EXHIBIT 99.4
HIGH COUNTRY VENTURES, INC.
FINANCIAL STATEMENTS
YEARS ENDED APRIL 30, 2000, 1999 AND 1998
TABLE OF CONTENTS
Page
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Independent Auditors' Report................................................ 1
Financial Statements:
Balance Sheets..................................................... 2
Statements of Operations........................................... 3
Statements of Stockholders' Equity (Deficit)....................... 4
Statements of Cash Flows........................................... 5
Notes to Financial Statements...................................... 6
<PAGE>
CALLAHAN, JOHNSTON & ASSOCIATES, LLC
CERTIFIED PUBLIC ACCOUNTANTS AND CONSULTANTS
--------------------------------------------------------------------------------
INDEPENDENT AUDITORS' REPORT
Stockholders and Board of Directors
High Country Ventures, Inc.
Minneapolis, Minnesota
We have audited the accompanying balance sheets of High Country Ventures, Inc.
as of April 30, 2000, 1999 and 1998, and the related statements of operations,
stockholders' equity (deficit), 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 audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatements. 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 High Country Ventures, Inc. as
of April 30, 2000, 1999 and 1998 and the results of operations, stockholders'
equity (deficit) and cash flows for the years then ended, 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 2 to the
financial statements, the Company has no viable operations or significant assets
and is dependent upon shareholders to provide sufficient working capital to
maintain the integrity of the corporate entity. These circumstances create
substantial doubt the Company's ability to continue as a going concern and are
discussed in Note 2. The financial statements do not contain any adjustments
that might result from the outcome of these uncertainties.
/s/ Callahan, Johnston & Associates, LLC
CALLAHAN, JOHNSTON & ASSOCIATES, LLC
Minneapolis, Minnesota
July 14, 2000
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7850 METRO PARKWAY, SUITE 207, MINNEAPOLIS, MN 55425
TELEPHONE: (952)858-7207 FAX: (952)858-7202
E-MAIL: [email protected]
<PAGE>
HIGH COUNTRY VENTURES, INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
April 30,
----------------------------------------------
2000 1999 1998
------------ ------------ ------------
<S> <C> <C> <C>
ASSETS
------
Current assets:
Attorney Trust Account $ 2,000 $ -- $ --
============ ============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
----------------------------------------------
Current liabilities:
Accounts payable and accrued liabilities $ 30,882 $ 35,791 $ 34,751
------------ ------------ ------------
Stockholders' equity (deficit):
Preferred stock: undesignated par value;
5,000,000 shares authorized; none issued
and outstanding -- -- --
Common stock: no par value; 50,000,000
shares authorized; issued and outstanding
shares 35,425,920 in 2000, 5,425,920 in
1999 and 1998 448,383 437,415 437,415
Accumulated deficit (477,265) (473,206) (472,166)
------------ ------------ ------------
Total stockholders' equity (deficit) (28,882) (35,791) (34,751)
------------ ------------ ------------
Total liabilities and
stockholders' equity (deficit) $ 2,000 $ -- $ --
============ ============ ============
</TABLE>
The accompanying notes are an integral part of
these financial statements.
2
<PAGE>
HIGH COUNTRY VENTURES, INC.
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Years Ended April 30,
----------------------------------------------
2000 1999 1998
------------ ------------ ------------
<S> <C> <C> <C>
Revenues $ -- $ -- $ --
Administrative expenses 4,059 1,040 1,732
Income tax expense (benefit) -- -- --
------------ ------------ ------------
Net income (loss) (4,059) (1,040) (1,732)
Other comprehensive income (loss) -- -- --
------------ ------------ ------------
Comprehensive income (loss) $ (4,059) $ (1,040) $ (1,732)
============ ============ ============
Basic earnings (loss) per share $ -- $ -- $ --
============ ============ ============
"Weighted" average number of
shares outstanding 34,439,619 5,425,920 5,425,920
============ ============ ============
Actual issued and outstanding shares 35,425,920 5,425,920 5,425,920
============ ============ ============
</TABLE>
The accompanying notes are an integral part of
these financial statements.
3
<PAGE>
HIGH COUNTRY VENTURES, INC.
STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
YEARS ENDED APRIL 30, 2000, 1999 AND 1998
<TABLE>
<CAPTION>
Preferred Stock Common Stock
------------------------- ------------------------- Accumulated
Shares Amount Shares Amount Deficit Total
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
BALANCES, May 1, 1997 -- $ -- 5,425,920 $ 437,415 $ (470,434) $ (33,019)
Fiscal year 1998 -- -- -- (1,732) (1,732)
----------- ----------- ----------- ----------- ----------- -----------
BALANCES, April 30, 1998 -- -- 5,425,920 437,415 (472,166) (34,751)
Fiscal year 1999 -- -- -- -- (1,040) (1,040)
----------- ----------- ----------- ----------- ----------- -----------
BALANCES, April 30, 1999 -- -- 5,425,920 437,415 (473,206) (35,791)
Issuance of common stock
at $.0001 per share -- -- 30,000,000 3,000 -- 3,000
Additional equity
contributions to cover
administrative expenses
and settle liabilities -- -- -- 7,968 -- 7,968
Fiscal year 2000 -- -- -- -- (4,059) (4,059)
----------- ----------- ----------- ----------- ----------- -----------
BALANCES, April 30, 2000 -- $ -- 35,425,920 $ 448,383 $ (477,265) $ (28,882)
=========== =========== =========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
HIGH COUNTRY VENTURES, INC.
STATEMENTS OF CASH FLOWS
Increase (Decrease) In Cash
<TABLE>
<CAPTION>
Years Ended April 30,
---------------------------------------------
2000 1999 1998
------------ ------------ ------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss) $ (4,059) $ (1,040) $ (1,732)
Adjustments to reconcile net income
(loss) to cash flows from
operating activities:
Attorney Trust Account (2,000) -- --
Accounts payable and other
current liabilities (4,909) 1,040 1,732
------------ ------------ ------------
Cash flows from operating activities (10,968) -- --
------------ ------------ ------------
Cash flows from financing activities:
Proceeds from issuance of common stock
and additional equity contributions 10,968 -- --
------------ ------------ ------------
Cash flows from investing activities -- -- --
------------ ------------ ------------
Increase (decrease) in cash -- -- --
Cash:
Beginning of year -- -- --
------------ ------------ ------------
End of year $ -- $ -- $ --
============ ============ ============
Supplemental cash flow information:
Interest paid $ -- $ -- $ --
============ ============ ============
Income taxes paid $ -- $ -- $ --
============ ============ ============
</TABLE>
Summary of non cash activity:
None.
The accompanying notes are an integral part of
these financial statements.
5
<PAGE>
HIGH COUNTRY VENTURES, INC.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED APRIL 30, 2000, 1999 AND 1998
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Business
The Company was incorporated on February 11, 1959, under the laws of the State
of Minnesota. On April 13, 1988, the Company changed its name to High Country
Ventures, Inc.
High Country Ventures, Inc. formerly acted as a holding company for its
wholly-owned subsidiary, High Country Fashions, Inc. (HCF). On April 29, 1997
the Company abandoned its investment in HCF and approved the transfer of HCF to
Continental Casuals, LTD, a Company owned by High Country Ventures, Inc.'s then
President and then majority stockholder. The Company recorded a gain on this
abandonment and resulting debt cancellation of $1,600,000 because the
liabilities of HCF exceeded its assets.
The Company currently has no operations.
Risks, Estimates and Uncertainties
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 reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and reported amounts of revenues and expenses during
the reporting period.
(Continued)
6
<PAGE>
HIGH COUNTRY VENTURES, INC.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED APRIL 30, 2000, 1999 AND 1998
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Comprehensive Income
SFAS No. 130 establishes standards for the reporting and disclosure of
comprehensive income and its components which will be presented in association
with our Company's financial statements. Comprehensive income is defined as the
change in a business enterprise's equity during a period arising from
transactions, events or circumstances relating to nonowner sources, such as
foreign currency translation adjustments and unrealized gains or losses on
available-for-sale securities. It includes all changes in equity during a period
except those resulting from investments by or distributions to owners. For the
fiscal years ended April 30, 2000, 1999, and 1998, net income and comprehensive
income were equivalent.
