EX-2 3 a2047042zex-2.txt EXHIBIT 2 EXHIBIT 2 DISTECH LIMITED AND SUBSIDIARY UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2000 AND 1999

-------------------------------------------------------------------------------- DISTECH LIMITED AND SUBSIDIARY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2000 AND 1999 -------------------------------------------------------------------------------- 1. BASIS OF PRESENTATION Distech Limited and Subsidiary (the "Company") has prepared its condensed consolidated financial statements for the nine months ended December 31, 2000 and 1999 without audit by the Company's independent auditors. In the opinion of management, all adjustments necessary to present fairly the financial position, results of operations, and cash flows of the Company as of December 31, 2000 and for the nine months ended December 31, 2000 and 1999 have been made. Such adjustments consist only of normal recurring adjustments. Certain note disclosures normally included in the Company's annual financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted. These condensed consolidated financial statements and notes should be read in conjunction with the accompanying March 31, 2000 and 1999 audited financial statements within this Form 8-K filed with the Securities and Exchange Commission. The Company's financial position and results of operations are measured using the Company's local currency, the New Zealand dollar, as the functional currency. Revenues and expenses have been translated into U.S. dollars at average exchange rates prevailing during the periods. Assets and liabilities have been translated at the rates of exchange on the balance sheet dates. The resulting translation gain and loss adjustments are recorded directly as a separate component of stockholders' equity (deficit). The results of operations for the nine months ended December 31, 2000 and 1999 are not necessarily indicative of the results to be expected for the full year. 2. DUE TO RELATED PARTY In connection with the acquisition of the Company, as described in Note 3 below, Liquitek Enterprises, Inc. ("Liquitek") made certain advances to the Company. Advances totaling $620,000 at December 31, 2000 are due on demand and are non-interest bearing. 3. ACQUISITION On November 30, 2000, Liquitek acquired approximately 71% of the Company's equity securities in exchange for a total of approximately 11,400,000 shares and warrants of Liquitek, as further discussed in Note 13 to the accompanying March 31, 2000 and 1999 audited financial statements contained herein in Form 8-K. In accordance with New Zealand law, Liquitek subsequently made a successful tender offer for the remaining 1.6 million Company equity securities in exchange for a total of approximately 4.8 million Liquitek shares, options and warrants. -------------------------------------------------------------------------------- PAGE 5 -------------------------------------------------------------------------------- DISTECH LIMITED AND SUBSIDIARY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2000 AND 1999 -------------------------------------------------------------------------------- 3. ACQUISITION (continued) All tax net operating loss carryforwards were eliminated by operation of tax law as a result of the Company's acquisition by Liquitek. 4. ISSUANCE OF COMMON STOCK, WARRANTS, AND OPTIONS As further discussed in Note 13 to the accompanying March 31, 2000 and 1999 audited financial statements contained herein in Form 8-K, the Company issued options and warrants to certain stockholders during October 2000. 5. LOSS PER SHARE In accordance with Statement of Financial Accounting Standards No. 128, "Earnings per Share," basic loss per share is computed by dividing the loss attributable to common stockholders by the weighted average number of common shares outstanding during the period. Diluted loss per share reflects the amount that would have resulted if certain dilutive potential common stock had been issued. Because the Company has experienced losses from inception, certain issuances of options and warrants are antidilutive. -------------------------------------------------------------------------------- PAGE 6

LIQUITEK ENTERPRISES INC 8-K/A