FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES OF SMALL
BUSINESS ISSUERS
Under Section 12(b) of (g) of the Securities Exchange Act of 1934
WINMAX TRADING GROUP, INC.
____________________________________________
(Name of Small Business Issuer in its charter)
Florida 65-0702554
________________________________ ___________________________________
(State or other jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or organization)
429 Seabreeze Boulevard, Suite 227
Fort Lauderdale, Florida 33316
_______________________________________ __________
(Address of principal executive offices) (Zip Code)
Issuer's Telephone Number: (954) 523-4500
________________
Securities to be registered under Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be registered Each class is to be registered
None None
______________________ ______________________________
Securities to be registered under Section 12(g) of the Act:
Common
________________
(Title of class)
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Table of Contents
PART I
ITEM 1. DESCRIPTION OF BUSINESS
ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
ITEM 3. DESCRIPTION OF PROPERTY
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
ITEM 5. DIRECTORS, EXECUTIVE, OFFICERS, PROMOTERS AND CONTROL PERSONS
ITEM 6. EXECUTIVE COMPENSATION
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
ITEM 8. DESCRIPTION OF SECURITIES
PART II
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY
AND OTHER SHAREHOLDER MATTERS
ITEM 2. LEGAL PROCEEDINGS
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS RECENT SALES OF
UNREGISTERED SECURITIES
ITEM 4. RECENT SALE OF UNREGISTERED SECURITIES
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS
PART F/S
PART III
ITEM 1. INDEX TO EXHIBITS
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PART I
Item 1. DESCRIPTION OF BUSINESS
BUSINESS DEVELOPMENT
The Company was organized on September 26, 1996 under the laws of the
State of Florida for the purpose of providing investment opportunities in
commodities futures trading to individuals and institutional investors. The
Company currently acts as the general partner, manager, and commodity pool
operator of one fund, the Winmax ALPHA Fund Limited Partnership (formerly
known as the Winmax S&P 500 Fund LP), a limited partnership engaged in futures
commodity funds investing. The Company's business is regulated by the
Commodities Futures Trading Commission ("CFTC"); it is registered as a
Commodity Pool Operator and as a Commodity Trading Advisor with the CTFC. It
is also a member of the National Futures Association and the Managed Funds
Association. (See This PART I, Item 1, BUSINESS OF THE REGISTRANT, and its
subheadings for a full discussion on the Company's business.)
Voluntary Filing of this Form 10-SB
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The Company has elected to file this Form 10-SB registration statement on
a voluntary basis in order to become subject to the reporting requirements of
Section 13 of the Securities and Exchange Act of 1934, as amended (the "1934
Act"). The primary purpose is for the Company to maintain its current listing
on the National Association of Securities Dealers ("NASD") Over-the Counter
Bulletin Board ("OTCBB"). Under current NASD rules, an issuer cannot maintain
a listing (or apply for a listing) unless it is current in its reporting
obligations under Sections 13 or 15(d) of the 1934 Act. Issuers, such as the
Company, were given a phase-in date for completion of the necessary Securities
and Exchange Commission required filings. The phase-in date is based on its
trading symbol at January 4, 1999. The Company's symbol at January 4, 1999
was "WNMX", and, as a result, its phase-in date is May 1, 2000. This means
that the Company must file this form and clear S.E.C. comments, on or before
that date, or it will be delisted from the OTCBB. The filing of this
registration statement will trigger reporting obligations for the Company
sixty (60) days from the filing date.
Forward Looking Information
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This registration statement contains certain forward-looking statements
information relating to the Company that are based upon beliefs of the
Company's Management as well as assumptions made by and information currently
available to the Management. When used in this registration statement, the
words anticipate, believe, estimate, expect, and similar expressions, as they
related to the Company and the Company's Management, are intended to identify
forward-looking statements. Such statements reflect the current view of the
Company with respect to the future events and are subject to certain risks,
uncertainties, and assumptions. Should one or more of these risks or
uncertainties materialize, or should underlying assumptions prove incorrect,
actual results may vary materially from those described herein as anticipated,
believed, estimated or expected. The Company does not intend to update these
forward looking statements.
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BUSINESS OF REGISTRANT
Definitions
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The following definitions should be utilized in the understanding of
disclosures made herein:
Call Option - an option that gives the buyer the right to purchase a
specified quantity of the underlying interest at a fixed price at any time
during the life of the option.
Commodities - Those things where are useful or serviceable, particularly
articles of merchandise moveable in trade. Goods, wares and merchandise of
any kind; articles of trade or commerce. Moveable articles of value; things
that are bought and sold. Staples such as wool, cotton, etc., which are
traded on a commodity exchange an on which there is trading in futures.
Commodity Future a Speculative transaction involving the sale for
future delivery of a staple such as wool or cotton at a predetermined price.
A contract covering the purchase and sale of a physical commodities for future
delivery on a commodity exchange.
Commodity Futures Contract a present right to receive at a future date
a specific quantity of a given commodity for a fixed price. Commodity
futures contracts are commitments to buy or sell commodities at a specified
time and place in the future. The price is established when the contract is
made in open auction on a futures exchange. Only a small percentage of
futures trading actually leads to delivery of a commodity because a contract
may change hands or be liquidated before the delivery date. Participants fall
into two categories: commercial hedgers who use futures to minimize price
risks inherent in their marketing operations and speculators who, employing
venture capital, seek profits through price changes. Both purchase contracts
with only a small margin payment. Futures prices are an indication of the
direction of prices based on current market conditions. Such exchanges and
transaction are regulated by the Commodity Futures Trading Commission.
Commodity Futures Options - the right, but no the obligation, to buy or
sell a futures contract at a specified price within a fixed period (such as
three, six, nine months or longer.) The option buyer pays a premium to the
dealer for this right, plus the ususal commission and nothing else. The
option buyer does not have to be concerned about margin calls. All he can
lose is the premium paid and the commission.
Commodity Option - A right that is purchased by the option holder
entitling him to either buy ("call option") from or sell to ("put option") at
a stated price and within a stated time and underlying physical commodity
(such a specific quantity of gold, or coffee) or a commodity futures contract
relating to that commodity. The price paid for the option right is referred
to as the "premium" and the price that which the option purchaser is entitled
to buy or sell the underlying commodity for futures contract is referred to as
the "striking price." "Exercise" is the decision of the option holder to
require performance by the grantor of his obligation with respect to the
underlying commodity or futures contract. The period during which an option
may be exercised is specified in the contract. The "exercise date" or
"expiration date" is the final day on which the option holder may exercise the
option.
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Commodity Futures Trading Commission an independent agency of the US
government established to administer the Commodity Exchange Act, an act
designed to insure fair practices and honest dealing on the commodity futures
exchanges and to provide a measure of control over speculative activity.
Delta a measure of the change in an option's price compared to the
change in the underlying price of the stock; mathematical calculations
comparing market price with the market volatility.
Floor - a contract that protects the holder against a decline in prices
below a certain point.
Foreign Currency Option - An option that conveys the right to buy (in the
case of a call option) or sell (put option) a specified amount of a specified
foreign currency at a specified price within a specified period of time.
Future - and agreement between two parties that commits one party to sell
a commodity or security to the other at a given price and on a specified
future date.
Futures Market Commodity exchanges where futures contacts are traded
such as the Chicago Board of Trade.
Futures Trading the buying and selling of futures contracts, usually on
commodity exchanges.
Hedging - A means by which a party who deals in the purchase of
commodities in large quantities for the actual delivery at some future time
insures itself against unfavorable changes in the price of such commodities by
entering into compensatory arrangements of counterbalancing transactions on
the other side. The purchase and sale of options and futures solely for the
purpose of establishing a known price level. A transaction where an
identified forward exchange contract is locked into an identified agreement to
purchase or sell goods in the future.
Index - statistical method of tracking or measuring changes in the
economy and movement in stock markets. Usually keyed to a based year or month
or other period of comparison. The Standard & Poor's Index (the "S&P500
Index") contains the market value of the 500 largest companies in the Unites
States; the Dow Jones Index (the "Dow") does the same.
Index Fund a mutual fund whose portfolio is designed to match the
performance of a broad based index such as the Standard & Poor's Index, and
whose performance therefore mirrors the market as reflected by the index.
Index Option A type of security in which the holder has the right to
buy or sell, for a specified price at a specified future date, a theoretical
interest in stocks making up the index. The option is exercised in cash, in
an amount equal to the difference between the closing level of the index on
the exercise date and the exercise price of the option multiplied by the index
"multiplier".
Limit - the maximum amount a futures price may move up or down, in any
one trading day.
Long - the purchase of a futures contract to establish a market position
that has not been closed out through an offsetting sale; opposite of short.
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Margin - in futures trading, a good faith deposit to guarantee
fulfillment of the purchase or sale obligation.
Margin Call - a demand for additional cash because of an unfavorable
movement in a price.
Options on Futures - options that give the buyer the right but not the
obligation to buy or sell a particular futures contract at a stated price at
any time prior to a specified date.
Position - an interest in the market in the form of open contracts,
either long or short.
Put Option - an option that gives the buyer the right to sell a specified
quantity of the underlying interest at a fixed price at any time during the
life of the option.
Short - a futures contract sold to establish a market position that has
not been closed out through an offsetting purchase; opposite of long.
Short Sale a contract for sale of shares of stock which the seller does
not own, or certificates for which are not within his control, so as to be
available for delivery at the time when, under rules of the exchange, delivery
must be made.
Speculating -assuming the price risk that hedgers are seeking to
minimize.
Straddle - the simultaneous purchase of a put and a call on the same
stock with identical expiration price and expiration month.
Standard & Poor 500 Index - contains the market value of the 500 largest
companies in the United States.
Technical Analysis - attempts to predict future price movements by
analyzing the past sequence of prices, volumes, etc.
Principal Products or Services and Their Market
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INTRODUCTION
The Company currently acts as a general partner of one limited
partnership called the Winmax ALPHA Fund LP (the "ALPHA Fund") which raises
capital for investment in commodity futures trading. The ALPHA Fund was
organized in November of 1996, and has approximately $2.05 Million invested by
its partners with approximately $99,000 invested by the Company. The Company
receives 25% of the new profits of the ALPHA Fund as its fee for managing the
partnership, interest on the Fund's assets, plus approximately a $14
commission per trade. (See this Part I, Item 2. MANAGEMENT'S DISCUSSION AND
ANALYSIS OR PLAN OF OPERATION.) Although the trading of commodities is highly
speculative, the Company believes that its experience, knowledge and
proprietary trading system developed by one of the members of Management will
generate profit for the limited partnership and the Company as a result.
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INDUSTRY BACKGROUND
Future trading exists to shift price risk from producers and
manufacturers to speculators. The professionally managed futures fund
industry has continuously grown from its early beginnings in the 1980's to a
multi billion dollar industry today. Professionally managed commodity trading
has increased from $14 billion in 1990 to over $39 billion in 1998. This
trend is expected to continue as the industry gains wide-spread acceptance.
The Company hopes to capitalize on the increasing popularity of the industry
combined with its proprietary trading approach by providing management and
trading services for commodities funds, currently only the ALPHA Fund. The
Company based the foregoing on information provided by the National Futures
Association, the Managed Funds Association, and Managed Account Reports.
PRINCIPAL SERVICE: THE ALPHA FUND
The Company acts as the manager, commodity pool operator, and the
general partner to one futures commodity fund, the ALPHA Fund, with
approximately 42 limited partners each of whom invested a minimum of $20,000.
The ALPHA Fund is a Delaware limited partnership established for the purpose
of trading, investing, buying and selling (including short sales) or otherwise
acquiring, holding, or disposing of futures contracts, options on futures
contracts, and all rights therein and thereon. The Company makes all trading
decisions for the ALPHA Fund. Its investment objective is to achieve
appreciation of its assets through trading and investment with rigorous risk
management. The ALPHA Fund trades exclusively in futures and options on
futures in the Standard & Poor 500 ("S&P500") index and related indexes such
as Value-Line and MidCap, and had $2,056,609 in assets as of the January 31,
2000 which are traded using a 50% stop loss level. The Company's Executive
Vice-President, Secretary, and Director, and the principal trader for the
ALPHA Fund, Igor A. Klaehre ("Klaehre"), has extensive experience in
successfully trading futures and options. Klaehre utilizes a proprietary
technical system that he has developed over years of extensive use. (See
various other discussions under this Part I, Item 1. BUSINESS OF THE
REGISTRANT including Proprietary Trading System, as well as the discussion
under ITEM 5. DIRECTORS, EXECUTIVE, OFFICERS, PROMOTERS AND CONTROL PERSONS.)
THE ALPHA FUND IS THE COMPANY'S ONLY BUSINESS OPERATIONS AS
OF THE DATE OF THIS REGISTRATION STATEMENT.
HISTORICAL OVERVIEW OF THE ALPHA FUND: FUNDING AND PERFORMANCE
The ALPHA Fund was initially funded in May of 1997 at its inception as a
limited partnership offering up to $20,000,000 in partnership interests with
approximately $50,000 from the initial limited partners. At December 31, 1997
the ALPHA Fund had $281,554 (including 24.13% net trading profits for 1997)in
net assets which was the result of approximately $40,918 in net income to the
ALPHA Fund for that period ended and capital contributions throughout 1997 of
$190,635. There were no withdrawals made in 1997. The net assets grew to
$664,240 in December of 1998 which reflected net income of approximately
$93,678 (34%), capital contributions of $367,837, less redemptions of
approximately $78,828. As of December 31, 1999, net assets of the ALPHA Fund
equaled: $2,024,574 as a result of net income of $73,809 (10.69%), capital
contributions of $1,859,692 less $573,167 in redemptions of interest.
The ALPHA Fund has the following performance record as filed with the
National Future's Association(although past performance is not indicative of
future results):
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THE WINMAX ALPHA FUND PERFORMANCE RECORD
______________________________________________________________________________
Percentage rate return (compounded
on a compounded monthly basis) 1997 1998 1999 2000
- ------------------------------- ---------- ---------- ----------- ----------
January 3.84% -0.87% 8.27%
February -0.17% 6.61%
March 2.06% 0.05%
April 13.67% 7.51%
May 8.46% 4.16%
June 5.29% 0.99% -1.55%
July 0.56% 1.28% -0.06%
August 5.00% 1.98% 0.66%
September 15.84% -14.29% 0.63%
October -7.29% 13.79% -7.74%
November 1.99% 0.50% 0.86%
December 1.93% 0.86% 0.71%
_____________________________________________________________________________
Year To Date +24.13% +34.50% +10.60% +8.27%
_____________________________________________________________________________
Rate of Return Since Inception (32 Months) 95.46%
The following rankings have been published by independent reporting
agencies:
RANKINGS
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Ranked: For Time Period: % Earning for Period Published:
- ------- ---------------- -------------------- ----------
Ranked #6* September 15.84% September 1997
Ranked #1* 12 Months 61.90% May 1998
Ranked #6* 12 Months 55.29% June 1998
Ranked #2* 12 Months 56.41% July 1998
Ranked #1* October 13.79% October 1998
Ranked #7* 12 Months 37.12% February 1999
Ranked #6* May 4.16% May 1999
Ranked #3** 25 months 83.30%(monthly win rate) May 1999
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* From MAR- Managed Accounts Report, New York
**From Stark Report, LaJolla, California
TARGET MARKETS
Today's commodities market consists primarily of two main segments: the
retail market and the institutional market. The ALPHA Fund solicits clients
in both areas: the retail or individual investor (currently its principal
target market), and the larger investment firms. The Company believes the
ALPHA Fund it is unique in targeting the retail market which is often
overlooked for managed commodities. Although the Company, as general partner
and fund manager, certainly hopes to attract institutional investors, it
attributes ALPHA Fund's success to date to the retail investor and the
Company's unique trading system and believes that the commodity futures
industry is going to develop in much the same way that mutual funds gained
popularity over the past 15 years. The Company's belief is supported by the
growth in the futures funds from the large clearing houses like Merrill Lynch
and Morgan Stanley Dan Witter.
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Assuming ALPHA Fund's trading record continues to be favorable, it is
anticipated that interest from institutional investors will be generated.
Typically, this takes place after 36 months of established records of
technical index trading. In order to balance the financial composition of the
ALPHA Fund, the Company, as its general partner and manager, is ultimately
seeking a 50/50 ratio of both investor groups. The ALPHA Fund currently has
32 months of technical index trading history.
FUTURES COMMISSION MERCHANT
Lind-Waldock & Company ("Lind-Waldock") currently acts as the ALPHA
Fund's Future's Commission Merchant ("FCM") and provides for order execution
through their presence at the exchange. The ALPHA Fund may engage additional
FCMs in the future. Lind Waldock is an Illinois corporation and is registered
with the CFTC as an FCM since 1982 and is a member in good standing. Lind
Waldock has been continuously conducting business as an FCM since 1965 and is
located in Chicago. It is a clearing member of the Chicago Board of Trade,
the Chicago Mercantile Exchange, and other principal commodities exchanges.
Through affiliations with other international firms, Lind Waldock has access
to all international commodity exchanges. Lind Waldock has from time to time
recommended the ALPHA Fund and such recommendations have directly resulted in
five new limited partners in the ALPHA Fund.
UNIQUE AND PROPRIETARY TRADING SYSTEM
The ALPHA Fund's trading system, developed by Klaehre, employs a two
tiered approach: (1) find market inefficiencies and implement futures and
options trades based on these inefficiencies; and (2) maintain market
neutrality along with intensive risk management. Although the system is
basically technical, fundamental analysis is used as the basis for selecting
and evaluating the trades. Real time market signals are processed through
sophisticated, selective, pattern-recognition computer models (software),
which evaluate the market and provide trading recommendations. Volatility is
an important factor in the models. Recommendations made in markets with high
volatility will differ from those in more stable markets. The ALPHA Fund then
employs a second set of filters to evaluate the trades for which the computer
models indicate a high confidence pattern. If both analyses are positive, the
ALPHA Fund may initiate a position in the market.
The ALPHA Fund's system is neither long nor short and does not follow
trends. It is rather a delta or neutral market, buying and selling futures
option on both sides of the market. These options contracts, together, form
one position which is neither long nor short, but "at" the market. Trading
results are aimed at non-correlation to both the stock market and to the vast
majority of trend following managed futures strategies. The ALPHA Fund is,
therefore, a useful tool in diversifying portfolios of both securities and
managed commodity futures products.
Another aspect to the Company's proprietary system for managing the ALPHA
Fund (or any other fund in which it may become a managing partner in the
future) is that positions are hedged at all times. Most trading activity
occurs after the initial position is put into place in order to protect the
position and maintain a neutral delta. Hedging is done with both commodity
options and futures contracts. In addition, the use of options in initial
positions provides further softening of futures volatility and adds an element
of yield enhancement.
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Any highly liquid market can provide a stable trading environment for the
Company's proprietary trading system. The Company intends to continue to
utilize Klaehre's trading techniques with the ALPHA Fund and in any other fund
it may establish and manage in the future.
SUMMARY OF THE ALPHA FUND LIMITED PARTNERSHIP AGREEMENT WITH THE COMPANY
The Company is a party to a Limited Partnership Agreement in connection
with its role of General Partner in the ALPHA Fund. The material terms and
conditions of the Limited Partnership Agreement (the "Partnership Agreement")
between the Company (as general partner) and its limited partners (currently
numbering 42)(the "Limited Partner(s)" are set forth below. Because the
partnership has been referred to as the "ALPHA Fund", it shall continue to be
referred to in the same manner and any reference to the ALPHA Fund continues
to mean the Winmax Alpha Fund Limited Partnership. In each place where the
generic term the "General Partner" is utilized, it also means the Company. The
following are applicable to all limited partners notwithstanding differences
in each limited partners investment(s) and investment date(s).
1. Nature of the Alpha Fund: The Alpha Fund was formed under the
Delaware revised Uniform Limited Partnership Act. A limited partner's capital
contribution to the ALPHA Fund is subject to the risks of the ALPHA Fund's
business but a limited partner is not personally liable for any debts or
losses of the ALPHA Funds beyond the amount of its capital contribution and
profits attributable thereto, if any. Under certain circumstances, the
general partner (the Company) may establish a reserve for contingent
liabilities. In such event, the amount receivable by a limited partner on
redemption of its interest will be reduced by its proportionate share of the
reserve. A limited partner who receives an unlawful distribution from the
ALPHA Fund may be liable to the ALPHA Fund for the amount of the distribution.
The General Partner will be liable for all obligations of the ALPHA Fund to
the extent that the assets of the ALPHA Fund are insufficient to discharge
such obligations. The death, insolvency or dissolution of a limited partner
cannot terminate or dissolve the ALPHA Fund, and neither a limited partner or
a representative of a deceased, insolvent or dissolved limited partner has a
right to withdraw such limited partner's interest except in accordance with
the Partnership Agreement. Each limited partner, in the event of death,
insolvency or dissolution, waives on behalf of itself, its estate, and or
legal representatives the furnishing of any inventory, accounting, or
appraisal of ALPHA Fund assets or any right to audit or examination of the
books of the ALPHA Fund.
2. Management of the ALPHA Fund's Affairs: the limited partners will
not participate in the management or operations of the ALPHA Fund and any such
participation by a limited partner could jeopardize the limited liability of
the limited partner. Responsibility for managing the ALPHA Fund, including
investment decisions, is vested solely in the General Partner (the Company).
Responsibilities of the General Partner include, but are not limited to, the
opening of bank and brokerage accounts, paying or authorizing payment of
distributions to the limited partners and expenses of the ALPHA Fund, trading
or investing of funds of the ALPHA Fund not being used a cash margin deposits;
borrowing money; administering redemption of interests; causing reports to be
prepared and delivered to limited partners; selection and maintenance of
relationships with banks, brokerages, and dealers; execution of documents on
behalf of the ALPHA Fund and its limited partners pursuant to powers of
attorney; and supervising the liquidation of the ALPHA Fund if an event
causing termination occurs. The execution of the Partnership Agreement
appoints the General Partner with power of substitution, each limited partners
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attorney in fact to facilitate the execution of various documents. Documents
which may be executed on behalf of the Partnership Agreement pursuant to such
Power of Attorney include without limitation other than the fiduciary
responsibility of the General Partner and the expressed provisions of the
Partnership Agreement, amendments to the Partnership Agreement, and the
Certificate of Limited Partnership.
3. Partnership Accounting; Sharing of Profits and Losses: Each
partner including the General Partner, will have a capital account with an
initial balance equal to the amount of the partner's initial capital
contribution. Each partner's capital account shall be increased by the amount
of any additional capital contributions and reduced by distributions and by
the amount paid to a limited partner on redemption of all or part of his
interest. Each month the ALPHA Fund's net assets and profits and losses will
be determined, profit or loss for each partner's respective interest will be
calculated and appropriate charges and credits made to the capital account of
each partner in the ratio that the balance of such partner's capital account
bore to the aggregate balance of all capital accounts as of the beginning of
the month. Capital contributions are credited to each limited partner's
capital account as of the beginning of the month following the later of (i)
the month in which the capital contributions are received by the ALPHA Fund,
or (ii) the month in which the related subscriptions are accepted by the
General Partner.
In general, all items of income, gain, deduction, and loss shall be
allocated for federal income tax purposes as of the end of each fiscal year in
such manner as to reflect as nearly as possible the amounts credited or
charged to each partner's capital account, provided that unrealized gains and
losses which have been credited or charged to a partner's capital account,
when realized for federal income tax purposes, shall be allocated as nearly
as possible to reflect such prior allocation to a partner's capital account.
4. Distributions: the Partnership Agreement gives the General Partner
sole discretion in determining distributions (other than distributions in
redemption of interest), if any, the ALPHA Fund will make to partners,
provided that all distributions to limited partners shall be pro rata in
accordance with each partner's respective capital account. There is no
requirement for periodic or regular cash distributions and the General Partner
does not intend to make any such distributions.
5. Reserves: Appropriate reserves may be created, accrued, and
charged against the net assets of the ALPHA Fund and proportionately against
the capital accounts of the partners for contingent liabilities, if any, as of
the date any such contingent liability becomes known to the General Partner,
such reserves to be in the amounts which the General Partner in its sole
discretion deems necessary.
6. Redemptions: a request for redemption in proper form must be
delivered to the General Partner and the General Partner will cause the ALPHA
Fund to redeem for cash all or a portion in an amount greater than $5,000 of a
limited partner's interest in an amount equal to the balance of the limited
partner's capital account relating to the portion of the interest to be,
(after taking into account the monthly allocations to the capital account
provided for in the Partnership Agreement) less any money owing by such
limited partner to the ALPHA Fund. Such redemption shall occur at the close
of business of the last day of any month. The redemption value is calculated
on such day in an amount that is determined by the ALPHA Fund's total Net
Asset value divided by the individual's interest (percentage) that is to be
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redeemed. The ALPHA Fund's net asset value is the ALPHA Fund's assets minus
its liabilities including any unrealized profits or losses on the ALPHA Fund's
opening position. The Partnership Agreement further also defines the rights
and terms by which the General Partner to cause the ALPHA Fund to redeem a
limited partner's interest, the date of redemption payments, special
circumstances regarding redemption, and prohibitions under Delaware statutes
regarding distributions to limited partners.
