Campuslive Incorporated
[A Development Stage Company]
FINANCIAL STATEMENTS
December 31, 2002
[WITH INDEPENDENT AUDITORS' REPORT]
Campuslive Incorporated
[A Development Stage Company]
Table of Contents
Page
------
Independent Auditors' Report . . . . . . . . . . . . . . . . . . . . . 1
Balance Sheet - December 31, 2002. . . . . . . . . . . . . . . . . . . 2
Statements of Stockholders' Equity/(Deficit) for the period
from Inception [May 1, 2001] through December 31, 2002 . . . . . . . . 3
Statements of Operations for the periods ended December
31, 2002 and 2001, and for the period from Inception
[May 1, 2001] through December 31, 2002. . . . . . . . . . . . . . . . 4
Statements of Cash Flows for the periods ended December
31, 2002 and 2001 and for the period from Inception
[May 1, 2001] through December 31, 2002. . . . . . . . . . . . . . . . 5
Notes to Financial Statements. . . . . . . . . . . . . . . . . . . 6 - 8
INDEPENDENT AUDITORS' REPORT
Board of Directors and Stockholders
Campuslive Incorporated
Salt Lake City, Utah
We have audited the accompanying balance sheet of Campuslive Incorporated
[a development stage company] as of December 31, 2002, and the related
statements of stockholders' equity/(deficit), operations, and cash flows
for the periods ended December 31, 2002 and 2001, and for the period from
inception [May 1, 2001] through December 31, 2002. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based
on our audit.
We conducted our audit in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we
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. We
believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Campuslive Incorporated
as of December 31, 2002, and the results of operations and cash flows for
the periods ended December 31, 2002 and 2001, and for the period from
inception [May 1, 2001] through December 31, 2002, in conformity with
accounting principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that
Campuslive Incorporated will continue as a going concern. As discussed in
Note D to the financial statements, the Company has accumulated losses and
has not had significant operations since inception. These issues raise
substantial doubt about its ability to continue as a going concern.
Management's plans in regard to these matters are also described in Note D.
The financial statements do not include any adjustment that might result
from the outcome of this uncertainty.
/S/ Mantyla McReynolds
October 15, 2003
Salt Lake City, Utah
Campuslive Incorporated
[A Development Stage Company]
Balance Sheet
December 31, 2002
<Table>
ASSETS
Current Assets:
Cash $ 0
-----------
Total Current Assets 0
Property & Equipment - Note F 19,500
Less: Accumulated Depreciation (5,850)
-----------
13,650
Intangible assets, net -Note F 125,000
TOTAL ASSETS $ 138,650
===========
LIABILITIES AND STOCKHOLDERS' EQUITY/(DEFICIT)
Current Liabilities:
Payable to related parties - Note E $ 175,000
-----------
Total Current Liabilities 175,000
-----------
Total Liabilities 175,000
Stockholders' Equity/(Deficit) - Notes B & E
Common stock, $.001 par value;
authorized 20,000,000 shares; issued
and outstanding 2,680,500 2,681
Additional paid-in capital 222,319
Deficit accumulated during development stage (261,350)
-----------
Total Stockholders' Equity/(Deficit) (36,350)
-----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY/(DEFICIT) $ 138,650
===========
</Table>
See accompanying notes to financial statements
2
Campuslive Incorporated
[A Development Stage Company]
Statements of Stockholders' Equity/(Deficit)
For the period from Inception [May 1, 2001] through December 31, 2002
<Table>
<Caption>
Deficit
Accumulated Total
During Stockholders'
Number of Common Paid-in Development Equity/
Shares Stock Capital Stage (Deficit)
-------------------------------------------------------------
Balance, May 1, 2001 0 $ 0 $ 0 $ 0 $ 0
Issued stock for assets
and expenses, at $.02
per share 2,500,000 2,500 42,000 44,500
Issued stock for cash
in private placement
at $1 per share 120,000 120 119,880 120,000
Net loss for period
