Veridigm (VRGD) 8-K A Development Stage Company

Exhibit 99.1

VERIDIGM, INC.

(FORMERLY ENOTES SYSTEMS, INC.)

(FORMERLY TOTALMED, INC. AND SUBSIDIARIES)

A Development Stage Company

AUDITED FINANCIAL STATEMENTS

DECEMBER 31, 2007 AND 2006

1

Michael F. Albanese, CPA

18 Lisa Court

Parsippany, NJ 07054

TELEPHONE: (201) 406-5733

FACSIMILE: (973) 887-9103

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTANT

To the Board of Directors and Stockholders

Veridigm, Inc.

17383 Sunset Blvd, Suite B-280,

Pacific Palisades, California 90270

I have audited the accompanying balance sheets of Veridigm, Inc. (a Delaware corporation in the development stage) as of December 31, 2007 and 2006 (restated), and the related statements of operations, stockholders’ deficit and cash flows for the years then ended and for the period August 7, 1997 (inception) to December 31, 2007.  These financial statements are the responsibility of the Company’s management.  My responsibility is to express an opinion on these financial statements based on my audit.  

I conducted my audit in accordance with standards of the Public Company Accounting Oversight Board (United States).  Those standards require that I 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.  I believe that my audit provides a reasonable basis for my opinion.

In my opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Veridigm, Inc. as of December 31, 2007 and 2006 (restated), and the result of its operations and its cash flows for the years then ended and from August 7, 1997 (inception) to December 31, 2007, in conformity with accounting principles general accepted in the United States of America.  

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern.  As discussed in Note 6 to the financial statements, the Company’s significant net losses raise substantial doubt about its ability to continue as a going concern.  The financial statements do not include any adjustments that might result from the outcome of this uncertainty.  

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.  Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the Company’s internal control over financial reporting.  Accordingly, we express no such opinion.  

/s/ Michael f. Albanese, CPA

Michael F. Albanese, CPA

Parsippany, New Jersey

Wednesday, April 16, 2008

2

VERIDIGM, INC.
(FORMERLY ENOTES SYSTEMS, INC.)
(FORMERLY TOTALMED, INC. AND SUBSIDIARIES)
(A Development Stage Company)
Balance Sheets
ASSETS
				RESTATED
		December 31,		December 31,
		2007		2006
Current assets:
Cash	$	--	$	56,205
Property and equipment, net		3,471		5,246
Total Assets	$	3,471	$	61,451
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable	$	758,552	$	559,422
Notes payable - related parties		972,235		923,235
Notes payable		223,862		223,862
Total Current Liabilities		1,954,649		1,706,519
Contingencies
Stockholders' deficit :
Preferred stock - Series A; $.0001 par value; authorized -
10,000,000 shares; issued and outstanding -
2,142,000 shares in 2007 and 0 in 2006		214		--
Common stock; $.0001 par value; authorized -
500,000,000 shares; issued and outstanding -
552,171 shares in 2007 and 68,705,989 in 2006		55		6,871
Additional paid-in capital		11,544,534		8,660,092
Treasury stock, 500 shares at cost		(1,500)		(1,500)
Deficit accumulated during the development stage		(13,494,481)		(10,310,531)
Total Stockholders' (Deficit)		(1,951,178)		(1,645,068)
Total Liabilities and Stockholders' (Deficit)	$	3,471	$	61,451

The accompanying notes are an integral part of these audited financial statements.