7. Withdrawals: The Partnership Agreement does not permit the limited
partners to withdraw their capital contribution or net profits except through
redemption of their interest or termination of the ALPHA Fund.
8. Additional Partners: The Partnership Agreement provides that the
General Partner may admit additional limited partners as of the first day of
each month upon payment of a capital contribution to the ALPHA Fund of at
least $20,000 or such lesser amount as the General Partner may permit.
9. Restrictions on Assignment: The Partnership Agreement provides
that interests may not be assigned, transferred or encumbered without prior
written consent of the General Partner.
10. Termination of the ALPHA Fund: the affairs of the ALPHA Fund will
be wound up and the ALPHA Fund will be liquidated as soon as practicable upon
the first to occur of the following: (i) December 31, 2020; (ii) any of the
"events of withdrawal" specified under Section 17-402 of the Delaware Limited
Partnership Act, (such as the withdrawal, insolvency, or dissolution, of the
General Partner); (iii) the Net Assets of the ALPHA Fund at the end of any day
drop below 50% of the Net Assets at the commencement of the ALPHA Fund
operations, or after the ALPHA Fund's first full calendar month, to below the
ALPHA Fund's Net Assets at the end of any previous calendar month; (iv) any
event which shall make it unlawful for the existence of the ALPHA Fund to be
continued; or (v) the General Partner elects to terminate the ALPHA Fund at
any time for any reason in its absolute and sole discretion.
11. Amendments. If at any time during the ALPHA Fund's existence the
General Partner shall deem it necessary or desirable to amend the Partnership
Agreement, such amendment shall be effective only if embodied in an instrument
signed by the General Partner and by the Limited Partners, and if made in
accordance with and to the extent permissible under the Delaware Limited
Partnership Act. In addition the ALPHA Fund Partnership Agreement may be
amended by the General Partner alone with notice to each individual limited
partner, for certain specified purposes, including the curing of ambiguities
and inconsistencies and the making of any changes required by governmental
agencies and authorities for the benefit and protection of the Limited
Partners. The Partnership Agreement prohibits any amendment that would cause
the ALPHA Fund to become a general partnership, change the liabilities of the
partners so as to materially and adversely affect any partner, change any
partner's share of the profits or losses of the ALPHA Fund without such
partner's consent, extend the duration of the ALPHA Fund.
12. Reports to Limited Partners. Each limited partner will be
furnished with a report of the ALPHA Fund's activities on a monthly basis.
Each limited partner will be furnished with certified audited financial
statements of the ALPHA Fund within 90 days of the end of the calendar year.
Also, within 90 days after the close of each of each fiscal year, the General
Partner will report to each limited partner the ALPHA Fund related tax
information necessary for the preparation of the limited partner's federal
income tax return. Information regarding positions held by the ALPHA Fund, to
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the extent deemed proprietary or confidential by the General Partner, will not
be made available to limited partners except as required by law.
13. The General Partner is required to maintain an interest in the
ALPHA Fund equal to 1% of aggregate capital contributions or $200,000 which
ever is lesser. The General Partner may withdraw (through redemption
procedures) only the portion of interest which is in excess of its require
partnership interest. The General Partners interest shall enjoy all rights
and privileges and is subject to all limitations and duties of the limited
partners in respect to its interests.
TECHNOLOGY- EFFECTS OF YEAR 2000
All operations of the Company pertaining to the trading and
administration of the ALPHA Fund, are computerized. The Company utilizes the
latest communications technology with regard to trade order execution such as
a multitude high speed computer system, and advanced chart tracking software
program. (The software programs are not specially designed programs; the
Company uses software which is commercially available.) The Company accesses
cable and satellite feed lines which provide real-time market quotes on a 24
hour basis. Trading orders are facilitated by direct state of the art ISDN
communications links to clearing brokers allowing nearly instant order
execution and confirmation (6 to 10 seconds). The Company also has complete
e-mail facilities which are available to clients and business partners by way
of the Internet. Daily accounting and document preparation are accomplished
on the Company's in-house computer system and laser equipment, which are up to
date. The Company is extremely reliant on computer technology for the conduct
of its business. The Company has suffered no Year 2000 effects.
FUTURE PLANS FOR DISTRIBUTION OF THE COMPANY'S SERVICES
The Company intends to diversify its business operations by organizing
other funds. The technical trading system developed by the Company can be
adapted for use in a variety of commodity markets. The ALPHA Fund's current
limited partners will be the Company's first choice as prospects for
alternative commodity funds such as Dow Jones, agricultural, currencies, etc.
The Company also intends to diversify into other types of funds, and
recently announced its intent to establish a "multi-advisor hedge fund"
sometime in the near future through a newly formed subsidiary. The Company,
however, will devote the majority of its efforts over the next year to
successfully managing the ALPHA Fund. (See Status of any Publicly Announced
New Products or Services, below.)
Distribution Methods of the Products or Service
- -----------------------------------------------
The Company currently has only one business, management of the ALPHA
Fund. In general, any distribution of the Company's services will be effected
through organization of additional funds. The Company, however, in its
capacity as ALPHA Fund's general partner and fund manager, is responsible for
attracting new investment into the ALPHA Fund and is extremely limited in the
manner in which it may do so. The ALPHA Fund is offering up to $20,000,000 in
partnership interests pursuant to the exemption provided for under Section
3(b), Regulation D, Rule 506 of the Securities Act of 1933 which does not
limit proceeds. However, the exemption does: (1) limit offers to up to 35
"non-accredited" investors, and unlimited "accredited" investors; (2) specify
disclosure requirements which must be provided to investors; (3) prohibits
general solicitation and advertising; and (4) requires the issuer use
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reasonable care to determine that purchasers would not be deemed "statutory
underwriters". The Company, as general partner to the fund, must take care to
comply with the foregoing regulations as well as regulations imposed by the
CFTC when offering partnership interests on the ALPHA Fund's behalf. There are
currently 42 limited partners in the ALPHA Fund, of which 35 are "accredited".
The Company, as the ALPHA Fund's general partner, provides prospective
investors with disclosure information in an offering memorandum complying with
National Future's Association ("NFA") rules, as well as regulations imposed by
the Commodities Futures Trading Commission ("CFTC"). Such Memorandum must be
updated and is reviewed by the NFA every 9 months pursuant to NFA regulations.
Each prospective investor receives a copy of the ALPHA Fund Offering
Memorandum for review, prior to any sales presentation, and must execute
suitability questionnaires in connection with their proposed investment. The
Company is prohibited from using general solicitation for attracting new
investment to the ALPHA Fund. The Company, as the ALPHA Fund manager, admits
new investors based on referrals and word-of-mouth; it also receives
additional investment from current limited partners from time to time. The
Company relies on some of the following to stimulate interest in the ALPHA
Fund:
1. Reputation in the Industry/Published Reports. The Company is
building a results orientated reputation in the industry and believes
reputation will prove to be its strongest marketing tool. ALPHA Fund
performance information and reports have appeared in industry periodicals
which have stimulated interest in the ALPHA Fund. Some of these reports
include: The ALPHA Fund was rated as one of the top ten performing funds and
pools for the May 31, 1998 in "Managed Accounts Reports", Issue No. 232, June
1998. The periodical considers itself a global source for managed futures. In
May of 1999, "Managed Account Reports" ranked the ALPHA Fund as Number 6 with
a return of 4.16%, and in "Stark Report" of La Jolla, California it was ranked
#3 for percentage of profitable months since inception. BRIDGE NEWS, a
financial publication/news services similar to Reuters or Bloomberg,
spotlighted the ALPHA Fund in its July 1999 report with a favorable one page
report. The October 1999 issue of FUTURES MAGAZINE, in an article written by
its Senior Editor, named the Company the "Hot New Trading Advisor of the
Year". The ALPHA Fund attributes 45% of its new business to current limited
partners who are pleased with the ALPHA Fund's performance and have elected to
make additional contributions, individuals it considers referrals, and
individuals who have heard of the ALPHA Fund through word-of-mouth and via the
industry reports.
2. Marketing Personnel. The Company has hired Ms. Ruth Horn as
Vice-President of Sales and Marketing. In such capacity, Ms. Horn refers
individuals known to her through her many years in the industry to the ALPHA
Fund. She also has the responsibility of maintaining investor communications
through telephone, mail and internet as well as managing the Company's web
site. The Company attributes 20% of its new business in the ALPHA Fund to Ms.
Horn's efforts. The Company has also recently appointed a new director, Mr.
Paul Olin, who has a strong background in the industry and will be
instrumental in introducing institutional investors, asset allocations firms,
and accredited investors to the Company.(See DIRECTORS, EXECUTIVE, OFFICERS,
PROMOTERS AND CONTROL PERSONS.)
3. WEB Site. The Company has maintains a web site at
www.winmaxgroup.com. The site was established to report performance and
other information about the ALPHA Fund to current and potential investors.
Although the Company does not have a counter on its site and does not know how
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many hits it receives each month, it attributes new investment interest of
approximately 20% to the availability of on-line information via the web site.
The Company is not using its website to solicit investors and so states
specifically on its home page. The Company is required, however, by the NFA
to post a copy of the ALPHA Fund Limited Partnership Disclosure Document on
the website, along with a disclaimer on the page which publishes the monthly
performance results asking each individual viewing the information to
acknowledge their familiarity with the ALPHA Fund's disclosure information.
4. Asset Managers/Commodities Brokers: The Company relies upon both
asset managers and commodities brokers to recommend the ALPHA Fund to
potential new investors. Because the ALPHA Fund has experienced a certain
amount of positive exposure in various reports which are read by asset
managers and commodities brokers, the ALPHA Fund has received a number of
referrals. Lind Waldock is responsible for some of these referrals which have
resulted in ALPHA Fund new limited partners equaling approximately 15% of the
ALPHA Fund's new business since inception.
Status of Any Publicly Announced New Product or Service
- -------------------------------------------------------
On January 13, 2000, the Company formed a wholly owned subsidiary,
Frontline Investment Management, Inc, a Florida Corporation ("Frontline")
which was formed to diversify the Company's fund management services. The
Company intends to utilize Frontline to establish a "multi-advisor hedge fund"
in the near future. The Company will retain the services of a consultant, Mr.
William Hayworth Hurlin, who is experienced in hedge fund management, to
advise and assist the Company on the new fund's management. Mr. Hurlin will
likely be compensated on a performance basis although no agreement with
Mr.Hurlin has yet been entered into.
Competitive Business Conditions/Competitive Position
in the Industry/Methods of Competition
- ---------------------------------------
The business of managing investments is a highly competitive field and
dominated by large professional firms, such as John Henry, Paul Tudor Jones,
Dean Witter, and Prudential Securities. The ALPHA Fund competes for investors
who have a multitude of options and investment opportunities. In addition,
investments are influenced by many factors beyond the Company's control no
matter how attractive the product/service including interest rates, inflation,
unemployment rates and the general condition of the economy. The Company faces
extreme competition in trying to attract investors to the ALPHA Fund in its
capacity as fund manager, and will also suffer intense competition in other
funds it may elect to establish and manage. It hopes to compete through the
following factors:
1. RESULTS ORIENTATED MANAGEMENT OF ITS FUND. The Company believes its
best method of competition is results, that is, managing a successful fund.
The Company believes, to date, it has achieved success with the ALPHA FUND.
The ALPHA Fund has seen a steady increase in funds under management; during
1998 only 72 of 10,165 mutual funds posted higher gains than the Company's
ALPHA Fund gains; during 1999 the ALPHA remained in the top 100 funds. A
successful fund will help promote additional investment by current partners,
attract new retail investors and institutional investors with less likelihood
of partners requesting redemption of capital, and establish the Company's
ability as a successful manager which will be useful when competing for
investors in other funds it may establish.
15
<PAGE>
2. DISTINCTIVE APPROACH. The Company's approach to commodities
investment has three unique factors: (i) it has courted the retail investor, a
overlooked market for managed futures; (ii) it jumped right into a fund
structure instead of the usual progression from managed accounts, because a
fund can be managed more effectively; and (iii) it pursues a market neutral
approach with a unique twist, a strategy usually associated with hedge funds,
not managed futures.
3. ADVANTAGES OF MANAGED FUTURES - The Company hopes to compete with
other investment opportunities by attracting investors who wish to diversify
investment portfolios and hedge against down markets. Traditional investments
in stocks only appreciate in value if the underlying stock's value increases.
If it diminishes, the investor will lose money. Because the ALPHA Fund
invests exclusively in major stock indexes, and can be profitable by selling
(shorting) the index, it can remain profitable even during market decline and
an investor can profit in a down market. Because of this, the managed futures
industry has grown and become more attractive to investors. The Company also
believes that just as mutual funds have become more attractive to retail
investors over the past 15 years, so the commodity futures industry is going
to develop. In addition, because limited partners/investors have the ability
to redeem interests monthly, they have a greater control over their risk on an
individual basis and are able to limit their risk exposure to a degree
consistent with their investment objectives.
4. PROFESSIONAL/EXPERIENCED MANAGERS/PROPRIETARY TRADING TECHNIQUES -
Pistor and Klaehre have combined experience of 30 years in the commodities and
futures industry. Their proprietary trading techniques and investment
strategies have demonstrated a certain amount of success in the limited time
the ALPHA Fund has operated. The investment strategies include electronic
analysis of the market data, use of sophisticated technical indicators,
advanced software programs, and the use of hedging techniques such as
straddles, spreads, butterflies, etc., to reduce risk. (See above under
Principal Products or Services and Their Market, TRADING STRATEGY OF THE ALPHA
FUND/ UNIQUE AND PROPRIETARY TRADING SYSTEM.)
5. UNIQUE CHARACTERISTICS OF ALPHA FUND: The ALPHA Fund has the
following characteristics which Management believes are unique in industry and
have contributed to the success of the fund to date:(i) Low Minimum Investment
- - Investors in the ALPHA Fund partnership interests pay only a low minimum
investment of $20,000. The majority of managed funds for commodities and
futures require investments of approximately $100,000 and up; (ii) Monthly
Admission/Redemption - The ALPHA Fund will both admit new investment and allow
for redemption of interest on a monthly basis unlike other funds which are
often illiquid for a long period of time;(iii) Stop-Loss Exit Provision -
should the assets of the ALPHA Fund fall below 50% of its beginning value,
trading will be suspended and the fund will automatically dissolve in an
attempt to limit the client's risk exposure; and (iv) General Partner
Maintains a Higher than Required Interest in the ALPHA Fund to demonstrate
its faith in the ALPHA Fund, the Company keeps a larger than required interest
in the ALPHA Fund equaling approximately 5% at December 31, 1999.
Dependence on a Few Major Customers
- -----------------------------------
The Company manages only one fund, the ALPHA Fund in which it also
maintains an interest; it is, therefore, entirely dependent on its ability to
successfully manage the ALPHA Fund to provide revenues.
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Patents, Trademarks, Licenses, Franchises,
Concessions, Royalties Agreements, Labor Contracts
- --------------------------------------------------
The Company has no patents, franchises, concessions, royalty agreements,
or labor contracts in effect. The Company is registered with the National
Future's Association, and Klaehre, Pistor, Ruth Horn and Paul Olin are
registered/licensed as Associated Persons of the Company with the NFA. (See
Need for Government Approval below.)
A trademark application has been filed for and approved for the name WINMAX.
Need for Government Approval
- ----------------------------
In order to act as a fund manager, the Company is required by the
Commodities Futures Trading Commission ("CTFC")to be registered as a
Commodities Pool Operator ("CPO") and Commodity Trading Advisor ("CTA").
Application for registration with the CFTC and membership in the NFA were
filed on January 8, 1997 and became effective on January 31, 1997. Any such
registration will remain in effect so long as it is not revoked, terminated or
suspended. The Company is required to keep its registration information on
file with the NFA including prompt reporting of any changes or corrections.
The Company is also a member of the Managed Funds Association ("MFA").
Effect of Existing or Probable Government Regulations
- -----------------------------------------------------
The commodities and futures business, as well as the sale of partnership
interests, is highly regulated by both state and federal agencies. Some of the
existing regulations which could have an impact on the Company include: (1)
the Securities Act of 1933- which regulates the offer and sale of partnership
interests in the ALPHA Fund; (2) the Delaware Corporation Laws, Limited
Partnership Act- regulates the rules by which the ALPHA Fund is run,
notwithstanding any regulations imposed under federal laws; (3) the rules and
regulations of the various states in which the Company conducts business
regarding offer and sale of limited partnerships in the various states in
which the Company conducts business; and (4) the Commodities Exchange Act of
1974, Section 17, which regulates and governs the trading of commodities and
commodity futures and futures contracts. In addition the Company is subject
to rules and regulations promulgated under the Securities Act of 1933
regarding sales of its own securities and the Securities and Exchange Act of
1934 which imposes certain financial reporting obligations to which the
Company will be subjected 60 days from the filing of this registration
statement.
The Company may be subject to certain provisions of Investment Company
Act of 1940 and the Investment Advisor Act of 1940. Although the Company has
determined that it does not operate as an investment company nor investment
advisor, should it be determined that the Company operates as either of the
foregoing, the 1940 Act(s)could impose numerous additional rules and
regulations which the Company would be required to comply with including
registration under one of the 1940 Acts.
There are numerous regulatory agencies to administer these rules
including, but not limited to, the Securities and Exchange Commission, the
Commodities Futures Trading Commission, and the National Futures Association
which requires that the ALPHA Fund offering memorandum disclosure be updated
and reviewed every nine months. The Company, therefore, is burdened with
numerous compliance requirements in the conduct of its business, including, in
its capacity as general partner, regular full on-site audits for the ALPHA
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Fund; annual audited financial statements for the ALPHA Fund submitted to the
CFTC; and the registering/licensing of associated persons with NFA. If the
Company fails to meet each of the applicable requirements of the various
regulations, penalties could be imposed including the prohibition of Pistor
and/or Klaehre to continue to serve in their various capacities with the
Company or with the ALPHA Fund. If it determined that the Company is an
investment company by definition or acts as an investment advisor, there are
numerous other rules and regulations which the Company will be required to
comply with. Compliance with the various regulations may be costly and
complicated and the failure of the Company to do so could have a severe
negative impact on the Company's business. In addition, principals of the
Company, because it is a registered CTA and CPO are subjected to criminal
background checks with their fingerprints registered with the Federal Bureau
of Investigation.
The Company estimates compliance with the various regulations cost the
Company approximately $ 10,000 per year and consist of mainly legal and
accounting costs associated with annual audits of the ALPHA Fund and keeping
disclosure documentation current.
Research and Development Activities in the Past Two Years
- ---------------------------------------------------------
The Company is conducting ongoing development of its business which
includes continuous refinement of its trading system. It has spent
approximately $12,000 in the past two years in the development of its business
operations for that same time period. (See Item 2. MANAGEMENT'S DISCUSSION AND
ANALYSIS OR PLAN OF OPERATION.)
Total Number of Employees
- --------------------------
The Company has two full-time employees, Ruth Horn and Ralph Pistor.
Neither has a written employment agreement in effect and Pistor does not have
an agreement in effect as to the amount of his compensation. Klaehre provides
services to the Company on an as-needed basis.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Overview
- --------
The Company's revenues from operations are derived from its
participation as general partner and manager of the ALPHA Fund and are
substantially dependent upon achieving profits in its trading activities on
the ALPHA Fund's behalf. Although the Company has achieved revenues in each of
its last two fiscal years, the Company's has operated at a net loss both
years. Management believes that pattern will shift as the Company increases
the amount of funds under management and proportionately reduces its cost of
those revenues.
Liquidity and Capital Resources
- -------------------------------
REVENUES
The Company has only a limited operating history and the revenues it has
experienced may not continue. The Company has generated revenues from
operations in each of the last two fiscal years: totaling $64,301 in 1998 and
$166,587 in 1999. Such revenues reflect revenues derived from the Company's
management of the ALPHA Fund and are comprised of: (1) INCENTIVE PAYMENTS OF
25% ON NEW PROFITS to the ALPHA Fund from each limited partner - "New Profit"
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is defined as the amount by which the amount of profit credited to a limited
partners capital account at the end of a calendar month (before deduction of
any incentive fee payable in respect to that month - The "Capital Account" is
an account established for each limited partner to which is credited each
limited partners initial contribution and is increased or decreased by the
close of business on the last day of each month by the amount of additional
contributions, allocation of profits, and incentive allocations; (2) A PORTION
OF BROKERAGE COMMISSION - The ALPHA Fund charges a $25.00 turn around fee (in
and out of one contract). The Company receives $14 of that fee; (3)ACCRUED
INTEREST ON THE ALPHA FUND'S CAPITAL ASSETS - estimated at approximately 5% of
the ALPHA Fund's total assets annually; and (4) PARTNERSHIP ALLOCATIONS - Net
income is allocated to the Company on a pro-rata monthly basis based upon its
percentage ownership in the ALPHA Fund at the beginning of the month. The
Company currently owns 5% of the ALPHA Fund.
During 1999 commission and incentive revenues to the Company equaled
$133,831 and interest revenues equaled $32,756. Revenues increased mostly due
to the amount of funds the Company has under management which were $281,554 at
the beginning of 1998 and rose to $664,240 at the end of 1998; during 1999 the
amount of funds under management increased to $2,024,574. Although net
performance on the ALPHA Fund was higher at 34% during 1998, as opposed to
approximately 10.6% in 1999, and resulted in proportionately higher revenues
from incentive payments to the Company during the 1998, the substantial
increase in total amount of funds under management provided an overall revenue
increase to the Company during 1999. This also resulted in increased interest
income derived from the ALPHA Fund which equaled $32,756 during 1999 as
compared to $12,485 in 1998. Management expects that revenues will continue to
increase as the amount of funds under management increases. The Company has
increased the amount of funds under management by approximately 300% annually
over the last two years and intends to continue admitting qualified clients
into the ALPHA Fund. Percentage of revenues derived from each of the four
sources will vary in accordance with numerous factors and will be closely
related to the amount of net profits the Company can achieve in its trading
activities. The Company believes that the 10.6% net profit to the ALPHA Fund
achieved in 1999 was not indicative of its potential; it achieved net profits
percentages of 24% and 34% respectively in 1997 and 1998 resulting in a 29%
annual compounded return since inception although past performance is not
indicative of future results. The Company's goal is to have $10,000,000 under
Management by the end of 2000. The Company estimates it can expect
approximately $95,000 in revenues for every $1,000,000 under management
assuming a 10% annual return. A 20% annual return would provide approximately
$130,000 in revenues to the Company for every $1,000,000 under management.
INVESTMENTS
The Company also had an increase in assets during 1999. The Company's
assets are mostly comprised of a limited amount of property and equipment,
accounts receivable (from the ALPHA Fund), and its investment in the ALPHA
Fund. In 1998, the Company's investment in the ALPHA Fund was $4,254; at
December 31, 1999 that investment was $99,266 and accounted for the majority
of the Company's assets at December 31, 1999 which equaled $107,367. The
Company can redeem a portion of its investment, if necessary, so long as it
maintains the minimum amount required under the Limited Partnership Agreement.
The Company withdrew $95,000 from the ALPHA Fund in 1999 to fund operations
which offset its contributions to the ALPHA Fund in that same year of $183,600
resulting in cash flows from its investing activities of $88,600. A key
component in the Company's profit potential is its re-investment into the
ALPHA Fund of a portion of the profits and fees generated from the ALPHA Fund.
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Currently the Company's investment equals 5% and the Company intends to
maintain or increase such interest through retained earnings investment.
LIABILITIES/CONTINGENT LIABILITIES
The Company has no long term liabilities and current liabilities of
$5,646 the majority of which is attributable to accounts payable. As of
December 31, 1999, the Company's principal commitments include lease payments
on its current office space of $1,735 per month through October 31, 2000 with
total future minimum lease payments of $17,350.
The Company also entered a second lease in July of 1999 on office
facilities for five years commencing in December of 1999. The lease provides
for an initial base rent of $4,020 per month plus the Company's proportionate
share of operating expenses with yearly increases in the monthly payments.
The Company has elected to default on the lease and has lost its down payment
of $5,000. The Company does not know if the landlord will seek to enforce the
terms of the new lease. If the new lease is enforced, the Company could be
liable for an amount up to the total of initial base rent adjusted as provided
for in the lease, and its proportionate share of the operating expenses. The
Company has been informed by the its "new" landlord that the space has been
rented to another business.
The Company has offered to repurchase 100,000 shares of its common stock
from Mr. Joseph Robe for $30,000. The offer is part of a termination of a
consulting agreement between Mr. Robe and the Company for an alleged breach of
the Agreement by the consultant. Upon Mr. Robe's acceptance of the offer, the
Company will pay him $30,000 and the subject shares will be returned to the
treasury.
FINANCING ACTIVITIES
The Company has suffered a net loss in each of the last two years. The
Company has funded its losses partially through revenues, cash flows from
investing activities in 1999, and partly through financing activities
comprised of sales of its common stock. During 1998, the Company received
$33,500 for 114,000 shares of its common stock. During 1999, the Company sold
a total of 2,260,000 of its unregistered common shares for proceeds to the
Company of $245,875 including $65,000 in proceeds from an offering which
commenced on November 1, 1999. During 2000, the Company completed the
offering which commenced in November of 1999 with an additional $250,000 in
proceeds to Company.
