EXHIBIT 99.5
SPIDERBOY.COM, INC.
(A Development Company)
FINANCIAL STATEMENTS
PERIOD FROM INCEPTION (NOVEMBER 18, 1999) TO
JUNE 30, 2000
TABLE OF CONTENTS
Page
----
Independent Auditors' Report................................................ 1
Financial Statements:
Balance Sheet............................................................. 2
Statement of Operations................................................... 4
Statement of Stockholders' Equity......................................... 5
Statement of Cash Flows................................................... 6
Notes to Financial Statements............................................. 7
<PAGE>
CALLAHAN, JOHNSTON & ASSOCIATES, LLC
CERTIFIED PUBLIC ACCOUNTANTS AND CONSULTANTS
--------------------------------------------------------------------------------
INDEPENDENT AUDITORS' REPORT
To The Board of Directors and
Stockholders of Spiderboy.com, Inc.
(A Development Stage Company)
Ft. Myers, Florida
We have audited the accompanying balance sheet of Spiderboy.com, Inc. (d/b/a
Spiderboy.com) as of June 30, 2000, and the related statements of operations,
stockholders' equity, and cash flows for the period from November 18, 1999
(inception) to June 30, 2000. 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 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 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 Spiderboy.com, Inc. as of June
30, 2000, and the results of its operations and its cash flows for the period
from November 18, 1999 (inception), to June 30, 2000, in conformity with
generally accepted accounting principles.
As described in Note 2 to the financial statements, the ultimate recoverability
of investments in the development stage and patent costs is dependent on future
profitable operations, which presently cannot be determined.
/s/ Callahan, Johnston & Associates, LLC
CALLAHAN, JOHNSTON & ASSOCIATES, LLC
Minneapolis, Minnesota
September 6, 2000
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7850 METRO PARKWAY, SUITE 207, MINNEAPOLIS, MN 55425
TELEPHONE: (952)858-7207 FAX: (952)858-7202
EMAIL: [email protected]
<PAGE>
SPIDERBOY.COM, INC.
(A Development Stage Company)
BALANCE SHEET
JUNE 30, 2000
ASSETS
------
Current assets:
Cash $ 18,406
------------
Other assets:
Organization costs, net of accumulated
amortization of $26 171
Purchased domain names and technology
rights, net of accumulated
amortization of $3,333 36,667
------------
Total other assets 36,838
------------
Total assets $ 55,244
============
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities:
Accounts payable $ 195
Note payable - related party 14,500
------------
Total current liabilities 14,695
------------
Stockholders' equity:
Preferred stock, no par value; authorized
1,000,000 shares of Class B 8.75%
convertible, no shares issued --
Common stock, no par value; authorized
10,000,000 shares, issued: 4,004,000 73,000
Deficit accumulated during the
development stage (32,451)
------------
Total stockholders' equity 40,549
------------
Total liabilities and stockholders' equity $ 55,244
============
The accompanying notes are an integral part of
these financial statements.
2
<PAGE>
SPIDERBOY.COM, INC.
(A Development Stage Company)
STATEMENT OF OPERATIONS
PERIOD FROM DATE OF INCEPTION (NOVEMBER 18, 1999)
THROUGH JUNE 30, 2000
Revenues $ --
------------
Expense:
Advertising $ 181
Amortization 3,360
Bank service charges 53
Domain name registration costs 17,655
Postage and delivery 272
Printing and reproduction 660
Professional and consulting fees 8,994
Repairs and maintenance 477
State filing fees 594
Telephone 205
------------
Total expense 32,451
------------
Net loss before income taxes (32,451)
Income taxes --
------------
Net loss $ (32,451)
============
Basic earnings (loss) per share $ (.01)
============
Weighted average number of shares outstanding 3,563,142
============
The accompanying notes are an integral part of
these financial statements.
3
<PAGE>
SPIDERBOY.COM, INC.
