EXHIBIT 99.4
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BTSL Technologies Limited
Financial Statements at December 31st 2001.
Exhibit 99.4
Registration Number 347818
BTSL Technologies Limited
(A Development Stage Company)
Directors' Report and Financial Statements
For the period ended December 31, 2001
Exhibit 99.4 - Pg. 1
BTSL Technologies Limited
Financial Statements at December 31st 2001.
Company Information
Directors Tim Coburn
Padraig Maloney
Secretary Padraig Maloney
Company Number 347818
Registered Office 5 Eglinton St
Galway
Co.Galway
Auditors Keogh Condron
6c Liosban Business Park
Tuam Rd
Galway
Business Address 5 Eglinton St
Galway
Ireland
Exhibit 99.4 - Pg. 2
BTSL Technologies Limited
Financial Statements at December 31st 2001.
Contents
Page
Directors' Report 4-5
Auditors' Report 6-7
Balance Sheet 8
Statement of Operations & Deficit Accumulated
during Development Stage 9
Statement of Change in Shareholders Equity 10
Cashflow Statement 11
Notes to the Financial Statements 12-15
Exhibit 99.4 - Pg. 3
BTSL Technologies Limited
Financial Statements at December 31st 2001.
The directors present their report and the financial statements for
the period ended December 31, 2001.
Principal Activity
The principal activity of the company to carry on the business of a
holding and management company
Results And Dividends
The (loss)/profit for the period after providing for depreciation
and taxation amounted to US $ (424,407)
The directors do not recommend payment of a final dividend.
Directors
In accordance with the Articles of Association, Tim Coburn and
Padraig Maloney retire by rotation and, being eligible, offer
themselves for re-election.
Directors and their Interests
The directors who served during the period and their interests in
the company are as stated below:
Ordinary shares
2001
Tim Coburn 2,700
Padraig Maloney 2,700
There were no changes in their shareholdings between December 31,
2001 and the date of signing the financial statements.
Directors' Responsibilities
Company law requires the directors to prepare financial statements
for each financial period, which give a true and fair view of the
state of the affairs of the company and of the profit or loss of the
company for that period. In preparing these accounts the directors
are required to:
- - select suitable accounting policies and apply them consistently;
- - make judgements and estimates that are reasonable and prudent;
- - prepare the financial statements on the going concern basis unless
it is inappropriate to presume that the company will continue in
business.
- - state whether applicable accounting standards have been followed,
subject to any material departure disclosed and explained in the
financial statements.
The directors are responsible for keeping proper accounting records,
which disclose with reasonable accuracy at any time the financial
position of the company and to enable them to ensure that the
financial statements comply with the Companies Acts 1963 to 1999.
They are also responsible for safeguarding the assets of the company
and hence for taking reasonable steps for the prevention and
detection of fraud and other irregularities.
Exhibit 99.4 - Pg. 4
BTSL Technologies Limited
Financial Statements at December 31st 2001.
Auditors
The auditors, Keogh Condron, have indicated their willingness to
continue in office in accordance with the provisions of Section
160(2) of the Companies Act, 1963.
On behalf of the Board
Tim Coburn )
) Directors
Padraig Maloney )
Exhibit 99.4 - Pg. 5
BTSL Technologies Limited
Financial Statements at December 31st 2001.
Auditors' Report to the Shareholders of BTSL Technologies ltd (A
development stage company)
We have audited the financial statements on pages 8 to 11, covering
the period from 12th September 2001 to 31st December 2001 which have
been prepared under the historical cost convention and the
accounting policies set out on page 14.
Respective responsibilities of directors and auditors
As described on page 1 the company's directors are responsible for
the preparation of financial statements, which are required to be
prepared in accordance with applicable Irish Law and accounting
standards. Our responsibilities as independent auditors are
established in Ireland by statute, the Auditing Practices Board and
by our profession's ethical guidance.
We report to you our opinion as to whether the financial statements
give a true and fair view and are properly prepared in accordance
with the Irish statute comprising the Companies Acts, 1963 to 2001.
We also report to you whether in our opinion: Proper books of
account have been kept by the group; whether at the balance sheet
date, there exists a financial situation requiring the convening of
an extraordinary general meeting of the group ; and whether the
information given in the directors' report is consistent with the
financial statements. In addition, we state whether we have
obtained all the information and explanations necessary for the
purposes of our audit and whether the group's balance sheet and it's
profit and loss account are in agreement with the books of account.
