<PAGE> 1
EXHIBIT 99
ARCHIVALCD, INC.
(A Development Stage Company)
BALANCE SHEET
JUNE 30, 2000
(Unaudited)
<TABLE>
<CAPTION>
<S> <C>
ASSETS
CURRENT ASSETS
Receivable from stockholders $ 1,000
Employee advances 30,057
------------
TOTAL CURRENT ASSETS 31,057
------------
PROPERTY AND EQUIPMENT, NET (NOTE 2) 310,686
------------
OTHER ASSETS
Deposit 1,000
------------
TOTAL ASSETS $ 342,743
============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 31,221
Accrued liabilities 15,652
Loans from stockholders 4,000
Notes payable to stockholders, current portion 15,000
------------
TOTAL CURRENT LIABILITIES 65,872
------------
NOTES PAYABLE TO STOCKHOLDERS, NET OF CURRENT PORTION 18,000
------------
STOCKHOLDERS' EQUITY
Cumulative convertible preferred stock, $20 par value,
1,000,000 shares authorized, no shares outstanding --
Common stock, $0.01 par value; 25,000,000 shares
authorized; 18,573,783 shares issued and outstanding 185,738
Additional paid-in capital 263,368
Deficit accumulated during the development stage (190,236)
------------
TOTAL STOCKHOLDERS' EQUITY 258,871
------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 342,743
============
</TABLE>
Accompanying notes are an integral part
of the financial statements.
1
<PAGE> 2
ARCHIVALCD, INC.
(A Development Stage Company)
INCOME STATEMENTS
(Unaudited)
<TABLE>
<CAPTION>
CUMULATIVE,
NOVEMBER 12,
1998
SIX MONTHS ENDED (INCEPTION) TO
JUNE 30, JUNE 30,
2000 1999 2000
------------ ------------ ------------
<S> <C> <C> <C>
OPERATING REVENUE $ -- $ -- $ --
------------ ------------ ------------
GENERAL AND ADMINISTRATIVE
EXPENSES 70,970 40,945 186,092
------------ ------------ ------------
OPERATING INCOME (40,945) (186,092) (70,970)
OTHER EXPENSES
Interest expense
(2,562) (150) (4,144)
------------ ------------ ------------
NET INCOME (LOSS) $ (73,532) $ (41,095) $ (190,236)
============ ============ ============
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING (NOTE 3)
18,485,169 18,188,729 18,296,326
============ ============ ============
NET INCOME (LOSS) PER
COMMON SHARE $ (0.01) $ (0.01) $ (0.01)
============ ============ ============
</TABLE>
Interim results are not indicative of the results expected for a full year.
Accompanying notes are an integral part of the financial statements.
2
<PAGE> 3
ARCHIVALCD, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
CUMULATIVE,
NOVEMBER 12,
1998
SIX MONTHS ENDED (INCEPTION) TO
JUNE 30, JUNE 30,
2000 1999 2000
------------ ------------ ------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash paid for goods and services $ (23,237) $ (38,337) $ (104,621)
Interest paid -- -- (150)
------------ ------------ ------------
NET CASH USED BY
OPERATING ACTIVITIES (23,237) (38,337) (104,771)
------------ ------------ ------------
NET CASH USED BY INVESTING ACTIVITIES:
Fixed asset purchases (1,368) (319) (9,058)
------------ ------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of common stock 20,350 23,657 76,829
Proceeds from long-term debt -- -- 18,000
Proceeds from short-term debt 3,000 15,000 20,000
Repayment of short-term debt -- -- (1,000)
------------ ------------ ------------
NET CASH PROVIDED BY
FINANCING ACTIVITIES 23,350 38,657 113,829
------------ ------------ ------------
NET INCREASE (DECREASE) IN CASH (1,255) -- --
CASH AT BEGINNING OF PERIOD 1,255 -- --
------------ ------------ ------------
CASH AT END OF PERIOD $ -- $ -- $ --
============ ============ ============
</TABLE>
Accompanying notes are an integral part
of the financial statements.
