SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 Form 10-KSB
 
 [X]  ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
 For the fiscal year ended December 31, 2003
 
 [  ]  TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
 For the transition period from _______________ to _______________.
 
 Commission file number: 000-28733









Weight Loss Forever International, Inc.


(Name of small business issuer in its charter)





Nevada
(State or other jurisdiction of
incorporation or organization)
88-0430607
(I.R.S. Employer
Identification No.)120 International Parkway, Suite 120
Heathrow, FL
(Address of principal executive offices)
32746
(Zip Code)





Issuers telephone number (407) 333-8998





Securities registered under Section 12(g) of the Exchange Act:





Common stock, par value $0.0001


(Title of class)





Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No __.





Check if there is no disclosure of delinquent filers pursuant to Item 405 of Regulation S-B is not contained in this form, and no disclosure will be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB. [  ]





State issuers revenues for its most recent fiscal year.  The issuers revenues for the year ended December 31, 2003 were $146,244.





State the aggregate market value of voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was sold, or the average bid and asked prices of such common equity, as of a specified date within the past 60 days. (See definition of affiliate in rule 12b-2 of the Exchange Act.) $7,037,544, based on the closing price of $0.27 for our common stock on April 12, 2004.







State the number of shares outstanding of each of the issuers classes of common stock, as of the latest practicable date. As of April 13, 2004, there were 46,577,837 shares of common stock, par value $0.0001, issued and outstanding.





DOCUMENTS INCORPORATED BY REFERENCE





If the following documents are incorporated by reference, briefly describe them and identify the part of the form 10-KSB (e.g., Part I, Part II, etc.) into which the document is incorporated: (1) any annual report to security holders; (2) any proxy or information statement; and (3) any prospectus filed pursuant to rule 424(b) or (c) of the Securities Act of 1933 (Securities Act). The listed documents should be clearly described for identification purposes (e.g., annual report to security holders for fiscal year ended December 24, 1990). None.





Transitional Small Business Disclosure Format (check one):





Yes _____ No __ X __















Weight Loss Forever International, Inc.





TABLE OF CONTENTS








PART I

3ITEM 1
DESCRIPTION OF BUSINESS
3ITEM 2
DESCRIPTION OF PROPERTY
8ITEM 3
LEGAL PROCEEDINGS
8ITEM 4
SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
8PART II

9ITEM 5
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
9ITEM 6
MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
12ITEM 7
FINANCIAL STATEMENTS
16ITEM 8
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
16ITEM 8A
DISCLOSURE CONTROLS AND PROCEDURES
16PART III

17ITEM 9
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS, COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
17ITEM 10
EXECUTIVE COMPENSATION
19ITEM 11
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
21ITEM 12
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
22ITEM 13
EXHIBITS AND REPORTS ON FORM 8-K
22ITEM 14
CONTROLS AND PROCEDURES
24ITEM 15
PRINCIPAL ACCOUNTANTS FEES AND SERVICES
24




2


PART I
 
 This Annual Report includes forward-looking statements within the meaning of the Securities Exchange Act of 1934 (the Exchange Act). These statements are based on management's beliefs and assumptions, and on information currently available to management. Forward-looking statements include the information concerning possible or assumed future results of operations of the Company set forth under the heading Management's Discussion and Analysis of Financial Condition or Plan of Operation. Forward-looking statements also include statements in which words such as expect, anticipate, intend, plan, believe, estimate, consider or similar expressions are used.
 
 Forward-looking statements are not guarantees of future performance. They involve risks, uncertainties and assumptions. The Company's future results and shareholder values may differ materially from those expressed in these forward-looking statements. Readers are cautioned not to put undue reliance on any forward-looking statements.
 
 ITEM 1 - DESCRIPTION OF BUSINESS
 
 We are a franchisor of weight loss and nutrition retail clinics offering all-natural herbal dietary supplements. We operate through two wholly-owned subsidiaries, Weight Loss Management, Inc. and Beverly Hills Franchising Corp. In the fourth quarter of 2003, we made an investment into Tammy Phillips Boot Camp, LLC, acquiring a 50% interest for investment purposes, and our management is still deciding whether or not the investment will be held long term.
 
 Operations
 
 We sell our proprietary Weight Loss Forever® and Beverly Hills Weight Loss & Wellness® systems to the public through our franchised centers and clinics. Our proprietary systems consist of supplementing daily food intake with formulations of specialty herbs developed to produce a gradual but steady and persistent loss of body fat. Our proprietary products are manufactured for us to our specifications. We also sell food bars, shakes, cereals, puddings and soups that are high in protein. The products are privately labeled for us. Our franchisees support clients in reaching weight loss goals not only through sale of products, but also through a computerized follow-up program providing weekly (and sometimes daily) personal support by telephone, fax, e-mail or in person at our centers and clinics. We believe that personal contact serves to reinforce the commitment to stay on the program, answers questions, and overcomes hurdles by providing first-hand information, experience, menu guidance, analysis of eating habits, and other tips for successful weight loss. The Tammy Phillips Fitness Boot Camp is a program designed around cardio-strength training, flexibility training, and nutrional counseling.
 
 Location of Centers and Clinics
 
 The following table lists our centers and clinics as of December 31, 2003. Our centers and clinics are located in North Carolina, Virginia, Rhode Island, Tennessee and Florida.




Weight Loss Forever ® Centers





North Carolina

Virginia·Greensborough

·Charlottesville·Asheborough

·Suffolk·Southern Pines

·Franklin·Kernersville

·Harrisonburg













3


·Elizabeth City

·Roanoke·Fredericksburg·Winchester·Richmond (East)·Richmond (West)·Colonial Heights·Virginia Beach·Chesapeake·Norfolk·New Port News




Beverly Hills Weight Loss & Wellness ® Clinics
 
 North Carolina

Virginia·Lexington

·Virginia Beach·High Point

·Chesapeake·Salisbury·Mocksville

Rhode Island·Statesville

·Cranston·Winston-Salem

·Cumberland·PortsmouthFlorida

·East Providence·Orlando·Jensen Beach·Stuart·Port St. Lucie
 Tammy Phillips Fitness Boot Camps
  Virginia

North Carolina·Virginia Beach

·4 sites under contractTennessee·26 sites under contract




Company-owned Centers and Clinics
 
 We are now strictly a franchise management company. We do not have, nor do we expect, to open company-owned centers or clinics. We may, however acquire units from franchisees with the intent to re-franchise to a suitable franchise candidate. We may also consider entering into partnership or joint venture agreements.
 
 Franchised Centers and Clinics
 
 We franchise the right to own and operate retail centers and clinics which sell approved weight loss and nutrition products and provide related consulting services. At present our franchises are being offered for a 10-year term. As of December 31, 2003, we have franchised 20 Weight Loss Forever® centers, 19 Beverly Hills Weight Loss & Wellness® clinics, and we have 3 Tammy Phillips Fitness Boot Camps opened and another 30 under contract.
 
 4
 We have updated our Uniform Franchise Offering Circulars for both Weight Loss Forever® and Beverly Hills Weight Loss & Wellness® and are presently offering franchises for both concepts. We are concentrating on offering franchises to individuals in areas where we already have a presence. In areas of the country where we do not have existing locations, we are seeking multi-unit franchisees.

We are presently reviewing the overlap of our two concepts in certain areas and we are considering various options to distinguish and differentiate Weight Loss Forever® and Beverly Hills Weight Loss & Wellness®. In certain areas, we may convert certain centers to the Beverly Hills® program or to the Weight Loss Forever® system.

Franchise Pricing

Our franchise requires an initial non-refundable franchise fee of $20,000 which is payable to us upon execution of the franchise agreement. Lump sum payments to third parties must be made for leasehold improvements, equipment, and standard signage. Additional costs to the franchisee include travel and accommodations for training; security deposits, permits and utility costs; incorporation and other legal fees; opening inventory and local advertising for the first three months. The initial investment is generally under $100,000.

Franchise Agreement

Our franchise agreement provides for fees including:

Royalties Six percent of gross sales is payable weekly, based upon gross sales of the prior week.

Inspection Fee An inspection fee will be imposed if, upon inspection of the franchisee's accounting records, an underpayment to us is found of more than 2%.

Enforcement Costs The franchisee is obligated to reimburse us for the cost of defending claims against us as a result of the operation of the business by the franchisee, and to pay expenses including attorneys' fees if required to enforce the franchise agreement against the franchisee.

Some of the provisions of our franchise agreement are:

Quality Control The franchisee must maintain high uniform operating standards to increase demand for our products and services and to protect our trademarks, reputation and goodwill.

Training The franchisee must attend and complete our initial training programs prior to opening for business and any additional training programs we may require. Our initial training program covers forming a legal entity, selection and lease negotiation for location, store layout, computer requirements, signage, insurance, inventory, advertising, media research, payroll and accounting, recruiting and training store personnel, forms, legal responsibilities, interviewing, marketing, counseling guidelines, product knowledge and operationa1 policies. Upon opening, our employee remains at the center or clinic for approximately one week to assist with the opening and to provide additional on-site training.

Operations Each center or clinic must operate exclusively to sell Weight Loss Forever® and/or Beverly Hills Weight Loss & Wellness® products and services. The franchisee agrees to maintain appropriate supplies and inventory.

5

Condition and Appearance The franchisee must maintain the center or clinic in the highest degree of sanitation, repair and condition as we may require, and must refurbish the store as needed. The franchisee must permit us to conduct inspections and must immediately correct deficiencies detected during our inspections.

Purchase of Products The franchisee must purchase all products, supplies and other materials required for the operation of the business solely from approved suppliers.

