Item 1. Financial Statements
Accountant's Review Report
To the Board of Directors and Stockholders of
M.C.F.T.Y. National
We have reviewed the accompanying balance sheet of M.C.F.T.Y. National as of
June 30, 2004, and the related statements of operations, changes in
stockholders' equity, and cash flows for the six months then ended in accordance
with Statements on Standards for Accounting and Review Services issued by the
American Institute of Certified Public Accountants. All information included in
these financial statements is the representation of the management of M.C.F.T.Y.
National.
A review consists principally of inquiries of Company personnel and analytical
procedures applied to financial data. It is substantially less in scope than an
audit in accordance with generally accepted auditing standards, the objective of
which is the expression of an opinion regarding the financial statements taken
as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the accompanying financial statements in order for them to be in
conformity with generally accepted accounting principles.
Godels, Solomon, Barber & Company, L.L.C.
GODELS, SOLOMON, BARBER & COMPANY, L.L.C.
770 First Avenue North
St. Petersburg, Florida 33701
Telephone: (727) 896-2111
Fax: (727) 896-2208
August 9, 2004
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M.C.F.T.Y. National
Balance Sheet
June 30, 2004
ASSETS
Current Assets:
Total Checking/Savings 0.00
Total Current Assets 0.00
Fixed Assets:
Equipment 5,541.00
Less - Accumulated Depreciation (3,708.23)
Total Fixed Assets 1,832.77
Other Assets:
Costs - Organizational 185.00
Less - Accumulated Amortization (129.50)
Total Other Assets 55.50
TOTAL ASSETS 1,888.27
LIABILITIES & STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts Payable 3,000.00
Accrued Expenses 41,000.00
Due to Shareholder 36,622.80
Total Current Liabilities 80,622.80
Total Liabilities 80,622.80
Stockholders' Equity:
Common Stock, $.0005 par value, 50,000,000
shares authorized, 3,180,929 shares issued
and outstanding 1,590.46
Paid-in-Capital 125,116.00
Retained Earnings (205,440.99)
Total Stockholders' Equity (78,734.53)
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY 1,888.27
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See accompanying notes and accountant's report.
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M.C.F.T.Y. National
Statement of Operations
For the Six Month Period Ended June 30, 2004
Revenues:
Sales 0.00
0.00
Cost of Goods Sold:
Cost of Goods Sold 0.00
0.00
Gross Profit 0.00
Operating Expenses:
Amortization 18.50
Depreciation Expense 337.84
Insurance 2,839.70
Professional Fees 2,892.90
6,088.94
Income (Loss) Before Income Taxes (6,088.94)
Income Taxes 0.00
Net Income (Loss) (6,088.94)
Earnings per common share:
Net Income (Loss) 0.00
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See accompanying notes and accountant's report.
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M.C.F.T.Y. National
Statement of Cash Flows
For the Six Month Period Ended June 30, 2004
OPERATING ACTIVITIES:
Net Income (Loss) (6,088.94)
Adjustments to reconcile Net Income
to net cash provided by operations:
Depreciation & Amortization 356.34
Accounts Payable (14,755.10)
Accrued Expenses 2,500.00
Net cash used by Operating Activities (17,987.70)
INVESTING ACTIVITIES:
Net cash provided by Investing Activities 0.00
FINANCING ACTIVITIES:
Shareholder Loans 3,232.60
Purchase of Treasury Stock (42,996.55)
Net cash used by Financing Activities (39,763.95)
Net cash decrease for year (57,751.65)
Cash at beginning of year 57,751.65
Cash at end of year 0.00
Supplemental Disclosures:
Noncash Transactions:
Decrease in Prepaid Expenses 4,954.42
Decrease in inventory 47,478.78
Shareholder Receivable arising from sale of Treasury Stock (50,000.00)
Note Payable arising from purchase of Treasury Stock (50,000.00)
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See accompanying notes and accountant's report.
