UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES OF
SMALL BUSINESS ISSUERS
Under Section 12(b) or (g) of the Securities Exchange Act of 1934
CACTUS NEW MEDIA I, INC.
(Name of Small Business Issuer in its charter)
Delaware 65-0907798
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
235 Lincoln Road, Suite 204, Miami Beach, Florida 33139
----------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (305) 672-2700
Securities to be registered under Section 12(b) of the Act:
None
Securities to be registered under Section 12(g) of the Act:
Common Stock, $.0001 par value per share
(Title or class)
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TABLE OF CONTENTS
<TABLE>
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Page
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PART I
<S> <C> <C>
ITEM 1. DESCRIPTION OF BUSINESS.............................................................. 1
ITEM 2. MANAGEMENT DISCUSSION AND ANALYSIS................................................... 5
ITEM 3. DESCRIPTION OF PROPERTY.............................................................. 6
ITEM 4 SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT..................................................... 6
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS,
PROMOTERS AND CONTROL PERSONS........................................................ 7
ITEM 6. EXECUTIVE COMPENSATION............................................................... 7
ITEM 7. CERTAIN RELATIONSHIPS AND
RELATED TRANSACTIONS................................................................. 8
ITEM 8. DESCRIPTION OF SECURITIES............................................................ 8
PART II
ITEM 1. MARKET FOR COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS.......................................................... 9
ITEM 2. LEGAL PROCEEDINGS.................................................................... 10
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH
ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE................................................................. 10
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES.............................................. 10
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS............................................ 10
PART F/S
ITEM 1. FINANCIAL STATEMENTS AND EXHIBITS.................................................... 12
</TABLE>
<PAGE>
INFORMATION REQUIRED IN REGISTRATION STATEMENT
PART I
ITEM 1. DESCRIPTION OF BUSINESS
Cactus New Media I, Inc. ("New Media" or the "Company"), a Delaware
corporation, is a development stage company that was incorporated on March 29,
1999 for the purpose of engaging in the business of Internet services, telephony
services and telecommunications. The Company's main business focus will be on
link exchanges in conjunction with Internet banners. Since inception, the
Company has established and created its own website, grown from three to more
than 25 web address links and acquired banners from numerous entities, including
America Online. The Company is currently negotiating with telephone networks,
local exchange carriers (LECs) and information providers.
The Company is in its development stage. The Company intends to achieve
its growth through aggressive development and acquisitions of telephony and
Internet opportunities.
The Company intends to advertise worldwide utilizing Internet traffic,
banners, and click through programs. Advertising is paid for on a monthly basis,
on a per click or hit basis, and can be traded for with other click through
programmers.
The Company intends to become active in Internet entertainment services
through the registration of several Internet broadcast channels through
registration of Internet domains with InterNIC, an organization responsible for
registration of Internet domains. The Company projects that Internet services
will only account for a small percentage of revenues for the Company in the near
future. However, as the Internet becomes integrated with the standard home
television and phone systems, the Company anticipates that a greater proportion
of its revenues may be derived from this portion of the business.
Telephony entertainment services are estimated to be a 1 billion dollar
industry growing at 10% per year. Internet entertainment services, including
live one-on-one interaction are currently estimated to be a 3 billion dollar
industry growing at 100% per year. This growth is expected to further increase
with the anticipated availability of Internet access on standard home
televisions, and emerging world Internet markets.
The Company has identified key elements as integral to the success of
its telephony entertainment services:
1. Banners and Links which facilitate the increase of Internet
traffic to and from a site. The greater the amount of traffic
received by a site, the higher value a site can charge for
traffic that it sells or exchanges.
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2. The telephone switching network which permits handling of a
large volume of calls, including forwarding, billing, and
collection.
3. Agreements with LECs, which allow a company to contract for
billing services directly through LECs. Such charges appear
directly on the over 200 million telephone bills that local
phone companies send out monthly.
4. The ability to act as an information provider. This is the
function of an advertising agency for an industry, including
information creation, placement and tracking of advertising
for providing services.
The Company also intends to engage in the development of proprietary
software and services designed to support and facilitate its Internet services.
The development in-house of such services as web design, programming and
hosting, will allow for cost savings and a competitive edge. The Company intends
to focus its development plans on areas integral to its service such as credit
card processing, live video conferencing and on-demand video via the Internet.
Development of more efficient and secure credit card processing through web
interface user management, user fraud control, the ability to support multiple
payments methods, fast database lookup and the ability to generate accurate
financial and usage reports will enable the Company to streamline billing and
provide a more secure environment for its customers. The development of enhanced
live video conferencing and on-demand video through such methods as streaming
technology and jpg push technology will allow the Company to provide its
customers with superior video quality and greater access to the attractions
featured on Company websites. The development of such services may also create
the potential for a future profit center for the Company through sales of such
services to third parties.
The Company will incur some expenses over the next twelve months. The
principal expense categories are:
(1) research and development; and
(2) indirect costs, including general and administrative expenses.
Since a substantial portion of the business is anticipated to be
conducted over the telephone, the various telephone charges will make up a major
expense. There are both direct costs of telephone line usage, which are based on
actual time used, and additional charges for service, contract, accounting, and
billing expenses. The actual usage, which is a variable expense related directly
to time and revenue, is anticipated to be high.
Competition
Markets for the Company's services in the area of telecommunications
and Internet and telephony services are characterized by intense competition and
rapid change. Furthermore, due to the increased demand for products and services
such as those to be
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offered by the Company, management expects the competition will continue to
increase in the future as more companies enter the field of telephone and
Internet services. The Company's current and prospective competitors include
many companies that have substantially greater name recognition and financial,
technical and marketing resources than the Company. Company's competitors may be
able to offer customers more competitive pricing or to adapt more quickly than
the Company to new technologies and evolving customer requirements. Consequently
there can be no assurance that the Company will be able to compete successfully
in its target markets.
Employees
As of the date of this filing, the Company employs one employee. At
present, the Company utilizes the services of consultants and other outside
sources in the areas of Internet, telecommunications, corporate and financial
services. The Company plans to significantly expand its operations and, in
connection with such operations, may require other consultants and outside
services.
The Company's offices are located at 235 Lincoln Road, Suite 204, Miami
Beach, Florida. The Company's telephone number is (305) 672-2700. The Company's
website is "www.cactusnewmedia.com".
RISK FACTORS
Limited Operating History; Development Stage Company.
The Company was formed in March 29, 1999 and has had a very limited
operating history, with limited sales revenues recorded. The Company had been
primarily engaged in the development of its business plan and commencement of
business operations on a limited scale. The Company must be considered to be in
its development stage and subject to all the risks inherent in any newly formed
business including the absence of a significant operating history, lack of
market recognition and limited banking and financial relationships. Furthermore,
no assurance can be given that the Company can undertake meaningful operations
and achieve that point where full-scale commercial operations can be realized
or, even if such commercial operations can be achieved, that operating profits
will be realized in the future. In addition, the Company's business plan and
operating strategy involves expansion into businesses and markets (i.e.
telecommunications and Internet related products) which are highly competitive
and typified by well established and better financed companies with a long
established and highly recognized market presence.
Dependence on Key Existing and Future Personnel.
The Company's success will depend to a large degree upon the efforts
and abilities of it's President and sole Director, R S Schmitt. The loss of the
services of RS Schmitt could have a material adverse effect on the Company's
business prospects and potential earning capacity. As the Company's business
plan is implemented, it will need to recruit
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and retain additional management and key employees in virtually all phases of
its operations. There can be no assurances that the Company will be able to
recruit or retain such new employees on terms suitable to the Company.
Additional Financing Required - Lack of Traditional Financing Sources.
The Company is pursuing an aggressive growth strategy which will
require substantially more funding. However, there can be no assurance that all,
or any part of such additional financing will in fact be realized. The Company
may seek such financing from sources such as bank financing or through the sale
of additional debt or equity securities (or a combination thereof) in future
public or private offerings. However, there can be no assurance that any such
financing will in fact be available to the Company when needed or upon terms
acceptable to the Company.
Continued Control by Existing Stockholders.
The Company was established by its principal stockholder who continues
to own 90% of the outstanding Shares of Common Stock. As a result, this
principal stockholder will be in a position to control the affairs of the
Company and any matters requiring a stockholder vote, including the election of
directors, the amendment of the Company's charter documents, the merger or
dissolution of the Company and the sale of all or substantially all of the
Company's assets.
Trading of Shares.
Of the Company's outstanding stock, 1,000,000 shares of Common Stock
were issued in accordance with and pursuant to Rule 504 under the Securities Act
of 1933, as amended, (the "Act"). Securities sold pursuant to an offering made
under Rule 504 are not subject to restrictions on resale under United States
federal law. These securities, however, are subject to transfer restrictions
pursuant to the securities laws of the individual states.
ITEM 2. MANAGEMENT DISCUSSION AND ANALYSIS
General
Management's discussion and analysis contains various forward looking
statements within the meaning of the Securities and Exchange Act of 1934. These
statements consist of any statement other than a recitation of historical fact
and can be identified by the use of forward looking terminology such as "may,"
"expect," "anticipate," "estimates" or "continue" or use of negative or other
variations of comparable terminology. Management cautions that these statements
are further qualified by important factors that could cause actual results to
differ materially from those contained in forward looking statements, that these
forward looking statements are necessarily speculative, and there are certain
risks
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and uncertainties that could cause actual events or results to differ materially
from those referred to in forward looking statements.
Comparisons of results of operations are impossible since the Company
was incorporated during 1999.
