F-1

Index To Financial Information

SolarAttic,Inc.

Page

AUDITED FINANCIAL STATEMENTS

Independent Auditors’ Report on the Financial Statements............................................ F-2

Balance sheets............................................................................................... F-3

Statements of operations................................................................................... F-4

Statements of stockholders’ equity....................................................................... F-5

Statements of cash flows.................................................................................. F-6

Notes to financial statements ............................................................................. F-8

F-2

Independent Auditors’ Report

To the Board of Directors and Stockholders
SolarAttic, Inc.
Elk River, Minnesota

We have audited the accompanying balance sheets of SolarAttic, Inc.as of December 31, 1997
and 1998, and the related statements of operations, stockholders' equity, 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 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 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 SolarAttic, Inc. as of December 31, 1997 and 1998, and the results of its
operations and its cash flows for the years then ended, in conformity with generally accepted
accounting principles.

Plymouth, Minnesota
February 28, 1999

15395-31stAve. N., Ste 1uPlymouth, Minnesota 55447u(612) 553-2731uFax (612) 553-2741

F-3

SOLARATTIC, INC.
BALANCE SHEETS

At December 31
ASSETS

1997

1998

Current Assets
Cash
Accounts receivable
Inventories
Prepaid expenses
Prepaid rent
Prepaid stock issuance costs

$

14,148
8,236
34,995
8,525
24,822
5,694

$

30,479
10,433
42,522
9,984
6,205
31,155

Total current assets

96,420

130,778

Furniture and Equipment
Less accumulated depreciation

66,268
34,064

66,268
42,983

Net furniture and equipment

32,204

23,285

Other Assets
Prepaid rent
Due from officer
Patent, net of amortization of $34,089 and $40,531
Customer list, net of amortization of $7,071 and $11,785

6,205
56,198
27,111
25,929

—
66,918
20,669
21,215

Total other assets

115,443

108,802

Total assets

$

244,067

$

262,865

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities
Accounts payable and accrued liabilities
Current maturities of note payable to officer
Other liabilities

$

2,009
788
42,400

$

47,642
771
49,823

Total current liabilities

45,197

98,236

Note Payable to Officer, Net of Current Portion

100,462

99,696

Stockholders' Equity
Common stock, no par value; authorized 100,000,000 shares;
issued and outstanding 9,385,752 and 9,979,678 shares
Less stock notes receivable
Retained earnings (deficit)

691,067
—
(592,659)

840,432
(33,500)
(741,999)

Total stockholders' equity

98,408

64,933

Total liabilities and stockholders' equity

$

244,067

$

262,865

See Notes to Financial Statements.