Exhibit 99.2
MOORE & ASSOCIATES, CHARTERED
ACCOUNTANTS AND ADVISORS
------------------------
PCAOB REGISTERED
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
-------------------------------------------------------
To the Board of Directors
Eaton Laboratories, Inc. (A development stage company)
Las Vegas, Nevada
We have audited the accompanying balance sheet of Eaton Laboratories, Inc. as
of December 31, 2005, and the related statements of operations, stockholders'
equity and cash flows for the period from inception on February 2, 2000 through
December 31, 2005. These statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we
plan and perform the audits 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
audits provide reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Eaton Laboratories, Inc. as of
December 31, 2005 and the results of its operations and its cash flows for the
period from inception on January 28, 2004 through December 31, 2005, in
conformity with accounting principles generally accepted in the United States
of America.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 3 to the
financial statements, the Company's recurring losses and lack of operations
raises substantial doubt about its ability to continue as a going concern.
Management's plans concerning these matters are also described in Note 3.
The financial statements do not include any adjustments that might result
from the outcome of this uncertainty.
/s/ Moore & Associates
- ----------------------------
Moore & Associates Chartered
Las Vegas, Nevada
April 14, 2006
2675 S. Jones Blvd. Suite 109, Las Vegas, NV 89146
(702) 253-7511 Fax (702) 253-7501
F-1
Eaton Laboratories, Inc.
(A Development Stage Company)
Balance Sheet
Balance Sheet
December 31, December 31,
2005 2004
------------- -------------
Assets
Current assets:
Cash and equivalents $ 248 $ 368
------------- -------------
Total current assets 248 368
$ 248 $ 368
============= =============
Liabilities and Stockholders' Equity
Current liabilities: $ 5,000 $ 5,000
------------- -------------
Total current liabilities 5,000 5,000
------------- -------------
Stockholders' equity:
Common stock, $0.001 par value, 80,000,000
shares authorized, 10,873,750 shares
issued and outstanding 10,873 10,873
Additional paid-in capital 386,626 386,626
(Deficit) accumulated during development
stage (402,251) (402,131)
------------- -------------
(4,752) (4,632)
$ 248 $ 368
============= =============
The accompanying notes are an integral part of these financial statements.
F-2
Eaton Laboratories, Inc.
(A Development Stage Company)
Statements of Operations
Statements of Operations
February 2, 2000
Year ending Year ending (inception) to
December 31, December 31, December 31,
2005 2004 2005
------------ ------------ ----------------
Revenue $ - $ - $ -
------------ ------------ ----------------
Expenses:
General administrative expenses 120 7,715 107,608
R & D Expenses 294,825
------------ ------------ ----------------
Total expenses 120 7,715 402,433
------------ ------------ ----------------
Interest Income 3 182
Net (loss) $ (120) $ (7,712) $ (402,251)
============ ============ ================
Weighted average number of
common shares outstanding 10,873,750 10,873,750
============ ============
Net (loss) per share $ (0) $ (0)
============ ============
The accompanying notes are an integral part of these financial statements.
F-3
Eaton Laboratories, Inc.
(A Development Stage Company)
Statements of Changes in Stockholders' Equity
For the period February 2, 2000 (Date of Inception) to December 31, 2005
Statements of Changes in Stockholders' Equity
(Deficit)
Accumulated
Common Stock Additional During Total
------------------ Paid-in Development Stockholders'
Shares Amount Capital Stage Equity
---------- ------- -------- ---------- --------------
Balance,
February 2, 2000 - $ - $ - $ - $ -
Founders shares issued
for cash 10,500,000 10,500 118,500 129,000
Net (loss) for the
period ended
December 31, 2000 (9) (9)
---------- ------- -------- ---------- --------------
Balance,
December 31, 2000 10,500,000 10,500 118,500 - 128,991
Donated capital 105,000 105,000
Shares issued for
cash pursuant to
Rule 504 offering 373,750 373 102,012 102,385
Net (loss) for the
year ended
December 31, 2001 (18,653) (18,653)
---------- ------- -------- ---------- --------------
Balance,
December 31, 2001 10,873,750 10,873 325,512 (18,662) 317,723
F-4
(Deficit)
Accumulated
Common Stock Additional During Total
------------------ Paid-in Development Stockholders'
Shares Amount Capital Stage Equity
---------- ------- -------- ---------- --------------
Donated capital 61,114 61,114
Net (loss) for the
year ended
December 31, 2002 (48,469) (48,469)
---------- ------- -------- ---------- --------------
Balance,
December 31, 2002 10,873,750 10,873 386,626 (67,131) 330,368
Net (loss) for the
year ended
December 31, 2003 (327,288) (327,288)
---------- ------- -------- ---------- --------------
Balance,
December 31, 2003 10,873,750 10,873 386,626 (394,419) 3,080
Net (loss) for the
year ended
December 31, 2004 (7,712) (7,712)
---------- ------- -------- ---------- --------------
Balance,
December 31, 2004 10,873,750 10,873 386,626 (402,131) (4,632)
Net (loss) for the
year ended
December 31, 2005 (120) (120)
---------- ------- -------- ---------- --------------
Balance,
December 31, 2005 10,873,750 10,873 386,626 (402,251) (4,752)
========== ======= ======== ========== ==============
The accompanying notes are an integral part of these financial statements.
