Conspiracy Entertainment (CPYE) 8-K/A Financial statements and exhibits

EXHIBIT 99.2

Conspiracy Entertainment Corporation

Unaudited Financial Statements

September 30, 2003

Conspiracy Entertainment Corporation

Balance Sheets

	September 30, 2003
	(Unaudited)
ASSETS
Current Assets
Cash	$	152,478
Accounts Receivable (Net of Allowance of $3,200,844)		4,640,597
Total Current Assets		4,793,075
Property and Equipment, Net		59,532
Other Assets
Capitalized Development Costs and Licenses, Net		1,622,753
Other Assets		19,297
Total Other Assets		1,642,050
Total Assets	$	6,494,657
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities
Accounts Payable and Accrued Expenses	$	504,831
Accounts Payable - Swingarm		4,571,353
Due to Related Party		262,801
Deferred Revenue		924,006
Deferred Compensation		438,900
Current Portion of Long-Term Debt		1,245,694
Total Current Liabilities		7,947,585
Long-Term Liabilities
Notes Payable		257,628
Convertible Notes Payable		950,000
Capital Lease Payable		38,066
Less: Current Portion of Long-Term Debt		(1,245,694	)
Total Long-Term Liabilities		—
Total Liabilities		7,947,585
Stockholders’ Equity
Common Stock, Authorized 50,000 Shares, No Par Value Issued and Outstanding 23,400 Shares		11,512
Additional Paid in Capital		22,872
Retained Earnings (Deficit)		(1,487,312	)
Total Stockholders’ Equity		(1,452,928	)
Total Liabilities and Stockholders’ Equity	$	6,494,657

Conspiracy Entertainment Corporation

Statements of Operations

(Unaudited)

	For the Nine Months Ended September 30,
	2003			2002
Revenues	$	979,916		$	4,241,694
Cost of Sales		718,992			2,999,698
Gross Profit (Loss)		260,924			1,241,996
Operating Expenses
General & Administrative		1,374,914			1,547,727
Total Operating Expenses		1,374,914			1,547,727
Net Operating Income (Loss)		(1,113,990	)		(305,731	)
Other Income (Expense)
Interest Income		2			18
Interest Expense		(45,700	)		(1,881	)
Miscellaneous Income		2,438,189
Gain on Settlement of Debt		100,000			—
Total Other Income (Expense)		2,492,491			(1,863	)
Income (Loss) Before Income Taxes		1,378,501			(307,594	)
Income Tax Expense		—			—
Net Income (Loss)	$	1,378,501		$	(307,594	)
Net Income (Loss) Per Share	$	58.91		$	(14.65	)
Weighted Average Shares Outstanding		23,400			21,000

Conspiracy Entertainment Corporation

Statements of Cash Flows

(Unaudited)

	For the Nine Months Ended September 30,
	2003			2002
Cash Flows from Operating Activities:
Net Income (Loss)	$	1,378,501		$	(307,594	)
Adjustments to Reconcile Net Loss to Net Cash Provided by Operations:
Depreciation & Amortization		38,362			33,334
Amortization of Capitalized Development Costs and Licenses		718,992			2,999,698
Change in Operating Assets and Liabilities:
(Increase) Decrease in:
Accounts Receivable		(2,382,728	)		(136,065	)
Prepaid Expenses		10,997			2,265
Increase (Decrease) in:
Accounts Payable and Accrued Expenses		133,640			(14,804	)
Due to Related Party		(20,000	)		—
Deferred Revenue		215,684			1,360,806
Deferred Compensation		134,500			240,300
Net Cash Provided (Used) by Operating Activities		227,948			4,177,940
Cash Flows from Investing Activities:
Payments for Development Costs and Licenses		(1,096,220	)		(4,142,353	)
Payments for Property and Equipment		(2,872	)		(7,823	)
Net Cash Provided (Used) by Investing Activities		(1,099,092	)		(4,150,176	)
Cash Flows from Financing Activities:
Proceeds from Notes Payable		265,128			—
Proceeds from Convertible Notes Payable		650,000			—
Payments for Capital Leases		—			(8,062	)
Principal Payments on Notes Payable		(7,500	)		—
Net Cash Provided (Used) by Financing Activities		907,628			(8,062	)
Increase (Decrease) in Cash		36,484			19,702
Cash and Cash Equivalents at Beginning of Period		115,994			224,874
Cash and Cash Equivalents at End of Period	$	152,478		$	244,576
Cash Paid For:
Interest	$	—		$	—
Income Taxes	$	—		$	—

Conspiracy Entertainment Corporation

Notes to the Consolidated Financial Statements

September 30, 2003

GENERAL

Conspiracy Entertainment Corporation (the Company) has elected to omit substantially all footnotes to the financial statements for the nine months ended September 30, 2003 since there have been no material changes (other than indicated in other footnotes) to the information reported by the Company in their Form 8-K for the year ended December 31, 2002.

UNAUDITED INFORMATION

The information furnished herein was taken from the books and records of the Company without audit. However, such information reflects all adjustments which are, in the opinion of management, necessary to properly reflect the results of the interim period presented. The information presented is not necessarily indicative of the results from operations expected for the full fiscal year.

REVERSE ACQUISITION

On August 11, 2003, the Company (a private company) entered into a merger agreement with Conspiracy Entertainment Holdings, Inc. (CEHI) (a public company). Pursuant to the agreement, the Company will exchange all of its shares for 21,552,900 shares of CEHI. The acquisition will be recorded as a reverse acquisition whereby the Company is the accounting survivor and CEHI is the legal survivor.

CONVERTIBLE NOTES PAYABLE

Pursuant to the reverse merger agreement detailed above, the Company received an additional $650,000 from a convertible notes payable during 2003. The notes payable is convertible into the common stock of CEHI at $0.67 per share and the attached warrants are convertible into 970,149 shares at $1 per share.

ACCOUNTS RECEIVABLE

The Company is currently in negotiations with Swing Entertainment to settle the accounts payable owed by the Company to Swing Entertainment. At December 31, 2002, the Company owed Swing Entertainment $4,571,353 and assigned accounts receivable in the amount of $2,133,165 as partial payment for the accounts payable balance. During 2003, the Company billed Swing Entertainment an additional $5,639,033. However, since Swing is currently in bankruptcy, an allowance for doubtful accounts of $3,200,844 was recognized by the Company for the additional receivables invoiced during 2003. The accounts receivable balance as of September 30, 2003 is $4,571,353 which will be used as payment for the accounts payable balance of $4,571,353. For the nine months ended September 30, 2003, the Company has recognized $2,438,189 of miscellaneous income for the accounts receivable.