MARKED TO SHOW CHANGES
As filed with the Securities and Exchange Commission on November 9, 1999
Registration No. 000-26377
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
AMENDMENT NO. 1
to
FORM 10-SB/A
GENERAL FORM FOR REGISTRANTS OF SECURITIES OF SMALL
BUSINESS ISSUERS
Under Section 12(b) or (g) of the Securities Exchange Act of 1934
OXIR INVESTMENTS, INC.
(Name of Small Business Issuer in its charter)
California 88-0397134
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3980 Howard Hughes Parkway, Suite 340, Las Vegas, Nevada 89109
(Address of principal executive officers) (Zip Code)
Issuer's telephone number: (702) 369-4260
Securities to be registered under Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
N/A N/A
Securities to be registered under Section 12(g) of the Act:
Common Stock, no par value
(Title of Class)
OXIR INVESTMENTS, INC.
FORM 10-SB
TABLE OF CONTENTS
PAGE
PART I
ITEM 1. Description of Business. . . . . . . . . . . . . . . . . 3
ITEM 2. Management's Discussion and Analysis or
Plan of Operation. . . . . . . . . . . . . . . . . . . 20
ITEM 3. Description of Property. . . . . . . . . . . . . . . . . 26
ITEM 4. Security Ownership of Certain Beneficial
Owners and Management. . . . . . . . . . . . . . . . . 27
ITEM 5. Directors, Executive Officers, Promoters
and Control Persons. . . . . . . . . . . . . . . . . . 27
ITEM 6. Executive Compensation . . . . . . . . . . . . . . . . . 30
ITEM 7. Certain Relationships and Related Transactions . . . . . 31
ITEM 8. Description of Securities. . . . . . . . . . . . . . . . 32
PART II
ITEM 1. Market Price of and Dividends on Registrant's
Common Equity and Other Shareholder Matters. . . . . . 32
ITEM 2. Legal Proceedings. . . . . . . . . . . . . . . . . . . . 35
ITEM 3. Changes in and Disagreements with Accountants. . . . . . 35
ITEM 4. Recent Sales of Unregistered Securities. . . . . . . . . 35
ITEM 5. Indemnification of Directors and Officers. . . . . . . . 36
PART F/S
Financial Statements . . . . . . . . . . . . . . . . . . . . . . . 37
PART III
ITEM 1. Index to Exhibits. . . . . . . . . . . . . . . . . . . . S-1
ITEM 2. Description of Exhibits. . . . . . . . . . . . . . . . . S-1
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-2
FORM 10-SB
PART I
Except as otherwise indicated, the information in this
Registration Statement reflects the three (3) shares for one
(1) share forward stock split of the Common Stock on November
25, 1998.
ITEM 1. Description of Business
Business Development
Oxir Investments, Inc. was incorporated in the State of
California on November 2, 1923 as Monte Regio Corporation with
the stated purpose to engage in the business of real estate
development. The Company continued in that endeavor for several
years then discontinued operations. On March 1, 1972 the Company
changed its name to Precision Resources, Inc. The Company remained
dormant with no business activity until September 1998. Upon
reinstating business operations, the Company changed its name
to Oxenuk, Inc. on November 11, 1998, and again changed its name to
its current name on November 25, 1998.
Earlier in 1998, the Company initiated negotiations to merge
with Oxir Investments, Inc., a private California company
incorporated on May 19, 1998 ("Oxir-Private"). The merger was
consummated on November 25, 1998, at which time Oxir-Private was
merged with and into the Company and the Company changed its
corporate name to Oxir Investments, Inc. Under the terms of the
merger, Oxir-Private was dissolved.
Oxir-Private was founded for the purpose of pursuing
investment opportunities in real estate, technology and industrial
businesses in the United States and internationally, particularly
in Russia. The founders of Oxir-Private believe that there exists
a need for an economic bridge between the United States and Russia.
Prior to its inception on May, 19, 1988, Oxir-Private operated
through Oxir Financial Services Ltd., a British Virgin Islands
corporation ("OFS"), and through Oxir Investments Ltd., a British
Virgin Islands corporation ("OIL"). From March 1995, Oxir-Private
was involved exclusively in trading activities in the equity
markets though OFS. In 1997, Oxir-Private founded OIL to engage in
the business of direct investments such as real estate development
in Moscow, Russia. On May 19, 1998 Oxir Investments Inc., the
private California corporation, was formed with the purpose of
introducing the East-European market investment opportunities to
the United States.
