Common use of Financial Statements; Liabilities; Accounts Receivable; Inventories Clause in Contracts

Financial Statements; Liabilities; Accounts Receivable; Inventories. (a) SCHEDULE 4.08(A) contains true and complete copies of unaudited ----------------- Financial Statements with respect to Spectrum and its business as of and for the year ended December 31, 2002. All of such Financial Statements present fairly the financial condition and results of operations of Spectrum for the dates or periods indicated thereon. All of such Financial Statements have been prepared in accordance with GAAP applied on a consistent basis throughout the periods indicated. Within 60 days of the Closing, Spectrum shall provide SILVA BAY with audited Financial Statements as of and for the years exxxx December 31, 2001 and 2002 (the "POST-CLOSING AUDIT") and such other financial information requested ------------------ by SILVA BAY to enable SILVA BAY to file a Form 10-SB with the Securitxxx xnd Exchange Commxxxxxn with respect to the Merger. (b) Except for (i) the liabilities reflected on Spectrum's December 31, 2002 balance sheet included with the Financial Statements attached as SCHEDULE -------- 4.08(A), (ii) trade payables and accrued expenses incurred since December 31, ------ 2002 in the ordinary course of business, none of which are material, (iii) executory contract obligations under (x) Contracts listed on SCHEDULE 4.14, ------------- and/or (y) Contracts not required to be listed on SCHEDULE 4.14, and (iv) the ------------- liabilities set forth in SCHEDULE 4.08(B) attached hereto, Spectrum does not --------------- have any material liabilities or obligations (whether accrued, absolute, contingent, known or unknown). (c) Except as otherwise set forth in SCHEDULE 4.08(C), the accounts ---------------- receivable reflected on the December 31, 2002 balance sheet included in the Financial Statements referenced in Section 4.08(a) and all of Spectrum's accounts receivable arising since December 31, 2002 (the "BALANCE SHEET DATE") ------------------ arose from bona fide transactions in the ordinary course of business, and the goods and services involved have been sold, delivered and performed to the account obligors, and no further filings (with governmental agencies, insurers or others) are required to be made, no further goods are required to be provided and no further services are required to be rendered in order to complete the sales and fully render the services and to entitle Spectrum to collect the accounts receivable in full. Except as set forth in SCHEDULE 4.08(C), no such ---------------- account has been assigned or pledged to any other person, firm or corporation, and, except only to the extent fully reserved against, as set forth in the December 31, 2002 balance sheet included in such Financial Statements, no defense or set-off to any such account has been asserted by the account obligor or exists. (d) Except as otherwise set forth in SCHEDULE 4.08(D), Spectrum's ---------------- Inventory as of the Closing Date shall consist of items of quality, condition and quantity consistent with normal seasonally-adjusted Inventory levels of Spectrum and be usable and saleable in the ordinary and usual course of business for the purposes for which intended, except to the extent written down or reserved against on the Closing Date Balance Sheet. Except as otherwise set forth in SCHEDULE 4.08(D), Spectrum's Inventory is valued on Spectrum's books of ---------------- account in accordance with GAAP (on an average cost basis) at the lower of cost or market.

