Audited Finacial Statements =========================== NATIONAL CAPITAL FREENET INCORPORATED Balance Sheet December 31, 1995, with comparative figures for 1994 --------------------------------------------------------------------------- 1995 1994 --------------------------------------------------------------------------- Assets Cash $ 95,885 $ 52,467 Amounts receivable 5,000 27,747 Prepaid expenses 601 - ___________________________ 101,486 80,214 Equipment and software: Computer equipment 113,830 75,421 Systems software 36,909 36,909 Telecommunications equipment 83,753 80,644 Business equipment 6,033 - --------------------------------------------------------------------------- 240,525 192,974 Less accumulated depreciation 99,211 44,534 --------------------------------------------------------------------------- 141,314 148,440 --------------------------------------------------------------------------- $242,800 $228,654 --------------------------------------------------------------------------- Liabilities and Surplus Liabilities: Accounts payable and accrued liabilities 16,481 $ 39,034 Deferred contributions (note 3) 53,581 67,671 Surplus 172,738 121,949 --------------------------------------------------------------------------- $ 242,800 $ 228,654 --------------------------------------------------------------------------- See accompanying notes to financial statements. On behalf of the Board: ______________________ Director ______________________ Director <-------------------> NATIONAL CAPITAL FREENET INCORPORATED Statement of Revenue, Expenses and Suprlus Year ended December 31, 1995, with comparative expenses for 1994 ------------------------------------------------------------------------------ 1995 1994 ------------------------------------------------------------------------------ Revenue: Donations $ 175,941 $ 160,177 Government grants (note 2) 105,000 52,500 Fundraising 81,390 40,951 Deferred contributions (note 3) 23,290 15,983 Promotional items 5,992 2,973 Public access cost recoveries 530 2,738 Conference (note 4) - 48,272 ---------------------------------------------------------------------- 392,143 323,594 Expenses: Telecommunications 69,076 71,604 Administration and professional fees 67,352 32,179 Systems administration 57,459 49,449 Depreciation 54,677 34,327 Fundraising 53,652 29,615 Office staff and supplies 31,217 44,753 Promotional items 6,113 2,515 Public access 1,086 428 Public events 722 968 Conference - 48,019 --------------------------------------------------------------- 341,354 313,857 ----------------------------------------------------------------------- Excess of revenue over expenses 50,789 9,737 Surplus, beginning of year 121,949 112,212 ----------------------------------------------------------------------- Surplus, end of year $ 172,738 $ 121,949 ----------------------------------------------------------------------- See accompanying notes to financial statements < =============================> NATIONAL CAPITAL FREENET INCORPORATED Notes to Financial Statements Year ended December 31, 1995 ------------------------------------------------------------------------------ National Capital FreeNet Incorporated is a non-profit organization, the aims and objectives of which are to establish and operate a community based computer network to store, access and exchange information between individuals and organizations in the national capital region. The Company was incorporated on September 29, 1992 under the Canada Corporations Act as a non-profit organization without share capital within the meaning of the Income Tax Act (Canada) and accordingly is exempt from income tax. 1. Significant accounting policies: These financial statements have been prepared in accordance with generally accepted accounting principles. The significant accounting policies are summarized as follows: (a) Equipment and software: Equipment and systems software which is purchased is recorded at cost. Contributed equipment and software is recorded as an asset at fair value at the date of contribution. Contributed equipment and software is recognized as revenue at an amount equal to the related depreciation on those assets. Depreciation is provided on the straight-line basis using an annual rate of 25%. (b) Revenue recognition: Government grants provided for specific purposes are recognized as revenue in the period in which the related expenses are incurred. Unrestricted government grants are recognized as revenue when received. (c) Contributed services: Contributed services are recognized when a fair value can be reasonably estimated and when the services would otherwise have been purchased. 2. Government grants: Grants have been obtained from the following sources: ------------------------------------------------------------------------------ 1995 1994 ------------------------------------------------------------------------------ Ontario Ministry of Economic Development and Trade (Ontario Network Infrastructure Program) $ 15,000 $ 50,000 Regional Municipality of Ottawa-Carleton 90,000 - Industry Canada - 2,500 ------------------------------------------------------------------------------ $ 105,000 $ 52,500 ------------------------------------------------------------------------------ 3. Deferred contributions: Deferred contributions relate to the unrecognized portion of contributed equipment and software. The changes in the deferred contributions balance for the year are as follows: ------------------------------------------------------------------------------ 1995 1994 ------------------------------------------------------------------------------ Balance, beginning of year $ 67,671 $ 34,388 Add contributed equipment and software 9,200 49,266 Less amount recognized as revenue (23,290) (15,983) ------------------------------------------------------------------------------ Balance, end of year $ 53,581 $ 67,671 ------------------------------------------------------------------------------ 4. Conference: During 1994, the Company held the Canadian Community Networks Conference on behalf of Telecommunities Canada. In 1995, Telecommunities Canada assumed the responsibility for the conference. -- Sheila C. Alder Administrative Coordinator National Capital FreeNet / Libertel de la Capitale nationale