Exhibit 99.2
Auditor's report to the members of Fone.com Limited
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We have audited the financial statements which have been prepared under the
historical cost convention and the accounting policies.
Respective responsibilities of the director and auditors
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The company's director is responsible for the preparation of financial
statements. It is our responsibility to form an independent opinion, based on
our audit, on those statements and to report our opinion to you.
Basis of opinion
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We conducted our audit in accordance with Auditing Standards issued by the
Auditing Practices Board. An audit includes examination, on a test basis, of
evidence relevant to the amounts and disclosures in the financial statements. It
also includes an assessment of the significant estimates and judgements made by
the director in the preparation of the financial statements, and of whether the
accounting policies are appropriate to the company's circumstances, consistently
applied and adequately disclosed.
We planned and performed our audit so as to obtain all the information and
explanations which we considered necessary in order to provide us with
sufficient evidence to give reasonable assurance that the financial statements
are free form material misstatement, whether caused by fraud or other
irregularity or error. In forming our opinion we also evaluated the overall
adequacy of the presentation of information in the financial statements.
Opinion
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In our opinion the financial statements give a true and fair view of the state
of the company's affairs as at 31 March 2000 and of its loss for the period then
ended and have been properly prepared in accordance with the Companies Act 1985.
/s/ Chantry Vellacott DFK
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CHANTRY VELLACOTT DFK
Chartered Accountants
Registered Auditors
LONDON
9 August 2000
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Fone.com, Limited
Balance sheet at 31 March 2000
Notes 2000
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(Pounds Sterling)
Current assets
Debtors 4 20,010
Cash at bank and in hand 988
20,998
Creditors: amounts falling due within one year 5 (183,983)
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Total assets less current liabilities (162,985)
Capital reserves
Called up share capital 6 2
Profit and loss account 7 (162,987)
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Shareholders' funds 8 (162,985)
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The notes form part of these financial statements.
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Fone.com, Limited
Profit and loss account for the period ended 31 March 2000
304 Days
ended
Notes 31 March 2000
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(Pounds Sterling)
Turnover 10,452
Cost of sales 30,572
Gross loss (20,120)
Administrative 142,867
Loss on ordinary activities 2 (162,987)
Tax on loss on ordinary activities 3 --
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Loss for the period 7 (162,987)
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Fone.com, Limited
Statement of Stockholders' Equity for the period ended 31 March 2000
Common Stock Accumulated
Shares Amount Deficit Total
------ ------ ------ ------
(Pounds Sterling)
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June 1999 (inception)
Issuance of common stock 2 2 2
Net loss (162,987) (162,987)
March 31, 2000 2 2 (162,987) (162,985)
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Fone.com, Limited
Statement of Cash Flows for the period ended 31 March 2000
(Pounds Sterling)
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Cash flows from operating activities:
Net loss (162,987)
Changes in assets and liabilities:
Increase in accounts receivable (20,010)
Increase in accounts payable 183,983
Net cash used in operating activities 986
Cash flows from financing activities:
Issuance of common stock 2
Net cash from financing activities 2
Net increase in cash 988
Cash, beginning of period --
Cash, end of period 988
None of company's activities was acquired or discontinued during the above
financial period.
The company has no recognised gains and losses other than those included in the
losses above and therefore no separate statement of total recognised gains and
losses has been presented.
There is no difference between the losses shown above and their historical cost
equivalents.
The note form part of these financial statements.
These financial statements have been prepared in accordance with the special
provisions of Part VII of the Companies Act 1985 relating to small companies.
Approved by the Board on September 8, 2000 and signed on its behalf.
By /s/ C Postelnik - Director
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C POSTELNIK - Director
The notes form part of these financial statements.
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Notes to the financial statements for the period ended 31 March 2000
Accounting policies
1. Basis of accounting
The financial statements are prepared on the historical cost basis of
accounting.
The company meets its day to day working capital requirements through
funding from its parent company.
The company has taken advantage of the exemption in Financial Reporting
Standard No. 1 from the requirement to produce a cash flow statement on the
grounds that it is a small company.
Deferred taxation
Deferred taxation is provided under the liability method in respect of all
material timing differences between the profits as computed for taxation
purposes and the profits as stated in the financial statements, to the
extent that it is probable that a liability or asset will crystallise. The
rate of tax used is that which is expected to be applied when the liability
or asset is expected to crystallise.
Hire purchase and lease transactions
Rentals under operating leases are charged to the profit and loss account
as they fall due.
2. Loss on ordinary activities before taxation
2000
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(Pounds Sterling)
This is stated after charging:
Operating lease rentals:
Land and buildings 13,699
Director's emoluments 9,992
Auditor's remuneration 6,750
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3. Tax on loss on ordinary activities
On the basis of these financial statements no provision has been made for
corporation tax.
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4. Debtors
2000
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(Pounds Sterling)
Trade debtors 289
Other debtors 19,721
Auditor's remuneration 20,010
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5. Creditors: amounts falling due within one year
2000
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(Pounds Sterling)
Trade creditors 66,233
Amounts owed to parent undertaking 94,492
Taxation and social security 5,862
Other creditors 17,396
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183,983
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6. Called up share capital
2000
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(Pounds Sterling)
Authorised
Equity shares:
100 Ordinary shares of (Pounds Sterling)1 each 100
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Allotted, called up and fully paid
Equity shares:
2 Ordinary shares of (Pounds Sterling)2 each 2
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During the year 2 ordinary shares of (Pounds Sterling)1.00 each were
allotted and fully paid at par for cash consideration.
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7. Reserves
Profit and loss account
(Pounds Sterling)
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Loss for the period (162,987)
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8. Reconciliation of movement on shareholders' funds
2000
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(Pounds Sterling)
Loss for the financial period (162,987)
Proceeds from issue of share 2
Net depletion in shareholder funds (162,985)
Opening shareholder funds --
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Closing shareholder funds (162,985)
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Shareholder funds are fully attributable to equity interests.
9. Contingent liabilities
H M Customs & Excise has proposed to assess the Company regarding
output VAT of approximately (Pounds Sterling)9,000 for an asset
allegedly returned to a supplier of the Company. No formal assessment
has as yet been made. The Company can establish that it did not return
any assets that would substantiate the position of H M Customs &
Excise. Expert opinion has been obtained that supports the Company's
position, however, at this time the outcome uncertain.
10. Financial commitments
The company is currently in negotiation with its landlord over the
lease for its office premises. Therefore, at 31 March 2000, there is
no legal commitment for rental payments under operating leases.
11. Control
The ultimate parent company is DCI Telecommunications Inc, which is
registered in the United States of America.