Financial Statements; Liabilities; Accounts Receivable; Inventories. (a) SCHEDULE 4.08(A) contains On or before the Effective Time of the Mergers, the Company shall have delivered to GenuTec true and complete copies of (i) the unaudited ----------------- Financial Statements with respect to Spectrum statements of income, balance sheet and statements of cash flows of the Company and its business as of and for the year years ended December October 31, 2002. 2003, October 31, 2004 and the eight months ended June 30, 2005 (as adjusted to give effect to the Asset and Liability Transfers); and (ii) the unaudited statements of income, balance sheets and statements of cash flows of SBN as of and for the years ended March 31, 2004, March 31, 2005 and the three months ended June 30, 2005 (as adjusted to give effect to the Asset and Liability Transfers) (collectively, the “Unaudited Financial Statements”). (b) All of such Unaudited Financial Statements present fairly the financial condition and results of operations of Spectrum the Company for the dates or periods indicated thereon. All To the best knowledge of such the Stockholder and the Company, the Unaudited Financial Statements have been prepared in accordance with GAAP applied on a consistent basis throughout are capable of being audited following the periods indicated. Within 60 days Effective Time of the ClosingMerger, Spectrum shall provide SILVA BAY with without qualification, by Stonefield Xxxxxxxxx & Company, or other independent accountants engaged by GenuTec. Such Unaudited Financial Statements, once audited Financial Statements as of and for the years exxxx December 31, 2001 and 2002 by such accountants (the "POST-CLOSING AUDIT"“Audited Financial Statements”) shall not differ in any material respects from the assets, liabilities, stockholder’s equity, revenues and such other financial information requested ------------------ by SILVA BAY to enable SILVA BAY to file a Form 10-SB with profits, as set forth on the Securitxxx xnd Exchange Commxxxxxn with respect to the MergerUnaudited Financial Statements. (bc) Except for (i) the liabilities reflected on Spectrum's December 31, 2002 the Company’s unaudited balance sheet included as of June 30, 2005 that gives pro-forma effect to (x) the Asset and Liability Transfers and (y) the elimination of all Assets and Liabilities of the Company, other than a minimum of $221,775 cash on hand and equipment with a basis of approximately $204,000 (the Financial Statements “June 30, 2005 Balance Sheet”) attached as SCHEDULE -------- 4.08(ASchedule 4.8(c), (ii) trade payables and accrued expenses incurred since December 31July 1, ------ 2002 2005 in the ordinary course of business, none of which are material, (iii) executory contract obligations under (x) Contracts listed on SCHEDULE 4.14Schedule 4.13, ------------- and/or (y) Contracts not required to be listed on SCHEDULE 4.14Schedule 4.13, and (iv) the ------------- liabilities set forth in SCHEDULE 4.08(BSchedule 4.8(c) attached hereto, Spectrum the Company does not --------------- have any material liabilities or obligations (whether accrued, absolute, contingent, known known, unknown or unknown)otherwise, and whether or not of a nature required to be reflected or reserved against in a balance sheet. (cd) Except as otherwise set forth in SCHEDULE 4.08(CSchedule 4.8(d), the accounts ---------------- receivable reflected on the December 31June 30, 2002 balance sheet included in the Financial Statements referenced in Section 4.08(a) 2005 Balance Sheet and all of Spectrum's the Company’s accounts receivable arising since December 31June 30, 2002 2005 (the "BALANCE SHEET DATE"“Balance Sheet Date”) ------------------ arose from bona fide transactions in the ordinary course of business, and the goods and services involved have been sold, delivered and performed to the account obligors, and no further filings (with governmental agencies, insurers or others) are required to be made, no further goods are required to be provided and no further services are required to be rendered in order to complete the sales and fully render the services and to entitle Spectrum the Company to collect the accounts receivable in full. Except as set forth in SCHEDULE 4.08(CSchedule 4.8(d), no such ---------------- account has been assigned or pledged to any other person, firm or corporation, and, except only to the extent fully reserved against, against as set forth in the December 31June 30, 2002 balance sheet included in such Financial Statements2005 Balance Sheet, no defense or set-off to any such account has been asserted by the account obligor or exists. (de) Except as otherwise set forth in SCHEDULE 4.08(DSchedule 4.8(e), Spectrum's ---------------- the Inventory of the Company as of the Closing Date shall consist of items of a quality, condition and quantity consistent with normal seasonally-adjusted Inventory levels of Spectrum the Company and be usable and saleable in the ordinary and usual course of business for the purposes for which intended, except to the extent written down or reserved against on the Closing Date Balance SheetJune 30, 2005 balance sheet. Except as otherwise set forth in SCHEDULE 4.08(DSchedule 4.8(e), Spectrum's the Company’s Inventory is valued on Spectrum's the Company’s books of ---------------- account in accordance with GAAP (on an average cost basis) at the lower of cost or market, and the value of obsolete materials, materials below standard quality and slow-moving materials have been written down. (f) Except as provided under the provisions of the agreements described in Schedule 4.8(f), the Company has and will have as of the Closing Date legal and beneficial ownership of its Intellectual Properties and other assets, free and clear of any and all Liens.