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Common Stock Deficit
------------------------ During
Number of Development
Shares Amount Stage Total
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Issuance of founders stock 3,800,000 $ 5,000 $ -- $ 5,000
Issuance of stock at $.33 per share
in March and June 2000 204,000 68,000 -- 68,000
Loss November 18,1999 to June 30, 2000 -- -- (32,451) (32,451)
---------- ---------- ---------- ----------
Balances at June 30, 2000 4,004,000 $ 73,000 $ (32,451) $ 40,549
========== ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
SPIDERBOY.COM, INC.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
Increase (Decrease) in Cash
PERIOD FROM DATE OF INCEPTION (NOVEMBER 18, 1999)
THROUGH JUNE 30, 2000
Cash flows from operating activities:
Net loss $ (32,451)
Adjustments to reconcile net loss to cash flows from
operating activities:
Amortization 3,360
Accounts payable 195
-----------
Net cash flows from operating activities (28,896)
-----------
Cash flows from investing activities:
Incurrence of organization costs (198)
-----------
Cash flows from financing activities:
Proceeds from common stock 73,000
Principal reductions on note payable - related party (25,500)
-----------
Net cash flows from financing activities 47,500
-----------
Increase in cash 18,406
Cash - beginning of period --
-----------
Cash - end of period $ 18,406
===========
Supplemental information:
Interest paid $ --
===========
Income taxes paid $ --
===========
Summary of non cash activity:
The Company issued founders' common stock in November 1999 and March 2000
with no stated value.
In February 2000 the Company purchased domain names and technology rights
from a related party through incurrence of a $40,000 note payable.
The accompanying notes are an integral part of
these financial statements.
5
<PAGE>
SPIDERBOY.COM, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
FOR THE PERIOD FROM INCEPTION (NOVEMBER 18, 1999)
TO JUNE 30, 2000
1. Summary of Significant Accounting Policies and
Other Information
Company
Spiderboy.com, Inc. (d/b/a Spiderboy.com) was formed under the laws
of the State of Florida on November 18, 1999.
The goal of the Company is to create "Spiderboy's Web" and "Spiderboy's
Information Superhighway" (www.spiderboy.com), providing an organized
system of internal portals linked first geographically and then
categorically by content. This system will become much like an
information highway with exits and stops for every country and for most
major cities in each country. A user should be able to find
approximately 90% of the information that he or she would normally
access on the worldwide web, without tedious searches and without the
possibility of inadvertently accessing pornographic websites. The access
time should be efficient, and once within "Spiderboy's Web" and on
"Spiderboy's Information Superhighway", a user has virtually no reason
to leave until completion of his tasks.
"Spiderboy's Web" will link geographical locations and content by
Continents, Countries, Counties and Cities. The locations will be
further organized into government, community organizations, hospitals,
schools, clubs, etc. and, of course, commercial endeavors. These many
portals will be linked to one another within "Spiderboy's Web", which
will all be interlinked to feed traffic to other sites within the
"Spiderboy's Web". One needs only to "point and click" to the
geographical location anywhere within the world or the U.S. in which the
information should reside to find practically anything that he or she
needs on the worldwide web.
At June 30, 2000 the Company owned 307 domain names for incorporation
into "Spiderboy's Web" and "Spiderboy's Information Superhighway".
(Continued)
6
<PAGE>
SPIDERBOY.COM, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
FOR THE PERIOD FROM INCEPTION (NOVEMBER 18, 1999)
TO JUNE 30, 2000
1. Summary of Significant Accounting Policies and
Other Information (Continued)
Intangible Assets
Organization costs are carried at cost and are being amortized over
sixty months using the straight-line method.
An intangible asset was recorded at the cost paid for domain names,
search engine and technology rights, tradenames, and sites in progress
purchased from Captiva Outlook Corporation, a related party (see Note
3). This intangible asset is being amortized over sixty months using the
straight-line method
Stock-Based Consideration
The Company has applied the fair value-based method of accounting for
employee and nonemployee stock-based consideration and/or compensation
in accordance with FASB Statement 123.
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. Accordingly, deferred tax liabilities and assets are
determined based on the differences between the financial statement and
tax bases of assets and liabilities, using enacted tax rates in effect
for the year in which the differences are expected to reverse.
The Company's net operating loss carryforward is fully allowed for
at June 30, 2000. See Note 4.
(Continued)
7
<PAGE>
SPIDERBOY.COM, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
FOR THE PERIOD FROM INCEPTION (NOVEMBER 18, 1999)
TO JUNE 30, 2000
1. Summary of Significant Accounting Policies and
Other Information (Continued)
Concentrations, Risks 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.
Actual results could differ from those estimates.
Key Personnel
Marketing efforts, consulting services and technical and
administrative efforts of the Company's majority stockholder have
accounted for 100% of the Company's activities inception to date.
This individual is not being compensated for these services. No
employment agreement currently exists with this stockholder.
