E-TRANS LOGISTICS, INC.
AUDITED FINANCIAL STATEMENTS
Years ended December 31, 1999 and 1998
<PAGE>
E-TRANS LOGISTICS, INC.
TABLE OF CONTENTS
Page
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REPORT OF INDEPENDENT AUDITOR 1
FINANCIAL STATEMENTS
Balance Sheet 2
Statements of Operations and (Accumulated Deficit) Retained Earnings 3
Statements of Cash Flows 4
Notes to Financial Statements 5
<PAGE>
AARON STEIN
CERTIFIED PUBLIC ACCOUNTANT
REPORT OF INDEPENDENT AUDITOR
To the Board of directors and stockholders
of E-Trans Logistics, Inc.
I have audited the accompanying balance sheet of E-Trans Logistics, Inc. as of
December 31, 1999, and the related statements of operations and (accumulated
deficit) retained earnings, and cash flows for each of the two years ended
December 31, 1999 and 1998. These financial statements are the responsibility of
the Corporation's management. My responsibility is to express an opinion of
these financial statements based on my audit.
I conducted my audit in accordance with generally accepted auditing standards.
Those standards require that I 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.
I believe that my audit provides a reasonable basis for my opinion.
In my opinion, such financial statements present fairly, in all material
respects, the financial position of E-Trans Logistics, Inc. as of December 31,
1999 and the results of their operations and their cash flows for each of the
two years ended December 31, 1999 and 1998 in conformity with generally accepted
accounting principles.
AARON STEIN, CPA
June 12, 2000
534 WILLOW AVENUE o PO BOX 315 o CEDARHURSt, NY o 11516
Phone: 516.569.0520
1
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E-TRANS LOGISTICS, INC.
BALANCE SHEET
December 31, 1999
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ --
Accounts receivable 191,583
Other current assets 116,426
---------
Total current assets 308,009
---------
PROPERTY AND EQUIPMENT
Furniture and fixtures 4,000
Less accumulated depreciation and amortization 800
---------
3,200
$ 311,209
=========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Checks written in excess of depository balance $ 27,594
Accounts payable and accrued expenses 474,018
---------
Total current liabilities 501,612
---------
STOCKHOLDERS' EQUITY
Common stock, no par value; authorized 1,500
shares; issued and outstanding 1,500 shares 10,000
Accumulated deficit (200,403)
---------
(190,403)
---------
$ 311,209
=========
See notes to financial statements.
2
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E-TRANS LOGISTICS, INC.
STATEMENTS OF OPERATIONS AND
(ACCUMULATED DEFICIT) RETAINED EARNINGS
Years ended December 31,
---------------------------
1999 1998
----------- -----------
NET SALES $ 1,449,623 $ 1,631,132
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 1,788,068 1,635,966
----------- -----------
OPERATING LOSS (338,445) (4,834)
----------- -----------
OTHER INCOME
Other -- 2,120
Interest income 201 --
----------- -----------
201 2,120
----------- -----------
LOSS BEFORE INCOME TAX EXPENSE (338,244) (2,714)
INCOME TAX EXPENSE -- --
----------- -----------
NET LOSS (338,244) (2,714)
RETAINED EARNINGS, Beginning 137,841 140,555
----------- -----------
(ACCUMULATED DEFICIT)
RETAINED EARNINGS, Ending $ (200,403) $ 137,841
=========== ===========
LOSS PER SHARE
Basic $ (225.49) $ (1.80)
=========== ===========
AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING
Basic $ 1,500 $ 1,500
=========== ===========
See notes to financial statements.
3
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<TABLE>
<CAPTION>
E-TRANS LOGISTICS, INC.
STATEMENTS OF CASH FLOWS
Years ended December 31,
----------------------
1999 1998
--------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(338,244) $ (2,714)
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 800 --
Changes in assets and liabilities:
Accounts receivable 81,162 (125,703)
Other assets (75,480) (3,126)
Accounts payable and accrued expenses 247,677 --
--------- ---------
Net cash (used in) provided by
operating activities (84,085) (131,543)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment (4,000) (51,287)
--------- ---------
Net cash used in investing activities (4,000) (51,287)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Increase in checks written
in excess of depository balance 27,594 --
--------- ---------
Net cash provided by financing activities 27,594 --
--------- ---------
NET DECREASE IN CASH
AND CASH EQUIVALENTS (60,491) (182,830)
CASH AND CASH EQUIVALENTS, Beginning 60,491 69,336
--------- ---------
CASH AND CASH EQUIVALENTS, Ending $ -- $(113,494)
========= =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Income taxes paid $ 3,281 $ 4,533
========= =========
Interest paid $ -- $ --
========= =========
</TABLE>
See notes to financial statements.
