EXHIBIT 99.1
------------
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF BRIGHTCUBE, INC. AND EXTREME
VELOCITY GROUP, INC.
We have audited the accompanying consolidated balance sheet of Extreme Velocity
Group, Inc. (the Company) as of December 20, 2000, and the related consolidated
statements of operations, shareholders' deficiency, and cash flows for the
period from January 1, 2000 through December 20, 2000 and the period from July
1, 1999 (Commencement of Operations) through December 31, 1999. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.
We conducted our audits in accordance with auditing principles generally
accepted in the United States of America. Those standards require that we plan
and perform our audits to obtain reasonable assurance about whether the
consolidated financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the consolidated financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall consolidated financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Extreme Velocity
Group, Inc. as of December 20, 2000, and the results of its operations and cash
flows for the period from January 1, 2000 through December 20, 2000 and the
period from July 1, 1999 (Commencement of Operations) through December 31, 1999
in conformity with accounting principles generally accepted in the United States
of America.
The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 1 to
the financial statements, the Company has an accumulated deficit of $3,458,500
as of December 20, 2000 and incurred a net loss of $3,124,100 for the period
from January 1, 2000 through December 20, 2000. Additionally, the Company has
negative working capital of $1,803,200 as of December 20, 2000. These conditions
raise substantial doubt about the Company's ability to continue as a going
concern. Management's plans regarding those matters are also described in Note
1. The consolidated financial statements do not include any adjustments relating
to the recoverability and classification of reported asset amounts or the amount
and classification of liabilities that might result from the outcome of this
uncertainty.
/s/ BDO Seidman, LLP
San Francisco, California
March 2, 2001
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EXHIBIT 99.1
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EXTREME VELOCITY GROUP, INC.
CONSOLIDATED BALANCE SHEET
December 20,
2000
--------------
ASSETS
CURRENT ASSETS:
Accounts receivable, net of allowance for doubtful
accounts of $29,000 $ 35,700
Inventory 179,700
Prepaid expenses and other current assets 102,500
--------------
TOTAL CURRENT ASSETS 317,900
PROPERTY AND EQUIPMENT, NET (NOTE 2) 165,200
OTHER ASSETS 53,600
--------------
TOTAL ASSETS $ 536,700
==============
LIABILITIES AND SHAREHOLDERS' DEFICIENCY
CURRENT LIABILITIES:
Bank overdraft $ 180,500
Accounts payable 362,000
Accrued expenses (Note 3) 37,900
Lines of credit due bank and related party (Note 6) 690,000
Due to related party (Note 10) 800,000
Note payable to Brightcube, Inc. (Note 10) 38,700
Note payable to minority shareholder (Note 10) 12,000
--------------
TOTAL CURRENT LIABILITIES 2,121,100
--------------
Commitments and Contingencies (Notes 4, 5 and 9)
SHAREHOLDERS' DEFICIENCY (Notes 7, 10 and 12)
Common stock, no par, 10,000,000 shares authorized, 1,064
shares issued and outstanding 1,874,100
Accumulated deficit (3,458,500)
--------------
TOTAL SHAREHOLDERS' DEFICIENCY (1,584,400)
--------------
TOTAL LIABILITIES & SHAREHOLDERS' DEFICIENCY $ 536,700
==============
See accompanying notes to consolidated financial statements.
7
EXHIBIT 99.1
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EXTREME VELOCITY GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
July 1, 1999
(Commencement
January 1, 2000 of Operations)
through through
December 20, December 31,
2000 1999
----------------- ---------------
REVENUES (Note 1):
Dealer network membership fees $ 873,900 $ -
Sales of product 492,400 -
----------------- ---------------
TOTAL REVENUES 1,366,300 -
Cost of Revenues (Note 9) 452,600 -
----------------- ---------------
GROSS PROFIT 913,700 -
----------------- ---------------
OPERATING EXPENSES:
Sales and marketing (Note 1 and 10) 1,772,400 99,100
General and administrative (Notes 4, 8 and 10) 2,126,500 235,300
----------------- ---------------
TOTAL OPERATING EXPENSES 3,898,900 334,400
----------------- ---------------
LOSS FROM OPERATIONS (2,985,200) (334,400)
----------------- ---------------
OTHER INCOME (EXPENSE):
Other income 4,200 -
Interest expense (Note 10) (42,100) -
Litigation settlement (Note 5) (101,000) -
----------------- ---------------
TOTAL OTHER INCOME (EXPENSE) (138,900) -
----------------- ---------------
NET LOSS $ (3,124,100) $ (334,400)
================= ===============
See accompanying notes to consolidated financial statements.