Financial Statements; Liabilities; Accounts Receivable; Inventories. (a) SCHEDULE 4.08(AParent has delivered to Company Stockholders (i) contains the consolidated audited accounts of the Parent for the fiscal years ended December 31, 2006 and 2007 true and complete copies of the audited balance sheet, statement of operations and statement of cash flows and (ii) copies of the unaudited ----------------- Financial Statements with respect to Spectrum balance sheet, statement of operations and its business statement of cash flows of the Parent as of at June 30, 2008 and for the year six month period then ended (the “Parent Financial Statements”). (b) Buyer has delivered to Company Stockholders (i) audited accounts of Buyer for the fiscal years ended December 31, 20022006 and 2007 true and complete copies of the audited balance sheet, statement of operations and statement of cash flows and (ii) copies of the unaudited balance sheet, statement of operations and statement of cash flows of Buyer as at June 30, 2008 and for the six month period then ended (the “Buyer’s Financial Statements”) and are attached hereto as Schedule 5.7(a). Buyer’s Fiancial Statements have been prepared as per U.S. GAAP (as the Parent) and Hungarian accounting standards and translated to US GAAP applied on a consistent basis throughout the periods indicated. All of such Buyers Financial Statements present fairly the financial condition and results of operations of Spectrum the Buyer for the dates or periods indicated thereon. All of such Financial Statements have been prepared in accordance with GAAP applied on a consistent basis throughout the periods indicated. Within 60 days of the Closing, Spectrum shall provide SILVA BAY with audited Financial Statements as of and for the years exxxx December 31, 2001 and 2002 (the "POST-CLOSING AUDIT") and such other financial information requested ------------------ by SILVA BAY to enable SILVA BAY to file a Form 10-SB with the Securitxxx xnd Exchange Commxxxxxn with respect to the Merger. (bc) Except for (i) security interests and liens on the liabilities reflected on Spectrum's December 31, 2002 balance sheet included with assets of the Financial Statements attached as SCHEDULE -------- 4.08(A), Buyer to secure indebtedness of the Parent and/or the Buyer not to exceed $250,000 in the aggregate; (ii) trade payables and accrued expenses incurred since December 31, ------ 2002 in the ordinary course of business, none of which are material, (iii) executory contract obligations under (x) Contracts listed on SCHEDULE 4.14Schedule 5.12, ------------- and/or (y) Contracts not required to be listed on SCHEDULE 4.14Schedule 5.12, and (iv) the ------------- liabilities set forth in SCHEDULE 4.08(BSchedule 5.7(c) and the (v) the Parent Loan Balance set forth in Schedule 2.2 attached hereto, Spectrum the Buyer does not --------------- have any material liabilities or obligations (whether accrued, absolute, contingent, known or unknownotherwise, and whether or not of a nature required to be reflected or reserved against in a balance sheet in accordance with GAAP). The Parent shall be solely responsible to retire the aforesaid indebtedness secured by the liens on the assets of the Buyer. (cd) Except as otherwise set forth in SCHEDULE 4.08(CSchedule 5.7(d), the accounts ---------------- receivable reflected on the December 31June 30, 2002 2008 balance sheet included in the Buyers Financial Statements referenced in this Section 4.08(a5.7(a) and all of Spectrum's the Buyer’s accounts receivable arising since December 31June 30, 2002 2008 (the "BALANCE SHEET DATE"“Balance Sheet Date”) ------------------ arose from bona fide transactions in the ordinary course of business, and the goods and services involved have been sold, delivered and performed to the account obligors, and no further filings (with governmental agencies, insurers or others) are required to be made, no further goods are required to be provided and no further services are required to be rendered in order to complete the sales and fully render the services and to entitle Spectrum the Buyer to collect the accounts receivable in full. Except as set forth in SCHEDULE 4.08(CSchedule 5.7(d), no such ---------------- account has been assigned or pledged to any other person, firm or corporation, and, except only to the extent fully reserved against, as set forth in the December 31, 2002 balance sheet included in such Financial Statements, and no defense or set-off to any such account has been asserted by the account obligor or exists. (de) As of the date of Closing the Buyer has either a positive stockholders equity or capital of not less than United States One Thousand Dollars (USD $1,000.00) equivalent in