3
<PAGE> 4
<TABLE>
<CAPTION>
CUMULATIVE,
NOVEMBER 12,
1998
SIX MONTHS ENDED (INCEPTION) TO
JUNE 30, JUNE 30,
2000 1999 2000
------------ ------------ --------------
<S> <C> <C> <C>
RECONCILIATION OF NET LOSS TO NET
CASH USED BY OPERATING ACTIVITIES:
Net loss $ (73,532) $ (41,095) (190,236)
------------ ------------ ------------
Adjustments to reconcile net loss to net
cash used by operating activities:
Depreciation 18,634 -- 52,882
Stock issued in exchange for services -- -- 12,015
Stock issued in lieu of interest
on stockholder loan -- 150 150
Stock issued as compensation 5,000 15 5,602
Stock compensation accrual -- -- 2,500
(Increase) Decrease in deposits -- -- (1,000)
(Increase) Decrease in receivables
from stockholders -- -- (1,000)
(Increase) Decrease in employee receivables (5,930) -- (30,057)
Increase (Decrease) in accrued liabilities 1,370 -- 13,152
Increase (Decrease) in accounts payable 31,221 2,593 31,221
------------ ------------ ------------
Total Adjustments 50,295 2,758 85,465
------------ ------------ ------------
NET CASH USED
BY OPERATING ACTIVITIES $ (23,237) $ (38,337) $ (104,771)
============ ============ ============
SUPPLEMENTAL DISCLOSURE OF
NON-CASH ACTIVITIES:
Stock issued to acquire fixed assets $ -- $ -- $ 354,510
</TABLE>
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<PAGE> 5
ARCHIVALCD, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
SIX MONTHS ENDED JUNE 30, 2000 AND 1999
AND THE PERIOD NOVEMBER 12, 1998 (DATE OF INCEPTION)
TO JUNE 30, 2000
(Unaudited)
NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS
ArchivalCD, Inc. (referred to herein as or "the Company") was
incorporated under the laws of the state of Delaware on November
12, 1998. The Company specializes in digitization of historic
microfilm, enhancing the images, and writing them to compact discs.
The Company intends to provide subscribers with access to the
digitized historical records on compact disc for use in
genealogical, historical, and educational research. The Company
further intends to provide file conversion services to businesses
and local governments.
The Company is in the development stage as its operations
principally involve research and development, market analysis, and
other business planning activities. The Company has had no
significant revenue from product sales. As of June 30, 2000, the
Company's accumulated deficit in the development stage was
$190,236, which was funded primarily through loans from
stockholders and the proceeds from sales of common stock. The
Company believes that it will commence its principal operations and
begin generating revenues in the third quarter of the fiscal year
ending December 31, 2000.
The accompanying unaudited financial statements reflect all
adjustments, which, in the opinion of management, are necessary for
a fair presentation of the results of operations for the periods
shown. The results of operations for such periods are not
necessarily indicative of the results expected for the full fiscal
year or for any future period.
These financial statements should be read in conjunction with
the Company's audited financial statements and related notes the
year ended December 31, 1999. The financial statements of the
Company have been prepared on the basis that it is a going concern,
which contemplates the realization of assets and the satisfaction
of liabilities in the normal course of business. However, because
the Company has not commenced its principal operations and,
therefore, has had no significant operating revenue, such
realization of assets and liquidation of liabilities is subject to
significant uncertainty. Further, the Company's ability to continue
as a going concern is highly dependent on its ability to continue
to raise sufficient operating capital.
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<PAGE> 6
ARCHIVALCD, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
SIX MONTHS ENDED JUNE 30, 2000 AND 1999
AND THE PERIOD NOVEMBER 12, 1998 (DATE OF INCEPTION)
TO JUNE 30, 2000
(Unaudited)
NOTE 2 - PROPERTY AND EQUIPMENT
Property and equipment are recorded at cost. Depreciation is
recorded using the straight-line method over the estimated useful
lives of the assets of five to ten years. Property and equipment
consists of the following at June 30, 2000:
<TABLE>
<S> <C>
Equipment $ 174,370
Archived records 180,140
Automobile 2,600
Office equipment 6,458
Accumulated depreciation (52,882)
-----------
Property and equipment, net $ 310,686
===========
</TABLE>
Depreciation expense for the Six Months Ended June 30, 2000
was $18,634.