Year Ended December 31, 1999 and Quarter Ended March 31, 2000
Plan of Operations
The Company is in its development stage. It has recognized limited
revenues of $1,800 from inception through December 31, 1999 and $4,600 from
inception through March 31, 2000. Management believes it will continue to
operate at a loss for the next 12 months. The Company expects to have limited
sales, if any, as the Company continues to develop its Internet and
telecommunication business.
Liquidity and Capital Resources
Since its inception the Company has experienced negative cash flows and
has met its cash requirements by issuing, through a private placement, shares of
its common stock. The Company generated additional funds through borrowings from
a related party. Management anticipates that funds received from these sources
and cash generated from operations should be sufficient to satisfy contemplated
cash requirements for the next 12 months. After such time, the Company
anticipates that it will need to raise additional funds through private or
public offerings or additional borrowings.
Management does not anticipate any significant purchase of equipment.
The number and level of the Company's employees and consultants at year end
December 31, 1999 and March 31, 2000, is adequate to maintain business.
Sales
At December 31, 1999, the Company earned revenues of $1,800 related to
transactions with various entities related by virtue of common ownership. In
generating these revenues, the Company also incurred expenses of $2,325 relating
to website trafficking fees to other website companies related by common
ownership.
At March 31, 2000, the Company earned revenues of $4,600 related to
transactions with various entities related by virtue of common ownership. In
generating these revenues, the Company also incurred expenses of $5,125 related
to website trafficking fees to other website companies related by common
ownership.
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Expenses
The Company incurred expenses for management fees, consulting and other
costs of operations throughout the year ended December 31, 1999. These expenses
totaled approximately $13,639. Through March 31, 2000, the Company has incurred
expenses totaling approximately $19,815. The Company's expenses will increase as
its business develops.
Results of Operations
As stated previously, from its inception to March 31, 2000 the Company
was primarily involved in organization and development of business.
Consequently, the Company suffered operating and cash flow losses. The Company's
net loss for the year end December 31, 1999, was $11,839. The Company's net loss
through March 31, 2000, was $15,215. The Company expects similar losses for the
next 12 months.
ITEM 3. DESCRIPTION OF PROPERTY.
The Company has entered into a one year lease with 305-672-9200
Management, Inc. for its executive offices. These executive offices are located
at 235 Lincoln Road, Suite 204, Miami Beach, Florida 33139. This lease is at a
rate of $120.00 per year, payable annually, and is automatically renewable by
the Company for an additional one year term. RS Schmitt, the Company's sole
director and officer, serves as president of 305 672-9200 Management, Inc.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table sets forth certain information as of March 31, 2000
regarding the beneficial ownership of the Company's Common Stock by (i) each
stockholder known by the Company to be the beneficial owner of more than 5% of
the Company's Common Stock, (ii) by each Director and executive officer of the
Company and (iii) by all executive officer and Directors of the Company as a
group. Each of the persons named in the table has sole voting and investment
power with respect to Common Stock beneficially owned.
<TABLE>
<CAPTION>
Number of Percentage of
Name and Address Shares Owned Shares owned
- ---------------- ------------ ------------
<S> <C> <C>
R S Schmitt 9,000,000 90%
235 Lincoln Road
Suite 204
Miami Beach, Florida 33139
All Directors & Officers 9,000,000 90%
as a group (1 person)
</TABLE>
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ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS.
The following table sets forth certain information concerning each of
the Company's directors and executive officers:
<TABLE>
<CAPTION>
Name Age Position
---- --- --------
<S> <C> <C>
R S Schmitt 35 Director, President, Secretary and
Treasurer
</TABLE>
R S Schmitt - Mr. Schmitt has been director of the Company since its
formation in March 1999, and was recently elected to be President, Secretary,
and Treasurer of the Company. Mr Schmitt has extensive experience in the
Internet and communications industry. At present, in addition to his duties as a
director and officer of the Company, Mr. Schmitt is also a director of the
following companies : Computer Consultants & Associates, involved in the
development and management of numerous websites; 305-672-9200 Management, a
business management and consulting firm; Mel Schmitt Realty, which handles
commercial and residential sales; and Private Client Services, a mortgage
brokerage business, which handles both commercial and residential financing. Mr.
Schmitt is the majority shareholder and serves as a director and officer of the
following Internet companies: Cactus Productions I, Inc., Cactus Enterprises I,
Inc. and Cactus Marketing I, Inc. He is the sole owner and director of Schmitt
Corp., a Missouri company. Mr. Schmitt served as a director and officer for
Cactus Multimedia I, Inc. from March 1999 to March 2000. Mr. Schmitt was also
the managing partner of the website "Miami-Exotics." Mr. Schmitt holds a
bachelor degree in speech communication, and a minor in business administration.
Mr. Schmitt devotes approximately 10% of his time to the Company.
ITEM 6. EXECUTIVE COMPENSATION
Non-employee directors receive reimbursement for out-of-pocket expenses
incurred while attending Board meetings and it is intended that they will
receive certain non-qualified stock option grants in the future. Directors of
the Company who are officers or employees of the Company may also receive extra
compensation for their service on the Board in the form of non-qualified stock
options. To date, however, no such options have been approved by the Board of
Directors for any officer or director of the Company.
The Company has agreed to pay RS Schmitt $12,000 per year. The Company
and Mr. Schmitt have entered into a written employment agreement which commenced
May 1, 1999. Mr. Schmitt and the Company have agreed that his salary is payable
by the Company utilizing a demand promissory note.
The following table sets forth all compensation awarded or to be paid
by the Company from its inception through December 31, 1999, to its executive
officer:
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<TABLE>
<CAPTION>
Name and Position Salary Other Compensation
- ----------------- ------ ------------------
<S> <C> <C>
R S Schmitt, President $8,000 None
</TABLE>
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The Company has entered into a lease agreement with 305 672-9200
Management Inc. for its executive offices. The annual lease amount is $120.00.
RS Schmitt, the Company's sole director and officer serves as president of 305
672-9200 Management, Inc.
During the period from inception (March 29, 1999) through March 31, 2000, the
Company contracted an affiliated company, related by virtue of common ownership,
for management and consulting service amounting to $11,000.
The Company earned revenues of $4,600 related to transactions with various
entities related by virtue of common ownership. Also, the Company incurred
expenses of $5,125 relating to website trafficking fees to other website
companies, related by virtue of common ownership.
ITEM 8. DESCRIPTION OF SECURITIES.
Common Stock
The authorized capital stock of the Company consists of 100,000,000 shares of
Common Stock, $.0001 par value. As of March 31, 2000, there were 10,000,000
shares of Common Stock outstanding. The holders of Common Stock
(1) have equal and ratable rights to dividends from funds legally
available therefore, when as and if declared by the Board of
Directors of the Company;
(2) are entitled to share ratably in all of the assets of the
Company available for distribution to holders of Common Stock
upon liquidation, dissolution or winding up of the affairs of
the Company;
(3) do not have pre-emptive, subscription or conversion rights
(there are no redemption or sinking fund provisions applicable
thereto); and
(4) are entitled to one non-cumulative vote per share on all
matters which shareholders may vote at all meetings of
shareholders.
All shares of Common Stock now outstanding are fully paid for and non-assessable
and all Shares which are part of the Offering, when issued, will be fully paid
for and non-assessable.
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Preferred Stock
In addition to the 100,000,000 shares of Common Stock, $.0001 par value, the
Company is also authorized to issue up to 10,000,000 shares of preferred stock
with such rights and preferences as the Board of Directors may so designate. At
present, no preferred stock has been issued by the Company, nor have any
preferences been set forth by Board of Directors.
Non-cumulative Voting
The holders of Common Stock do not have cumulative voting rights, which means
that the holders of more than 50% of such outstanding Shares of Common Stock,
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 of Common Stock will not be able to elect any of the Company's directors.
PART II
ITEM 1. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
The Company's Common Stock has never been traded. The Company plans to
apply to have its Common Stock traded on the over-the-counter market and listed
on the OTC Bulletin Board. There is no assurance that a trading market will ever
develop or, if such a market does develop, that it will continue.
Of the 10,000,000 shares of Common Stock outstanding as of March 31,
2000, 9,000,000 shares of Common Stock are "restricted securities" as the term
is defined under the Securities Act of 1933 and must be held indefinitely unless
subsequently registered under the Act, as amended, or an exemption becomes
available. An exemption which may become available in the future is Rule 144
adopted under the Act. The remaining 1,000,000 outstanding shares of Common
Stock were issued in accordance with and pursuant to Rule 504 under Regulation D
of the Act and are not subject to restrictions on resale under federal law.
As of March 31, 2000, the number of holders of the Company's Common Stock
was 26.
DIVIDEND POLICY
The Company has not paid any cash dividends on its Common Stock and
presently intends to continue a policy of retaining earnings, if any, for
reinvestment in its business.
ITEM 2. LEGAL PROCEEDINGS.
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The Company is not a party to any legal proceedings.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
The Company has not changed accountants since its formation and there
are no disagreements with the findings of the accountants.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES.
On March 29, 1999 the Company issued 9,000,000 shares of Common Stock
to R S Schmitt, the founder of Cactus New Media. These shares of Cactus New
Media were valued at a nominal amount. The Company issued these shares relying
upon the exemption from registration requirements of the Act provided by Section
4(2) of the Securities Act.