4
<PAGE>
E-TRANS LOGISTICS, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 1 -- NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
Nature of Operations
E-Trans Logistics, Inc. (the Company), formerly known as Gerard Express, Inc.,
is engaged in trucking, transport and logistics of a wide range of commodities
throughout the Northeast. The Company provides credit in the normal course of
business to its customers and performs ongoing credit evaluations of those
customers. Credit losses, when realized, have been within the range of the
Company's expectations and, historically, have not been significant.
Significant Accounting Policies
Use of Estimates -- Management uses estimates and assumptions in preparing these
financial statements in accordance with generally accepted accounting
principles. Those estimates and assumptions affect the reported amounts of
assets and liabilities, the disclosure of contingent assets and liabilities, and
the reported revenues and expenses. Actual results could vary from the estimates
that were used.
Cash and Cash Equivalents --- For purposes of reporting cash flows, the Company
includes all cash accounts, which are not subject to withdrawal restrictions or
penalties, as cash and cash equivalents.
Property and Equipment -- Property and equipment is depreciated and amortized
utilizing accelerated methods over their estimated useful lives. Expenditures
for repairs and maintenance are charged to expense as incurred.
For assets sold or otherwise disposed of, the cost and related accumulated
depreciation are removed from the accounts, and any resulting gain or loss is
reflected in income for the period.
Income Taxes -- The Company accounts for income taxes under the asset and
liability method. Under this method, deferred income tax assets and liabilities
are determined based on the difference between the financial statement and tax
basis of assets and liabilities using enacted tax rates in effect for the period
in which the differences are expected to reverse.
NOTE 2 -- SUBSEQUENT EVENT
On February 14, 2000, the Company entered into an agreement with Universal Media
Holdings, Inc., a holding company, under which E-Trans became a wholly owned
subsidiary of Universal Media Holdings, Inc. The new office is located at the
E-Trans facility, where there are offices and a warehouse. Sometime during the
second quarter of 2000, Universal Media Holdings, Inc. plans to rename itself to
E-Trans Logistics, Inc.
5
<PAGE>
NOTE 3 -- RELATED PARTY
The Company has an unsecured loan receivable from an affiliate. The balance on
December 31, 1999 is $78,160. The loan is short-term in nature and bears
interest at 8 percent.
6
<PAGE>
E-TRANS LOGISTICS, INC.
REVIEWED FINANCIAL STATEMENTS
(Unaudited)
Six months ended March 31, 2000
<PAGE>
E-TRANS LOGISTICS, INC.
TABLE OF CONTENTS
Page
REVIEW REPORT OF INDEPENDENT ACCOUNTANT 1
FINANCIAL STATEMENTS
Balance Sheet 2
Statement of Operations and Accumulated Deficit 3
Statement of Cash Flows 4
Notes to Financial Statements 5
<PAGE>
AARON STEIN
CERTIFIED PUBLIC ACCOUNTANT
REVIEW REPORT OF INDEPENDENT ACCOUNTANT
To the Board of directors and stockholders
of Universal Media Holding, Inc. & Subsidiary
I have reviewed the accompanying balance sheet of Universal Media Holding, Inc.
& Subsidiary as of March 31, 2000, and the related statement of operations,
stockholders' deficit, and cash flows for the six months then ended. These
financial statements are the responsibility of the Corporation's management.
I conducted my review in accordance with the standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted in
accordance with generally accepted auditing standards, the objective of which is
the expression of an opinion regarding the financial statements taken as a
whole. Accordingly, I do not express such an opinion.
Based on my review, I am not aware of any material modifications that should be
made to the accompanying financial statements for them to be in conformity with
generally accepted accounting principles.
AARON STEIN, CPA
June 13, 2000
534 WILLOW AVENUE o PO BOX 315 o CEDARHURST, NY o 11516
Phone: 516.569.0520
1
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E-TRANS LOGISTICS, INC.
