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Previous: NETWORK SYSTEMS INTERNATIONAL INC, 8-K/A, EX-23.1, 2001-01-19 |
Next: NETWORK SYSTEMS INTERNATIONAL INC, 8-K/A, EX-99.2, 2001-01-19 |
<PAGE> 1
Exhibit 99.1
interLAN COMMUNICATIONS, INC.
FINANCIAL REPORT
DECEMBER 31, 1999
7
<PAGE> 2
CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
INDEPENDENT AUDITOR'S REPORT 1
FINANCIAL STATEMENTS:
Balance Sheet 2
Income Statement 3
Statement of Cash Flow 4
Notes to financial statements 5-6
</TABLE>
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<PAGE> 3
INDEPENDENT AUDITORS REPORT
To the Board of Directors
InterLAN Communications, Inc.
131 Elden Street
Herndon, Virginia
We have audited the accompanying balance sheet, statement of operations and
statement of cash flow of interLAN Communications, Inc. as of December 31 ,
1999. This financial statement is the responsibility of the 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 the 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 balance sheet, statement of operations and statement of cash
flows referred to above, presents fairly, in all material respects, the
financial position of interLAN Communications, Inc. as of December 31, 1999, in
conformity with generally accepted accounting principles.
CROOKS & SETH PC
Herndon, Va.
January 31, 2000
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<PAGE> 4
interLAN COMMUNICATION, INC.
Balance Sheet
as of DECEMBER 31, 1999
<TABLE>
<CAPTION>
ASSETS
<S> <C> <C>
CURRENT ASSETS
Cash in Banks $111,471
Accounts Receivable 270,898
TOTAL CURRENT ASSETS 382,369
PROPERTY AND EQUIPMENT
Furniture & Fixtures 13,516
Computers & Equipment 12,377
Accum. Depreciation (20,138)
--------
TOTAL PROPERTY & EQUIPMENT 5,755
OTHER ASSETS
Other Noncurrent Assets 1,211
Accum. Amortization (1,043)
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TOTAL OTHER ASSETS 168
--------
TOTAL ASSETS $388,292
========
LIABILITIES & EQUITY
CURRENT LIABILITIES
Accounts payable $233,339
Taxes payable 8,419
Loan -Payable -Other 28,575
--------
270,333
LONG-TERM LIABILITIES
Long-term Note Payable 32,061
--------
32,061
--------
TOTAL LIABILITIES 302,394
EQUITY
Common Stock 13,500
Paid in Capital 78,515
Retained Earnings (19,571)
Current Period Income 13,454
-------
TOTAL EQUITY 85,898
--------
TOTAL LIABILITIES & EQUITY $388,292
========
</TABLE>
Read Accountant's Audit report Page 2
10
<PAGE> 5
interLAN COMMUNICATION, INC.
Income Statement
For the Twelve Months Ending December 31, 1999
<TABLE>
<S> <C> <C>
REVENUES
Computer Sales & Rentals $2,662,838
Freight Income 11,871
Other income and Reimbursements 6,728
----------
TOTAL REVENUES $2,681,437
DIRECT COSTS OF REVENUE
Costs of Goods $2,123,510
Wages & Benefits 443,584
TOTAL DIRECT COSTS $2,567,094
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GROSS PROFIT 114,343
OPERATING EXPENSES:
Selling and Marketing expenses $ 19,442
General & Administrative expenses 78,063
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TOTAL OPERATING EXPENSES $ 97,505
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INCOME BEFORE TAXES $ 16,838
----------
Corporate Income Tax 3,384
NET INCOME AFTER TAXES $ 13,454
==========
</TABLE>
Read Accountant's Audit report
Page 3
11
<PAGE> 6
interLAN COMMUNICATION, INC.
STATEMENT OF CASH FLOW
FOR THE THREE MONTHS ENDING DECEMBER 31, 1999
<TABLE>
<S> <C>
CASH FLOWS FROM OPERATIONS:
Net Income (Loss) $ 13,454
Adjustments to reconcile Net Income
Depreciation 3,100
Decrease (Increase) in:
Accounts Receivable- Net (75,613)
Prepaid Expenses 40,000
Increase (Decrease) in:
Accounts Payable 8,570
Deferred Income (11,726)
Loans 58,451
Paid in Capital 0
Net Cash Flows from Operations $ 36,236
---------
Cash Flows from Investing Activities
Purchases of Fixed Assets (3,500)
Net Cash Flows from Investing Activities $ (3,500)
---------
Net Increase (Decrease) in Cash $ 32,736
Cash at Beginning of Year $ 78,735
---------
Cash at End of the Period $ 111,471
=========
</TABLE>
Read Accountant's Audit Report
Page 4
12
<PAGE> 7
interLAN COMMUNICATIONS, INC.
Notes to Financial Statements
December 31, 1999
(1) ORGANIZATION
The interLAN Communications, Inc. (Company) is a for profit
organization providing computers, software and support services to the
Federal Government and commercial organizations. The Company was
incorporated in the state of Virginia in 1995.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
REVENUE RECOGNITION
Revenue is recorded on the accrual basis and billed to the customer
when shipped. The Company has not experienced any significant
uncollectibles, therefore no provision has been made for bad debt.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the financial
statements and the accompanying notes. Actual results could differ from
those estimates.
PROPERTY, PLANT AND EQUIPMENT
Furniture and equipment are recorded at cost. Depreciation is
calculated using the 150% Declining Balance method over the useful life
permitted by IRS. The company maintains offices at 131 Elden Street,
Herndon, Va. The company has two equipment leases with monthly payments
totaling $347, which will expire by February 2002
INCOME TAXES
The Company has elected to report Income Tax Returns on the accrual
basis as a C Corporation. The Tax Receivable has been accrued for the
estimated payments and the loss carryback. Historically, there are no
significant differences between the Tax returns and the Financial
Statements.
NOTE PAYABLE
The Company has borrowed funds from United Bank on January 5, 1999 in
the amount of $80,000. The repayment terms are 36 monthly payments of
$2,557.97 at 9.25% interest. The note has an outstanding balance as of
December 31, 1999 of $58,450.
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<PAGE> 8
(3) CONTINGENCIES
The Company is a computer and software sales firm, which provides
systems to primarily business customers. The liability for warranty is
passed through to the manufactures. However, the Company does have
direct responsibility for labor costs for the repair or replacement of
various components. The estimated accrual for these costs as of
December 31, 1999 is based on a percentage of sales over a period of
time.
(4) CONCENTRATIONS OF CREDIT AND MAJOR CUSTOMERS
The Company performs periodic credit evaluations of the financial
condition of its customers and does not require collateral from its
customers.
Concentrations of credit risk with respect to accounts receivable are
limited due to the large number of customers in the Company's customer
base.
(5) RELATED PARTY TRANSACTIONS
Bonuses in addition to wages were paid to employee/stockholders in the
amount of $90,000 in 1999.
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