Renewal Franchises are renewable for additional periods, subject to the conditions specified in the Franchise Agreement which must be met prior to renewal.

Competition

The weight loss business is highly competitive and we compete against a large number of companies, many of which are better known and have substantially greater financial resources than we do. Our principal direct competitors are national chains such as Weight Watchers International, and Jenny Craig, Inc. Weight Watchers had revenues of more than $800 million in 2002 and we estimate that Jenny Craig had revenues of more than $300 million in the same period. We also compete with regional and local weight loss businesses.

We also compete against other companies such as Herbalife International, Inc. and Metabolife International, Inc. that sell herbal weight loss regimens. Our competition also includes doctors, nutritionists, herbalists, dieticians, pharmacists, and pharmaceutical companies that offer weight control help by means of medication, herbs, diets, exercise, and weight loss drugs. In addition, new and different products or methods of weight control are continually being introduced. We believe that we compete on the basis of the effectiveness of our system, our competitive pricing, the quality of our products, and the marketing and management skills of our management and franchisees.

Supply Arrangements

Our proprietary products are manufactured for us, to our specifications, by several laboratories. Although most of our herbal dietary supplement products are produced for us by several suppliers, we have not entered into a formal supply contract with them and consequently they could sell such products to other parties and could stop or limit their sales to us. If our current arrangements are discontinued, we could engage other companies to manufacture our products for us, although there would probably be a time delay in production. There can be no assurance that our operations would not be adversely affected until we were able to obtain an alternate source of supply.

In addition to product development, our manufacturers monitor quality control, product labeling and compliance issues with the Food and Drug Administration and monitor state laws affecting the labeling and sale of herbs and food supplements and keep us apprised of changes in regulations that might require changes in any products, labels, advertising, or any other area of marketing.

Governmental Regulation

We are subject to Federal Trade Commission (FTC) regulation and several state laws which regulate the offer and sale of franchises. We are also subject to a number of state laws which regulate substantive aspects of the franchisor-franchisee relationship. The FTCs Trade Regulation Rule on Franchising (the FTC Rule) requires us to furnish to prospective franchisees a franchise offering circular containing information prescribed by the FTC Rule.

6

The following is a summary of the information required in the FTC offering circular:

oA description of the franchisor, its predecessors and affiliates, and the business experience of the franchisors key employees.

oA summary of litigation involving the franchisor.

oThe initial franchise fee and other fees paid by the franchisee to the franchisor, the total estimated initial investment by franchisee, restrictions    on franchisees sources of products and services, and franchisee's and franchisor's obligations under the franchise agreement.

oSources of financing available to franchisee.

oWhether or not the franchisee has a protected territory.

oThe franchisors trademarks, patents, copyrights and proprietary information.

oFranchisees requirement to operate the business, restrictions on what the franchisee can sell, requirements upon renewal, termination, or     transfer, of the franchise agreement, and provisions for dispute resolution.

oAny public figures paid by the franchisors and any sales or earnings claims made by the franchisor.

o    Theoffering circular includes a list of locations, franchisors financial statements and copies of the franchise agreement and related contracts.
State laws that regulate the offer and sale of franchises and the franchisor-franchisee relationship presently exist in a substantial number of states. State laws that regulate the offer and sale of franchises require registration of the franchise offering with state authorities. Those that regulate the franchise relationship generally require that the franchisor deal with its franchisees in good faith, prohibiting interference with the right of free association among franchisees, limiting the imposition of standards of performance on a franchisee and regulating discrimination against franchisees in charges, royalties or fees. Although such laws may restrict a franchisor in the termination of a franchise agreement by, for example, requiring "good cause" to exist as a basis for the termination, advance notice to the franchisee of the termination, an opportunity to cure a default and a repurchase of inventory or other compensation, these provisions have not had a significant effect on our franchise operations.

In October 1999, the FTC issued proposed changes to the FTC Rule that would effect certain disclosure obligations in connection with franchise sales. These proposed changes are still subject to public comment, and even if adopted as proposed, we do not think the changes would materially effect our franchise sales or other operations. We are not aware of any other probable pending franchise legislation that in our view is likely to affect our operations significantly. We believe that our operations comply in all material respects with the FTC Rule and the applicable state franchise laws.

Our current and future locations are, and will continue, to be subject to state and local laws and regulations governing health, sanitation and safety and the sale of dietary supplements. The processing, formulation, packaging, labeling and advertising of our products may be subject to regulation by the Food and Drug Administration, the Federal Trade Commission, the Consumer Product Safety Commission, the U.S. Department of Agriculture among others, including state and local agencies. The Food and Drug Administration, in

7

particular, regulates the advertising, labeling and sales of vitamin and mineral supplements if it believes they are drugs, or food additives rather than diet supplements. The selection of new locations is affected by federal, state and local zoning laws. Difficulties in obtaining necessary licenses or permits could cause delays in new openings. Our relations with our franchisees will be governed by state laws, which regulate substantive aspects of the franchisor-franchisee relationship. Current and proposed franchise laws limit, among other things, the duration and scope of non-competition provisions; the ability of a franchisor to terminate or refuse to renew a franchise and the ability of a franchisor to designate sources of supply. Our operations are also subject to federal and state laws governing such matters as wages, working conditions, citizenship requirements and health insurance.

Possible Side Effects of Dietary Supplements

Some dietary supplements can cause side effects. For example, valerian root, a supplement component in our nighttime formulation, may cause heart palpitations and sleeplessness. Another component, kava kava, may cause gastrointestinal disturbances and temporary skin, hair and nail discoloration. We do not carry any products containing ephedra. There can be no assurances that other supplement components do not have side effects of varying severity.

Intellectual Property

We have registered various trademarks and logos for Weight Loss Forever; and Beverly Hills Weight Loss and Wellness with the U. S. Patent and Trademark Office.

We rely on trade secrets and proprietary knowledge with respect to our product formulations and consulting advice. Persons who have access to confidential information must sign a non-disclosure agreement. There can be no assurance that our trade secrets will not become known or be independently developed by competitors.

Employees

We have four employees. We utilize independent contractors, consultants, and other personnel from time to time to assist in developing, and promoting our products and franchises.

ITEM 2 - DESCRIPTION OF PROPERTY

Our corporate headquarters is sublet, free of charge, from one of our franchisees on a verbal, month-to-month arrangement.

ITEM 3 - LEGAL PROCEEDINGS

In the ordinary course of business, we may be from time to time involved in various pending or threatened legal actions. The litigation process is inherently uncertain and it is possible that the resolution of such matters might have a material adverse effect upon our financial condition and/or results of operations. However, in the opinion of our management, matters currently pending or threatened against us are not expected to have a material adverse effect on our financial position or results of operations.

ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

There have been no events that are required to be reported under this Item.

8

PART II

ITEM 5 - MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Market Information

Our common stock currently trades on the Over the Counter Bulletin Board under the symbol WLFI, and has traded under that symbol since April 3, 2002. Prior to April 3, 2002, our common stock was traded under the symbol YTIX.

The following table sets forth the high and low bid information for each quarter during the prior two fiscal years, as provided by The Nasdaq Stock Market, Inc. The information reflects prices between dealers, and does not include retail markup, markdown, or commission, and may not represent actual transactions.
High

LowFiscal year ended December 31, 2002:First Quarter

$0.26

$0.08Second Quarter

$0.30

$0.10Third Quarter

$0.30

$0.09Fourth Quarter

$0.16

$0.04Fiscal year ended December 31, 2003:First Quarter

$0.42

$0.065Second Quarter

$0.19

$0.07Third Quarter

$0.19

$0.08Fourth Quarter

$0.66

$0.12Fiscal year ended December 31, 2004:First Quarter (through March 5, 2004)

$1.03

$0.30

The Securities Enforcement and Penny Stock Reform Act of 1990 requires additional disclosure relating to the market for penny stocks in connection with trades in any stock defined as a penny stock. The Commission has adopted regulations that generally define a penny stock to be any equity security that has a market price of less than $5.00 per share, subject to a few exceptions which we do not meet. Unless an exception is available, the regulations require the delivery, prior to any transaction involving a penny stock, of a disclosure schedule explaining the penny stock market and the risks associated therewith.

Holders

As of December 31, 2003 and April 13, 2004, there were 46,577,837 shares of our common stock issued and outstanding and held of record by approximately 104 and 97 shareholders, respectively. There are no shares of our preferred stock issued or outstanding.

9
Dividends

We have not paid any dividends on our common stock and do not expect to do so in the foreseeable future. We intend to apply our earnings, if any, in expanding our operations and related activities. The payment of cash dividends on our common stock in the future will be at the discretion of the Board of Directors and will depend upon such factors as earnings levels, capital requirements, our financial condition and other factors deemed relevant by the Board of Directors.

Securities Authorized for Issuance Under Equity Compensation Plans

On April 27 and June 4, 2001, our directors and shareholders, respectively, approved the youticket.com, inc. 2001 Stock Option Plan, effective April 27, 2001. The plan offers selected employees, directors, and consultants an opportunity to acquire our common stock, and serves to encourage such persons to remain employed by us and to attract new employees. There are 3,000,000 shares available under the plan, and there have been no grants of stock or options under the plan.