3

VERIDIGM, INC.
(FORMERLY ENOTES SYSTEMS, INC.)
(FORMERLY TOTALMED, INC. AND SUBSIDIARIES)
(A Development Stage Company)
Statements of Operations
						RESTATED
				RESTATED		Aug. 7, 1997
		Year Ended		Year Ended		(Inception) to
		December 31,		December 31,		December 31,
		2007		2006		2007
Revenue:
Sales	$	--	$	--	$	10,840
Cost of sales		--		--		5,662
Gross profit		--		--		5,178
Interest income		--		--		5,257
Total revenue		--		--		10,435
Costs and expenses:
Depreciation		1,775		300		212,501
Amortization		--		--		4,118
Research and development, related party		--		--		432,256
Officer's compensation		15,000		1,102,506		2,255,826
Impairment of investment in related party		--		--		50,000
Impairment of investment in subsidiaries		--		--		450,000
Loss on disposition of assets		--		--		11,449
SEC litigation settlement		--		--		110,977
Interest expense		114,170		47,613		243,828
Interest expense - beneficial conversion feature		--		2,493,161		2,493,161
General and administrative		3,053,005		805,081		7,240,800
		3,183,950		4,448,661		13,504,916
Net loss	$	(3,183,950)	$	(4,448,661)	$	(13,494,481)
Basic and fully diluted loss per common share	$	(29.49)	$	(80.16)
Weighted average common shares outstanding		107,969		55,495
Diluted weighted average shares and equivalent
shares outstanding		988,243		55,495

The accompanying notes are an integral part of these audited financial statements.

4

VERIDIGM, INC.
(FORMERLY ENOTES SYSTEMS, INC.)
(FORMERLY TOTALMED, INC. AND SUBSIDIARIES)
(A Development Stage Company)
Statements of Changes in Stockholders' Equity
For the Period August 7, 1997 (Inception) to December 31, 2007
													Deficit
													Accumulated
	Series A							Additional					During the
	Preferred Stock			Common Stock				Paid-in	Treasury Stock				Development
	Shares		Amount	Shares		Amount		Capital	Shares		Amount		Stage
Balances, August 7, 1997 (inception)	-	$	-	-	$	-	$	-	-	$	-	$	-
Common stock issued for services
and costs advanced, valued at
$.0001 per share	-		-	2,000,000		200		-	-		-		-
Common stock issued for services,
valued at $.15 per share	-		-	200,000		20		29,980	-		-		-
Net loss for the period													(61,404)
Balances, December 31, 1997	-		-	2,200,000		220		29,980	-		-		(61,404)
Sale of common stock ($.4156 per share)	-		-	204,500		20		84,965	-		-		-
Net loss													(95,211)
Balances, December 31, 1998	-		-	2,404,500		240		114,945	-		-		(156,615)
Sale of common stock ($.7622 per share)	-		-	1,098,505		110		837,160	-		-		-
Services contributed by the
president of the Company	-		-	-		-		60,000	-		-		-
Common stock issued for services,
valued at $.81 per share	-		-	333,333		33		269,967	-		-		-
Net loss													(785,366)
Balances, December 31, 1999	-		-	3,836,338		383		1,282,072	-		-		(941,981)
Sale of common stock ($1.25 per share)	-		-	25,000		3		31,247	-		-		-
Common stock issued for services,
valued at $.11 per share	-		-	1,466,667		147		157,353	-		-		-
Common stock issued for services,
valued at $.5312 per share	-		-	623,367		62		331,071	-		-		-
Purchase of treasury stock	-		-	-		-		-	500		(1,500)		-
Net loss													(897,368)
Balances, December 31, 2000	-		-	5,951,372		595		1,801,743	500		(1,500)		(1,839,349)
													(continued)

The accompanying notes are an integral part of these audited financial statements.