8
EXHIBIT 99.1
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EXTREME VELOCITY GROUP, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' DEFICIENCY
Common Stock
--------------------------- (Accumulated
Shares Amount Deficit) Total
================================================================================================================
JULY 1, 1999 (COMMENCEMENT OF OPERATIONS) - $ - $ - $ -
Issuance of common stock
for cash in December 1999 20 25,000 - 25,000
Issuance of common stock
for services in December 1999 20 25,000 - 25,000
Additional Contributions (Notes 7 and 10) 309,400 309,400
Net Loss (334,400) (334,400)
--------------------------- ------------ ------------
BALANCES, DECEMBER 31, 1999 40 359,400 (334,400) 25,000
Issuance of common stock
for services in January 2000 12 15,000 15,000
Issuance of common stock
for cash in March 2000 980 202,000 202,000
Issuance of common stock
for services in March 2000 32 5,000 5,000
Additional Contributions (Notes 7 and 10) - 1,292,700 1,292,700
Net Loss (3,124,100) (3,124,100)
--------------------------- ------------ ------------
BALANCES, DECEMBER 20, 2000 1,064 $ 1,874,100 $(3,458,500) $(1,584,400)
=========================== ============ ============
See accompanying notes to consolidated financial statements.
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EXHIBIT 99.1
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EXTREME VELOCITY GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
July 1, 1999
(Commencement
January 1, 2000 of Operations)
through through
December 20, December 31,
2000 1999
----------------- ---------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss $ (3,124,100) $ (334,400)
Adjustment to reconcile net loss to net cash used in operating
activities:
Depreciation and amortization 29,200 -
Allowance for doubtful accounts 29,000 -
Promotional activity funded by related party 600,000 -
Non-cash contributions for unreimbursed expenses 1,292,700 309,400
Common stock issued for services 20,000 25,000
Changes in operating assets and liabilities:
Accounts receivable (64,700) -
Inventory (179,700)
Prepaid expenses and other current assets (102,500) -
Accounts payable 362,000 -
Accrued expenses 26,600 -
----------------- ---------------
NET CASH USED IN OPERATING ACTIVITIES (1,111,500) -
----------------- ---------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (174,800) (17,000)
Acquisition of intangible assets (38,700) -
Other assets (6,200) -
----------------- ---------------
NET CASH USED IN INVESTING ACTIVITIES (219,700) (17,000)
----------------- ---------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Bank overdraft 180,500 -
Advances on lines of credit 690,000 -
Proceeds from related party loan 183,000 17,000
Proceeds from Brightcube loan 38,700 -
Proceeds from shareholder loan 12,000 -
Capital contributions 202,000 25,000
----------------- ---------------
NET CASH PROVIDED BY IN FINANCING ACTIVITIES 1,306,200 42,000
----------------- ---------------
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (25,000) 25,000
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 25,000 -
----------------- ---------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ - $ 25,000
================= ===============
See accompanying notes to consolidated financial statements.
10
EXHIBIT 99.1
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EXTREME VELOCITY GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
THE COMPANY
Extreme Velocity Group, Inc. ("EVG"), formerly Frameyourart.com, a California
corporation commenced operations on July 1, 1999 and was incorporated on March
6, 2000. EVG provides Internet and digital imaging services and solutions to
the art market. EVG's original focus was on developing its off-line
subscription based network of frame shops. EVG provides this network marketing
support and Internet solutions. In addition, EVG has expanded its offerings to
include other business-to-business art market websites and a proprietary line of
digital paper and ink.
The digital paper was developed by Advanced Media Products, Inc. ("AMP"). AMP
was incorporated on November 24, 1999 as a separate California corporation.