NOTE 3 - INCOME (LOSS) PER COMMON SHARE
The computation of income (loss) per share from continuing
operations for the six months ended June 30, 2000 and 1999 and from
inception were as follows:
<TABLE>
<CAPTION>
FROM
2000 1999 INCEPTION
------------ ------------- -------------
<S> <C> <C> <C>
Income (loss) attributable to
common shares $ (73,532) $ (41,095) $ (190,236)
Weighted average common
Shares outstanding 18,485,169 18,188,729 18,296,326
------------ ------------- -------------
Net income (loss) per
common share $ (0.01) $ (0.01) $ (0.01)
============ ============= =============
</TABLE>
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<PAGE> 7
ARCHIVALCD, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
SIX MONTHS ENDED JUNE 30, 2000 AND 1999
AND THE PERIOD NOVEMBER 12, 1998 (DATE OF INCEPTION)
TO JUNE 30, 2000
(Unaudited)
NOTE 4 - COMMON STOCK ISSUANCES
The following is a summary of common stock issued by the
Company for the six months ended June 30, 2000:
<TABLE>
<CAPTION>
AVERAGE NUMBER
DATE(S) TYPE OF TRANSACTION PER-SHARE OF SHARES
ISSUED CONSIDERATION VALUE VALUATION ISSUED
------ ------------- ----------- ---------- ---------
<S> <C> <C> <C> <C> <C>
Jan-Apr Cash $ 14,250 $ 1.50 9,500
March 1 See Note 5 6,000 1.00 6,000
March 8 See Note 5 2,500 0.01 250,000
April 1 See Note 5 2,500 1.00 2,500
June 6 Cash 100 1.75 57
</TABLE>
The per-share valuation set forth above is based on the
recorded value of the transaction divided by the number of shares
issued as consideration for the transaction.
NOTE 5 - COMMITMENTS AND CONTINGENCIES
As described in the notes to the audited financial statements
for the year ended December 31, 1999, the Company passed a
resolution on January 18, 1999 to compensate the former
shareholders of the defunct ArchivalCD, LLC in the form of stock or
cash, as a gesture of goodwill. The projected cash payment and
stock issuance, valued at par, were accrued in 1999. The stock
issuance detailed in Note 4 represents the balance of the December
31, 1999 stock accrual. At June 30, 2000, the remaining cash
accrual relating to this commitment was $10,500
On May 12, 1999, the Company entered into a repurchase
agreement with a stockholder, whereby the Company will repurchase
up to 15,000 shares of its common stock at, the direction of the
stockholder, at the greater of $1.50 per share or the market value
on the date of repurchase. These shares were originally purchased
at $1.00 per share. If the Company offers to redeem the shares and
the stockholder elects to retain the shares, the agreement will
become void six months after the offer date and will be replaced by
a two year guarantee to repurchase the shares at $1.10 per share,
regardless of market price. As of June 30, 2000, the Company had
paid $1,000 to the stockholder to repurchase 667 shares, which had
not been returned to the Company. Accordingly, a receivable of
$1,000 from the
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<PAGE> 8
ARCHIVALCD, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
SIX MONTHS ENDED JUNE 30, 2000 AND 1999
AND THE PERIOD NOVEMBER 12, 1998 (DATE OF INCEPTION)
TO JUNE 30, 2000
(Unaudited)
NOTE 5 - COMMITMENTS AND CONTINGENCIES (CONTINUED)
stockholder has been recorded. In July 2000, the Company paid an
additional $4,000 to the stockholder to repurchase 2,667 shares,
leaving 11,166 shares held by the stockholder that could be subject
to this agreement.
The Company entered into a repurchase agreement with a
stockholder, with an effective date of March 1, 2000, whereby the
Company will repurchase, at the stockholder's direction, up to
6,000 shares of common stock six months from the effective date at
a price equal to $1.15 per share. Alternatively, the Company may
repurchase the stock in twelve months at $1.20 per share if the
shareholder so chooses. The shares were originally purchased at
$1.00 per share.
The Company entered into a repurchase agreement with a
stockholder, with an effective date of April 1, 2000, whereby the
Company will repurchase, at the stockholder's direction, up to
2,500 shares of common stock six months from the effective date at
a price equal to $1.00 per share. Alternatively, the Company may
repurchase the stock in twelve months at $1.10 per share if the
shareholder so chooses. The shares were originally issued in
exchange for other non-cash consideration at $1.00 per share.
8