As of December 31, 2003, the plan information is as follows:

Plan Category
Number of Securities to be issued upon exercise of outstanding options, warrants and rights
****

(a)
Weighted-average exercise price of outstanding options, warrants and rights
****

(b)
Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
****
(c)Equity compensation plans approved by security holders
-0-
N/A
3,000,000Equity compensation plans not approved by security holders
3,813,440
$.07
-0-Total
3,813,440
$.07
3,000,000

Recent Sales of Unregistered Securities

In April 2003, we issued 3,058,956 shares of common stock, restricted in accordance with Rule 144, to four accredited investors who were designees of a party with whom we entered into a consulting agreement. The four investors are not affiliated parties to each other or to us. The issuance was exempt from registration pursuant to Section 4(2) of the Securities Act of 1933.

In August 2003, we issued 2,400,000 shares of common stock, restricted in accordance with Rule 144, to three accredited investors who were designees of a party with whom we entered into a consulting agreement. The three investors are not affiliated parties to each other or to us. The issuance was exempt from registration pursuant to Section 4(2) of the Securities Act of 1933.

In October 2003, we issued 750,000 shares of common stock, restricted in accordance with Rule 144, to two consultants for services rendered to the Company. The two shareholders are not affiliated parties to each other or to us. The issuance was exempt from registration pursuant to Section 4(2) of the Securities Act of 1933, and they were sophisticated investors.


10


In November 2003, we issued 200,000 shares of common stock, restricted in accordance with Rule 144, to Tammy Phillips pursuant to the terms of a Pre-Organization Agreement which established a joint venture between the Company and Ms. Phillips. The issuance was exempt from registration pursuant to Section 4(2) of the Securities Act of 1933, and Ms. Phillips was a sophisticated investor.

In November 2003, we issued 500,000 shares of common stock, restricted in accordance with Rule 144, to a consultant for services rendered to the Company. The issuance was exempt from registration pursuant to Section 4(2) of the Securities Act of 1933. The consultant was a sophisticated investor.



11

ITEM 6 - MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

Disclaimer Regarding Forward Looking Statements

Our Managements Discussion and Analysis contains not only statements that are historical facts, but also statements that are forward-looking (within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934). Forward-looking statements are, by their very nature, uncertain and risky. These risks and uncertainties include international, national and local general economic and market conditions; demographic changes; our ability to sustain, manage, or forecast growth; our ability to successfully make and integrate acquisitions; raw material costs and availability; new product development and introduction; existing government regulations and changes in, or the failure to comply with, government regulations; adverse publicity; competition; the loss of significant customers or suppliers; fluctuations and difficulty in forecasting operating results; changes in business strategy or development plans; business disruptions; the ability to attract and retain qualified personnel; the ability to protect technology; and other risks that might be detailed from time to time in our filings with the Securities and Exchange Commission.

Although the forward-looking statements in this Annual Report reflect the good faith judgment of our management, such statements can only be based on facts and factors currently known by them. Consequently, and because forward-looking statements are inherently subject to risks and uncertainties, the actual results and outcomes may differ materially from the results and outcomes discussed in the forward-looking statements. You are urged to carefully review and consider the various disclosures made by us in this report and in our other reports as we attempt to advise interested parties of the risks and factors that may affect our business, financial condition, and results of operations and prospects.

Overview

We franchise weight loss and nutrition retail clinics offering all-natural herbal dietary supplements. As of December 31, 2003, we have franchised 20 Weight Loss Forever® centers, 19 Beverly Hills Weight Loss & Wellness® clinics, and we have 3 Tammy Phillips Fitness Boot Camps opened and another 30 under contract. We generate revenue through royalty agreements, and we generally receive 6% of the revenues of our franchised locations, payable on a weekly basis.

We have historically grown by selling additional franchises, and we have done several acquisitions. We anticipate continuing to grow using these methods. We have 30 Tammy Phillips Boot Camps under contract, which we anticipate will increase our revenues in the next fiscal year.

Explanatory Paragraph in Report of Our Independent Certified Public Accountants

Our independent accountants have included an explanatory paragraph in their most recent report, stating that our audited financial statements for the period ending December 31, 2003 were prepared assuming that we will continue as a going concern. However, they note that we have not yet generated significant revenues, that we have experienced net losses, that we continue to have a large accumulated working capital deficit, and that there are no assurances that we will be able to meet our financial obligations in the future.

Our independent accountants included the explanatory paragraph based primarily on an objective test of our historical financial results. Our going concern paragraph may be viewed by some shareholders and investors as an indication of financial instability, and it may impair our ability to raise capital.

12
Year ended December 31, 2003 compared to the year ended December 31, 2002

Results of Operations

Introduction

Our operations for 2003 were essentially the same as for 2002, except that we disposed of all of our company-owned locations in 2002 and focused our business plan only on being a franchisor and on targeting one or more acquisition candidates. We did not execute any acquisition, however, during the fourth quarter of 2003 we did enter into an agreement to jointly open Tammy Phillips Boot Camps.

Revenues and Loss from Operations

Our revenue, general and administrative expenses, and loss from continuing operations for the year ended December 31, 2003 as compared to the year ended December 31, 2002 are as follows:

Year Ended
December 31, 2003

Year Ended
December 31, 2002

Percentage ChangeRevenue

$ 146,244

$ 60,452

142%General & Administrative Expenses

1,512,038

236,614

539%Loss from Operations

(1,398,289)

(196,762)

610%

Our revenues increased modestly in 2003 because of the overall performance of our franchise locations and the sale of new franchises and the corresponding franchise fee. Of the $146,244 in revenues for 2003, $132,832 was royalty income, while $16,000 was income from the sale of franchises.

Our general and administrative expenses during 2003 were $1,512,038, an increase of $1,275,424, or 539% as compared to 2002. This increase in general and administrative expenses was primarily due to consulting fees for franchise development and expansion.

Interest Expense, Loss from Continued Operations, Gain on Disposition of Subsidiary, Taxes, and Net Loss

Our interest expense, loss from continued operations, gain on disposition of subsidiary, taxes, and net loss for the year ended December 31, 2003 as compared to the year ended December 31, 2002 are as follows:

Year Ended
December 31, 2003

Year Ended
December 31, 2002

Percentage ChangeInterest Expense

$ (32,495)

$ (20,600)

58%Loss from Continued Operations

-

(88,150)

N/AGain on Disposition of Subsidiary

-

208,602

N/AIncome Taxes

-

-

N/ANet Loss

(1,398,289)

(76,310)

1,732%Net Loss per Share

(0.027)

(0.002)

1,250%


13

As a result of the above, our net loss for the year ended December 31, 2003 was $(1,398,289), an increase of $1,321,979 from the year ended December 31, 2002.

Three Months Ended December 31, 2003 Compared to the Three Months Ended December 31, 2002

Revenues and Loss from Operations

Our revenue, general and administrative expenses, and loss from continuing operations for the quarter ended December 31, 2003 as compared to the quarter ended September 30, 2003 and the quarter ended December 31, 2002 are as follows:

Quarter Ended December 31, 2003

Quarter Ended September 30, 2003

Quarter Ended December 31, 2002Revenue

$ 13,783

$ 42,604

$ 59,080General & Administrative Expenses

1,126,679

168,797

236,614Loss from Operations

(1,145,391)

(126,193)

(177,534)

Our revenue for the fourth quarter of 2003 was significantly less than the third quarter of 2003 because of seasonal factors at franchise units. In addition, our revenue for the fourth quarter of 2003 was less than the fourth quarter of 2002 because of a one-time reduction in royalties from franchisees to allow them to increase their local marketing efforts.

Our general and administrative expenses for the fourth quarter of 2003 were significantly more than the third quarter of 2003 and the fourth quarter of 2002 because of consulting fees for franchise development and expansion.

Interest Expense, Taxes, and Net Loss

Our interest expense, loss from continued operations, gain on disposition of subsidiary, taxes, and net loss for the quarter ended December 31, 2003 as compared to the quarter ended September 30, 2003 and the quarter ended December 31, 2002 are as follows:



Quarter Ended December 31, 2003

Quarter Ended September 30, 2003

Quarter Ended December 31, 2002Interest Expense

$ 11,255

$ 7,080

$ 7,580Loss from Continued Operations

-

-

-Gain on Disposition of Subsidiary

-

-

-Taxes

-

-

-Net Loss

(1,124,151)

(133,272)

(196,762)


14

Liquidity and Capital Resources

Introduction

During 2003, we did not generate positive operating cash flows. As the Tammy Phillips Boot Camps are opened, and as our franchise stores increase operations, we anticipate an increase in our operating cash flow. We also anticipate that one-time and transaction related expenses will decrease. However, we will likely not achieve positive operating cash flow during 2004. To date, we have funded operations primarily through the issuance of equity securities, and anticipate continuing to do so in 2004.

Our cash, current assets, total assets, current liabilities, and total liabilities as of December 31, 2003 as compared to September 30, 2003 were:



As of December 31, 2003

As of September 30, 2003

ChangeCash

$ 1,131

$ 2,088

$ (957)Total current assets

12,668

13,725

(1,057)Total assets

1,146,268

1,081,325

64,943Total current liabilities

348,353

285,402

62,951Total liabilities

605,500

550,319

55,181

Cash Requirements

For the year ended December 31, 2003 our net cash used in operating activities was ($36,706), as compared to ($194,098) for the year ended December 31, 2002. Negative operating cash flows during 2003 were primarily created by a net loss from operations of $1,398,289, partially offset by stock issued for services and interest of $1,236,853, an increase in accounts payable and accrued expenses of $104,387, and an increase in amounts due to related parties of $21,010.

Negative operating cash flows in 2002 were primarily created by a net loss from operations of $76,310, partially offset by an increase of $127,466 in stock issued for services and interest, gain on disposition of property and equipment of ($208,602), loss from discontinue operations of $88,150, and an decrease in accounts payable and accrued expenses of ($260,541).

