DIT VENTURES, INC.
Financial Statements and Supplementary Information
For the quarter ended March 31, 2001
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DIT VENTUERS, INC.
Financial Statements and Supplementary Information
March 31, 2001
Table of Contents
<TABLE>
| Page | |
| Independent Auditor's Review Report | 1 |
| Financial Statements | |
| Balance Sheet | 2-3 |
| Statement of Income | 4 |
| Statement of Stockholders' Equity | 5 |
| Statement of Cash Flows | 6 |
| Note to Financial Statements | 7-11 |
| Supplementary Information | |
| Supplementary Schedule- Operating Expenses | 12 |
| Auditor's Consent Letter | 13 |
</TABLE>
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EDWARD C. LEE, CPA
A Professional Corp.
9420 Telstar Avenue, Suite 101
El Monte, California 91731
Phone: (626) 453-8781
Fax: (626) 453-8785
Stockholders and Board of Directors
DIT Ventures, Inc.
El Monte, CA 91731
We have reviewed the accompanying balance sheet of DIT Ventures, Inc.as of March 31, 2001 and the related statement of income, stockholders' equity, and cash flows for the quarter then ended, in accordance with Statements on Standards for Accounting and Review Services issued by the American Institute of Certified Public Accountants. All information included in these financial statements is the representation of the management of DIT Ventures, Inc.
A review consists principally of inquiries of company personnel and analytical procedures applied to financial data. It is substantially less in scope than an audit in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should be made to the accompanying financial statements in order for them to be in conformity with generally accepted accounting principles.
Our review was made primarily for the purpose of expressing limited assurance that there is no material modifications that should be made to the financial statements in order for them to be in conformity with generally accepted accounting principles. The supplementary data appearing as "Supplementary Schedule - Operating Expenses" is presented only for supplementary analysis purposes. This supplementary information has been subjected to the inquiry and analytical procedures applied in the review of the basic financial statements, and we are not aware of any material modifications that should be made to these data.
/S/ EDWARD C. LEE, CPA
Edward C. Lee, CPA
El Monte, California, U.S.A.
May 21, 2001
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DIT VENTURES, INC.
Balance Sheet
As of March 31, 2001
ASSETS
<TABLE>
| CURRENT ASSETS | |
| Cash and cash equivalent (Note 2) | $188 |
| Accounts receivable-net | $16,830 |
| Prepaid expenses and other (Note-3 | $1,500 |
| Total Current Assets | $18,518 |
| PROPERTY AND EQUIPMENT-NET (Note 4) | $115,594 |
| OTHER ASSETS | |
| Security deposit | $9,500 |
| TOTAL ASSETS | $143,612 |
</TABLE>
See accompanying notes to the financial statements.
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DIT VENTURES, INC.
Balance Sheet
As of March 31, 2001
LIABILITIES & EQUITY
<TABLE>
| CURRENT LIABILITIES | |
| Notes payable - Current (Note-5) | $160,000 |
| Credit card-American Express | $378 |
| P/R tax & withholding payable | $7,006 |
| State income tax payable (CA) | $800 |
| Accrued expenses (Note-6) | $84,588 |
| Total Current Liabilities | $252,772 |
| NONCURRENT LIABILITIES | -0- |
| STOCKHOLDERS' EQUITY (Note 7) | |
| Stock authorized: 70,000,000 Common | -0- |
| Stock authorized: 30,000,000 Preferred | -0- |
| Stock issued: 12,000,697 common @ $0.001 par value | $12,001 |
| Additional paid-in capital | $330,685 |
| Accumulated deficit | ($451,846) |
| Stockholders' equity - Net | ($109,160) |
| TOTAL LIABILITIES AND EQUITY | $143,612 |
</TABLE>
See accompanying notes to the financial statements.
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DIT VENTURES, INC.
Statement of Income
For The Quarter Ended March 31, 2001
<TABLE>
| Quarter-to-Date |
March 31, 2001
March 31, 2001
</TABLE>
See accompanying notes to the financial statements.
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DIT VENTURES, INC.
Statement of Stockholders' Equity
As of March 31, 2001
<TABLE>
Common
Stock
Share
Common
Stock
Value
Accumulated
Deficit
Total
</TABLE>
See accompanying notes to the financial statements.
