EX-99.1 2 v117505_ex99-1.htm
EXHIBIT 99.1
 
Financial Statements of Intelligent Digital Systems, LLC
 
REPORT OF INDEPENDENT AUDITORS

The Members
Intelligent Digital Systems, LLC

We have audited the accompanying balance sheet of Intelligent Digital Systems, LLC as of December 31, 2007 and the related statements of income and members’ capital and cash flows for the year then ended. 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. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements. An audit includes examining, on a test basis, evidence supporting the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statements 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 Intelligent Digital Systems, LLC at December 31, 2007 and the results of their preparations and cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States.


January 28, 2008


Perlson, Touhy & Company LLP
North Massapequa, NY
 

 
Intelligent Digital Systems, LLC
 
 
 
 
Balance Sheets
At
 
At
 
 
December 31,
2007
 
March 31,
2008
 
 
(audited)
 
(unaudited)
 
Current Assets
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
5,217
 
$
2,777
 
Accounts Receivable
 
38,874
 
 
3,185
 
Inventory
 
44,155
 
 
20,123
 
Prepaid Expenses
 
1,150
 
 
-
 
Total Current Assets 
 
89,396
 
 
26,085
 
 
 
 
 
 
 
 
Property and Equipment, net
 
300
 
 
225
 
 
 
 
 
 
 
 
Total Assets 
 
89,696
 
 
26,310
 
 
 
 
 
 
 
 
Current Liabilities
 
 
 
 
 
 
Accounts payable
 
1,093
 
 
15,000
 
Long term liabilities
 
15,000
 
 
 
 
 
 
 
 
 
 
 
Member's capital
 
73,603
 
 
10,502
 
 
 
 
 
 
 
 
Total liabilites and member's capital 
$
89,696
 
$
26,310
 
 
 
 
 
 
 
 
Intelligent Digital Systems, LLC
 
 
 
 
 
 
Statements of Operations
 
 
 
 
 
 
 
 
For the twelve months ended
 
 
For the three months ended
 
 
 
December 31,
2007
(audited)
 
 
March 31,
2008
(unaudited)
 
 
 
 
 
 
 
 
Revenues - net
$
131,260
 
$
9,918
 
 
 
 
 
 
 
 
Cost of revenues
 
130,716
 
 
63,849
 
 
 
 
 
 
 
 
Gross margin
 
544
 
 
(53,931
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating expenses
 
337,585
 
 
17,303
 
 
 
 
 
 
 
 
Loss from operations
 
(337,041
)
 
(71,234
)
 
 
 
 
 
 
 
Other (income) expenses
 
 
 
 
 
 
Debt conversion expense
 
 
 
 
-
 
Interest income
 
(12
)
 
-
 
Interest expense
 
 
 
 
-
 
Miscellaneous income
 
 
 
 
-
 
-
 
(12
)
 
-
 
 
 
 
 
 
 
 
Net Profit (Loss)
$
(337,029
)
$
(71,234
)
 
 
 

 
 
Intelligent Digital Systems, LLC
For the twelve months ended
 
For the three months ended
 
Statements of Cash Flows
December 31,
2007
 
March 31,
2008
 
 
(audited)
 
(unaudited)
 
 
 
 
 
 
Cash flows from operating activities
 
 
 
 
Net loss
$
(337,029
)
$
(71,234
)
Adjustment to reconcile net loss to net cash
 
 
 
 
 
 
used by operating activities:
 
 
 
 
 
 
Depreciation
 
1,865
 
 
75
 
Effects of changes in operating assets and liabilities
 
 
 
 
 
 
 Accounts receivable
 
32,261
 
 
35,689
 
 Inventories
 
37,843
 
 
24,032
 
 Prepaid payroll taxes
 
(1,150
)
 
1,150
 
 Accounts payable
 
466
 
 
(1,093
)
 Payroll taxes payable
 
(5,137
)
 
808
 
 
 
 
 
 
 
 
Net cash used by operating activities
 
(270,881
)
 
(10,573
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash flows from financing activities
 
 
 
 
 
 
Contributed capital by members
 
267,667
 
 
8,133
 
 
 
 
 
 
 
 
Net decrease in cash and cash equivalents
 
(3,214
)
 
(2,440
)
Net increase in cash and cash equivalents
 
-
 
 
-
 
 
 
 
 
 
 
 
Cash and cash equivalents, beginning of year
 
8,431
 
 
5,217
 
 
 
 
 
 
 
 
Cash and cash equivalents, end of period
$
5,217
 
$
2,777
 

See notes to financial statements


INTELLIGENT DIGITAL SYSTEMS, LLC
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2007

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNT POLICIES

Description of Business
Intelligent Digital Systems, LLC (the “Company”), is a developer and distributor of digital video recording equipment. The company has an office in West Islip, New York.

Inventories
Inventories are stated at the lower of cost or market on a first-in, first-out basis.
 


Property and Equipment
Property and equipment are stated at cost and are depreciated using the straight-line method over the estimated useful lives of the respective assets, which range from 3 to 7 years. Leasehold improvements are stated at cost and are depreciated using the straight-line method over the shorter of the lease term or estimated useful life of the asset. Expenditures for major renewals and improvements are capitalized, while repairs and maintenance that do not extend the useful life of such assets are charged to expense as incurred. The cost of assets sold or retired and the related accumulated depreciation are removed from the accounts with any resulting gain or loss included in net income (loss). Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

Income Taxes
Under the provisions of the Internal Revenue Code, the Company, is a limited liability company and is not directly subject to federal or state income taxes. The results of its operations are includable in the individual tax returns of its members, therefore no provision for income tax expense has been included in the accompanying financial statements. There are no significant differences between the tax basis and the reported amounts of assets and liabilities.

Revenue Recognition
The company recognizes revenue from product sales upon shipment to the customer.

Use of Estimates
The preparation of the audited financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities from the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates.

NOTE 2 - ACCOUNTS RECEIVABLE

Accounts receivable are presented without a reserve for bad debt since the entire balance has been collected subsequent to the balance sheet date.

NOTE 3 - DUE TO RELATED ENTITY

The Company owes a related entity $15,000. The advance is non-interest bearing.