Sources and Uses of Cash

Net cash used in investing activities was $zero and $208,602, respectively, for the years ended 2003 and 2002. Net cash provided by financing activities was $15,886 and $6,277, respectively, for the years ended 2003 and 2002.

We are not generating sufficient cash flow from operations to cover our working capital expenses or to fund our growth. If we can successfully complete one or more capital raises, and one or more acquisitions of profitable businesses, then we anticipate that we can operate at a profitable level. Until such time, however, and in order to complete the acquisitions, we will need to raise additional capital through the sale of our equity securities. If we are unsuccessful in raising the required capital, we may have to curtail operations.

15Critical Accounting Policies

The discussion and analysis of the Companys financial condition and results of operations are based upon its consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. In consultation with its Board of Directors, the Company has identified accounting policies related to the valuation of stock issued for services that it believes are key to an understanding of its financial statements. These are important accounting policies that require managements most difficult, subjective judgments.

ITEM 7 - FINANCIAL STATEMENTS

Index to Financial StatementsReport of Independent Certified Public Accountants
F-1Balance Sheet
F-3Statement of Operations
F-5Statement of Stockholders Equity
F-6Statement of Cash Flows
F-7Notes to Financial Statements
F-8 to F-18
ITEM 8 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

There have been no events that are required to be reported under this Item.

ITEM 8A  DISCLOSURE CONTROLS AND PROCEDURES

The Company's Chief Executive Officer and Chief Financial Officer (or those persons performing similar functions), after evaluating the effectiveness of the Company's disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of a date within 90 days of the filing of this annual report (the Evaluation Date), have concluded that, as of the Evaluation Date, the Company's disclosure controls and procedures were effective to ensure the timely collection, evaluation and disclosure of information relating to the Company that would potentially be subject to disclosure under the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder. There were no significant changes in the Company's internal controls or in other factors that could significantly affect the internal controls subsequent to the Evaluation Date.


16

PART III

ITEM 9 - DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT

The following table sets forth the names and ages of our current directors and executive officers, the principal offices and positions held by each person and the date such person became a director or executive officer. Our executive officers are elected annually by the Board of Directors. The directors serve one-year terms until their successors are elected. The executive officers serve terms of one year or until their death, resignation or removal by the Board of Directors. Unless described below, there are no family relationships among any of the directors and officers, and none of our officers and directors serve as a director for any other reporting issuer.

Name

Age

Position(s)John Martin

61

President, Director (2001)Byron Rambo

46

Secretary, Chief Financial Officer, Director (2003)Michael DApolito

51

Director (2002)Harold Kestenbaum

54

Director (2002)Charles Bolianites III (1)

51

Former Director (2002)

(1) Mr. Bolianites resigned from our Board of Directors effective April 9, 2004.

John Martinhas been our President since December 4, 2001, and chairman of our board of directors since March 18, 2002. Mr. Martin is the founder, and, for more than the last five years, President, of our former subsidiary, Weight Loss Forever International, (Virginia) Inc.

Byron Rambohas been our Chief Financial Officer and a member of our Board of Directors since November 2003. Mr. Rambo has been an accountant in public practice in Central Florida specializing in taxation for over 18 years.

Michael DApolitohas been a member of our board of directors since June 2002. He has been President of American Home Trust Corporation, a real estate investment company, for the past five years. He is also been a member of the board of directors of Advanced Wellness Corp., which is now a Weight Loss Forever franchisee.

Harold L Kestenbaumbecame a member of our board of directors in June 2002. He has been a practicing attorney in New York, specializing in franchise law, for more than the past five years.  He has been a director of Sbarro, Inc. since 1985 and is also a director of Rezconnect Technologies, Inc. and Ultimate Franchise Systems, Inc.

Audit Committee

Our board of directors has an audit committee to review our internal accounting procedures and to consult with and review the services provided by our independent accountants, although they have not adopted a formal charter. The directors that will serve on the audit committee have not yet been appointed but are expected to during the current fiscal year.  There are no other committees at this time.


17

Compliance with Section 16(a) of the Securities Exchange Act of 1934

Section 16(a) of the Securities Exchange Act of 1934 requires the Company's directors and executive officers and persons who own more than ten percent of a registered class of the Company's equity securities to file with the SEC initial reports of ownership and reports of changes in ownership of Common Stock and other equity securities of the Company. Officers, directors and greater than ten percent shareholders are required by SEC regulations to furnish the Company with copies of all Section 16(a) forms they file.

During the two most recent fiscal years, to the Companys knowledge, the following delinquencies occurred:

Name
No. of Late Reports
No. of Transactions Reported Late
No. of
Failures to FileJohn Martin
-0-
-0-
1Byron Rambo
1
-0-
-0-Michael DApolito
-0-
-0-
1Harold Kestenbaum
1
-0-
-0-Charles Bolianites III (1)
1
1
-0-


(1) Mr. Bolianites resigned from our Board of Directors effective April 9, 2004.




Code of Ethics
 
 We have not adopted a written code of ethics, primarily because we believe and understand that our officers and directors adhere to and follow ethical standards without the necessity of a written policy.






18




ITEM 10 - EXECUTIVE COMPENSATION
 
 The Summary Compensation Table shows certain compensation information for services rendered in all capacities for the fiscal years ended December 31, 2003 and 2002. In addition, the table shows compensation for our current sole executive officer. Other than as set forth herein, no executive officer's salary and bonus exceeded $100,000 in any of the applicable years. The following information includes the dollar value of base salaries, bonus awards, the number of stock options granted and certain other compensation, if any, whether paid or deferred.




Annual Compensation

Long Term CompensationAwards

PayoutsName and
Principal Position
Year
Salary
($)
Bonus
($)
Other Annual
Compensation
($)

Restricted Stock
Awards
($)
Securities Underlying Options SARs
(#)

LTIP Payouts
($)
All Other
Compensation
($)John Martin
2003
-0-
-0-
-0-

-0-
-0-

-0-
-0-President
2002
-0-
-0-
-0-

-0-
-0-

-0-
-0-Byron Rambo
2003
-0-
-0-
-0-

-0-
-0-

-0-
-0-CFO
2002
-0-
-0-
-0-

-0-
-0-

-0-
-0-Michael DApolito
2003
-0-
-0-
-0-

-0-
-0-

-0-
-0-Director
2002
-0-
-0-
-0-

-0-
-0-

-0-
-0-Harold Kestenbaum
2003
-0-
-0-
-0-

-0-
-0-

-0-
-0-Director
2002
-0-
-0-
-0-

-0-
-0-

-0-
-0-Charles Bolianities, III (1)
2003
-0-
-0-
75,000

-0-
-0-

-0-
-0-Former Director
2002
-0-
-0-
8,065

-0-
-0-

-0-
-0-Christopher M. Swartz (2)
2003
-0-
-0-
-0-

-0-
-0-

-0-
-0-Former Director
2002
-0-
-0-
-0-

-0-
-0-

-0-
-0-




(1) Mr. Bolianites resigned from our Board of Directors effective April 9, 2004. Mr. Boliantes received $8,065 in 2002 pursuant to a consulting agreement, and was entitled to receive $75,000 during 2003 under the same agreement. For accounting purposes, we treat the payments to Mr. Bolianites as principal reductions plus imputed interest payments on a contract payable for the acquisition of the Beverly Hills Weight Loss & Wellness System.
 
 (2) Mr. Swartz resigned from our Board of Directors effective November 2003.
 
 OPTION/SAR GRANTS IN LAST FISCAL YEAR
(Individual Grants)Name
Number of Securities
Underlying
Options/SARs Granted
(#)
Percent of Total
Options/SARs Granted
to Employees In Fiscal
Year
Exercise or Base Price
($/Sh)
Expiration DateJohn Martin
-0-
-0-
N/A
N/AByron Rambo
-0-
-0-
N/A
N/AMichael DApolito
-0-
-0-
N/A
N/AHarold Kestenbaum
-0-
-0-
N/A
N/ACharles Bolianites, III
-0-
-0-
N/A
N/AChristopher M. Swartz
-0-
-0-
N/A
N/A








19




AGGREGATED OPTIONS/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUESName
Shares Acquired On
Exercise
(#)
Value Realized
($)
Number of Unexercised
Securities Underlying
Options/SARs at FY-End
(#)
Exercisable/Unexercisable
Value of Unexercised
In-The-Money
Option/SARs
at FY-End
($)
Exercisable/UnexercisableJohn Martin
-0-
N/A
-0-
N/AByron Rambo
-0-
N/A
-0-
N/AMichael DApolito
-0-
N/A
-0-
N/AHarold Kestenbaum
-0-
N/A
-0-
N/ACharles Bolianites, III
-0-
N/A
-0-
N/AChristopher M. Swartz
-0-
N/A
-0-
N/A




None of our officers or directors are subject to an employment agreement, and none of our officers or directors receive any compensation for acting as an officer or director other than as set forth herein.
 
 20
 ITEM 11 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth, as of April 13, 2004, certain information with respect to the Companys equity securities owned of record or beneficially by (i) each Officer and Director of the Company; (ii) each person who owns beneficially more than 5% of each class of the Companys outstanding equity securities; and (iii) all Directors and Executive Officers as a group.

