IMAGES OF LIFE, INC.
[A DEVELOPMENT STAGE COMPANY]
Peoria, Arizona
FINANCIAL STATEMENTS
With
INDEPENDENT AUDITORS REPORT
April 30, 1998
Prepared By:
Cordovano and Harvey P.C.
Certified Public Accountants
Denver, Colorado
IMAGES OF LIFE, INC.
[A Development Stage Company]
Index to Financial Statements
At and for the four months ended April 30, 1998
For the period September 23 1997 [inception] through April 30
1998
Independent Auditors Report
Balance Sheet
Statement of Operations
Statement of Shareholders Equity
Statement of Cash Flows
Summary of Significant Accounting Policies
Notes to Financial Statements
To the Board of Directors and Shareholders
Images of Life, Inc.
Independent Auditors Report
We have audited the balance sheet of Images of life, Inc. [a
development stage company] as of April 30 1998 and the related
statements of operations, shareholders equity, and cash flows for
the period from September 23, 1997 [inception] through April 30,
1998 and from January 1, 1998 through April 30 1998. 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 audit.
We conducted our audit in accordance with generally accepted
auditing standards. 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 assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that
our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly the financial position of Images of Life Inc., as
of April 30, 1998 and the results of its operations and its cash
flows for the period from September 30, 1997 [inception] through
April 30, 1998 and January 1, 1998 through April 30, 1998 in
conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming
the company will continue as a going concern. As discussed in Note E
to the financial statements, the company has incurred net
losses since its inception and has not yet commenced operations
which raises substantial doubt as to its ability to continue as a
going concern. The financial statements do not include any
adjustments that might result from the outcome of this
uncertainty.
Cordovano and Harvey P.C.
Denver, Colorado
June 23, 1998
<TABLE>
IMAGES OF LIFE, INC.
[A Development Stage Company]
BALANCE SHEET
April 30, 1998
ASSETS
<CAPTION>
<S> <C>
CURRENT ASSETS
Cash $ 242
TOTAL CURRENT ASSETS $ 242
ORGANIZATION COSTS,
- net of $232 accumulated amortization $ 1,768
$ 2,010
LIABILITIES AND SHAREHOLDER'S EQUITY
CURRENT LIABILITIES
Accrued expenses $ 1,400
TOTAL CURRENT LIABILITIES $ 1,400
SHAREHOLDER'S EQUITY
Common stock, $.001 par value, 15,000,000 shares
authorized, 5,000,000 shares issued and outstanding $ 5,000
Additional paid-in capital $ 67,305
Deficit accumulated during development stage $[71,695]
TOTAL SHAREHOLDER'S EQUITY $ 610
$ 2,010
<FN>
See accompanying summary of significant accounting
policies and notes to financial statements
</FN>
</TABLE>
<TABLE>
STATEMENT OF OPERATIONS
<CAPTION>
Inception
Four months Sept. 23 1997
Ended Through
April 30 1998 April 30 1998
<S> <C> <C>
REVENUE
Sales of Carvings 712 712
TOTAL REVENUE $ 712 $ 712
COSTS AND EXPENSES
Web site development - 15,000
Officer compensation [Note B] 4,494 12,844
Consulting [Note B] - 4,500
Investment banking - 15,000
Marketing and advertising - 10,000
Legal and accounting 1,200 4,900
Molds and supplies 2,973 5,765
Amortization 132 232
General and administration 1,469 4,166
NET LOSS BEFORE INCOME TAXES (9,556) (71,695)
INCOME TAXES [Note E]
Current Benefit 2,164 16,893
Deferred expense (2,164) (16,893)
NET LOSS (9,556) (71,695)
Basic loss per common share * *
Basic weighted average common
Shares outstanding 5,000,000 5,000,000
*less than $.01 per share
<FN>
See accompanying summary of significant accounting
policies and notes to financial statements
</FN>
</TABLE>
<TABLE>
STATEMENT OF SHAREHOLDER'S EQUITY
Sept. 23, 1997 [inception] through April 30, 1998
<CAPTION>
Additional
Common Stock Paid in Retained
Shares Amount Capital Deficit Total
<S> <C> <C> <C> <C> <C>
Balance, September 23 1997 - $ - $ - $ - $ -
Shares issued for cash into
public offering net of
$6,195 offering costs 1,500,000 1,500 67,305 68,805
Issuance of common
stock for services 3,500,000 3,500 - - 3,500
Net loss for period ended
December 31 1997 (62,139) (62,139)
BALANCE,DECEMBER 31 1997 5,000,000 5,000 67,305 (62,139) 10,166
Net loss for period ended
April 30 1998 (9,556) (9,556)
BALANCE April 30 1998 5,000,000 5,000 67,305 (71,695) 610
<FN>
See accompanying summary of significant accounting
policies and notes to financial statements
</FN>
</TABLE>
<TABLE>
STATEMENT OF CASH FLOWS
<CAPTION>
Inception
Four months Sept. 23 1997
Ended Through
April 30 1998 April 30 1998
<S> <C> <C>
OPERATING ACTIVITIES
Net Loss $ (9,556) $ (71,695)
Non-cash transactions
Amortization expense 132 232
Stock issued for services - 3,500
Changes in working capital
Prepaid expenses 5,000 -
Accounts Payable & accrued expenses 1,200 1,400
NET CASH (USED IN) OPERATING ACTIVITIES (3,224) (66,563)
INVESTING ACTIVITIES
Payments for organization costs - 2,000
NET CASH (USED IN)INVESTING ACTIVITIES - 2,000
FINANCING ACTIVITIES
Proceeds from issuance of common stock - 75,000
Offering costs - (6,195)
NET CASH (USED IN)FINANCING ACTIVITIES - 68,805
NET INCREASE IN CASH AND EQUIVALENTS (3,224) 242
Cash and equivalents beginning of period 3,466 -
Cash and equivalents end of period 242 242
Supplemental disclosure of cash
flow information
Cash paid for interest - -
Cash paid for income taxes - -
Non-cash investing and financing
activities $3,500
<FN>
See accompanying summary of significant accounting
policies and notes to financial statements
</FN>
</TABLE>
IMAGES OF LIFE, INC.