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DIT VENTURES, INC.
Statement of Cash Flows
For The Quarter Ended March 31, 2001
<TABLE>
| CASH FLOWS FROM OPERATING ACTIVITIES | |
| Net income for the period | $(136,958) |
| Adjustments to reconcile net income to net cash: | |
| Depreciation | $2,576 |
| Cash provided by (used for) changes in assets and liabilities: | |
| Accounts receivable | $(10,410) |
| Prepaid purchase | $1,267 |
| State income tax payable | $800 |
| P/R tax &withholding payable | $(2,265) |
| Credit card-American Express | $(1,322) |
| Accrued expenses & interest | $47,961 |
| NET CASH USED FOR OPERATING ACTIVITIES | $(98,351) |
| CASH FLOWS FROM INVESTING ACTIVITIES | |
| Purchases of fixed assets | $(33,539) |
| NET CASH USED FOR INVESTING ACTIVITIES | $(33,539) |
| CASH FLOWS FROM FINANCING ACTIVITIES | |
| Proceeds of issuance of common stock | $60 |
| Additional paid-in capital | $59,923 |
| Notes payable - Current | $(20,000) |
| NET CASH PROVIDED BY FINANCING ACTIVITIES | $39,983 |
| NET INCREASE (DECREASE) IN CASH | $(91,907) |
| Cash and cash equivalents, beginning of period | $92,095 |
| Cash and cash equivalents, end of period | $188 |
| Supplementary disclosure of cash flow information: | |
| Cash paid: Interest expense | $-0- |
| Cash paid: Income taxes | $-0- |
</TABLE>
See accompanying notes to the financial statements.
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<PAGE>
DIT VENTURES, INC.
Notes to Financial Statements
March 31, 2001
NOTE 1: ORGANIZATION AND SUMMARY SIGNIFICANT
ACCOUNTING POLICIES
Organization and Purpose
The company was incorporated on February 25, 1981 in the state of Michigan,
U.S.A. under the name Clarks Fork Oil Company, Inc. On March 24, 1994, the
company changed its name to Paramount Casino Corporation. The company has
been substantially inactive since incorporation.
MEDIA888.COM was incorporated on June 1, 2000 in the state of Nevada and
authorized to do intrastate business in the state of California on June 13, 2000.
On August 14, 2000, the name of the corporation was changed to DIT Ventures, Inc.
Paramount changed its name to DIT Ventures, Inc. after the completion of merge
with DIT Ventures, Inc. (a corporation in the state of Nevada) on October 15, 2000.
On April 17, 2001, the corporation officially changed its name to MEDIA888, Inc.
It is mainly engaged in the business of website design & hosting, financial
information translating, and the network link of business to business and business
to consumers.
Going Concern
These financial statements have been prepared in accordance with accounting
principles applicable to a going concern, which assumes that the company will realize
its assets and discharges its liabilities in the ordinary course of business. At March
31, 2001, the company has a working capital and shareholders' deficiency of
$109,160 and has incurred losses in each period since incorporation. The ability of
the company to settle its liabilities as they come due and to fund its ongoing operations
is dependent upon the company's ability to obtain financing, new capital injection,
and ultimately achieve profitable operations from its business activities. Failure to
continue as a going concern would require a restatement of assets and liabilities on a
liquidation basis, which could differ materially from the going concern basis.
Subsequent to March 31, 2001, the company has received a written financing
proposal for an additional $500,000 of financing. The funds are expected to be received
on or before May 25, 2001. Management believes that these funds will enable the
company to continue in business at least until December 31, 2001.
Significant Accounting Policies
The company uses the accrual method of accounting for financial reporting and income
tax purpose by which assets and liabilities are recorded and revenues and expenses are
recognized in the period in which they are earned and incurred.
(See accompanying notes to the financial statements.)
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A. Use of Estimates
In preparing financial statements in conformity with generally accepted accounting
principles, management is required to make estimates and assumptions that affect certain
reported amounts and disclosures. Accordingly, actual results could differ from those
estimates.
B. Income Taxes
In February 1992, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 109 ("SFAS 109"), Accounting for Income Taxes.