Including the operations of Oxir-Private in 1995 and through
the merger in November 1998, the Company has been involved in
investment and financial services for clients, direct investments
into technological and industrial projects in Russia, real estate
developments in Russia, and Internet business development including
e-commerce, web site design and web hosting.
On February 24, 1999, the Company entered into an agreement to
acquire, through a tax free exchange of shares, One Hundred Percent
(100%) of the issued and outstanding shares of OXIR Financial
Services, Ltd. ("OFS"), a British Virgin Islands corporation,
registered number # 146395, incorporated on the 30th day of March,
1995. OFS is actively involved in trading activities in the equity
markets. This agreement was finalized on June 29, 1999.
On February 24, 1999, the Company entered into an agreement to
acquire, through a tax free exchange of shares, One Hundred Percent
(100%) of the issued and outstanding shares of OXIR Investment,
Ltd. ("OIL"), a British Virgin Islands corporation, registered #
229863, incorporated on the 5th day of May, 1997. OIL is involved
in real estate development projects in Russia. This transaction
was finalized on June 29, 1999. Both OFS and OIL have
become wholly owned subsidiaries of the Company.
In 1999 the Company initiated the "Oxir Internet Solutions"
project aimed at exploring the e-commerce possibilities on the
Russian market. On August 2, 1999 Oxir Internet Solutions, Inc.
became a distinct entity, wholly owned by the Company.
Management of the Company is committed to pursue the original
goal of Oxir-Private; introducing global investment opportunities
with special emphasis on emerging markets. The Company offers a
wide variety of financial services to its clients. The Company's
emphasis is on asset management through direct and portfolio
investment ranging from high technologies and telecommunications to
construction and medical research. The Company is an active
participant in a number of projects, supported by the Government of
the Russian Federation and City of Moscow, including the
construction of a high-rise elite apartment complex in Moscow.
Currently the Company is also working on implementing its
first Internet Shop and Web-Hosting Center in Russia. In addition
to full-time financial management services, the Company helps to
define clients' financial goals, tolerance for market fluctuations
and investment objectives.
<PAGE>
Equity Market Investing and Asset Management
The Company manages funds of private and corporate clients in
the stock and money markets of the United States, Europe and Asia.
The majority of the Company's clients are concentrated in Russia,
however, the Company intends to ultimately expand its customer
base. The Company is in the process of consolidating all of its
resources, financial and otherwise, to serve both its clients and
its shareholders.
The Company offers a wide range of investment opportunities
from conservative to highly aggressive investments in real estate,
communications and high technologies.
After the acquisitions of Oxir Financial Services Ltd.
("OFS") and Oxir Investment Ltd. ("OIL"), the Company is
planning to expand its various trading activities in the
American stock market. The Company is a client of a number of on-
line brokers. Direct satellite lines to information centers
permit the Company's fund managers to obtain stock market data
online.
The Company's investment goal is to achieve profits in a
long-term perspective rather than in higher risk short-term
speculations. The Company's portfolio holdings are primarily in
stocks of American companies belonging to the high technology
sector including the Internet, hardware and software
products and telecommunications. The Company's traders practice
the essential methods of technical and fundamental analysis as well
as personal, original approaches to financial risk management. The
Company's fund managers are very careful and consider several
criteria in choosing the companies in which to invest,
traditionally preferring those companies with a good trading
history and reliable reputation. The Company usually avoids high-
risk investments such as companies going public for the first time.
Russian Real Estate Development Project
The Company's real estate investment activities are conducted
through Oxir Investment, Ltd. ("OIL"). Presently, the
Company is a major investor in the construction of a luxury
housing complex in Moscow, Russia. Leninski Prospect 116-1,
the first elite high-rise building of the five-building
complex, was recently completed and sold. Of the $2,030,023
invested in the project, the Company paid $920,000, OIL paid
$463,994 and OFS paid $646,029. For this investment, the
Company received unimproved space totaling 985 square meters
(approximately 10,603 square feet) that is to be used for the
Company's future business activities. Such activities will include
establishment of a fitness center, health bar and a beauty salon.
Leninski Prospect 128, the second project, also located in Moscow,
is expected to be completed in the fourth quarter of 2000. The
Company anticipates that its total investment in this project will
be approximately $2,200,000. As of the date hereof, approximately
twenty percent (20%) of the Leninski Prospect 128 has been
pre-sold.