We also report to you if, in our opinion, any information specified
by law regarding directors' remuneration and directors' transactions
is not given and, where, practicable, include such information in
our report.
Basis of opinion
We also report to you if, in our opinion, any information specified
by law regarding directors' remuneration and directors' transactions
is not given and, where, practicable, include such information in
our report.
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 from material misstatement,
whether caused by fraud or other irregularity or error. However, the
company's system of control is generally dependent on the close
involvement of the directors. The directors have provided assurances
as to the completeness of the account records, but independent
confirmation by us that all transactions were properly recorded was
not possible in many areas
In forming our opinion we also evaluated the overall adequacy of the
presentation of information in the financial statements.
Exhibit 99.4 - Pg. 6
BTSL Technologies Limited
Financial Statements at December 31st 2001.
Opinion
In our opinion the financial statements give a true and fair view of
the state of the company's affairs as at the 31 December 2001 and of
its loss for the period then ended and have been properly prepared
in accordance with the Companies Acts 1963 to 2001.
We have obtained all the information and explanations we consider
necessary for the purposes of our audit. In our opinion the company
has kept proper books of account. The financial statements are in
agreement with the books of account.
In our opinion the information given in the directors' report on
pages 4-5 are consistent with the financial statements.
The net assets of the company, as stated in the Balance Sheet on
page 9, are more than half of the amount of its called up share
capital and, in our opinion, on that basis there did not exist at 31
December 2001 a financial situation which under Section 40(1) of the
Companies (Amendment) Act 1983 may require the convening of an
extraordinary meeting of the company.
/s/Keogh Condron
Registered Auditors
6c Liosban Business Park
Tuam Rd
Galway
Exhibit 99.4 - Pg. 7
BTSL Technologies Limited
Financial Statements at December 31st 2001.
BALANCE SHEET
As of December 31, 2001
ASSETS
US$
---------
Current Assets:
Cash 28,915
Total Current Assets 28,915
Other Assets:
Patents 300,000
Less Patents Amortization (5,000)
Investments 115,000 410,000
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438,915
=========
LIABILITIES AND STOCKHOLDERS EQUITY
Current Liabilities:
Accrued Expenses: 281,352
Stockholders' equity:
Convertible Preferred Stock (Series A)
Authorized 10,000,000
Par Value $.00176964
43,426 shares issued and outstanding 768
Additional Paid in Capital 191,353
Common Stock,
Authorized 90,000,000 shares
Par value $ .00884828
20,000 shares issued and outstanding 178
Additional Paid in Capital 1,222,517
Deficit accumulated during the
Development stage (1,257,284)
---------
Total stockholders equity 157,532
---------
438,915
=========
Exhibit 99.4 - Pg. 8
BTSL Technologies Limited
Financial Statements at December 31st 2001.
STATEMENT OF OPERATIONS AND DEFICIT
ACCUMULATED DURING DEVELOPMENT STAGE
US$
---------
Revenue: 0.00
Expenses:
Research and development 846,994
General and administrative 410,290
---------
Net Loss (1,257,284)
Other Income 0.00
---------
Loss before income taxes (1,257,284)
Income taxes provision 0.00
---------
Net income (loss) (1,257,284)
=========
Exhibit 99.4 - Pg. 9
BTSL Technologies Limited
Financial Statements at December 31st 2001.
STATEMENT OF CHANGE IN SHAREHOLDERS EQUITY FROM
INCEPTION SEPTEMBER 12, 2001 TO DECEMBER, 2001
Additional Deficit Accumulated
Common Preferred Paid-In During the Total Stockholders
Shares Amount Shares Amount Capital Development Stage Equity
------ ------ ------ ------ ---------- ------------------- -------------------
Issuance of common
Stock Shares
issued 20,000 178 1,222,517 1,222,695
Issuance of
Convertible
Preferred Stock
Shares issued 43,426 768 191,533 192,121
Deficit
accumulated
during
development
stage (1,257,284) (1,257,284)
------ ------ ------ ------ ---------- ----------- -----------
Balance at
December 31, 2001 20,000 $ 178 43,426 $ 768 $1,413,870 $(1,257,284) $ 157,532
Exhibit 99.4 - Pg. 10
BTSL Technologies Limited
Financial Statements at December 31st 2001.