F-5
Eaton Laboratories, Inc.
(A Development Stage Company)
Statements of Cash Flow
Statements of Cash Flow
February 2, 2000
Year ending Year ending (inception) to
December 31, December 31, December 31,
2005 2004 2005
------------ ------------ ----------------
Cash flows from operating
activities
Net (loss) $ (120) $ (7,712) $ (402,251)
Adjustments to reconcile net
(loss) to net cash (used) by
operating activities:
Increase in accounts
payable - related party 5,000 5,000
------------ ------------ ----------------
Net cash (used) by operating
activities (120) (2,712) (397,251)
------------ ------------ ----------------
Cash flows from investing
activities - - -
------------ ------------ ----------------
-
----------------
Net cash by investing activities -
----------------
Cash flows from financing activities
Issuance of common stock 10,873
Donated capital - 386,626
------------ ------------ ----------------
Net cash provided by financing
activities - - 397,499
------------ ------------ ----------------
Net increase (decrease) in cash (120) (2,712) 248
Cash - beginning 368 3,080 -
------------ ------------ ----------------
Cash - ending $ 248 $ 368 $ 248
============ ============ ================
Supplemental disclosures:
Interest paid $ - $ - $ -
============ ============ ================
Income taxes paid $ - $ - $ -
============ ============ ================
The accompanying notes are an integral part of these financial statements.
F-6
Eaton Laboratories, Inc.
Notes to Financial Statements
NOTE 1. General Organization and Business
The Company was organized February 2, 2000 (Date of Inception) under the laws
of the State of Nevada, as Eaton Laboratories, Inc. The Company is
authorized to issue 80,000,000 shares of $0.001 par value common stock. The
Company has limited operations, and in accordance with SFAS #7, the Company
is considered a development stage company.
NOTE 2. Summary of Significant Accounting Practices
The Company has cash assets of $248 and $5,000 current liabilities as of
December 31, 2005. The relevant accounting policies are listed below.
Basis of Accounting
- -------------------
The basis is United States generally accepted accounting principles.
Earnings per Share
- ------------------
The basic earnings (loss) per share is calculated by dividing the Company's
net income (loss) available to common shareholders by the weighted average
number of common shares during the year. The diluted earnings (loss) per
share is calculated by dividing the Company's net income (loss) available to
common shareholders by the diluted weighted average number of shares
outstanding during the year. The diluted weighted average number of shares
outstanding is the basic weighted number of shares adjusted as of the first
of the year for any potentially dilutive debt or equity.
The Company has not issued any options or warrants or similar securities
since inception.
Dividends
- ---------
The Company has not yet adopted any policy regarding payment of dividends.
No Dividends have been paid during the period shown.
Income Taxes
- ------------
The provision for income taxes is the total of the current taxes payable and
the net of the change in the deferred income taxes. Provision is made for
the deferred income taxes where differences exist between the period in which
transactions affect current taxable income and the period in which they enter
into the determination of net income in the financial statements.
Year-end
- --------
The Company has selected December 31 as its year-end.
F-7
Eaton Laboratories, Inc.
Notes to Financial Statements
Advertising
- -----------
Advertising is expensed when incurred. There has been no advertising
during the period.
Use of Estimates
- ----------------
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts
of revenue and expenses during the reporting period. Actual results could
differ from those estimates.
