bpo_8k-ex9902.htm

Exhibit 99.2

Horwath Orenstein LLP

DOCUCOM LIMITED PARTNERSHIP

Financial Statements

Year Ended October 31, 2005

Horwath Orenstein LLP

AUDITORS' REPORT

To the Partners of DocuCom Limited Partnership

We have audited the balance sheet of DocuCom Limited Partnership as at October 31, 2005 and the statements of income, partners' capital and cash flow for the year then ended. These financial statements are the responsibility of the partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with Canadian generally accepted auditing standards. Those standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.

In our opinion, these financial statements present fairly, in all material respects, the financial position of the partnership as at October 31, 2005 and the results of its operations and its cash flows far the year then ended in accordance with Canadian generally accepted accounting principles.

Toronto, Ontario

December 21, 2005 CHARTERED ACCOUNTANTS

DOCUCOM LIMITED PARTNERSHIP

Balance Sheet

October 31, 2005

	2005		2004
ASSETS
CURRENT
Accounts receivable	$	1,879,956	$	2,288,165
Inventories		899,955		1,463,474
Prepaid expenses		47,569		42,045
Due from partners (Note 3)		-		400,000
		2,827,480		4,193,684
CAPITAL ASSETS (Note 4)		539,757		685,124
	$	3,367,237	$	4,878,808

LIABILITIES AND PARTNERS' CAPITAL
CURRENT
Bank indebtedness (Note 5)	$	51,244	$	1,406,898
Accounts payable and accrued liabilities		1,455,761		1,290,635
Current portion of obligations under capital lease		-		73,190
Deferred income		637,003		560,954
Current portion of long term debt (Note 6)		-		11,667
		2,144,008		3,343,344
LONG TERM DEBT (Note 6)		200,000		339,722
		2,344,008		3,683,066
PARTNERS' CAPITAL		1,023,229		1,195,742
	$	3,367,237	$	4,878,808

APPROVED BY THE GENERAL PARTNER

See the accompanying notes

DOCUCOM LIMITED PARTNERSHIP

Statement of Income

Year Ended October 31, 2005

	2005		2004
SALES	$	13,396,833	$	13,567,879

COST OF SALES		9,823,487		9,985,059

GROSS PROFIT		3,573,346		3,582,820

OPERATING EXPENSES (Schedule 1)
Selling		1,502,288		1,638,141
General and administrative		1,334,049		1,374,169
Distribution		167,020		204,819
Financing		97,518		163,657
Amortization		75,886		224,337

		3,176,761		3,605,123

NET INCOME (LOSS)	$	396,585	$	(22,303	)

See the accompanying notes

DOCUCOM LIMITED PARTNERSHIP

Statement of Partners' Capital

Year Ended October 31, 2005

	2004 Balance		Net Income		Withdrawals			2005 Balance

PARTNERS' CAPITAL	$	1,195,742	$	396,585	$	(569,096	)	$	1,023,229

	$	1,195,742	$	396,585	$	(569,096	)	$	1,023,229

See the accompanying notes

DOCUCOM LIMITED PARTNERSHIP

Statement of Cash Flow

Year Ended October 31, 2005

	2005			2004
OPERATING ACTIVITIES
Net income (loss)	$	396,585		$	(22,303	)
Item not affecting cash:
Amortization		238,511			283,232
		635,096			260,929

Changes in non-cash working capital:
Accounts receivable		408,209			(6,029	)
Inventories		563,519			1,638,314
Accounts payable and accrued liabilities		165,126			(555,471	)
Deferred income		76,049			(38,277	)
Prepaid expenses		(5,524	)		19,433
Due from partners		400,000			(210,000	)
		1,607,379			847,970

Cash flow from operating activities		2,242,475			1,108,899

INVESTING ACTIVITY
Purchase of equipment		(93,144	)		(72,905	)
Cash flow used by investing activities		(93,144	)		(72,905	)

FINANCING ACTIVITIES
Reduction of bank indebtedness		(1,355,654	)		(450,136	)
Repayment of long term debt		(151,389	)		(11,667	)
Repayment of obligations under capital lease		(73,190	)		(73,191	)
Partners' drawings		(569,098	)		(501,000	)

Cash flow used by financing activities		(2,149,331	)		(1,035,994	)

INCREASE IN CASH FLOW
Cash - beginning of year

CASH - END OF YEAR	$	-		$	-
CASH FLOW SUPPLEMENTARY INFORMATION
Interest paid	$	97,518		$	163,657

See the accompanying notes

DOCUCOM LIMITED PARTNERSHIP

Notes to Financial Statements

Year Ended October 31, 2005

1. DESCRIPTION OF OPERATIONS

DocuCom Limited Partnership ("the Partnership'') sells and services systems for the capture, storage and retrieval of document images using micrographic and digital technologies throughout Canada.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

These financial statements, which have been prepared in accordance with Canadian generally accepted accounting principles, reflect the accounting policies set out below.