Hungarian Forinth calculated at the then current rate of exchange. (f) As of the date of Closing the Parent Loan Balance shall (i) bear interest calculated at the rate of LIBOR for twelve month United States dollars interbank deposits as fixed by the BBA plus a margin of 3%, such interest to be paid annually in arrears (ii) be due and payable as to principal and any interest accrued on the fifth anniversary of the Closing Date, (iii) not be convertible into or exchangeable for capital shares of the Buyer, and (iv) be subject and subordinated to all creditors of the Buyer and its consolidated Subsidiaries, including the Company. (g) Except as otherwise set forth in SCHEDULE 4.08(DSchedule 5,7(g), Spectrum's ---------------- the Inventory of the Buyer as of the Closing Date shall consist of items of a quality, condition and quantity consistent with normal seasonally-adjusted Inventory levels of Spectrum the Buyer and be usable and saleable in the ordinary and usual course of business for the purposes for which intended, except to the extent written down or reserved against on the Closing Date Balance Sheet. Except as otherwise set forth in SCHEDULE 4.08(DSchedule 5.7(g), Spectrum's the Buyer’s Inventory is valued on Spectrum's the Buyer’s books of ---------------- account in accordance with GAAP (on an average cost basis) at the lower of cost or market, and the value of obsolete materials, materials below standard quality and slow-moving materials have been written down in accordance with GAAP. (h) Except as provided under the provisions of the agreements described in Schedule 5.7(h), the Buyer has and will have as of the Closing Date legal and beneficial ownership of its Properties, free and clear of any and all Liens.

Financial Statements; Liabilities; Accounts Receivable; Inventories. (a) SCHEDULE 4.08(ASet forth in Section 3.08(a) contains true and complete copies of the Seller Disclosure Schedule are the unaudited ----------------- Financial Statements consolidated financial statements with respect to Spectrum and its business as of and for the year ended December 31Company, 2002. All of such Financial Statements present fairly giving effect to the financial condition and results of operations of Spectrum for the dates or periods indicated thereon. All of such Financial Statements have been prepared in accordance with GAAP applied on a consistent basis throughout the periods indicated. Within 60 days transfer of the ClosingDivision Entities to the Company and the removal of the California Business and the Northeast Business (the “Partial Restructuring”), Spectrum shall provide SILVA BAY with audited Financial Statements as of and for the years exxxx ended December 31, 2001 2007 and 2002 (2008, and the "POST-CLOSING AUDIT") and such other unaudited consolidated financial information requested ------------------ by SILVA BAY to enable SILVA BAY to file a Form 10-SB with the Securitxxx xnd Exchange Commxxxxxn statements with respect to the MergerCompany, giving effect to the Partial Restructuring, as of and for the three months ended March 31, 2009 (the unaudited consolidated balance sheet of the Company, giving effect to the Partial Restructuring, as of March 31, 2009 (including the explanatory statements thereto) is referred to herein as the “Acquisition Balance Sheet”) (in each case including the explanatory statements thereto, collectively, the “Financial Statements”). The Financial Statements: (i) have been prepared from the books and records of the Company and the Division Entities (except (A) as otherwise disclosed therein and (B) for failures to be so prepared that would not result in an unfair presentation of the financial position and the results of operations of the Company and the Division Entities, in the aggregate, on the basis of presentation outlined in Section 3.08(a) of the Seller Disclosure Schedule); (ii) have been prepared in the manner set forth in Section 3.08(a) of the Seller Disclosure Schedule; and (iii) fairly present in all material respects the financial position of the Company and the Division Entities, in the aggregate, on the basis of presentation outlined in Section 3.08(a) of the Seller Disclosure Schedule. (b) Except for (i) the liabilities reflected on Spectrum's December 31, 2002 balance sheet included with the Financial Statements attached as SCHEDULE -------- 4.08(A)Acquisition Balance Sheet, (ii) trade payables liabilities and accrued expenses obligations incurred since December 31, ------ 2002 the Balance Sheet Date in the ordinary course of business, none of which are material, (iii) executory contract obligations under (x) Contracts any Contract of the Company or any of the Division Entities either listed on SCHEDULE 