NOTE 3 - Going concern
The Company's financial statements are prepared using the generally accepted
accounting principles applicable to a going concern, which contemplates the
realization of assets and liquidation of liabilities in the normal course of
business. However, the Company has not commenced its planned principal
operations and it has not generated any revenues. In order to obtain the
necessary capital, the Company is seeking equity and/or debt financing. If
the financing does not provide sufficient capital, some of the shareholders
of the Company have agreed to provide sufficient funds as a loan over the
next twelve-month period. However, the Company is dependent upon its ability
to secure equity and/or debt financing and there are no assurances that the
Company will be successful, without sufficient financing it would be unlikely
for the Company to continue as a going concern.
NOTE 4 - Stockholders' equity
The Company is authorized to issue 80,000,000 shares of its $0.001 par value
common stock and 20,000,000 shares of its $0.001 par value preferred stock.
During November 2000, the Company issued 10,500,000 shares of its $0.001 par
value common stock to its founders for total cash of $129,000.
During the year ended December 31, 2001, shareholders of the Company
contributed $105,000 of cash as paid-in capital.
During the year ended December 31, 2001, the Company issued 373,750 shares of
its $0.001 par value common stock to investors for cash of $102,385 (net of
offering costs) pursuant to a Regulation D, Rule 504 of the Securities
Exchange Act of 1934 offering.
F-8
Eaton Laboratories, Inc.
Notes to Financial Statements
NOTE 4 - Stockholders' equity (Continued)
During the year ended December 31, 2002, shareholders of the Company
contributed $61,114 of cash as paid-in capital.
There have been no other issuances of common stock.
NOTE 5. Related Party Transactions
The Company does not lease or rent any property. Office services are
provided without charge by a director. Such costs are immaterial to the
financial statements and, accordingly, have not been reflected therein. The
officers and directors of the Company are involved in other business
activities and may, in the future, become involved in other business
opportunities. If a specific business opportunity becomes available, such
persons may face a conflict in selecting between the Company and their other
business interests. The Company has not formulated a policy for the
resolution of such conflicts.
As of July 1, 2004, an officer of the Company advanced a total of $5,000 to
the Company for various expenses. This amount is recorded as noted
payable to related party and is due upon demand without interest.
NOTE 6. Provision for Income Taxes
The Company accounts for income taxes under Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes" ("SFAS No. 109"), which
requires use of the liability method. SFAS No. 109 provides that deferred
tax assets and liabilities are recorded based on the differences between the
tax bases of assets and liabilities and their carrying amounts for financial
reporting purposes, referred to as temporary differences. Deferred tax
assets and liabilities at the end of each period are determined using the
currently enacted tax rates applied to taxable income in the periods in which
the deferred tax assets and liabilities are expected to be settled or
realized.
F-9
Eaton Laboratories, Inc.
Notes to Financial Statements
NOTE 6. Provision for Income Taxes (Continued)
The provision for income taxes differs from the amount computed by applying
the statutory federal income tax rate to income before provision for income
taxes. The sources and tax effects of the differences are as follows:
U.S federal statutory rate (34.0%)
Valuation reserve 34.0%
------
Total -%
NOTE 7. Operating Leases and Other Commitments
The Company also has no lease obligations.
NOTE 8. Recent Pronouncements
In November 2004, the FASB issued SFAS No. 151, Inventory Costs, an amendment
of ARB No. 43, Chapter 4. SFAS No. 151 amends the guidance in ARB No. 43,
Chapter 4, Inventory Pricing, to clarify the accounting for abnormal amounts
of idle facility expense, freight, handing costs, and spoilage. This
statement requires that those items be recognized as current period charges
regardless of whether they meet the criterion of "so abnormal" which was the
criterion specified in ARB No. 43. In addition, this Statement requires that
allocation of fixed production overheads to the cost of production be based
on normal capacity of the production facilities. This pronouncement is
effective for the Company beginning October 1, 2005. The Company does not
believe adopting this new standard will have a significant impact to its
financial statements.
In December 2004, the FASB issued SFAS No. 123 (revised 2004). Share-Based
Payment, which is a revision of SFAS No. 123, Accounting for Stock-Based
Compensation. SFAS No. 123(R) supersedes APB Opinion No. 25, Accounting for
Stock Issued to Employees and amends SFAS No. 95, Statement of Cash Flows.
Generally, the approach in SFAS No. 123(R) is similar to the approach
described in SFAS No. 123. However, SFAS No. 123(R) requires all share-based
payments to employees, including grants of employee stock options, to be
recognized in the income statement based on their fair values. Pro forma
disclosure is no longer an alternative. The new standard will be effective
for the Company in the first interim or annual reporting period beginning
after December 15, 2005. The Company expects the adoption of this standard
will have a material impact on its financial statements assuming employee
stock options are granted in the future.
F-10