Operations did not commence until January of 2000. Al Marco, the majority owner
of EVG, is also the majority owner of Marco Fine Arts ("MFA"), a company which
provided a majority of the loans and capital contributions to EVG and AMP since
their commencement of operations (Notes 6 and 10).
On November 2, 2000, EVG issued 52 shares of its common stock to the
shareholders of AMP in exchange for all of the outstanding shares of AMP. Due
to the commonality of ownership, management and operations of the two companies,
the transaction has been accounted for as a combination of entities under common
control in a manner similar to a pooling of interests. Accordingly, the
accompanying financial statements of AMP and EVG have been presented as if the
companies had been merged for all periods presented. All inter-company accounts
and transactions have been eliminated. Any reference herein to "the Company"
includes EVG and AMP. Separate results of operations for the companies are as
follows:
2000 EVG AMP CONSOLIDATED
Revenues $ 873,900 $ 492,400 $ 1,366,300
Net loss (2,579,700) (544,400) (3,124,100)
1999 EVG AMP CONSOLIDATED
Revenues $ - $ - $ -
Net loss (334,400) - (334,400)
11
EXHIBIT 99.1
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BASIS OF PRESENTATION AND GOING CONCERN UNCERTAINTY
The accompanying financial statements have been prepared on a going concern
basis, which contemplates the realization of assets and the satisfaction of
liabilities in the normal course of business. As shown in the financial
statements, the Company had an accumulated deficit of $3,458,500 as of December
20, 2000 and incurred a net loss of $3,124,100 for the period from January 1,
2000 through December 20, 2000. Additionally, the Company has negative working
capital of $1,803,200 as of December 20, 2000.
These conditions give rise to substantial doubt about the Company's ability to
continue as a going concern. The financial statements do not include any
adjustments relating to the recoverability and classification of reported asset
amounts or the amount and classification of liabilities that might be necessary
should the Company be unable to continue as a going concern. The Company's
continuation as a going concern is dependent upon its ability to obtain
additional financing or refinancing as may be required and ultimately to attain
profitability. The Company is actively marketing its existing and new products,
which it believes will ultimately lead to profitable operations. Management
believes that after its acquisition by BrightCube, Inc. (Note 12), its available
funds will be sufficient to meet its anticipated needs for working capital,
capital expenditures and business operations through August 2001. However, no
assurances can be given that these available funds will meet the Company's cash
requirements in the future. After August 2001 the Company may need to seek
additional funding.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported 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 reporting period.
Actual results could differ from those estimates.
ACCOUNTS RECEIVABLE AND ALLOWANCE FOR DOUBTFUL ACCOUNTS
The Company grants credit to its customers after undertaking an investigation of
credit risk for all significant amounts. An allowance for doubtful accounts is
provided for estimated credit losses at a level deemed appropriate to adequately
provide for known and inherent risks related to such amounts. The allowance is
based on reviews of loss, adjustments history, current economic conditions and
other factors that deserve recognition in estimating potential losses. While
management uses the best information available in making its determination, the
ultimate recovery of recorded accounts receivable is also dependent upon future
economic and other conditions that may be beyond management's control.
INVENTORY
Inventory, consisting primarily of finished goods, is stated at the lower of
cost (first-in, first-out) or market.
12
EXHIBIT 99.1
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PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Depreciation is provided using the
straight-line method over the estimated economic useful lives of the assets,
generally ranging from three to five years.
INTANGIBLE ASSETS
Intangible assets, consisting of an Internet domain name and a trade name, are
included in Other Assets and stated at cost, net of accumulated amortization.
Amortization is computed by using the straight-line method over an estimated
life of three years. The net book value of these intangible assets at December
20, 2000 was $47,400, net of accumulated amortization of $2,600.
LONG-LIVED ASSETS
The Company periodically reviews its long-lived assets and certain identifiable
intangibles for impairment. When events or changes in circumstances indicate
that the carrying amount of an asset may not be recoverable, the Company writes
the asset down to its estimated fair value.