Measurement uncertainty

The preparation of financial statements in conformity with Canadian generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amount of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the period. Actual results could differ from these estimates. These estimates are reviewed periodically, and, as adjustments become necessary they are reported in earnings in the period in which they become known.

Unincorporated business

Since this business is unincorporated, the accompanying financial statements do not provide for taxes on income and do not include all the assets, liabilities, revenues or expenses of the partners. No provision has been made for salaries, interest or similar items accruing to the partners.

Revenue recognition

Sales are normally recognized when the products are shipped, at which time title passes to the customer.

Revenue derived from the sale of service contracts is initially recorded as deferred revenue when billed. Billings commonly occur two months before the contract commences. Deferred revenue represents approximately two months worth of advance service billings.

Inventories

Inventories of finished goods and service parts are valued at the lower of cost or net realizable value, on a first-in first-out basis.

(continues)

DOCUCOM LIMITED PARTNERSHIP

Notes to Financial Statements

Year Ended October 31, 2005

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Capital assets

Capital assets are stated at cost less accumulated amortization. Capital assets are amortized over their estimated useful lives at the following rates and methods:

Rental assets	3 years	straight-line method
Computer software	100%	declining balance method
Computer equipment	30%	declining balance method
Equipment	20%	declining balance method
Leasehold improvements	5 years	straight-line method

For assets acquired or brought into use during the year, other than rental assets, amortization is calculated at 50% of the full year's amortization. For rental assets, amortization is calculated from the month following that in which additions come into operation. During the year, the Partnership recorded amortization on capital assets of $238,511. $162,625 was included in cost of sales and $75,886 was included in operating costs.

3. DUE FROM PARTNER

	2005		2004

Due from partner	$	-	$	400,000

Amount due from partner is non interest bearing.

4. CAPITAL ASSETS

	Cost		Accumulated amortization		2005 Net book value		2004 Net book value
Rental assets	$	499,592	$	234,958	$	264,634	$	411,606
Equipment		416,114		271,620		144,494		115,002
Computer equipment		566,972		439,362		127,610		155,091
Leasehold improvements		6,850		4,795		2,055		3,425
Computer software		1,801		837		964		-

	$	1,491,329	$	951,572	$	539,757	$	685,124

DOCUCOM LIMITED PARTNERSHIP

Notes to Financial Statements

Year Ended October 31, 2005

5. BANK INDEBTEDNESS

The Partnership has available $1,400,000 (2004 - $2,000,000) credit facilities by way of a combination of:

Account overdraft which is due on demand and bearing interest at bank prime plus 1.25%. As of the year-end, $51,244 of the facility is utilized (2004 - $406,898).

Bank Acceptance which is renewable monthly, bearing interest at the bankers acceptance monthly rate with a 2.35% annual fee. As of the year-end, $0 of the facility is utilized (2004 - $1,000,000).

The account overdraft and bankers acceptance are secured by a general assignment of book debts, a security agreement over inventories, a first ranking general security agreement over all assets, an assignment of fire insurance and the guarantees of two directors of the partner corporations aggregating $800,000.

The credit facilities agreement requires maintenance of certain covenants, including a minimum current ratio of 1.15:1, a minimum net worth of $1,000,000 and a maximum debt to net worth ratio of 3.00:1. At the year-end, the Partnership is not in violation of any covenants.

6. LONG TERM DEBT

	2005		2004
Revolving loan bearing interest at prime plus 1.25%, monthly interest payable at end of subsequent month.	$	200,000	$	330,000

Term loan bearing interest at prime plus .75% per annum, repayable in monthly blended payments of $972. The loan matures on August 31, 2006 .				21,389
		200,000		351,389
Less portion relating to interest on long term debt				(11,667	)
	$	200,000	$	339,722

The Partnership has available $500,000 demand revolving loan, for which the principal repayment terms are determined by a formula based on the net book value of rental assets. To the extent that 75% of the net book value of the rental assets exceed the loan outstanding, no principal repayments are required. Interest incurred on long term debt amounted to approximately $15,000.