The Moscow government has authorized "Kvartal 32-33" (Decision
#393 from May 10, 1994; and #346 from April 16, 1996), a Russian
construction company, to coordinate reconstruction of two
housing blocks in Moscow consisting of 46.98 acres. The goal of
this project is to provide modern housing, comparable to European
standards, by building high-rise elite apartment complexes
located at Leninski Prospect 116-1, Leninski Prospect 128-1,
Udaltzova Street 5-1, and Udaltzova Street 27-1.
The project is being financed by public investors instead of
commercial banks in order to keep development costs down. The
investment agreements allow "Kvartal 32-33" access to funds for
construction regardless of future or prospective apartment sales.
Major investors and participants in the project include "Kvartal
32-33", a public company and the project initiator and executor;
the Company; Zarubezhtsvetmet, a Russian exporter of non-ferrous
metal; DTD Trading House, a Nizhnevartovsk (Russia) oil company;
and Kvazar, a publishing company.
The first building of the apartment complex is located in the
West part of Moscow on Leninski Prospect 116-1. The nearest metro
station, "Vernadski Prospect," is 10 minutes away and it takes only
15 minutes to get to the center of the city by car or by metro.
This part of Moscow has a well-developed infrastructure of stores,
schools, hospitals, supermarkets, movie theaters and other consumer
services essential for quality living. Moscow State University and
the Institute of External Economic Affairs are located in this
area.
Main communications are located only 50 to 60 meters away from
the buildings. This factor allowed "Kvartal 32-33" to save
significantly on telecommunication tie-ins. "Kvartal 32-33" enjoys
substantial benefits as an active participant of various social
programs which enables "Kvartal 32-33" to sell units at more
attractive prices. The apartment complex is multi-storied
consisting of 28 floors and 125 apartments in each building. The
goal of the developers is to provide comfort, safety and a high
level of services to tenants at a reasonable expense.
Another advantage of this project is the fact that there are
no carrying walls inside the building. This will allow floor plans
of any apartment in any stage of construction to be altered, thus
providing the flexibility necessary to cater to each tenant's
individual needs and desires.
The Leninski 116-1 and 128-1 apartment complexes are designed
and built to appeal to the most demanding tastes. The first floor
of the building will accommodate a fitness center, fitness bar,
sauna, liquor bar, restaurant, catering services, maid services,
and other tenants' services. Concierge services will be available
to guests of the tenants. The complex will be monitored 24 hours
a day by a security crew and entrance to the building will be
limited to those having a coded magnetic card.
The Company, OIL and OFS, have invested $2,030,023 into
development and construction of the Leninski 116-1 high-rise
apartment buildings. From its return on investment, the Company
was able to purchase the Fitness and Entertainment Center in
Leninski 116-1 building. The Company estimates that the total
investment in the center will be approximately $600,000. The
Fitness and Entertainment Center will include a workout area,
fitness bar, sauna, Jacuzzi, massage parlor, tanning salon,
beauty salon, billiard room, restaurant and a liquor bar. The
floor space is 7,432 square feet. The center is designed to host
up to 300 people. Presently, the project is in the initial
construction stage with an anticipated completion date of December
1999.
Moscow real estate is relatively expensive taking
into account that the average yearly income for a Moscow citizen is
approximately $4,000 per year. A typical 465 square foot apartment
in a block building in the Moscow suburbs will sell for $35,000 to
$40,000. This results from overall high costs of living and the
necessity to control the migration. However, the current rates
still provides housing upgrade possibilities for Moscow residents
and people from other parts of Russia.
Management of the Company is not targeting the regular housing
market in Moscow. The Company is involved in the construction of
upscale property which management believes will be more lucrative
than regular apartment complexes. This is primarily due to the
fact that the wealthiest segment of the Russian population is
concentrated in Moscow, and the number of deluxe properties
available on the market is still far from satisfying the demand.
There are relatively few private houses within the Moscow city
limits. Approximately 95% of Moscow's population lives in
apartments with summerhouses in the outskirts of Moscow.
However, the Company is not targeting the majority of the
population, rather it designs its projects to appeal to wealthier
people that normally might have preferred a house to an apartment.
Management believes that an upscale apartment may offer certain
benefits over an upscale house or estate in the heart of Moscow.
First, there are tremendous costs involved in the renovation of
older structures and installation of new communications. Also,
there are serious security issues that may be averted by an
apartment with a modern security system.