Common StockTitle of Class

Name and Address of
Beneficial Owner

Amount and Nature of Beneficial Ownership

Percent
of Class (1)Common
Stock

John Martin (2)(3)

5,153,656

11.1%Common
Stock

Byron Rambo (2)

161,834

<1%Common
Stock

Michael DApolito (2)(3)

-0-

-0-Common
Stock

Harold Kestenbaum (2)(3)

-0-

-0-Common
Stock

Charles Bolianites III (4)
92 Magnium Drive
Laconia, NH 03246

6,200,000

13.3%Common
Stock

Ultimate Franchise Systems, Inc.
300 International Parkway, Suite 100
Heathrow, FL 32746

8,997,368

19.3%All Officers and Directors
as a Group (4 Persons)

5,315,490

11.4%




(1) Unless otherwise indicated, based on 46,577,837 shares of common stock outstanding. Shares of common stock subject to options or warrants currently exercisable, or exercisable within 60 days, are deemed outstanding for purposes of computing the percentage of the person holding such options or warrants, but are not deemed outstanding for purposes of computing the percentage of any other person.
 
 (2) Unless otherwise indicated, the address of each director is c/o Weight Loss Forever International, Inc., 120 International Parkway, Suite 120, Heathrow, Florida 32746.
 
 (3) Indicates a Director of the Company.
  (4) Bolianites resigned from our Board of Directors effective April 9, 2004.
   The issuer is not aware of any person who owns of record, or is known to own beneficially, five percent or more of the outstanding securities of any class of the issuer, other than as set forth above.
   21
 There are no classes of stock other than common stock issued or outstanding. There are no current arrangements that will result in a change in control.
 
 ITEM 12 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
  On May 31, 2002, we sold our wholly owned subsidiary, Weight Loss Forever International, Inc., a Virginia corporation, to a corporation owned by our companys president, John Martin. Pursuant to that agreement, Mr. Martin became area developer for Weight Loss Forever for the states of Virginia and North Carolina and the owner of several franchises in those states.
 
 In June 2002, Christon Mergers & Acquisitions, LLC, a firm which was owned by two then-directors of our company, Mr. Swartz and Mr. Cipparone, acquired $50,000 of our convertible debentures. As of December 31, 2002, the debentures, together with accrued interest, were converted into shares of our common stock.
 
 In June 2002, we acquired certain franchise contract and royalty rights from Advanced Wellness Corporation. After that acquisition, an employee of Advanced Wellness Corp., Mr. Michael DApolito joined our board of directors.
 
 In October 2002, we acquired the assets of Beverly Hills Weight Loss & Wellness from Charles Bolianites. Upon completion of the acquisition, Mr. Bolianites became a member of our board of directors. As part of the acquisition, the Company entered into a consulting agreement whereby Mr. Bolianites is scheduled to receive $6,250 per month for 60 months.
 
 
 **ITEM 13 - EXHIBITS AND REPORTS ON FORM 8-K**
 
 (a)Exhibits






2.1 (4)

Reorganization and Stock Purchase Agreement dated September 30, 2001 with Sobiks International Franchising, Inc.2.2 (5)

Asset Purchase Agreement dated October 30, 2002 with Angela Enterprises, Inc. and Sabrina Weight Loss and Wellness of Canada, Inc.3.1 (1)

Articles of Incorporation of BNE Associates, Inc. dated May 9, 1996.3.2 (1)

Certificate of Amendment of Articles of Incorporation dated May 5, 1998 changing our name to Occidental Rand Corporation, increasing our authorized common stock, and effecting a forward stock split.3.3 (1)

Certificate of Amendment of Articles of Incorporation dated December 30, 1998 effecting a forward stock split.3.4 (1)

Certificate of Amendment of Articles of Incorporation dated August 27, 1999 changing our name to youticket.com, inc. and increasing our authorized common stock.














22




3.5 (2)

Certificate of Amendment of Articles of Incorporation dated April 2001 increasing our authorized common stock and effecting a reverse stock split.3.6 (2)

Restated Articles of Incorporation of youticket.com, inc. dated April 2001.3.7 (3)

Certificate of Amendment of Articles of Incorporation dated March 2002 changing our name to Weight Loss Forever International, Inc.3.8 (1)

Bylaws of youticket.com, inc.10.1 (2)

youticket.com, inc. 2001 Stock Option Plan10.2

Pre-Organization Agreement of Tammy Phillips Fitness Boot Camp, LLC dated September 15, 200321

Subsidiaries of Weight Loss Forever International, Inc.31.1

Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer31.2

Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer32.1

Chief Executive Officer Certification Pursuant to 18 USC, Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.32.2

Chief Financial Officer Certification Pursuant to 18 USC, Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.




(1)  Incorporated by reference from our Form 10-SB filed with the Commission on December 30, 1999.
 
 (2)  Incorporated by reference from our Schedule 14C Information Statement filed with the Commission on May 11, 2001.
 
 (3)  Incorporated by reference from our Schedule 14C Information Statement filed with the Commission on March 1, 2002
 
 (4)  Incorporated by reference from our Current Report on Form 8-K filed with the Commission on January 15, 2002.
 
 (5)  Incorporated by reference from our Current Report on Form 8-K filed with the Commission on November 8, 2002.






23


(b)  Reports on Form 8-K
 
 We made no 8-K filings during the quarter ended December 31, 2003.




ITEM 14  CONTROLS AND PROCEDURES
 
 See Item 8A  Controls and Procedures.
 
 ITEM 15  PRINCIPAL ACCOUNTANT FEES AND SERVICES
 
 Audit Fees
 
 During the fiscal years ended December 31, 2003 and 2002, Parks, Tschopp, Whitcomb & Orr, P.A. billed us $12,000 and $12,000, respectively, and Gately & Associates, LLC billed us zero and $1,500, respectively, in fees for professional services for the audit of our annual financial statements and review of financial statements included in our Form 10-QSB.
 
 Audit  Related Fees
 
 During the fiscal years ended December 31, 2003 and 2002, Parks, Tschopp, Whitcomb & Orr, P.A. and Gately & Associates, LLC did not bill us any fees for assurance and related services related to the performance of the audit or review of our financial statements.
 
 Tax Fees
 
 During the fiscal years ended December 31, 2003 and 2002, Parks, Tschopp, Whitcomb & Orr, P.A. and Gately & Associates, LLC did not bill us any fees for professional services for tax planning and preparation.
 
 All Other Fees
 
 During the fiscal years ended December 31, 2003 and 2002, Parks, Tschopp, Whitcomb & Orr, P.A. and Gately & Associates, LLC did not bill us for any other fees.
 
 Of the fees described above, 100% were approved by the Board of Directors of the Company as there was not an Audit Committee in place at the time of the approvals.






24


SIGNATURES
 
 In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.




Dated:April 21, 2004
/s/ John MartinBy:John MartinIts:PresidentDated:  April 21, 2004
/s/ Byron RamboBy:Byron RamboIts:Secretary and Chief Financial Officer





In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.




Dated:April 21, 2004
/s/ John MartinBy:John Martin, DirectorDated:April 21, 2004
/s/ Byron RamboBy:Byron Rambo, DirectorDated:April 21, 2004
/s/ Michael D'ApolitoBy:Michael DApolito, DirectorDated:April 21, 2004
/s/ Harold L. KestenbaumBy:Harold L. Kestenbaum, Director






25




Gately & Associates, LLC  Altamonte Springs, FL
  
 
 REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT
 
 The Board of Directors and Shareholders  Weight Loss Forever International, Inc.
 
  Gentlemen:
 
 We have audited the accompanying balance sheet of Weight Loss Forever International, Inc. as of December 31, 2003 and the related statements of operations, stockholders equity and cash flows for the year ended December 31, 2003. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on the audit. We did not audit the accompanying balance sheet as of December 31, 2002, and the related statements of operations and cash flows for the year ended were audited by another auditor. The auditor expressed in the report dated May 5, 2003 an unqualified opinion on those statements.
 
 We conducted the audit in accordance with generally accepted auditing standards. These 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 the 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 Weight Loss Forever International, Inc. as of December 31, 2003, and the statement of operations and cash flows for the year then ended in conformity with generally accepted accounting principles.
  The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in note 11 to the financial statements, the Company has experienced net losses of $1,517,289 and $76,310 for the years ended December 31, 2003 and 2002, respectively. At December 31, 2003, the Company continues to experience a working capital deficit. These matters raise substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to these matters are described in note 11. The accompanying financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might result should the Company be unable to continue as a going concern.
 
 
 /s/ Gately & Associates, LLCGately & Associates, LLC 
 April 5, 2004
 
 
 F - 1


Independent Auditors' Report
 
 The Shareholders and Board of Directors  Weight Loss Forever International, Inc.:
  We have audited the accompanying consolidated balance sheets of Weight Loss Forever International, Inc., a Nevada corporation, and subsidiaries as of December 31, 2002 and 2001, and the related consolidated statements of operations, stockholders' equity and cash flows for the years then ended. These financial 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 auditing standards generally accepted 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 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 financial position of the companies as of December 31, 2002 and 2001, and the results of their operations and their cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.
 The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in note 11 to the financial statements, the Company has experienced net losses of $76,310 and $440,654 for the years ended December 31, 2002 and 2001, respectively. At December 31, 2002, the Company continues to experience a working capital deficit. These matters raise substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to these matters are described in note 11. The accompanying financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might result should the Company be unable to continue as a going concern.
  May 5, 2003
 
  /s/ Parks, Tschopp, Whitcomb & Orr, P.A.Parks, Tschopp, Whitcomb & Orr, P.A.Maitland, Florida




F - 2








**WEIGHT LOSS FOREVER INTERNATIONAL, INC.**


**CONSOLIDATED BALANCE SHEET**


As of December 31, 2003 and December 31, 2002


**ASSETS**










|                                        |  |      |          
|--------------------------------------- |  | ---- | ---------
|                                        |  | 2003 | 2002     
|                                        |  |      |          
|                                        |  |      |          
|CURRENT ASSETS                          |  |      |          
|                                        |  |      |          
|                                        |  |      |          
|Cash                                    |  | $    | 1,131    
|Accounts receivable:                    |  |      |          
|Royalties and rebates (note 1)          |  |      | 11,537   
|Due from affiliates (note 10)           |  |      | -        
|                                        |  |      |          
|                                        |  |      |          
|Total Current Assets                    |  |      | 12,668   
|                                        |  |      |          
|                                        |  |      |          
|PROPERTY AND EQUIPMENT                  |  |      |          
|                                        |  |      |          
|                                        |  |      |          
|At cost net of accumulated depreciation |  |      | 3,840    
|                                        |  |      |          
|OTHER ASSETS                            |  |      |          
|                                        |  |      |          
|                                        |  |      |          
|Franchise contract rights (note 7)      |  |      | 1,063,760
|Investment (note 7)                     |  |      | 66,000   
|                                        |  |      |          
|TOTAL ASSETS                            |  | $    | 1,146,268
|                                        |  |      |          



The accompanying notes are an integral part of these consolidated financial statements.