FAIR VALUES OF FINANCIAL INSTRUMENTS
The following methods and assumptions were used by the Company in estimating its
fair value disclosures for financial instruments:
ACCOUNTS RECEIVABLE AND ACCOUNTS PAYABLE
The carrying amount of accounts receivable and accounts payable approximates
fair value because of the short period of time to maturity.
SHORT-TERM DEBT
The fair value of short-term debt approximates cost because of the short period
of time to maturity and comparability to interest rates that are available to
the Company for loans with similar terms and remaining maturities.
REVENUE RECOGNITION AND CONCENTRATION
The Company's revenues are derived principally from the sale of subscriptions to
its dealer network and the sale of digital paper and ink. Subscription revenues
are derived from numerous customers located principally in metropolitan areas
throughout the United States and billed to credit cards on a monthly basis.
Generally the credit cards are billed at the end of a month of service.
Therefore, the revenue is considered fully earned and no deferred revenue is
recognized. The Company originally offered two plans for subscriptions; monthly
billings and a year prepaid. The number of prepaid yearly subscriptions was
very small with the vast majority of subscribers electing the monthly billings.
Product revenue from the sale of digital paper and ink are recognized upon
shipment, provided no significant obligations remain and collectibility is
likely. For the period from January 1, 2000 through December 20, 2000, the
Company had three customers that comprised 50%, 15% and 10% of total AMP sales
(18%, 5% and 4% of total consolidated revenues). Included in accounts
receivable at December 20, 2000 is $1,100 and $3,700 due from two of these
customers.
13
EXHIBIT 99.1
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ADVERTISING
The cost of advertising is expensed as incurred, except for certain promotional
art prints which are capitalized and amortized over the promotional period
(generally less than one year). Included in prepaid expenses and other current
assets at December 20, 2000 are promotional art prints totaling $100,000.
Advertising costs for the period from January 1, 2000 through December 20, 2000
and the period from July 1, 1999 (Commencement of Operations) through December
31, 1999 aggregated $1,772,400 and $99,100, respectively.
INCOME TAXES
The Company is recognized as an S Corporation for income tax purposes under the
terms of which the shareholders agree to include their respective share of the
taxable income of the Company in their individual tax returns.
NEW ACCOUNTING PRONOUNCEMENTS
In June 1998, the FASB issued Statement of Financial Accounting Standards (SFAS)
No. 133, Accounting for Derivative Instruments and Hedging Activities. SFAS No.
133 requires companies to recognize all derivatives contracts as either assets
or liabilities in the balance sheet and to measure them at fair value. If
certain conditions are met, a derivative may be specifically designated as a
hedge, the objective of which is to match the timing of gain or loss recognition
on the hedging derivative with the recognition of (i) the changes in the fair
value of the hedged assets or liability that are attributable to the hedged risk
or (ii) the earnings effect of the hedged forecasted transaction. For a
derivative not designated as a hedging instrument, the gain and loss is
recognized in income in the period of change. SFAS No. 133, as amended by SFAS
No. 137, is effective for all fiscal years beginning after June 15, 2000.
Historically, the Company has not entered into derivatives contracts either to
hedge existing risks or for speculative purposes. Accordingly, the Company does
not expect adoption of the new standard on January 1, 2001 to affect its
financial statements.
In December 1999, the SEC staff released Staff Accounting Bulletin (SAB) No.
101, Revenue Recognition in Financial Statements, which provides interpretive
guidance on the recognition, presentation, and disclosure of revenue in
financial statements. SAB 101 must be applied to financial statements no later
than the quarter ended September 30, 2000. There was no material impact from the
application of SAB 101 on the Company's financial position, results of
operations, or cash flows.
In March 2000, the FASB issued Interpretation No. 44 (FIN 44), Accounting for
Certain Transactions Involving Stock Compensation, an interpretation of APB
Opinion No. 25. FIN 44 clarifies the application of Opinion No. 25 for (a) the
definition of an employee for purposes of applying Opinion No. 25, (b) the
criteria for determining whether a plan qualifies as a non-compensatory plan,
(c) the accounting consequences of various modifications to the terms of a
previously fixed stock option or award, and (d) the accounting for an exchange
of stock compensation awards in a business combination. FIN 44 became effective
July 2, 2000, but certain conclusions cover specific events that occur after
either December 15, 1998, or January 12, 2000. FIN 44 did not have a material
impact on the Company's financial position, results of operations, or cash
flows.