Most construction companies working in the Russian market of
elite housing were forced to reduce their prices in the fourth
quarter of 1998. This was due to a general economic crisis and a
subsequent short period decrease in demand. The drop in prices
varied from minor, 5% to 10%, to significant, 35% to 50%.
Presently, the demand for elite apartments has stabilized again.
Prices of elite housing are stable and continue to grow in some
cases. Management anticipate that the average price per square
meter of the elite apartments similar to the ones built by "Kvartal
32-33" will stabilize in the range between $1,300 and $1,800.
Internet Solutions
On August 2, 1999, the Company established Internet Solutions,
Inc. as a Nevada corporation. Oxir Internet Solutions, Inc. is a
100% owned subsidiary of the Company. The Company
through this
subsidiary, is operating two separate Internet profit centers;
on-line sales and Internet services. On-line sales will
ultimately consist of audio and video products, books,
periodicals, travel services and electronics. Internet
services consist of research and consulting, web design,
set-up and support of on-line payment systems, web-hosting, web-
site advertising and promotion, and Internet and data security
including consulting, designing, development, sales and
installation of security software and systems.
Online Sales
The online sales system designed by the Company presents a
universal structure, permitting the Company to sell literally any
type of product via the Internet. The Company's site (Internet
address http://www.oxiris.com.) currently offers books, newspapers,
magazines, and audio-video products to the Russian speaking
consumer. The audio-video product store was launched in August
1999 and is undergoing its final testing stage. The Company
anticipates that in the future it will also offer sporting goods,
health care products and travel services.
The Company is planning to support its product sales by
seeking agreements with leading publishing houses and commercial
postal agencies. To date, the Company has agreements with "MK-
Periodika" (paper version periodical), "Russian Football
(publishing house)", "Novaja Gazeta" (publishing house),
Nezavisimaja Gazeta Editorial" (an independent newspaper),
Moskovskije Novostti" (Moscow News), "Varus-Video" and "Viking
Video". When fully operational, the Company anticipates on-
line sales of travel services including train and airplane tickets,
electronics as well as other affordable goods, which can be
delivered by courier or by mail. Management estimates that there
are approximately 1,000,000 Internet users in Russia, of which
approximately 700,000 are in the Moscow or Saint Petersburg area.
The Russian-based market is not the Company's only target.
Management believes that it may receive a favorable response from
the Russian Diaspora residing in the United States, Israel, Canada,
and Australia. These countries present great distribution
possibilities because they provide the combination of an advanced
credit card system and mass use of the Internet.
Payment for goods and services is supported by an
American clearance system, CyberCash, allowing customers to make
payments with one of several major credit cards. Credit
confirmation or declination of a transaction is received
within 40 seconds, which expedites the delivery process.
The per transaction cost to the Company is in the range of
$0.50 to 2.5% per transaction. The first on-line store using this
system opened May 18, 1999 and its Internet address is
http://www.oxiris.com.
Because not all Russian residents own credit cards, the
Company will also accept ruble payments. In this case, the
customer will make a purchase, select the payment method, print out
a payment order, and make a deposit to the Company's account at
Sberbank, the Russian Savings Bank with branch offices throughout
Russia. The order will be shipped as soon as the money is
transferred.
Typically, the Company will buy products directly from the
supplier which eliminates the necessity for warehouse facilities
and other related expenses. Suppliers regularly update the
database information for products offered on the Company's site.
This updated information is edited and verified by the Company and
then published on the site, together with additional comments in
the form of reviews and recommendations. Orders are automatically
forwarded to the delivery department. The Company courier service
delivers the merchandise from the suppliers' warehouses to the
interim warehouse, where the orders are packaged and distributed to
the customers, typically by courier.
For delivery to Moscow and Saint Petersburg, a courier service
will be used. Certified state mail and EMS (commercial postal
agency) will be used to make deliveries in other regions of Russia.
Shipments abroad will initially be handled by couriers such as DHL
and UPS. At some point, to reduce shipment costs, the Company
intends to open local warehouses in the United States, Canada,
Israel, and Australia to facilitate direct shipments.
For those Russian customers who do not have a credit card, but
are willing to obtain one, the Company will be offering a special
program called "Buying on the Internet." Anyone interested in this
program will be able to fill out the necessary forms on the Web
Site and then stop at the Company's office to pick up the debit
card and make the initial payment. The necessary agreements with
the Rietumu Bank (Riga, Latvia) have been signed. This program
will be targeted at young middle class citizens of Moscow and Saint
Petersburg and will allow the Company to expand its customer base.