Between April 1, 1999 and April 4, 1999, the Company completed a
private offering of an aggregate of 1,000,000 shares of Common Stock to 25
investors, all of whom were accredited, pursuant to the exemption from
registration provided by Rule 504 of Regulation D promulgated under the Act at
an offering price of $.025 per share. Solicitations were made by the director of
the Company. These investors received a disclosure document and financial
information concerning Cactus New Media before they were sold securities.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company's Certificate of Incorporation limits, the maximum extent
permitted by the Delaware General Corporation Law, the personal liability of
directors and officers for monetary damages for breach of their fiduciary duties
as directors and officers (other than liabilities arising from acts or omissions
that involve intentional misconduct, fraud or knowing violations of law or the
payment of distributions in violation of Delaware General Corporation Law). The
Certificate of Incorporation provides further that the Company shall indemnify,
to the fullest extent permitted by Delaware General Corporation Law, any person
made a party to an action or proceeding by reason of the fact that such person
was a director, officer, employee or agent of the Company. Subject to the
Company's Certificate of Incorporation, the By-laws provided that the Company
shall indemnify directors and officers for all costs reasonably incurred in
connection with any action, suit or proceeding in which such director or officer
is finally adjudged to have been derelict in the performance of his duties as
such director or officer.
The Company intends to enter into separate indemnification agreements
with its directors and officers containing provisions that provide for the
maximum indemnity allowed to directors and officers by the Delaware General
Corporation Law and the Company, among other obligations, to indemnify such
directors and officers against certain liabilities that may arise by reason of
their status as directors and officers, other than liabilities arising from
wilful misconduct of a culpable nature, provided that such person acted in
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good faith and in a manner that he or she reasonably believed to be in or not
opposed to the best interests of the Company and, in the case of a criminal
proceeding, had no reasonable cause to believe that his conduct was unlawful. In
addition, the indemnification agreements provide generally that the Company
will, subject to certain exceptions, advance the expenses incurred by directors
and officers as a result of any proceeding against them as to which they my be
entitled to indemnification. The Company believes these arrangements are
necessary to attract and retain qualified persons as directors and officers.
The indemnification provisions in the Company's By-laws, and the
indemnity agreements entered into between the Company and its directors and
executive officers, may permit indemnification for liabilities arising under the
Securities Act of 1933, as amended. Insofar as indemnification for liabilities
arising under the Securities Act may be permitted to directors, officers and
controlling persons of the Company pursuant to the foregoing provisions or
otherwise, 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 Securities Act and is therefore unenforceable.
Indemnification of officers or persons controlling the company for
liabilities arising under The Securities Act of 1933, is held to be against
public policy by the Securities and Exchange Commission and is therefore
unenforceable.
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PART F/S
ITEM 1. FINANCIAL STATEMENTS AND EXHIBITS.
(a) The following financial statements of the Company are filed as part of
this Report:
(1) (i) Audited Financial Statements Page
----
Report of Independent Auditors F-1
Balance Sheet as of December 31, 1999 F-2
Statements of Operations, For the
Period From Inception (March 29, 1999)
to December 31, 1999 F-3
Statement of Changes in Stockholders' Equity
For the Period From Inception) through
December 31, 1999 F-4
Statements of Cash Flows, For the
Period From Inception
to December 31, 1999 F-5
Notes to Financial Statements as of
December 31, 1999 F-6
(ii) Unaudited Financial Statements
Balance Sheet as of March 31, 2000 F-1
Statements of Operations, For the
Period From Inception (March 29, 1999)
to March 31, 2000 F-2
Statement of Changes in Stockholders' Equity
For the Period From Inception) through
March 31, 2000 F-3
Statements of Cash Flows, For the
Period From Inception
to March 31, 2000 F-4
Notes to Financial Statements as of
March 31, 2000 F-5
(2) Exhibits:
2.0 Articles of Incorporation
2.1 By-laws
3 Specimen Common Stock Certificate
4 Subscription Agreement
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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.
Cactus New Media I, Inc.
Date: May 12, 2000 /s/ R S Schmitt
---------------
R S Schmitt, President and Director
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================================================================================
CACTUS NEW MEDIA I, INC.
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
FOR THE PERIOD FROM INCEPTION
(MARCH 29, 1999) THROUGH
DECEMBER 31, 1999
================================================================================
<PAGE>
<TABLE>
<CAPTION>
C O N T E N T S
Page
----
================================================================================
<S> <C>
INDEPENDENT AUDITORS' REPORT F-1
FINANCIAL STATEMENTS
Balance Sheet F-2
Statement of Operations F-3
Statement of Stockholders' Equity F-4
Statement of Cash Flows F-5
Notes to Financial Statements F6-8
FINANCIAL STATEMENTS
FOR THE PERIOD FROM INCEPTION
(MARCH 29, 1999) THROUGH
DECEMBER 31, 1999 F-9
Balance Sheet F-10
Statement of Operations F-11
Statement of Stockholders' Equity F-12
Statement of Cash Flows F-13
Notes to Financial Statements F14-16
</TABLE>
<PAGE>
INDEPENDENT AUDITORS' REPORT
- --------------------------------------------------------------------------------
To the StockholdersCactus New Media I, Inc.
Miami, Florida
We have audited the accompanying balance sheet of Cactus New Media I, Inc. (a
Development Stage Company) as of December 31, 1999, and the related statements
of operations, stockholders' equity and cash flows for the period from inception
(March 29, 1999) through December 31, 1999. 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 audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit 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 audit provides 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 Cactus New Media I, Inc. as of
December 31, 1999, and the results of its operations, and its cash flows for the
period from inception (March 29, 1999) through December 31, 1999, in conformity
with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 4 to the
financial statements, the Company has minimal working capital as of December 31,
1999. This raises substantial doubt about the Company's ability to continue as a
going concern. The financial statements do not include any adjustments to
reflect the possible future effects on the recoverability and classification of
assets or the amounts and classification of liabilities that might result from
the outcome of the foregoing uncertainties.
KAUFMAN, ROSSIN & CO.
Miami, Florida
May 1, 2000
F-1
<PAGE>
CACTUS NEW MEDIA I, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
DECEMBER 31, 1999
- -----------------------------------------------------------------------------------------------------------------------------------
ASSETS
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C>
CASH $ 7,536
OTHER CURRENT ASSETS 190
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS $ 7,726
- -----------------------------------------------------------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
- -----------------------------------------------------------------------------------------------------------------------------------
ACCRUED LIABILITIES, $9,345 TO RELATED PARTIES (NOTE 2) $ 11,665
STOCKHOLDERS' EQUITY (3,939)
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 7,726
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes.
F-2
<PAGE>
CACTUS NEW MEDIA I, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
PERIOD FROM INCEPTION (MARCH 29, 1999) THROUGH DECEMBER 31, 1999
- -----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C>
REVENUES (NOTE 2) $ 1,800
- -----------------------------------------------------------------------------------------------------------------------------------
EXPENSES
Interest 800
Internet services 2,532
Management fee 8,000
Office 7
Professional fees 2,000
Rent 80
Taxes 220
- -----------------------------------------------------------------------------------------------------------------------------------
Total expenses $ 13,639
- -----------------------------------------------------------------------------------------------------------------------------------
NET LOSS $ 11,839
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes.
F-3
<PAGE>
CACTUS NEW MEDIA I, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
PERIOD FROM INCEPTION (MARCH 29, 1999) TO DECEMBER 31, 1999
Common stock, $.0001 par value; Deficit
shares authorized, 100,000,000; Accumulated
issued and outstanding, 10,000,000 Additional Note During the
----------------------------------- Paid-In Receivable- Development
Transaction Date Shares Par Value Capital Stockholder Stage Total
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Issuance of founder's shares 3/31/99 9,000,000 $ 900 $ ( 900) $ - $ - $ -
Sales of stock for cash
($.025 per share) 4/4/99 316,000 32 7,868 - - 7,900
Issuance of stock for note
receivable 4/4/99 684,000 68 17,032 (17,100) - -
Net loss from inception
(March 29, 1999) to
December 31, 1999 - - - - (11,839) (11,839)
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL 10,000,000 $ 1,000 $ 24,000 $ (17,100) $ (11,839) $ (3,939)
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes.
F-4
<PAGE>
CACTUS NEW MEDIA I, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
PERIOD FROM INCEPTION (MARCH 29, 1999) THROUGH DECEMBER 31, 1999
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C>
Net loss $ (11,839)
Adjustments to reconcile net loss to net cash used in operating activities:
Changes in operating assets and liabilities:
Other current assets (190)
Accrued liabilities 11,665
- -----------------------------------------------------------------------------------------------------------------------------------
Total adjustments 11,475
- -----------------------------------------------------------------------------------------------------------------------------------
Net cash used in operating activities (364)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from the issuance of common stock and capital contributions 7,900
- ------------------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN CASH, representing cash balance at December 31, 1999 $ 7,536
- ------------------------------------------------------------------------------------------------------------------------------------
Supplemental Disclosures:
- ------------------------------------------------------------------------------------------------------------------------------------
Interest paid $ -
- ------------------------------------------------------------------------------------------------------------------------------------
Income taxes paid $ -
- ------------------------------------------------------------------------------------------------------------------------------------
Supplemental Disclosures of Non-Cash Financing Activity:
- ------------------------------------------------------------------------------------------------------------------------------------
Common stock issued in exchange for note receivable $ 17,100
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes.
F-5
<PAGE>
CACTUS NEW MEDIA I, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
- -------------------------------------------------------------------------------
Organization and Business Activity
Cactus New Media I, Inc. (the Company) was incorporated in
March 1999, under the laws of the State of Delaware. The
Company's business activities to date have primarily consisted
of the formation of a business plan for internet link
exchanges in conjunction with internet banner advertising.
The Company intends to become an operating company active in
internet entertainment services through the registration of
internet domains with InterNIC. In addition, the Company may
also engage in the development of proprietary software and
services designed to support and facilitate its internet
services.
The Company intends to file a registration statement on Form
10-SB to become a United States public company and to register
certain shares of its common stock. Once public, the Company
intends to be available as a public shell to be acquired or to
merge with another entity.