5

VERIDIGM, INC.
(FORMERLY ENOTES SYSTEMS, INC.)
(FORMERLY TOTALMED, INC. AND SUBSIDIARIES)
(A Development Stage Company)
Statements of Changes in Stockholders' Equity
For the Period August 7, 1997 (Inception) to December 31, 2007
								Deficit
								Accumulated
	Series A				Additional			During the
	Preferred Stock		Common Stock		Paid-in	Treasury Stock		Development
	Shares	Amount	Shares	Amount	Capital	Shares	Amount	Stage
Common stock issued for services,
valued at $.12 per share	-	-	6,959,708	696	858,080	-	-	-
Sale of common stock ($.017 per share)	-	-	1,087,976	109	17,891	-	-	-
Common stock issued in acquisition
of subsidiaries, valued at $.50 per share	-	-	900,000	90	449,910	-	-	-
Net loss								(1,878,498)
Balances, December 31, 2001	-	-	14,899,056	1,490	3,127,624	500	(1,500)	(3,717,847)
Sale of common stock ($.012 per share)	-	-	10,746,826	1,074	122,878	-	-	-
Common stock issued for services,
valued at $.03 per share	-	-	32,928,174	3,293	1,123,851	-	-	-
Net loss								(1,857,167)
Balances, December 31, 2002	-	-	2,928,704	293	4,379,917	500	(1,500)	(5,575,014)
Common stock issued for services,	-	-	850,000	85	16,915	-	-	-
valued at $.001 per share
Common stock issued as repayment of	-	-	1,150,000	115	22,885	-	-	-
related party debt
valued at $.001 per share
Net loss								(126,307)
Balances, December 31, 2003	-	-	4,928,704	493	4,419,717	500	(1,500)	(5,701,321)
Common stock issued for services,	-	-	625,000	63	1,188	-	-	-
valued at $.0001 per share
Net loss								(105,037)
Balances, December 31, 2004	-	-	5,553,704	555	4,420,905	500	(1,500)	(5,806,358)
Common stock issued for services,	-	-	625,000	63	1,188	-	-	-
valued at $.0001 per share
Common stock issued as repayment of	-	-	1,500,000	150	9,650	-	-	-
debt, valued at $.003 per share
Common stock retired	-	-	(2,475,819)	(248)	247	-	-	-
Additional shares due to stock split	-	-	6			-	-	-
Net loss								(55,512)
Balances, December 31, 2005	-	-	5,202,891	520	4,431,990	500	(1,500)	(5,861,870)
								(continued)

The accompanying notes are an integral part of these audited financial statements.

6

VERIDIGM, INC.
(FORMERLY ENOTES SYSTEMS, INC.)
(FORMERLY TOTALMED, INC. AND SUBSIDIARIES)
(A Development Stage Company)
Statements of Changes in Stockholders' Equity
For the Period August 7, 1997 (Inception) to December 31, 2007
													Deficit
													Accumulated
	Series A							Additional					During the
	Preferred Stock			Common Stock				Paid-in	Treasury Stock				Development
	Shares		Amount	Shares		Amount		Capital	Shares		Amount		Stage
Common stock issued as repayment of	-		-	2,850,000		285		56,715	-		-		-
debt, valued at $.02 per share
Common stock issued as repayment of	-		-	37,633,098		3,764		720,522	-		-		-
debt, valued at $.019 per share
Beneficial conversion feature(RESTATED)	-		-	-		-		2,493,161	-		-		-
Common stock issued in acquisition of
eNotes Systems, Inc., valued at $.0001	-		-	20,000,000		2,000		(2,000)	-		-		-
Common stock issued for services,	-		-	1,020,000		102		299,904	-		-		-
valued at $.30 per share
Common stock issued for services,	-		-	2,000,000		200		659,800	-		-		-
valued at $.33 per share
Net loss													(4,448,661)
Balances, December 31, 2006	-		-	68,705,989		6,871		8,660,092	500		(1,500)		(10,310,531)
Common stock issued for services,	-		-	378,000,000		37,800		2,797,200	-		-		-
valued at $.0075 per share
Reverse stock split of 809 to 1 on 1/7/08	-		-	(446,153,818)		(44,616)		44,616
Preferred stock issued for services,	2,142,000		214	-		-		42,626	-		-		-
valued at $.02 per share
Net loss													(3,183,950)
Balances, December 31, 2007	2,142,000	$	214	552,171	$	55	$	11,544,534	500	$	(1,500)	$	(13,494,481)
													(concluded)

The accompanying notes are an integral part of these audited financial statements.