CASH REQUIREMENTS OVER THE NEXT YEAR
The Company has estimated its cash requirements for day to day operations
over the next 12 months to be approximately $ 212,300. Cash requirements
include lease payments of $1,735 per month (or approximately $20,800 over the
next 12 months); legal and accounting expenses (including those necessary to
maintain compliance of the ALPHA Fund) estimated at $22,000 for legal and
$26,000 for accounting; salaries of $96,000; automobile lease payments of
$12,000 per year; telephone and data services of approximately $12,500; and
postage, printing and miscellaneous other expenses for printing, mailing, etc.
of approximately $23,000. These estimates do not reflect any unexpected
expenses which may be incurred or additional investment in the ALPHA Fund made
by the Company. The Company hopes to achieve sufficient revenues from the
ALPHA Fund to satisfy its cash requirements; however, revenues are entirely
dependent on the Company's ability to achieve increases
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in net assets of the ALPHA Fund and will also be a product of the amount of
funds under Management. The Company has the option of withdrawing a portion of
its assets to finance operations if necessary; however, it may choose to
maintain its interest and seek other methods of financing either debt or
equity to raise capital. It is estimated that the Company will compensate
Pistor, who expends 100% of his time on the Company's business, approximately
$50,000 during 2000, an amount similar to what he received in 1999; the
Company's cash requirements reflect the inclusion of this estimated
compensation although Pistor may not receive that amount. He also has the
option of accruing or deferring any such compensation. These cash requirements
do not include any compensation to Klaehre although the Company intends to
compensate Klaehre in the future.
SEASONAL ASPECTS
There are no seasonal aspects to the Company's business.
INFLATION
Because inflation has an overall impact on major markets, it would
influence the trading strategies of the Company's ALPHA Fund which, in turn,
could affect the Company's ability to raise additional client funds. There is
no direct effect of inflation on the Company's business.
Comparative- Years Ended December 31, 1999 and 1998
- ---------------------------------------------------
The following discussion addresses the Company's financial conditions and
results of its operations.
During 1999 the Company has a net loss of $165,804 compared with a net
loss for 1998 of $58,398. The increase is mostly attributable to an increase
in general and administrative expenses which nearly tripled between the two
years. The Company's revenues, which more than doubled from $64,301 in 1998
to $166,587 in 1999, were not sufficient to provide for its general and
administrative expenses. The increase in revenues is due to an increase in
the amount of funds under the Company's Management which increased revenues
from all three related sources: incentives and transaction fees revenues in
1999 were $133,831 in 1999 as opposed to $51,816 in 1998; and, interest on
ALPHA Fund assets was $32,756 in 1999, 2.6 times higher than the $12,485
interest income of the prior year. The Company's equity in net income of the
ALPHA Fund increased from $1,240 in 1998 to $6,412 in 1999 as a result of its
overall increase in investment in the ALPHA Fund.
The large increase in general and administrative expenses reflects a
gearing up of the Company's business operations between the two years. The
Company incurred approximately $75,000 in fees/salaries due to the hiring of
Ms. Horn during 1999 and payment made to Pistor for services rendered to the
Company with little compensation paid during 1998. During 1999, the Company
also incurred substantially larger accounting fees and legal fees (a combined
increase over last year of more than $43,000) as it began incurring expenses
related to fund raising, and the filing of this registration statement, as
well as other compliance matters; the increase also reflects the payment of a
retainer to an attorney of $25,000 with no similar expense in 1998. The
Company had $46,000 in consulting fees in 1999 which was a substantial
increase over consulting fees paid in 1998 which were only $7,738. Several
other general and administrative expenses reflected large increases in 1999
including printing, telephone, advertising, postage, travel expenses, licenses
and dues, all related to a larger amount of funds under management as well as
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the Company's efforts to develop its business and position itself in the
industry. Expenses which remained similar between the two years were mostly
fixed expenses such as rent, internet connections, and the Company's data
quotation service. The Company incurred an expense of $5,000 in 1999
associated with the lease of a second office space. The Company elected not
to take the space and lost its deposit. Operating costs and expenses were 2.4
times more than revenues during 1998 and 2.5 times more than revenues in 1999.
The Company expects its operating costs to continue to rise as its business
grows and it has more funds under management although it hopes to decrease
such costs as a percent of revenues during its next fiscal year.
Until such time as the Company achieves $ 500,000 in revenues, it will
likely continue operate at a loss.
Trends/Uncertainties/Risk Factors Affecting Continuing Operations
- -----------------------------------------------------------------
COMPANY'S LIMITED OPERATING HISTORY - The Company is a relatively new
venture and lacks a significant operating history. The Company is faced with
all of the problems inherent in a new business enterprise.
COMPETITION - Substantial competition in the investment business exists
and there can be no assurance that the Company will be able to successfully
compete. Most of the Company's competitors have greater financial and
marketing resources than the Company as well as more experience. (See this
Part I, Item 1, BUSINESS OF THE REGISTRANT, Competitive Business
Conditions/Competitive Position in the Industry/Methods of Competition.)
UNCERTAINTY OF MARKET ACCEPTANCE/LACK OF DIVERSIFICATION - The Company's
financial service products compete in a highly competitive market for
investment opportunities. The Company's prospects for success depend on its
ability to successfully manage and increase the net assets of the ALPHA Fund,
attract new investors to the ALPHA Fund in its capacity as general partner, or
organize other funds. Investors may be inhibited from doing business with the
Company because of commitments to other products. In addition, commodities and
futures are highly speculative investments and the Company could have
difficulties in attracting investors or organizing additional funds.
Currently, the Company offers only one service, that is its management of the
ALPHA Fund. The Company, as the ALPHA Fund's general partner, is prohibited
from utilizing general advertising and solicitation and must rely on
reputation and performance to attract new investors. As a result, the demand
and market acceptance for the Company's service is uncertain. (See Principal
Products or Services and Their Markets and Distribution Methods of the
Products or Service under this PART I, ITEM 1, BUSINESS OF THE REGISTRANT.)
INVESTMENT RISKS - Investments in commodities futures is a highly
speculative business and may result in losses. This may affect the ability of
the Company to attract investors for its ALPHA Fund, and result in a loss of
the Company's capital currently invested in it. As of this date, revenues to
the Company are entirely dependent on the success of the ALPHA Fund although
Management attempts to reduce investment risks through its trading strategies
as the Commodity Pool Operator of the ALPHA Fund. Trading losses or lack of
profits from the ALPHA Fund would have an material adverse effect on the
Company. In addition, the Company itself is subject to the same investment
risks as the limited partners in the ALPHA Fund, that is, the Company has
ownership interests in the ALPHA Fund, which equaled 5% at December 31, 1999
or $99,266 which is higher than the amount required by its partnership
agreement with the limited partners (1% of the aggregate capital contributions
made by the limited partners or $200,000, which ever is less). The Company
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<PAGE>
intends to maintain interest in the ALPHA Fund in excess of its required
investment subjecting it to the same risks as its limited partners and intends
to keep increasing its interest in the ALPHA Fund by depositing much of the
revenues derived from the ALPHA Fund back into the fund. All of the Company's
investment in the ALPHA Fund should be considered at risk.
INVESTMENT RISKS SPECIFICALLY RELATED TO COMMODITIES. The following
risks are specifically related to the Company's investment in the ALPHA Fund
and to the Company's ability to generate revenues from new profits on the
ALPHA Fund's assets:
a. Commodities contract prices are highly volatile. Price
movements for commodities contracts may be influenced by many factors
including the changing supply and demand relationships, trade, fiscal and
monetary and exchange control programs, and policies of governments, domestic,
foreign political and economic events, changes in domestic or foreign interest
rates and rates of inflation, currency devaluation, and re-evaluations and
emotions of the market place in general. Governments from time to time
intervene directly with markets by regulations in certain markets. Such
intervention is often intended to influence prices directly.
b. The low margin deposits normally required in commodity contact
trading (typically between 2% and 25% of the value of the contract purchased
or sold) permit an extremely high degree of leverage. Accordingly, a
relatively small price movement in a contract can result in immediate and
substantial losses to the investor. Like any other leveraged instrument, any
trade could result in losses in excess of the amount invested.
c. Most US commodity exchanges limit fluctuations in certain
commodity interest contract prices during a single day by regulations referred
to as "daily price fluctuation limits" or "daily limits". During a single
trading day, no trades may be executed at prices beyond daily limits. Once the
price of a particular contract has increased or decreased by an amount equal
to the daily limit, positions in the contract can neither be taken or
liquidated unless traders are willing to effect trades at or within the limit.
Contract prices have occasionally moved the daily limit for several
consecutive days with little or not trading. Similar occurrences could
prevent the Company, as general partner and fund trader, from liquidating
unfavorable positions and subject the ALPHA Fund to substantial losses which
could exceed the margin initially committed in the trade. Even if contract
prices have not moved the daily limit, trades may not be able to be executed
at favorable prices if little trading in the contracts involved is taking
place.
d. The CTFC and US exchanges have established limits referred to
as "speculative position limits" or "position limits" generally on the maximum
net long or net short (although some exchanges set such limits based upon the
total or gross) speculative position which any person or group of persons may
hold or control in particular commodity interests or contracts. In addition,
the CTFC requires US exchanges to set position limits on all contracts that do
not have such limits. The assets of the ALPHA Fund and all other accounts
managed and controlled by the Company will be combined (aggregated) for
position limit purposes. The Company believes that established position
limits will not adversely affect its contemplated trading for the ALPHA Fund
especially at this time when it is managing only the one fund. However, it is
possible from time to time that the trading decisions of the Company as the
general partner, may have to be modified and positions held or controlled by
it may have to be liquidated in order to avoid exceeding applicable position
23
<PAGE>
limits. Such modifications or liquidation, if required, could adversely
affect the performance of the ALPHA Fund. Because the Company manages only
one fund, the risks involved in exceeding position limits is unlikely. It will
be a factor however, when and if the Company establishes other pools.
e. The ALPHA Fund's investment strategies require a liquid,
properly functioning market. Under certain extraordinary circumstances, the
liquidity of some trading instruments may be impaired because pricing
mechanisms may not function properly. The ALPHA Fund could suffer substantial
losses if the Company is forced to liquidate positions under such
circumstances; the Company, as a result would see a loss of revenues.
f. Each of the exchanges on which futures are traded and the
CFTC typically have the right to suspend or limit trading in the contracts
which each such exchange lists. Such suspension of limitation could render it
impossible for the ALPHA Fund to liquidate its positions and thereby expose it
to losses. Also, there is no guarantee that exchange and other secondary
markets will always remain liquid enough for the Company to close out existing
futures positions. It is also possible that an exchange or the CTFC could
order immediate liquidation and settlement of a particular contract, or order
that trading in a particular contract be conducted for liquidation only.
g. The trading approach of the Company may not be successful and
thereby may cause the ALPHA Fund to incur losses on the positions that it
initiates.
CONFLICTS OF INTEREST AND POTENTIAL CONFLICTS OF INTEREST - The Company
is responsible for making all decisions for the ALPHA Fund including
investment decisions. The Company is also free to manage accounts for other
investors, investment vehicles, itself, its employees, its principals, and
their respective families, and is free to trade on the basis of methods
similar or identical to those it uses in its capacity as general partner to
the ALPHA Fund. If the Company is making trading decisions for other accounts
at or about the same time, including accounts in the name of the Company and/
or its principals, the Company may compete with the ALPHA Fund for the same or
similar positions as its own account or the accounts of its principals, its
employees or their respective families. The Company, as the general partner
to the ALPHA Fund, is responsible to exercise good faith and fairness in all
dealings affecting the ALPHA Fund. The Company, especially Klaehre, may run
into conflicts of interest in the management of the ALPHA Fund and the
management of other funds established and managed by the Company, if any, as
well as other accounts he may manage. In addition, Klaehre and/or Pistor may
elect to work for other corporations with the same or similar purposes. There
is no agreement written or otherwise prohibiting the same. Additional
conflicts of interest could arise should either of those individuals do so.
There is no assurance that any conflict of interest that may arise will be
resolved in favor of the Company.
DEPENDENCE ON MANAGEMENT - The Company is highly dependent upon the
services of Klaehre and Pistor, both of whom are officers and directors of the
Company as well as majority stockholders. The Company, because its revenues
are dependent on profits to the ALPHA Fund, is especially dependent on Klaehre
who is the principal trader for the ALPHA Fund. Accordingly, the Company
would be adversely affected if the services of either person ceased to be
available to the Company. Klaehre and Pistor have no employment contracts in
effect with the Company; Klaehre currently receives no salary; nor does the
Company have any key man insurance policies. (See this Part I, Item 5.
DIRECTORS, EXECUTIVE, OFFICERS, PROMOTERS AND CONTROL PERSONS.)
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<PAGE>
NEED FOR ADDITIONAL FINANCING - As of the present date, the Company has
been able to support its operations through loans from principals during the
first few months, profits and fees generated by the ALPHA Fund's activities,
and through various private placements of its common stock. Proceeds from
recent offerings, including a private placement which closed on February 18,
2000, have been utilized for general working capital and/or as additional
contributions by the Company to the ALPHA Fund. There can be no assurance,
however, that funds will be available to the Company when and as needed. The
Company may be forced, at times, to redeem a portion its interest in the ALPHA
Fund. Notwithstanding the Company's ability to withdraw a portion of its
contributions to the ALPHA Fund, unless the Company is able to generate
sufficient revenues to successfully develop and sustain its business
operations, the survival of the Company will likely depend on additional
financing. No assurance can be made that such financing would be available,
and, if available, whether it would take the form of debt or equity financing.
In either case, additional financing could have a negative impact on the
Company's shareholders in the form of dilution.
CONTROL BY CURRENT STOCKHOLDERS - Currently there are 9,215,000 common
shares issued and outstanding, not including 185,000 shares subscribed for but
unissued as of the date of this registration statement, (9,075,000 at December
31, 1999) with 5,410,000 shares, or 64.5%, owned by Management, sufficient to
give them voting control of the Company. Since the Company's common stock
does not have cumulative voting rights, they will be able to continue to
determine and direct the affairs of the Company. (See This Part I, Item 4,
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.)
Item 3. DESCRIPTION OF PROPERTY
The Company owns no property and leases office space sufficient to
conduct its day to day operations as well as the management of the Alpha Fund.
Its office space is located at 429 Seabreeze Blvd., Fort Lauderdale, Florida
33316 and is approximately 1,000 square feet. The Company pays $1,735 per
month for the space. The lease was entered into in October of 1998 for one
year, but was extended for one additional year until October 31, 2000. The
Company will stay at its present location for the foreseeable future and is in
the process of renewing its lease with its present landlord.
The Company entered into a lease on a second facility during July 1999
for a five year term commencing December 1999. The lease provided for an
initial base rent of $4,020 per month plus the Company's proportionate share
of operating expenses and annual adjustments to base rent. During December of
1999, the Company elected not to honor the terms of the lease and forfeited
its $5,000 security deposit. (See Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OR PLAN OF OPERATION, Contingent Liabilities.)
Item 4. SECURITY OWNERSHIP OF BENEFICIAL OWNERS AND MANAGEMENT
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth the amount and nature of beneficial
ownership of each person known to a beneficial owner of more than five percent
of the issued and outstanding shares of the Company. The following
information is based on 9,215,000 shares issued and outstanding as of February
17, 2000. (The issued and outstanding at that date does not reflect an
additional 185,000 shares subscribed for but not yet issued.):
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
_____________________________________________________________________________
Name and Amount and
Address of Nature of
Title of Beneficial Beneficial Percent
Class Owner Ownership Of Class
- --------- ------------- ----------- ----------
Common Ralph Pistor(1) 2,958,000 32.1%
1156 S. Ocean Lane #203
Fort Lauderdale FL 33301
Common Igor A. Klaehre(1) 2,958,000 32.1%
333 Sunset Dr. #303
Fort Lauderdale
FL 33301
Common Mark Delott (2) 706,100 7.7%
1946 Mansion Drive
Fairfield IO 52556
Common Robert Rein(3) 635,000 6.9%
23439 Mirabella Circle
Boca Raton FL 33433
_______________________________________________________________________
(1) Also an officer and director
(2) 500,000 shares are held in Mark Delott's record name with the balance
held in a clearing house name.
(3) 350,000 shares are held in Robert Rein's record name with the balance held
in a clearing house name.
The following table sets forth the amount and nature of beneficial
ownership of each of the executive officers and directors of the Company. The
following information is based on 9,215,000 shares issued and outstanding as
of February 17, 2000. (The issued and outstanding shares at that date does not
include 185,000 shares subscribed for but unissued.)
SECURITY OWNERSHIP OF MANAGEMENT
_____________________________________________________________________________
Amount and
Name and Address of Nature of
Title of Beneficial Beneficial Percent
Class Owner Ownership Of Class
- -------- ------------------- ----------- ------------
Common Ralph Pistor 2,958,000 32.1%
1556 S. Ocean Dr. #303
Fort Lauderdale FL 33301
Common Igor A. Klaehre 2,958,000 32.1%
333 Sunset Dr. #303
Fort Lauderdale
FL 33301
Common Paul Olin 25,000 0.3%
763 Riford Rd
Glen Ellyn, IL 60137
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Officers & Directors as a group 5,941,000 64.5%
_____________________________________________________________________________
(1) None of the Company's officer or directors have any rights to acquire
additional shares of the Company's common stock, beneficially or
otherwise.
CHANGES IN CONTROL
The Company has no arrangements which might result in a change in
control of the Company.
Item 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
OFFICERS AND DIRECTORS
The names and ages of all directors and executive officers of the
Company, along with their respective positions, term of office and period such
position(s) was held, is as follows:
Name Age Position Held & Since(1)
- -------------------- --- ---------------------
Ralph Pistor(2) 44 President, Chief Operating Officer, Chief
Financial Officer, Treasurer, Chief Executive
Officer and Director since Oct. 1996
Igor A. Klaehre 50 Vice President, Director, Secretary
Since Oct. 1996
Paul Olin 43 Director since September 1999
(1) Each of the above individuals will serve in their respective capacities
until the next annual meeting of the shareholders or until a successor is duly
qualified and elected.
(2) Ralph Pistor is also the sole director and an officer of the Company's
recently founded subsidiary, Frontline Investment Management, Inc.
- ------------------------
BIOGRAPHICAL INFORMATION ON OFFICERS AND DIRECTORS and KEY PERSONNEL
Igor A. Klaehre Age 50. Mr. Klaehre currently serves as Executive
Vice-President and a Director of the Company which he co-founded in 1996 with
Mr. Pistor. He is currently the principal trader for the ALPHA Fund and is
responsible for all trading decisions and supervises all persons so engaged.
From 1986 through 1991, he served as a member of the Kansas City Board of
Trade in Kansas City, Missouri as a floor trader and options specialist.
During this period he developed a proprietary trading approach which is now
utilized by the ALPHA Fund and which he also utilized from 1991 to 1996 when
he left the floor to trade various futures and options using his proprietary
approach. From 1977 through 1986, Klaehre was employed by the brokerage firm
of Bache, Halsey, Stuart and Frankfurt where he was an account executive. The
firm merged with Prudential Securities and he was promoted to Senior Vice
President/Investments for the Prudential's Frankfurt operation. Klaehre has a
Bachelors of Arts degree in political science from Georgia University,
Columbia College.
27
<PAGE>
Ralph D. Pistor Age 44. Mr. Pistor is the President and a Director of the
Company which he co-founded in 1996 with Klaehre. He currently is responsible
for overseeing all of its day to day operations. He is also the sole
officer/director of Frontline Investment Management Inc., a Florida
corporation founded on January 13, 2000 as a wholly owned subsidiary of the
Company. In 1986, he founded and became President of Spectrum Diagnostics,
Inc., a distributorship for medical instrumentation. From 1979 through 1985,
he served as Vice President of General Signs Express Services, Inc. of
Florida, a manufacturing firm using licensed technology from Europe. He
attended Berlin University's program in international business law in 1975 and
received a BA in International Business from Hamburg Trade College in 1978.
Paul Olin - Age 43, is currently a director of the Company. He recently
served, until December of 1999, as President of Previsor Asset Management of
Chicago formed for the purpose of consolidating several futures brokerage
firms and commodity trading advisors. He was employed by Commodities
Corporation, a subsidiary of Goldman Sachs of Chicago, Illinois from 1994
through 1998 where he was Vice President, Portfolio Management and Manager
Selection during 1997 and 1998, Associate VP, Trading Administration during
1997, and Assistant Vice President of Trading Development from 1994 through
1997. He has a Bachelors of Business Administration from Vanderbilt
University.
Key Personnel
- -------------
Ruth F. Horn - Age 48. Ms. Horn was hired by the Company in April of 1999 as
Vice President of Sales and Marketing. From 1984 through 1997, when she
returned to the managed futures industry, Ms. Horn worked as a lobbyist and
fund raiser for political organizations and as a marketing consultant for
financial and trading organizations. She worked as an intern under David
Stockman at the Office of Management and Budget and was Assistant Treasurer
for the 1984 Reagan/Bush campaign. Prior to that, from 1977 to 1981, Ms. Horn
worked as a broker/trader for Sinclair & Company, a commodity trading and
precious metal firm in New York City. She received her MBA from the
University of Chicago in 1983.
FAMILY RELATIONSHIPS
There are no familial relationships between the Company's officers and
directors.
INVOLVEMENT IN OTHER PUBLIC COMPANIES.
None of the Company's officers or directors are involved with any public
companies which would considered "reporting companies".
INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS
To the knowledge of Management, during the past five years, no present or
former director, executive officer, or person nominated to become a director
or executive officer of the Company:
(1) Filed a petition under federal bankruptcy laws or any state
insolvency law, nor had a receiver, fiscal agent or similar officer appointed
by a court for the business or property of such person, or any partnership in
which he was a general partner at or within two years before the time of such
filing, or any corporation or business association of which he was an
executive officer at or within two years before the time of such filing;
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<PAGE>
(2) Was convicted in a criminal proceeding or named subject of a
pending criminal proceeding (excluding traffic violations and other minor
offences);
(3) Was the subject of any order, judgment or decree, not
subsequently reversed, suspended or vacated, of any court of competent
jurisdiction, permanently or temporarily enjoining him or her from or
otherwise limiting his/her involvement in any type of business, securities or
banking activities;
(4) Was found by a court of competent jurisdiction in a civil
action, by the Securities and Exchange Commission or the Commodity Futures
Trading Commission, to have violated any federal or state securities law, and
the judgment in such civil action or finding by the Securities and Exchange
Commission has not been subsequently reversed, suspended, or vacated.
Item 6. EXECUTIVE COMPENSATION
There are no employment agreements in effect, written, verbal or
otherwise with members of management. Pistor and Klaehre have an
understanding with the Company that they will in the future enter into
employment agreements and/or some other compensatory arrangement with the
Company at such time as it is determined that the Company has sufficient cash
flows from operations to pay them. Because Klaehre and Pistor occupy two of
the three positions on the Board of Directors, and also own a majority of the
outstanding shares, they are in a position to determine their future
compensation. During each of the last two years, the Company has compensated
Pistor for services performed. (See "Summary Compensation Table", below.) He
expends almost 100% of his time on the Company's business. Klaehre has
received no compensation to date and serves the Company on an "as needed"
basis.
The following table sets forth certain information as to compensation
received by the Company's Chief Executive Officer who is also a director of
the Company and its President and Treasurer, as of December 31, 1999, 1998 and
1997.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long Term Compensation
- -------------------------------------------------------------------------------------------------
Annual Compensation Awards Payouts
- -------------------------------------------------------------------------------------------------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Other All
Name Annual Restricted Other
and Compensa- Stock Underlying LTIP Compensa-
Principal sation Award Options/ Payouts tion
Position Year Salary($) Bonus($) ($) ($) SAR's(#) ($) ($)
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Ralph D. Pistor(1) 1999 -0- -0- $47,089(2) -0- -0- -0- -0-
President, COO, CFO 1998 -0- -0- $24,000(2)(3) -0- -0- -0- -0-
Treasurer, CEO 1997 -0- -0- -0- -0- -0- -0- -0-
Director
- -------------------------------------------------------------------------------------------------
(1) Pistor gets reimbursed for all out-of-pocket expenses and is allowed the use of a Company
leased car.
(2) Because there are no specific arrangements regarding compensation, Pistor's compensation is
categorized as other annual compensation.
(3) During 1998, Pistor accrued $24,000 in compensation which he contributed to the Company's
capital during that year. He did not receive equity in the Company for the contribution.
29
<PAGE>
(4) Pistor will likely receive approximately $50,000 in 2000 although there is no written or
verbal agreement regarding the same as of this date; and, he is in a position to control his
compensation.
</TABLE>
OPTIONS/SAR GRANTS
There were no stock options or stock appreciation rights granted to any
executive officer since its inception through present date.
AGGREGATED OPTION/SAR EXERCISES AND FISCAL YEAR END OPTION/SAR VALUE TABLE
Not applicable.
LONG TERM INCENTIVE PLANS
There are no long term incentive plans in effect and therefore no awards
have been given to any executive officer in the past year.
COMPENSATION OF DIRECTORS
The Company pays no fees to members of the Company's Board of Directors
for the performance of their duties as directors. The Company has not
established committees of the Board of Directors. Mr. Olin received a one-time
only grant of 25,000 shares of the Company's stock as a bonus for joining the
Company's Board of Directors. (See Item 7. CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS, below.)
