EXHIBIT 99.5
Financial Statements and Independent Auditors' Report
N2plus, Inc.(formerly NOW Tools, LLC)
September 20, 2000
BOARD OF DIRECTORS
N2PLUS, INC.
Phoenix, Arizona
We have audited the accompanying balance sheet of N2PLUS, INC. as of September
20, 2000 and the related statements of operations, stockholders' deficit and
cash flows for the period from January 1 to September 20, 2000. These financial
statements are the responsibility of N2plus, Inc.'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 disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of N2plus, Inc. as of September
20, 2000, and the results of its operations and its cash flows for the period
then ended, in conformity with generally accepted accounting principles.
The Company has a limited operating history and its prospects are subject to the
risks, expenses and uncertainties frequently encountered by companies in new and
rapidly evolving markets for internet products and services. As discussed in
Note 7 to the financial statements, the Company was only recently formed, and
has not generated sufficient revenues to achieve profitability. Failure to
secure financing or its ability to generate sufficient cash flows through
operations may have a material adverse impact on the Company's operations and
financial position. Management's plans in regards to these matters are also
described in Note 7. The financial statements do not include any adjustments
that might result from the outcome of these uncertainties.
November 3, 2000
By: /s/ Hood & Strong, LLP
-------------------------------
Hood and Strong, LLP
1
<PAGE>
N2PLUS, INC.
BALANCE SHEET
September 20, 2000
====================================================================
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 22,345
Receivables 13,888
--------------------------------------------------------------------
Total current assets 36,233
FURNITURE AND EQUIPMENT, net 29,750
OTHER ASSETS 263
--------------------------------------------------------------------
$ 66,246
====================================================================
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
Trade payables $ 73,304
Notes payable 83,063
--------------------------------------------------------------------
Total current liabilities 156,367
--------------------------------------------------------------------
STOCKHOLDERS' DEFICIT:
Preferred stock, $.001 par value, 20,000,000 shares
authorized, no shares issued and outstanding
Common stock, $.001 par value, 40,000,000 shares
authorized, 26,480,295shares issued and outstanding 307,347
Accumulated deficit (397,468)
--------------------------------------------------------------------
Total stockholders' deficit (90,121)
--------------------------------------------------------------------
$ 66,246
====================================================================
2
<PAGE>
N2PLUS, INC.
STATEMENT OF OPERATIONS
For the Period from January 1 to September 20, 2000
============================================================
REVENUE $ 148,874
COST OF SALES 8,518
------------------------------------------------------------
GROSS PROFIT 140,356
------------------------------------------------------------
OPERATING EXPENSES:
Advertising and promotions 16,400
Professional fees 98,009
Depreciation expense 8,993
Loss on fixed assets 13,113
Office expenses 111,335
Travel 11,543
Computer expense 3,795
Salaries and employee benefits 271,673
Taxes 2,963
------------------------------------------------------------
537,824
------------------------------------------------------------
NET LOSS AND ACCUMULATED DEFICIT $(397,468)
============================================================
3
<PAGE>
<TABLE>
<CAPTION>
N2PLUS, INC.
STATEMENT OF STOCKHOLDERS' DEFICIT
For the period from January 1 to September 20, 2000
=======================================================================================
Number Total
of Shares Common Accumulated Stockholders'
Outstanding Stock Deficit Deficit
<S> <C> <C> <C> <C>
BALANCES - January 1, 2000 $ - $ - $ -
Common stock issued 26,480,295 307,347 307,347
Net loss for the period
ended September 20, 2000 (397,468) (397,468)
---------------------------------------------------------------------------------------
BALANCES - September 20, 2000 26,480,295 $ 307,347 $ (397,468) (90,121)
=======================================================================================
</TABLE>
4
<PAGE>
N2PLUS, INC.
STATEMENT OF CASH FLOWS
For the Period from January 1 to September 20, 2000
===============================================================
OPERATING ACTIVITIES:
Net loss $(397,468)
Adjustments to reconcile net loss to
net cash used by operations:
Depreciation 8,993
Loss on disposal 13,113
Changes in:
Receivables 14,115
Prepaid expenses 3,456
Accounts payable 56,788
---------------------------------------------------------------
Net cash used by operating activities (301,003)
---------------------------------------------------------------
FINANCING ACTIVITIES:
Proceeds from issuance of notes payable 83,063
Issuance of common stock 228,628
---------------------------------------------------------------
Net cash provided by financing activities 311,691
---------------------------------------------------------------
INCREASE IN CASH AND CASH EQUIVALENTS 10,688
CASH AND CASH EQUIVALENTS, beginning of period 11,657
---------------------------------------------------------------
CASH AND CASH EQUIVALENTS, end of period $ 22,345
===============================================================
NON-CASH ACTIVITIES:
Contribution of certain assets and liabilities in
exchange for common stock $ 78,719
5
<PAGE>
Notes to Financial Statements for N2plus, Inc.
