EX-99 3 ex991.txt EXHIBIT 99.1 JB Accounting Joel Bachrach, CPA tel 201-307-1215 60 Chestnut Avenue fax 201-307-1261 Park Ridge, New Jersey 07656 joelbach@aol.com ___________________________________________________________________________ Independent Auditor's Report To the Board of Directors and Stockholders GIT Securities Corporation 271 North Avenue, Suite 1103, New Rochelle, NY 10801 We have audited the accompanying statement of financial position of GIT Securities Corporation as of December 31, 2001 and the related statement of operations, stockholders' equity and cash flows for the year then ended. These financial statements are the responsibility of the organization'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 referred to above present fairly, in all material respects, the financial position of GIT Securities Corporation as of December 31, 2001 and 2000 and the results of its operations and cash flows for the year then ended in conformity with generally accepted accounting principles. /S/ Joel Bachrach Joel Bachrach, CPA February 11, 2002 GIT SECURITIES CORPORATION STATEMENT OF FINANCIAL POSITION AS OF DECEMBER 31, 2001 ASSETS Cash $ 454 Receivables from broker dealers 132,200 Cleaning deposits 75,293 Receivables from holding company 80,000 ----------- Total current assets 287,947 Furniture, fixtures and equipment, net of accumulated depreciation of $1,263 17,882 ----------- Total assets $ 305,829 =========== LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities: Commissions payable $ 65,299 Accrued expenses 7,000 ----------- Total liabilities 72,299 Stockholders' equity: Common stock 10 Additional paid in capital 234,774 Retained earnings (deficit) (1,254) ----------- Total stockholders' equity 233,530 ----------- Total liabilities and stockholders' equity $ 305,829 ===========
See accompanying auditor's report and notes to financial statements -2- GIT SECURITIES CORPORATION STATEMENT OF OPERATIONS AS OF DECEMBER 31, 2001 REVENUE Commissions $ 384,727 EXPENSES Commissions and clearing charges $ 240,284 Consulting fees 17,330 Postage and fedex delivery costs 35,081 Telephone, fax and other communication costs 11,716 Agency and registration fees 36,594 Rent expenses 13,848 Depreciation 1,283 Other operating expenses 29,845 ----------- Total expenses 385,981 ----------- NET LOSS $ (1,254) ===========
See accompanying auditor's report and notes to financial statements. -3- GIT SECURITIES CORPORATION STATEMENT OF STOCKHOLDERS' EQUITY YEAR ENDED DECEMBER 31, 2001
ADDITIONAL RETAINED COMMON PAID IN EARNINGS STOCK CAPITAL (DEFICIT) TOTAL -------------------------------------------- Balance, January 1, 2001 $ 0 $ 0 $ 0 $ 0 Net loss for the year ended December 31, 2001 - - - - (1,254) (1,254) Capital Contributions 10 234,774 - - 234,784 -------------------------------------------- Balance - December 31, 2001 $ 10 $ 234,774 $ (1,254) $ 233,530 ============================================
See accompanying auditor's report and notes to financial statements. -4- GIT SECURITIES CORPORATION STATEMENT OF CASH FLOWS AS OF DECEMBER 31, 2001 Cash flows from operating activities: Net loss $ (1,254) ---------- Adjustments to reconcile net loss to net cash used by operating activities: Depreciation 1,263 Increase in receivable from broker dealers (132,200) Increase in clearing deposits (75,293) Increase in receivable from holding company (80,000) Increase in commissions payable 65,299 Increase in accrued expenses 7,000 ---------- Total adjustments (213,931) ---------- Net cash used by operating activities (215,185) ---------- Cash flows from investing activities Cash paid for purchase of fixed assets (19,145) ---------- Net cash used by investing activities (19,145) ---------- Cash flows from financing activities Proceeds from capital contributions 234,784 ---------- Net cash provided by financing activities 234,784 ---------- NET INCREASE IN CASH 454 CASH - BEGINNING 0 ---------- CASH - END $ 454 ========== Supplemental disclosures of cash flow information: Cash paid during the year for: Interest expense $ 0 Income tax $ 800
See accompanying auditor's report and notes to financial statements. -5- GIT SECURITIES CORPORATION NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2001 1. SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES ------------------------------------------------- Organization GIT Securities Corporation (the "Company") is a registered broker-dealer and clears its securities transactions on a fully-disclosed basis with another broker-dealer. The Company's headquarters are in New Rochelle, New York with another office located in Plainview, New York. Its customers are located throughout the United States. Reporting Period The accompanying financial statements reflect, in addition to activity for the 12 months ending December 31, 2001, activity from August 1, 2000 through December 31, 2000. No income was derived during this period and therefore the Company obtained an exemption from filing for the first five months ending December 31, 2000, with the agreement to include the financial results during that five month period in the December 31, 2001 statements. There was minimal activity during that period. Securities Transactions Securities transactions are recorded on settlement date, generally the third business day following the trade date. There is no material difference between the accounting on a settlement date basis as compared to a trade date basis. The Company does not currently own any of its own securities and therefore does not trade its own account at this time. Furniture, Fixtures and Equipment Furniture, fixtures and equipment are recorded at cost. Depreciation is provided for by the straight line method over the useful lives of the assets. Clearing Arrangements The Company as a non-clearing broker does not handle any customer funds or securities. The responsibility for processing customer activity rests with the Company's clearing firms, First Southwest Company and AVTG. If a customer or counterparty fail to perform, the Company may sustain a profit or loss if the market value of the securities differs from the contract price. During the year ended December 31, 2001, no such material losses occurred. Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management of the Company to use estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. -6- GIT SECURITIES CORPORATION NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2001 2. COMMITMENTS AND CONTINGENCIES ---------------------------------- Lease The Company leases office space at its two offices in New Rochelle, New York and Plainview, New York. Future minimum lease commitments are as follows: Years Ended December 31, 2002 $ 19,800 2003 19,800 ---------- $ 39,600 ========== Rent expense was approximately $13,800 for the year ended December 31, 2001. 3. NET CAPITAL REQUIREMENT ---------------------------- The Company is subject to the Securities and Exchange Commission Uniform Net Capital Rule (SEC 15c3-1), which requires the maintenance of minimum net capital and requires that the ratio of aggregate indebtedness to net capital, both as defined, shall not exceed 15 to 1 (and that equity capital may not be withdrawn or cash dividends paid if the resulting net capital ratio would exceed 10 to 1). At December 31, 2001, the Company had net capital of $135,648, which was $130,648 in excess of its required net capital of $5,000. The Company's percentage of aggregate indebtedness to net capital was 53% as of December 31, 2001. -7-