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE IN CONTROL
ARRANGEMENTS
The Company has no written or verbal employment contracts in effect with
any of the members of its Board of Directors or its executive officers nor are
there any agreements or understandings with such persons regarding termination
of employment or change-in-control arrangements. (See Item 7, below: CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS.)
Item 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During the past years, the following transactions occurred or are
proposed to occur between the Company and an officer or director, nominee for
officer or director, security holder owning 5% or more of the Company's
outstanding shares, or any member of the immediate family of the foregoing
individuals:
During 1998 the Company advanced $11,000 to an executive officer, Ralph
Pistor, which was repaid to the Company during 1999. The executive officer
was not charged interest.
Both Pistor and Klaehre, currently serve the Company in various
capacities as officers and Directors; Pistor is also the sole director of the
Company's wholly owned subsidiary, Frontline. Klaehre, is the trader for the
Company's ALPHA Fund and does not receive a salary, commission or otherwise.
Any profits seen by the ALPHA Fund, and hence the Company's share of such
profits, are largely the result of Klaehre's efforts. Pistor has received
compensation in each of fiscal years 1998 and 1999 although he contributed his
1998 compensation to the Company's capital. In 1999, he received $47,089 for
services performed. There is no employment agreement in effect with either of
these officers. Because these gentlemen comprise 2/3 of the Board of
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<PAGE>
Directors and hold controlling interest in the Company, the possibility arises
that the Company could be authorized to compensate one or both individuals for
services performed or as incentive to perform. Such compensation would be
based on numerous factors and could include, but not be limited to, restricted
stock awards, salary and/or cash bonuses, stock options or stock appreciation
rights, among other things, and could be substantial. The Company does not
have any immediate plans or understandings with these individuals regarding
any future compensation other than it will likely compensate Pistor during
this fiscal year approximately the same amount as in 1999. Pistor, however,
may defer any compensation the Company agrees to pay him.
Mr. Paul Olin, received 25,000 shares of the Company's common stock as a
bonus for joining the Company's Board of Directors. The shares were issued in
January of 2000 at a deemed value of $1.00 per share, the same price paid by
investors in a private placement being made at that time. The Company's stock
in the over-the-counter market at the date of issuance was approximately $1.75
per share.
Klaehre and Pistor owned a 3.04% position in the ALPHA Fund at December
31, 1999; the Company (in which Klaehre and Pistor own 64.2% of the
outstanding shares) owned 5% of the pool as of December 31, 1999
Mark Delott, an individual who own more than 5% of the Company's
outstanding shares, received a total of $90,000 during 1999 and early 2000 for
financial consulting services provided to the Company.
Item 8. DESCRIPTION OF SECURITIES
The authorized capital stock of the Company consists of 50,000,000 shares
of Common Stock, $.001 par value per share and 1,000,000 shares of Preferred
Stock, $1.00 par value per share.
COMMON STOCK
The holders of Common Stock (i) have equal ratable rights to dividends
from funds legally available therefore, when, as and if declared by the Board
of Directors of the Company; (ii) are entitled to share ratably in all of the
net assets of the Company, after payment of liabilities and Preferred Stock
obligations which may be outstanding, available for distribution or winding
up of the affairs of the Company; (iii) do not have preemptive subscription or
conversion rights and there are no redemption or sinking fund applicable
thereto; and (iv) are entitled to one non-cumulative vote per share, on all
matters which shareholders may vote on at all meetings of shareholders. The
outstanding shares of Common Stock are not subject to further call or
redemption and are fully paid non-assessable. The Company, however, does
not anticipate paying dividends on its Common Stock in the foreseeable future
but plans to retain earnings, if any, for the operation and expansion of its
business.
There are no provisions in the Company's charter or bylaws which would
delay, defer, or prevent a change in control of the Company.
PREFERRED STOCK
The Company is authorized to issued up to 1,000,000 shares of preferred
stock, par value $1.00 (the "Preferred Stock"). The Company has no Preferred
Stock outstanding and has not established a class or series of any Preferred
Stock with the rights and preferences associated therewith. The Board of
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<PAGE>
Directors is authorized and empowered to establish the rights and preferences
a one or more series or class of the Preferred Stock. The Board of Directors
does not need to seek shareholder approve regarding the establishment of such
series of class of Preferred Shares.
NON-CUMULATIVE VOTING
The holders of shares of Common Stock of the Company do not have
cumulative voting rights which means that the holders of more than fifty
percent (50%) of such outstanding shares, voting for the election of
directors, can elect all of the directors to be elected, if they so choose,
and, in such event, the holders of the remaining shares will not be able to
elect any of the Company's directors. Management currently owns 64.5% of the
outstanding shares of the Company.
PART II
Item 1. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY
AND RELATED STOCKHOLDER MATTERS
SHARE PRICE HISTORY
The Company's common stock has been quoted on the OTCBB since May 2,
1997, Under the symbol of "WNMX". Prior to that date, no active market
existed for the Company's Common Stock. The following table sets forth the
high/low information of the Company's Common stock for the periods indicated.
It should be understood that such over-the-counter quotations reflect
inter-dealer prices without retail mark-up, markdown or commission.
Quarter Ended High Bid Low Bid
- ------------- -------- -------
1999
- ----
December 31 $1.75 $1.0625
September 30 $1.625 $1.0313
June 30 $2.2188 $0.0700
March 31 $0.07 $0.0156
1998
December 31 $0.0313 $0.0156
September 30 $0.1875 $0.03125
June 30 $0.1875 $0.1876
March 31 $0.3125 $0.1875
Although the Company's Common Stock is currently quoted on the OTCBB, in
early 1999, the National Association of Securities Dealers Inc. amended its
listing requirements to limit quotations on the OTCBB to securities of issuers
that are current in their reports filed with the Securities and Exchange
Commission and inhibits quotations by a member unless an issuer has made
current filings. Companies trading on the OTCBB which are not "reporting
Companies" received a phase in schedule to meet the new listing requirements.
In order to be eligible to make current filings, the issuer must first
register its securities pursuant to Section 12 of the Securities Exchange Act
of 1934 (the "Exchange Act"). The Company's phase in date is May 1, 2000. If
the Company fails to meet new listing requirements for its securities by May
1, 2000, it will be delisted from the OTCBB and the Company will no longer be
able to effect trades in its securities on the OTCBB until it clears comments
with the SEC and reapplies for listing.
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<PAGE>
HOLDERS
As of February 17, 2000 there were 32 shareholders of record of the
Company's common stock.
DIVIDENDS
The payment by the Company of dividends, if any, in the future, rests
within the discretion of its Board of Directors and will depend among other
things, upon the Company's earnings, its capital requirements and its
financial condition, as well as other relevant factors. The Company has not
paid or declared any dividends to date due to its present financial status.
The Company does not anticipate paying dividends on its common stock in the
foreseeable future but plans to retain earnings, if any, for the operation and
expansion of its business. There are no restrictions that limit the ability to
pay dividends on common equity or that are likely to limit the same in the
near future.
Item 2. LEGAL PROCEEDINGS
The Company is not a party to any pending legal proceedings and, to the
best of its knowledge, no such action by or against the Company has been
threatened. None of the Company's officers, directors, or beneficial owners
of 5% or more of the Company's outstanding securities is a party to a
proceeding adverse to the Company nor do any of the foregoing individuals have
a material interest in a proceeding adverse to the Company.
Item 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
None
Item 4. RECENT SALES OF UNREGISTERED SECURITIES
The Company has issued the following unregistered common shares in the
past three years.
1. In August of 1997, 101,000 shares of the Company's common stock were
issued to one shareholder upon exercise of 101,000 warrants for proceeds to
the Company of $101,000. The warrants were initially issued to the
shareholder as part of an offering by the Company which commenced in January
of 1997 and closed on February 17, 1997 in which Company offered a total of
10,000 Units at $5.00 per Unit. Each Unit was comprised of 50 common shares
and 95 warrants to purchase common stock. Warrants were exercisable at $1.00
and entitled the holder to one share of common stock upon exercise. The
warrants expired on January 31, 1999. The Company relied upon the exemption
provided for under Regulation D, Rule 504 in the conduct of the initial
offering as well as for the exercise of the 101,000 warrants. The Company
believes it was entitled to rely upon the exemption because it was not a
"reporting company", nor an investment company, and it was raising funds for
a specific purpose, that is general working capital expenses, promotion and
financial services related to its business plan. The offering was well with
the exemption's proceeds limitation of $1,000,000.
2. During August 1998, in connection with a consulting agreement, the
Company issued 100,000 shares of restricted stock to Mr. Joe Robe for $30,000
in cash. The shares were issued in reliance upon Section 4(2) of the Act. The
agreement was terminated in August of 1999 by the Company; the Company alleged
various breaches of the consulting agreement by Mr. Robe. The Company offered
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<PAGE>
to return the $30,000 paid by Mr. Robe in exchange for the return of his
100,000 shares. The issue is unresolved.
3. During August 1998, the Company issued an additional 14,000 shares of
its common stock to 3 individuals for cash at $0.25 per share for proceeds to
the Company of $3,500. The foregoing issuance were made in reliance on
Section 4(2) of the 1933 Act as a "transaction not involving a public
offering." The individuals were known to the Company and no commissions were
paid.
4. Between February of 1999 and May of 1999, the Company sold 2,005,000
shares to 11 individuals at prices between $.025 per share to $0.35 per share
for proceeds to the Company of $114,375. The Company relied on the exemptions
provided for under Section 4(2) and Rule 504 of the Act. The first two
investors in the offering received unrestricted shares at $.05 per share and
were completed prior to changes in Rule 504 which went into effect in early
April of 1999. The changes in Rule 504 required one of the following: (a)that
an offering made in reliance upon Rule 504 be registered in a state that
requires registration in order for unrestricted securities to be issued, or,
(b) that an offering made in reliance on Rule 504 be conducted as a "private"
offering under the same terms and conditions as Rules 505 and 506, except for
specific disclosure requirements, with securities issued as restricted. The
Company continued with the offering relying on the latter conditions with
shares issued as restricted. The investors were not solicited by any general
form of advertising, were all individuals known by or introduced to the
Company, had a prior existing relationship with the Company or were existing
shareholders. Offers and sales were made by management and no commissions were
paid. All of the investors in the offering were "accredited" as defined under
Rule 501 of Regulation D. The Company has integrated the offering with the
transaction discussed under 5. below, and has "aggregated proceeds" for all
issuances in a 12 month period made in reliance upon a Regulation D exemption
for purposes of determining whether it meets the aggregate proceeds provision
of Rule 504 of $1,000,000. The Company is within the proceeds limitation.
5. On March 31, 1999, the Company issued warrants to purchase up to
265,000 shares of the Company's common stock to 5 individuals each of whom was
an existing shareholder and who purchased stock in its 1999 - 504 offering.
These warrants were exercisable at various prices ranging from $.35 to $1.00
per share depending on the date of exercise and expire on March 15, 2001. On
July 22, 1999, four of the individuals exercised their warrants to purchase
190,000 shares of common stock at $0.35 each for proceeds to the Company of
$66,500. Warrants to purchase 75,000 shares are currently outstanding in the
name of one individual, and, may be exercised prior to March 15, 2000 for $.75
per share and subsequent to March 31, 2000 until expiration on March 15, 2001,
for $1.00 par share. The transaction was done in reliance on Section 4(2) of
the 1933 Act as a "transaction not involving a public offering." The Company
notes that for purposes of maximum proceed determination, absent a safe harbor
of a minimum of 6 months between offerings, offerings may be considered
"integrated". The Company considers the exercise of warrants "integrated"
with the 504 offering referenced under Item 6, above. The Company remains
well within its proceeds limitations of $1,000,000.
6. In early November 1, 1999, the Company commenced an offering
under the exemption provided for under Rule 506, for sale of up to 250,000 of
its unregistered common shares, at an offering price of $1.00 per share. The
offering closed on February 18, 2000 with a total of 315,000 shares sold to 10
individuals all of whom it considers "accredited" investors, for proceeds to
34
<PAGE>
the Company of $315,000. Of the 315,000 shares sold, 65,000 shares were sold
to three individuals prior to the Company's year ended December 31, 1999, with
remaining shares offered and sold during January and February of 2000. All of
the proceeds will be used to increase the Company's position in the ALPHA Fund
and for general working capital. Of the ten individuals who have purchased
shares in the offering, one is a prior investor and the remaining were
introduced to the Company by existing shareholders. No public solicitation was
made and the investors were provided with an a private placement memorandum.
Offers were made by members of management who were not paid a commission, and
did not involve advertising or solicitation to the public. The Company
believes the Regulation D, Rule 506 exemption was available to them because
the Company met the safe harbor provisions of the Act (six months had passed
since the completion of its last offering made in reliance upon Section 3(b)
of the Act); it limited offers to "accredited" investors; it provided
information to investors in a private placement memorandum which it believes
meets disclosure requirements; it did not utilize any general solicitation and
advertising; management used reasonable care to determine that purchasers
would not be deemed "statutory underwriters"; and, the Company issued only
"restricted" shares in the transaction.
7. In January of 2000, the Company issued 50,000 shares to Timothy Elms
for consulting services rendered. The shares were issued at a deemed value of
$1.00 per share. The Company also issued 25,000 shares to Paul Olin as a one-
time bonus for joining the Company's Board of Directors. The shares were
issued at a deemed value of $1.00 per share. In each instance the shares were
issued at the price being paid by investors in the private placement discussed
under item 6, above. The shares issued in each of the foregoing transactions
were issued in reliance upon Section 4(2) of the Act "as a transaction not
involving a public offering."
Item 5. INDEMNIFICATION OF OFFICERS AND DIRECTORS
The statutes, charter provisions, by-laws, contracts or other arrangements
under which any controlling person, director or officer of the Company is
insured or indemnified in any manner against any liability which he may incur
in his capacity as such, are as follows:
A. Indemnification provided by statute:
Section 607.0850 of the Florida Statutes provides that
(1) A corporation shall have power to indemnify any person who was or is a
party to any proceeding (other than an action by, or in the right of, the
corporation), by reason of the fact that he or she is or was a director,
officer, employee, or agent of the corporation or is or was serving at the
request of the corporation as a director, officer, employee, or agent of
another corporation, partnership, joint venture, trust, or other enterprise
against liability incurred in connection with such proceeding, including any
appeal thereof, if he or she acted in good faith and in a manner he or she
reasonably believed to be in, or not opposed to, the best interests of the
corporation and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his or her conduct was unlawful. The termination
of any proceeding by judgment, order, settlement, or conviction or upon a plea
of nolo contendere or its equivalent shall not, of itself, create a
presumption that the person did not act in good faith and in a manner which he
or she reasonably believed to be in, or not opposed to, the best interests of
the corporation or, with respect to any criminal action or proceeding, had
reasonable cause to believe that his or her conduct was unlawful.
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<PAGE>
(2) A corporation shall have power to indemnify any person, who was or is
a party to any proceeding by or in the right of the corporation to procure a
judgment in its favor by reason of the fact that the person is or was a
director, officer, employee, or agent of the corporation or is or was serving
at the request of the corporation as a director, officer, employee, or agent
of another corporation, partnership, joint venture, trust, or other
enterprise, against expenses and amounts paid in settlement not exceeding, in
the judgment of the board of directors, the estimated expense of litigating
the proceeding to conclusion, actually and reasonably incurred in connection
with the defense or settlement of such proceeding, including any appeal
thereof. Such indemnification shall be authorized if such person acted in good
faith and in a manner he or she reasonably believed to be in, or not opposed
to, the best interests of the corporation, except that no indemnification
shall be made under this subsection in respect of any claim, issue, or matter
as to which such person shall have been adjudged to be liable unless, and only
to the extent that, the court in which such proceeding was brought, or any
other court of competent jurisdiction, shall determine upon application that,
despite the adjudication of liability but in view of all circumstances of the
case, such person is fairly and reasonably entitled to indemnity for such
expenses which such court shall deem proper.
(3) To the extent that a director, officer, employee, or agent of a
corporation has been successful on the merits or otherwise in defense of any
proceeding referred to in subsection (1) or subsection (2), or in defense of
any claim, issue, or matter therein, he or she shall be indemnified against
expenses actually and reasonably incurred by him or her in connection
therewith.
(4) Any indemnification under subsection (1) or subsection (2), unless
pursuant to a determination by a court, shall be made by the corporation only
as authorized in the specific case upon a determination that indemnification
of the director, officer, employee, or agent is proper in the circumstances
because he or she has met the applicable standard of conduct set forth in
subsection (1) or subsection (2). Such determination shall be made:
(a) By the board of directors by a majority vote of a quorum consisting
of directors who were not parties to such proceeding;
(b) If such a quorum is not obtainable or, even if obtainable, by
majority vote of a committee duly designated by the board of directors (in
which directors who are parties may participate) consisting solely of two or
more directors not at the time parties to the proceeding;
(c) By independent legal counsel:
1. Selected by the board of directors prescribed in paragraph (a)
or the committee prescribed in paragraph (b); or
2. If a quorum of the directors cannot be obtained for paragraph (a)
and the committee cannot be designated under paragraph (b), selected by
majority vote of the full board of directors (in which directors who are
parties may participate); or
(d) By the shareholders by a majority vote of a quorum consisting of
shareholders who were not parties to such proceeding or, if no such quorum is
obtainable, by a majority vote of shareholders who were not parties to such
proceeding.
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<PAGE>
(5) Evaluation of the reasonableness of expenses and authorization of
indemnification shall be made in the same manner as the determination that
indemnification is permissible. However, if the determination of
permissibility is made by independent legal counsel, persons specified by
paragraph (4)(c) shall evaluate the reasonableness of expenses and may
authorize indemnification.
(6) Expenses incurred by an officer or director in defending a civil or
criminal proceeding may be paid by the corporation in advance of the final
disposition of such proceeding upon receipt of an undertaking by or on behalf
of such director or officer to repay such amount if he or she is ultimately
found not to be entitled to indemnification by the corporation pursuant to
this section. Expenses incurred by other employees and agents may be paid in
advance upon such terms or conditions that the board of directors deems
appropriate.
(7) The indemnification and advancement of expenses provided pursuant to
this section are not exclusive, and a corporation may make any other or
further indemnification or advancement of expenses of any of its directors,
officers, employees, or agents, under any bylaw, agreement, vote of
shareholders or disinterested directors, or otherwise, both as to action in
his or her official capacity and as to action in another capacity while
holding such office. However, indemnification or advancement of expenses shall
not be made to or on behalf of any director, officer, employee, or agent if a
judgment or other final adjudication establishes that his or her actions, or
omissions to act, were material to the cause of action so adjudicated and
constitute:
(a) A violation of the criminal law, unless the director, officer,
employee, or agent had reasonable cause to believe his or her conduct was
lawful or had no reasonable cause to believe his or her conduct was unlawful;
(b) A transaction from which the director, officer, employee, or agent
derived an improper personal benefit;
(c) In the case of a director, a circumstance under which the liability
provisions of s. 607.0834 are applicable; or
(d) Willful misconduct or a conscious disregard for the best interests
of the corporation in a proceeding by or in the right of the corporation to
procure a judgment in its favor or in a proceeding by or in the right of a
shareholder.
(8) Indemnification and advancement of expenses as provided in this section
shall continue as, unless otherwise provided when authorized or ratified, to a
person who has ceased to be a director, officer, employee, or agent and shall
inure to the benefit of the heirs, executors, and administrators of such a
person, unless otherwise provided when authorized or ratified.
(9) Unless the corporation's articles of incorporation provide otherwise,
notwithstanding the failure of a corporation to provide indemnification, and
despite any contrary determination of the board or of the shareholders in the
specific case, a director, officer, employee, or agent of the corporation who
is or was a party to a proceeding may apply for indemnification or advancement
of expenses, or both, to the court conducting the proceeding, to the circuit
court, or to another court of competent jurisdiction. On receipt of an
application, the court, after giving any notice
37
<PAGE>
that it considers necessary, may order indemnification and advancement of
expenses, including expenses incurred in seeking court-ordered indemnification
or advancement of expenses, if it determines that:
(a) The director, officer, employee, or agent is entitled to mandatory
indemnification under subsection (3), in which case the court shall also order
the corporation to pay the director reasonable expenses incurred in obtaining
court-ordered indemnification or advancement of expenses;
(b) The director, officer, employee, or agent is entitled to
indemnification or advancement of expenses, or both, by virtue of the exercise
by the corporation of its power pursuant to subsection (7); or
(c) The director, officer, employee, or agent is fairly and reasonably
entitled to indemnification or advancement of expenses, or both, in view of
all the relevant circumstances, regardless of whether such person met the
standard of conduct set forth in subsection (1), subsection (2), or subsection
(7).
B. Articles VI of the Company's Restated Articles of Incorporation provides
that the Company's officers and directors shall be indemnified to the fullest
extent provided for under the laws of the State of Florida. It further
provides that no director of the Company have any personal liability to the
Company or its stockholders for monetary damages for a breach of fiduciary
duty arising out of any act or omission although the foregoing does not
eliminate any liability of a directors for any breach of loyalty to the
Company or its stockholders; for acts or omissions not in good faith which
involve substantial misconduct or knowing violations of the law; the payment
of dividends in violation of Florida law; or for any transaction from which
the director derived personal profit.
C. The Company's bylaws do not provide for any general indemnification of
officers of directors. Article XIV. EMERGENCY BYLAWS, paragraph 4
specifically authorizes the Company to indemnify members of emergency Boards
of Directors who are authorized to use any means at their disposal to preserve
and protect the assets of the corporation so long as such action in good
faith. Article IV- OFFICERS, paragraph 10. authorizes the Board of
Directors of the Company, at their discretion, to require any officer or agent
of the Company to provide a surety bond conditioned on faithful performance of
their duties; the Board of Directors of the Company has not required any such
surety from any officer or agent of the Company.
As of the date hereof, the Company has no contracts in effect
providing any indemnitee with any specific rights of indemnification although
the Company's bylaws authorize its Board of Directors to enter into and
deliver such contracts to provide an indemnitee with specific rights of
indemnification in addition to the rights provided in the Articles and Bylaws
to the fullest extent provided under Florida law. The Company has no special
insurance against liability although the Company's bylaws provide that the
Company may, unless prohibited by Florida law, maintain such insurance.
Indemnification for liabilities arising under the Securities Act may
be permitted for directors, officers and controlling persons of the Company
pursuant to the foregoing or otherwise. However, the Company has been advised
that, in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable.
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<PAGE>
PART F/S
The following financial statements are included herewith: the Company's
audited financial statements for the year ended December 31, 1999.
39
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors and Shareholders:
Winmax Trading Group, Inc.
We have audited the balance sheet of Winmax Trading Group, Inc. as of December
31, 1999 and the related statements of operations, stockholders' equity and
cash flows for each of the two years then ended. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to
obtain reasonable assurance about 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. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Winmax Trading Group, Inc. as
of December 31, 1999, and the results of its operations and its cash flows for
each of the two years then ended, in conformity with generally accepted
accounting principles.
/s/ Stark Tinter & Associates
Stark Tinter & Associates, LLC
Certified Public Accountants
Denver, Colorado
January 26, 2000
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<PAGE>
Winmax Trading Group, Inc.
Balance Sheet
December 31, 1999
Assets
Current assets
Accounts receivable $ 7,381
-------------
Investments 99,266
-------------
Property and equipment, net 720
-------------
$ 107,367
=============
Liabilities and Stockholders' Equity
Current liabilities
Bank overdraft $ 696
Accounts payable 4,950
-------------
5,646
-------------
Stockholders' equity
Preferred stock, $1.00 par value,1,000,000 shares
authorized, no shares issued or outstanding -
Common stock, $.001 par value, 50,000,000 shares
authorized, 9,075,000 shares issued and outstanding 9,075
Additional paid-in capital 455,200
Accumulated deficit (362,554)
-------------
101,721
-------------
$ 107,367
=============
See the accompanying notes to financial statements.
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<PAGE>
Winmax Trading Group, Inc.
Statements of Operations
Years Ended December 31, 1998 and 1999
1998 1999
-------------- -------------
Revenue:
Fees and commissions $ 51,816 $ 133,831
-------------- -------------
Operating Costs and Expenses:
General and administrative 123,939 338,803
-------------- -------------
(Loss) from operations (72,123) (204,972)
Other income:
Equity in income of unconsolidated investees 1,240 6,412
Interest income 12,485 32,756
-------------- -------------
Net (loss) $ (58,398) $ (165,804)
============== =============
Per Share Information:
Weighted average common shares outstanding 6,720,410 8,398,526
============== =============
(Loss) per share - basic and fully diluted $ (0.01) $ (0.02)
============== =============
See the accompanying notes to the financial statements.
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<PAGE>
Winmax Trading group, Inc.