F - 3


****
 **WEIGHT LOSS FOREVER INTERNATIONAL, INC.**
 **CONSOLIDATED BALANCE SHEET**
 As of December 31, 2003 and December 31, 2002




LIABILITIES AND STOCKHOLDERS' EQUITY








|                                                  |  | 2003 | 2002      
|------------------------------------------------- |  | ---- | ----------
|                                                  |  |      |           
|CURENT LIABILITIES                                |  |      |           
|                                                  |  |      |           
|                                                  |  |      |           
|Accounts payable and accrued expenses             |  | $    | 134,623   
|Due to related parties (note 10)                  |  |      | 89,610    
|Loans payable                                     |  |      | 28,100    
|Contract payable-Current portion (note 5)         |  |      | 96,020    
|                                                  |  |      |           
|                                                  |  |      |           
|Total current liabilities                         |  |      | 348,353   
|                                                  |  |      |           
|LONG-TERM LIABILITIES                             |  |      |           
|                                                  |  |      |           
|                                                  |  |      |           
|Contract payable (note 5)                         |  |      | 171,147   
|Convertible debenture (note 6)                    |  |      | 86,000    
|                                                  |  |      |           
|                                                  |  |      |           
|Total long-term liabilities                       |  |      | 257,147   
|                                                  |  |      |           
|TOTAL LIABILITIES                                 |  |      | 605,500   
|                                                  |  |      |           
|                                                  |  |      |           
|SHAREHOLDERS' EQUITY                              |  |      |           
|                                                  |  |      |           
|                                                  |  |      |           
|Preferred stock - $.0001 par value                |  |      |           
|authorized 10,000,000 shares                      |  |      |           
|issued and outstanding: none                      |  |      | -         
|Common stock - $.0001 par value;                  |  |      |           
|authorized 100,000,000 shares;                    |  |      |           
|issued and outstanding: 54,622,489 and 47,613,533 |  |      | 5,462     
|Additional paid-in-capital                        |  |      | 2,680,854 
|Accumulated deficit                               |  |      | (2,145,548
|                                                  |  |      |           
|                                                  |  |      |           
|Total shareholders' equity                        |  |      | 540,768   
|                                                  |  |      |           
|                                                  |  |      |           
|TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY        |  | $    | 1,146,268 
|                                                  |  |      |           
|                                                  |  |      |           
|                                                  |  |      |           



The accompanying notes are an integral part of these consolidated financial statements.





F - 4






**WEIGHT LOSS FOREVER INTERNATIONAL, INC.**


**CONSOLIDATED STATEMENTS OF OPERATIONS**


For the twelve months ended December 31, 2003 and 2002








2003
2002REVENUESRevenue

$
146,244

$
60,452TOTAL REVENUES


146,244


60,452EXPENSESGeneral and administrative


1,512,038


236,614TOTAL EXPENSES


1,512,038


236,614OPERATING INCOME (LOSS)


(1,365,794
)

(176,162
)Interest expense


(32,495
)

(20,600
)NET INCOME (LOSS) FROM CONTINUING OPERATIONS


(1,398,289
)

(196,762
)Loss from continued operations


-


(88,150
)Gain on disposition of subsidiary


-


208,602INCOME (LOSS) BEFORE INCOME TAXES


(1,398,289
)

(76,310
)Income taxes


-


-NET INCOME (LOSS)

$
(1,398,289
)
$
(76,310
)Basic and diluted income (loss) per share:Loss from continuing operations

$
(0.027
)
$
(0.005
)Loss from discontinued operations


-


(0.002
)Gain on disposition of subsidiary


-


0.005NET INCOME (LOSS) PER COMMON SHARE

$
(0.027
)
$
(0.002
)(less than $.01 per share for 2003)WEIGHTED AVERAGE COMMONSHARES OUTSTANDING


50,982,750


38,966,152




The accompanying notes are an integral part of these consolidated financial statements.



F - 5




**WEIGHT LOSS FOREVER INTERNATIONAL, INC.**
 **CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY**
 For the twelve months ended December 31, 2003 and 2002
 
 
 AdditionalCommon Stock

Paid-In
AccumulatedShares

Amount
Capital
Deficit
TotalBalances, December 31, 2001


35,114,881




$
3,511

$
394,336

$
(670,949
)
$
(273,102
)Issuance of stock for services


1,394,652





140


124,326





124,466Issuance of stock for acquisition ofAdvanced Wellness franchise rights


3,204,000





320


127,840





128,160Issuance of stock for acquisition ofBeverly Hills Weight Loss & Wellnessfranchise rights


6,200,000





620


619,380





620,000Issuance of stock for conversion of debentures


1,625,000





162


64,838





65,000Issuance of stock for interest on debentures


75,000





8


2,992





3,000Net Loss














(76,310
)

(76,310
)Balances, December 31, 2002


47,613,533





4,761


1,333,712


(747,259
)

591,214Issuance of stock for conversion of debt


50,000





5


4,995





5,000Issuance of for services


6,758,956





676


1,276,167





1,276,843Issuance of stock for investment


200,000





20


65,980





66,000Net Loss














(1,398,289
)

(1,398,289
)Balances, December 31, 2003


54,622,489




$
5,462

$
2,680,854

$
(2,145,548
)
$
540,768




The accompanying notes are an integral part of these consolidated financial statements.



F - 6


****
 **WEIGHT LOSS FOREVER INTERNATIONAL, INC.**
 **CONSOLIDATED STATEMENTS OF CASH FLOWS**
 For the twelve months ended December 31, 2003 and 2002
 
 CASH FLOWS FROM OPERATING ACTIVITIES


2003


2002Net (loss)

$
(1,398,289
)
$
(76,310
)Adjustments to reconcile net loss to net cashused in operating activities:Depreciation and organization costs


-


6,052Common stock issued for services and interest


1,236,853


127,466Loss from discontinued operations


-


88,150Gain on disposition of property and equipment


-


(208,602
)Changes in operating asserts and liabilities:Due from affiliates


100


60,302Accounts receivable


(767
)

90,458Inventories


-


45,027Prepaid expenses and other assets


-


7,596Accounts payable and accrued expenses


104,387


(260,541
)Due to related parties


21,010


(73,696
)Net cash flows provided by (usded in) operating activities


(36,706
)

(194,098
)CASH FLOWS FROM INVESTING ACTIVITIESProceeds from disposition of property and equipment


-


208,602Net cash flows provided by (used in) investing activites


-


208,602CASH FLOWS FROM FINANCING ACTIVITIESProceeds from loans payable


-


30,600Proceeds from related parties


15,886


10,000Proceeds from issuance of debentures-related parties


-


50,000Principal payments on line of credit


-


(77,989
)Payment on contract payable


-


(6,334
)Net cash flows provided by (used in) financing activities


15,886


6,277CASH RECONCILIATIONNet increase (decrease) in cash


(20,820
)

20,781Cash at beginning of period


21,951


1,170.CASH AT END OF PERIOD

$
1,131

$
21,951SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATIONCash paid during the year for interest

$
-

$
-Cash paid during the year for income taxes

$
-

$
-




The accompanying notes are an integral part of these consolidated financial statements.



F - 7


WEIGHT LOSS FOREVER INTERNATIONAL, INC.  Notes to Consolidated Financial Statements  December 31, 2003 and 2002
  (1)  Summary of Significant Policies
 
 (a)  Nature of Operations
 
 Weight Loss Forever International, Inc., (the Company) a Nevada corporation, franchises weight loss centers under the trade names Weight Loss Forever® and Beverly Hills Weight Loss & Wellness®, through subsidiary corporations, Weight Loss Management, Inc. and Beverly Hills Franchising Corp.
  At December 31, 2003, the Company franchised 20 Weight Loss Forever® centers and 21 Beverly Hills Weight Loss & Wellness® clinics. At December 31, 2002, the Company franchised 20 Weight Loss Forever® centers and 20 Beverly Hills Weight Loss & Wellness® clinics. The Company, in addition to being a franchisor, had previously operated company-owned locations. As of May 31, 2002, the Company disposed of all its company-owned locations to concentrate on franchising. The franchised locations are primarily in Virginia, North Carolina, New England and Florida. The Company receives a non-refundable franchise fee, generally $20,000, from entities which enter into an agreement with the Company to own and operate a retail location.  The franchisees are required to purchase the necessary furniture, fixtures, equipment and inventory either from the Company, from an affiliate of the Company, or from a source approved by the Company.  During the term of the agreement, the Company receives a service fee equal to six percent of gross sales, payable weekly.  Area developers receive a rebate on their units' royalty fees and a discount on product orders.  New agreements provide for a franchise term of ten years subject to renewal. The agreements provide for other fees and charges based on various conditions and circumstances.  The Company provides operational assistance, training, periodic inspections, and continuing new product development.  The Company also has the right to establish an advertising fund to which the franchisees would contribute.  This fund has not yet been established.
 