The Company is considered to be in the development stage and
the accompanying financial statements represent those of a
development stage company.
Use of Estimates
The preparation of these 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 reported period. Actual results could differ from
those estimates.
Fair Value of Financial Instruments
The carrying values of cash, cash equivalents and accrued
liabilities approximate their fair values due to the short
maturity of these instruments.
Preferred Stock
The Company has the authority to issue 10,000,000 shares of
preferred stock, par value $0.0001 per share, which may be
divided into series and with the preferences, limitations and
relative rights determined by the Board of Directors. At
December 31, 1999 no preferred stock shares were issued and
outstanding.
F-6
<PAGE>
- --------------------------------------------------------------------------------
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
- --------------------------------------------------------------------------------
Income Taxes
The Company accounts for income taxes according to Statement
of Financial Accounting Standards (SFAS) No. 109, "Accounting
for Income Taxes". Under the liability method specified by
SFAS No. 109, deferred income taxes are recognized for the
future tax consequences of temporary differences between the
financial statement carrying amounts and tax bases of assets
and liabilities.
Net Loss Per Share
The Company applies Statement of Financial Accounting
Standards No. 128, "Earnings Per Share" (FAS 128). Net loss
per share excludes dilution and is computed by dividing net
income by the weighted average number of common shares
outstanding during the reported periods.
Year 2000 Uncertainties
Although the Company has not identified any computer system or
program problems, there is still a possibility that at some
time during the Year 2000 their computer systems and programs,
as well as equipment that uses embedded computer chips, may be
unable to distinguish between the years 1900 and 2000. This
may create system errors and failures resulting in the
disruption of normal business operations. Although it is
unlikely, there may be some third parties, such as
governmental agencies, utilities, telecommunication companies,
vendors and customers that at times may not be able to
continue business with the Company due to their own Year 2000
problems.
- --------------------------------------------------------------------------------
NOTE 2. RELATED PARTY TRANSACTIONS
- --------------------------------------------------------------------------------
The Company leases its office facility on an annual basis from
a company related by virtue of common ownership. Total rent
expense amounted to $80 for the period from inception (March
29, 1999) through December 31, 1999.
During the period from inception (March 29, 1999) through
December 31, 1999, the Company contracted an affiliate,
related by virtue of common ownership, for management and
consulting services amounting to $8,000.
The Company earned revenues of $1,800 related to transactions
with various entities related by virtue of common ownership.
Also, the Company incurred expenses of $2,325 relating to
website trafficking fees to other website companies, related
by virtue of common ownership.
F-7
<PAGE>
- --------------------------------------------------------------------------------
NOTE 3. INCOME TAXES
- --------------------------------------------------------------------------------
At December 31, 1999 the Company had a deferred tax asset of
approximately $1,800, resulting from net operating losses of
approximately $12,000. The deferred tax asset is offset
entirely by a valuation allowance. The net operating loss will
expire in 2019.
Deferred tax assets are reduced by a valuation allowance if,
in the opinion of management, it is more likely than not that
some portion or all of the deferred tax assets will not be
realized. Management's valuation procedures consider projected
utilization of deferred tax assets prospectively over the next
several years, and continually evaluate new circumstances
surrounding the future realization of such assets.
- --------------------------------------------------------------------------------
NOTE 4. GOING CONCERN
- --------------------------------------------------------------------------------
As discussed in Note 1, the Company has been in the
development stage since its inception on March 29, 1999. At
December 31, 1999 the Company has minimal working capital
available to fund operations and may not be able to commence
and/or sustain operating activity. The Company believes,
however, it has sufficient funds to commence operations and it
intends to fund future operations from operating cash flows
and/or from a merger with another operating entity.
F-8
<PAGE>
===============================================================================
CACTUS NEW MEDIA I, INC.
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
FOR THE PERIOD FROM INCEPTION
(MARCH 29, 1999) THROUGH
MARCH 31, 2000
================================================================================
F-9
<PAGE>
CACTUS NEW MEDIA I, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
MARCH 31, 2000
- ----------------------------------------------------------------------------------------------------------------------------------
ASSETS
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C>
CASH $ 7,346
OTHER CURRENT ASSETS 184
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS $ 7,530
- -----------------------------------------------------------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
- -----------------------------------------------------------------------------------------------------------------------------------
ACCRUED LIABILITIES, $12,625 TO RELATED PARTIES (NOTE 2) $ 14,845
STOCKHOLDERS' EQUITY (7,315)
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 7,530
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes.
F-10
<PAGE>
CACTUS NEW MEDIA I, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
PERIOD FROM INCEPTION (MARCH 29, 1999) THROUGH MARCH 31, 2000
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C>
REVENUES (NOTE 2) $ 4,600
- -----------------------------------------------------------------------------------------------------------------------------------
EXPENSES
Interest 1,100
Internet services 5,378
Management fee 11,000
Office 7
Professional fees 2,000
Rent 110
Taxes 220
- -----------------------------------------------------------------------------------------------------------------------------------
Total expenses 19,815
- -----------------------------------------------------------------------------------------------------------------------------------
NET LOSS $ 15,215
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes.
F-11
<PAGE>
CACTUS NEW MEDIA I, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF STOCKHOLDERS' EQUITY
PERIOD FROM INCEPTION (MARCH 29, 1999) TO MARCH 31, 2000
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Common stock, $.0001 par value; Deficit
shares authorized, 100,000,000; Accumulated
issued and outstanding, 10,000,000 Additional Note During the
----------------------------------- Paid-In Receivable- Development
Transaction Date Shares Par Value Capital Stockholder Stage Total
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Issuance of founder's shares 3/31/99 9,000,000 $ 900 $ ( 900) $ - $ - $ -
Sales of stock for cash
($.025 per share) 4/4/99 316,000 32 7,868 - - 7,900
Issuance of stock for note
receivable 4/4/99 684,000 68 17,032 (17,100) - -
Net loss from inception
(March 29, 1999) to
December 31, 2000 - - - - (15,215) (15,215)
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL 10,000,000 $ 1,000 $ 24,000 $ (17,100) $ (15,215) $ (7,315)
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes.
F-12
<PAGE>
CACTUS NEW MEDIA I, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
PERIOD FROM INCEPTION (MARCH 29, 1999) THROUGH MARCH 31, 2000
- ----------------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C>
Net loss $ (15,215)
Adjustments to reconcile net loss to net cash used in operating activities:
Changes in operating assets and liabilities:
Other current assets (184)
Accrued liabilities 14,845
- -----------------------------------------------------------------------------------------------------------------------------------
Total adjustments 14,661
- -----------------------------------------------------------------------------------------------------------------------------------
Net cash used in operating activities (554)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from the issuance of common stock and capital contributions 7,900
- -----------------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN CASH, representing cash balance at March 31, 2000 $ 7,346
- ------------------------------------------------------------------------------------------------------------------------------------
Supplemental Disclosures:
- ------------------------------------------------------------------------------------------------------------------------------------
Interest paid $ -
- ------------------------------------------------------------------------------------------------------------------------------------
Income taxes paid $ -
- ------------------------------------------------------------------------------------------------------------------------------------
Supplemental Disclosures of Non-Cash Financing Activity:
- ------------------------------------------------------------------------------------------------------------------------------------
Common stock issued in exchange for note receivable $ 17,100
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes.
F-13
<PAGE>
CACTUS NEW MEDIA I, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
- -------------------------------------------------------------------------------
Organization and Business Activity
Cactus New Media I, Inc. (the Company) was incorporated in
March 1999, under the laws of the State of Delaware. The
Company's business activities to date have primarily consisted
of the formation of a business plan for internet link
exchanges in conjunction with internet banner advertising.
The Company intends to become an operating company active in
internet entertainment services through the registration of
internet domains with InterNIC. In addition, the Company may
also engage in the development of proprietary software and
services designed to support and facilitate its internet
services.
The Company intends to file a registration statement on Form
10-SB to become a United States public company and to register
certain shares of its common stock. Once public, the company
intends to be available as a public shell to be acquired or to
merge with another entity.
The Company is considered to be in the development stage and
the accompanying financial statements represent those of a
development stage company.
Use of Estimates
The preparation of these 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 reported period. Actual results could differ from
those estimates.
Fair Value of Financial Instruments
The carrying values of cash, cash equivalents and accrued
liabilities approximate their fair values due to the short
maturity of these instruments.
Preferred Stock
The Company has the authority to issue 10,000,000 shares of
preferred stock, par value $0.0001 per share, which may be
divided into series and with the preferences, limitations and
relative rights determined by the Board of Directors. At March
31, 2000 no preferred stock shares were issued and
outstanding.
F-14
<PAGE>
- --------------------------------------------------------------------------------
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
- --------------------------------------------------------------------------------
Income Taxes
The Company accounts for income taxes according to Statement
of Financial Accounting Standards (SFAS) No. 109, "Accounting
for Income Taxes". Under the liability method specified by
SFAS No. 109, deferred income taxes are recognized for the
future tax consequences of temporary differences between the
financial statement carrying amounts and tax bases of assets
and liabilities.
Net Loss Per Share
The Company applies Statement of Financial Accounting
Standards No. 128, "Earnings Per Share" (FAS 128). Net loss
per share excludes dilution and is computed by dividing net
income by the weighted average number of common shares
outstanding during the reported periods.
Year 2000 Uncertainties
Although the Company has not identified any computer system or
program problems, there is still a possibility that at some
time during the Year 2000 their computer systems and programs,
as well as equipment that uses embedded computer chips, may be
unable to distinguish between the years 1900 and 2000. This
may create system errors and failures resulting in the
disruption of normal business operations. Although it is
unlikely, there may be some third parties, such as
governmental agencies, utilities, telecommunication companies,
vendors and customers that at times may not be able to
continue business with the Company due to their own Year 2000
problems.