BALANCE SHEET
March 31, 2000
(Unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 2,334
Accounts receivable 73,437
Other assets 179,275
---------
Total current assets 255,046
PROPERTY AND EQUIPMENT, net 3,200
---------
$ 258,246
=========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 497,903
---------
Total current liabilities 497,903
---------
STOCKHOLDERS' EQUITY
Common stock, no par value, 1,500
shares authorized, 1,500 issued and outstanding 10,000
Accumulated deficit (249,657)
---------
(239,657)
---------
$ 258,246
=========
See review report of independent accountant and notes to financial statements.
2
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E-TRANS LOGISTICS, INC.
STATEMENT OF OPERATIONS AND ACCUMULATED DEFICIT
Six months ended March 31, 2000
(Unaudited)
REVENUES EARNED $ 582,049
COST OF REVENUES EARNED --
---------
GROSS PROFIT 582,049
GENERAL AND ADMINISTRATIVE EXPENSES 857,512
---------
OPERATING LOSS (275,463)
---------
OTHER INCOME
Interest income 339
---------
Total other income 339
---------
LOSS BEFORE PROVISION FOR INCOME TAXES (275,124)
INCOME TAX EXPENSE --
---------
NET LOSS (275,124)
RETAINED EARNINGS, Beginning 25,467
---------
ACCUMULATED DEFICIT, Ending $(249,657)
=========
LOSS PER SHARE
Basic $ (183.42)
=========
AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
Basic $ 1,500
=========
See review report of independent accountant and notes to financial statements.
3
<PAGE>
E-TRANS LOGISTICS, INC.
STATEMENT OF CASH FLOWS
Six months ended March 31, 2000
(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(275,124)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization 800
Changes in assets and liabilities:
Accounts receivables (73,437)
Other assets (183,304)
Accounts payable and accrued expenses 501,996
---------
Net cash used in operating activities (29,069)
CASH AND CASH EQUIVALENTS, Beginning 31,403
---------
CASH AND CASH EQUIVALENTS, Ending $ 2,334
=========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Interest paid $ --
=========
Income taxes paid $ --
=========
See review report of independent accountant and notes to financial statements.
4
<PAGE>
E-TRANS LOGISTICS, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 1 -- NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
Nature of Operations
E-Trans Logistics, Inc. (the Company), formerly known as Gerard Express, Inc.,
is engaged in trucking, transport and logistics of a wide range of commodities
throughout the Northeast. The Company provides credit in the normal course of
business to its customers and performs ongoing credit evaluations of those
customers. Credit losses, when realized, have been within the range of the
Company's expectations and, historically, have not been significant.
Significant Accounting Policies
Use of Estimates -- Management uses estimates and assumptions in preparing these
financial statements in accordance with generally accepted accounting
principles. Those estimates and assumptions affect the reported amounts of
assets and liabilities, the disclosure of contingent assets and liabilities, and
the reported revenues and expenses. Actual results could vary from the estimates
that were used.
Cash and Cash Equivalents --- For purposes of reporting cash flows, the Company
includes all cash accounts, which are not subject to withdrawal restrictions or
penalties, as cash and cash equivalents.
Property and Equipment -- Property and equipment is depreciated and amortized
utilizing accelerated methods over their estimated useful lives. Expenditures
for repairs and maintenance are charged to expense as incurred.
For assets sold or otherwise disposed of, the cost and related accumulated
depreciation are removed from the accounts, and any resulting gain or loss is
reflected in income for the period.
Income Taxes -- The Company accounts for income taxes under the asset and
liability method. Under this method, deferred income tax assets and liabilities
are determined based on the difference between the financial statement and tax
basis of assets and liabilities using enacted tax rates in effect for the period
in which the differences are expected to reverse.
NOTE 2 -- ACCOUNTS RECEIVABLE
During 2000, the Company sold certain receivables with recourse to a financial
institution in the amount of $118,146.
5
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See Notes to Financial Statements.
NOTE 3 -- RELATED PARTIES
The Company has an unsecured loan receivable from an affiliate. The balance on
March 31, 2000 was $141,009. The loan is short-term in nature and bears interest
at 8 percent.
NOTE 4 -- MERGER
On February 14, 2000, the Company entered into an agreement with Universal Media
Holdings, Inc., a holding company, under which E-Trans became a wholly owned
subsidiary of Universal Media Holdings, Inc. The new office is located at the
E-Trans facility, where there are offices and a warehouse. Sometime during the
second quarter of 2000, Universal Media Holdings, Inc. plans to rename itself to
E-Trans Logistics, Inc.
6