7. GUARANTEE FOR PARTNER

The Partnership has guaranteed the bank indebtedness of a partner to an amount not exceeding $300,000. Such a bank indebtedness bears interest at bank prime rate and is secured by a general assignment of the assets of the Partnership.

DOCUCOM LIMITED PARTNERSHIP

Notes to Financial Statements

Year Ended October 31, 2005

8.	LEASE COMMITMENTS

The Partnership is committed to the following future payments under operating leases for premises of $398,170, automobiles of $163,399, and equipment of $10,176:

2006	$	231,865
2007		158,711
2008		135,118
2009		46,051
	$	571,745

9. FINANCIAL INSTRUMENTS

Credit risk

The Partnership's financial instruments consist of accounts receivable, bank indebtedness, accounts payable and accrued liabilities, and long term debt. The partnership is exposed to credit risk on accounts receivable from its customers. It has adopted credit policies which include the analysis of the financial position of its customers and the regular review of credit limits.

Fair Value

The fair value of these financial instruments approximate their carrying values due to their short-term maturity. The fair value of long-term debt approximate their carrying value as the instruments bear interest at current market rates.

DOCUCOM LIMITED PARTNERSHIP

Schedule of Expenses

Year Ended October 31, 2005

			(Schedule 1)


	2005		2004
SELLING
Salaries, commissions and benefits	$	1,147,003	$	1,226,303
Travel, automobile and meetings		226,880		214,743
Office and general		97,162		136,518
Advertising		31,243		60,577
	$	1,502,288	$	1,638,141
DISTRIBUTION
Salaries and benefits	$	158,146	$	197,836
General and office		8,862		11,065
Freight (net of recoveries)		12		(4,082	)
	$	167,020	$	204,819
GENERAL AND ADMINISTRATIVE
Salaries, fees and benefits	$	361,821	$	365,857
Rent and Occupancy		299,863		428,938
Travel, automobile and meetings		192,200		173,583
Office and general		190,843		209,344
Severance cost		147,925		25,639
Profit sharing		66,226		60,078
Legal, audit and professional fees		59,999		93,891
Public relations		15,172		16,839
	$	1,334,049	$	1,374,169
AMORTIZATION
Computer software	$	28,661	$	153,012
Furniture and Fixtures		25,780		23,796
Computer equipment		20,075		28,960
Leasehold improvements		1,370		18,569
	$	75,886	$	224,337
FINANCING
Interest and bank charges	$	77,434	$	124,421
Interest on capital lease		20,084		39,236
	$	97,518	$	163,657

See the accompanying notes

Horwath Orenstein LLP

DOCUCOM LIMITED PARTNERSHIP

Financial Statements

Year Ended October 31, 2006

Horwath Orenstein LLP

AUDITORS' REPORT

To the Partners of DocuCom Limited Partnership

We have audited the balance sheet of DocuCom Limited Partnership as at October 31, 2006 and the statements of loss, partners' capital and cash flow for the year then ended. These financial statements are the responsibility of the partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit.

In our opinion, these financial statements present fairly, in all material respects, the financial position of the partnership as at October 31, 2006 and the results of its operations and its cash flows for the year then ended in accordance with Canadian generally accepted accounting principles.

Toronto, Ontario

December 20, 2006

Except for note 5, which is as of February 22, 2007

CHARTERED ACCOUNTANTS

DOCUCOM LIMITED PARTNERSHIP

Balance Sheet

October 31, 2006

	2006		2005
ASSETS
CURRENT
Accounts receivable	$	1,897,230	$	1,879,956
Inventories (Note 3)		203,272		899,955
Prepaid expenses		50,069		47,569

		2,150,571		2,827,480
CAPITAL ASSETS (Note 4)		331,382		539,758

	$	2,481,953	$	3,367,238

LIABILITIES AND PARTNERS' CAPITAL
CURRENT
Bank indebtedness (Note 5)	$	245,008	$	51,244
Accounts payable and accrued liabilities		1,486,016		1,455,762
Deferred income		566,980		637,003

		2,298,004		2,144,009
LONG TERM DEBT (Note 6)		-		200,000

		2,298,004		2,344,009
PARTNERS' CAPITAL		183,949		1,023,229

	$	2,481,953	$	3,367,238

APPROVED BY THE GENERAL PARTNER

See the accompanying notes

DOCUCOM LIMITED PARTNERSHIP

Statement of Income

Year Ended October 31, 2006

	2006			2005
SALES	$	13,190,245		$	13,396,833

COST OF SALES		10,093,973			9,823,487

GROSS PROFIT		3,096,272			3,573,346

OPERATING EXPENSES (Schedule 1)
Selling		1,616,990			1,502,288
General and administrative		1,433,150			1,334,049
Distribution		187,195			167,020
Financing		75,453			97,518
Amortization		72,448			75,886