4.14, ------------- and/or (ySection 3.13(a) Contracts not required to be listed on SCHEDULE 4.14of the Seller Disclosure Schedule or entered into in the ordinary course of business, and (iv) liabilities that are not and are not reasonably expected to be material to the ------------- liabilities set forth in SCHEDULE 4.08(B) attached heretoCompany and the Division Entities, Spectrum does taken as a whole, the Company and the Division Entities do not --------------- have any material undisclosed liabilities or obligations of any nature (whether accrued, absolute, contingent, known known, unknown or unknownotherwise, and whether or not of a nature required to be reflected or reserved against in a balance sheet in accordance with GAAP). (c) Except as otherwise set forth in SCHEDULE 4.08(C), the The accounts ---------------- receivable reflected on the December 31, 2002 balance sheet included in the Financial Statements referenced in Section 4.08(a) and all of Spectrum's accounts receivable arising since December 31, 2002 (the "BALANCE SHEET DATE") ------------------ Acquisition Balance Sheet arose from bona fide transactions in the ordinary course of business, and the goods and services involved have been sold, delivered and performed to the or events. No such account obligors, and no further filings (with governmental agencies, insurers or others) are required to be made, no further goods are required to be provided and no further services are required to be rendered in order to complete the sales and fully render the services and to entitle Spectrum to collect the accounts receivable in full. Except as set forth in SCHEDULE 4.08(C), no such ---------------- account has been assigned or pledged to any other person, firm or corporation, and, except only to the extent fully reserved against, as set forth in the December 31, 2002 balance sheet included in such Financial Statements, no defense or set-off to any such account has been asserted by the account obligor or existsPerson. (d) Except as otherwise set forth has not had and would not reasonably be expected to have, individually or in SCHEDULE 4.08(D)the aggregate, Spectrum's ---------------- Inventory as a Company Material Adverse Effect, the inventory of the Closing Date shall consist Company and the Division Entities consists of items that are of a quality, condition and quantity (when added to inventory subject to the Consignment Agreement) consistent with normal seasonally-adjusted Inventory inventory levels of Spectrum the Company and be the Division Entities and are usable and saleable for the purposes for which intended in the ordinary and usual course of business for the purposes for which intendedbusiness, except to the extent written down or reserved against on the Closing Date Acquisition Balance Sheet. . (e) Except as otherwise has not been and is not reasonably expected to be material to the Company and the Division Entities, taken as a whole, the Company or the Company’s Subsidiaries have, or (taking into account the Ancillary Agreements) as of the Closing will have, good and valid title to, or a valid leasehold interest in or other valid legal right to use, all of the properties and assets used by the Company and the Division Entities to carry on their respective businesses as currently conducted, free and clear of any and all liens, mortgages, deeds of trust, pledges, adverse claims, encumbrances or other restrictions or limitations whatsoever (“Liens”), except Permitted Liens and Liens set forth in SCHEDULE 4.08(D)Section 3.08(e) of the Seller Disclosure Schedule. (f) No personal loans have been made by the Company, Spectrum's Inventory is valued on Spectrum's books the Division Entities or Seller to or for the Company’s or any Division Entity’s officers and/or directors. (g) Each of ---------------- account the Company and its Subsidiaries maintains a system of internal accounting controls sufficient to provide reasonable assurance that (i) transactions are executed in accordance with management’s general or specific authorization; (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain accountability for assets; (on an average cost basisiii) access to assets is permitted only in accordance with management’s general or specific authorization; and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences. Since the lower end of cost the Company’s most recent fiscal year, there has been (i) to the Knowledge of Seller, no material weakness in the Company’s internal control over financial reporting (whether or marketnot remediated) and (ii) no change in the Company’s internal control over financial reporting that has materially affected the Company’s internal control over financial reporting.