SFAS 109 requires a change from the deferred method of accounting for income taxes
of APB Opinion No. 11 to the asset and liability method of accounting for income
taxes. Under the asset and liability method of SFAS 109, deferred tax assets and
liabilities are recognized for the future income tax consequences attributable to
differences between the financial statement carrying amounts of existing assets and
liabilities and their respective tax basis. 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 be recovered or settled.
C. Revenue Recognition and SAB 101 Impact
The company has reviewed Securities and Exchange Commission Staff Accounting
Bulletin ("SAB") No. 101, "Revenue Recognition in Financial Statements", and its
effect on the recognition of online service and other fee revenue. The company
believes the effect of SAB 101 on its historical fee revenue to be insignificant. DIT
Ventures has, however, adopted the provision for future licensing, web-hosting and
maintenance fee revenue. As such, any future license fee, web-hosting fee and
maintenance fee revenue will be recognized ratably over the period of the licensing,
web-hosting on maintenance agreements.
With the exception of the licensing fees, maintenance fees and web-hosting fees
mentioned above, other revenue generating agreements are on a fee for service
basis. These transaction revenues will be derived primarily from subscription fees,
banner ads, and news dissemination fees. In all of these revenue streams, revenue
will be recognized only when the services for which payment has been received
have been performed.
The company will record barter revenue only to the extent that specific objective
evidence exists demonstrating the fair value of benefits given and received. As a
result, most barter transactions will be judged to have no value or associated
revenue. To date advertising revenue which includes barter advertising, has
accounted for less than 1% of the company's revenue.
NOTE 2: CASH AND CASH EQUIVALENTS
<TABLE>
| Cash on hand | $211 |
| United National Bank #3026604 (Business Checking) | $(23) |
| Total | $188 |
</TABLE>
(See accompanying notes to the financial statements.)
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NOTE 3: PREPAID EXPENSES AND OTHER
<TABLE>
| Prepaid purchase - Domain names | $1,500 |
| $1,500 |
</TABLE>
NOTE 4: PROPERTY AND EQUIPMENT
Property and equipment additions are recorded at cost. Maintenance, repairs,
and renewals are expensed, and additions and improvements are capitalized.
Depreciation is computed using straight-line methods over the estimated useful
lives of asset ranging from 5-7 years.
<TABLE>
| Furniture and fixture | $11,954 |
| Computer - PC's | $27,721 |
| Computer - Servers | $37,670 |
| Office equipment | $1,052 |
| Computer software | $9,513 |
| Less accumulated depreciation and amortization | $(10,956) |
| Total Fixed Asset - Net | $76,954 |
</TABLE>
Website Development Costs
The company has implemented policy 002 of the Emerging Issues Task Force
with respect to its statements. As such, in statements after December 31, 2000,
computer software costs that are incurred in the preliminary project stage will be
expensed as incurred. Once an application reaches the development stage,
internal and external costs will be capitalized. Such costs include but are not
limited to external direct costs and services, payroll and payroll related costs,
and interest costs incurred while developing internal use software. All
capitalized costs will be amortized on a straight-line basis over four years.
<TABLE>
| Software Development Costs | $41,216 |
| Accumulated Depreciation | $(2,576) |
| Software Development Costs - Net | $38,640 |
</TABLE>
NOTE 5: NOTES PAYABLE AND RELATED PARTY TRANSACTION
<TABLE>
| Loan from Richard Manley - A | $20,000 |
| Loan from WGN Enterprises, Ltd. - B | $120,000 |
| Loan from WGN Enterprises, Ltd. - C | $20,000 |
| $160,000 |
</TABLE>
(See accompanying notes to the financial statements.)
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A. This loan was executed on July 12, 2000 with maturity date June 30, 2001.
Interest rate is stated at 8% per annum, compounded monthly.
B. This loan was executed on August 30, 2000 with maturity date June 30, 2001.
Interest rate is stated at 8% per annum, compounded monthly.
Upon maturity, the above two creditors have the right, at their options, to require
the company to convert all of the unpaid principal balance and accrued interest into
shares of the common stock of the company at a deemed price per share of $0.875.
In the event of a prepayment of Loan B, the creditor may only elect to convert a
lesser portion of its loan principal into common shares (up to $40,000) and must
accept the balance in cash.