ending 12/31/2001 (43,617) (43,617)
-------------------------------------------------------------
Balance,
December 31, 2001 2,620,000 2,620 161,880 (43,617) 120,883
Issued shares for cash
in private placement at
$1 per share 60,500 61 60,439 60,500
Net loss for year ended
12/31/2002 (217,733) (217,733)
-------------------------------------------------------------
Balance,
December 31, 2002 2,680,500 $ 2,681 $ 222,319 $ (261,350) $ (36,350)
=============================================================
</Table>
See accompanying notes to financial statements
3
Campuslive Incorporated
[A Development Stage Company]
Statements of Operations
For the periods ended December 31, 2002 and 2001
and for the Period from Inception [May 1, 2001] through December 31, 2002
<Table>
<Caption>
From
Inception
[5/1/01]
through
2002 2001 12/31/02
----------- ----------- -----------
Revenues $ 0 $ 0 $ 0
General and Administrative Expenses 217,733 43,617 261,350
----------- ----------- -----------
Net Loss from Operations (217,733) (43,617) (261,350)
----------- ----------- -----------
Net Loss Before Income Taxes (217,733) (43,617) (261,350)
Provision for Income Taxes - Notes A&C 0 0 0
----------- ----------- -----------
Net Loss $ (217,733) $ (43,617) $ (261,350)
=========== =========== ===========
Loss Per Share $ (0.08) $ (0.02) $ (0.11)
=========== =========== ===========
Weighted Average Shares Outstanding 2,670,721 2,050,902 2,422,386
=========== =========== ===========
</Table>
See accompanying notes to financial statements
4
Campuslive Incorporated
[A Development Stage Company]
Statements of Cash Flows
For the years ended December 31, 2002 and 2001
and for the Period from Inception [May 1, 2001] through December 31, 2002
<Table>
<Caption>
For the
period from
Inception
[5/1/01]
through
2002 2001 12/31/02
----------- ----------- -----------
Cash Flows Provided by/
(Used for) Operating Activities
- -------------------------------
Net Loss $ (217,733) $ (43,617) $ (261,350)
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation & amortization 87,233 43,617 130,850
Increase in income taxes payable 0 0 0
Expenses paid on behalf of Company by
shareholder 0 0 0
Increase in accrued liabilities 0 0 0
----------- ----------- -----------
Net Cash Provided by/(Used for)
in Operating Activities (130,500) 0 (130,500)
Cash Flows Used for Investing Activities
- ----------------------------------------
Purchased property & equipment 0 0 0
----------- ----------- -----------
Net Cash Used in Investing Activities 0 0 0
Cash Flows Provided by Financing Activities
- -------------------------------------------
Decrease in loans from shareholder (50,000) 0 (50,000)
Issued stock for cash 60,500 120,000 180,500
----------- ----------- -----------
Net Cash Provided by Financing Activities 10,500 120,000 130,500
Net Increase(decrease) in Cash (120,000) 120,000 0
Beginning Cash Balance 120,000 0 0
----------- ----------- -----------
Ending Cash Balance 0 120,000 0
=========== =========== ===========
Supplemental Disclosure Information:
Cash paid during the year for interest 0 0 0
Cash paid during the year for income taxes 0 0 0
Acquired intellectual property for debt 0 250,000 250,000
Issued stock for debt and property 0 44,500 44,500
</Table>
See accompanying notes to financial statements
5
Campuslive Incorporated
[A Development Stage Company]
Notes to Financial Statements
December 31, 2002
NOTE A Summary of Significant Accounting Policies
------------------------------------------
Company Background
------------------
The Company incorporated under the laws of the State of Delaware
on May 1, 2001. The Company was organized to acquire
intellectual property and products developed and marketed to
introduce innovative learning technologies, digital CD-ROM
yearbooks and recruitment products to students and educational
communities throughout America. Campuslive Incorporated, is in
the development stage and is commencing its planned principal
operations.
The financial statements of the Company have been prepared in
accordance with U. S. generally accepted accounting principles.
