EXHIBIT 99.4
Financial Statements and Independent Auditors' Report
NOW Tools, LLC
December 31, 1999 and 1998
TO THE MEMBERS
NOW TOOLS, LLC
Phoenix, Arizona
We have audited the accompanying balance sheet of NOW TOOLS, LLC as of December
31, 1999 and 1998 and the related statements of operations, members' equity and
cash flows for the years then ended. These financial statements are the
responsibility of NOW TOOLS, LLC's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits 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 audits provide 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 NOW TOOLS, LLC as of December
31, 1999 and 1998, and the results of its operations and its cash flows for the
years 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 6 to the financial statements, the Company was only recently formed, and
has not generated sufficient revenues to achieve continued 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 6. 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
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Hood & Strong, LLP
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NOW TOOLS, LLC
BALANCE SHEET
December 31, 1999 1998
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ASSETS
CURRENT ASSETS:
Cash and cash equivalents $11,657 $47,510
Receivables 28,003 8,049
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Total current assets 39,660 55,559
FURNITURE AND EQUIPMENT, net 51,856 9,940
OTHER ASSETS 3,719 380
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$95,235 $65,879
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LIABILITIES AND MEMBERS' EQUITY
CURRENT LIABILITIES:
Trade payables $16,516 $18,328
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Total current liabilities 16,516 18,328
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MEMBERS' EQUITY:
Members' capital 78,719 47,551
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Total members' capital 78,719 47,551
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$95,235 $65,879
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NOW TOOLS, LLC
STATEMENT OF OPERATIONS
Years Ended December 31, 1999 1998
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REVENUE $577,738 $147,763
COST OF SALES 33,506 2,325
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GROSS PROFIT 544,232 145,438
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OPERATING EXPENSES:
Advertising and promotions 8,286 14,755
Professional fees 46,908 4,104
Depreciation 12,857 3,006
Loss on fixed assets 31,748
Office expenses 109,975 14,702
Travel 8,043
Salaries and employee benefits 187,295
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405,112 36,567
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NET INCOME $139,120 $108,871
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NOW TOOLS, LLC
STATEMENT OF MEMBERS' EQUITY
Years Ended December 31, 1999 and 1998
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Members'
Equity
Balance
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BALANCES - December 31, 1997 $ 17,680
Member draws (79,000)
Net income for the year ended
December 31, 1998 108,871
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BALANCES - December 31, 1998 47,551
Member draws (107,953)
Net income for the year ended
December 31, 1999 139,121
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BALANCES - December 31, 1999 $ 78,719
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NOW TOOLS, LLC
STATEMENT OF CASH FLOWS
Years Ended December 31, 1999 1998
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OPERATING ACTIVITIES:
Net income $ 139,120 $108,871
Adjustments to reconcile net loss to
net cash provided by operations:
Depreciation 12,740 3,006
Loss on disposal 15,874 2,163
Increase in:
Receivables (19,954) (1,413)
Prepaid expenses (3,456)
Other assets 117 (380)
Accounts payable (1,812) 15,175
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Net cash provided by operating activities 142,629 127,422
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INVESTING ACTIVITIES:
Purchase of furniture and equipment (70,529) (10,783)
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Net cash used by investing activities (70,529) (10,783)
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FINANCING ACTIVITIES:
Owner draws (107,953) (79,000)
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Net cash provided by financing activities (107,953) (79,000)
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(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (35,853) 37,639
CASH AND CASH EQUIVALENTS, beginning of year 47,510 9,871
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CASH AND CASH EQUIVALENTS, end of year $ 11,657 $ 47,510
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Notes to Financial Statements for NOW Tools,LLC.
NOTE 1 - ORGANIZATION AND CHANGE OF ENTITY:
NOW Tools, LLC (the Company) was a Limited Liability Company
organized under the laws of the State of Nevada 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 December 31, 1999 and 1998).
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. 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
December 31, 1999 and 1998:
1999 1998
Computer software $2,425 $2,425
Furniture and fixtures 65,060 10,404
67,485 12,829
Less accumulated depreciation (15,629) (2,889)
$ 51,856 $ 9,940
Depreciation expense amounted to $12,857 and $3,006 for the
periods ended December 31, 1999 and 1998, respectively.
NOTE 4 - INCOME TAXES:
The Company is organized as a limited liability company and as
such all tax attributes flow directly to the individual members
accordingly no tax provision has been recorded in these financial
statements.
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NOTE 5 - CONCENTRATION OF CREDIT RISK:
The Company has identified its financial instruments which are
potentially subject to credit risk. These financial 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 the federally insured limits.
Credit risk for receivables is substantially mitigated by the
Company's historically short collection periods.
NOTE 6 - BUSINESS RISKS:
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. 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 7, the Company merged
with Digital Bridge, Inc., effective September 20, 2000.
NOTE 7 - MERGER:
As discussed in Note 1, the Company liquidated January 1, 2000
and formed N2Plus, Inc. 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. The Company's financial statements
reflect balances and activity immediately prior to the above
transaction. This transaction is expected to be recorded as a
pooling of interests.
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