VDO.COM, INC.
(FKA VENTECH INTERNATIONAL CORP.)
-----------------------------
FINANCIAL STATEMENTS
-----------------
DECEMBER 31, 1998 AND 1999
<PAGE>
VDO.COM, INC.
CONTENTS
--------
Page
----
Independent Auditor's Report.................................................. 1
Financial Statements:
Balance Sheet............................................................. 4
Statements of Operations.................................................. 5
Statement of changes in Stockholders' Equity.............................. 7
Statements of Cash Flows............................................... 8-10
Notes to Financial Statements......................................... 11-26
<PAGE>
INDEPENDENT AUDITOR'S REPORT
----------------------------
The Stockholdersand Board of Directors
of VDO.com, Inc.
We have audited the accompanying balance sheets of VDO.com, Inc. as of December
31, 1998 and December 31, 1999, and the related 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 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 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 VDO.com, Inc. as of December
31, 1998 and December 31, 1999, and the results of its operations and cash flows
for the years ended December 31, 1998 and 1999, in conformity with generally
accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 13 to the
financial statements, the Company has suffered recurring losses from operations
and has an accumulated deficit that raises substantial doubt about its ability
to continue as a going concern. Management's plans in regard to those matters
are also described in Note 1. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
Salt Lake City, Utah
March 24, 2000
<PAGE>
VDO.COM, INC.
Balance Sheets
December 31, December 31,
1999 1998
------------ ------------
ASSETS
Current Assets
--------------
Cash and cash equivalents (Note 1) 39,571 $ --
Accounts Receivable 88,000 --
Due from Related Party (Note 2) 101,012 100,308
------------ ------------
Total Assets $ 228,583 $ 100,308
============ ============
LIABILITIES
Current Liabilities
-------------------
Accounts Payable 11,772 48,772
Accounts Payable - Related Party (Note 2) -- 12,000
------------ ------------
Total Liabilities 11,772 60,772
------------ ------------
STOCKHOLDERS' EQUITY
Common Stock 16,900 13,400
Additional Paid-in Capital 336,600 95,100
Retained Earnings (136,690) (68,964)
------------ ------------
Total Stockholders' Equity 216,810 39,536
------------ ------------
Total Liabilities and Stockholders' Equity $ 228,583 $ 100,308
============ ============
The accompanying notes are an integral part of these financial statements.
-4-
<PAGE>
VDO.COM, INC.
Statements of Operations
For the Years Ended December 31, 1999 and 1998
1999 1998
----------- -----------
Revenue -- --
General and administrative expenses 51,964 43,439
Management Fees (related party) 24,000 12,000
----------- -----------
Operating loss (67,726) (63,964)
----------- -----------
Net loss before income tax (67,726) (63,964)
Income tax provision (Note 7) -- --
----------- -----------
Net loss (67,726) (63,964)
=========== ===========
Earnings per share (.004) (.010)
=========== ===========
Weighted average common shares outstanding 16,025,000 5,933,333
=========== ===========
The accompanying notes are an integral part of these financial statements.
-5-
<PAGE>
<TABLE>
<CAPTION>
VDO.COM, INC.
Statement of Stockholders' Equity
For the Years Ended December 31, 1999 and 1998
Common Stock Additional Pd Accumulated
Shares Amount In Capital Deficit Total
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Balance @ December 31, 1997 5,000 5,000 -- (5,000) --
Changed par value from $1.00 to
$.001 (4,995) 4,995
Forward stock split 200:1 995,000 995 (995)
Common stock issued for cash 12,400,000 12,400 91,100 103,500
----------- ----------- ----------- -----------
Net Loss for year ended 12/31/98 (62,192) 103,500
=========== ===========
Balance @ 12/31/98 13,400,000 13,400 95,100 (67,192) 207,000
Common stock issued for cash 3,500,000 3,500 241,500 245,000
Net Loss for year ended 12/31/99 (67,726) (67,726)
----------- -----------
Balance at December 31, 1999 16,900,000 16,900 336,600 (134,918) 384,274
=========== =========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
-6-
<PAGE>
VDO.COM, INC.
Statements of Cash Flows
For the Years Ended December 31, 1999 and 1998
1999 1998
--------- ---------
Reconciliation of net loss provided by (used in)
operating activities:
Net loss $ (67,726) $ (63,964)
Changes in assets affecting operations - (increase)
decrease
Other receivable (88,000) --
Related party receivables (703) (100,308)
Changes in liabilities affecting operations - increase
(decrease)
Management fee payable (related party) (12,000) 12,000
Other payables (42,000) 42,000
Accounts payable 5,000 6,772
--------- ---------
Net cash provided by (used in) operating activities (205,429) (103,500)
--------- ---------
Cash flows from financing activities:
Proceeds from issuance of common stock 245,000 103,500
--------- ---------
Net cash provided by (used in) financing activities 245,000 103,500
Cash flows from investing activities:
-- --
--------- ---------
Net cash provided by (used in) investing activities -- --
--------- ---------
Increase (decrease) in cash 39,571 --
Cash - beginning of period -- --
Cash - end of period $ 39,571 $ --
========= =========
The accompanying notes are an integral part of these financial statements.