The Internet "Press Shop" went into operation on May 18, 1999.
Subscriptions to any publication are available on-line presenting
an alternative to regular post office handled subscriptions.
Customers are able to subscribe to an electronic version of the
periodical (PDF) at a price compatible to the paper editions.
Publishing companies receive a percentage of these sales. The
electronic edition is available on the web site 18 to 22 hours
prior to the availability of the printed paper version. The
Company intends to use a wide information base with user-friendly
access to the texts of all editions to ease the process of press
monitoring. To help customers make choices and save time, the web
site also contains daily reviews of interesting articles and
publications. The on-line shop will primarily sell Russian CDs,
Audiocassettes, Videotapes and books. Direct contact with major
Russian publishers and recording companies allows the Company to
offer a wide variety of products to the consumer. Presently the
Company has agreements with "MK-Periodika" (paper version
periodical), "Russian Football (publishing house)", "Novaja Gazeta"
(publishing house), Nezavisimaja Gazeta Editorial" (an independent
newspaper), Moskovskije Novostti" (Moscow News).
According to preliminary research and meetings with
manufacturers of audio and video merchandise, the Company expects
to offer up to 50,000 movie titles. Approximately 20% to 30% will
be Russian productions and the remainder will be licensed movies
produced in the West. Approximately 80 to 100 new titles will be
added monthly. The average price per video will be 40 to 65 rubles
(approximately $1.60 to $2.60), depending on the film category.
Comparatively, the average retail price for similar kinds of
merchandise is 90-120 rubles (approximately $3.60 to 4.90).
The Company intends to create an opportunity for a variety of
Russian businesses to sell their goods and services over the
Internet. Those businesses will be welcome to use the Company's
payment system. However, to reduce the risk of loss due to charge
backs and dishonest sellers, the Company would obtain advance
payments, corresponding to two to three weeks of expected revenues
to ensure that there are sufficient funds on hand to cover any
charge backs and defalcation.
Web-Hosting
The Company has created infrastructure for a web-hosting
center that offers several channels from different providers,
reliable servers, and daily back-ups of the
information. Traditional Russian Web-Hosting generally only
provides space on the World Wide Web, e-mail routing, and the
use of client CGL (computer graphics laboratory) programs. These
services, like on-line shops, are primarily set-up for creating
mailing lists and are made available at substantial costs to the
retailer. This situation has created a need for more user-friendly
and less costly services, especially in light of the fact that the
customer base has expanded dramatically. Therefore, the
Company's system is designed to allow the set-up and operation
of web sites for clients. This "virtual machine" concept will
enable clients to administer their site by means of a simple
browser. Clients will be able to add and delete users, determine
access privileges, create and delete e-mail addresses for their
domain, form mailing lists, organize and operate Web conferences,
review the statistical data on the site visitors in the form of
easy reports, and permits the client's customers to change
their site information. Clients will have the option to place
their sites at virtual, dedicated or co-location servers. The
Company will provide round the clock technical support, daily
back-up of information reserve duplication, special security
features, and 100 Mega Bit bandwidth to M9-IX, the main Russian
Internet Traffic Exchange point.
A minimal payment for the initial package is anticipated to be
comparable to the current average market price. Presently, the
average per month charge is from $25 to $30 for Web-Hosting. A
separate package will include installation of the on-line shopping
software with its subsequent link to the CyberCash payment system.
The Web-Hosting System was launched in November 1999.
The Company will be able to provide businesses interested in
working on the Internet with specialists trained in consulting,
marketing research, and computer design as well as support the
sites and organize advertising and promotion campaigns.
The Company is currently finalizing development of its web-
hosting system that will enable the Company to maintain websites
through the Internet. The Company has the capability to upgrade
the system as the need arises, be independent of terms and
conditions enforced by the licensed producers of the existing
software, and sell the final product as shrink-wrapped software.
Marketing
Today Internet Web shopping is a rapidly developing and
growing media for product sales. According to the Neilson New
Media Research report dated February 3, 1999, the number of online
shoppers has been growing at a faster rate than the increase of
Internet users in general. Also, the number of persons who bought
items online started increasing even more quickly in recent years.