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M.C.F.T.Y. National
Statement of Changes in Stockholders' Equity
For the Six Month Period Ended June 30, 2004
Total
Common Stock Paid in Retained Treasury Stock Stockholders'
Shares Amount Capital Earnings Shares Amount Equity
Balances
at
January 1,
2004 12,984,500 6,492.24 215,643.97 (199,352.05) 0 0.00 22,784.16
Issuance
of
common
stock 2,442,929 1,221.47 1,221.47
Paid in
capital 0.00 0.00
Net income
(loss) 0 0.00 0.00 (6,088.94) (6,088.94)
Treasury
Stock
Cost of
12,246,500
shares of
common
stock (12,246,500) (6,123.25) (90,527.97) 12,246,500 96,651.22 0.00
12,246,500
shares to
unissued 0 0.00 (12,246,500) (96,651.22) (96,651.22)
Balances
at
June 30,
2004 3,180,929 1,590.46 125,116.00 (205,440.99) 0 0.00 (78,734.53)
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See accompanying notes and accountant's report.
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M.C.F.T.Y. National
Notes to Financial Statements
June 30, 2004
NOTE A - ORGANIZATION AND NATURE OF BUSINESS
The Company was incorporated May 22, 2000 in the State of Nevada. The Company
offered products and services that are merchandised from full-service retail
business centers offering private mailbox rentals. On July 30, 2003 the Company
changed its name from M.C.F.T.Y. National to The International White Tea
Company. In June 21, 2004 the Company changed its name back to M.C.F.T.Y.
National. The Company will now be a retail business.
NOTE B - SIGNIFICANT ACCOUNTING POLICIES
Cash and Cash Equivalents
For purposes of the statement of cash flows, the Company considers all
short-term securities with a maturity of three months or less to be cash
equivalents.
Fixed Assets
Property and equipment are stated at cost. Depreciation is computed using
straight-line and accelerated methods over the estimated useful lives of the
assets. Expenditures for major renewals and betterments that extend the useful
lives of property and equipment are capitalized. Expenditures for maintenance
and repairs are charged to expense as incurred.
Intangible Assets
Intangibles purchased were being amortized over fifteen (15) years on a
straight-line basis; organizational costs are being amortized over five (5)
years on a straight-line basis.
Income Taxes
The Company has loss carryforwards of $198,959.00, which can be carried forward
twenty (20) years to offset future taxable income.
Use of Estimates
The preparation of the financial statements in accordance with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect certain reported
amounts and disclosures. Accordingly, actual results could differ from those
estimates.
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M.C.F.T.Y. National
Notes to Financial Statements (continued)
June 30, 2004
Revenue Recognition
The Company recognizes its revenue when it completes the delivery of its goods
and services to its customers. SAB 101 had no substantive effect on the
Company's financial statements, as it did not impact the Company's method of
recognizing revenue.
NOTE C - EARNINGS PER COMMON SHARE
Earnings (loss) per common share of ($0.00) were calculated based on a net
income numerator of $(6,088.94) divided by a denominator of 6,197,412
weighted-average shares of outstanding common stock. The denominator was
calculated based on the following issuances of common shares during 2004:
January 1, 2004 12,984,500 common shares outstanding
February 25, 2004 3,180,929 common shares outstanding
NOTE D - RESCISSION AGREEMENT
The Company, on July 30, 2003, entered into a reorganization transaction whereby
new shareholders were elected as Officers and Directors and they acquired a
controlling block of the Company's common stock in exchange for the transfer of
all intangible assets and rights of certain of the new shareholders in and to
the white tea collection of consumer drinks. The transaction was entered into
under the assumption that the Company's shares of stock could be moved on to the
NASD Bulletin Board public trading market, and could commence trading prior to
November 15, 2003. The Company did not move its stock on to trading to the
Bulletin Board prior to November 15, 2003, and still has not moved its stock
trading to the Bulletin Board. As a result of this fundamental and material
mistake by all parties, both parties agreed to rescind the transaction. The new
shareholders received all cash held at Washington Mutual, all inventory of White
Tea product and labels, plus all rights to intangible property associated with
the white tea product, and all other assets associated with the white tea
product and/or contributed or transferred to the Company, free and clear of all
liens, claims and encumbrances. The new shareholders, in exchange, transferred
all the shares of the Company's stock originally issued back to the Company.
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