 (b) Principles of Consolidation
 The consolidated financial statements of the Company include the accounts of Weight Loss Forever International, Inc. and its subsidiaries, Weight Loss Management, Inc., from the date of its incorporation, June 4, 2002, and Beverly Hills Franchising Corp., from the date of its incorporation, October 31, 2002. All significant intercompany account balances and transactions between the Company and its subsidiaries have been eliminated in consolidation.
    F - 8


(c) Inventories
 
 As of December 31, 2003 and 2002 the Company did not own any inventory. Inventories at December 31, 2001 consist of vitamins and dietary supplements and are stated at the lower of cost or market. Cost is determined by the first-in, first-out method.
  (d) Property and Equipment
 
 As of December 31, 2003 the Company owned an internet Website valued at cost, $3,840. As of December 31, 2002 the Company did not own any property or equipment. The Company provides depreciation for machinery and equipment using the straight-line method over the estimated useful lives of the respective assets, which range from three to 39 years. Amortization of leasehold improvements is computed using the straight-line method over the lesser of the lease term or estimated useful lives of the improvements.
  (e) Research and Development Costs
 
 Research and development costs are charged against income in the year incurred.
  (f) Revenue Recognition
 
 The principal sources of revenue are derived from the collection of franchise royalties based on a percentage of the franchisee gross receipts and franchisee licensing fees and purchase rebates. Income from royalties is recognized as earned. Revenue from franchisee licensing and revenue from area franchise agreements are recognized as the initial agreements are signed. Product rebates are recognized as products are purchased.
  (g) Advertising Costs
 
 Advertising expenditures relating to product distribution and marketing efforts consisting primarily of franchise materials, product presentation material, catalog preparation, printing and postage expenses are expensed as incurred.
  (h) Use of Estimates
 
 F - 9
 
 The Companys management has made certain estimates and assumptions relating to the reporting of assets and liabilities and disclosure of contingent assets and liabilities to prepare these financial statements in conformity with generally accepted accounting principles. Actual results could differ from those estimates.
  (i)  Financial Instruments Fair Value, Concentration of Business and Credit Risks
 
 The carrying amount reported in the balance sheet for cash, accounts receivable, accounts payable and accrued expenses approximates fair value because of the immediate or short-term maturity of these financial instruments.  The carrying amount reported in the accompanying balance sheet for convertible debentures approximates fair value because the actual interest rate does not significantly differ from current rates offered for instruments with similar characteristics.  Financial instruments, which potentially subject the Company to concentrations of credit risk, consist principally of trade and royalty accounts receivable which amount to approximately $10,000.  The Company performs periodic credit evaluations of its franchisees and generally does not require collateral.  The Company maintains its cash balances at certain financial institutions in which balances are insured by the Federal Deposit Insurance Corporation up to $100,000.
  (j)  Stock-Based Compensation
 
 In October 1995, the Financial Accounting Standards Board issued Statements of Financial Accounting Standards No. 123, "Accounting for Stock-Based Compensation"; (SFAS 123) which sets forth accounting and disclosure requirements for stock-based compensation arrangements.  The new statement encourages but does not require, companies to measure stock-based compensation using a fair value method, rather than the intrinsic value method prescribed by Accounting Principles Board Opinion No. 25 ("APB No. 25";.)  The Company has adopted disclosure requirements of SFAS 123 and has elected to continue to record stock-based compensation expense using the intrinsic value approach prescribed by APB No. 25.  Accordingly, the Company computes compensation cost for each employee stock option granted as the amount by which the quoted market price of the Company's common stock on the date of grant exceeds the amount the employee must pay to acquire the stock.  The amount of compensation cost, if any, will be charged to operations over the vesting period.  SFAS 123 requires companies electing to continue using the intrinsic value method to make certain pro forma disclosures (see note 7).
  (k)  Income Taxes
 
 F - 10
 
 Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases.  Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.  The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
  (l)  Cash Flows
 
 For purposes of cash flows, the Company considers all highly liquid investments with an initial maturity of three months or less to be cash equivalents.
  (m)  Earnings Per Common Share
 
 Basic earnings per common share have been computed based upon the weighted average number of common shares outstanding during the years presented.  Common stock equivalents resulting from the issuance of the stock options and warrants have not been included in the calculations because such inclusion would be antidilutive.
  (2) History and Corporate Developments
 
 Reverse Merger with youticket.com, inc.
 
 Weight Loss Forever International, Inc. (WLFI-VA) was incorporated in 1995, in the state of Virginia.  WLFI-VA franchised the right to own and operate retail centers selling weight loss products under the Weight Loss Forever® trade name.  WLFI-VA began selling franchises in June 1996, and granting area development requests, whereby area developers may operate multiple stores within a geographic territory.  It is also the sole source supplier of products associated with the Weight Loss Forever® program.
  On September 30, 2001, WLFI-VA agreed to exchange shares with youticket.com, inc. (YTIX), a Nevada public company.  Accordingly, WLFI increased its authorized share capital to facilitate, and to effectuate, the exchange of 10,304,200 shares of WLFI-VA stock for 26,004,716 shares of youticket.com, inc. stock in a business combination accounted for as a reverse acquisition.  During the period youticket.com was in existence, prior to the reverse acquisition, it had minimal operations.  For accounting purposes, the reverse acquisition is reflected as if WLFI-VA issued its stock for the net assets of YTIX.  The net assets of YTIX were not adjusted in connection with the reverse acquisition since they were monetary in nature.  Subsequent to the reverse acquisition, youticket.com, inc. changed its name to Weight Loss Forever International, Inc.
  Sale  of WLFI-VA
 
 F - 11
 
 On May 31, 2002, the Company sold all of the issued and outstanding stock of the Company's subsidiary WLFI-VA to a corporation owned by the Company's president. The transaction resulted in a gain to the Company of approximately $209,000. The Company also acquired from WLFI-VA all rights to franchise the Weight Loss Forever® concept and all related intellectual property. The Company also changed its operations so as to only franchise weight loss centers and no longer own and operate them. Accordingly, the financial statements have been restated to reflect WLFI-VA as a discontinued operation.
  Acquisition of Assets of Advanced Wellness Corp.
 
 In June 2002, the Company acquired various franchising rights and intellectual property from Advanced Wellness Corp., located in South Florida.
  Formation of Weight Loss Management, Inc.
 
 On June 4, 2002, the Company formed Weight Loss Management, Inc., a wholly owned Florida corporation to hold the franchising assets of the Weight Loss Forever® concept and to conduct the business of selling and servicing Weight Loss Forever® franchises which are presently located in Virginia, North Carolina and Florida.
  Acquisition of Assets of  Beverly Hills  Weight Loss & Wellness and Formation of  Beverly Hills  Franchising Corp.
 
 Beverly Hills Franchising Corp., was formed on October 31, 2002 as a Florida corporation. From inception, it has been a wholly owned subsidiary of Weight Loss Forever International, Inc., a Nevada corporation. Beverly Hills Franchising Corp. was organized to hold the franchising assets of the Beverly Hills Weight Loss & Wellness® concept and to conduct the business of selling and servicing Beverly Hills Weight Loss & Wellness franchises. Beverly Hills Franchising Corp. acquired franchise agreements with 22 clinics located in North Carolina, Virginia, Rhode Island, New Hampshire, Kentucky and Colorado and is presently offering franchises in those and other states pursuant to the Beverly Hills Weight Loss & Wellness® Uniform Offering Circular.
  (3) Goodwill
 
 As a consequence of the sale by the Company, on May 31, 2002, of its subsidiary WLFI-VA, the Company disposed of all recorded goodwill resulting from prior acquisitions made by the subsidiary. Although, as of December 31, 2002, the Company did not include goodwill as a corporate asset, it has adopted Financial Accounting Standards Board (FASB) approved SFAS No. 142, "Goodwill and Other Intangible Assets.", and will not, in the future, amortize goodwill and other intangible assets with indefinite lives. The Company plans to test goodwill for impairment on an annual basis or on an interim basis if an event occurs or circumstances change that would reduce the fair value of a reporting unit below its carrying value.
   F - 12
   (4)  Property and Equipment
 
 Property and equipment consists of the following at December 31, 2003 and 2002
 2003

2002Furniture and equipment

$              -

$ -Website

3,840

-Leasehold improvements

-

-3,840

-Less accumulated depreciation and amortization

-

-$             3,840

$  -






(5) Contract Payable





As part of the consideration for the assets acquired by it, the Company entered into a five-year consulting agreement with Bolianites Enterprises, LLC, which is owned by the president of the seller of the franchising assets referred to in Note 2 above. The total to be paid pursuant to the agreement is $375,000, payable in 60 monthly payments of $6,250. The consulting agreement does not provide for any specific obligations on the part of Bolianites Enterprises, LLC other than the requirement that its managing member, Mr. Charles Bolianites, serve on the Board of Directors of Weight Loss Forever International, Inc. The Company has treated the discounted value of the contract as an additional cost of the assets acquired. The contract payable in the total amount of $375,000 has been discounted to its present value of $285,000, based on an interest rate of 12%. As monthly payments are made in the future, approximately 76% will be applied to the contract payable and the balance would be interest expense.




