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
<Table>
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
===========
</Table>
See accompanying auditor's report and notes to financial statements
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GIT SECURITIES CORPORATION
STATEMENT OF OPERATIONS
AS OF DECEMBER 31, 2001
<Table>
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)
===========
</Table>
See accompanying auditor's report and notes to financial statements.
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GIT SECURITIES CORPORATION
STATEMENT OF STOCKHOLDERS' EQUITY
YEAR ENDED DECEMBER 31, 2001
<Table>
<Caption>
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
============================================
</Table>
See accompanying auditor's report and notes to financial statements.
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GIT SECURITIES CORPORATION
STATEMENT OF CASH FLOWS
AS OF DECEMBER 31, 2001
<Table>
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
</Table>
See accompanying auditor's report and notes to financial statements.
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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.
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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.
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