The study indicated that in the United States and Canada, out
of 79,000,000 Internet users, 20,000,000 have made purchases. The
number of Web shoppers, people who compare prices or research
services online, is presently at 48,000,000.
According to Simba International statistics, a "market news"
magazine dated December 24, 1998, total volume of retail sales
through the Internet was $1 billion in 1997. Transaction in
corporate market business was at $6 billion.
According to ROCIT (a Moscow, Russia based marketing firm)
figures, based on "Itogi Magazine" dated August 28, 1998, total
Internet users in Russia in July 1996 was 500,000. Currently,
relying on "Computer and Technology Magazine" dated January 15,
1999 there are about 1,200,000 users in Russia. Russian Web users
in America also increase total potential Russian consumers. It is
estimated that there are approximately 2,000,000 Russian
immigrants in the United States.
EStates, an American research corporation, estimates, based on
"Media Research Newspaper" dated February 11, 1999, that 65% of
current Internet users have used the Web to "shop around" online.
Shopping is defined as checking out products and services and
comparing prices, prior to a purchase decision. However,
approximately 14% of Internet users have actually purchased
something online.
International Data Corp estimates that by the year 2000,
approximately 92% of Internet users will do some shopping online
and another 45% will actually make purchases. This growth will
result from increased security as well as a psychological boost in
trust, familiarity and overall ease with online technology.
<R<
The Company employs a marketing strategy that involves
extensive advertising in international and local publications such
as "Global Review", "Expert", "Banks and Technologies" and "Moscow
News." In Russia, several television programs in the series
"Russian Businessmen" featured the activities of the Company and
its Chief Executive Officer, Vassili Oxenuk. The Company has used
and will continue to use advertising in various media.
The Company has created an interactive web-site, containing
information about its major lines of business. The main web-sight
has links to the Company's current projects. Furthermore, the
Company is an active participant in major Russian business forums
and trade shows. Management believes that this exposure will
create a positive image for the Company in its various business
endeavors.
Competition
The Company is likely to encounter competitors and potential
competitors in developing its real estate properties and marketing
its Internet related products. Many of the Company's competitors
are larger, established companies with greater assets and financial
reserves than the Company. The Company's future success will
partly depend on its ability to compete with these businesses.
Presently, there can be no assurance that the Company will be able
to compete with these businesses.
Because the Company operates primarily in emerging markets,
particularly Russia, many of the local competitors do not
demonstrate stronger financial reserves, greater assets or higher
level of expertise. The Company also has advantages as a foreign
resident entity including being subject to United States taxation
instead of Russian, a developed business network, and certain forms
of protection and guarantees from Russian and Moscow governments.
However, an unstable Russian economy makes it difficult to predict
the Company's success with complete certainty.
Financial Services
The principal competitors to the Company's financial services
to Russian clients are Interstock (http://www.interstock.ru/),
Global Market Online (http://www.activtrade.com), Nat Invest
Securities (http://www.natinvest.com), Internet Trading Group
(http://www.internettrading.ru) and Infoline
(http://svn.edunet.ru/Stocks/). Although the Company has a
relatively short operating history, it believes it can compete in
the financial services business because of experience and expertise
of its personnel in dealing in the Russian economy. The Company
also offers smaller initial minimum investments and is price
competitive for its services.
Real Estate
The Company believes that the development of elite apartment
complexes will appeal to the upscale consumer that will be able to
afford higher priced dwellings. Further, the ability of the
Company's projects to offer modernized facilities and
infrastructure will enhance the marketability of the projects.
The elite real estate market in Moscow may be subdivided into
four basic categories. Category 1 consists of remodeled apartments
in old "Stalin" municipal buildings that are typically three to
eight storied brick buildings. Cost per square meter varies from
$800 to $1,400. Demand for this property type is declining due to
poor building structure and communications and from the lack of
basic maintenance.
Another popular trend common for this category is to remodel
old (beginning of the century) buildings completely from the
inside, leaving the facade untouched. This presents a number of
difficulties for both, sellers and buyers. Current residents must
be relocated by the developer, who should provide them with
apartments in the suburbs of Moscow. Superlative construction
know-how is required in order to keep the facade in its original
state and completely remodel the inside of the building. Average
price per square meter is $2,500. Because the developer is usually
limited in his means to ensure safety, to establish corresponding
infrastructure and to influence the overall appearance of the
neighborhood, the demand for this type of property is not high.