-7-
<PAGE>
VDO.COM, INC.
Statements of Cash Flows
For the Years Ended December 31, 1999 and 1998
SCHEDULE OF NON-CASH INVESTING AND FINANCING TRANSACTIONS
---------------------------------------------------------
1999 1998
------------ ------------
Purchase of fixed assets through issuance of debt $ -- $ --
============ ============
Debt paid through issuance of stock $ -- $ --
============ ============
Stock issued for services $ -- $ --
============ ============
Additional cash flow information Cash paid for:
Interest $ -- $ --
============ ============
Income taxes $ -- $ --
============ ============
The accompanying notes are an integral part of these financial statements.
-8-
<PAGE>
VDO.COM, INC. AND SUBSIDIARIES
Notes to Financial Statements
December 31, 1998
1. Summary of significant accounting policies
------------------------------------------
Nature of business and organization
VDO.com, Inc., formerly known as Ventech International Corp., Inc. and CTC
3, Inc., (the Company), was incorporated February 9, 1989 in the state of
Florida. The Company currently has no operations and, in accordance with
SFAS #7, is considered a development stage company.
Effective July 14, 1998, the Company changed it's name to Ventech
International Corp. On June 14, 1999, the Company changed it's name to
VDO.Com, Inc.
On February 26, 1989 the Company issued 5,000 shares of it's $1.00 par
value common stock for services $5,000.
On May 21, 1998, the Company forward split its common stock 200:1, thus
increasing the number of outstanding common stock shares from 5,000 shares
to 1,000,000 shares.
Basis of presentation
The accompanying financial statements have been prepared in conformity with
principles of accounting applicable to a going concern, which contemplates
the realization of assets and the liquidation of liabilities in the normal
course of business. The Company has incurred losses since inception and has
not yet generated sufficient working capital to support its operations. The
Company's ability to continue as a going concern is dependent, among other
things, on its ability to operate profitably, and its obtaining additional
financing and eventually attaining a profitable level of operations.
It is management's opinion that the going concern basis of reporting its
financial condition and results of operations is appropriate at this time.
Cash and cash equivalents
For the purpose of the statement of cash flows, the Company considers
currency on hand, demand deposits with banks or other financial
institutions, money market funds, and other investments with original
maturities of three months or less to be cash equivalents.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect reported amounts of assets and liabilities,
disclosure of contingent assets and liabilities at the date of the
financial statements and revenues and expenses during the reporting period.
In these financial statements assets and liabilities involve extensive
reliance on management's estimates. Actual results could differ from those
estimates.
-9-
<PAGE>
1. Summary of significant accounting policies (continued)
-----------------------------------------------------
Income tax
Effective January 1, 1993, the Financial Accounting Standards Board (FASB)
issued FASB No. 109, "Accounting for Income Taxes". FASB No. 109 requires
that the current or deferred tax consequences of all events recognized in
the financial statements be measured by applying the provisions of enacted
tax laws to determine the amount of taxes payable or refundable currently
or in future years. There was no impact on from the adoption of this
standard.
Deferred income taxes are provided for temporary differences in reporting
income for financial statement and tax purposes arising from differences in
the methods of accounting for construction contracts and depreciation.
Loss per common share
Loss per common share is based on the weighted average number of common
shares outstanding during the period. Options, warrants and convertible
debt outstanding are not included in the computation because the effect
would be antidilutive.
2. Related party transactions
--------------------------
The Company issued 11,000,000 shares of restricted common stock to an
entity with common ownership for $5,500 in cash on July 24, 1998. This
transaction was valued at $.0005 per share since the stock was restricted.
A director of the Company has interests in several entity's which have
borrowed money from the Company. These are receivables and are non-interest
bearing.
The Company also pays a management fee of $2,000 per month to a director
for management services.
3. Stockholders' equity
--------------------
During 1998, the Company issued 11,000,000 shares of restricted common
stock to a director in exchange for $5,500 in cash. This transaction was
valued at $.0005 per share since the company had no operations and the
shares were restricted. In August of 1998, the Company issued 1,400,000
shares of common stock for $98,000 cash. This transaction was valued at an
agreed upon price of $.07 per share. The stock was not actively trading
during 1998, therefore no market values were available.
In April of 1999, the Company issued 3,500,000 shares of common stock in
exchange for $245,000 cash. This transaction was valued at $.07 per share.
The stock was not sufficiently active during 1999 to establish market
values.
-10-
<PAGE>
5. Going concern uncertainty
-------------------------
The accompanying financial statements have been prepared in conformity with
principles of accounting applicable to a going concern, which contemplates
the realization of assets and the liquidation of liabilities in the normal
course of business. The Company has incurred operating losses from
inception and has not yet generated any revenues to support its operations.
The Company's ability to continue as a going concern is dependent, among
other things, on its ability to operate profitably, obtain and additional
financing and eventually, attaining a profitable level of operations.
It is management's opinion that the going concern basis of reporting its
financial condition and results of operations is appropriate at this time.
The Company plans to increase cash flows through the sale of securities and
take steps towards achieving profitable operations through the merger with
or acquisition of profitable operations.
-11-