- --------------------------------------------------------------------------------
NOTE 2. RELATED PARTY TRANSACTIONS
- --------------------------------------------------------------------------------
The Company leases its office facility on an annual basis from
a company related by virtue of common ownership. Total rent
expense amounted to $110 for the period from inception (March
29, 1999) through March 31, 2000.
During the period from inception (March 29, 1999) through
March 31, 2000, the Company contracted an affiliate, related
by virtue of common ownership, for management and consulting
services amounting to $11,000.
The Company earned revenues of $4,600 related to transactions
with various entities related by virtue of common ownership.
Also, the Company incurred expenses of $5,125 relating to
website trafficking fees to other website companies, related
by virtue of common ownership.
F-15
<PAGE>
- --------------------------------------------------------------------------------
NOTE 3. INCOME TAXES
- --------------------------------------------------------------------------------
At March 31, 2000 the Company had a deferred tax asset of
approximately $2,300, resulting from net operating losses of
approximately $15,200. The deferred tax asset is offset
entirely by a valuation allowance. The net operating loss will
expire in 2019.
Deferred tax assets are reduced by a valuation allowance if,
in the opinion of management, it is more likely than not that
some portion or all of the deferred tax assets will not be
realized. Management's valuation procedures consider projected
utilization of deferred tax assets prospectively over the next
several years, and continually evaluate new circumstances
surrounding the future realization of such assets.
- --------------------------------------------------------------------------------
NOTE 4. GOING CONCERN
- --------------------------------------------------------------------------------
As discussed in Note 1, the Company has been in the
development stage since its inception on March 29, 1999. At
March 31, 2000 the Company has minimal working capital
available to fund operations and may not be able to commence
and/or sustain operating activity. The Company believes,
however, it has sufficient funds to commence operations and it
intends to fund future operations from operating cash flows
and/or from a merger with another operating entity.
F-16
<PAGE>
EXHIBIT INDEX
Exhibit No. Description
- ----------- -----------
2.0 Articles of Incorporation
2.1 By-laws
3 Specimen Common Stock Certificate
4 Subscription Agreement
State of Delaware
Certificate of Incorporation
Cactus New Media I, Inc.
FIRST: The name of this Delaware corporation is:
Cactus New Media I, Inc.
SECOND: The name and address of the Corporation's Registered Agent is:
Corporate Creations Enterprises, Inc.
2530 Channin Drive
Wilmington, DE 19810
New Castle County
THIRD: The purpose of the Corporation is to conduct or promote any
lawful business or purposes.
FOURTH: The Corporation shall have the authority to issue 100,000,000
shares of common stock, par value $.0001 per share. In
addition, the Corporation shall have the authority to issue
10,000,000 shares of preferred stock, par value $.0001 per
share, which may be divided into series and with the
preferences, limitations and relative rights determined by the
Board of Director.
FIFTH: The directors shall be protected from personal liability to
the fullest extent permitted by law.
SIXTH: The name and address of the incorporator is:
Corporate Creations International, Inc.
941 Fourth Street, #200
Miami Beach, FL 33139
SEVENTH: This Certificate of Incorporation shall become effective on
the date shown below.
/s/ Luis A. Uriarte
- -----------------------------
CORPORATE CREATIONS INTERNATIONAL, INC.
Luis A. Uriarte, Vice President
Date: March 29, 1999.
Bylaws
of
Cactus New Media I, Inc.
ARTICLE I. DIRECTORS
--------------------
Section 1. Function. All corporate powers shall be exercised by or under the
authority of the Board of Directors. The business and affairs of the Corporation
shall be managed under the direction of the Board of Directors. Directors must
be natural persons who are at least 18 years of age but need not be shareholders
of the Corporation. Residents of any state may be directors.
Section 2. Compensation. The shareholders shall have authority to fix the
compensation of directors. Unless specifically authorized by a resolution of the
shareholders, the directors shall serve in such capacity without compensation.
Section 3. Presumption of Assent. A director who is present at a meeting of the
Board of Directors or a committee of the Board of Directors at which action on
any corporate matter is taken shall be presumed to have assented to the action
taken unless he objects at the beginning of the meeting (or promptly upon
arriving) to the holding of the meeting, or if the director votes against the
action taken or abstains from voting because of an asserted conflict of
interest.
Section 4. Number. The Corporation shall have at least the minimum number of
directors required by law. The number of the directors may be increased or
decreased from time to time by the Board of Directors.
Section 5. Election and Term. At each annual meeting of shareholders, the
shareholders shall elect directors to hold office until the next annual meeting
or until their earlier resignation, removal from office or death. Directors
shall be elected by a plurality of the votes cast by the shares entitled to vote
in the election at a meeting at which a quorum is present.
Section 6. Vacancies. Any vacancy occurring in the Board of Directors, including
a vacancy created by an increase in the number of directors, may be filled by
the shareholders or by the affirmative vote of a majority of the remaining
directors though less than a quorum of the Board of Directors. A director
elected to fill a vacancy shall hold office only until the next election of
directors by the shareholders. If there are no remaining directors, the vacancy
shall be filled by the shareholders.
Section 7. Removal of Directors. At a meeting of shareholders, any director or
the entire Board of Directors may be removed, with or without cause, provided
the notice of the meeting states that one of the purposes of the meeting is the
removal of the director. A
<PAGE>
director may be removed only if the number of votes cast to remove him exceeds
the number of votes cast against removal.
Section 8. Quorum and Voting. A majority of the number of the directors fixed by
these Bylaws shall constitute a quorum for the transaction of business. The act
of a majority of directors present at a meeting at which a quorum is present
shall be the act of the Board of Directors.
Section 9. Executive and Other Committees. The Board of Directors, by resolution
adopted by a majority of the full Board of Directors, may designate from among
its members one or more committees each of which must have at least two members.
Each committee shall have the authority set forth in the resolution designating
the committee.
Section 10. Place of Meeting. Regular and special meetings of the Board of
Directors shall be held at the principal place of business of the corporation or
at another place designated by the person or persons giving notice or otherwise
calling the meeting.
Section 11. Time, Notice and Call of Meetings. Regular meetings of the Board of
Directors shall be held without notice at the time and on the date designated by
resolution of the Board of Directors. Written notice of the time, date and place
of special meetings of the Board of Directors shall be given to each director by
mail delivery at least two days before the meeting.
Notice of a meeting of the Board of Directors need not be given to a
director who signs a waiver of notice either before or after the meeting.
Attendance of a director at a meeting constitutes a waiver of notice of that
meeting and waiver of all objections to the place of the meetings, the time of
the meetings, and the manner in which it has been called or convened, unless a
director objects to the transaction of business (promptly upon arrival at the
meeting) because the meeting is not lawfully called or convened. Neither the
business to be transacted at, nor the purpose of, any regular or special meeting
of the Board of Directors must be specified in the notice or waiver of notice of
the meeting.
A majority of the directors present, whether or not a quorum exists,
may adjourn any meeting of the Board of Directors to another time and place.
Notice of an adjourned meeting shall be given to the directors who were not
present at the time of the adjournment and, unless the time and place of the
adjourned meeting are announced at the time of the adjournment, to the other
directors. Meetings of the Board of Directors may be called by the President or
the Chairman of the Board of Directors. members of the Board of Directors and
any committee of the Board of Directors may participate in a meeting by
telephone conference or similar communications equipment if all persons
participating in the meeting can hear each other at the same time. Participation
by these means constitutes presence in person at a meeting.
Section 12. Action By Written Consent. Any action required or permitted to be
taken at a meeting of directors may be taken without a meeting if a consent in
writing
2
<PAGE>
setting forth the action to be taken and signed by all of the directors is filed
in the minutes of the proceedings of the Board. The action taken shall be deemed
effective when the last director signs the consent, unless the consent specifies
otherwise.
ARTICLE II. MEETINGS OF SHAREHOLDERS
------------------------------------
Section 1. Annual Meeting. The annual meeting of the shareholders of the
corporation for the election of officers and for such other business as may
properly come before the meeting shall be held at such time and place as
designated by the Board of Directors.
Section 2. Special Meeting. Special meetings of the shareholders shall be held
when directed by the President or when requested in writing by shareholders
holding at least 10% of the Corporation's stock having the right and entitled to
vote at such meeting. A meeting requested by shareholders shall be called by the
President for a date not less than 10 nor more than 60 days after the request is
made. Only business within the purposes described in the meeting notice may be
conducted at a special shareholders' meeting.
Section 3. Place. Meetings of the shareholders will be held at the principal
place of business of the Corporation or at such other place as is designated by
the Board of Directors.
Section 4. Notice. A written notice of each meeting of shareholders shall be
mailed to each shareholder having the right and entitled to vote at the meeting
at the address as it appears on the records of the Corporation. The meeting
notice shall be mailed not less than 10 nor more than 60 days before the date
set for the meeting. The record date for determining shareholders entitled to
vote at the meeting will be the close of business on the day before the notice
is sent. The notice shall state the time and place the meeting is to be held. A
notice of a special meeting shall also state the purposes of the meeting. A
notice of meeting shall be sufficient for that meeting and any adjournment of
it. If a shareholder transfers any shares after the notice is sent, it shall not
be necessary to notify the transferee. All shareholders may waive notice of a
meeting at any time.
Section 5. Shareholder Quorum. A majority of the shares entitled to vote,
represented in person or by proxy, shall constitute a quorum at a meeting of
shareholders. Any number of shareholders, even if less than a quorum, may
adjourn the meeting without further notice until a quorum is obtained.
