BALANCE SHEET

(Snapshot on certain date)

as of  May 30, 2001

OPERATING STATEMENT

(a/k/a Profit & Loss Statement or P&L)

(Results of operations over a certain time period)

for 5 months ending May 30, 2001

Assets

Income

Cash & bank accounts

100,000

Fees

500,000

Equipment

100,000

Royalties

500,000

Trademark & goodwill

100,000

Net sales of merchandise

500,000

Land & buildings

100,000

Accounts receivable

100,000

     Total assets

500,000

     Total income

1,500,000

Liabilities

Expenses

Notes & loans payable

10,000

Payroll

200,000

Accounts payable

10,000

Equipment rent & repairs

200,000

Contract obligations

10,000

Building rent & interest

200,000

Taxes withheld

10,000

Accounting & legal

200,000

     Total liabilities

-40,000

 Insurance

200,000

Travel

200,000

     Total expenses

1,200,000

Net Worth (EQUITY) includes:

Beginning equity

160,000

460,000

Net Income (PROFIT/LOSS)  before:

-taxes,

-dividends to shareholders,

-distributions to partners/members

300,000

Net income current period

300,000

Ending equity

460,000

BUSINESS ENTITY CHOICE ISSUE: Who gets the EQUITY in case of:

     1. Dissolution

     2. Sale

     3. Death

BUSINESS ENTITY CHOICE ISSUES:

     1. Who gets allocated the profit or loss for tax purposes and how much?

     2. Who gets the distributions and dividends and how much?