Statement of Stockholders' Equity
Years Ended December 31, 1998 and 1999
<TABLE>
<CAPTION>
Common Stock Additional
-------------------- Paid in Accumulated
Shares Amount Capital Deficit Total
---------- --------- ---------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Balance December 31, 1997 6,701,000 $ 6,701 $ 154,199 $ (138,352) $ 22,548
Issuance of common stock
for cash 114,000 114 33,386 - 33,500
Contribution of officers
salary - - 24,000 - 24,000
Net loss for the year - - - (58,398) (58,398)
---------- --------- ---------- ----------- ------------
Balance December 31, 1998 6,815,000 6,815 211,585 (196,750) 21,650
Shares issued pursuant to
private placements for cash 2,070,000 2,070 177,305 - 179,375
Shares issued pursuant to the
exercise of warrants
for cash 190,000 190 66,310 - 66,500
Net loss for the year - - - (165,804) (165,804)
---------- --------- ---------- ----------- ------------
Balance, December 31, 1999 9,075,000 $ 9,075 $ 455,200 $ (362,554) $ 101,721
========== ========= ========== =========== ============
See the accompanying notes to the financial statements.
43
</TABLE>
<PAGE>
Winmax Trading Group, Inc.
Statements of Cash Flows
Years Ended December 31, 1998 and 1999
1998 1999
------------- -------------
Net (loss) $ (58,398) $ (165,804)
Adjustments to reconcile net (loss) to net
cash (used in) operating activities:
Depreciation 870 870
Officer's contribution of salary to capital 24,000 -
Equity in income of unconsolidated investee (1,240) (6,412)
Changes in assets and liabilities:
Increase in accounts receivable (1,502) (2,907)
Decrease in receivables from officers 431 11,000
Increase in accounts payable - 4,950
------------- -------------
Total adjustments 22,559 7,501
------------- -------------
Net cash (used in) operating activities (35,839) (158,303)
------------- -------------
Cash flows from investing activities:
Increase in investment in partnership - (183,600)
Withdrawal of investment in partnership - 95,000
------------- -------------
Net cash (used in) investing activities - (88,600)
------------- -------------
Cash flows from financing activities:
Increase in bank overdraft - 696
Common stock issued for cash 33,500 245,875
------------- -------------
Net cash provided by financing activities 33,500 246,571
------------- -------------
Increase (decrease) in cash and cash equivalents (2,339) (332)
Cash and cash equivalents, beginning of period 2,671 332
------------- -------------
Cash and cash equivalents, end of period $ 332 $ -
============= =============
Supplemental cash flow information:
Cash paid for interest $ - $ -
Cash paid for income taxes $ - $ -
Non cash investing and financing activities:
Contribution of salary by an officer to
the capital of the Company $ 24,000 $ -
See the accompanying notes to the financial statements.
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<PAGE>
Winmax Trading Group, Inc.
Notes to Financial Statements
December 31, 1999
NOTE 1 - ACCOUNTING POLICIES
- ----------------------------
A. Organization
The Company was incorporated under the laws of the State of Florida on
September 26, 1996. The Company is in the business of operating and managing
an investment fund, the Winmax Alpha Fund Limited Partnership (Alpha), for
which it is the general partner. The incentive fees, commissions and interest
income derived from the operation and management of this fund account for
substantially all of the Company's operating revenue.
The Winmax Alpha Fund Limited Partnership is a Delaware limited partnership
formed to trade, invest in, buy, sell or otherwise acquire, hold or dispose of
futures contracts, options on futures contracts, and all rights and interests
pertaining thereto.
B. Equity method investments
The Company owns a 5% interest in Alpha. This investment is carried at cost,
adjusted for the Company's proportionate share of the undistributed earnings
or losses, because the Company exercises significant influence over the
financial and operating activities of Alpha.
C. Revenue recognition
The Company's revenue consists primarily of commissions and incentive fees
earned from operating and managing an investment fund. In addition, the
Company earns interest income based upon the monthly balances of the fund.
Revenues are recorded as earned.
D. Property and equipment
Property and equipment are recorded at cost. Depreciation is provided over
estimated useful lives of the respective assets on a straight-line basis.
Depreciation is calculated using the expected useful lives of the assets as
follows:
Furniture and office equipment 3 years
Expenditures for repairs and maintenance are charged to expense when incurred.
Expenditures for major renewals and betterments, which extend the useful lives
of existing equipment, are capitalized and depreciated. Upon retirement or
disposition of property and equipment, the costs and related accumulated
depreciation are removed from the accounts and any resulting gain or loss is
recognized in the statement of operations.
E. Cash and cash equivalents
The Company considers all highly liquid investments purchased with a maturity
of three months or less at the date of purchase to be cash equivalents.
45
<PAGE>
Winmax Trading Group, Inc.
Notes to Financial Statements
December 31, 1999
F. Use of Estimates
Preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
G. Fair value of financial instruments
Fair value estimates discussed herein are based upon certain market
assumptions and pertinent information available to management as of December
31, 1999. The respective carrying value of certain on-balance-sheet financial
instruments approximated their fair values. These financial instruments
include cash, receivables and long term investments. Fair values were assumed
to approximate carrying values for cash and receivables because they are short
term in nature and their carrying amounts approximate fair values or they are
receivable or payable on demand. For long-term investments, fair values are
based on the market value of the investment.
H. Impairment of long lived assets
Long lived assets and certain identifiable intangibles held and used by the
Company are reviewed for possible impairment whenever events or circumstances
indicate the carrying amount of an asset may not be recoverable or is
impaired.
I. Earnings per share
The Company follows Statement of Financial Accounting Standards No. 128,
"Earnings Per Share" ("SFAS No. 128"). Basic earnings per common share ("EPS")
calculations are determined by dividing net income by the weighted average
number of shares of common stock outstanding during the year. Diluted earnings
per common share calculations are determined by dividing net income by the
weighted average number of common shares and dilutive common share equivalents
outstanding. During the periods presented common stock equivalents were not
considered as their effect would be anti-dilutive.
J. Comprehensive income
The Company follows Statement of Financial Accounting Standards No. 130,
"Reporting Comprehensive Income" ("SFAS No. 130"). SFAS No. 130 establishes
standards for reporting and display of comprehensive income and its components
in the financial statements. For all periods presented, there were no
differences between reported net income and comprehensive income.
K. Segment Reporting
The Company follows Statement of Financial Accounting Standards No. 130,
"Disclosures About
46
<PAGE>
Winmax Trading Group, Inc.
Notes to Financial Statements
December 31, 1999
Segments of an Enterprise and Related Information." The Company operates as a
single segment and will evaluate additional segment disclosure requirements as
it expands its operations.
L. Income taxes
The Company follows Statement of Financial Accounting Standard No. 109,
"Accounting for Income Taxes" ("SFAS No. 109") for recording the provision for
income taxes. Deferred tax assets and liabilities are computed based upon the
difference between the financial statement and income tax basis of assets and
liabilities using the enacted marginal tax rate applicable when the related
asset or liability is expected to be realized or settled. Deferred income tax
expenses or benefits are based on the changes in the asset or liability each
period. If available evidence suggests that it is more likely than not that
some portion or all of the deferred tax assets will not be realized, a
valuation allowance is required to reduce the deferred tax assets to the
amount that is more likely than not to be realized. Future changes in such
valuation allowance are included in the provision for deferred income taxes in
the period of change.
Deferred income taxes may arise from temporary differences resulting from
income and expense items reported for financial accounting and tax purposes in
different periods. Deferred taxes are classified as current or non-current,
depending on the classification of assets and liabilities to which they
relate. Deferred taxes arising from temporary differences that are not related
to an asset or liability are classified as current or non-current depending on
the periods in which the temporary differences are expected to reverse.
M. Recent pronouncement
The FASB recently issued Statement No 137, "Accounting for Derivative
Instruments and Hedging Activities-Deferral of Effective Date of FASB
Statement No. 133". The Statement defers for one year the effective date of
FASB Statement No. 133, "Accounting for Derivative Instruments and Hedging
Activities". The rule now will apply to all fiscal quarters of all fiscal
years beginning after June 15, 2000. In June 1998, the FASB issued SFAS No.
133, "Accounting for Derivative Instruments and Hedging Activities," which is
required to be adopted in years beginning after June 15, 1999. The Statement
will require the Company to recognize all derivatives on the balance sheet at
fair value. Derivatives that are not hedges must be adjusted to fair value
through income. If the derivative is a hedge, depending on the nature of the
hedge, changes in the fair value of derivatives will either be offset against
the change in fair value of the hedged assets, liabilities, or firm
commitments through earnings or recognized in other comprehensive income
until the hedged item is recognized in earnings. The ineffective portion of a
derivative's change in fair value will be immediately recognized in earnings.
The Company has not yet determined what the effect of SFAS No. 133 will be on
the earnings and financial position of the Company.
NOTE 2 - PROPERTY AND EQUIPMENT
- -------------------------------
Property and equipment consists of the following at December 31, 1999:
47
<PAGE>
Winmax Trading Group, Inc.
Notes to Financial Statements
December 31, 1999
Furniture and office equipment $ 2,605
Less: accumulated depreciation 1,885
------------
$ 720
============
Depreciation expense was $870 for the years ended December 31, 1998 and 1999.
NOTE 3 EQUITY METHOD INVESTMENT
- ---------------------------------
The Company is the general partner of Alpha of which it owns approximately 5%
at December 31, 1999. The Company's investment is being held for an indefinite
period.
The Company's equity in the results of operations was $1,240 and $6,412 for
the years ended December 31, 1998 and 1999.
A summary of the activity of the investment account is as follows:
Balance January 1, 1998 $ 3,014
Equity in net income of Alpha 1,240
------------
Balance December 31, 1998 4,254
Investments 183,600
Withdrawals (95,000)
Equity in net income of Alpha 6,412
------------
Balance December 31, 1999 $ 99,266
============
A condensed summary of the assets and liabilities and results of operations of
Alpha is as follows:
1998 1999
----------- ------------
Total assets $ 665,000 $ 2,025,000
Total liabilities 2,000 -
----------- ------------
Total partners' equity $ 663,000 $ 2,025,000
=========== ============
Total revenue $ 165,000 $ 193,000
Total expenses 73,000 119,000
----------- ------------
Net income $ 92,000 $ 74,000
=========== ============
NOTE 4 - COMMITMENTS AND CONTINGENCIES
- --------------------------------------
Operating Leases
- -----------------
The Company currently leases its office facilities pursuant to a one year
lease which included a one year renewal option. The current lease expires on
October 31, 2000 and the current rent is $1,735 per month.
Rent expense was $15,922 and $27,938 in 1998 and 1999.
48
<PAGE>
Winnmax Trading Group, Inc.
Notes to Financial Statements
December 31, 1999
Future minimum rentals are as follows:
2000: $17,350
Other contingencies
- -------------------
During August, 1999 the Company terminated an agreement with a former
consultant for breach of the agreement by the consultant. The Company has
offered to settle the dispute if the consultant returns 100,000 common shares
purchased by him during August, 1998 in exchange for a payment by the Company
of $30,000.
During July, 1999 the Company entered into a lease agreement for office
facilities for a five year term commencing during December, 1999. The lease
provides for an initial base rent of approximately $4,020 per month plus the
Company's proportionate share of operating expenses. In addition, the lease
provides for annual adjustments to the base rent.
During December, 1999 the Company elected not to honor the terms of the new
lease and forfeited its $5,000 security deposit which has been charged to rent
expense during 1999. The new landlord has not indicated whether it will seek
to enforce the terms of the new lease. If the terms of the new lease were
enforced the Company could be liable for an amount up to the total of initial
base rent, adjusted as provided for in the lease and its proportionate share
of the operating expenses as provided for in the lease.
NOTE 5 STOCKHOLDERS' EQUITY
- -----------------------------
During August, 1998 the Company issued 114,000 shares of its $.001 par value
common stock for cash aggregating $33,500.
During the year ended December 31, 1998 an officer agreed to contribute
$24,000 in unpaid salary to the capital of the Company.
During the period from January, 1999 through October, 1999 the Company issued
2,005,000 shares of its $.001 par value common stock pursuant to private
placements at prices ranging from $.025 to $.35 per share for cash aggregating
$114,375. In addition, the purchasers of the common shares received 265,000
warrants to purchase common stock exercisable as follows:
$ .35 per share if exercised before June 15, 1999
$ .50 per share if exercised between June 16 and September 15, 1999
$ .75 per share if exercised between September 16, 1999 and March 15, 2000
$1.00 per share if exercised after March 15, 2000
During July, 1999 the Company issued 190,000 shares of its $.001 par value
common stock pursuant to the exercise of 190,000 of the above warrants for
cash aggregating $66,500.
49
<PAGE>
Winmax Trading Group, Inc.
Notes to Financial Statements
December 31, 1999
During November, 1999 the Company began offering pursuant to a private
placement 250,000 shares of its $.001 par value common stock at $1 per share.
During November, 1999 the Company issued 65,000 shares of its common stock for
cash aggregating $65,000
Warrants
- --------
As of December 31, 1999 the Company had warrants outstanding to purchase
75,000 shares of the Company's $.001 par value common stock at $.75 per share
through March 15, 2000 and $1.00 per share thereafter. These warrants expire
on March 15, 2001.
NOTE 6 - INCOME TAXES
- --------------------
The provision for income taxes for the years presented has been computed in
accordance with Financial Accounting Standards Board Statement No. 109,
Accounting for Income Taxes. There are no material differences between
financial statement income and taxable income.
The amounts shown for income taxes in the statements of operations differ from
amounts that would be derived from computing income taxes at federal statutory
rates. The following is a reconciliation of those differences.
Tax at federal statutory rate 34% 34%
Net operating loss (34) (34)
-------- ------
-% - %
The Company currently has net operating loss carryforwards aggregating
approximately $362,000 which expire $138,000 in 2012, $58,000 in 2013 and
$166,000 in 2014. The deferred tax asset related to these carryforwards has
been fully reserved.
NOTE 7 RELATED PARTY TRANSACTIONS
- -----------------------------------
During the year ended December 31, 1998 an officer of the Company contributed
$24,000 of unpaid salary to the capital of the Company (see Note 5).
During 1998 the Company made advances aggregating $11,000 to an officer. These
advances were repaid in 1999.
NOTE 8 CONCENTRATIONS
- ------------------------
The Company derives substantially all of its revenue from the operation and
management of Alpha. The following summarizes the revenue for 1998 and 1999.
1998 1999
-------- ----------
Fees and commissions $ 51,816 $ 133,831
Interest income 12,485 32,756
-------- ----------
$ 64,301 $ 166,587
======== ==========
<PAGE>
Winmax Trading Group, Inc.
Notes to Financial Statements
December 31, 1999
In addition, the balance of $7,381 included in accounts receivable at December
31, 1999 is due from Alpha.
51
<PAGE>
PART III
Item 1. INDEX TO EXHIBITS
Exhibit
No. Description
- ---- ------------
3.1.1 Articles of Incorporation of Winmax Trading Group, dated September
26, 1996
3.1.2 Amendment to the Articles of Incorporation of Winmax Trading
Group, Inc. dated January 27, 1997
3.1.3 Amendment to Articles of Incorporation of Winmax Trading Group,
Inc., dated October 6, 1999
3.2 Bylaws of Winmax Trading Group, Inc., and Amendment.
10.1 Limited Partnership Agreement Between Winmax Trading Group as
General Partner and the Limited Partners in the Winmax
Alpha Fund Limited Partnership
10.2 Lease on principal office on Seabreeze Boulevard
21 Subsidiaries
27 Financial Data Schedule
99.1 Certificate of Incorporation of Winmax Alpha Fund Limited
Partnership (as Winmax S&P 500 Fund Limited Partnership), with
the Company as general partner, dated November 4, 1996
99.2 Certificate of name change of Winmax Alpha Fund Limited
Partnership, (Amendment to Application of Limited Partnership for
name change, filed on February 22, 1999)
52
<PAGE>
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934, the
registrant caused this registration statement to be signed on its behalf by
the undersigned, thereunto duly authorized.
Registrant:
WINMAX TRADING GROUP, INC.
Date: March 1, 2000 By: /s/ Ralph D. Pistor
-----------------------------
Ralph D. Pistor
President, Chief Operating Officer
Chief Financial Officer, Treasurer
Chief Executive Officer, and Director
/s/Igor A. Klaehre
Date: March 1, 2000 By: -------------------------------
Igor A. Klaehre
Secretary, Vice President and
Director
FILED
96 SEP 26 PM 4:22
SECRETARY OF STATE
TALLAHASSEE FLORIDA
ARTICLES OF INCORPORATION
WINMAX TRADING GROUP, INC.
The undersigned , acting as incorporator of a corporation under the
Florida General Corporation Act, adopts the following Articles of
Incorporation for such corporation:
ARTICLE I
The name of the corporation is WINMAX TRADING GROUP, INC., whose
principal place of business is 429 Seabreeze Boulevard, Ft. Lauderdale,
Florida 33316.
ARTICLE II
The period of duration of the corporation is perpetual.
ARTICLE III
The purpose or purposes for which the corporation is organized are to
engage in any activity or business permitted under the laws of the United
States and of the State.
ARTICLE IV
The corporation shall have the authority to issue ten thousand (10,000)
shares, all of one class of common Stock, with a par value of $1.00 per share.
ARTICLE V
The name of the Registered Agent and address of its initial registered
office are:
DEBORAH FISCHER MORAITIS, ESQ.
2929 East Commercial Boulevard
Suite 701
Ft. Lauderdale, Florida 33308
<PAGE>
ARTICLE VI
The number of directors constituting its initial Board of Directors is two
(2), whose names and addresses are:
Ralph Pistor- President/Treasurer
Igor Klaehre- Vice President/Secretary
429 Seabreeze Boulevard
Ft. Lauderdale, Florida 33316
ARTICLE VII
The name and address of the incorporator is:
RALPH PISTOR
429 Seabreeze Boulevard
Ft. Lauderdale, Florida 33316
ARTICLE VIII
The shareholders shall have the power to adopt, amend, a1ter, change, or
repeal the Articles of Incorporation when proposed and approved at a
stockholder's meeting, with not less than a two-thirds vote of the common
stock.
ARTICLE IX
The power to adopt, alter, amend or repeal By-Laws shall be vested in the
Board of Directors.
ARTICLE X
The holders of the common stock of this corporation shall have preemptive
right to purchase, at prices, terms, and conditions that shall be fixed by the
Board of Directors, such as the shares of the stock of this corporation as may
be issued for money (money or any property or services) from time to time, in
addition to that stock authorized by the corporation. The preemptive right of
any holder
<PAGE>
is determined by the ratio of the authorized shares of common stock held by
the holder to all shares of common stock currently authorized.
ARTICLE XI
Pursuant to Florida Statute Section 607.167(1), the effective date of
the commencement of corporate existence is the 24th day of September, 1996,
which is the date of subscription and acknowledgement of the Articles of
Incorporation. Said Articles of Incorporation are to the filed within five (5)
days after such date.
IN WITNESS WHEREOF, THE UNDERSIGNED has made and subscribed of these
Articles of Incorporation at Fort Lauderdale, Florida, on the 24th day of
September, 1996.
/s/ Ralph Pistor
--------------------
RALPH PISTOR
STATE OF FLORIDA )
)
COUNTY OF BROWARD )
BEFORE ME, the undersigned authority appeared RALPH PISTOR, who is
personally known to be the person described in and who subscribed the above
Articles of Incorporation, and he did freely and voluntarily acknowledge
before me according to law that he made and subscribed the same for the uses
and purposes therein mentioned and set forth.
IN WITNESS WHEREOF, I have hereunto set my hand and my official seal at
Fort Lauderdale, in said County and State this 24th day of September, 1996.
/s/ Deborah Fischer Moraitis
- ------------------------------
Notary Public, State of Florida
My Commission Expires:
<Notary stamp for
N0TARY PUBLIC, STATE OF FLORIDA
DEBORAH FISCHER MORAITIS
COMMISSION NO. AA 764 157
MY COMMISSION EXPIRES APRIL 1997>
STATEMENT OF ACCEPTANCE OF REGISTERED AGENT
I am familiar with and hereby accept the obligations of Registered Agent
for WINMAX TRADING GROUP, INC.
/s/ Deborah Fischer Moraitis
-----------------------------
DEBORAH FISCHER MORAITIS, ESQ.
Registered Agent
STATE OF FLORIDA )
)
COUNTY OF BROWARD )
BEFORE ME, the undersigned authority personally appeared DEBORAH FISCHER
MORAITIS, ESQ., who is known to be the person described in and who is named as
the Registered Agent in the above Articles of Incorporation, and she freely
and voluntarily acknowledged before me according to law that she has
authorized said corporation to name her as its initial Registered Agent for
the purposes mentioned and set forth in Article V.
IN WITNESS WHEREOF, I have hereunto set my hand and my official seal at
Ft. Lauderdale, in said County and State this 24th day of September, 1996.
/s/ Kathleen A. Papa
---------------------------------
Notary Public, State Florida
My Commission Expired
Affiant is personally known [ x] or provided the following form of
identification ___________________________________________.
<Official Notary Stamp of
Kathleen A. Papa
Commission Number
CC367602
My Commission expires
A P R 26 ???>
<STAMPED:
F I L E D
SECRETARY OF STATE
DIVISION OF CORPORATIONS
97 JAN 27 AM 11:02>
AMENDMENT TO THE ARTICLES OF INCORPORATION
OF
WINMAX TRADING GROUP, INC.
The undersigned, being a director, shareholder, and officer of WINMAX
TRADING GROUP, INC., a Florida corporation, hereby amends said Articles of
Incorporation as follows, in accordance with Florida Statute Sections 607.1005
and 607.1006:
ARTICLE IV
1. The Corporation shall have the authority to issue Fifty Million
(50,000,000) Shares of Common Stock at $.001 par value, and Five Million
(5,000,000) Shares of Preferred Stock at $1.00 par value.
2. Other than hereinabove set forth, said Articles of Incorporation
as originally adopted, shall remain in full force and effect.
IN WITNESS WHEREOF, the following individual being a director,
shareholder, and officer of the Corporation adopted the Amendment without
shareholder action as same was not required, and executed this Amendment to
the Articles of Incorporation, this 15th day of January, 1997.
WINMAX TRADING GROUP, INC.
By: /S/ Ralph Pistor
-------------------------
RALPH PISTOR, Director
Signed, Sealed and Delivered
In the Presence of:
/s/ signature illegible
- --------------------------
/s/ Deborah Fischer Moraitis
- -----------------------------
<PAGE>
STATE OF FLORIDA )
COUNTY OF BROWARD )
BEFORE ME, a Notary Public authorized to take acknowledgments in the State
and County forth above, personally appeared: RALPH PISTOR, Director, of
WINMAX TRADING GROUP, INC., a Florida corporation, and known to me and known
by me to be the person who executed the foregoing Amendment to this Articles
of Incorporation, and who acknowledged before me that he executed said
instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal in the
County and State aforesaid, this 15th day of January, 1997.
/s/ Deborah Fischer Moraitis
-------------------------------
NOTARY PUBLIC, State of Florida
My Commission Expires:
<Notary Stamp appears here
N0TARY PUBLIC, STATE OF FLORIDA
DEBORAH FISCHER
MORAITIS
COMMISSION NO: AA 764157
MY COMMISSION EXPIRES
APRIL 3, 1997>
F I L E D
99 OCT-6 AM 10:57
SECRETARY OF STATE
TALLASSEE, FLORIDA
Restated Articles of Incorporation
---------------------------------
Winmax Trading Group, Inc. (WNMX)
Pursuant to the provisions of the General Corporation Law of the State of
Florida the undersigned directors adopt the following Articles of Amendment to
its Articles of Incorporation:
THE UNDERSIGNED, being the sole directors of Winmax Trading Group, Inc., do
hereby amend its Articles of Incorporation effective September 30th, 1999, as
follows:
ARTICLE ONE:
- -----------
The name of the corporation is Winmax Trading Group, Inc.
ARTICLE TWO:
- -----------
The number of shares the corporation is authorized to issue is 50,000,000 of
Common stock, at $.001 per share per value described as follows, and 1,000,000
of Preferred Stock at $1.00 per share par value.:
CLASSES AND NUMBER OF SHARES. The total number of shares of all classes of
stock, which the corporation shall have authority to issue is 51,000,000
shares, consisting of 50,000,000 of Common Stock par value of $.001 per share
(the Common Stock") and 1,000,000 shares of Preferred Stock, par value of
$1.00 per shares (the Preferred Stock").
POWERS AND RIGHTS OF COMMON STOCK
VOTING RIGHTS AND POWERS. With respect to all matters upon which stockholders
are entitled to vote or to which stockholders are entitled to give consent,
the holders of the outstanding shares of the Common Stock shall be entitled to
cast thereon one (1) vote in person or by proxy for each share of the Common
Stock standing in his name.
DIVIDENDS AND DISTRIBUTIONS.
(i) CASH DIVIDENDS. Subject to the rights of holders of Preferred Stock,
holders of Common Stock shall be entitled to receive such cash dividends as
may be declared thereon by the Board of Directors from time to time out of
assets or funds of the Corporation legally available therefor.
(ii) OTHER DIVIDENDS AND DISTRIBUTIONS. The Board of Directors may issue
shares of the Common Stock in the form of a distribution or distributions
pursuant to a stock dividend or split-up of the shares of the Common Stock.
<PAGE>
(iii) OTHER RIGHTS. Except as otherwise required by the Florida Revised
Statutes and as may otherwise be provided in theses Amended Articles of
Incorporation, each share of the Common Stock shall have identical powers,
preferences and rights, including rights in liquidation.