Long-Lived Assets
In accordance with SFAS 121, Accounting For The Impairment Of
Long-Lived Assets And For Long-Lived Assets To Be Disposed Of, the
Company reviews its long-lived assets and intangibles related to
those assets periodically to determine potential impairment by
comparing the carrying value of the long-lived assets outstanding
with estimated future cash flows expected to result from the use of
the assets, including cash flows from disposition. Should the sum
of the expected future cash flows be less than the carrying value,
the Company would recognize an impairment loss. An impairment loss
would be measured by comparing the amount by which the carrying
value exceeds the fair value of the long-lived assets and
intangibles. To date, management has determined that no impairment
of long-lived assets exists.
(Continued)
8
<PAGE>
SPIDERBOY.COM, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
FOR THE PERIOD FROM INCEPTION (NOVEMBER 18, 1999)
TO JUNE 30, 2000
1. Summary of Significant Accounting Policies and
Other Information (Continued)
Concentrations, Risks and Uncertainties
Development Stage
The Company has not commenced principal operations and is
considered to be in the development stage (see Note 2).
Domain "Squatting"
Domain "squatting" is the process of registering domain names in
the name of well known individuals or entities with the hope of
selling these domain names back to the individual or entity. Recent
court rulings and standards being implemented and enforced by
Internet regulatory bodies have found this process to be
inappropriate. Many recent cases have required transference of the
domain name to the well known individual or entity at little, if
any, consideration.
The Company does not feel its registered domain names could be
construed as domain "squatting". The Company's registered domain
names are being incorporated into "Spiderboy's Web" and
"Spiderboy's Information Superhighway". The Company is offering to
link these registered domain names to existing sites for these
geographical or business entities. In addition, the Company is
offering to assist with development of these sites for the
geographical or business entities.
Since some of these registered domain names incorporate well known
and/or trademarked names it is at least reasonably possible that a
claim of domain "squatting" be brought against the Company. If such
a claim was brought the Company feels its exposure would be limited
to forfeiture of that name. Management does not feel such a
forfeiture would materially impact the Company's operations.
(Continued)
9
<PAGE>
SPIDERBOY.COM, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
FOR THE PERIOD FROM INCEPTION (NOVEMBER 18, 1999)
TO JUNE 30, 2000
1. Summary of Significant Accounting Policies and
Other Information (Continued)
Earnings Per Share
The Company has 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. Stock options and warrants are
excluded in the EPS calculation due to their antidulitive effect.
Weighted-average shares for basic EPS
inception (November 18, 1999) to June 30, 2000 3,563,142
=========
2. Development Stage Company
From inception to June 30, 2000, the Company is deemed to be in the
development stage. To date the Company has devoted the majority of its
efforts to: raising capital; registration and/or acquisition of domain
names and annual registration to protect these domain names; search
engine and web site development; and researching and articulating the
plan of operations for the purpose of introducing Spiderboy.com and
thereafter for providing information services via the Internet. Planned
principal operations have not yet commenced and the first principal
revenues are not anticipated until 2001.
Management feels that it can complete development of "Spiderboy's Web"
and "Spiderboy's Information Superhighway" (see Note 1: Company) and
generate sufficient site traffic that the Company can generate
sufficient revenues to achieve profitable operations and thereby
realize assets and settle obligations in the normal course of
operations. No estimate can be made of the range of loss that is
reasonably possible should the Company be unsuccessful.
(Continued)
10
<PAGE>
SPIDERBOY.COM, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
FOR THE PERIOD FROM INCEPTION (NOVEMBER 18, 1999)
TO JUNE 30, 2000
3. Related Party Transactions
Office Space/Furniture and Equipment
The Company currently receives office space and use of certain
furniture and equipment from its majority stockholder under a
month-to-month agreement at no cost. No value has been reflected
for this donated rentals in the accompanying financial statements.
Note Payable - Related Party
In February 2000, the Company purchased domain names, websites in
progress, and rights and technology relating to the Spiderboy.com
search engine for a $40,000 note payable to Captiva Outback
Corporation. Captiva Outback Corporation is wholly owned by the
Company's majority stockholder. This note is unsecured and non
interest bearing through August 17, 2000. After August 17, 2000
interest will accrue at 6% compounded monthly on an unpaid balance.
4. Income Taxes
The Company has fully allowed for its net operating carryforwards as
follows:
Deferred tax asset relating to net operating
loss carryforwards $ 8,000
Valuation allowance (8,000)
---------
Deferred tax asset $ --
=========
At June 30, 2000, the Company has carryforwards available to offset
future taxable income as follows:
Federal State
--------- ---------
2015 $ 32,000 $ 32,000
========= =========
11