14
EXHIBIT 99.1
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NOTE 2. PROPERTY AND EQUIPMENT
Property and equipment consists of the following:
December 20, 2000
Office equipment $ 7,200
Furniture and fixtures 26,300
Computers and computer equipment 58,500
Leasehold Improvements 99,800
------------------
191,800
Less accumulated depreciation 26,600
------------------
$ 165,200
==================
NOTE 3. ACCRUED EXPENSES
A summary of accrued expenses follows:
December 20, 2000
Vacation $ 12,900
Sales Tax payable 2,000
Salaries and wages 11,700
Domain name payable 11,300
------------------
$ 37,900
==================
NOTE 4. LEASE COMMITMENTS
LEASES
The Company leases its facility and certain equipment under operating leases
which expire on December 2004 and August 2003, respectively. The facility is
leased from the Company's majority shareholder, Al Marco (Note 10), and requires
the Company to pay certain maintenance and operating expenses, such as
utilities, property taxes and insurance costs. Rent expense related to these
operating leases for the period from January 1, 2000 through December 20, 2000
and the period from July 1, 1999 (Commencement of Operations) through December
31, 1999 was $148,000 and $35,700, respectively.
15
EXHIBIT 99.1
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A summary of future minimum lease payments required under non-cancelable leases
with terms in excess of one year follows:
Years ending December 31,
2001 $ 158,200
2002 165,700
2003 168,900
2004 173,600
------------------
Total future minimum lease payments $ 666,400
==================
NOTE 5. LITIGATION SETTLEMENT
On December 7, 2000, the Company and one of its minority shareholders entered
into a settlement agreement with a vendor which provided for the payment of
$26,000 by the Company and $75,000 by one of the Company's minority shareholders
for a release of all claims relating to a trade secret infringement lawsuit.
Since the Company reimbursed the minority shareholder for his portion of the
cash settlement, the entire $101,000 has been recorded in Other Expense during
the period from January 1, 2000 through December 20, 2000.
NOTE 6. DEBT AGREEMENTS
The Company maintains a $250,000 revolving line of credit with a bank and a
second $440,000 line of credit for the Company's benefit, which is maintained by
MFA. These lines are secured by all of the Company's assets, including accounts
receivable, inventory and intangible assets and are personally guaranteed by Al
Marco. The $250,000 line of credit accrues interest at 1.375% over the lenders
prime rate (9.5% at December 20, 2000) and the $440,000 line of credit accrues
at 1% over the prime rate. The lines were fully withdrawn as of December 20,
2000 with a consolidated balance of $690,000. As of December 20, 2000, the
weighted average interest rate was 10.57%. In connection with the purchase of
the Company by BrightCube, Inc. ("BrightCube") on December 20, 2000 (Note 12),
BrightCube assumed and refinanced the entire $690,000 loan. Under the
refinanced terms, the $690,000 loan is due in twenty-four monthly principal
payments of $28,800 plus interest at the prime rate plus 1.25% through December
2002. The refinanced terms also require that BrightCube maintain minimum cash
balances of at least 1.75 times the current principal balance of the loan.
Should the cash balance fall below the minimum cash requirements an amount equal
to the principal balance will become restricted.
16
EXHIBIT 99.1
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NOTE 7. COMMON STOCK
The Company authorized 1,000,000 shares of no-par value common stock on March 6,
2000. On August 22, 2000, the Company amended their Articles of Incorporation
for an increase in authorized shares from 1,000,000 to 10,000,000. The 1,064
shares issued during the period from July 1, 1999 through December 20, 2000
reflect the Company's stock register on a post-AMP merger basis. Included in
the statements of shareholders' deficiency during the period from January 1,
2000 through December 20, 2000 and the period from July 1, 1999 (Commencement of
Operations) through December 31, 1999 are actual cash contributions totaling
$202,000 and $25,000, respectively, with the additional contributions
representing the Company's expenses paid for directly by MFA and non-cash
contributions (Note 10).