NOTE 1 - ORGANIZATION AND CHANGE OF ENTITY:
N2plus, Inc. (the Company) is a corporation organized under the
laws of the State of Delaware for the purpose of doing business
as a provider of website development and management services.
Effective January 1, 2000, members of NOW TOOLS, LLC liquidated
the LLC and contributed the respective assets net of liabilities
to a newly formed entity, N2plus, Inc. in exchange for shares of
common stock.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
a. Basis of Presentation:
---------------------
The Company maintains its accounts on the accrual basis of
accounting. The preparation of financial statements in
conformity with generally accepted accounting principles
requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amount of
revenues and expenses during the reported period. Actual
results could differ from those estimates.
b. Cash and Cash Equivalents:
-------------------------
For purposes of the statement of cash flows, the Company
considers all highly liquid instruments purchased with a
maturity of three months or less to be cash equivalents (of
which there are none as of September 20, 2000).
c. Depreciation:
------------
Fixed assets are recorded at cost. Property and equipment is
depreciated on a straight-line basis over estimated useful
lives ranging from three to seven years.
d. Revenue Recognition:
--------------------
The Company records revenue based upon specific contract
rates for website development and management services
rendered.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
e. Advertising Costs:
-------------------
The Company expenses all advertising costs, including direct
response advertising costs as they are incurred.
f. Recently Enacted Accounting Standards:
-------------------------------------
Statement of Financial Accounting Standards (SFAS) No. 130,
"Reporting Comprehensive Income", SFAS No. 131, "Disclosures
about Segments of an Enterprise and Related Information",
SFAS No. 132, "employer's Disclosure about Pensions and
Other Postretirement Benefits", SFAS No.133 (as amended by
SFAS No. 137 and 138), "Accounting for Derivative
Instruments and Hedging Activities", SFAS No. 134,
"Accounting for Mortgage-Backed Securities ", and SFAS 135,
"Rescission of FASB No. 75 and Technical Corrections", were
recently issued. SFAS No. 130, 131, 132, 133 (as amended),
134 and 135 have no current application to the Company or
their affect on the financial statements would not have been
significant.
NOTE 3 - FURNITURE AND EQUIPMENT:
Furniture and equipment, at cost, is summarized as follows as of
September 20, 2000:
Computer software $ 2,425
Furniture and fixtures 51,947
54,372
Less accumulated depreciation 24,622
$ 29,750
Depreciation expense amounted to $8,993 for the period ended
September 20, 2000.
NOTE 4 - NOTES PAYABLE:
At September 20, 2000 there is a note payable in the amount of
$25,000. This note bears and interest rate of 8% per annum. This
note is currently payable upon demand.
At September 20, 2000 there is a note payable to a stockholder in
the amount of $39,072. The note bears an interest rate of 7% per
annum. This note is due December 31, 2000.
NOTE 5 - INCOME TAXES:
No provision for federal and state income taxes has been recorded
because the Company has incurred net operating losses since
inception. The net operating loss carry-forwards as of September
20, 2000 approximate $395,000. These carry-forwards will be
available to offset future taxable income and expire beginning in
2020. Deferred income tax assets arising from such loss
carryforwards have been fully reserved as of September 20, 2000.
6
<PAGE>
NOTE 6 - CONCENTRATION OF CREDIT RISK:
The Company has identified its financial investments which are
potentially subject to credit risk. These instruments consist
principally of cash and cash equivalents and receivables.
During the year, the Company had significant operating cash and
cash equivalents in excess of federally insured limits. Credit
risk from receivables is substantially mitigated by the Company's
historically short collection periods.
NOTE 7 - BUSINESS RISKS:
The Company has limited operating history and its prospects are
subject to the risks, expenses, and uncertainties frequently
encountered by companies in new and rapidly evolving markets for
Internet products and services. The Company was only recently
formed, and has not generated sufficient revenues to achieve
profitability. The Company's failure to secure financing or its
ability to generate sufficient cash flows through operations may
have a material adverse impact on the Company's future operations
and financial position. As discussed in Note 8, the Company
merged with Digital Bridge, Inc., effective September 20, 2000.
NOTE 8 - MERGER:
Effective September 20, 2000, the Company's stockholders entered
into an agreement to exchange 100% of their shares of common
stock to Digital Bridge, Inc., a Nevada corporation, in a merger
transaction, pursuant to which Digital Bridge, Inc. will be the
surviving entity. As consideration Digital Bridge, Inc. issued to
the stockholders of the N2plus, Inc. 1,000,000 shares of the
Company's common stock with an estimated value of $1,812,500.
This transaction is expected to be recorded as a pooling of
interest. The Company's The Company's financial statements
reflect balances as activity immediately prior to the above
transaction.
7
<PAGE>