		3,385,236			3,176,761

NET INCOME (LOSS)	$	(288,964	)	$	396,585

See the accompanying notes

DOCUCOM LIMITED PARTNERSHIP

Statement of Partners' Capital

Year Ended October 31, 2006

	2005 Balance		Net Loss			Withdrawals			2006 Balance

PARTNERS' CAPITAL (Note 7)	$	1,023,229	$	(288,964	)	$	(550,316	)	$	183,949

	$	1,023,229	$	(288,964	)	$	(550,316	)	$	183,949

See the accompanying notes

DOCUCOM LIMITED PARTNERSHIP

Statement of Cash Flow

Year Ended October 31, 2006

	2006			2005
OPERATING ACTIVITIES
Net income (loss)	$	(288,964	)	$	396,585
Items not affecting cash:
Amortization		241,299			238,511
Provision for obsolete inventory		425,800
		378,135			635,096
Changes in non-cash working capital:
Accounts receivable		(17,274	)		408,209
Inventories		270,883			563,519
Prepaid expenses		(2,500	)		(5,524	)
Accounts payable and accrued liabilities		30,254			165,126
Deferred income		(70,023	)		76,049
Due from partners					400,000
		211,340			1,607,379
Cash flow from operating activities		589,475			2,242,475
INVESTING ACTIVITY
Purchase of equipment		(32,923	)		(93,144	)
Cash flow used by investing activity		(32,923	)		(93,144	)
FINANCING ACTIVITIES
Advances (repayment) of bank indebtedness		193,764			(1,355,654	)
Repayment of long term debt		(200,000	)		(151,389	)
Partners' drawings		(550,316	)		(569,098	)
Repayment of obligations under capital lease					(73,190	)
Cash flow used by financing activities		(556,552	)		(2,149,331	)
INCREASE IN CASH FLOW
Cash - beginning of year
CASH - END OF YEAR
CASH FLOW SUPPLEMENTARY INFORMATION
Interest paid	$	75,453		$	97,518

See the accompanying notes

DOCUCOM LIMITED PARTNERSHIP

Notes to Financial Statements

Year Ended October 31, 2006

DESCRIPTION OF OPERATIONS

DocuCom Limited Partnership ("the Partnership") sells and services systems for the capture, storage and retrieval of document images using micrographic and digital technologies throughout Canada.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Unincorporated business

Inventories

Inventories of finished goods and service parts are valued at the lower of cost or net realizable value, on a first-in first-out basis.

Capital assets

Capital assets are stated at cost less accumulated amortization. Capital assets are amortized over their estimated useful lives at the following rates and methods:

Rental assets	3 years	straight-line method
Computer software	100%	declining balance method
Computer equipment	30%	declining balance method
Equipment	20%	declining balance method
Leasehold improvements	5 years	straight-line method

For assets acquired or brought into use during the year, other than rental assets, amortization is calculated at 50% of the full year's amortization. For rental assets, amortization is calculated from the month following that in which additions come into operation. During the year, the Partnership recorded amortization on capital assets of $241,299 (2005- $238,511). $168,851 (2005 - $162,625) was included in cost of sales and $72,448 (2005- $75,886) was included in operating costs.

Impairment of long-lived assets

The Partnership reviews long-lived assets for impairment if events or changes in circumstances indicate that the carrying value may not be recoverable. When indicators of impairment in the carrying value of the assets exist, and the carrying value is greater than the net recoverable value, an impairment loss is recognized to the extent that the fair value is below the carrying value. Recoverability is measured by a comparison of the carrying amount of an asset to future undiscounted net cash flows expected to be generated by the asset.

(continues)

DOCUCOM LIMITED PARTNERSHIP

Notes to Financial Statements

Year Ended October 31, 2006

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Revenue recognition

Sales are normally recognized when the products are shipped, at which time title passes to the customer.

Measurement uncertainty

3. INVENTORIES

	2006			2005
Finished goods	$	1,025,530		$	1,386,201
Service parts		875,744			826,219
Subtotal		1,901,274			2,212,420
Obsolescence reserve - Equipment		(845,936	)		(612,129	)
Obsolescence reserves - Parts		(852,067	)		(700,336	)
	$	203,271		$	899,955

During the year, the Partnership recorded a provision on obsolete inventory for $425,800 (2005 - $nil). The amount was included in the cost of sales.