Category 2 consists of elite housing construction which is
currently extensive in the center of Moscow. Generally, the houses
are seven to eight stories high, including one to two service
floors, and provide underground parking garages. The cost per
square meter varies from $1,800 to $4,000. Additional costs of
parking space are $25,000 to $40,000. Management believes that
this real estate sector has indicated much higher supply than
demand.
Category 3 consists of properties located in the outskirts of
Moscow and are mostly represented by five to sixteen storied brick
and block buildings. Most of these properties and related
structures were formerly built for the Russian government
bureaucracy. Prices are determined by a number of factors including
location, building technology, ambient factors and availability of
additional services. Prices vary from $1,200 to $2,500 per square
meter.
Developers of category 4 housing, and to an extent category 3,
present direct competition to "Kvartal 32-33." These properties
offer brand new multi-storied buildings using monolith or mixed
construction technology. Management believes that the Company can
compete with the developers of category 3 and 4 because of its
location, advanced building technology, competitive prices,
implementation of a mortgage system modified for Russian
conditions, and overall prestige of the project. Management does
not believe categories 1 and 2 present significant competition to
the Company's real estate development.
Those companies presenting direct competition for the
developer "Kvartal 32-33" include "New Olympic Village" residential
complex, "Donstroi Company" residential complex, Kuntsevo"
residential complex, "Sunshine Coast" residential complex, "Golden
Keys" residential complex and "Krylatskie Hills" residential
complex. However, the Company believes that the "Kvartal 32-33"
housing has advantages over these competitors, namely a better
location, no charge for parking and superior amenities and personal
services.
Internet
Those entities in direct competition with the Company's e-
commerce business in Russia are Ozon (http://www.o3.ru/), Mistral
(http://www.russianstory.ru), Books of Russia
(http://www.books.ru), Knorus (http://www.book.ru) and Y Sitina
(http://www.kvest.com). All of these companies offer products
similar to those offered by the Company and some have a history of
up to three years. This is a disadvantage to the Company because
it has not had sufficient time to establish its brand name.
However, by investigating the history of these competitors, the
Company has learned from their experiences and been able to avoid
some of the pitfalls typically experienced by start-ups.
The Company believes that it can compete with existing
entities in the field of "e-commerce" (Internet) primarily due to
the Company's use of its advanced payment system. None of the
existing local competitors in Russia can establish a merchant
account, enabling the merchant to process the credit card payment
in real time. The Company, being an American entity, was able to
establish such an account. As a result, the authorization time
using the Company's system is 40 seconds versus the typical two
days necessary for competitors to process their credit card
information.
The Company also plans to employ payment methods that are
traditional for Russia, from cash on delivery to wire transfers.
Most competitors target the exclusive affluent population segment
and therefore are not willing to use customary payment methods.
The Company believes that it can expand its market share by
attracting a more typical consumer. The Company also intends to
introduce a special buyers' program, "Buying on the Internet."
This program will allow customers that do not have a regular credit
card to obtain a secured credit card from the Company and enjoy the
benefits of Internet shopping on the Company's site.
The Company also believes it can compete successfully by
offering a wide variety of products and services. Existing
competitors' sites are typically specialized, with a limited
selection of products and services. The Company has entered into
agreements with producers of audio-video-CD products and
publishing houses. As the Company's business develops, it intends
to expand its range of goods and services by offering traveling
services, health and beauty care products and other consumer goods.
Risk Factors Relating to the Company's Business
Because of the nature of the Company's business, it encounters
certain risk factors. Each of these factors could adversely affect
the business, operating results and financial condition of the
Company.
Operations in Russia
Much of the Company's business is being conducted either in
Russia or with Russian citizens. The Russian economic and
political situations are considered highly unstable and
unpredictable. Russia experienced a financial crisis in August
1998 which had a strong negative impact on its middle class
citizens, who are the primary target of the Company's business.
There exists a low confidence level in Russian financial
institutions and Russia does not have a developed credit card
system. Also, Russia does not have a highly developed
telecommunications infrastructure which can result in overloaded
lines, slow speed of electronic traffic, and a potential for
break-downs.
Rapid Technology Change
A portion of the Company's business involves e-commerce on the
Internet, a fast growing and rapidly changing industry. Internet
technology, commercial applications and online users are constantly
evolving. If the Company is unable to respond to rapid changes
involving the Internet and its technology, the Company's business
could be adversely affected.