Section 6. Shareholder Voting. If a quorum is present, the affirmative vote of a
majority of the shares represented at the meeting and entitled to vote on the
subject matter shall be the act of the shareholders. Each outstanding share
shall be entitled to one vote on each matter submitted to a vote at a meeting of
shareholders. An alphabetical list of all shareholders who are entitled to
notice of a shareholders, meeting along with their addresses and the number of
shares held by each shall be produced at a shareholders, meeting upon the
request of any shareholder.
3
<PAGE>
Section 7. Proxies. A shareholder entitled to vote at any meeting of
shareholders or any adjournment thereof may vote in person or by proxy executed
in writing and signed by the shareholder or his attorney-in-fact. The
appointment of proxy will be effective when received by the Corporation's
officer or agent authorized to tabulate votes. No proxy shall be valid more than
11 months after the date of its execution unless a longer term is expressly
stated in the proxy.
Section 8. Validation. If shareholders who hold a majority of the voting stock
entitled to vote at a meeting are present at the meeting, and sign a written
consent to the meeting on the record, the acts of the meeting shall be valid,
even if the meeting was not legally called and noticed.
Section 9. Conduct of Business By Written Consent. Any action of the share-
holders may be taken without a meeting if written consents, setting forth the
action taken, are signed by at least a majority of shares entitled to vote and
are delivered to the officer or agent of the Corporation having custody of the
Corporation's records within 60 days after the date that the earliest written
consent was delivered. Within 10 days after obtaining an authorization of an
action by written consent, notice shall be given to those shareholders who have
not consented in writing or who are not entitled to vote on the action. The
notice shall fairly summarize the material features of the authorized action. If
the action creates dissenters' rights, the notice shall contain a clear
statement of the right of dissenting shareholders to be paid the fair value of
their shares upon compliance with and as provided for by the state law governing
corporations.
ARTICLE III, OFFICERS
---------------------
Section 1. Officers; Election; Resignation; Vacancies. The Corporation shall
have the officers and assistant officers that the Board of Directors appoint
from time to time. Except as otherwise provided in an employment agreement which
the Corporation has with an officer, each officer shall serve until a successor
is chosen by the directors at a regular or special meeting of the directors or
until removed. Officers and agents shall be chosen, serve for the terms, and
have the duties determined by the directors. A person may hold two or more
offices.
Any officer may resign at any time upon written notice to the
Corporation. The resignation shall be effective upon receipt, unless the notice
specifies a later date. If the resignation is effective at a later date and the
Corporation accepts the future effective date, the Board of Directors may fill
the pending vacancy before the effective date provided the successor officer
does not take office until the future effective date. Any vacancy occurring in
any office of the Corporation by death, resignation, removal or otherwise may be
filled for the unexpired portion of the term by the Board of Directors at any
regular or special meeting.
Section 2. Powers and Duties of OfficersThe officers of the Corporation shall
have such powers and duties in the management of the Corporation as may be
prescribed by
4
<PAGE>
the Board of Directors and, to the extent not so provided, as generally pertain
to their respective offices, subject to the control of the Board of Directors.
Section 3. Removal of Officers. An officer or agent or member of a committee
elected or appointed by the Board of Directors may be removed by the Board with
or without cause whenever in its judgment the best interests of the Corporation
will be served thereby, but such removal shall be without prejudice to the
contract rights, if any, of the person so removed. Election or appointment of an
officer, agent or member of a committee shall not of itself create contract
rights. Any officer, if appointed by another officer, may be removed by that
officer.
Section 4. Salaries. The Board of Directors may cause the Corporation to enter
into employment agreements with any officer of the Corporation. Unless provided
for in an employment agreement between the Corporation and an officer, all
officers of the Corporation serve in their capacities without compensation.
Section 5. Bank Accounts. The Corporation shall have accounts with financial
institutions as determined by the Board of Directors.
ARTICLE IV. DISTRIBUTIONS
-------------------------
The Board of Directors may, from time to time, declare distributions to
its shareholders in cash, property, or its own shares, unless the distribution
would cause (i) the Corporation to be unable to pay its debts as they become due
in the usual course of business, or (ii) the Corporation's assets to be less
than its liabilities plus the amount necessary, if the Corporation were
dissolved at the time of the distribution, to satisfy the preferential rights of
shareholders whose rights are superior to those receiving the distribution. The
shareholders and the Corporation may enter into an agreement requiring the
distribution of corporate profits, subject to the provisions of law.
ARTICLE V. CORPORATE RECORDS
----------------------------
Section 1. Corporate Records. The corporation shall maintain its records in
written form or in another form capable of conversion into written form within a
reasonable time. The Corporation shall keep as permanent records minutes of all
meetings of its shareholders and Board of Directors, a record of all actions
taken by the shareholders or Board of Directors without a meeting, and a record
of all actions taken by a committee of the Board of Directors on behalf of the
Corporation. The Corporation shall maintain accurate accounting records and a
record of its shareholders in a form that permits preparation of a list of the
names and addresses of all shareholders in alphabetical order by class of shares
showing the number and series of shares held by each.
The Corporation shall keep a copy of its articles or restated articles
of incorporation and all amendments to them currently in effect; these Bylaws or
restated Bylaws and all amendments currently in effect; resolutions adopted by
the Board of Directors creating one or more classes or series of shares and
fixing their relative rights, preferences, and limitations, if shares issued
pursuant to those resolutions are outstanding; the minutes of
5
<PAGE>
all shareholders, meetings and records of all actions taken by shareholders
without a meeting for the past three years; written communications to all
shareholders generally or all shareholders of a class of series within the past
three years, including the financial statements furnished for the last three
years; a list of names and business street addresses of its current directors
and officers; and its most recent annual report delivered to the Department of
State.
Section 2. Shareholders' Inspection Rights. A shareholder is entitled to inspect
and copy, during regular business hours at a reasonable location specified by
the Corporation, any books and records of the Corporation. The shareholder must
give the Corporation written notice of this demand at least five business days
before the date on which he wishes to inspect and copy the record(s). The demand
must be made in good faith and for a proper purpose. The shareholder must
describe with reasonable particularity the purpose and the records he desires to
inspect, and the records must be directly connected with this purpose. This
Section does not affect the right of a shareholder to inspect and copy the
shareholders, list described in this Article if the shareholder is in litigation
with the Corporation. In such a case, the shareholder shall have the same rights
as any other litigant to compel the production of corporate records for
examination.
The Corporation may deny any demand for inspection if the demand was
made for an improper purpose, or if the demanding shareholder has within the two
years preceding his demand, sold or offered for sale any list of shareholders of
the Corporation or of any other corporation, had aided or abetted any person in
procuring any list of shareholders for that purpose, or has improperly used any
information secured through any prior examination of the records of this
Corporation or any other corporation.
Section 3. Financial Statements for Shareholders.Unless modified by resolution
of the shareholders within 120 days after the close of each fiscal year, the
Corporation shall furnish its shareholders with annual financial statements
which may be consolidated or combined statements of the Corporation and one or
more of its subsidiaries, as appropriate, that include a balance sheet as of the
end of the fiscal year, an income statement for that year, and a statement of
cash flows for that year. if financial statements are prepared for the
Corporation on the basis of generally accepted accounting principles, the annual
financial statements must also be prepared on that basis.
If the annual financial statements are reported upon by a public
accountant, his report must accompany them. If not, the statements must be
accompanied by a statement of the President or the person responsible for the
Corporation's accounting records stating his reasonable belief whether the
statements were prepared on the basis of generally accepted accounting
principles and, if not, describing the basis of preparation and describing any
respects in which the statements were not prepared on a basis of accounting
consistent with the statements prepared for the preceding year. The Corporation
shall mail the annual financial statements to each shareholder within 120 days
after the close of each fiscal year or within such additional time thereafter as
is reasonably necessary to enable the Corporation to prepare its financial
statements. Thereafter, on written request from a shareholder who was not mailed
the statements, the Corporation shall mail him the latest annual financial
statements.
6
<PAGE>
Section 4. Other Reports to ShareholdersIf the Corporation indemnifies or
advances expenses to any director, officer, employee or agent otherwise than by
court order or action by the shareholders or by an insurance carrier pursuant to
insurance maintained by the Corporation, the Corporation shall report the
indemnification or advance in writing to the shareholders with or before the
notice of the next annual shareholders' meeting, or prior to the meeting if the
indemnification or advance occurs after the giving of the notice but prior to
the time the annual meeting is held. This report shall include a statement
specifying the persons paid, the amounts paid, and the nature and status at the
time of such payment of the litigation or threatened litigation.
If the Corporation issues or authorizes, the issuance of shares for
promises to render services in the future, the Corporation shall report in
writing to the shareholders the number of shares authorized or issued, and the
consideration received by the corporation, with or before the notice of the next
shareholders' meeting.
ARTICLE VI. STOCK CERTIFICATES
------------------------------
Section I. Issuance. The Board of Directors may authorize the issuance of some
or all of the shares of any or all of its classes or series without
certificates. Each certificate issued shall be signed by the President and the
Secretary (or the Treasurer). The rights and obligations of shareholders are
identical whether or not their shares are represented by certificates.
Section 2. Registered Shareholders. No certificate shall be issued for any share
until the share is fully paid. The Corporation shall be entitled to treat the
holder of record of shares as the holder in fact and, except as otherwise
provided by law, shall not be bound to recognize any equitable or other claim to
or interest in the shares.
Section 3. Transfer of Shares. Shares of the Corporation shall be transferred on
its books only after the surrender to the Corporation of the share certificates
duly endorsed by the holder of record or attorney-in-fact. If the surrendered
certificates are canceled, new certificates shall be issued to the person
entitled to them, and the transaction recorded on the books of the Corporation.