NOTE 8. INCOME TAXES
The Company has elected to be an S Corporation for tax purposes, under the terms
of which the shareholders agree to include their respective share of the taxable
income of the Company in their individual income tax return. As a result, no
federal income tax is imposed on the Company. California recognizes Federal S
Corporation provisions, but imposes a tax on the Company's taxable income at a
reduced rate. Because the Company has incurred a taxable loss since its
commencement of operations, the income tax provision for each period presented
consists of the California State minimum tax of $800 for each affiliate, which
has been included in selling, general and administrative expenses.
NOTE 9. MAJOR SUPPLIERS
For the period from January 1, 2000 through December 20, 2000, AMP had two
suppliers that comprised approximately 70% and 15% of total purchases. Included
in accounts payable at December 20, 2000 is $11,700 due to one of these vendors.
Management believes other vendors could supply similar products, but on terms
that may not be as favorable as currently being offered. A change in suppliers
could cause a delay in availability of products and possible loss of sales,
which could adversely affect operating results. The cost of revenues included
in the Statements of Operations for the period from January 1, 2000 through
December 20, 2000 relates principally to product sales made by AMP.
17
EXHIBIT 99.1
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NOTE 10. RELATED PARTY TRANSACTIONS
Since its commencement of operations, the Company has received non-interest
bearing loans from MFA totaling $800,000 at December 20, 2000 including $600,000
in promotional art prints. In connection with the purchase of the Company by
BrightCube on December 20, 2000 (Note 12), BrightCube repaid the entire amount
due MFA.
On December 11, 2000 the Company received a $38,700 loan from BrightCube for
working capital purposes.
The Company received a $12,000 loan from one of its minority shareholders in
November 2000. The entire balance of the loan was repaid on January 10, 2001.
The following related party transactions have been recorded as capital
contributions as the liabilities for these items have been assumed by Al Marco,
the CEO and majority shareholder of EVG and/or MFA:
During the period from January 1, 2000 through December 20, 2000, the Company
received approximately $396,300 in promotional art prints from MFA, of which
$100,000 is on hand at December 20, 2000 for use in future promotions and is
included in prepaid expenses and other current assets.
In connection with the line of credit that MFA maintains for the Company's
benefit (Note 6), $24,600 of interest was paid by MFA on behalf of the Company
during the period from January 1, 2000 through December 20, 2000.
Four unrelated companies have rendered consulting services to EVG, totaling
$312,700 and $79,700 in 2000 and 1999, respectively, that were not compensated.
Al Marco has agreed to provide payment separate from EVG.
Tony Marco, brother of Al Marco, provided human resource, administration and
operational services totaling $96,000, of which $80,000 and $16,000 pertained to
the period from January 1, 2000 through December 20, 2000 and for the period
from July 1, 1999 (Commencement of Operations) through December 31, 1999,
respectively. He was not compensated for these services and Al Marco has agreed
to provide payment separate from EVG.
Al Marco, who owns the building occupied by EVG, has contributed rent in the
amount of $142,800 and $35,700 for the period from January 1, 2000 through
December 20, 2000 and for the period from July 1, 1999 (Commencement of
Operations) through December 31, 1999, respectively (Note 4).
Al Marco contributed services estimated at $150,000 during the period from
January 1, 2000.
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EXHIBIT 99.1
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NOTE 11. STATEMENT OF CASH FLOWS
During the period from January 1, 2000 through December 20, 2000, the Company
paid $18,100 for interest, and $1,600 for income taxes. During the period from
July 1, 1999 (Commencement of Operations) through December 31, 1999, no cash was
paid for interest nor income taxes.
NOTE 12. MERGER AGREEMENT
On December 20, 2000, 100% of the Company's common stock was purchased by
BrightCube for 18,192,600 shares of BrightCube restricted common stock of which
3,208,600 shares were placed in a twelve-month escrow account as security for
the indemnification obligations of the former EVG shareholders. In addition,
BrightCube agreed to assume and pay an $800,000 liability of EVG to MFA and
certain lines of credit aggregating $690,000 (Note 6).
19