7

VERIDIGM, INC.
(FORMERLY ENOTES SYSTEMS, INC.)
(FORMERLY TOTALMED, INC. AND SUBSIDIARIES)
(A Development Stage Company)
Statements of Cash Flows
						RESTATED
				RESTATED		Aug. 7, 1997
		Year Ended		Year Ended		(Inception) to
		December 31,		December 31,		December 31,
		2007		2006		2007
Cash flows from operating activities:
Net loss	$	(3,183,950)	$	(4,448,661)	$	(13,494,481)
Adjustments to reconcile net loss to net
cash used in operating activities
Depreciation		1,775		300		212,501
Amortization		--		--		4,118
Preferred stock issued for services		42,840				42,840
Common stock issued for services		2,835,000		960,006		6,649,259
Common stock issued in acquisition of subsidiaries		--		--		450,000
Beneficial conversion feature		--		2,493,161		2,493,161
Common stock issued to an officer in payment of debt		--		--		23,000
Notes issued for payment of expenses		--		--		47,530
Write-down of lost inventory		--		--		204,338
Write off uncollectible accounts		--		--		10,840
Loss on disposition of assets		--		--		11,449
Changes in assets and liabilities
Increase in accounts receivable		--		--		(10,840)
(Increase) decrease in inventory		--		--		(204,338)
Increase in accounts payable		199,130		103,618		794,351
Net cash used in operating activities		(105,205)		(891,576)		(2,766,272)
Cash flows from investing activities:
Payments on notes receivable		--		--		(1,200)
Repayments of notes receivable		--		--		1,200
Organization costs		--		--		(368)
Purchases of property and equipment		--		(5,546)		(226,171)
Acquisition of patent rights		--		--		(5,000)
Net cash used in investing activities		--		(5,546)		(231,539)
Cash flows from financing activities:
Proceeds from short-term debt		--		30,075		358,224
Repayment of short-term debt		--		--		(63,348)
Increase in amounts
due to an officer/stockholder		49,000		923,235		1,608,978
Purchase of treasury stock		--		--		(1,500)
Proceeds from sale of common stock		--		--		1,095,457
Net cash provided by financing activities		49,000		953,310		2,997,811
Net increase (decrease) in cash		(56,205)		56,188		--
Cash at beginning of year		56,205		17		--
Cash at end of year	$	--	$	56,205	$	--
						(continued)

The accompanying notes are an integral part of these audited financial statements.

8

VERIDIGM, INC.
(FORMERLY ENOTES SYSTEMS, INC.)
(FORMERLY TOTALMED, INC. AND SUBSIDIARIES)
(A Development Stage Company)
Statements of Cash Flows
			RESTATED
		RESTATED	Aug. 7, 1997
	Year Ended	Year Ended	(Inception) to
	December 31,	December 31,	December 31,
	2007	2006	2007
Supplemental Cash Flow Information:
Taxes paid	--	--
Interest paid	--	--
Short-term debt converted to stock	--	144,543
Officer loans converted to common stock	--	636,743
Accrued interest on loans converted to common stock	--	(35,799)
Software distribution agreement costs advanced	--
by stockholder	--	(108,368)
			(concluded)

The accompanying notes are an integral part of these audited financial statements.

9

VERIDIGM, INC.

(FORMERLY ENOTES SYSTEMS, INC.)

(FORMERLY TOTALMED, INC. AND SUBSIDIARIES)

(A Development Stage Company)

Notes to Financial Statements

Note 1 - Summary of Significant Accounting Policies

Description of Business and Basis of Presentation

The financial statements presented are those of Veridigm, Inc., (formerly eNotes Systems, Inc. and TotalMed, Inc.) a development stage company (the “Company”). The Company was incorporated under the laws of the State of Delaware on August 7, 1997. The Company is presently not involved in a business activity and is seeking a merger candidate.  The Company has abandoned its business plan as a developer of online gaming software.  

The Company has limited operations and in accordance with Statement of Financial Accounting Standards No. 7 (SFAS #7), the Company is considered a development stage company.

Merger Transaction

The Company entered into a Stock Purchase Agreement on April 28, 2006 to acquire all of the issued and outstanding shares of eNotes Systems, Inc. a Florida corporation, from its selling shareholders in exchange for 20,000,000 shares of restricted common stock of the Company.  Subsequent to the merger, the Company changed its name to eNotes Systems, Inc.  The management of the Company resigned from their positions and the management of Veridigm, Inc. was appointed as the new management of the Company.

Use of Estimates in the Preparation of Financial Statements

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reporting amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the period. Actual results could differ from those estimates.