Financial Statements; Liabilities; Accounts Receivable; Inventories. (a) SCHEDULE 4.08(AParent has delivered to Company Stockholders (i) contains the consolidated audited accounts of the Parent for the fiscal years ended December 31, 2006 and 2007 true and complete copies of the audited balance sheet, statement of operations and statement of cash flows and (ii) copies of the unaudited ----------------- Financial Statements with respect to Spectrum balance sheet, statement of operations and its business statement of cash flows of the Parent as of at September 30, 2008 and for the year nine months then ended (the “Parent Financial Statements”). (b) Buyer has delivered to Company Stockholders (i) audited accounts of Buyer for the fiscal years ended December 31, 20022006 and 2007 true and complete copies of the audited balance sheet, statement of operations and statement of cash flows and (ii) copies of the unaudited balance sheet, statement of operations and statement of cash flows of Buyer as at December 31, 2008 and for the fiscal year period then ended (the “Buyer Financial Statements”) and are attached hereto as Schedule 5.7(a). All of such Buyer’s Financial Statements have been prepared as per U.S. GAAP (as the Parent) and Hungarian accounting standards and translated to US GAAP applied on a consistent basis throughout the periods indicated. Such Buyer Financial Statements present fairly the financial condition and results of operations of Spectrum the Buyer for the dates or periods indicated thereon. All of such Financial Statements have been prepared in accordance with GAAP applied on a consistent basis throughout the periods indicated. Within 60 days of the Closing, Spectrum shall provide SILVA BAY with audited Financial Statements as of and for the years exxxx December 31, 2001 and 2002 (the "POST-CLOSING AUDIT") and such other financial information requested ------------------ by SILVA BAY to enable SILVA BAY to file a Form 10-SB with the Securitxxx xnd Exchange Commxxxxxn with respect to the Merger. (bc) Except for (i) security interests and liens on the liabilities reflected on Spectrum's December 31, 2002 balance sheet included with assets of the Financial Statements attached as SCHEDULE -------- 4.08(A), Buyer to secure indebtedness of the Parent and/or the Buyer not to exceed $250,000 in the aggregate; (ii) trade payables and accrued expenses incurred since December 31, ------ 2002 in the ordinary course of business, none of which are material, (iii) executory contract obligations under (x) Contracts listed on SCHEDULE 4.14Schedule 5.12, ------------- and/or (y) Contracts not required to be listed on SCHEDULE 4.14Schedule 5.12, and (iv) the ------------- liabilities set forth in SCHEDULE 4.08(BSchedule 5.7(c) and the (v) the Parent Loan Balance set forth in Schedule 2.2 attached hereto, Spectrum the Buyer does not --------------- have any material liabilities or obligations (whether accrued, absolute, contingent, known or unknownotherwise, and whether or not of a nature required to be reflected or reserved against in a balance sheet in accordance with GAAP). The Parent shall be solely responsible to retire the aforesaid indebtedness secured by the liens on the assets of the Buyer. (cd) Except as otherwise set forth in SCHEDULE 4.08(CSchedule 5.7(d), the accounts ---------------- receivable reflected on the December 31, 2002 2008 balance sheet included in the Buyers Financial Statements referenced in this Section 4.08(a5.7(a) and all of Spectrum's the Buyer’s accounts receivable arising since December 31, 2002 2008 (the "BALANCE SHEET DATE"“Balance Sheet Date”) ------------------ arose from bona fide transactions in the ordinary course of business, and the goods and services involved have been sold, delivered and performed to the account obligors, and no further filings (with governmental agencies, insurers or others) are required to be made, no further goods are required to be provided and no further services are required to be rendered in order to complete the sales and fully render the services and to entitle Spectrum the Buyer to collect the accounts receivable in full. Except as set forth in SCHEDULE 4.08(CSchedule 5.7(d), no such ---------------- account has been assigned or pledged to any other person, firm or corporation, and, except only to the extent fully reserved against, as set forth in the December 31, 2002 balance sheet included in such Financial Statements, and no defense or set-off to any such account has been asserted by the account obligor or exists. (de) As of the date of Closing the Buyer has either a positive stockholders equity or capital of not less than United States One Thousand Dollars (USD $1,000.00) equivalent in Hungarian Forinth calculated at the then current rate of exchange. (f) As of the date of Closing the Parent Loan Balance shall (i) bear interest calculated at the rate of LIBOR for twelve month United States dollars interbank deposits as fixed by the BBA plus a margin of 3%, such interest to be paid annually in arrears (ii) be due and payable as to principal and any interest accrued on the fifth anniversary of the Closing Date, (iii) not be convertible into or exchangeable for capital shares of the Buyer, and (iv) be subject and subordinated to all creditors of the Buyer and its consolidated Subsidiaries, including the Company. (g) Except as otherwise set forth in SCHEDULE 4.08(DSchedule 5.7(g), Spectrum's ---------------- the Inventory of the Buyer as of the Closing Date shall consist of items of a quality, condition and quantity consistent with normal seasonally-adjusted Inventory levels of Spectrum the Buyer and be usable and saleable in the ordinary and usual course of business for the purposes for which intended, except to the extent written down or reserved against on the Closing Date Balance Sheet. Except as otherwise set forth in SCHEDULE 4.08(DSchedule 5.7(g), Spectrum's the Buyer’s Inventory is valued on Spectrum's the Buyer’s books of ---------------- account in accordance with GAAP (on an average cost basis) at the lower of cost or market, and the value of obsolete materials, materials below standard quality and slow-moving materials have been written down in accordance with GAAP. (h) Except as provided under the provisions of the agreements described in Schedule 5.7(h), the Buyer has and will have as of the Closing Date legal and beneficial ownership of its Properties, free and clear of any and all Liens.