Section 4. Lost, Stolen or Destroyed CertificatesIf a shareholder claims to have
lost or destroyed a certificate of shares issued by the Corporation, a new
certificate shall be issued upon the delivery to the Corporation of an affidavit
of that fact by the person claiming the certificate of stock to be lost, stolen
or destroyed, and, at the discretion of the Board of Directors, upon the deposit
of a bond or other indemnity as the Board reasonably requires.
ARTICLE VII. INDEMNIFICATION
----------------------------
Section 1. Right to Indemnification. The Corporation hereby indemnifies each
person (including the heirs, executors, administrators, or estate of such
person) who is or was a director or officer of the Corporation to the fullest
extent permitted or authorized by current
7
<PAGE>
or future legislation or judicial or administrative decision against all fines,
liabilities, costs and expenses, including attorneys' fees, arising out of his
or her status as a director, officer, agent, employee or representative. The
foregoing right of indemnification shall not be exclusive of other rights to
which those seeking an indemnification may be entitled. The Corporation may
maintain insurance, at its expense, to protect itself and all officers and
directors against fines, liabilities, costs and expenses, whether or not the
Corporation would have the legal power to indemnify them directly against such
liability.
Section 2. Advances. Costs, charges and expenses (including attorneys' fees)
incurred by a person referred to in Section I of this Article in defending a
civil or criminal proceeding shall be paid by the Corporation in advance of the
final disposition thereof upon receipt of an undertaking to repay all amounts
advanced if it is ultimately determined that the person is not entitled to be
indemnified by the Corporation as authorized by this Article, and upon
satisfaction of other conditions required by current or future legislation.
Section 3. Savings Clause. If this Article or any portion of it is invalidated
on any ground by a court of competent jurisdiction, the Corporation nevertheless
indemnifies each person described in Section 1 of this Article to the fullest
extent permitted by all portions of this Article that have not been invalidated
and to the fullest extent permitted by law.
ARTICLE VIII. AMENDMENT
-----------------------
These Bylaws may be altered, amended or repealed, and new Bylaws
adopted, by a majority vote of the directors or by a vote of the shareholders
holding a majority of the shares.
I certify that these are the Bylaws adopted by the Board of Directors
of the Corporation.
Secretary
Date:
--------------------------------
--------------------------------
8
NUMBER SHARES
1
Delaware Corporation
Cactus New Media I, Inc.
100,000,000 Shares of Common Stock Authorized o Par value $.0001 per share
10,000,000 Shares of Preferred Stock Authorized o Par value $.0001 per share
This Certifies that ____________________________________________________ is that
registered holder of Voting Common Stock Shares transferable only on the books
of the Corporation by the holder hereof in person or by Attorney upon surrender
of this Certificate properly endorsed.
In Witness Whereof, the said Corporation has caused this Certificate to be
signed by its duly authorized officers and its Corporate Seal to be hereunto
affixed this_________________________ day of _________ A.D. 19___
- --------------------------- ----------------------------
President Secretary
<PAGE>
The following abbreviations, when used in the inscription on the face
of this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations.
<TABLE>
<CAPTION>
<S> <C>
TEN COM - as tenants in common UNIF GIFT MIN ACT - . . . Custodian . . . . .
TEN ENT - as tenants by the entireties (Cust) (Minor)
JT TEN - as joint tenants with right of under Uniform Gifts to Minors
survivorship and not as tenants Act . . . . . . . . . . . . .
in common (State)
</TABLE>
Additional abbreviations may also be used though not in the above list.
For value received, ___________________________________ hereby sell,
assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
- ------------------------------
|
|
|
- ------------------------------|-------------------------------------------------
- --------------------------------------------------------------------------------
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS OF ASSIGNEE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Shares represented by the within Certificate, and do hereby irrevocably
constitute and appoint
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Attorney to transfer the said shares on the books of the within-named
Corporation with full power of substitution in the premises.
Dated,
---------------------
-------------------------
In presence of
NOTICE: THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS
WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR, WITHOUT ALTERATION
OR ENLARGEMENT, OR ANY CHANGE WHATEVER.
SUBSCRIPTION AGREEMENT
Date: April 01, 1999
CACTUS NEW MEDIA I, Inc.
C/o Chris Nelson
Attorney at Law
1221 Brickell Avenue, 21st Floor
Miami, Fl. 33131
RE: Subscription for Shares
Ladies and Gentlemen:
1. Acknowledgement and Adoption. The undersigned (herein the "Subscriber")
hereby acknowledges that he has received a Confidential Private Offering
Memorandum, No. ____ , which includes, among other things, pertinent financial
and business information regarding CACTUS NEW MEDIA, Inc. (the "Company") and
its present operations, together with all such other information as has been
requested by him from the Company (all of which information Subscriber
acknowledges he has read and understands) so that the undersigned may properly
make an informed investment decision concerning the subscription for the
Company's securities pursuant to which this Agreement is being made. Subscriber
further acknowledges that, except as specifically set forth herein or in the
information provided to him by the Company, no representations or warranties
have been made to the undersigned, or to his advisers by the Company or by any
officer, director, employees or by any person acting in the Company's behalf,
and the undersigned has not relied upon any information concerning this
Offering, written or oral, other than that provided by the Company.
<PAGE>
2. Subscription. Subscriber irrevocably Subscribes for and agrees to purchase
the number of Shares referred to on the signature page of this Agreement under
the conditions described herein. Subscriber delivers herewith a check in the
amount required to pay for his Subscription as indicated in the "Instructions
for Completion of Subscription Agreement" attached hereto.
3. Escrow Provisions. Since this offering is being conducted on a strict "best
efforts" basis, all funds of Subscribers will be immediately deposited with the
Company and will NOT be segregated in a special escrow account. See "RISK
FACTORS." All proceeds from this Offering shall be used by the Company as set
forth under the caption "USE OF PROCEEDS" in the Confidential Private Offering
Memorandum.
4. Subscription Not Binding Until Accepted. This Subscription is not binding on
the Company until it is accepted as evidenced by the signature of an authorized
officer of the Company. The Company had the right to reject this Subscription in
whole or in part for any reason whatsoever. In the event of rejection of this
Subscription, the Company will promptly returned to the Subscriber by mail, a
check in the amount paid by the Subscriber without interest thereon or deduction
for expenses, and this Subscription Agreement shall thereafter have no further
force or effect.
5. Subscriber Representations, Warranties and Covenants.
Subscriber hereby acknowledges, represents and warrants to, and agrees with, the
Company and any other persons acting as selling agents as follows:
(a) The Subscriber is acquiring the Share for his own
account, as principal, for investment and not with a view to resale,
distribution or fractionalization in whole or in part, and has no present
agreement, understanding or arrangement to subdivide, sell, assign, or otherwise
dispose of all or any part of the 'shares;
(b) The Subscriber acknowledges his understanding that the
Offering and sale of the Shares is intended to be exempt from registration under
the Securities Act 1933 (the "Securities Act") by virtue of Section 4(2) of the
Securities Act Regulation D adopted thereunder, and Rule 504 in particular, that
except for purchasers who are foreign residents or residents of states where
this offering has been qualified for trading, the Shares can not be sold,
pledged, assigned or otherwise disposed of unless they are subsequently
registered under the Securities Act or an exemption from
<PAGE>
such registration is available. The Subscriber also understands that sales or
transfers of his a Shares may be further restricted by the provisions of certain
state securities laws;
(c) The Subscriber further understands and agrees that the
Company shall be under no obligation whatsoever to include any of said Shares in
any future registration statement filed under the Securities Act and that,
consequently, except for foreign residents and residents of states where this
offering has been qualified for trading, the sale or transfer thereof in the
future will be subject to significant restrictions as provided under the
Securities Act and certain state securities laws;
(d) The Subscriber (i) by himself or together with his
advisor(s), has such knowledge and experience in financial, business and tax
matters that the Subscriber is capable of evaluating the merits of the
prospective investment in the Company and making an investment decision with
respect to the Company; and (ii) Subscriber is able to bear the risk of this
investment;
(e) The Subscriber has been given the opportunity to ask
questions of, and receive answers from, the officers and directors of the
Company or the Company's representatives concerning the terms and conditions of
this Offering and other matters pertaining to this investment, and has been
given the opportunity to obtain any additional information which the Company
possesses or can acquire without unreasonable effort or expense that is
necessary to verify the accuracy of the information provided;
(f) Other than the information contained in the aforesaid
Confidential Private Offering Memorandum, or other information, if any, given to
the Subscriber as described herein, no representations or warranties have been
made to the undersigned by the Company or any other person in connection with
this Offering, or any officer, employee, agent, affiliate or subsidiary of any
of them;
(g) If the Subscriber is a corporation, partnership, trust
or other entity, it is authorized and qualified to purchase the securities
indicated in this Subscription Agreement and authorized to make its capital
contribution to the Company and otherwise to comply with its obligations under
this Subscription Agreement, and the person signing this Subscription Agreement
on behalf of such entity had been duly authorized by such entity to do so;
(h) If the Subscriber is an individual, he is over 21 years
of age and is a citizen and resident of the state or country indicated herein;
or, if the Subscriber is a partnership, trust or other entity, each equity owner
of such entity is over 21 years of age and a citizen of the country
<PAGE>
indicated herein; or if the Subscriber is a corporation, it is duly organized
under the laws of the country set forth herein and if of the United States then
also of the state set forth herein;
(i) Any information which the Subscriber has heretofore
furnished to the Company in the Purchaser Questionnaire and in this Subscription
Agreement, including information with respect to his financial position,
investment objectives and business experience, is correct and complete as of the
date of this Subscription Agreement and if there should be any material change
in such information prior to his purchase of the Shares herein, he will
immediately furnish such revised or corrected information to the Company;
(j) ALL SUBSCRIBERS HERETO WHO ARE NEW YORK INVESTORS ARE
REQUIRED TO REPRESENT THAT THEY UNDERSTANT THAT THE OFFERING MAY BE MADE ONLY TO
THOSE NON-ACCREDITED RESIDENTS OF NEW YORK WHO (i) HAVE A NET WORTH ( ALONE OR
JOINTLY WITH A SPOUSE, BUT EXCLUSIVE OF HOME FURNISHINGS AND AUTOMOBILES ) OF
THREE TIMES THE AMOUNT OF INVESTMENT AND AN ADJUSTED GROSS INCOME ( ALONE OR
JOINTLY WITH A SPOUSE ) OF $75,000 OR (ii) A NET WORTH (ALONE OR JOINTLY WITH A
SPOUSE, BUT EXCLUSIVE OF HOME FURNISHINGS AND AUTOMOBILES) OF 5 TIMES THE AMOUNT
OF THE INVESTMENT. FURTHER, BY SIGNING BELOW ALL NON- ACCREDITED NEW YORK
INVESTORS CONFIRM THAT THEY MEET THE FOREGOING CRITERIA FOR INVESTMENT:
- -----------------------------------
(signature by New York residents only)
6. Indemnity. The Subscriber agrees to indemnify and hold harmless
the Company, its officers and directors or any other persons participating in
the sale of Shares against any and all loss, liability, claim, damage and
expense whatsoever (including, but not limited to, any and all expenses
whatsoever reasonably incurred in investigating, preparing or defending against
litigation commenced or threatened or with respect to any claim) arising out of
or based upon any breach of or failure by the Subscriber herein or in any other
document furnished by the Subscriber to any of the foregoing in connection with
this transaction.