(6) Convertible Debentures





Series A Debentures





On September 30, 2001, the Company issued $101,000 of one-year 12% convertible debentures. During 2002, $15,000 of principal amount of the debentures were converted into 375,000 shares of the Companys common stock. The maturity date of the remaining $86,000 of debentures was extended to December 31, 2004. The debentures are convertible at the option of the holders at the conversion price of $0.04 per share or a total of 2,150,000 shares.




Series B Debentures





F - 13





In June 2002, the Company issued $50,000 of one-year 12% convertible debentures. As of December 31, 2002, the debentures were converted into 1,250,000 shares of the Companys common stock. Also, as of December 31, 2002, accrued interest on the debentures in the amount of $3,000 was converted into 75,000 shares of common stock.




(7)  Stockholders' Equity





On January 6, 2003 the Company issued 50,000 common shares for services for a value of $5,000, or $0.10 per share.




On January 6, 2003 the Company issued 50,000 common shares to retire debt owed by the Company for a value of $5,000, or $0.10 per share.




On April 1, 2003 the Company issued 3,058,956 common shares for services for a value of $458,843, or $0.15 per share.




On August 13, 2003 the Company issued 2,400,000 common shares for services for a value of $468,000, or $0.195 per share.




On October 30, 2003 the Company issued 750,000 common shares for services for a value of $180,000, or $0.24 per share.




On November 26, 2003 the Company issued 500,000 common shares for services for a value of $165,000, or $0.33 per share.




On November 26, 2003 the Company issued 200,000 common shares for an investment in Tammy Philips Fitness Boot Camp, LLC, a 50% interest, for a value of $66,000, or .33 per share.




Investment





The Company invested in Tammy Philips Fitness Boot Camp, LLC, a 50% interest, for a value of $66,000, or .33 per share as noted above with the issuance of 200,000 common shares of Company stock. The value of the stock issued was based on the trading value of the Companys stock in a public market and approximates the fair value of the investment. The investment may be considered temporary by the Companys management and therefore is accounted for at its fair value. The method of accounting for this investment may change depending on managements future plans regarding this investment and therefore the equity method and consolidation method may be future options. The Company applies Financial Accounting Standard No. 115, Accounting for Certain Investments in Debt and Equity Securities, for its investments.




Reverse  Split








F - 14







On June 4, 2001, the Company's shareholders approved a 1-for-30 reverse split of the common stock.  All references to shares have been adjusted retroactively.




Stock Options and Warrants





During 1999, YTIX granted options to purchase 15,000 shares of common stock.  These options were granted with an exercise price of $0.25 with a term of five years.




During 2000, YTIX granted options to employees to purchase 400,000 shares of common stock.  These options were granted with an average exercise price of $0.21 with a term of five and one half years. No options were granted in 2001, 2002 and 2003.




In June 2001, the board of directors of the Company approved the 2001 Stock Option Plan that authorized up to 3,000,000 shares to be issued.  The Company has reserved 3,000,000 shares of Common Stock for issuance under this plan.




The Company has also granted options under non-qualified option agreements.




Activity under the performance equity plan and non-qualified option agreements is as follows:




Shares

WeightedAverageExercisePriceOutstanding at December 31, 2002

42,750

$    8.71Granted

-

-Exercised

-

-Canceled

-

-Outstanding at December 31, 2003

42,750

$   8.71






In September 2001, the Company granted warrants to purchase 3,398,440 shares of common stock to an investor relations firm which has entered into a consulting agreement with the Company.  The warrants, which expire at various dates between June 30, 2003 and March 31, 2004, were granted at exercise prices ranging from $.035 - $.08 which were below the market value of the underlying stock at the date of the grant.  Accordingly, the Company, in 2001, recorded consulting fee expense of $144,433 in connection with this transaction.  In addition, the Agreement provided for the issuance of a total of 3,228,518 shares of common stock in exchange for consulting services.  At December 31, 2001, 2,208,986 shares had been issued in connection with the consulting agreement described herein.  In September 2002, the consulting agreement was extended for an additional year. The extended agreement provides for payment of 3,398,440 shares of common stock of which 1,019,652, valued at $101,965, were issued as of December 31, 2002. No shares were issued during the year ended December 31, 2003.






F - 15






All other stock options issued to employees have an exercise price not less than the fair market value of the common stock on the date of grant, and in accounting for such options utilizing the intrinsic value method, there is no related compensation expense recorded in the Company's consolidated financial statements.  If compensation cost for stock-based compensation had been determined based on the fair market value of the stock options and stock purchase warrants on their dates of grant in accordance with SFAS 123, the Company's net loss for the year ended December 31, 2003 and 2002 would have been:




2003

2002Net loss:As reported

$ (1,398,289)

$ (76,310)Pro forma

(1,389,289)

(76,310)Basic and diluted loss per common share:As reported

$  ( 0.027)

$  ( 0.002)Pro forma

(0.027)

(0.002)


Additional information relating to stock options and warrants outstanding and exercisable at December 31, 2003, summarized by exercise price follows:



Outstanding Weighted Average

Exercisable Weighted AverageLife

Exercise



ExerciseShares

(Years)

Price

Shares

Price6,500

.9

$    7.50

6,500

$    7.503,333

2.4

8.10

3,333

8.1012,917

1.4

8.45

12,917

8.4520,000

.8

9.38

20,000

9.3842,750





42,750


The computation of the effect on net earnings and earnings per share with respect to outstanding options and warrants in accordance with SFAS 123 was calculated using the Black-Scholes option-pricing model which included the following significant assumptions:



F - 16








PurchaseOptions

WarrantsRisk-free interest rate

7.0%

5.0%Expected volatility

5.0%

5.0%Expected dividend yield

0.0%

0.0%Expected life

6.5 years

2 years






The weighted average fair value at the date of grant of the options granted during 2000 and 1999 was $0.21 and $0.28 per option, respectively.


Acquisition of Franchise Rights of Advanced Wellness    In June 2002, the Company issued 3,204,000 shares of common stock, valued at $0.04 per share for total of $128,160 for the acquisition of the franchise rights and intellectual property of Advanced Wellness Corp.


Acquisition of Franchise Contract Rights of  Beverly Hills  Weight Loss & Wellness





On October 30, 2002, the Company acquired intellectual property, franchise agreements, trademarks and the rights to the names Beverly Hills Weight Loss & Wellness® and Roseglen Weight Loss and Wellness® for 6,200,000 shares of the Companys stock, valued at $620,000 or $0.10 per share. As additional consideration, the Company entered into a five-year consulting agreement with Bolianites Enterprises, LLC at $75,000 per year. (See Contract Payable - Note 5.)




(8)  Income Taxes





At December 31, 2003, the Company had net operating loss carryforwards of approximately $2,145,548 for financial statement and income tax purposes which will expire in varying amounts through 2023.  Due to change in ownership, the losses will be limited in their use and management has not determined the amount of losses that may ultimately be utilized.  Realization of deferred tax assets is dependent upon generating sufficient taxable income prior to their expiration.  A valuation allowance equal to the tax benefit of the net operating losses has been established since it is uncertain that future taxable income will be realized during the carryforward period.  Accordingly, a provision for income taxes had not been recorded in the accompanying financial statements.




(9)  Lease Commitments





Office facilities have been provided, without charge, to the Company by shareholder, Ultimate Franchise Systems, Inc. This arrangement is not covered by a lease. The Company may be required to pay rent in the future. As of December 31, 2003, the Company was not obligated under any lease commitments.


Total lease and rental expense for continuing operations was $0 in 2003 and 2002.






F - 17






(10) Related Party Transactions





At December 31, 2003 and 2002, the Company has balances due from affiliates amounting to $0 and $100, respectively. The Company has received advances from certain related parties during the years ending December 31, 2003 and 2002. The balances at December 31, 2003 and 2002 amount to $89,610 and $68,600, respectively. The advances are due on demand and are non-interest bearing.




In June 2002, a firm, which was owned at that time by two Company directors, acquired $50,000 of the Companys convertible debentures. As of December 31, 2002, the debentures, together with accrued interest, were converted into shares of the Companys common stock.




On May 31, 2002, the Company sold its wholly owned subsidiary, WLFI-VA to a corporation owned by the Companys president. Pursuant to that agreement, the Companys president is now the area developer for Weight Loss Forever for the states of Virginia and North Carolina and the owner of several franchises in those states.




In June 2002, the Company acquired certain franchise contract and royalty rights from Advance Wellness Corporation (AWC). After that acquisition, an employee of AWC became a director of the Company.




In October 2002, the Company acquired the assets of Beverly Hills Weight Loss & Wellness from Charles Bolianites. Upon completion of the acquisition, Mr. Bolianites, became a director of the Company. As part of the acquisition, the Company entered into a consulting agreement whereby Mr. Bolianites is scheduled to receive $6,250 per month for 60 months.(See Consulting Agreement- Note 5)




(11) Going Concern





The Company's consolidated financial statements have been presented on a going concern basis which contemplates the realization and the satisfaction of liabilities in the normal course of business.  As more fully described below, the liquidity of the Company has been adversely affected by significant losses from operations.  The Company reported net losses of $1,398,289 and $76,310 for the years ended December 31, 2003 and 2002, respectively.  Additionally, there is a working capital deficit of $335,685 at December 31, 2003.




These conditions raise substantial doubt about the Company's ability to continue as a going concern without additional capital contributions and/or achieving profitable operations.  Management's plans are to generate revenue from the sale of new franchises and to raise additional capital through either debt or equity instruments.






F - 18