F-13

SOLARATTIC, INC.
BALANCE SHEETS
(UNAUDITED)

JUNE 30
ASSETS

1998

1999

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

$

1,562
1,887
42,504
8,139
18,616
5,694

$

10,408
19,916
34,519
10,847
18,615
31,155

Total current assets

78,402

125,460

Furniture and Equipment
Less accumulated depreciation

66,268
38,523

66,710
46,743

Net furniture and equipment

27,745

19,967

Other Assets
Due from officer
Patent, net of amortization of $37,310 and $43,752
Customer list, net of amortization of $9,428 and $14,142

61,122
23,890
23,572

72,611
17,448
18,858

Total other assets

108,584

108,917

Total assets

$

214,731

$

254,344

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities
Accounts payable and accrued liabilities
Accrued advanced payments from customers
Current maturities of notes payable to officers
Current maturities of note payable to bank
Other liabilities

$

23,268
24,708
686
—
52,439

$

46,294

8,380
7,240
48,186

Total current liabilities

101,101

110,100

Note Payable to Officer, Net of Current Portion
Note Payable to Bank, Net of Current Portion

100,235
—

99,831
5,944

Stockholders' Equity
Common stock, no par value; authorized 100,000,000 shares;
issued and outstanding 9,406,252 and 9,985,947 shares
Less stock notes receivable
Retained earnings (deficit)

695,167
—
(681,772)

871,777
(23,500)
(809,808)

Total stockholders' equity

13,395

38,469

Total liabilities and stockholders' equity

$

214,731

$

254,344

See Notes to Unaudited Financial Statements.

F-14

SOLARATTIC, INC.
STATEMENTSOF OPERATIONS
(UNAUDITED)

Six Month Periods Ending June 30

1998

1999

Revenues

$

53,491

$

107,450

Cost of Goods Sold

29,545

47,708

Gross profit

23,946

59,742

Operating Expenses

105,217

118,332

Operating loss

(81,271)

(58,590)

Interest Expense

7,842

9,219

Net loss

$

(89,113)

$

(67,809)

Weighted Average Common Shares
Outstanding

9,400,671

9,983,449

See Notes to Unaudited Financial Statements.

F-15

SOLARATTIC, INC.
STATEMENTSOF STOCKHOLDERS’ EQUITY
(UNAUDITED)

Period from December 31, 1996 to June 30, 1999

Retained
Earnings
(Deficit)

Total
Stockholders
Equity

Common Stock
SharesAmount

Stock Notes
Receivable

December 31, 1996

8,977,216

$

544,353

$-

$

(433,099)

$

111,254

Issuance of stock
Stock issued for rent
Stock issued for services
Net loss

279,426
124,110
5,000
-

92,070
49,644
5,000
-

-
-
-
-

-
-
-
(159,560)

92,070
49,644
5,000
(159,560)

December 31, 1997

9,385,752

691,067

$-

$

(592,659)

$

98,408

Issuance of stock
Net loss

20,500
-

4,100
-

-
-

-
(89,113)

4,100
(89,113)

June 30, 1998

9,406,252

$

695,167

$-

$

(681,772)

$

13,395

Issuance of stock
Stock issued for services
Stock issuance expense
Stock notes receivable
Net loss

571,026
2,400
-
-
-

140,265
12,000
(7,000)

-
-
-
(33,500)
-

-
-
-
-
(60,227)

140,265
12,000
(7,000)
(33,500)
(60,227)

-

December 31, 1998

9,979,678

$

840,432

$

(33,500)

$

(741,999)

$

64,933

Issuance of stock
Stock issued for rent
Stock notes receivable
Net loss

1,305
4,964
-
-

6,525
24,820

-
-
10,000
-

-
-
-
(67,809)

6,525
24,820
10,000
(67,809)

-

June 30, 1999

9,985,947

$

871,777

$

(23,500)

$

(809,808)

$

38,469

See Notes to Unaudited Financial Statements

F-16

SOLARATTIC, INC.
STATEMENTSOF CASH FLOWS
(UNAUDITED)

Six Month Periods Ending June 30

1998

1999

Cash Flows From Operating Activities
Net loss$
Adjustments to reconcile net loss to net cash flows
from operating activities:
Depreciation
Amortization
Amortization of prepaid rent from stock
(Increase) decrease in operating assets:
Accounts receivable
Inventory
Prepaid expenses
Increase (decrease) in operating liabilities:
Accounts payable and accrued liabilities
Advanced payments from customers
Other liabilities

(89,113)

$

(67,809)

4,459
5,578
12,411

3,760
5,578
12,411

6,349
(7,509)
386

(9,483)
8,003
(863)

21,259
24,708
10,039

(1,348)
—
(1,578)

Net cash flows from operating activities

(11,433)

(51,329)

Cash Flows From Investing Activities
Increase in due from officers
Purchase of equipment

(4,924)
—

(5,693)
(442)

Net cash flows from investing activities

(4,924)

(6,135)

Cash Flows From Financing Activities
Proceeds from issuance of common stock
Proceeds from stock notes receivable
Proceeds from note payable to bank
Payments on note payable to bank
Proceeds from note payable to officer
Payments on notes payable to officer

4,100
—
—
—
—
(329)

6,525
10,000
15,000
(1,816)
8,000
(316)

Net cash flows from financing activities

3,771

37,393

Change in cash and equivalents

(12,586)

(20,071)

Cash and Equivalents
Beginning of period

14,148

30,479

End of period

$

1,562

$

10,408

See Notes to unaudited Financial Statements.