PREFERRED STOCK. The powers, preferences, rights, qualifications, terms,
limitations and restrictions pertaining to the Preferred Stock, or any Common
Stock and the Preferred Stock herein authorized in accordance with the terms
and conditions set forth in these Amended Articles of Incorporation for such
purposes, in such amounts, to such persons, corporations, or entities, for
such consideration and in the ease of the Preferred Stock, in one or more
series, all as the Board of Directors in its discretion may determine and
without any vote or other action by the stockholders, except as otherwise
required by law. The Board of Directors, from time to time, also may
authorize, by resolution, options, warrants, and other rights convertible into
Common Stock or Preferred Stock (collectively "securities"). The securities
must be issued for such consideration, including cash, property, or services,
as the Board of Directors may deem appropriate, subject to the requirements
that the value of such consideration be no less than the par value of the
shares issued. Any shares issued for which the consideration so fixed has been
paid or delivered shall be fully paid stock and the holder of such shares
shall not be liable for any further call or assessment or any other payment
thereon, provided that the actual value of such consideration is not less than
the par value of the shares so issued. The Board of directors may issue shares
of the Common Stock in the form of a distribution or distributions pursuant to
a stock dividend or split-up of the shares of the Common Stock only to the
then holders of the outstanding shares of the Common Stock..
CUMULATIVE VOTING. Except as otherwise required by the applicable law,
there shall be no cumulative voting on any matter brought to a vote of
stockholders of the Corporation.
DENY PREEMPTIVE RIGHTS. No holder of any of the shares of any class of the
corporation shall be entitled as of right to subscribe for, purchase, or
otherwise acquire and shares of any class of the corporation which the
corporation proposes to issue or any rights or options which the corporation
proposes to grant for the purchase of shares of any class of the corporation
or for the purchase of any shares, bonds securities, or obligations of the
corporation which are convertible into or exchangeable for, or which carry any
rights, to subscribe for, purchase or otherwise acquire shares of any class of
the corporation; and any and all of such shares, bonds, securities, or
obligations of the corporation, whether new or hereafter authorized, or
created, may be issued or may be reissued or transferred if the same have been
reacquired and have treasury status, and any and all of such rights and
options may be granted by the Board of Directors to such persons, firms,
corporations and associations, and for such lawful consideration, and on such
terms as the Board of directors in its discretion may determine, without first
offering the same, or any thereof, to any said holder.
2
<PAGE>
ARTICLE THREE:
- -------------
PURPOSE AND BUSINESS
The purpose of the corporation is to engage in any lawful act or activity for
which corporations may now or hereafter be organized under the Statutes of the
State of Florida, including but not limited to the following:
(a) The Corporation may at any time exercise such rights, privileges and
powers, when not inconsistent with the purposes and object for which this
Corporation is organized;
(b) the Corporation shall have power to have succession by its corporate
name in perpetuity, or until dissolved and its affairs wound up according to
law;
(c) the Corporation shall have power to appoint such officers and agents as
the affairs of the Corporation shall require and allow them suitable
compensation.
(d) the Corporation shall have power to make bylaws not inconsistent with
the constitution or laws of the United States, or of the State of Florida, for
the management, regulation and government of its affairs and property, the
transfer of its stock, the transaction of its business and the calling and
holding of meeting of shareholders;
(e) The Corporation shall have the power to wind up and dissolve itself, or
be wound up or dissolved;
(f) The Corporation shall have the power to adopt and use a common seal or
stamp, or not to use such seal or stamp and if one is used, to alter the same.
The use of a seal or stamp by the Corporation on any corporate documents is
not necessary. The Corporation may use a seal or stamp, if it desires, but
such use or non-use shall not in any way affect the legality of the document;
(g) The Corporation shall have the power to borrow money and contract debts
when necessary for the transaction of its business, or for the exercise of its
corporate rights, privileges or franchises, or for any other lawful purpose of
its incorporation; to issue bonds, promissory notes, bills of exchange,
debentures and other obligations and evidence of indebtedness, payable at a
specified time or times, or payable upon the happening of a specified event or
events, whether secured by mortgage, pledge or otherwise, or unsecured , for
money borrowed, or in payment for property purchased, or acquired, or for
another lawful object;
(h) The Corporation shall have the power to guarantee, purchase, hold,
sell, assigns, transfer, mortgage, pledge or otherwise dispose of the Shares
of the capital stock of, or any bonds, securities or evidence of indebtedness
created by any other corporation or corporations of the State of Florida, or
any other state or government and, while the owner of such stock, bonds,
securities or evidence of
3
<PAGE>
indebtedness, to exercise all the rights, powers and privileges of ownership,
including the right to vote, if any;
(i) The Corporation shall have the power to purchase, hold, sell and
transfer shares of its own capital stock and use therefore its capital,
capital surplus, surplus or other property or fund;
(j) The Corporation shall have the power to conduct business, have one or
more offices and hold, purchase, mortgage and convey real and personal
property in the State of Florida and in any of the several states,
territories, possessions and dependencies of the United States, the District
of Columbia and any foreign country;
(k) The Corporation shall have the power to do all and everything necessary
and proper for the accomplishment of the objects enumerated in its amended
articles of incorporation, or any further amendments thereof
(l) The corporation shall have the power to enter into general or limited
partnerships, joint ventures, syndicates, pools, associations, and other
arrangements for carrying on of one or more of the purposes set forth in its
Amended Articles of Incorporation, jointly or in common with others;
(m) The Corporation shall have the power to carry on a general mercantile,
industrial, investing, and trading business in all its branches; to devise,
invent, manufacture, fabricate, assemble, install, services, maintain, alter,
buy, sell, import, distribute, job, enter into, negotiate, execute, acquire,
and assign contracts in respect of, acquire, grant and assign licensing
arrangements, options, franchises, and other rights in respect of, and
generally deal in and with, at wholesale and retail, as principal, and as
sales, business, special, or general agent, representative, broker, factor,
merchant, distributor, jobber, advisor, and in any other lawful capacity,
goods, wares, merchandise, commodities, and unimproved, improved, finished,
processed, and other real, personal, and mixed property of any and all kinds,
together with the components, resultants, and by-products thereof; to acquire
by purchase or otherwise own, hold, lease, mortgage, sell or otherwise dispose
of, erect, construct, make alter, enlarge, improve, and to aid or subscribe
the construction, acquisition or improvement of any factories, shops,
storehouses, buildings, and commercial and retail establishments of every
character, including all equipment, fixtures, machinery, implements, and
supplies necessary, or incidental to, or connected with, any of the purposes
or business of the Corporation; and generally to perform any and all acts
connected therewith or arising therefrom or incidental thereto, and all acts
proper or necessary for the purpose of the business;
The Corporation shall have the power to engage generally in the real estate
business as principal, agent, broker, and in any lawful capacity, and
generally to take, lease, purchase, or otherwise acquire, and to own, use,
hold, sell, convey,
4
<PAGE>
exchange, lease, mortgage, work, clear, improve, develop, divide, and
otherwise handle, manage, operate, deal in, and dispose of real estate, real
property, lands, multiple-dwelling structures, houses, buildings, and other
works and any interest or right therein; to take, lease, purchase, or
otherwise acquire, and to own, use, hold, sell, convey, exchange, hire, lease,
pledge, mortgage, and otherwise handle and deal in and dispose of as
principal, agent, broker, and in any lawful capacity, such personal property,
chattels, chattels real, rights, easements, privileges, chooses in action,
notes, bonds, mortgages, and securities as may lawfully be required, held or
disposed of and to acquire, purchase, sell, assign, transfer, dispose of, and
generally deal in and with, as principal, agent, broker, and in any lawful
capacity, mortgages and other interests in real, personal, and mixed
properties; to carry on a general construction, contracting, building and
realty management business as principal, agent, representative, contractor,
subcontractor, and in any other lawful capacity.
The Corporation shall have the power to apply for, register, obtain, purchase,
lease, take licenses in respect of, or otherwise acquire, and to hold, own,
use, operate, develop, enjoy, turn to account, grant licenses and immunities
in respect of, manufacture under and to introduce, sell, assign, mortgage, in
any state or subdivision thereof, or of any foreign country or subdivisions
thereof, and all rights connected therewith or appertaining thereunto;
Franchises licenses, grants and concessions.
(iv) The Corporation shall have the power to purchase or otherwise acquire,
and to hold, mortgage, pledge, sell, exchange or otherwise dispose of,
securities (which term, for the purpose of this Article THREE, includes,
without limitation of the generality thereof, any share of stock, bonds,
debentures, notes, mortgages, or other obligations, arm any certificates,
receipts, or other instruments representing rights to receive, purchase, or
subscribe for the same, or representing any other rights or interest therein
or in any property or assets) created or issued by any persons, firms,
associations, corporations, or governments or subdivisions thereof; to make
payment therefor in any lawful manner, and to exercise, as owner or holder of
any securities, any and all rights, powers, and privileges in respect thereof.
(n) The Corporation shall have the power to make, enter into, perform, and
carry out contracts of every kind and description with any person, film,
association, corporation, or government or subdivision thereof;
(o) The Corporation shall have the power to acquire, by purchase, exchange,
or otherwise, all, or any part of, or any interest in, the properties, assets,
business, and goodwill of any one or more persons, firms, associations, or
corporations heretofore or hereafter engaged in any business for which a
corporation may now or hereafter be organized under the laws of the State of
Florida, to pay for the
5
<PAGE>
same in cash, property or its own or other securities, to hold, operate,
reorganize, liquidate, sell, or in any manner dispose of the whole or any part
thereof; and in connection therewith, to assume or guarantee performance of
any liabilities, obligations or contracts of such persons, firms associations,
or corporations, and to conduct the whole or any part of any business thus
acquired;
(p) The corporation shall have the power to lend its uninvested funds from
time to time to such extent, to such persons, firms, associations,
corporations, governments or subdivisions thereof, and on such terms and on
such security, if any, as the Board of directors of the corporation may
determine;
(p) The Corporation shall have the power to endorse or guarantee the
payment of principal, interest, or dividends, upon and to guarantee the
performance of sinking fund or other obligations of, any securities, and to
guarantee in any way permitted by law the performance of any of the contracts
or other undertakings in which the corporation may otherwise be or become
interested, of any persons, firm, association, corporation, government or
subdivisions thereof, or of any other combination organization, or entity
whatsoever.
(q) the Corporation shall have the power to borrow money for any of the
purposes of the corporation from time to time, and without limit as to amount;
from time to time to issue and sell its own securities in such amounts, on
such terms and conditions, for such purposes and for such prices, now or
hereafter permitted by the laws of the State of Florida and by these Amendment
of Articles on Incorporation as the Board of Directors of the corporation may
determine, and to secure such securities by mortgage upon, of the pledge of,
or the conveyance or assignment in trust of, the whole or any part of the
properties, assets, business, and goodwill of the corporation, then owned or
thereafter acquired;
(r) The corporation shall have the power to purchase, hold, cancel,
reissue, sell, exchange, transfer, or otherwise deal in, its own securities
from time to time to such an extent and in such manner and upon such terms as
the Board of Directors of the corporation shall determine; provided that the
corporation shall not use its funds or property for the purchase of its own
shares of capital stock when such use would cause any impairment of its
capital, except to the extent permitted by law; and provided further that
shares of its own capital stock belonging to the corporation shall not be
voted upon directly or indirectly.
(s) The Corporation shall have the power to organize or cause to be
organized under the laws of the State of Florida, or of any other state of the
United States of America, or of the District of Columbia, or of any territory,
dependency, colony, or possession of the United States of America, or of any
foreign country, a corporation or corporations for the purpose of transacting,
promoting, or carrying on any or all of the objects or purposes for which the
corporation is organized, and to dissolve, wind up, liquidate, merge, or
consolidate any such corporation or
6
<PAGE>
corporations or to cause the same to be dissolved, wound up, liquidated,
merged, or consolidated;
(t) The Corporation shall have the power to conduct its business in any and
all of its branches and maintain offices both within and without the State of
Florida, in any and all states of the United States of America, in the
District of Columbia, in any and all territories, dependencies, colonies, or
possessions of the United States of America, or of any foreign countries; and
(u) The Corporation shall have the power to such extent as a corporation
organized under the laws of the State of Florida may now or hereafter lawfully
do, to do, either as principal or agent and either alone or in connection with
other corporations, firms, or individuals, all and everything necessary,
suitable, convenient or proper for, or in connection with, or incident to, the
accomplishment of any of the purposes or the attainment of any one or more of
the objects herein enumerated, or designed directly or indirectly to promote
the interests of the corporation or to enhance the value of its properties;
and in general to do any and all things and exercise any and all powers,
rights, and privileges which a corporation may now or hereafter be organized
to do or to exercise under the laws of the State of Florida or under any act
amendatory thereof, supplemental thereto, or substituted therefore.
The forgoing provisions of this Article THREE shall be construed both as
purposes and powers and each as an independent purpose and power. The forgoing
enumeration of specific purposes and powers shall not be held to limit or
restrict in any manner the purposes and powers of the corporation, and the
purposes and powers herein specified shall, except when otherwise provided in
this Article THREE, be in no wise limited or restricted by reference to, or
reference from, the term of any provision of this or any other Articles of
these amended Articles of Incorporation, provided, that the corporation shall
not carry on any business or exercise any power in any state, territory, or
country which under the laws thereof the corporation may not lawfully carry on
or exercise.
ARTICLE FOUR:
- --------------
The number of such directors shall not be less than one (1) and, subject to
such minimum may be increased or decreased from time to time in the manner
provided in the By-Laws.
Board of Directors. The name and address of the directors of the corporations
are:
Ralph D. Pistor 1556 S Ocean Lane, #203
Fort Lauderdale, FL 33316
Igor Klaehre 333 Sunset Dr., #303
Fort Lauderdale, FL 33301
7
<PAGE>
ARTICLE FIVE:
- ------------
Term of Existence.
The corporation shall have perpetual existence.
ARTICLE SIX:
- -----------
Indemnification of Officers and Directors.
The corporation shall, to the fullest extent permitted by the laws of the
State of Florida, as the same may be amended and supplemented, indemnify any
and all persons whom it shall have power to indemnify under said Law from and
against any and all of the expenses, possibilities, or other matters referred
to in or covered by said Law, and the indemnification provided for herein
shall not be deemed exclusive of any other laws to which those indemnified may
be entitled under any Bylaw, agreement, record of stockholders or
disinterested directors or otherwise, both as to action in his official
capacity and a to action in another capacity while holding such office, and
shall continue as a person who has ceased to be a director, officer, employee,
or agent, and shall inure to the benefit of the heirs, executors and
administrators of such person.
No director of this Corporation shall have personal liability to the
corporation or any of its stockholders for monetary damages for breach of
fiduciary duty as a director or officers involving any act or omission of any
such director or officer. The forgoing provision shall not eliminate or limit
any liability of a director (i) for any breach of the directors duty of
loyalty to the Corporation or its stockholders, (ii) for acts or omissions not
in good faith or, which involve intentional misconduct or a knowing violation
of law, (iii) under applicable laws of the State of Florida, (iv) the payment
of dividends in violation of the laws of the State of Florida or, (v) for any
transaction from which the director derived an improper personal profit. Any
repeal or modification of the Article by the stockholders of the corporation
shall be prospective only and shall not adversely affect any hesitation on the
personal liability of a director or officer of the Corporation prior acts or
omissions prior to such repeal or modification.
ARTICLE SEVEN:
- -------------
Other Amendments.
The Corporation reserves the right to adopt, repeal, rescind, alter or amend
in any respect any provision contained in these Amended and Restated Articles
of Incorporation in the manner now or hereafter prescribed by applicable law
and all rights conferred on stockholders herein are granted subject to this
reservation.
8
<PAGE>
I hereby certify that the following was adopted by a majority vote of the
shareholders and directors of the corporation on September 30, 1999 and that
the number of votes cast was sufficient for approval.
IN WITNESS WHEREOF, I have hereunto subscribed to and executed this Amendment
to Articles of Incorporation this September 30th, 1999.
/s/ Ralph D. Pistor
________________________________________
Ralph D. Pistor, President and director
/s/ Igor Klaehre
________________________________________
Igor Klaehre, Vice President and director
The foregoing instrument was acknowledged before me on September 30, 1999 by
Ralph Pistor and Igor Klaehre who are personally known to me.
_____________________________________
Notary Public
My commission expires:
BY-LAWS OF
WINMAX TRADING GROUP, INC.
ARTICLE I - OFFICES
The principal office of the corporation shall be established and
maintained at 429 Seabreeze Boulevard in the City of Fort Lauderdale
County of Broward State of Florida.
The corporation may also have offices at such places within or without
the State of Florida as the Board may from time to time establish.
ARTICLE II - STOCKHOLDERS
1. PLACE OF MEETINGS
Meetings of the stock-holders shall be held at the principal office of the
corporation or at such place within or without the State of Florida as the
Board shall authorize.
2. ANNUAL MEETING
The annual meeting of stockholders shall be held on the 1st day of October at
10:00 A.M. in each year; however, if such day falls on a Sunday or a legal
holiday, then on the next business day following at the same time, the
stockholders shall elect a Board of Directors and transact such other business
as may properly come before the meeting.
3. SPECIAL MEETINGS
Special meetings of the stockholders may be called by the Board or by the
president or at the written request of stockholders owning a majority of the
stock entitled to vote at such meeting. A meeting requested by the
stockholders shall be called for a date not less than ten nor more than sixty
days after a request is made. The secretary shall issue the call for the
meeting unless the president, the Board or the stockholders shall designate
another to make said call.
4. NOTICE OF MEETINGS
Written Notice of each meeting of stockholders shall state the purpose of the
meeting and the time and place of the meeting. Notice shall be mailed to each
stockholder having the right and entitled to vote at such meetings, at his
last address as it appears on the records of the corporation, not less than
ten nor more than sixty days before the date set for such meeting. Such notice
shall be sufficient for the meeting and any adjournment thereof. If any
stockholder shall transfer his stock after notice, it shall not be necessary
to notify the transferee. Any stockholder may waive notice of any meeting
either before, during or after the meeting.
5. RECORD DATE
The Board may fix a record date not more than forty days prior to the date set
for a meeting of stockholders as the date as of which the stockholders of
record who have the right to and are entitled to notice of and to vote at such
meeting and any adjournment thereof shall be determined. Notice that such date
has
<PAGE>
been fixed may be published in the city, town or county where the principal
office of the corporation is located and in each city or town where a transfer
agent of the stock of the corporation is located.
6. VOTING
Every stockholder shall be entitled at each meeting and upon each proposal
presented at each meeting to one vote for each share of voting stock recorded
in his name on the books of the corporation on the record date as fixed by the
Board if no record date was fixed, on the date of the meeting the book of
records of stockholders shall be produced at the meeting upon the request of
any stockholder. Upon demand of any stockholder, the vote for Directors and
the vote upon any question before the meeting, shall be by ballot. All
elections for Directors shall be decided by plurality vote; all other
questions shall be decided by majority vote.
7. QUORUM
The presence, in person or by proxy, of stockholders holding a majority of the
stock of the corporation entitled to vote shall I constitute a quorum at all
meetings of the stockholders. In case a quorum shall not be present at any
meeting, a majority in interest of the stockholders entitled to vote thereat
present in person or by proxy, shall have power to adjourn the meeting from
time to time, without notice other than announcement at the meeting, until the
requisite amount of stock entitled to vote shall be present. At any such
adjourned meeting at which the requisite amount of stock entitled to vote be
represented, any business may be transacted which might have been transacted
at the meeting as originally noticed; but only those stockholders entitled to
vote at the meeting as originally noticed shall be entitled to vote at any
adjournment or adjournments thereof.
8. PROXIES
At any stockholders' meeting or any adjournment thereof, any stockholder of
record having the right and entitled to vote thereat may be represented and
vote by proxy appointed in a written instrument. No such proxy shall be voted
after three years from the date of the instrument unless the instrument
provides for a longer period. In the event that any such instrument provides
for two or more persons to act as proxies a majority of such persons present
at the meeting or if only one be present, that one, shall have all the powers
conferred by the instrument upon all persons so designated unless the
instrument shall otherwise provide.
9. STOCKHOLDER LIST
After fixing a record date for a meeting, the corporation shall prepare an
alphabetical list of the names of all its shareholders who are entitled to
notice of a shareholders' meeting. Such list shall be arranged by voting group
with the names and addresses of, and the number and class and series if any,
of shares held by each. This list shall be available for inspection by any
shareholder for a period of ten days prior to the meeting.
<PAGE>
ARTICLE III - DIRECTORS
1. BOARD OF DIRECTORS
The business of the corporation shall be managed and its corporate powers
exercised by a Board of two (2) Directors each of whom shall be of full age.
It shall not be necessary for Directors to be stockholders.
2. ELECTION AND TERM OF DIRECTORS
Directors shall be elected at the annual meeting of stockholders and each
Director elected shall hold office until his successor has been elected and
qualified, or until the Director's prior resignation or removal.
3. VACANCIES
If the office of any Director, member of a committee or other office becomes
vacant the remaining Directors in office, by a majority vote, may appoint any
qualified person to fill such vacancy, who shall hold office for the unexpired
term and u until a successor shall be duly chosen.
4. REMOVAL OF DIRECTORS
Any or all of the Directors may be removed with or without cause by vote of a
majority of all the stock outstanding and entitled to vote at a special
meeting of stockholders called for that purpose.
5. NEWLY CREATED DIRECTORSHIPS
The number of Directors may be increased by amendment of these By-laws by the
affirmative vote of a majority of the Directors, though less than a quorum,
or, by the affirmative vote of a majority in interest of the stockholders, at
the annual meeting or at a special meeting called for that purpose, and by
like vote the additional Directors may be chosen at such meeting to hold
office until the next annual election and until their successors are elected
and qualify.
6. RESIGNATION
A Director may resign at any time by giving written notice to the Board, the
president or the secretary of the corporation. Unless otherwise specified in
the notice, the resignation shall take effect upon receipt thereof by the
Board or such officer, and the acceptance of the resignation shall not be
necessary to make it effective.
7. QUORUM OF DIRECTORS
A majority of the Directors shall constitute a quorum for the transaction of
business. If at any meeting of the Board there shall be less than a quorum
present, a majority of those present may adjourn the meeting until a quorum is
obtained and no further notice thereof need be given other than by
announcement at the meeting which shall be so adjourned.
<PAGE>
8. PLACE AND TIME OF BOARD MEETINGS
The Board may hold its meetings at the office of the corporation or at such
other places either within or without the State of Florida as it may from time
to time determine.
9. REGULAR ANNUAL MEETING
A regular annual meeting of the Board shall be held immediately following the
annual meeting of the stockholders at the place of such annual meeting of
stockholders.
10. NOTICE OF MEETINGS OF THE BOARD
Regular meetings of the Board may be held without notice at such time and
place as it shall from time to time determine. Special meetings of the Board
shall be held upon notice to the Directors and may be called by the president
upon three days notice to each Director either personally or by mail or by
wire; special meetings shall be called by the president or by the secretary in
a like manner on written request of two Directors. Notice of a meeting need
not be given to any Director who submits a Waiver of Notice whether before or
after the meeting or who attends the meeting without protesting prior thereto
or at its commencement, the lack of notice to him.
11. EXECUTIVE AND OTHER COMMITTEES
The Board, by resolution, may designate two or more of their number to one or
more committees, which, to the extent provided in said resolution or these By-
laws may exercise the powers of the Board in the management of the business of
the corporation.
12. COMPENSATION
No compensation shall be paid to Directors, as such for their services, but by
resolution of the Board a fixed sum and expenses for actual attendance, at
each regular or special meeting of the Board may be authorized. Nothing herein
contained shall be construed to preclude any Director from serving the
corporation in any other capacity and receiving compensation therefor.
ARTICLE IV - OFFICERS
1. OFFICERS, ELECTION AND TERM
A. The Board may elect or appoint a chairman, a president, one or more
vice-presidents, a secretary, an assistant secretary, a treasurer and an
assistant treasurer and such other officers as it may determine who shall have
duties and powers as hereinafter provided.
B. All officers shall be elected or appointed to hold office until the
meeting of the Board following the next annual meeting of stockholders and
until their successors have been elected or appointed and qualified.
<PAGE>
2. REMOVAL, RESIGNATION, SALARY, ETC.
A. Any officer elected or appointed by the Board may be removed by the
Board with or without cause.
B. In the event of the death, resignation or removal of an officer, the
Board in its discretion may elect or appoint a successor to fill the unexpired
term.
C. Any two or more offices maybe held by the same person.
D. The salaries of all officers shall be fixed by the Board.
E. The Directors may require any officer to give security for the
faithful performance of his duties.
3. CHAIRMAN
The chairman of the Board, if one be elected, shall preside at all meetings of
the Board and shall have and perform such other duties from time to time as
may be assigned to him by the Board or the executive committee.
4. PRESIDENT
The president shall be the chief executive officer of the corporation and
shall have the general powers and duties of supervision and management usually
vested in the office of the president of the corporation. The president shall
preside at all meetings of the stockholders if present thereat, and in the
absence or non-election of the chairman of the Board, at all meetings of the
Board, and shall have general supervision direction and control of the
business of the corporation. Except as the Board shall authorize the execution
thereof in some other manner, the president shall execute bonds, mortgages and
other contracts in behalf of the corporation and shall cause the seal to be
affixed to any instrument requiring it and when so affixed, the seal shall be
attested by the signature of the secretary or the treasurer or an assistant
secretary or an assistant treasurer.