The following summarizes the more significant of such policies:
Statement of Cash Flows
-----------------------
Cash is comprised of cash on hand or on deposit in banks. The
Company has $0 as of December 31, 2002.
Property & Equipment
--------------------
Property and equipment are stated at cost. Depreciation is
provided using the straight-line basis over the useful lives of
the related assets. Expenditures for maintenance and repairs are
charged to expense as incurred.
Income Taxes
------------
The Company applies Statement of Financial Accounting Standard
(SFAS) No. 109, "Accounting For Income Taxes," which requires the
asset and liability method of accounting for income taxes. The
asset and liability method requires that the current or deferred
tax consequences of all events recognized in the financial
statements are measured by applying the provisions of enacted tax
laws to determine the amount of taxes payable or refundable
currently or in future years. (See Note C below).
Net Loss Per Common Share
-------------------------
Net loss per common share is based on the weighted average number
of shares outstanding.
Revenue Recognition
-------------------
The Company recognizes revenue when earned, which is when
products or services are rendered to the customer. No revenue
has been recognized through December 31, 2002.
6
Campuslive Incorporated
[A Development Stage Company]
Notes to Financial Statements
December 31, 2002
NOTE A Summary of Significant Accounting Policies [continued]
------------------------------------------
Use of Estimates in Preparation of Financial Statements
-------------------------------------------------------
The preparation of financial statements in conformity with U. S.
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.
NOTE B Issuance of Common Shares
-------------------------
As part of the Company's organization, 2,500,000 shares of common
stock were issued to its founder in exchange for contributed
assets and as reimbursement for expenses paid on behalf of the
Company. These shares have been valued at approximately $0.02
per share for a total value of $44,500.
In December, 2001, the Company issued 120,000 shares of common
stock as part of a private placement memorandum. These shares
were issued at $1.00 per share for cash.
In early 2002, an additional 60,500 shares of common stock were
issued under the private placement memorandum, for cash at $1.00
per share.
NOTE C Accounting for Income Taxes
---------------------------
No provision has been made in the financial statements for income
taxes because the Company has accumulated losses from operations
since inception. Any deferred tax benefit arising from the
operating loss carried forward is offset entirely by a valuation
allowance since it is currently not likely that the Company will
be sufficiently profitable in the near future to take advantage
of the losses.
<Table>
<Caption>
Deferred tax assets Balance Tax Rate
-----------------------------------------------------------------
Federal Loss carryforward
(expires through 2022) $261,350 $39,203 15%
Valuation allowance (39,203)
--------
Deferred tax asset $ 0
========
The allowance has increased $32,660 from $6,543 as of December
31, 2001.
</Table>
7
Campuslive Incorporated
[A Development Stage Company]
Notes to Financial Statements
December 31, 2002
NOTE D Liquidity
---------
The Company has accumulated losses since inception totaling
$261,350, and has no operations through December 31, 2002.
Financing for the Company's limited activities to date has been
provided primarily by the issuance of stock and by advances from
related parties(see NOTE E). The Company's ability to achieve a
level of profitable operations and/or additional financing
impacts the Company's ability to continue as it is presently
organized. Management continues to develop its planned principal
operations. Should management be unsuccessful in its operating
activities, the Company may experience material adverse effects.
NOTE E Related Party Transactions
--------------------------
A stockholder has purchased assets or paid expenses on behalf of
the Company either personally or through other companies within
his control. The Company has settled some of these obligations
through the issuance of common stock as described in Note B. The
Company has recorded a loan payable as of December 31, 2002, at
$175,000. This loan is unsecured, non-interest bearing, and is
payable on demand.
NOTE F Property & Equipment
--------------------
The Company currently has one class of assets as follows:
<Table>
<Caption>
Asset Class Cost Depreciation Method/Life
-----------------------------------------------------------------
Electronic equipment $ 19,500 $ 5,850 SL/5 years
Intellectual property $ 250,000 $ 125,000 SL/3 years
</Table>
Depreciation and amortization expense was $87,233 and $43,617 for
the years ended December 31, 2002 and 2001.
8