STATEMENT OF CASH FLOWS
FROM INCEPTION SEPTEMBER 12, 2001 TO DECEMBER 31, 2001
US$
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net income/(Loss) (1,257,284)
Non-cash expenses included in net income/(loss): 5,000
Accrued Expenses 281,383
Compensation and services for common stock 719,107
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Net cash provided (used) by operating activities 251,794
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of Patents (300,000)
Investment in Other Companies (115,000)
Net cash provided (used) by investing activities (415,000)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from Preferred Stock 192,121
----------
Net cash provided by financing activities 192,121
Net increase (decrease) in cash and
Cash equivalents 28,915
Cash and cash equivalents, beginning
of period 0.00
Cash and cash equivalents, end of period $ 28,915
==========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for income taxes 0.00
==========
Cash paid during the period for interest expense 0.00
==========
Exhibit 99.4 - Pg. 11
BTSL Technologies Limited
NOTES TO FINANCIAL STATEMENTS
FROM INCEPTION September 12, 2001 to December 31, 2001
1. BTSL Technologies Limited (A development Stage Company)
Notes to the Financial Statements
From Inception to December 31st 2001
BTSL Technologies Limited is an Irish Limited Company formed n Sept
2001, whose principal business is of acquisition and development of
proven technologies and businesses with a high potential for future
revenue and profits.
The initial focus is two technologies, Gasification and Oxygen
Generation.
a. Gasification: The gasification process converts any carbon-
containing material into a synthesis gas composed primarily of
carbon monoxide and hydrogen, which can be used as a fuel to
generate electricity or steam or used as a basic chemical
building block for a large number of uses in the petrochemical
and refining industries. Gasification adds value to low- or
negative-value feed stocks by converting them to marketable
fuels and products.
b. Oxygen Generation: Oxygen Generation is the process of
separating oxygen from air using a Pressure Swing Adsorption
(PSA) or Vacuum Swing Adsorption system. Oxygen Generators
have many uses in Medical (Hospital) and Industrial
applications.
BTSL acquired registered worldwide patents and the technology
rights in the areas of Gasification, Oxygen Generation and other
products from a Belgium company, Jarix Scrl that is owned and
managed by a European scientist, Mr. Jacques Ribesse. As part of
the acquisition contract for these patents Jarix Scrl has the
potential to earn 200,000 convertible preferred series B shares as
per certain performance criteria. Following the transaction with a
US Public Company these convertible preferred series B shares will
be in the capital of that Company.
These products will be manufactured in Ireland by two international
engineering manufacturing companies who have many years experience
of exporting products worldwide. BTSL will provide and operate a
turnkey solution for its customers.
BTSL entered into a contract for the processing of certain materials
using its proprietary Gasification technology. As part of this
contract a service Company has the potential to earn 1,000,000
convertible preferred series B shares as per certain performance
criteria. Following the transaction with a US Public Company these
convertible preferred series B shares will be in the capital of that
Company.
BTSL is in discussions with foreign governments that it is believed
will result in orders for the Company's Oxygen Generation equipment.
Exhibit 99.4 - Pg. 12
BTSL Technologies Limited
BTSL entered into an agreement for the acquisition of Graham Energy
of NV Inc. Graham Energy of NV Inc is an independent oil and gas
company controlling six oil and or gas fields, with 24 currently
producing wells; 50 additional wells that will be re-activated upon
completion of a work-over; 86 legally established, proven but
undeveloped off-set well locations; and 24 additional highly
researched, probable well locations. This agreement was subject to
BTSL Technologies Limited completing a transaction that would give
BTSL the ability to acquire the oil and gas assets for publicly
traded stock.On February 6th 2002 "SILK" announced that it had
purchased 100% of the Graham Energy of N V Inc for 4,000,000 shares
of "SILK" common stock.
BTSL had agreed to form four operating subsidiary Companies for
manufacture and sales of its products. These four subsidiaries were
subsequently formed on completion of the agreement with Silk
Botanical.com Inc.