5. VICE-PRESIDENTS
During the absence or disability of the president, the vice-president, or if
there be more than one, the executive vice-president, shall have all the
powers and functions of the president. Each vice-president shall perform such
other duties as the Board shall prescribe.
6. SECRETARY
The secretary shall attend all meetings of the Board and of the stockholders,
record all votes and minutes of all proceedings in a book to be kept for that
purpose, give or cause to be given notice of all meetings of stockholders and
of meetings and special meetings of the Board, keep in safe custody the seal
<PAGE>
of the corporation and affix it to any instrument when authorized by the Board
or the president, when required prepare or cause to be prepared and available
at each meeting of stockholders a certified list in alphabetical order of the
names of stockholders entitled to vote thereat, indicating the number of
shares of each respective class held by each, keep all the documents and
records of the corporation as required by law or otherwise in a proper and
safe manner, and perform such other duties as may be prescribed by the Board
or assigned by the president.
7. ASSISTANT-SECRETARIES
During the absence or disability of the secretary, the assistant-secretary, or
if there are more than one, the one so designated by the secretary or by the
Board, shall have all the powers and functions of the secretary.
8. TREASURER
The treasurer shall have the custody of the corporate funds and securities,
keep full and accurate accounts of receipts and disbursements in the corporate
books, deposit all money and other valuables in the name and to the credit of
the corporation in such depositories as may be designated by the Board,
disburse the funds of the corporation as maybe ordered or authorized by the
Board and preserve proper vouchers for such disbursements, render to the
president and Board at the regular meetings of the Board, or whenever they
require it, an account of all the transactions made as treasurer and of the
financial condition of the corporation. The treasurer shall also render a full
financial report at the annual meeting of the stockholders if so requested.
The treasurer may request and shall be furnished by all corporate officers and
agents with such reports and statements as he may require as to all financial
transactions of the corporation, and perform such other duties as are
designated by these By-laws or as from time to time are assigned by the Board
of Directors.
9. ASSISTANT-TREASURERS
During the absence or disability of the treasurer, the assistant-treasurer, or
if there be more than one, the one so designated by the treasurer or the
Board, shall have all the powers and functions of the treasurer.
10. SURETIES AND BONDS
In case the Board shall so require, any officer or agent of the corporation
shall execute to the corporation a bond in such sum and with such surety or
sureties as the Board may direct, conditioned upon the faithful performance of
duties to the corporation and including responsibility for negligence and for
the accounting of all property, funds or securities of the corporation which
the officer or agent maybe responsible for.
<PAGE>
ARTICLE V - CERTIFICATES FOR SHARES
1. CERTIFICATES
The shares of the corporation shall be represented by certificates. They shall
be numbered and entered in the books of the corporation as they are issued.
They shall exhibit the holder's name, the number of shares and shall be signed
by the president and secretary and shall bear the corporate seal. When such
certificates are signed by the transfer agent or an assistant transfer agent
or by a transfer clerk acting on behalf of the corporation and a registrar,
the signatures of such officers may be facsimiles.
2. LOST OR DESTROYED CERTIFICATES
The Board may direct a new certificate or certificates to be issued in place
of any certificates theretofore issued by the corporation alleged to have been
lost or destroyed, upon the making of an affidavit of that fact by the person
claiming the certificate to be lost or destroyed. When authorizing such issue
of a new certificate or certificates, the Board may, in its discretion as a
condition preceding the issuance thereof, require the owner of such lost or
destroyed certificate or certificates, or the owner's legal representative, to
advertise the same in such manner as it shall require and/or give the
corporation a bond in such sum and with such surety or sureties as it may
direct as indemnity against any claim that maybe made against the corporation
with respect to the certificate alleged to have been lost or destroyed.
3. TRANSFER OF SHARES
Upon surrender to the corporation or the transfer agent of the corporation of
a certificate for shares duly endorsed or accompanied by proper evidence of
succession, assignment or authority to transfer, it shall be the duty of the
corporation to issue a new certificate to the person entitled thereto, and
cancel the old certificate; every such transfer shall be entered on the
transfer book of the corporation which shall be kept at its principal office.
Whenever a transfer shall be made for collateral security, and not absolutely,
it shall be so expressed in the entry of the transfer ledger. No transfer
shall be made within ten days next preceeding the annual meeting of the
stockholders.
4. CLOSING TRANSFER BOOKS
The Board shall have the power to close the share transfer books of the
corporation for a period of not more than ten days during the thirty day
period immediately preceeding (a) any stockholder's meeting, or (b) any date
upon which stockholders shall be called upon to or have a right to take action
without a meeting, or (c) any date fixed for the payment of a dividend or any
other form of distribution, and only those stockholders of record at the time
the transfer books are closed, shall be recognized as such for the purpose of
(a) receiving notice of or voting at such meeting or (b) allowing them to take
appropriate action, or (c) entitling them to receive any dividend or other
form of distribution.
<PAGE>
ARTICLE VI - DIVIDENDS
The Board may out of funds legally available, at any regular or special
meeting, declare dividends upon the capital stock of the corporation as and
when it deems expedient, Before declaring any dividend there maybe set apart
out of any funds of the corporation available for dividends, such sum or sums
as the Board from time to time in their discretion deem proper for working
capital or as a reserve fund to meet contingencies or for equalizing dividends
or for such other purposes as the Board shall deem conducive to the interest
of the corporation.
ARTICLE VII - CORPORATE SEAL
The seal of the corporation shall be circular in form and bear the name of the
corporation, the year of its organization and the words "CORPORATE SEAL,
FLORIDA". The seal may be used by causing it to be impressed directly on the
instrument or writing to be sealed, or upon adhesive substance affixed
thereto. The seal on the certificates for shares or on any corporate
obligation for the payment of money maybe facsimile, engraved or printed.
ARTICLE VIII - EXECUTION OF INSTRUMENTS
All corporate instruments and documents shall be signed or countersigned,
executed, verified or acknowledged by such officer or officers or other person
or persons as the Board may from time to time designate.
All checks, drafts or other orders for the payment of money, notes or other
evidences of indebtedness issued in the name of the corporation shall be
signed by such officer or officers, agent or agents of the corporation, and in
such manner as shall be determined from time to time by resolution of the
Board..
ARTICLE IX - FISCAL YEAR
The fiscal year shall begin on the first day of each year.
ARTICLE X - NOTICE AND WAIVER OF NOTICE
Whenever any notice is required by these By-laws to be given, personal notice
is not meant unless expressly so stated, and any notice so required shall be
deemed to be sufficient if given by depositing the same in a post office box
in a sealed postage-paid wrapper, addressed to the person entitled thereto at
the last known post office address, and such notice shall be deemed to have
been given on the day of such mailing. Stockholders not entitled to vote shall
not be entitled to receive notice of any meetings except as otherwise provided
by Statute.
Whenever any notice whatever is required to be given under the provisions of
any law, or under the provisions of the Articles of Incorporation of the
corporation or these By-laws, a waiver thereof in writing, signed by the
person or persons entitled to said notice, whether before or after the time
stated therein, shall be deemed equivalent thereto.
<PAGE>
ARTICLE XI - CONSTRUCTION
Whenever a conflict arises between the language of these By-laws and the
Articles of Incorporation the Articles of Incorporation shall govern.
ARTICLE XII - CLOSE CORPORATION
1. CONDUCT OF BUSINESS WITHOUT MEETINGS
Any action of the stockholders, Directors or committee may be taken without a
meeting if consent in writing, setting forth the action so taken, shall be
signed by all persons who would be entitled to vote on such action at a
meeting and filed with the secretary of the corporation as part of the
proceedings of the stockholders, Director or committees as the case maybe.
2. MANAGEMENT BY STOCKHOLDERS
In the event the stockholders are named in the Articles of Incorporation and
are empowered therein to manage the affairs of the corporation in lieu of
Directors, the stockholders of the corporation shall be deemed Directors for
the purposes of these By-laws and wherever the words "Directors", "Board of
Directors" or "Board" appear in these By-laws those words shall be taken to
mean stockholders.
The stockholders may, by majority vote, create a Board of Directors to manage
the business of the corporation and exercise its corporate powers.
ARTICLE XIII - AMENDMENTS
These By-laws may be altered or repealed and By-laws may be made at any annual
meeting of the stockholders or at any special meeting thereof if notice of the
proposed alteration or repeal to be made contained in the notice of such
special meeting, by the affirmative vote of a majority of the stock issued and
outstanding and entitled to vote thereat, or by the affirmative vote of a
majority of the Board at any regular meeting of the Board or at any special
meeting of the Board if notice of the proposed alteration or repeal to be made
is contained in the notice of such special meeting.
ARTICLE XIV - EMERGENCY BY-LAWS
1. CONDUCT OF BUSINESS WITHOUT MEETINGS
Pursuant to Florida Statue 607.0207 the corporation adopts the following By-
laws, which shall be effective only If a quorum of the Directors of the
corporation cannot be readily assembled because of some catastrophic event.
<PAGE>
2. CALLING A MEETING
In the event of such catastrophic event, any member of the Board of Directors
shall be authorized to call a meeting of the Board of Directors. Such member
calling an emergency meeting shall use any means of communication at their
disposal to notify all other members of the Board of such meeting.
3. QUORUM
Any one member of the Board of Directors shall constitute a quorum of the
Board of Directors. The members of the Board of Directors meeting during such
an emergency, may select any person or persons as additional Board members,
officers or agents of the corporation.
4. INDEMNIFICATION
The members of such emergency Board of Directors are authorized to utilize any
means at their disposal to preserve and protect the assets of the corporation.
Any action taken in good faith and acted upon in accordance with these By-laws
shall bind the corporation; and the corporation shall hold harmless any
Director, officer, employee or agent who undertake's an action pursuant to
these By-laws.
5. TERMINATION OF EMERGENCY BY-LAWS
These emergency By-laws shall not be effective at the end of the emergency
period.
<PAGE>
AMENDMENT TO BYLAWS
Pursuant to a special meeting of the Board of Directors of Winmax
Trading Group Inc. held on March 16, 1999, by a unanimous vote thereof, and
pursuant to the power vested in the Board of Directors by Article III -
DIRECTORS, 5. Newly Created Directorships and ARTICLE XIII - AMENDMENTS as
contained in the Company's Bylaws, ARTICLE III - DIRECTORS, 1. Board of
Directors is hereby amended as follows:
ARTICLE III -DIRECTORS
1. BOARD OF DIRECTORS
The business of the corporation shall be managed and its corporate powers
exercised by a Board of three (3) Directors each of whom shall be of full age.
It shall not be necessary for Directors to be stockholders.
Limited Partnership Agreement
The Winmax ALPHA Fund Limited Partnership
This Agreement of Limited Partnership (the "Agreement") made and entered
into this ______ day of ______________, 19 ____ , by and between Winmax
Trading Group, Inc. (the "General Partner") and other parties who shall
execute this agreement, whether in counterpart, by separate instrument or
otherwise, as Limited Partners (individually, a "Limited Partner" or
collectively, the "Limited Partners").
WITNESSETH
WHEREAS, the parties hereto desire to form a limited partnership for the
purpose of speculative trading in commodity futures, options on futures and
related financial instruments.
NOW, THEREFORE, the parties hereto agree as follows:
1. Formation and Name.
The parties hereto do hereby agree to form a limited partnership under the
Delaware Revised Uniform Limited Partnership Act, as amended and in effect on
the date hereof (the "Act"), and the rights and liabilities of the Partners
shall be as provided in the Act except as otherwise herein provided. The name
of the limited partnership shall be "The Winmax ALPHA Fund Limited
Partnership". The General Partner shall execute and file with the Office of
the Secretary of State of Delaware a Certificate of Limited Partnership in
accordance with the provisions of the Act and shall execute, file, record and
publish as appropriate such amendments, assumed name certificates and other
documents as necessary or advisable by the General Partner. Each Limited
Partner agrees to furnish the General Partner with a limited power of attorney
which may be filed with the Certificate of Limited Partnership and any
amendments thereto and such additional information as is required to complete
such documents and shall execute and cooperate in the filing, recording or
publishing of such documents at the request of the General Partner.
2. Principal Office.
The principal office of the Partnership shall be 429 Seabreeze Blvd., Suite
227, Ft.Lauderdale, FL 33316 , or such other place as the General Partner may
designate from time to time.
3. Business.
The Partnership's business and purpose is to trade, buy, sell or otherwise
acquire, hold or dispose of commodity futures contracts and options on futures
contracts and any rights pertaining thereto which are traded on US exchanges.
Page 1 of 8
<PAGE>
4. Term, Dissolution and Fiscal Year.
(a) Term. The term of the Partnership shall commence on the day on which the
Certificate of Limited Partnership is filed with the Office of the Secretary
of State of Delaware and shall end upon the first to occur of the following:
(i) December 31, 2020; (ii) any of the "events of withdrawal" specified in
Section 17-402 of the Act with respect to the General Partner; (iii) the Net
Assets of the partnership at the end of any day drop below 50% of the Net
Assets of the Partnership at the commencement of Partnerships operations or,
after the Partnership's first full calendar month, to below 50% of Partnership
Net Assets at the end of any previous calendar month, in either case after
adjusting for additions, distributions, redemptions and incentive allocation;
(iv) any event which shall make it unlawful for the existence of the
Partnership to be continued; or (v) the General Partner elects to terminate
the Partnership at any time for any reason in its sole and absolute
discretion.
(b) Dissolution. Upon the first to occur of the events in section (a) above,
the Partnership shall be dissolved in accordance with the Act. The General
Partner and each Limited Partner shall share in the assets of the Partnership
after the payment of creditors, pro rata in accordance with their respective
Capital Accounts, less any amount owing by such Partner to the Partnership.
(c) Fiscal Year. The fiscal year of the Partnership shall begin on January 1
of each year and end on the following December 31.
5. Management of the Partnership.
(a) Management. The General Partner, to the exclusion of all other partners,
shall conduct and manage the business of the Partnership including, without
limitation, the investment of the funds of the Partnership. No Limited Partner
shall be entitled to any salary, draw or other compensation from the
Partnership on account of any investment in the Partnership. The General
Partner shall have sole discretion in determining what distributions of
profits and income, if any, shall be made to the Partners, shall execute
various documents on behalf of the Partnership and the Partners and supervise
the liquidation of the Partnership if an event causing dissolution of the
Partnership occurs.
(b) Trading. The General Partner may in furtherance of the business of the
Partnership cause the Partnership to buy, sell, hold, or otherwise acquire or
dispose of commodity interests traded on US exchanges. The General Partner is
authorized to engage one or more selling agents, brokers, banks and dealers
for the Partnership from time to time in its sole discretion.
(c) Fiduciary responsibility. The General Partner shall devote such time to
the Partnership's affairs as shall be required to effectively manage the
business and affairs of the Partnership. The General Partner shall have a
fiduciary responsibility to the Partnership with respect to the safe keeping
and use of all funds and assets of the Partnership, and he shall not employ or
permit others to employ such funds and assets in any manner except for the
benefit of the Partnership.
(d) Employment. The General Partner has sole discretion regarding the
appointment or employment of all persons or entities providing services to the
Partnership including, but
Page 2 of 8
<PAGE>
not limited to, trading advisors, brokers and accountants and may employ any
such persons or entities on behalf of the Partnership without notice to the
Partners.
(e) Other business. The General Partner may engage in other business
activities and shall not be required to refrain from any other activity or
disgorge any profits from such activity, whether as general partner of
additional partnerships for investment in commodity interest or otherwise.
(f) Books and records. The Partnership shall keep and retain books and
records relating to the business of the Partnership as the General Partner
deems necessary or advisable, or as required by the Commodity Exchange Act, as
amended, and the rules and regulations of the CFTC, at the principal office of
the Partnership, or such other offices as the General Partner deems advisable.
Such books and records shall be retained by the Partnership for not less than
six years. The Limited Partners shall be given reasonable access to the books
and records of the Partnership.
(g) Commingling. The Partnership shall make no loans. Assets of the
Partnership will not be commingled with assets of any other entity. Deposits
of assets with a futures broker as margin shall not be considered commingling.
(h) Incentive allocation. The General Partner is entitled to receive a
monthly incentive allocation equal to 25% of each Limited Partner's Net New
Profit, if any, at the end of each calendar month. Net New Profit is the
amount by which the amount of profit credited to the Limited Partner's Capital
Accounts at the end of a calendar month (before deduction of any incentive
allocation payable in respect of such calendar month) exceeds (i) in the case
of the Partnership's initial calendar month, zero, or (II) in all other cases,
the highest amount of profit credited to such Capital Accounts as of the end
of any prior calendar month, after adjusting for intervening additions,
distributions and redemptions. Profit is the aggregate amount of net profit
(realized and unrealized) allocated to the Limited Partner's Capital Accounts
in accordance with the Limited Partnership Agreement on a cumulative basis,
before any charge for incentive allocations. The incentive allocation shall be
paid at the end of each calendar month. In the event of a redemption of a
Limited Partner's interest as of a date other than the end of a calendar
month, the incentive allocation payable will be determined as of the effective
date of such redemption or termination as if it were the end of a calendar
month. If any incentive allocation is paid by a Limited Partner to the General
Partner in respect of Net New Profits in such Limited Partner's Capital
Account and a loss is subsequently charged to such Capital Account, the
General Partner shall be entitled to retain the incentive allocations
previously paid in respect to such Capital Account. No subsequent incentive
allocation will be payable in respect to such Capital Account until the loss
charged to such Capital Account has been made up. Losses will be carried
forward from year to year for purposes of computing incentive allocations.
(i) Exculpation. The General Partner, and its respective officers, directors,
stockholders, employees, agents and affiliates and each person who controls
any of the same shall not be liable, responsible or accountable for damages or
otherwise to the Partnership or any of the Partners, their successors or
permitted assigns, except by reason of acts or omissions due to bad faith,
willful misconduct, gross negligence or breach of fiduciary duty. In no event
shall the General Partner be liable to the Partnership or to any of the
Partners or their successors for special, incidental, punitive or
consequential damages.
Page 3 of 8
<PAGE>
Each Limited Partner acknowledges that any claim, action or proceeding in
connection with this Agreement or the Partnership shall be brought solely
against the General Partner and the assets of the General Partner, and not
against any officer, director, shareholder, employee, agent or affiliate of
the General Partner or any person who controls any of the same.
6. Report to Limited Partners.
The Partnerships' books shall be audited annually by independent public
accountants. The Partnership will cause each Limited Partner to receive (i)
reports at least quarterly of the Partnership's activities; (ii) within 90
days after the close of each fiscal year, certified audited financial
statements of the Partnership for the fiscal year the ended; and (iii) within
90 days after the close of each fiscal year, such Partnership tax information
as is necessary for each Partner to complete its federal income tax return.
7. Capital Contributions and Limited Partnership Interests.
(a) Initial capital contributions. Interests in the Partnership shall be
evidenced by Units of Partnership Interest ("Units" or "Unit"). The General
Partner on behalf of the Partnership will issue Units to persons desiring to
become Limited Partners, provided that such persons are determined by the
General Partner to be qualified and provided their subscriptions and
Subscription Agreements are accepted by the General Partner. Immediately prior
to commencement of trading the General Partner will contribute to the capital
of the Partnership the lesser of (i) 1% of the aggregate contributions made by
all Partners to the Partnership or (ii) $200,000 and the General Partner shall
maintain its capital contribution to the Partnership at an amount equal to the
lesser of (i) 1% of the aggregate contributions made from time to time by all
Partners to the Partnership or (ii) $200,000. The General Partner may withdraw
any portion of its interest in the Partnership which is in excess of its
required general partnership interest established in the preceding sentence.
The General Partner also may purchase limited partnership interests in the
Partnership. The General Partner shall, with respect to any Interests owned by
it, enjoy all the rights and privileges and be subject to all of the
obligations and duties of a Limited Partner.
(b) Additional contributions. Limited Partners may make additional
contributions to the capital of the Partnership only to the extent (if at all)
that the General Partner shall permit. The aggregate of all contributions
shall be available to the Partnership to conduct its business. The General
Partner in its sole discretion may accept or reject any subscription for any
reason. All subscriptions are irrevocable by subscribers.
8. Allocation of Profit and Losses.
(a) Capital Accounts. A Capital Account shall be established for each
Partner. The initial balance of each Partner's Capital Account shall be the
amount of its initial capital contribution to the Partnership. Each Partner's
Capital Account shall be increased and/or decreased by the close of business
on the last day of each month by the amount of any additional contributions,
the allocation of profit and/or losses, incentive allocations as required by
the Partnership Agreement (See Paragraph 5 (h)) and any special contingencies
allocations. As of the close of business on the last day of each month
Page 4 of 8
<PAGE>
determination shall be made regarding the Net Asset Value of the Partnership
(See Paragraph 9) and 1% of any increase or decrease in Net Asset Value shall
be allocated to the Capital Account of the General Partner. Then 99% of any
increase or decrease in Net Asset Value shall be allocated to the Capital
Account of each Partner in the ratio that the balance of each account bears to
the balance of all accounts for that month.
(b) Monthly allocation of Profit and Loss. Taxable income and loss generally
will be allocated in such manner as to reflect as nearly as possible the
amounts credited or charged to each Partner's Capital Account. As of the end
of each month, the amounts determined in accordance with subparagraph (a)
above will be credited or charged, as applicable, proportionately to the
Partner's Capital Accounts based on the amount of each Partner's Capital
Account at the beginning of such month.
(c) Allocation of Profit and Loss for Federal Income Tax Purposes. As of the
end of each fiscal year, the Partnership's realized items of income, gain,
loss, deduction or credit shall be allocated among the Partners in the
proportion of their respective Capital Accounts bearing to the total account
of all Partners. Any Partner who redeems Units during any fiscal year will be
allocated his or her proportionate share of income, gain, loss, deduction or
credit realized by the Partnership during the period that such Units were
owned by such Partner.
(d) Expenses. The Partnership shall bear all futures brokerage commissions
and shall be obligated to pay all liabilities incurred by it including without
limitation, all expenses incurred in connection with its trading activities,
incentive allocations, ongoing professional fees, office and administrative
expenses, all extraordinary operating expenses and any taxes payable by the
Partnership on its net income or profits.
(e) Return of a Partner's Capital Contribution. A Partner shall have the
right to withdraw capital through redemption of Units and shall be entitled to
distributions in accordance with the terms of this Agreement. In no event
shall a Partner be entitled to demand or receive property other than cash.
9. Net Asset Value.
The Net Asset Value of the Partnership shall be the difference between the
value of the assets of the Partnership and the amount of liabilities of the
Partnership. Unless otherwise specified below, all assets and liabilities are
to be determined on the basis of generally accepted accounting principles,
consistently applied. For purposes of determining Net Asset Value such shall
include any unrealized profit or loss on open futures or options positions;
any US Government Securities valued at cost plus accrued monthly interest;
brokerage commissions and fees, if any, on open positions; incentive fees, if
incurred, during a given month and to be paid at the end of such month. Net
Asset Value per Unit is calculated by dividing the Net Asset Value of the
Partnership by the number of Partnership Units outstanding for that month.
10. Redemption of Units.
Upon the receipt of a request for redemption from a Limited Partner, the
General Partner will cause the Partnership to redeem for cash all (or any
portion in an amount not less than $5,000) of such Limited Partner's Interest
Units at their Net Asset Value. Such
Page 5 of 8
<PAGE>
redemption shall occur as of the last day of the month (the "Redemption Day")
after the General Partner has received a request for redemption at least 10
business days in advance of such redemption date. In such request, the Limited
Partner must represent and warrant that it is the true, lawful, and beneficial
owner of the subject Interest with full power and authority to request such
redemption. The signature of such request must be notarized. The General
Partner, in its sole discretion, may waive any notice period or the
requirement of a notarized signature, provided that in the sole opinion of the
General Partner the Partnership will not be prejudiced by such action. The
General Partner, in its sole discretion, upon 10 days' notice to any Limited
Partner, may cause the Partnership to redeem for cash as of the last day of
any calendar month all or any portion of such Limited Partner's Interest for
any reason. With respect to all redemptions payment will be made within 30
days after the Redemption Date, except that under special circumstance
including but not limited to the inability on the part of the Partnership to
liquidate positions or default or delay in payments due the Partnership from
brokers, banks or other persons, the Partnership may delay payment to Partners
whose Interest are being redeemed. The right to obtain redemption is
contingent upon the Partnership having property sufficient to discharge its
liabilities on the Redemption Date. The Capital Account of the redeeming
Limited Partner shall be reduced accordingly as of the Redemption Date. The
General Partner, at its sole discretion, may allow redemption at time other
than the redemption dates.
11. Assignability.
A Limited Partner may not directly or indirectly assign, transfer or encumber
any or all of its Interest without the prior written consent of the General
Partner. An assignee who does not become a substituted partner shall be
entitled to receive the share of the profits or the return of capital to which
his assignor would otherwise be entitled, but shall not be entitled to vote,
to an accounting of Partnership's transactions, to receive tax information, or
to inspect the books and records of the Partnership.