C. This loan was executed on September 28, 2000 with a maturity date of June
30, 2001. Interest is calculated at 8% per annum.
NOTE 6: ACCRUED EXPENSES
<TABLE>
| Accounting fee | $8,133 |
| Advertising | $12,875 |
| Accrued salaries and wages | $20,406 |
| Alarm & security | $81 |
| Consulting fee | $5,000 |
| Dues and subscriptions | $10,677 |
| Internet fees | $1,117 |
| Interest expenses | $8,302 |
| Insurance | $637 |
| Legal fees | $13,188 |
| Licenses and fees | $2,000 |
| Outside service | $1,800 |
| Office expenses | $148 |
| Telephone | $224 |
| $84,588 |
</TABLE>
NOTE 7: OWNERSHIP
<TABLE>
| Authorized: | 70,000,000 common shares |
| 30,000,000 preferred shares | |
| Issued: | 12,000,697 common shares with a par value of $0.001 per |
share. Nil Preferred Shares with no voting policy or other
rights yet established.
</TABLE>
(See accompanying notes to the financial statements.)
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NOTE 8: COST OF REVENUE AND WEBSITE DEVELOPMENT COST
<TABLE>
| Website development cost: | |
| Internet fees-T1 | $2,614 |
| Salaries & wages | $16,313 |
| Payroll taxes | $1,351 |
| Depreciation | $8,385 |
| Website development cost-Total | $28,663 |
| Marketing costs | $16,750 |
| Domain name fee | $250 |
| $45,663 |
</TABLE>
NOTE 9: PROVISION FOR INCOME TAX
The company has a loss carry forward of $451,846 available to offset income
for the next 20 years for federal income tax purpose.
NOTE 10: LEASE COMMITMENT
The company leases its office space under one noncancelable operating lease.
The commencement date is June 1, 2000 and will expire on May 31, 2002.
Future minimum lease payments are as follows:
<TABLE>
| 31-Dec-01 | $25,333 |
| 31-May-02 | $14,074 |
| Total minimum lease payments | $39,407 |
</TABLE>
NOTE 11: LOSS PER SHARE
The calculations of loss per share in the information for the period ended March
31, 2001 is based on the weighted average number of common shares outstanding.
(See accompanying notes to the financial statements.)
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DIT VENTURES, INC.
Supplementary Schedule-Operating Expenses
March 31, 2001
| A. Marketing Expenses | $-0- |
| Total Marketing Expenses | $-0- |
| B. General and Administrative Expenses | |
| Accounting | $5,000 |
| Bank charge | $40 |
| Commission | $2,518 |
| Credit card fees | $33 |
| Depreciation | $2,576 |
| Dues and subscriptions | $11,987 |
| Entertainment | $84 |
| Equipment rental | $200 |
| Health and dental insurance | $1,696 |
| Legal & professional | $6,015 |
| Consulting fee | $15,000 |
| Licenses and fees | $6,000 |
| Office expense & supplies | $421 |
| Postage | $328 |
| Rent | $8,444 |
| Repairs and maintenance | $6 |
| Salaries and wages | $35,159 |
| Show & promotion | $100 |
| Outside service | $4,527 |
| Alarm & security | $162 |
| Taxes-payroll | $5,025 |
| Telephone | $926 |
| Utilities | $137 |
| Total General and Administrative Expenses | $106,384 |
| TOTAL OPERATION EXPENSES | $106,384 |
See accompanying notes to the financial statements.
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<PAGE>
EDWARD C. LEE, CPA
A Professional Corp.
9420 Telstar Avenue, Suite 101
El Monte, California 91731
Phone: (626) 453-8781
Fax: (626) 453-8785
May 21, 2001
Mr. Kenneth Kang Yeh, CEO/President
DIT Ventures, Inc.
9420 Telstar Avenue, Suite 211
El Monte, CA 91731
Re: Filing of Form 10-Q
Dear Mr. Yeh:
We have reviewed the financial statements of DIT Ventures, Inc. (DITV) for the quarter ended March 31, 2001. We hereby grant our consent for DITV to include our reviewed report (dated May 21, 2001) in DIT's filing of Form 10-Q.
Very truly yours,
/S/ EDWARD C. LEE
Edward C. Lee, CPA
El Monte, California
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