On January 6th, 2002 BTSL completed a contract with a US public
company called Silk Botanical.com Inc. (OTCBB-SILK) for the sale of
certain "assets and business opportunities" in return for 20,000,000
shares from the public company. The transaction gave the
shareholders of BTSL Technologies Limited a majority of the issued
and outstanding common stock of "SILK." The Public Company "SILK"
then completed the acquisition of Graham Energy of NV Inc.
As a result of the Contract with "SILK" the assets and business
opportunities owned by BTSL Technologies were assigned to a newly
formed Irish Company, TecEnergy Limited. TecEnergy Limited is 100%
owned and will operate as a subsidiary of the US Public Company. The
four subsidiary companies required to operate the business were
subsequently formed as wholly owned subsidiaries of TecEnergy
Limited.
Under generally accepted accounting principles, the assets transferred
to "SILK" are the patents and the investments that were advanced to
"SILK," which were part of the acquisition transaction. The total
orders pending approval by foreign governments approximates US
$7,500,000.
The assets transferred to the public company include accrued operating
expenses related to the patents and development costs. These assets
will be part of the 10-QSB financials of the public company for the
quarter ending February 28, 2002.
Exhibit 99.4 - Pg. 13
BTSL Technologies Limited
2. Summary of Significant Accounting Policies
A. Cash and Cash Equivalents:
The company considers all money market funds and highly
liquid debt instruments with maturities of three months
or less when acquired to be cash equivalents.
B. Property and Equipment:
Property and Equipment is recorded principally at cost
less accumulated depreciation.
Depreciation is computed using the straight line method
under the estimated useful lives of the assets.
C. Use of Estimates:
The preparation of the financial statements in conformity
with generally accepted accounting principles requires
management to make extensive use of estimates and
assumptions that affect the reported amount of assets and
liabilities and disclosure of contingent assets and
liabilities and the reported amounts of revenue and
expenses. Significant estimates in these financial
statements include useful lives for depreciation and
amortization, fair values of financial instruments and
income taxes. Actual results could differ from these
estimates.
D. Adoption of Significant Accounting Polices:
Other Comprehensive Income:
The Company has adopted the provisions of Statement of
Financial Standards No. 130 ("SFAS No. 130"), "Reporting
Comprehensive Income." SFAS No. 130 establishes
standards for reporting comprehensive income and its
components in financial statements. Other comprehensive
income, as defined, includes all changes in equity during
a period from non-owner sources. To date, the company
has not had any transactions that are required to be
reported as comprehensive income.
Segment Information:
In June 1997, the Financial Accounting Standards Board,
"FASB") issued Statement of Financial Accounting
Standards No. 131 ("SFAS No. 131), "Disclosures about
segment of an Enterprise and Related Information." SFAS
No. 131 established standards for the way companies
report information about operating segments in annual
financial statements. It also established standards for
related disclosures about products and services,
geographic areas, and major customers. The disclosures
prescribed in SFAS No. 131 became effective for the year
ended December 31, 1998.
Business Combination:
SFAS 142 and SFAS 141, Business Combinations, are
designed to improve reporting and disclosure with respect
to goodwill and other acquired tangible assets. SFAS 141
eliminated the pooling of interests method as an
accounting option for business combination while SFAS 142
modified the purchase method of accounting by impairment
test. The FASB overcame several operation impediments to
non-amortization including: the reporting level at which
to conduct impairment reviews, consistency with SFAS 121
(Accounting for the impairment of long-lived assets) and
finite-lived goodwill. The emphasis will be on the fair
value measurements of assets and liabilities instead of
amortization.
Exhibit 99.4 - Pg. 14
BTSL Technologies Limited
The Company periodically evaluates the net realizable
value of long-lived assets, including property and
equipment, relying on a number of factors including
operating results, business plans, economic projections
and future cash flows. An impairment in the carrying
value of an asset is recognized when the fair value of
the asset is less than its carrying value.
E. Patents
Patents are valued at cost less accumulated amortization.
Amortization is calculated to write off the cost in equal
annual instalments over their estimated useful life of 15
years.
F. Research and development
Research expenditure is written off to income in the year
in which it is incurred.
G. Investments
Fixed asset investments are stated at cost less provision
for diminution in value.
Exhibit 99.4 - Pg. 15