Cash and Cash Equivalents

For purposes of reporting cash flows, cash and cash equivalents include checking and money market accounts and any highly liquid debt instruments purchased with a maturity of three months or less.

Fair Value of Financial Instruments

The fair value of the Company’s notes payable to related parties is not practicable to estimate due to the related party nature of the underlying transactions and the indefinite payment terms.

Property and Equipment and Depreciation

Property and equipment are stated at cost.  Depreciation for both financial reporting and income tax purposes is computed using combinations of the straight line and accelerated methods over the estimated lives of the respective assets.  During the year ended December 31, 2006, the Company purchased computer equipment totaling $5,546. Computer equipment is depreciated over 5 years.  Maintenance and repairs are charged to expense when incurred.  When property and equipment are retired or otherwise disposed of, the related cost and accumulated depreciation are removed from the respective accounts and any gain or loss is credited or charged to income.

10

VERIDIGM, INC.

(FORMERLY ENOTES SYSTEMS, INC.)

(FORMERLY TOTALMED, INC. AND SUBSIDIARIES)

(A Development Stage Company)

Notes to Financial Statements

Depreciation expense of $1,775 and $300 was charged to operations for the years ended December 31, 2007 and 2006, respectively.

Income Taxes

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to reverse. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the statement of operations in the period that includes the enactment date.

Loss Per Share

Basic earnings (loss) per share (“EPS”) of common stock is computed by dividing net income (loss) attributable to common stockholders by the weighted average number of shares of common stock outstanding during the period. Diluted EPS reflects the amount of net income (loss) for the period available to each share of common stock outstanding during the reporting period, giving effect to all potentially dilutive shares of common stock from the potential exercise of stock options and warrants and conversions of convertible preferred stocks.

Note 2 - Stockholders' Deficit

Common Stock

On January 7, 2008 there was a reverse stock split of the common stock of the Company on a basis of 809 to 1 with shareholders of record as of December 18, 2007.  The number of common shares outstanding as a result of the reverse stock split was 552,171.

On December 14, 2007, the Company issued 378,000,000 pre-split common shares to officers for services provided to the Company, valued at $.0075 per share.

During the year ended December 31, 2006, notes payable to former officers of the Company totaling $745,487 plus accrued interest of $35,799 were converted to 40,483,098 shares of common stock, valued at $.019 per share.  The Company issued 3,020,000 shares of common stock to officers for services, 1,020,000 shares of which were valued at $.30 per share and 2,000,000 shares which were valued at $.33 per share.

Two former directors of the company returned 49,516,387 shares of stock to the company on February 1, 2005. On May 11, 2005 there was a reverse stock split of the common stock of the Company on the basis of one share for each 20 shares outstanding with shareholders of record as of March 1, 2005.  The number of common shares outstanding as a result of the reverse stock split was 5,202,890.  The December 31, 2004 common stock and additional paid in capital balances were restated to reflect the reverse stock split.

On March 1, 2005, prior to the reverse stock split, the loan balance payable to Public Entity Acquisition Corp. (“PEACE”) of $9,800 was converted to 30,000,000 shares of common stock of the Company, valued at $.0003 per share.

11

VERIDIGM, INC.

(FORMERLY ENOTES SYSTEMS, INC.)

(FORMERLY TOTALMED, INC. AND SUBSIDIARIES)

(A Development Stage Company)

Notes to Financial Statements

Dividends may be paid on outstanding shares as declared by the Board of Directors from time to time. Each share of common stock is entitled to one vote.

Stock Options

At December 31, 2001 the Company reserved and granted 800,000 shares of common stock for issuance in connection with the stock option plan at an exercise price of $.50 per share. No options have been exercised as of December 31, 2007.

Preferred Stock

The Company has designated 10,000,000 shares as Series A Preferred Stock.  The Series A Preferred Stock is not redeemable and is convertible, at the option of the holder, to common stock at a rate of ten to one.

On December 17, 2007, the Company issued 1,342,000 shares of Series A Preferred Stock to a company owned by a director of the Company for services, valued at $.02 per share, and 800,000 shares to a consultant, valued at $.02 per share.

