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Report of Independent Registered Public Accounting Firm

 

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Title:

Report of Independent Registered Public Accounting Firm

Entities:

Natalma Industries Inc.

Date:

2006

Size:

76KB total

Price:

$53

ID:

#2676686

 

 

► Miscellany ► Agreements ► Misc. Agreements ► Reports of Independent Registered Public Accounting Firm

 

 

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AEROGROUP INCORPORATED AND SUBSIDIARIES

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
 
Report of Independent Registered Public Accounting Firm
  
F-1
 
    
Consolidated Balance Sheets at September 30, 2006 (Unaudited)
   
and December 31, 2005 (Audited)
  
F-2
     
Consolidated Statements of Operations
    
for the Nine Months Ended September30, 2006 and 2005 (Unaudited)
  
F-3
and for the Years Ended December 31, 2005 and 2004 (Audited)
    
     
Consolidated Statements of Stockholders
    
 for the Years Ended December 31, 2005 and 2004 (Audited) and
    
 for the Nine Months Ended September 30, 2006 (Unaudited)
  
F-4
     
Consolidated Statements of Cash Flows
    
for the Nine Months Ended September 30, 2006 and 2005 (Unaudited) and
    
for the Years Ended December 31, 2005 and 2004 (Audited)
  F-5
     
Notes to the Consolidated Financial Statements
  
F-6 to F-23

 
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors of
AeroGroup Incorporated
 
We have audited the accompanying consolidated balance sheet of AeroGroup Incorporated (the Company) as of December 31, 2005, and the related consolidated statements of operations, stockholders deficiency and cash flows for the years ended December 31, 2005 and 2004. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.  The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Companys internal control over financial reporting. Accordingly, we express no such opinion.  An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of AeroGroup Incorporated and Subsidiaries as of December 31, 2005, and the results of their operations and their cash flows for the years ended December 31, 2005 and 2004 in conformity with U.S. generally accepted accounting principles.

As discussed in Note 1 to the consolidated financial statements, the Company continues to generate operating losses and has a significant working capital deficiency as of December 31, 2005. In addition, the Company is in default on substantially all of its outstanding debt. These conditions raise substantial doubt about the Companys ability to continue as a going concern. Managements plans regarding these matters are also described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

On December 15, 2006, the Company sold substantially all of its assets in exchange for the (i) assumption by the purchaser of certain of the Companys liabilities and (ii) shares of common stock of the purchaser (see Note 8).

New York, New York
December 7, 2006, except for Notes 1 and 8 dated December 15, 2006
 
F-1
 
AEROGROUP INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

   
September 30,
  
December 31,
  
   
2006
  
2005
  
   
(Unaudited)
      
           
ASSETS
          
           
Current Assets:
          
Cash
 
$
1,464
  
$
720
  
Accounts receivable net of allowance for doubtful accounts of $355,238 at
             
September 30, 2006 (unaudited) and December 31, 2005.
    
-
   
-
 
Other current assets
    
14,669
   
14,669
 
 
              
Total Current Assets
    
16,133
   
15,389
 
 
              
Property and Equipment, net
    
7,089,485
   
88,000
 
 
              
TOTAL ASSETS
  
$
7,105,618
  
$
103,389
  
               
               
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
              
               
Current Liabilities:
              
Accounts payable
  
$
253,640
  
$
200,878
  
Accrued liabilities
    
799,613
   
899,574
 
Accrued liquidated damages
    
-
   
1,074,188
 
Convertible Debentures, including accrued interest, net of debt
             
discount of $1,268,154 at September 30, 2006 (unaudited) and $1,324,201
              
at December 31, 2005.
    
3,340,825
   
2,355,309
 
Notes Payable, includes related parties of 294,198 at September 30, 2006
(unaudited) and $359,198 at December 31, 2005
     319,198     384,198  
Derivative liabilities for conversion options and warrants
    
19,245,325
   
1,972,080
 
               
Total Current Liabilities
    
23,958,601
    
6,886,227
  
               
Notes Payable
    
7,813,003
    
-
  
               
TOTAL LIABILITIES
    
31,771,604
   
6,886,227
 
             
STOCKHOLDERS' DEFICIENCY:
            
Preferred stock-$.10 par value; 1,000,000 shares authorized; -
              
-0- shares issued and outstanding
    
   
 
Common stock-$.005 par value; 749,500,000 shares authorized; -
              
749,500,000 and 554,500,000 shares issued and outstanding
              
at September 30, 2006 (unaudited) and December 31,2005, respectively
    
3,747,500
   
2,772,500
 
Additional paid-in-capital
    
5,440,058
   
6,025,058
 
Accumulated deficit
    
(33,853,544
)
  
(15,580,396
)
               
TOTAL STOCKHOLDERS' DEFICIENCY
    
(24,665,986
)
  
(6,782,838
)
               
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIENCY
  
$
7,105,618
  
$
103,389
  
 
The accompanying notes are an integral part of these consolidated financial statements.
 
 
F-2
 
AEROGROUP INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS

   
Nine Months Ended
      
   
September 30,
  
Year Ended December 31,
  
   
2006
 
2005
 
2005
 
2004
  
   
(Unaudited)
          
                   
REVENUES
  
$
 
$
5,142
  
$
5,142
  
$
855,054
  
                           
OPERATING COSTS:
                          
Operating costs
    
209,361
   
119,138
   
131,710
   
610,509
 
General and administrative, including compensatory
                          
element of stock issuance of $144,773 and $-0- for the nine months ended September 30, 2006 and 2005 (unaudited) and $-0- and $389,000 for the years ended December 31, 2005 and 2004
    
985,696
    
584,216
    
680,527
    
1,346,561
  
                           
TOTAL OPERATING COSTS
    
1,195,057
   
703,354
   
812,237
   
1,957,070
 
                           
LOSS FROM OPERATIONS
    
(1,195,057
)
  
(698,212
)
  
(807,095
)
  
(1,102,016
)
                           
Derivative (losses) gains
    
(16,914,828
)
  
2,991,691
   
8,659,065
   
(1,222,289
)
Write-off of liquidated damages
    
1,074,188
   
-
   
-
       
Interest expense
    
(923,810
)
  
(3,778,133
)
  
(4,254,371
)
  
(4,508,019
)
Other (income) expenses
    
(2,386
)
  
   
206
   
23
 
                           
TOTAL OTHER (EXPENSES) INCOME
    
(16,766,836
)
  
(786,442
)
  
4,404,900
   
(5,730,285
)
                           
NET (LOSS) INCOME
  
$
(17,961,893
)
$
(1,484,654
)
$
3,597,805
  
$
(6,832,301
)
                           
Basic net (loss) income per common share
  
$
(0.02
)
$