Financial Statements; Liabilities; Accounts Receivable; Inventories. (a) SCHEDULE 4.08(A) contains true and complete copies of unaudited ----------------- Financial Statements with respect to Spectrum LiquidGolf and its business as of and for the year ended December 31, 2001 and for the ten months ended October 31, 2002. All of such Financial Statements present fairly the financial condition and results of operations of Spectrum LiquidGolf for the dates or periods indicated thereon. All of such Financial Statements have been prepared in accordance with GAAP applied on a consistent basis throughout the periods indicated. Within 60 days of the Closing, Spectrum LiquidGolf shall provide SILVA BAY NMDC with audited Financial Statements as of and for the years exxxx year ended December 31, 2001 and 2002 (the "POST-CLOSING AUDIT") and such other financial information requested ------------------ by SILVA BAY NMDC to enable SILVA BAY NMDC to file a Form 108-SB K with the Securitxxx xnd Securities and Exchange Commxxxxxn Commission with respect to the Merger. (b) Except for (i) the liabilities reflected on SpectrumLiquidGolf's December October 31, 2002 balance sheet included with the Financial Statements attached as SCHEDULE -------- 4.08(A), (ii) trade payables and accrued expenses incurred since December October 31, ------ 2002 in the ordinary course of business, none of which are material, (iii) executory contract obligations under (x) Contracts listed on SCHEDULE 4.14, ------------- and/or (y) Contracts not required to be listed on SCHEDULE 4.14, and (iv) the ------------- liabilities set forth in SCHEDULE 4.08(B) attached hereto, Spectrum LiquidGolf does not --------------- have any material liabilities or obligations (whether accrued, absolute, contingent, known or unknown). (c) Except as otherwise set forth in SCHEDULE 4.08(C), the accounts ---------------- receivable reflected on the December October 31, 2002 balance sheet included in the Financial Statements referenced in Section 4.08(a) and all of SpectrumLiquidGolf's accounts receivable arising since December October 31, 2002 (the "BALANCE SHEET DATE") ------------------ arose from bona fide transactions in the ordinary course of business, and the goods and services involved have been sold, delivered and performed to the account obligors, and no further filings (with governmental agencies, insurers or others) are required to be made, no further goods are required to be provided and no further services are required to be rendered in order to complete the sales and fully render the services and to entitle Spectrum LiquidGolf to collect the accounts receivable in full. Except as set forth in SCHEDULE 4.08(C4.08(c), no such ---------------- account has been assigned or pledged to any other person, firm or corporation, and, except only to the extent fully reserved against, as set forth in the December October 31, 2002 balance sheet included in such Financial Statements, no defense or set-off to any such account has been asserted by the account obligor or exists. (d) Except as otherwise set forth in SCHEDULE 4.08(D), SpectrumLiquidGolf's ---------------- Inventory as of the Closing Date shall consist of items of quality, condition and quantity consistent with normal seasonally-adjusted Inventory levels of Spectrum LiquidGolf and be usable and saleable in the ordinary and usual course of business for the purposes for which intended, except to the extent written down or reserved against on the Closing Date Balance Sheet. Except as otherwise set forth in SCHEDULE 4.08(D), SpectrumLiquidGolf's Inventory is valued on SpectrumLiquidGolf's books of ---------------- account in accordance with GAAP (on an average cost basis) at the lower of cost or market.