Note 3 – Debt to Stock Conversion

In association with the merger transaction entered into with Veridigm, Inc., the Company converted loans payable including accrued interest that were due to the founding officers of the Company to 37,633,098 shares of common stock that were issued to the former management of the Company (TotalMed, Inc.) as well as to the new management of the Company and their designees, during the three months ended June 30, 2006.  A beneficial conversion feature existed, as the fair market value of the shares exceeded the conversion rate of $.019 as defined by Emerging Issues Task Force No. 98-5 "Accounting for Convertible Securities with Beneficial Conversion Features or Contingently Adjustable Conversion Ratios" ("EITF 98-5") and No. 00-27 "Application of Issue No. 98-5 to Certain Convertible Instruments" ("EITF 00-27"). The excess of the fair market value over the conversion rate applied to the number of common shares issued resulted in a charge to interest expense, and increase to net loss of $2,493,161, with the same amount allocated to additional paid-in capital, thereby having no effect on total stockholders’ equity.

Note 4 - Income Taxes

There is no provision for income taxes since the Company has incurred net operating losses. At December 31, 2007, the Company has net operating loss carryforwards which may be available to offset future taxable income through 2027 in the amount of $10,450,363. A deferred tax asset has not been recorded for the net operating loss carryforwards due to uncertainties as to the ultimate realization of the deferred tax asset. The tax returns of the Company have not been filed.

Note 5 – Notes Payable

Notes payable totaling $223,862 at December 31, 2007 and 2006 consisted of the following:

Line of credit with Fleet Bank in the amount of $107,645, unsecured, guaranteed by the president of the Company, interest at 2.75% above prime, monthly payments equal to 2% of principal balance, was due November 2001. The Company is in default with respect to the terms of this note. Legal action has been taken by the bank as of the date of this report.

12

VERIDIGM, INC.

(FORMERLY ENOTES SYSTEMS, INC.)

(FORMERLY TOTALMED, INC. AND SUBSIDIARIES)

(A Development Stage Company)

Notes to Financial Statements

SBA note payable in the amount of $6,492 to Habib American Bank, unsecured, interest at 2.75% above prime, payable at $1,604 per month including interest, was due September 1, 2002.

A demand note payable in the amount of $30,000 to an individual, unsecured, with interest at 8%, due August 12, 2003.  The Company is in default with respect to the terms of this note. No legal action has been taken by the noteholder as of the date of this report.

A demand note payable in the amount of $25,000 to an individual, unsecured, with interest at 6%, due March 24, 2005. The Company is in default with respect to the terms of this note. No legal action has been taken by the noteholder as of the date of this report.

A demand note payable in the amount of $10,000 to an individual, unsecured, with interest at 6%, due March 24, 2005. The Company is in default with respect to the terms of this note. No legal action has been taken by the noteholder as of the date of this report.

Five demand notes payable totaling $19,725 to Public Entity Acquisition Corp. (“PEACE”), unsecured, with interest at 6%, due at various dates in 2006.  The Company is in default with respect to the terms of this note. No legal action has been taken by the noteholder as of the date of this report.

A demand note payable in the amount of $25,000 to an individual, unsecured, with no interest, due February 10, 2007. The Company is in default with respect to the terms of this note. No legal action has been taken by the noteholder as of the date of this report.

Interest expense on notes payable of $19,147 and $20,426 was charged to operations for the years ended December 31, 2007 and 2006, respectively.

Note 6 - Going Concern

The Company’s consolidated financial statements have been prepared in conformity with principles of accounting applicable to a going concern. These principles contemplate the realization of assets and liquidation of liabilities in the normal course of business. As shown in the consolidated financial statements, the Company has incurred significant net losses and as of December 31, 2007, reflects a deficit accumulated during the development stage of $13,494,481. The Company has not commenced its planned principal operations. The Company’s continued existence is dependent on its ability to generate sufficient cash flow or raise additional capital to meet its obligations on a timely basis. The Company has been exploring sources to obtain additional equity or debt financing. Without realization of additional capital, it would be unlikely for the Company to continue as a going concern. Accordingly, the Company’s continuation as a going concern is in substantial doubt and the financial statements do not include any adjustments that might be necessary should the Company be unable to continue in existence.

