CALL NOW AMERICA PREPAID COMPANY, L.L.C. (A LIMITED LIABILITY COMPANY) FINANCIAL STATEMENTS MARCH 31, 2004 CALL NOW AMERICA PREPAID COMPANY, L.L.C. (A LIMITED LIABILITY COMPANY) FINANCIAL STATEMENTS MARCH 31, 2004 INDEX TO FINANCIAL STATEMENTS PAGE(S)

CURRENT ASSETS
Cash and cash equivalents		$	12,800
Accounts receivable			8,325
Inventory			15,440
Total current assets			36,565
TOTAL ASSETS		$	36,565
LIABILITIES AND MEMBERS' EQUITY
CURRENT LIABILITIES
Accounts payable		$	35,915
Total current liabilities			35,915
MEMBERS' EQUITY			650
TOTAL LIABILITIES AND MEMBERS' EQUITY		$	36,565

REVENUES		$	21,125
COST OF SALES			20,475
GROSS PROFIT			650
NET INCOME		$	650

 

The accompanying notes are an integral part of these financial statements.

 

 

 

 

 

 

 

 

 

Call Now America Prepaid Company, L.L.C. was formed on May 3, 2003 as a Florida limited liability company. The Company purchases prepaid calling cards from manufacturers then resells them at a markup to wholesalers.

The Company considers all highly liquid debt instruments and other short-term investments with an initial maturity of three months or less to be cash or cash equivalents. There were no cash equivalents as of March 31, 2004.

The Company maintains cash and cash equivalents balances at financial institutions that are insured by the Federal Deposit Insurance Corporation up to $100,000. There were no uninsured cash balances as of March 31, 2004.

The Company is treated as a partnership for federal and state income tax purposes. Consequently, federal and state income taxes are not payable by, or provided for by the Company. Members are taxed individually on their shares of the Company’s earnings. The Company’s net income or loss is allocated among the members in accordance with the regulations of the Company.

The preparation of 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 disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during this reported period. Actual results could differ from those estimates.

 

 

The Company records its transactions under the accrual method of accounting whereby income gets recognized when the services are rendered and collection is reasonably assured.

The carrying amount reported in the balance sheets for cash and cash equivalents, accounts payable and accrued expenses approximate fair value because of the immediate or short-term maturity of these financial instruments.

In June 2001, the FASB issued Statement No. 142 “Goodwill and Other Intangible Assets”. This statement addresses financial accounting and reporting for acquired goodwill and other intangible assets and supersedes APB Opinion No. 17, Intangible Assets. It addresses how intangible assets that are acquired individually or with a group of other assets (but not those acquired in a business combination) should be accounted for in financial statements upon their acquisition. This Statement also addresses how goodwill and other intangible assets should be accounted for after they have been initially recognized in the financial statements. The Company reported no goodwill at March 31, 2004.

 

In August 2001, the FASB issued SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets” (“SFAS 144”). This statement addresses financial accounting and reporting for the impairment or disposal of long-lived assets. The new guidance resolves significant implementation issues related to SFAS 121. “Accounting for the impairment of long-lived assets to be disposed of.” SFAS 144 is affected for fiscal years beginning after December 21, 2001. Currently, the Company is assessing but has not determined how the adoption of SFAS 144 will impact its financial position and results of operation.

In May 2003, the FASB issued SFAS Statement No. 150, “Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity”. This Statement establishes standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity. It requires that an issuer classify a financial instrument that is within its scope as a liability (or an asset in some circumstances). This statement is effective for financial instruments entered into or modified after May 31, 2003, and otherwise is effective at the beginning of the first interim period beginning after June 15, 2003, except for mandatorily redeemable financial instruments of nonpublic entities, if applicable. It is to be implemented by reporting the cumulative effect of a change in an accounting principle for financial instruments created before the issuance date of the Statement and still existing at the beginning of the interim period of adoption. The adoption of this statement did not have a significant impact on the Company’s results of operations or financial position.

 

On April 19, 2004 The Company’s assets were acquired by Snap2 Corporation in a stock-for-assets acquisition. As part of the Asset Purchase Agreement (the Agreement) The Purchaser acquired all assets of The Seller including (1) all contracts and purchase orders entered into by the Seller as of the Agreement date, (2) all contracts and purchase orders entered into by the Seller prior to the closing date, and (3) the Seller’s distribution channel. The distribution channel was purported at the time of sale to possess existing business relationships with more than 300,000 retail locations.

In exchange for all the assets of the Seller, the Purchaser conveyed 3,000,000 shares of its common stock worth $1,620,000 under the United States Securities and Exchange Commission Rule 144, which regulates the timing and quantity of shares of the Purchaser that can be sold by the Seller. As part of The Agreement, the Seller was granted the right to purchase an additional 2,000,000 shares of the Purchaser in two separate transactions of 1,000,000 shares each, governed as follows, per the language of the Agreement:

Seller shall have the right to purchase 1,000,000 shares of Snap2 Corporation’s restricted common stock at $0.25 per share upon the Purchaser successfully acquiring 25,000 sales locations utilizing the assets purchased in this agreement. Additionally, Seller shall have the right to purchase an additional 1,000,000 shares of Snap2 Corporation’s restricted common stock at $0.25 per share upon the Purchaser successfully acquiring an additional 25,000 sales locations (total of 50,000) utilizing the assets purchased in this agreement.