Exhibit 99.2
STUDIO STORE DIRECT, INC.
(a) Interim Financials for the period January 01, 2008 to June 05, 2008 and
January 01, 2007 to June 05, 2007.
Note: The financial statements that follow for the period January 01, 2008
to June 05, 2008 and January 01, 2007 to June 05, 2007 have not been
audited by our independent auditors.
STUDIO STORE DIRECT, INC.
FINANCIAL STATEMENTS
5 JUNE 2008
The accompanying notes are an integral part of these consolidated financial
statements.
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STUDIO STORE DIRECT, INC.
BALANCE SHEETS
AS AT 5 JUNE 2008 AND 31 DECEMBER 2007
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5 June 31 December
2008 2007
(Unaudited) (Audited)
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ASSETS
Current Assets
Cash $ 47,788 $ 337
Accounts receivable 4,500 4,500
Advances to related party 76,798 76,798
Capitalized production costs 86,546 63,669
Prepaid and sundry assets 2,842 5,284
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Total Current Assets 218,474 150,588
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Long Term Assets
Property and equipment, net 28,113 32,456
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Total Assets $ 246,587 $ 183,044
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LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities
Accounts payable and accrued liabilities $ 88,615 $ 93,101
Deferred revenue 296,000 200,000
Advances from director 58,921 42,000
Advances from related party 40,000 20,000
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Total Liabilities 483,536 355,101
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Stockholders' Deficit
Preferred Stock, $.001 par value, 20,000,000 shares -- --
authorized, none issued and outstanding
Common Stock, $.001 par value; 80,000,000 shares
authorized, 3,270,250 (31 December 2007 - 3,270,250)
issued and outstanding 3,270 3,270
Additional paid-in capital 536,830 536,830
Accumulated deficit (777,049) (712,157)
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Total Stockholders' Deficit (236,949) (172,057)
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Total Liabilities and Stockholders' Deficit $ 246,587 $ 183,044
==================================================================================
The accompanying notes are an integral part of these consolidated financial
statements.
15
STUDIO STORE DIRECT, INC.
STATEMENTS OF LOSS AND COMPREHENSIVE LOSS
FOR THE PERIOD FROM 1 JANUARY 2008 TO 5 JUNE 2008
AND FOR THE PERIOD FROM 1 JANUARY 2007 TO 5 JUNE 2007
(Unaudited)
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Period Period
Ended 5 Ended 5
June 2008 June 2007
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REVENUE $ 692 $ 25,000
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EXPENSES
Selling, general and administrative 61,243 191,012
Depreciation 4,342 4,322
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TOTAL EXPENSES 65,585 195,334
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LOSS FROM OPERATIONS, NET LOSS AND COMPREHENSIVE LOSS $ (64,893) $(170,334)
================================================================================
The accompanying notes are an integral part of these consolidated financial
statements.
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STUDIO STORE DIRECT, INC.
STATEMENTS OF CASH FLOWS
FOR THE PERIOD FROM 1 JANUARY 2008 TO 5 JUNE 2008 AND
FOR THE PERIOD FROM 1 JANUARY 2007 TO 5 JUNE 2007
(Unaudited)
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Period Ended Period Ended
5 June 5 June
2005 2007
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CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (64,893) $(170,334)
Adjustment to reconcile net earnings to net cash
provided by (used in) operating activities
Depreciation 4,342 4,322
Changes in operating assets and liabilities:
Accounts receivable -- (9,710)
Capitalized production costs (22,877) (49,776)
Prepaid and sundry assets 2,442 --
Accounts payable and accrued liabilities (4,484) 27,525
Deferred revenue 96,000 100,000
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NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES 10,530 (97,973)
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CASH FLOWS FROM INVESTING ACTIVITIES -- --
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CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of capital stock -- 70,000
Advances from director 16,921 20,000
Advances from (to) related parties 20,000 (40,292)
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NET CASH PROVIDED BY FINANCING ACTIVITIES 36,921 49,708
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NET INCREASE (DECREASE) IN CASH 47,451 (48,265)
CASH, BEGINNING OF PERIOD 337 74,146
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CASH, END OF PERIOD $ 47,788 $ 25,881
================================================================================
The accompanying notes are an integral part of these consolidated financial
statements.