Financial Statements; Liabilities; Accounts Receivable; Inventories. (a) SCHEDULE 4.08(A) contains Pursuant to Section 5.14, InterDent shall deliver to Purchaser true and complete copies of unaudited ----------------- (i) Financial Statements with respect to Spectrum and its business DCA as of and for the years ended December 31, 1998, 1999 and 2000, and as of and for the one month ended January 31, 2001 (the "DCA Financial Statements") and (ii) Balance Sheets and Statements of Operations with respect to the Dental Practices for the year ended December 31, 20022000 and the one month ended January 31, 2001 (collectively, the "Financial Statements"). All To the Knowledge of InterDent, all of such Financial Statements present fairly the financial condition and results of operations of Spectrum the entities for the dates or periods indicated thereon. All thereon and all of such the DCA Financial Statements have been prepared in accordance with GAAP generally accepted accounting principles ("GAAP") applied on a consistent basis throughout the periods indicated. Within 60 days of the Closing, Spectrum shall provide SILVA BAY with audited Financial Statements as of and for the years exxxx December 31, 2001 and 2002 (the "POST-CLOSING AUDIT") and such other financial information requested ------------------ by SILVA BAY to enable SILVA BAY to file a Form 10-SB with the Securitxxx xnd Exchange Commxxxxxn with respect to the Merger. (b) Except for (i) the liabilities reflected on Spectrum's December the January 31, 2002 2001 balance sheet sheets included with the Financial Statements attached as SCHEDULE -------- 4.08(A)Statements, (ii) trade payables and accrued expenses incurred since December 31, ------ 2002 2000 in the ordinary course of business, none of which are material, and (iii) executory contract obligations under Transferred Contracts (x) Contracts listed on SCHEDULE 4.14, ------------- and/or (y) Contracts not required other than those with respect to be listed on SCHEDULE 4.14, and (iv) the ------------- liabilities items set forth in SCHEDULE 4.08(B) attached heretothe preceding clause (ii)), Spectrum does not --------------- have none of DCA and, to the Knowledge of InterDent, the Dental Practices has any material liabilities or obligations (whether accrued, absolute, contingent, known known, unknown or unknown)otherwise, and whether or not of a nature required to be reflected or reserved against in a balance sheet in accordance with GAAP) which, individually or in the aggregate, would have a DCA Material Adverse Effect. (c) Except as otherwise set forth in SCHEDULE 4.08(C)To the Knowledge of InterDent, the accounts ---------------- receivable reflected on the December January 31, 2002 2001 balance sheet sheets included in the Financial Statements referenced in Section 4.08(a3.08(a) and all of Spectrumthe Sellers' (with respect to the Dental Practices) and DCA's accounts receivable arising since December January 31, 2002 2001 (the "BALANCE SHEET DATEBalance Sheet Date") ------------------ arose from bona fide transactions in the ordinary course of business, are current and collectible net of reserves shown on the goods and services involved have been soldJanuary 31, delivered and performed to the account obligors, and no further filings (with governmental agencies, insurers or others) are required to be made, no further goods are required to be provided and no further services are required to be rendered in order to complete the sales and fully render the services and to entitle Spectrum to collect the accounts receivable in full2001 financial statements. Except as set forth in SCHEDULE 4.08(C), no No such ---------------- account has been assigned or pledged to any other personPerson by InterDent or any Seller, firm or corporation, and, except only to the extent fully reserved againstKnowledge of InterDent, as set forth in by any prior owner of the December 31, 2002 balance sheet included in such Financial Statements, no defense Assets or set-off to any such account has been asserted by the account obligor or existsother third party. (d) Except as otherwise set forth provided in SCHEDULE 4.08(DSchedule 3.08(d), Spectrum's ---------------- Inventory each of the Sellers, the Dental Practices and DCA has and will have as of the Closing Date shall consist legal and beneficial ownership of items their Properties, free and clear of quality, condition any and quantity consistent with normal seasonally-adjusted Inventory levels of Spectrum and be usable and saleable in the ordinary and usual course of business for the purposes for which intended, except to the extent written down or reserved against on the Closing Date Balance Sheet. Except as otherwise set forth in SCHEDULE 4.08(D), Spectrum's Inventory is valued on Spectrum's books of ---------------- account in accordance with GAAP (on an average cost basis) at the lower of cost or marketall Liens other than Permitted Liens.