7. Modification. Neither this Subscription Agreement nor any
provisions hereof shall be modified, changed, discharged or terminated except by
an instrument in writing signed by the party against whom any waiver, change,
discharge or termination is sought.
8. Revocability. Except as may be required by law in certain
jurisdictions, this Subscription Agreement is irrevocable and when signed, may
not be withdrawn by the Subscriber in whole or in part without the consent of
the Company.
<PAGE>
9. Notices. All notices, consents, requests, demands, offers,
reports and other communications required or permitted to be given pursuant to
this Subscription Agreement shall be in writing and shall be considered properly
given or made when personally delivered to the party entitled thereto, or when
sent by United States mail in a sealed envelope, with postage prepaid,
addressed, if to the Company, to the address given above, and if to the
Subscriber, to the address set forth opposite the Subscriber's signature on the
counterpart of this Subscription Agreement that he originally executed and
delivered to the Company. The Company may change its address by giving notice to
all Subscribers.
10. Counterparts. This agreement may be executed in counterpart
copies, each of which shall be considered an original and all of which
constitutes one and the same instrument binding on all the parties,
notwithstanding that all parties are not signatories to the same counterpart.
11. Successors and Assigns. This Subscription Agreement and all of
the terms and provisions hereof shall be binding upon and inure to the benefit
of the parties and their respective heirs, executors, administrators,
successors, trustees, legal representatives and assigns. If the Subscriber is
more than one person, the obligations of the Subscriber shall be joint and
several and the agreements, representations warranties and acknowledgements
herein contained shall be deemed to be made by and be binding upon each such
person and his heirs, executors, administrators, successors, representatives and
assigns.
12. Assignability. This Subscription Agreement is not transferable
by the Subscriber.
13. Applicable Law. This Agreement shall be governed and construed
in accordance with the laws of the State of New York.
INVESTORS QUESTIONAIRE
<PAGE>
THIS QUESTIONNAIRE MUST BE COMPLETED BY ALL SUBSCRIBERS TO THIS OFFERING. THE
INFORMATION CONTAINED HEREIN WILL BE KEPT IN STRICT CONFIDENCE AND IS REQUIRED
IN ORDER TO ESTABLISH AND CONFIRM THE COMPANY'S COMPLIANCE WITH APPLICABLE
PROVISIONS OF FEDERAL AND STATE SECURITIES LWAS AS THEY RELATE TO THIS OFFERING.
NO SUBSCRIPTION WILL BE CONSIDERED UNLESS THIS QUESTIONNAIRE IS COMPLETED AND
RETURNED WITH THE SUBSCRIPTION DOCUMENTS.
PLEASE ANSWER ALL QUESTIONS AS COMPLETELY AS POSSIBLE. IF YOU NEED ADDITIONAL
SPACE FOR THE ANSWER TO ANY QUESTIONS PLEASE ATTACH SEPARATE SHEETS WITH THE
QUESTION BEING ANSWERED CLEARLY MARKED THEREON. IF YOU BELIEVE THAT ANY QUESTION
DOES NOT APPLY TO YOU OR TO YOUR CIRCUMSTANCES PLEASE MARK THE SPACE PROVIDED
FOR AN ANSWERS "N/A" OR "NOT APPLICABLE."
IF THIS INVESTMENT IS MADE IN MORE THAN ONE NAME, PLEASE COMPLET THIS
QUESTIONNAIRE FOR EACH PERSON MAKING THE INVESTMENT. IF THIS INVESTMENT IS BEING
MADE BY A PARTNERSHIP, PLEASE COMPLETE THIS QUESTIONNAIRE FOR EACH PARTNER. IF
THIS INVESTMENT IS BEING MAD BY A CORPORATION, PLEASE COMPLETE THIS
QUESTIONNAIRE FOR EACH OFFICER AND DIRECTOR.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- ------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- ------------------------------
Please provide the following general information:
General Biographical Information:
- ------------------------------- ---------------------------------
Name Home Address - No. and Street
- ------------------------------- ---------------------------------
Social Security No. Federal City and State or Country
Taxpayer I.D. No.
- -------------------------------
1. Are you a U.S. Citizen? Yes No
------- -------
<PAGE>
If "No" what country are you a citizen of?
-----------------------------
2. Do you have a residence in the U.S.? Yes No
------ -------
If "Yes," where?
-----------------------------
3. Do you have any formal education beyond
High School level or its equivalent? Yes No
------ -------
If "Yes," please specify:
a) number of years of formal education:
- --------------------------------
b) degree(s) received - include year:
-----------------------------
--------------------------
4. What is your occupation?
------------------------------
5. Name of Employer(s) during past 5 years?
------------------------------
--------------------------
--------------------------
6. What is your martial status?
------------------------------
7. What is your age at your most recent birthday?
------------------------------
General Financial Information:
8. Your present total net worth is
____ less than $100,000US
____ over $100,000US but less than
$500,000US
____ over $500,000US but less than
$1,000,000US
____ over $1,000,000US
9. During the past two (2) years, your annual
income was:
____ less than $1000,000US
<PAGE>
____ over $100,000US but less than
$200,000US
____ over $200,00US
10. During the present year, you expect your
annual income will be: ____ less than $100,00US
____ over $100,000US but less than
$200,000US
____ over $200,00US.
11. Are the funds being used for this
investment borrowed? ______ Yes ______ No
If "Yes," from where?
----------------------------------
12. Do you presently anticipate a need for
any part of the funds being invested
during the next 3 years? _______ Yes ______ No
13. Does anyone contribute to your support
or do you have any other source of
income other than as stated above?
Note: The answer to this question is
optional and will be used to evaluate
your ability to bear the economic risk
of this investment only. _______ Yes _______ No
If "Yes," what is the source of this
additional income and how much do you
expect it to be on an annual basis?
----------------------------------
- ------------------------------------
General Investment Information:
14. Have you ever invested in a private
placement of securities before? _______ Yes _______ No
If "Yes," how much such investments
<PAGE>
have you made during the past 5 years
and what were the amounts invested?
----------------------------------
- -----------------------------------
- -----------------------------------
15. Do you invest in the stock market? _______ Yes _______ No
If "Yes," at present, your total
investments equal: _____ Less than $25,000US
_____ over $25,000 US but less
than
$100,000US
_____ over $100,000 US but less
than
$250,000US
_____ over $250,000US
16. In connection with your
subscription for Shares herein,
has anyone made you any promise
about when you will be able to
sell the Shares or were you made
any promise about the price at
which you may, in the future, be
able to sell the Shares? _______ Yes _______ No
If "yes" please explain:
- ------------------------------------
-----------------------------------
-----------------------------------
-----------------------------------
After completing the above questions, please sign this questionnaire below and
return it with your subscription documents.
Dated: April ____, 1999
<PAGE>
- -----------------------------------
Signature
SUBSCRIPTION AGREEMENT SIGNATURE PAGE
IN WITNESS WHEREOF, the undersigned executed this Subscription
Agreement this ___day of April 1999.
-----------------------------
Name of Investor (Please Print): | |
| |
- ------------------------------------- | |
| |
Name of Investor (if joint subscriber) | |
| |
- ------------------------------------- | |
| |
| |
| |
-----------------------------
<PAGE>
Investor's Resident Address: Amount Subscribed For:
- -------------------------------- -------------------------------
(Number of Shares)
- ------------------------------
Social Security Number and/or $
------------------------------
Taxpayer identification Number: ------------------------------
(Amount in Words)
- ----------------------------
If a Corporation:
Country of Incorporation:
---------------
State: of Incorporation:
---------------
If a Partnership:
Countries of citizenship of members:
---------------------------------------
---------------------------------------
Countries of residence of members:
----------------------------------------
This Subscription Agreement is Accepted this __ day of April, 1999:
COMPANY:
CACTUS NEW MEDIA I, INC.
By: /s/ R S Schmitt, President
------------------------------
R S Schmitt, President