Note 7 – Litigation

On October 3, 2007, the Company, as well as one officer was named as a co-defendant in a lawsuit initiated by Bryce V. Geoffrey (“Geoffrey”) in the Supreme Court of British Columbia.  Geoffrey’s claim is for payment of the sum of $55,653.13 for past legal services provided to the Company, plus interest thereon and costs.  The Company has filed a Statement of Defense, however management believes the likelihood it will not succeed is probable.  Accordingly, a liability of $55,653.13 has been accrued in the financial statements.

13

VERIDIGM, INC.

(FORMERLY ENOTES SYSTEMS, INC.)

(FORMERLY TOTALMED, INC. AND SUBSIDIARIES)

(A Development Stage Company)

Notes to Financial Statements

During the year ended December 31, 2006, the Company advanced $118,750 to TotalMed Systems, Inc. (“TSI”) under a software distribution agreement, payment of which was made directly by a stockholder to whom a promissory note was issued.  Services were not consummated by TSI and a Release and Settlement Agreement was entered into, whereby the Company was to receive a refund of $108,368 by August 31, 2006.  The Company has not received such refund as of the date of this report and has commenced a lawsuit against TSI, demanding TSI to return the deposit of $108,368.  Management cannot speculate whether the Company will be successful in recovering the refund in full, and has accordingly charged the deposit of $108,368 to operations.

The Company was served with a summons and complaint for failure to pay the monthly payments on its line of credit with Fleet National Bank. Pursuant to the lawsuit, the Company would be liable to Fleet National Bank for the outstanding principal balance of $107,645 plus attorney’s fees. Management has indicated its intentions to defend the action and will repay the principal balance in monthly installments upon receipt of capital contributions from investors.

On April 8, 2002 the Securities and Exchange Commission filed a complaint alleging that a registration statement and amendments, filed with the Commission by the Company in December 2001, January 2002 and March 2002, and signed by the president of the Company, Daniel E. Charboneau, contained material misrepresentations and omissions. On January 6, 2004, a United States District Judge from the District of Columbia entered a default judgment against the Company restraining the Company from further violations of Section 17(a) of the Securities Act of 1933, Sections 10(b) and 13a-13 of the Securities Exchange Act of 1934 and Rules 10b-5, 12b-20, 13a-1 and 13a-13 thereunder. As part of this order the Court also ordered penalties and interest in the amount of $110,977.

Note 8 - Related Party Transactions

Notes Payable

A stockholder made loans to and paid expenses on behalf of the Company and issued promissory notes totaling $948,235 and $923,235 as of December 31, 2007 and 2006, respectively.  The notes bear interest at a rate of 10% and are payable in one year from the dates of issuance.  Interest expense on the notes payable was $94,748 and $27,187 for the years ended December 31, 2007 and 2006, respectively.

On December 5, 2007, a company owned by a director of the Company issued a promissory note for a loan of $24,000 to cover operating expenses.  The note bears interest at a rate of 15.5% and is due on February 1, 2008.  Interest expense of $275 was charged to operations for the year ended December 31, 2007.

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VERIDIGM, INC.

(FORMERLY ENOTES SYSTEMS, INC.)

(FORMERLY TOTALMED, INC. AND SUBSIDIARIES)

(A Development Stage Company)

Notes to Financial Statements

Note 9- Consulting Agreements

On December 10, 2007, The Company entered into a consulting agreement with 0718806 BC Ltd. (the “Consultant”), a Canadian corporation owned by A.J. Jamani, the chairman of the board of directors of the Company.   The duties of the Consultant are to provide the Company with financial planning, business development, equity capital structure reorganization, and overall corporate strategy reorganization.  In consideration of the consulting agreement, the Company issued 1,342,000 shares of Series A preferred stock to the Consultant that includes voting rights giving the Consultant 49% voting control of the Company.  The Consultant also designated the Company to issue 400,000 shares of Series A preferred stock to Aiden Demographics Inc and 400,000 shares of series A preferred stock to Icon Research Inc.  The consulting agreement is effective for 12 months and either party may terminate the agreement at any time for any reason up on 30 days’ prior written notice.

