Legal reserves 5,181
Accumulated deficit (1,171,691)
------------
(1,042,732)
------------
$ 6,192,856
============
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
QUALTON HOTELS & RESORTS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 2000
(UNAUDITED)
<TABLE>
<CAPTION>
1999 2000
------------ ------------
<S> <C> <C>
Fee and service revenues $ 14,350,503 $ 14,577,113
------------ ------------
Operating expenses:
Cost of services 2,091,134 2,007,394
Operating expenses 8,178,271 10,079,438
General and administrative expenses 3,255,851 2,130,044
Amortization and depreciation 136,802 160,440
------------ ------------
13,662,058 14,377,316
------------ ------------
Income from operations 688,445 199,797
Other (income) expense
Interest 3,531 17,515
Currency Translation adjustment 466,732 307,048
------------ ------------
470,263 324,563
------------ ------------
Net income (loss) $ 218,182 $ (124,766)
============ ============
Per share information:
Weighted average shares outstanding - basic and fully diluted 1,000 1,000
============ ============
Net income (loss) per share - basic and fully diluted $ 218.18 $ (124.77)
============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
QUALTON HOTELS AND RESORTS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 2000
(UNAUDITED)
<TABLE>
<CAPTION>
1999 2000
---------- ----------
<S> <C> <C>
Cash flows from operating activities:
Net cash provided by (used in) operating activities $ (808,716) $ (250,539)
---------- ----------
Cash flows from investing activities:
Net cash provided by (used in) investing activities (119,428) (11,727)
---------- ----------
Cash flows from financing activities:
Net cash provided by (used in) financing activities 349 -
---------- ----------
Net increase (decrease) in cash and cash equivalents (927,795) (262,266)
Beginning - cash and cash equivalents 1,208,590 322,632
---------- ----------
Ending - cash and cash equivalents $ 280,795 $ 60,366
========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
QUALTON HOTELS & RESORTS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
(UNAUDITED)
(1) BASIS OF PRESENTATION
The accompanying unaudited financial statements have been prepared in accordance
with generally accepted accounting principles ("GAAP") for interim financial
information and Item 310(b) of Regulation SB. They do not include all of the
information and footnotes required by GAAP for complete financial statements. In
the opinion of management, all adjustments (consisting only of normal recurring
adjustments) considered necessary for a fair presentation have been included.
The results of operations for the periods presented are not necessarily
indicative of the results to be expected for the full year. For further
information, refer to the financial statements of the Company as of December 31,
1999 and for the two years then ended, including notes thereto.
The Company was incorporated under the laws of the Republic of the Marshall
Islands on September 4, 1996. The purpose of the Company is to engage in any
lawful act or activity for which corporations may now or hereafter be organized
under the Marshall Islands Business Corporations Act. The Company owns 99% of
the issued and outstanding shares of capital stock of Hotelera Qualton, S.A. de
C.V.
Hotelera Qualton, S.A. de C.V., was incorporated in Mexico during September,
1992. The Company's is in the business of managing and consulting in the hotel
and tourism industry. It currently operates hotel properties in the cities of
Ixtapa, Acapulco and Puerto Vallarta, Mexico. The accompanying consolidated
financial statements include the accounts of the Company and its subsidiaries.
Intercompany transactions and balances have been eliminated in consolidation.
(2) EARNINGS PER SHARE
The Company calculates net income (loss) per share as required by SFAS No. 128,
"Earnings per Share." Basic earnings (loss) per share is calculated by dividing
net income (loss) by the weighted average number of common shares outstanding
for the period. Diluted earnings (loss) per share is calculated by dividing net
income (loss) by the weighted average number of common shares and dilutive
common stock equivalents outstanding. During the periods presented common stock
equivalents, if any, were not considered as their effect would be anti dilutive.
(3) INVENTORIES
Inventories consist principally of supplies used in the Company's operations.
(4) IMPAIRMENT OF LONG LIVED ASSETS
Long lived assets and certain identifiable intangibles held and used by the
Company are reviewed for possible impairment whenever events or circumstances
indicate the carrying amount of an asset may not be recoverable or is impaired.
Management has not identified any impairment losses as of September 30, 2000.
(5) SUBSEQUENT EVENT
On October 17, 2000, the Company sold to International Realty Group, Inc.
("IRG") all of its issued and outstanding capital stock in exchange for
163,540,000 shares of IRG's common stock representing approximately 56% of the
issued and outstanding common stock of IRG. IRG was incorporated under the laws
of the State of Delaware on April 13, 1970, and currently has no significant
business operations and holds land for development, primarily in Mexico, which
it intends to develop into various resort and commercial developments and to
market the developed properties. The net assets of IRG aggregate approximately
$4.8 million at September 30, 2000.
This reorganization will be accounted for as though it were a
recapitalization of Qualton Hotels & Resorts and sale by Qualton Hotels &
Resorts of 126,260,704 shares of common stock in exchange for the net assets
of IRG.