DOCUCOM LIMITED PARTNERSHIP

Notes to Financial Statements

Year Ended October 31, 2006

4. CAPITAL ASSETS

	Cost		Accumulated amortization		2006 Net book value		2005 Net book value
Rental assets	$	494,497	$	378,943	$	115,554	$	264,634
Equipment		415,069		299,578		115,491		144,494
Computer equipment		564,008		464,356		99,652		127,611
Leasehold improvements		6,850		6,165		685		2,055
Computer software		228,328		228,328		-		964
	$	1,708,752	$	1,377,370	$	331,382	$	539,758

5. BANK INDEBTEDNESS

The Partnership has available a $500,000 (2005 - $1,400,000) operating line by way of a combination of:

Account overdraft which is due on demand and bears interest at bank prime plus 1.25%. As of the year-end, $245,008 of the facility is utilized (2005 - $51,244).

Documentary letters of credit which is due on demand and bears interest at bank prime plus 1.25%. As of the year-end, $nil of the facility is utilized (2005 - $nil).

Letters of guarantee which have a maximum term of one year and is subject to a fee of 2.25% per annum. As of the year-end, $nil of the facility is utilized (2005 - $nil).

The operating line is secured by a general assignment of book debts, a security agreement over cash, credit balances and deposit instrument, an assignment of all risk insurance, and the guarantees of two directors of the partner corporations aggregating $800,000.

The credit facilities agreement requires maintenance of certain covenants, including a minimum current ratio of 1.15:1, a minimum net worth of $500,000 and a maximum debt to net worth ratio of 2.50:1. At the year-end, the Partnership was in violation of certain covenants. The bank has agreed to forbear the breach of the financial covenants on February 22, 2007.

6. LONG TERM DEBT

	2006		2005

Revolving loan bearing interest at prime plus 1.25%, monthly interest payable at end of subsequent month.	$	-		200,000

DOCUCOM LIMITED PARTNERSHIP

Notes to Financial Statements

Year Ended October 31, 2006

7. TRANSFER OF INTEREST BETWEEN LIMITED PARTNER AND GENERAL PARTNER

On October 31, 2006, the Partnership's Limited Partner sold, transferred and assigned its interest to the Partnership's General Partner (DocuCom Imaging Solutions Inc.) for $1. As a consequence, the Partnership ceased to exist effective that date and its assets, liabilities and operation were assumed by DocuCom Imaging Solutions Inc.

8. LEASE COMMITMENTS

The Partnership is committed to the following future payments under operating leases for premises of $312,457, automobiles of $136,083, and equipment of $1,830:

2007	$	186,155
2008		170,387
2009		81,710
2010		12,118
	$	450,370

9. FINANCIAL INSTRUMENTS

The Partnership's financial instruments consist of accounts receivable, bank indebtedness, accounts payable and accrued liabilities. The fair value of these financial instruments approximate their carrying values due to their short-term maturity. The Partnership is exposed to credit risk on accounts receivable from its customers. It has adopted credit policies which include the analysis of the financial position of its customers and the regular review of credit limits.

DOCUCOM LIMITED PARTNERSHIP

Schedule of Expenses

Year Ended October 31, 2006

			*(Schedule 1)*

	2006		2005
SELLING
Salaries, commissions and benefits	$	1,256,465	$	1,147,003
Travel, automobile and meetings		241,860		226,880
Office and general		82,453		97,162
Advertising		36,212		31,243
	$	1,616,990	$	1,502,288
DISTRIBUTION
Salaries and benefits	$	156,999	$	158,146
Freight (net of recoveries)		21,705		12
General and office		8,491		8,862
	$	187,195	$	167,020
GENERAL AND ADMINISTRATIVE
Salaries, fees and benefits	$	669,734	$	361,821
Rent and occupancy		305,693		299,863
Travel, automobile and meetings		177,988		192,200
Office and general		169,680		190,843
Profit sharing		53,814		66,226
Legal, audit and professional fees		39,930		59,999
Severance cost		16,087		147,925
Public relations		224		15,172
	$	1,433,150	$	1,334,049
AMORTIZATION
Furniture and fixtures	$	28,900		25,780
Computer software		22,248		28,661
Computer equipment		19,930		20,075
Leasehold improvements		1,370		1,370
	$	72,448	$	75,886
FINANCING
Interest and bank charges	$	51,557		77,434
Other interest		23,896		20,084
	$	75,453	$	97,518

See the accompanying notes