Note 10 – Development and Joint Venture Agreement

On August 22, 2006, the Company entered into an agreement with Jump Communications, Inc. (“Jump”) whereby certain services and products would be designed, developed and provided by Jump for the joint venture that was established pursuant to the agreement.  Jump has the exclusive rights in perpetuity to certain intellectual property relating to video compression and telephony network switch management that enables the delivery between distant end points of full motion video and data using a variety of delivery media and transmission formats (collectively the “Jump System”). These technologies are currently marketed by Jump as the “Jump System”.  The Company was required to pay to Jump $250,000 on the first day of each calendar quarter to ensure the exclusive right and license to use the Jump System technology.  The Company was to make the $250,000 payment each quarter for two years, at which time, if the joint ven ture had achieved certain targeted annualized revenues, the payment obligation was to cease; provided; however, if revenues did not meet or fell below such threshold as determined each quarter, the payments would continue or resume, as the case may be.  Ownership of intellectual property in the products and services developed for the Company and the joint venture by Jump was to be solely and exclusively owned by Jump.

As of the date of this report, the Company has abandoned the project and management has indicated that the Company is not subject to any further liabilities resulting from the agreement.

A licensing fee of $50,000 and $250,000 was charged to operations for the years ended December 31, 2007 and 2006, respectively.

Note 11 – Commitments and Contingencies

The Company provides accruals for all direct costs associated with the estimated resolution of contingencies at the earliest date at which it is deemed probable that a liability has been incurred and the amount of such liability can be reasonably estimated.

Note 12 – Subsequent Events

On February 14, 2008, the Company entered into a definitive agreement with Dinostar Inc. (“Dinostar”), a Nevada corporation, whereby the Company acquired Dinostar as a wholly owned subsidiary.  The Company received 100% of Dinostar’s issued and outstanding common shares of 35,000,000 in exchange for 5,000,000 shares of the Company’s common stock.

15

VERIDIGM, INC.

(FORMERLY ENOTES SYSTEMS, INC.)

(FORMERLY TOTALMED, INC. AND SUBSIDIARIES)

(A Development Stage Company)

Notes to Financial Statements

On March 26, 2008, the Company entered into a plan of acquisition with Winevin International Inc. (“Winevin”), a Nevada corporation, whereby the Company will acquire Winevin as a wholly owned subsidiary.  The Company will receive 100% of Winevin’s issued and outstanding common shares of 7,363,000 in exchange for 1,564,384 shares of the Company’s common stock.

On March 12, 2008, the Company declared a dividend of 18.5% on all issued and outstanding common shares payable ex dividend date May 23, 2008.

Note 13 – Restatement of Financial Statements

Subsequent to the issuance of the Company’s financial statements for the quarter ended June 30, 2006, the Company determined that the market price used to compute the beneficial conversion feature on debt converted to common stock was incorrect.  The prices used were as of the conversation date, not as of the date the option was granted. Based on the corrected market price the amount charged to interest expense due to the beneficial conversion feature has been reduced by $18,232,731. The additional paid in capital has been reduced by the same amount. The following summarizes the effect of the restatement:

	Quarter Ended June 30, 2006	Year Ended December 31, 2006
Additional paid-in capital
Previously Reported	$  25,953,615	$  26,892,823
Restated	7,720,884	8,660,092
Change	$  18,232,731	$  18,232,731
Deficit accumulated during the development stage
Previously Reported	$(26,599,518)	$(28,543,262)
Restated	(8,366,787)	(10,310,531)
Change	$  18,232,731	$  18,232,731
Interest expense - beneficial conversion feature
Previously Reported	$  20,725,892	$  20,725,892
Restated	2,493,161	2,493,161
Change	$  18,232,731	$  18,232,731
Net loss
Previously Reported	$(20,726,569)	$(22,681,392)
Restated	(2,493,838)	(4,448,661)
Change	$  18,232,731	$  18,232,731
Basic loss per common share
Previously Reported	$           (1.03)	$           (0.51)
Restated	(0.07)	(0.10)
Change	$             0.96	$             0.41

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