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STUDIO STORE DIRECT, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD FROM 1 JANUARY 2008 TO 5 JUNE 2008
(Unaudited)
1. NATURE OF OPERATIONS
Studio Store Direct, Inc. ("the Company") was incorporated in the state of
California in 2004. The Company is in the business of producing
infomercials and provides consulting services.
2. BASIS OF PRESENTATION
The accompanying unaudited interim financial statements have been prepared
in accordance with accounting principles generally accepted in the United
States of America for interim financial information. Accordingly, they do
not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. In the
opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included.
Operating results for the period from 1 January 2008 to 5 June 2008 are not
necessarily indicative of the results that may be expected for the year
ending 31 August 2008. For further information, refer to the financial
statements and footnotes thereto for the year ended 31 December 2007.
3. GOING CONCERN
The Company's financial statements are presented on a going concern basis,
which contemplates the realization of assets and satisfaction of
liabilities in the normal course of business. The Company has experienced
losses from operations since inception that raise substantial doubt as to
its ability to continue as a going concern.
The Company's existence is dependent upon management's ability to develop
profitable operations and resolve its liquidity problems. Management
anticipates the Company will attain profitable status and improve its
liquidity through additional equity investment in the Company.
The financial statements do not include any adjustments to reflect the
possible future effects on the recoverability and classification of assets
or the amounts and classification of liabilities that may result from the
possible inability of the Company to continue as a going concern.
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STUDIO STORE DIRECT, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD FROM 1 JANUARY 2008 TO 5 JUNE 2008
(Unaudited)
4. CAPITALIZED PRODUCTION COSTS
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For The Period
From 1 January For The Year
2008 To 5 Ended 31
June December
2008 2007
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Opening unamortized balance $ 63,669 $ 13,893
Production costs incurred 22,877 74,794
Amortization of capitalized production costs -- (25,018)
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Closing unamortized balance $ 86,546 $ 63,669
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All capitalized production costs relate to projects in development. The
Company expects 100% of the balance of capitalized production costs will be
amortized within the next year.
5. PROPERTY AND EQUIPMENT
The components of property and equipment are as follows:
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Net
Accumulated Net 31 December
Cost Depreciation 5 June 2008 2007
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Furniture and fixtures $ 16,468 $ (5,068) $ 11,400 $ 12,410
Equipment 25,459 (11,095) 14,364 16,548
Leasehold improvements 8,030 (5,681) 2,349 3,498
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$ 49,957 $(21,844) $ 28,113 $ 32,456
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6. ADVANCES TO (FROM) RELATED PARTIES
The Company periodically makes advances to related parties. These advances
are unsecured, non interest bearing with no formal terms of repayment. As
of 5 June 2008, advances to related parties amounted to $76,798 (31
December 2007 - $76,798). These advances were made to (from) companies
controlled by the spouse of a director and shareholder of the Company.
7. ADVANCES FROM DIRECTOR
These advances are unsecured, non interest bearing with no formal terms of
repayment.
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8. COMMITMENT AND CONTINGENCY
The Company leases office space from an unrelated third-party under a
non-cancelable operating lease expiring in 2009. Future minimum lease
payments are $14,652 for the remainder of the 31 December 2008 fiscal year
and $4,884 for the fiscal year ended 31 December 2009.
The Company is a defendant in a lawsuit from a complaint filed in the State
of Nevada on 27 October 2008, whereby the plaintiff has requested relief in
excess of $60,000 for an alleged material breach of contract. The Company
maintains that the claim is frivolous and has also filed a counterclaim for
damages. The Company therefore believes no accrual is necessary in the
financial statements.
9. FINANCIAL INSTRUMENTS
At 5 June 2008, the carrying amounts of cash, accounts receivable, accounts
payable, advances from director and advances to (from) related parties
approximate their fair values due to the short-term maturities of these
instruments.
10. SUPPLEMENTAL CASH FLOW INFORMATION
During the periods ended 5 June 2008 and 2007 the Company paid no interest
or income taxes.
11. SUBSEQUENT EVENT
On 6 June 2008, the Company entered into a Stock for Stock Exchange
Agreement (the "Exchange Agreement") with Red Rock Pictures Holdings, Inc.
("Red Rock").
Pursuant to the Exchange Agreement, the Company acquired 11,000,000
restricted common shares of Red Rock in exchange for all the issued and
outstanding shares of the Company. Further, the Company became a wholly
owned subsidiary of Red Rock.
(C) Pro Form Financial Information.