Earnings Per Share
The Company implemented FASB 128: Earnings Per Share. FASB 128 replaces the
presentation of primary EPS with basic EPS. Basic EPS excludes dilution and is
computed by dividing net income by the weighted-average number of common shares
outstanding for the year. Diluted EPS reflects the potential dilution from stock
options and warrants and is computed using the treasury stock method. Under the
treasury stock method stock options are assumed to have been exercised at the
beginning of the period if the exercise price exceeds the average market price
during the period. The computation of diluted EPS does not assume conversion or
exercise of securities that would have an antidilutive effect on earnings per
share.
There are not outstanding stock options or warrants.
Income Taxes
The Company accounts for income taxes in accordance with Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes" which requires the
use of the "liability method" of accounting for income taxes.
(Continued)
7
<PAGE>
HIGH COUNTRY VENTURES, INC.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED APRIL 30, 2000, 1999 AND 1998
NOTE 2 - CONTINUED EXISTENCE
The Company is fully dependent upon the support of certain stockholder(s) for
the maintenance of its corporate status and to provide all working capital
support for the Company. These stockholder(s) intend to continue to fund
necessary expenses to sustain the Company. The Company is presently seeking a
merger candidate and feels it will be successful in finding such a candidate.
Failure of the Company to find a merger candidate and achieve profitable
operations or the failure of its stockholder(s) to fund necessary expenses of
the Company could result in the Company being unable to continue as a going
concern.
NOTE 3 - DISPUTED LIABILITIES
On April 29, 1997, at the time of the abandonment of High Country Fashions, Inc.
(HCF) and its subsequent transfer to Continental Casuals, LTD, the Company
became inactive (see Note 1). On January 7, 1998, HCF voluntarily filed a
petition under Chapter 7 of the U.S. Bankruptcy Code. On July 24, 1999, the
trustee for HCF's bankruptcy filed a no-asset report with the Court indicating
HCF had no property available for distribution from the bankruptcy estate. On
October 5, 1999, HCF's bankruptcy case was closed and all of its obligations
discharged.
Although none of HCF's creditors pursued collection from the Company, the
Company settled certain of these liabilities through payments of cash totaling
$30,000 and the transfer of 100,000 of the Company's common stock owned by one
of the Company's largest stockholders. Through April 30, 2000 no other creditors
of HCF have contacted the Company.
NOTE 4 - INCOME TAXES
The abandonment of High Country Fashions, Inc. on April 29, 1997, resulted in
debt cancellation income of $1,600,000. The Company excluded this debt
cancellation from income under the insolvency exclusion allowed for under the
Internal Revenue Code. Under audit the Internal Revenue Service could question
the Company's use of the insolvency exclusion. The Company feels that use of the
insolvency exclusion is appropriate in that the Company was insolvent,
liabilities exceeded assets, immediately before and also after the debt
cancellation.
(Continued)
8
<PAGE>
HIGH COUNTRY VENTURES, INC.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED APRIL 30, 2000, 1999 AND 1998
NOTE 4 - INCOME TAXES (Continued)
As a result of its exclusion of the debt cancellation income, the Company was
required to reduce its tax attributes at that date. That reduced the Company's
net operating loss carryforwards to zero at that date. The Company's subsequent
net operating loss carryforwards are fully allowed for due to questions
regarding the Company's ability to utilize these losses before they expire.
Deferred tax asset relating to net operating
loss carryforwards $ 1,500
Valuation allowance (1,500)
---------
Net deferred tax asset $ --
=========
At April 30, 2000, the Company has carryforwards as follows:
Federal State
--------- ---------
2013 $ 1,700 $ 1,700
2014 1,000 1,000
2015 7,000 4,000
--------- ---------
$ 9,700 $ 6,700
========= =========
NOTE 5 - SUBSEQUENT EVENT
Equity Infusion
On July 12, 2000, a large stockholder of the Company infused $25,000 into the
Company to help settle a disputed payable (see Note 3). No additional shares
were issued as part of this equity infusion.
9