12. Additional Partners.
The General Partner may admit additional Limited Partners to the Partnership
as of the first day of any month after the Partnership has been formed and
commenced trading. Each additional person so admitted to the Partnership, if
any, shall be subject to and bound by all the provisions of this Agreement, as
it may be amended from time to time, as if originally a party hereto and shall
execute such documents as shall be necessary or appropriate to evidence its
admission to the Partnership and its obligations as a Limited Partner. Such
admittance will be in the sole discretion of the General Partner upon payment
of a capital contribution for each Unit of Partnership Interest to be acquired
at the Net Asset Value per Unit as of the last business day of each month.
13. Special Power of Attorney.
Each Limited Partner, by the execution of this Agreement, does irrevocably
appoint the General Partner, with power of substitution, as its true and
lawful attorney-in-fact to execute, acknowledge, swear to, deliver, file,
record and publish, as appropriate: amendments to this Agreement hereto; a
certificate of limited partnership and
Page 6 of 8
<PAGE>
amendments hereto; certificates of assumed name for the Partnership; and any
other instrument to conduct the Partnership's business and affairs. The power
of attorney shall be deemed irrevocable and deemed to be a power coupled with
an interest and shall survive the death, legal incapacity, insolvency or
dissolution of a Limited Partner.
14. Withdrawal or Death of a Partner.
The Partnership shall terminate and be dissolved upon the withdrawal,
insolvency or dissolution of the General Partner. The General Partner shall
not withdraw from the Partnership without giving the Limited Partners 30 days'
prior written notice. The death, legal disability, withdrawal, insolvency or
dissolution of a Limited Partner shall not terminate or dissolve the
Partnership and such Partner, his estate, custodian or personal representative
shall have no right to withdraw or value such Partner's Interest in the
Partnership except as provided in Subparagraph 10 above.
15. Amendments.
If, at any time during the term of the Partnership, the General Partner shall
deem it necessary or desirable to amend this Agreement, such amendment shall
be effective if embodied in an instrument signed by the General Partner and by
Limited Partners owning more than fifty percent (50%) of the Units then owned
by all Partners. However, the General Partner may, at its sole discretion
make such amendment to this Agreement as may be necessary to enable the
Partnership to be classified for federal income tax purposes as a Partnership
and not as an association taxable as a corporation or to permit the
qualification or registration of the Units for sale in any state or
jurisdiction. Any such supplemental or amendatory agreement shall be adhered
to and have the same effect from and after its effective date as if the same
had originally been embodied in and formed a part of this Agreement, however,
that no such supplemental or amendatory agreement shall, without the consent
of all Partners, change or alter this Section 15, extend the terms of the
Partnership, reduce the capital account of any Partner or modify the
percentage or profits, losses or distributions to which any Partner is
entitled.
16. Governing Law.
This Agreement shall be governed by and construed in accordance with the laws
of the State of Delaware.
17. Arbitration.
Any disputes, claims, actions or proceedings arising directly or indirectly
from or in connection with this Agreement shall be decided by arbitration
before the National Futures Association in accordance with its rules. If the
National Futures Association declines to hear any such dispute, the dispute
shall be decided by arbitration before the American Arbitration Association in
accordance with its rules. The place of arbitration shall be Ft.Lauderdale,
Florida. The Partners agree to submit to the jurisdiction of any state or
federal court located in Florida and to waive any right to transfer or to
change the venue of any such litigation
page 7 of 8
<PAGE>
18. Indemnification.
(a) By the Partnership. The Partnership shall indemnify, defend and hold
harmless the General Partner, and its employees and affiliates from and
against any loss, liability, damage, cost or expense (including legal fees and
expenses) and any amounts paid in settlement thereof (provided that the
Partnership shall have approved such settlement) resulting from or relating to
its actions or capacity as General Partner, or otherwise concerning the
business or activities undertaken on behalf of the Partnership, provided that
the act or omission which was the subject of the demand, claim or action did
not constitute gross negligence, willful misconduct, breach of fiduciary
obligations to the Partnership or violations of federal or state securities
law or any other intentional or criminal wrongdoing.
(b) By the partners. In the event the Partnership is made a party of or to
any claim, dispute or litigation or otherwise incurs any loss or expense as a
result of or in connection with any Partner's obligations or liabilities
unrelated to the Partnership's business, such Partner shall indemnify and
reimburse the Partnership for all loss and expenses incurred, including
reasonable attorneys' fees.
19. Miscellaneous.
(a) Priority among partners. No Partner shall be entitled to any priority or
preference over any other Partner with regard to the affairs of the
Partnership.
(b) Notices. All notices under this Agreement, other than reports by the
General Partner to the Partners, shall be in writing and shall be effective
upon personal delivery, or if sent by registered or certified mail, postage
prepaid, addressed to the last known address of the party to whom such notice
is given, upon deposit of such notice in the United States mails. Reports by
the General Partner to the Partners shall be in writing and shall be sent
first class mail to the last known address of each Partner.
(c) Binding effect. This Agreement shall inure to and be binding upon all of
the parties, their successors, assigns as permitted herein, custodians,
estates, heirs and personal representatives. For purposes of determining the
rights of any Partner hereunder, the Partnership and the General Partner may
rely upon the Partnership's records as to who are Partners and all Partners
agree that their rights shall be determined and that they shall be bound
thereby, including all rights which they may have under Sections 15 and 17
hereof.
(d) Captions. Captions in this Agreement no way define, limit, extend, or
describe the scope of this Agreement nor the effect of any of its provisions.
(e) Counterparts. This Agreement may be executed in several counterparts.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.
GENERAL PARTNER: LIMITED PARTNER:
Winmax Trading Group, Inc.
___________________________ _____________________________
/s/ Ralph D. Pistor, president /s/ Limited Partner
Page 8 of 8
SEABREEZE EXECUTIVE SUITES
429 Seabreeze Boulevard
Fort Lauderdale, FL 33316 (305) 779-7146
OFFICE LEASE
THIS AGREEMENT, entered into as of this 10th day of October, 1998 between
EMIL PAWUK, of Cleveland, Ohio, hereinafter called the Lessor, and Winmax
Trading Group, Inc a Florida Corporation, hereinafter called the Lessee or
Tenant:
WITNESSETH, That the said Lessor does this day lease unto said Lessee,
and said Lessee does hereby hire and take as Tenant under said Lessor, space
designated as offices #220, #225 and #227, on the attached drawing (Exhibit
A), at 429 Seabreeze Boulevard, Fort Lauderdale, Florida 33316, to be used and
occupied by the Lessee as one person occupancy office space and for no other
purpose or uses whatsoever, for the base term of 12 months subject and
conditioned on the provisions of clauses ten and twenty-seven of this Lease,
beginning the 1st day of November, 1998, and ending the 31st day of October,
1999, at and for the agreed total rental of Nineteen Thousand and Five Hundred
Dollars ($19,500.00) (plus tax), payable $1,625.00/per month (plus tax),
beginning November 1, 1998; all payments to be made to the Lessor on the first
day of each and every month in advance without demand at the office of
Castonguay Associates, Inc., 429 Seabreeze Boulevard, Fort Lauderdale, Florida
33316 or at such other place and to such other person as the Lessor may from
time to time designate in writing. Notwithstanding the foregoing, rent of
$450.00 (plus tax) for office #225 is waived for the month of November, 1998.
Lessee may extend the term of this Lease for one additional year, at an
agreed total rental of Twenty Thousand and Eight Hundred Twenty Dollars
($20,820) (plus tax), payable (as above) $1,735.00/per month (plus tax), by
giving written notice to Lessor at least thirty (30) days prior to expiration
of the base term. If extended, all other terms and conditions of this Lease
will apply to the extended term. Notwithstanding the foregoing, Lessee may not
extend the terms of this Lease if Lessee has not fully complied with all the
terms and conditions contained herein during the base term.
Lessor acknowledges the receipt of Last Month's Rent, and Security
Deposit, of $3,347.50 given by Lessee as security for the faithful performance
by Lessee of all terms of this lease, including, without limitation, the
payment of rent. The Security Deposit portion shall be returned to Lessee at
the expiration date of this Lease or any extension thereof, provided Lessee
complies with the terms and covenants of this Lease. Lessor is under no
obligation to pay interest thereon.
The following express stipulations and conditions are made a part of this
Lease and are hereby assented to by Lessee:
FIRST: The Lessee shall not assign this Lease, nor sub-let the
premises or any part thereof nor use the same, or any part thereof, nor permit
the same, or any part thereof, to be used for any other purpose than as above
stipulated, nor make any alterations therein or additions thereto, without the
written consent of the Lessor, and all additions, fixtures or improvements
which may be made by Lessee, except moveable office furniture, shall become
the property of the Lessor and remain upon the premises as a part thereof, and
be surrendered with the premises at the termination of this Lease.
SECOND: All personal property placed or moved into the premises above
described shall be at the risk of the Lessee or owner thereof, and Lessor
shall not be liable for any damage to said personal property, or to the
Lessee, arising from the bursting or leaking of water pipes, or from any act
of negligence of any co-tenant or occupants of the building or of any other
person whomsoever or for any other reason whatsoever.
THIRD: That the tenant shall promptly execute and comply with all
statutes, ordinances, rules, orders, regulations, and requirements of the
Federal, State and City Government and of any and all of their Departments and
Bureaus applicable to said premises for the correction, prevention, and
abatement of nuisances or other grievances, in, upon, or connected with said
premises during said term; and shall also promptly comply with and execute all
rules, orders, and regulations of the applicable fire prevention codes for the
prevention of fires, at Lessee's own cost and expense.
FOURTH: In the event premises shall be destroyed or so damaged or
injured by fire or other casualty during the life of this agreement, whereby
the same shall be rendered untenantable, then the Lessor shall have the right
to render said premises tenantable by repairs within ninety days therefrom. If
said premises are not rendered tenantable within said time, it shall be
optional with either party hereto to cancel this Lease, and in the event of
such cancellation the rent shall be payable only to the date of premises being
rendered untenantable. Upon notice of cancellation, the Lease shall be null
and void and of no further force and effect. The cancellation herein mentioned
shall be evidenced in writing.
FIFTH: The prompt payment of the rent for said premises upon the dates
named, and the faithful compliance with and performance of the covenants of
this Lease, and of such other and further rules or regulations
as may be hereafter made by the Lessor, are the conditions upon which the
Lease is made and accepted and any failure on the part of the Lessee to comply
with the terms of said Lease, or any of said rules and regulations now in
existence, or which may be hereafter prescribed by the Lessor, shall at the
option of the Lessor, work a forfeiture of this contract, and all the rights
of the Lessee hereunder.
SIXTH: If the Lessee shall abandon or vacate said premises before the
end of the term of this Lease, or shall suffer the rent to be in arrears, the
Lessor may, at his option, forthwith cancel this Lease or he may enter said
premises as agent of the Lessee, without being liable in any way therefor, and
relet the premises with or without any furniture that may be therein, as the
agent of the Lessee, at such price and upon such terms and for such duration
of time as the Lessor may determine, and receive the rent therefor, applying
the same to the payment of the rent due by these presents, and if the full
rent herein provided shall not be realized by Lessor over and above the
expenses of Lessor in such re-letting, the said Lessee shall pay any
deficiency.
Page 1 of 4
FC /s/ RP /s/
--------- -------
<PAGE>
SEVENTH: Lessee agrees to pay the cost of collection and all
attorney's fees incurred by Lessor in enforcing the terms of this Lease.
EIGHTH: The Lessee agrees that he will pay all charges for rent,
and should said charges for rent at any time remain due and unpaid for the
space of five days after the same shall have become due, the Lessor may at its
option consider the said Lessee tenant at sufferance and the entire rent for
the term hereof shall at once be due and payable and may forthwith be
collected by distress or otherwise. Lessor further reserves the right to
request payment of rent by cash or cashier's check upon written notice to
Lessee. In the event of such late payment as provided for herein, a late
charge shall be imposed of five (5%) per cent of the late payment.
NINTH: The said Lessee hereby pledges and assigns to the Lessor all
the furniture, fixtures, goods and chattels of said Lessee, which shall or may
be brought or put on said premises as security for the payment of the rent
herein reserved, and the Lessee agrees that the said lien may be enforced by
distress foreclosure or otherwise at the election of the said Lessor, and does
hereby agree to pay Attorney's fees together with all costs and charges
incurred or paid by the Lessor. Lessee agrees to execute appropriate Uniform
Commercial Code documentation to perfect Lessor's security interest granted
herein upon request by Lessor.
TENTH: It is hereby agreed and understood between Lessor and Lessee that
in the event Lessor decides to remodel, alter or demolish all or any part of
the premises leased hereunder, or in the event of the sale or long term lease
of all or any part of the building or part thereof requiring this space, the
Lessee hereby agrees to vacate same upon receipt of sixty (60) days' written
notice and the return of any advance rental paid on account of this Lease.
ELEVENTH: The Lessor, or any of his agents, shall have the right to
enter said premises during all reasonable hours, to examine the same, for the
purpose of making such repairs, additions or alterations as may be deemed
necessary for the safety, comfort, or preservation thereof, or of said
building, or to exhibit said premises, to supply agreed services and to put or
keep upon the doors or windows thereof a notice "FOR RENT" at any time within
thirty (30) days before the expiration of this Lease. The right of entry shall
likewise exist for the purpose of removing placards, signs, fixtures,
alterations, or additions which do not conform to this agreement or to the
rules and regulations of the building.
TWELFTH: Lessee hereby accepts the premises in the condition they
are in at the beginning of this Lease and agrees to maintain said premises in
the same condition, order and repair as they are at the commencement of said
term, excepting only reasonable wear and tear arising from the use thereof
under this agreement, and to make good to said Lessor, immediately upon
demand, any damage to water apparatus, or electric lights or any fixture,
appliance or appurtenances of said premises, or of the building, caused by any
act or neglect of Lessee, or of any person or persons in the employ of, under
the control of, or invitees of, the Lessee.
THIRTEENTH: It is expressly agreed and understood by and between the
parties to this agreement, that the Lessor shall not be liable for any damage
or injury by water, which may be sustained by the said tenant or other person
or for any other damage or injury resulting from the carelessness, negligence,
or improper conduct on the part of any other tenant or agents, or employees,
or by reason of breakage, leakage, or obstruction of the water, sewer or soil
pipes, or other leakage in or about the said building.
FOURTEENTH: If the Lessee shall become insolvent or if bankruptcy
proceedings shall be begun by or against the Lessee before the end of said
term, the Lessor is hereby irrevocably authorized, at its option, to forthwith
cancel this Lease, as and for a default. Lessor may elect to accept rent from
a receiver, trustee, or other judicial officer during the term of their
occupancy in their fiduciary capacity without affecting Lessor's rights as
contained in this contract, but no receiver, trustee or other judicial officer
shall ever have any right, title or interest in and to the above described
property by virtue of this document.
FIFTEENTH: Lessee agrees to indemnify and may be asked to provide
Lessor with a Certificate of Insurance indemnifying Lessor from all claims and
liability for losses of or damage to property, or injuries to persons
occurring in or about the demised premises.
SIXTEENTH: If the property or any part thereof wherein the demised
premises are located shall be taken by eminent domain or condemnation, this
Lease, at the option of the Lessor, shall be terminated and the Lessee shall
have no claim or interest in or to any award of damages for such taking.
SEVENTEENTH: This contract shall bind the Lessor and its assigns or
successors, and the heirs, assigns, personal representatives, or successor as
the case may be, of the Lessee.
EIGHTEENTH: It is understood and agreed between the parties hereto
that time is of the essence of this contract and this applies to all terms and
conditions contained herein.
NINETEENTH: It is understood and agreed between the parties hereto
that written notice mailed or delivered to the premises leased hereunder shall
constitute sufficient notice to the Lessee and written notice mailed or
delivered to the office of the Lessor's agent shall constitute sufficient
notice to the Lessor.
TWENTIETH: The rights of the Lessor under the foregoing shall be
cumulative, and failure on the part of the Lessor to exercise promptly any
rights given hereunder shall not operate to forfeit any of said rights.
TWENTY-FIRST: It is further understood and agreed between the parties
hereto that any charges against the Lessee by the Lessor for services or for
work done on the premises by order of the Lessee or otherwise accruing under
this contract shall be considered as rent due and shall be included in any
lien for rent due and unpaid.
TWENTY-SECOND: Lessor will install one sign at Lessee's office #225
in addition to tenants present signs, at Lessee's cost.
FC /s/ RP /s/
-------- ------
Page 2 of 4
<PAGE>
TWENTY-THIRD: Lessee is allowed three parking spaces and will park in
the parking lot owned by Lessor South of 429 Seabreeze Boulevard. (Parking
spaces located in front of 429 Seabreeze Boulevard are reserved for guests and
visitors of office tenants during normal business hours.) Lessor reserves the
right to charge a parking fee for additional cars.
TWENTY-FOURTH: Lessor has installed an AT&T Merlin Legend Phone System
for use and convenience of Lessee and will provide Lessee with a phone
instrument for use on said system. Lessee is responsible for arranging his own
local and long distance phone service through said system, and for all charges
therefor, including, but not limited to, installation fees, service deposits
and local and long distance charges. Lessee may not install any other phone
system in the premises, but may purchase, from AT&T only, interface equipment
for Lessee's equipment. Lessee will purchase multi-function modules.
TWENTY-FIFTH: Lessor will provide utilities, except as stated herein,
including electricity, water and sewer, at its sole expense. Lessor will
provide heat and/or air conditioning during normal business hours. Further
services provided by Lessor shall be specifically agreed to in writing between
the parties at the current charges therefor imposed by Lessor.
TWENTY-SIXTH: No terms and/or covenants of this instrument may be
changed except in writing.
TWENTY-SEVENTH: Lessor reserves the right to relocate Lessee within
the Seabreeze Executive Suites upon thirty (30) days written notice subject to
acceptable modification of rent. Moving expenses for personal property of the
Lessee, including, but not limited to, file cabinets, furniture or other
standard office equipment of the Lessee shall be borne by Lessor, but Lessor
shall have no responsibility or obligation to Lessee for stationery printing
expense or other expenses arising from the physical relocation of Lessee's
office within the executive suites area. If Lessor and Lessee are not able to
agree on an acceptable relocation office or rent, either Lessor or Lessee, at
its option, may cancel this lease.
TWENTY-EIGHTH: Lessee must act, and require all other persons in the
premises to act, in a manner that does not unreasonably disturb any co-lessees
or constitute a breach of the peace.
TWENTY-NINTH: Lessee shall not keep any dangerous or flammable items
on the premises that might increase the danger of fire or damage.
THIRTIEST: Lessor shall not be liable for any loss by reason of
damage, theft, or otherwise to the contents, belongings or personal effects of
Lessee or Lessee's agents, invitees, guests, visitors, employees or family
located in or about the premises, or damage or personal injury to Lessee or
Lessee's agents, invitees, guests, visitors, employees or family.
THIRTY-FIRST: This Lease and rights of Lessee hereunder is subordinate
to the lien of any mortgage encumbering the fee title to the premises from
time to time. Lessee agrees to provide estoppel information to such mortgagees
or their agents upon request by Lessor.
THIRTY-SECOND: Lessee shall not have the right or authority to
encumber the premises or to permit any person to claim or assert any lien for
the improvement or repair of the premises made by Lessee. Lessee shall notify
all parties performing work on the premises at Lessee's request that the Lease
does not allow any liens to attach to Lessor's interest.
THIRTY-THIRD: The venue of any litigation shall be the court of
competent jurisdiction in Broward County, Florida, applying Florida law.
THIRTY-FOURTH: If the Lessor shall be an individual, joint venture, tenancy in
common, joint tenancy, tenancy by the entireties, estate, general partnership,
limited partnership, unincorporated association, or any other unincorporated
aggregation of individuals and/or entities, or a corporation, Lessee shall
look only to such Lessor's interest in the building for the satisfaction of
any of Lessee's rights or remedies or for the collection of a judgement or
other judicial process requiring the payment of money by Lessor in the event
of any default by Lessor hereunder, and no other property or assets of Lessor
shall be subject to the levy, execution or other enforcement procedure for the
satisfaction of Lessee's rights or remedies under or with respect to this
Lease, the relationship of Lessor and Lessee hereunder, or Lessee's use or
occupancy of the premises.
THIRTY-FIFTH: This Lease shall not be recorded.
THIRTY-SIXTH: Lessor shall not be liable to Lessee for discontinuance of any
services hereunder provided to Lessee, for any business interruptions or
injury, annoyance or inconvenience arising from same, which discontinuance of
service is outside the control of Lessor.
THIRTY-SEVENTH: Lessee waives right to trial by jury in any court
proceeding or counterclaim arising under this Lease Agreement or the
relationship of the parties hereto.
THIRTY-EIGHTH: Business machines and mechanical equipment belonging to
Lessee which cause noise or vibration that may be transmitted to the structure
of the building or to the premises or which cause other interference to such a
degree as to be objectionable to Lessor, shall, at Lessee's expense, promptly
be placed and maintained by Lessee in settings of cork, rubber or spring-type
vibration eliminators or subjected to other measures sufficient to reduce such
noise, vibration or other interference to levels acceptable to Lessor.
THIRTY-NINTH: Lessee may not install any cooking equipment in
premises, including, but not limited to, coffee pots, hot plates and/or
microwaves.
FORTY: Lessee will provide, and use, carpet saver pad under wheeled
chairs.
FORTY-FIRST: Lessor has declared the subject property to be smoke-
free. Lessee agrees not to smoke in the leased premises and common areas nor
to allow it's employees, invitees or guests to smoke.
Page 3 of 4
FC /s/ RP /s/
------- -----
IN WITNESS WHEREOF, the parties hereto have hereunto executed this
instrument for the purpose herein expressed, the day and year above written.
Signed, sealed and delivered in the presence of
WITNESS: Lessor: Emil Pawuk
/s/ signature illegible By: /s/
- ---------------------------- ----------------------------(seal)
As To Lessor Fred J. Castonguay, II, Agent
Lessee: Winmax Trading Group, Inc.
/s/ Winmax Trading Group, Inc.
- ------------------------------ By: /s/ Ralph Pistor
As to Lessee ----------------------------(seal)
Ralph Pistor, President
Page 4 of 4
A Florida Corporation
<PAGE>
Exhibit A
<Dagram of Premises appears here>
SUBSIDIARIES OF REGISTRANT
Name Domicile Incorporation Date
- ---- -------- ------------------
Frontline Investment Management, Inc. Florida January 13, 2000
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> DEC-31-1999
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 7,381
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 7,381
<PP&E> 2,605
<DEPRECIATION> 1,885
<TOTAL-ASSETS> 107,367
<CURRENT-LIABILITIES> 5,646
<BONDS> 0
0
0
<COMMON> 9,075
<OTHER-SE> 92,646
<TOTAL-LIABILITY-AND-EQUITY> 107,367
<SALES> 133,831
<TOTAL-REVENUES> 172,999
<CGS> 0
<TOTAL-COSTS> 338,803
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (165,804)
<INCOME-TAX> 0
<INCOME-CONTINUING> (165,804)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (165,804)
<EPS-BASIC> (0.02)
<EPS-DILUTED> (0.02)
</TABLE>
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 09:00 AM 11/04/1996
960321437 - 2680348
STATE OF DELAWARE
CERTIFICATE OF LIMITED PARTNERSHIP
OF
The Winmax S&P 500 Fund Limited Partnership
The undersigned, desiring to form a limited partnership pursuant to the
Delaware Revised Uniform Limited Partnership Act, 6 Delaware Code, Chapter 17,
do hereby certify as follows:
FIRST: The name of the limited partnership is The Winmax S&P 500 Fund
Limited Partnership.
SECOND: The name and address of the Registered Agent in the State of
Delaware is CorpAmerica, Inc., 30 Old Rudnick Lane, in the City of Dover,
County of Kent, Delaware 19901.
THIRD: The name and mailing address of each general partner is follows:
Winmax Trading Group, Inc.
429 Seabreeze Blvd.
Suite 227
Ft. Lauderdale, FL 33316
IN WITNESS WHEREOF, the undersigned constituting the Attorney-in-Fact for
the General Partner of the Limited Partnership has executed this Certificate
of Limited Partnership as of the 4th day of November, 1996.
Winmax Trading Group, Inc.
CorpAmerica, Ic. Attorney-in-Fact
By: /s/ David M. Abel
David M. Abel, Assistant Secretary
STATE OF DELAWARE
OFFICE OF THE SECRETARY OF STATE
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO
HEREBY CERTIFY "THE WINMAX ALPHA FUND LP" IS DULY FORMED UNDER THE LAWS OF THE
STATE OF DELAWARE AND IS IN GOOD STANDING AND HAS A LEGAL EXISTENCE SO FAR AS
THE RECORDS OF THIS OFFICE SHOW, AS OF THIS FOURTEENTH DAY OF FEBRUARY, A.D.
2000.
AND I DO HEREBY FURTHER CERTIFY THAT THE SAID "THE WINMAX ALPHA FUND LP"
WAS FORMED ON THE FOURTH DAY OF NOVEMBER, A.D., 1996.
AND I DO HEREBY FURTHER CERTIFY THAT THE ANNUAL TAXES HAVE BEEN PAID TO
DATE.
/s/ Edward J. Freel
---------------------
Edward J. Freel, Secretary
of State
2680348 8300 0257123
001074573
Authentication: 02-14-00