[A Development Stage Company]
Summary Of Significant Accounting Policies
April 30, 1998
Development stage company
Images of life Inc. [the "Company"] is in the development stage
in accordance with Statement of Financial Accounting Standard[S
FAS] No. 7.
Use of Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect certain reported
amounts and disclosures. Accordingly actual results could differ
from those estimates.
Cash Equivalents
For the purpose of the statement of cash flows, the Company
considers all highly liquid debt instruments purchased with original
maturity of three months or less to be cash equivalents.
Organization Costs and Amortization
Organization costs are recorded at cost. Amortization is
calculated by the straight-line method over a period of sixty
months.
Income Taxes
Income taxes are provided for the tax effects of transactions
reported in the financial statements consist of taxes currently due
plus deferred taxes related primarily to differences between the
recorded book basis and tax bases of assets and liabilities for
financial and income tax reporting. The deferred tax assets and
liabilities represent future tax return consequences of those
differences, which will either be taxable or deductible when the
assets and liabilities are recovered or settled. Deferred taxes
are also recognized for operating losses that are available to offset
future taxable income and tax credits that are available to offset
future federal income taxes.
New Accounting Pronouncement
In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 128 [SFAS 128]
"Earnings per Share". SFAS 128 specifies the computation,
presentation, and disclosure requirements of earnings per share and
supersedes Accounting Principle Board Opinion No. 15 "Earnings
per Share". SAFS 128 requires a dual presentation of basic and
diluted earnings per share. Basic earnings per share, which
excludes the impact of common stock equivalents replaces primary
earnings per share. Diluted earnings per share which utilizes
the average market price per share as opposed to the greater of
the average market price per share or ending market price per
share when applying the treasury stock method in determining
common stock equivalents, replaces fully-diluted earnings per
share. SFAS 128 is effective for the company in 1997 and the
related information is included in the accompanying statements of
operations.
IMAGES OF LIFE, INC.
[A Development Stage Company]
Notes to Financial Statements
April 30, 1998
Note A: Background
Company was incorporated under the laws of the State of Nevada on
September 25, 1997. The principal activities from its inception
have been organizational matters and the sale and issuance of
shares of its $.001 par value common stock. Company was formed
to mold and mass-produce areas wood carvings and sculptures such
a cigar store Indians, bears, eagles, and coyotes and to sell
these products utilizing various means of retail distribution.
Note B: Related Party Transactions
On September 30, 1997 the Board of Directors approved issuance of
3,500,000 shares of the Company's $.001 par value common stock to
the Company's president in exchange for consulting servicers
rendered on behalf of a company in the amount of $3,500. The
$3,500 is included in the accompanying financial statements a
consulting expense. Additionally, the Company agreed to pay the
company's president up to $20,000 from the inception of the
company over a period of six months. Actual amounts paid to the
president from September 23, 1997 through December 31, 1997 and
January 1, 1998 through April 30, 1998 were $8,350 and $4,494
respectively.
Note C: Income Taxes
The following is a reconciliation of the U.S. Statutory Federal
Income Tax to effective tax rates at April 30, 1998:
U.S. Statutory Rate 15.00%
[graduated for income less than $50,000]
State income tax rate, net of federal effect 7.65%
Net Operating Losses for which there is no benefit (22.65%)
Effective Tax Rate 0%
The benefit for income taxes from operations consisted of the
following components: current tax benefit of $2,164, resulting
from net loss before income tax and deferred tax expense of
$2,164 resulting from the valuation allowance recorded against
the deferred tax asset resulting from net operating losses. The
change in the valuation allowance from September 23, 1997
[inception] through April 30, 1998 was $14,729. Net operating
loss carryforwards will expire in 2012.
The valuation allowance will be evaluated the end of each year,
considering positive and negative evidence about whether the
asset will be realized. At that time, the allowance will either
be increased or reduced: reduction could result in the complete
elimination of the allowance if positive evidence indicates to
that the value of the deferred tax asset is no longer impaired
and allowance is no longer required.
Note D: Public Stock Offering
During the period ended Oct. 22, 1997 pursuant to an exemption
under rule 504 of Regulation D. of the Securities Act of 1933, as
amended [the "Act"], the Company sold solely to unaccredited,
accredited and/or sophisticated investors, 1,500,000 to shares of
its $.001 par value, common stock at a price of $.05 per share
for total proceeds of $75,000.
The offering was oversubscribed by 50,000 shares or $2,500. The
Company refunded the excess to the subscriber.
Note E: Going Concern
As of April 30, 1998 the company had net losses since inception
and had no operations which raises substantial doubt about its
ability to continue as a going concern. The Company's intent was
to engage in the mass production and retail of its carvings and
sculptures.
The Company raised initial working capital through public
offering of its common stock. Proceeds from the offering were not
sufficient to enable a company to commence nor achieve profitable
operations. The Company's ability to continue a going concern is
ultimately dependent upon achieving profitable operations. The
financial statements do not include any adjustments that
might result from the outcome of this uncertainty.
Note F: Subsequent Event
On May 11, 1998 the Board of Directors decided to consider
several options which include but are not limited to the sale of
the Company or possible merger with appropriate merger candidate.