Technology Failures
The Company's e-commerce business is dependent on the
efficient and uninterrupted operation of its computer and
communication hardware and software systems. System interruptions
that cause the Company's web sites to be unavailable or that reduce
the ability to process transactions could materially and negatively
affect the Company's business, operating results and financial
conditions. Interruptions could result from natural disasters as
well as power loss, telecommunications failure and similar events.
Although the Company has experienced occasional short-term
interruptions, none lasting more than an hour, it has not developed
a formal disaster recovery plan in the event of a prolonged
interruption.
Online Security Breaches
Online security breaches could negatively impact the Company's
e-commerce line of business. To protect confidential information,
the Company relies on encryption technology, which transforms
information into code designed to be unreadable by third parties.
The Company also employs authentication technology that uses
passwords and other information to prevent unauthorized persons
from accessing a customer's information. If a person circumvents
existing security measures, that person could misappropriate
confidential information about the Company, its customers, or cause
interruption in operations. Security breaches that result in
access to confidential information also could damage the Company's
reputation and expose the Company to a risk of loss and liability.
Additionally, the Company may be required to make significant
expenditures and expend considerable effort and time to protect
against security breaches.
Securities Trading
The Company is actively involved in trading in various
securities markets and carries a substantial debt related to
trading on margin. Equity and other financial markets are
typically volatile and the Company is subject to a variety of
market and economic risks. By trading in leveraged or margin
accounts, the Company's risk is increased. Margin rates can vary
or increase making it much more difficult for the Company to carry
its margin debt. If the equity in its margin account falls below
set limits, the Company may be forced to liquidate an investment
which could cause substantial losses.
Short Operating History - No Assurance of Profitability
The Company has only a short operating history and is deemed
to be a development stage company in the early phases of operation.
The Company's likelihood of success must be considered in light of
the many unforeseen costs, expenses, problems, difficulties and
delays frequently associated with new ventures. Also, there is no
assurance that the Company's business ventures will be successful
or that it will be able to attract and retain sufficient customers
and clients to attain its goals. The Company anticipates that its
operating expenses will increase substantially as its business
expands and there will be a greater need to generate significantly
more revenues to achieve profitability. There is also the
possibility that the Company will have to secure future funding,
either debt or equity, in order to finance its activities. There
can be no assurance that any such funding will be available to the
Company or, that if it is, it will be available on terms favorable
to the Company.
Patents, Trademarks and Licensing Agreements
The Company has filed a trademark for its logo in the Russian
Federation. Currently, the Company has no patent or licensing
agreements.
Research and Development
Because of the nature of its business, the Company has not
allocated funds for conducting research and development activities
to develop new products or technology. Currently, management does
not anticipate that funds will be allocated for research in the
immediate future. If in the future the Company acquires or becomes
associated with a business or entity that requires research and
development of products, the Company will allocate such funds as
may be necessary for research activities. As of the date hereof,
the Company does not contemplate such activities in the immediate
future.
Employees
As of the date hereof, the Company has a total of sixty
eight employees. The Company's Las Vegas office employs
four full-time employees consisting of one executive officer
and three office staff personnel. In addition to its
full-time employees, the Company may use the services of certain
consultants on a contract basis. In January 1999, the Company
retained Howard Bronson and Associates ("Bronson") in New York
City, a public relations consultant, at the rate of $5,000 per
month. This arrangement expired in September 1999 and the Company
is presently negotiating with Bronson for a possible extension or
new agreement. On September 15, 1999, the Company entered into an
agreement with First Liberty Investments, Inc. ("First Liberty")
whereby First Liberty is to provide consulting and investment
banking services to the Company. This agreement, which will expire
in December 1999, is for three consecutive months at the rate of
$2,000 per month and a total of 60,000 shares of the Company's
stock.
The Company's Moscow, Russia representative office, which was
acquired from OFS and OIL, presently employs sixty full-
time employees, consisting of three executive officers, nine
traders and financial analysts, thirty four members of the
computer programming and technical support department, four
accountants, one office manager, four administrative assistants,
two drivers, one cook and two housekeepers.
The Company's Sochi, Russia representative office presently
employs four full-time employees, consisting of the head of the
representative office, one trader, one accountant, and one
administrative assistant.
Because the Company acts as an investor rather than a
developer of it construction projects in Russia, it is not
necessary for the Company to maintain a staff for these projects.
All construction and affiliated jobs are carried out by the
developer, "Kvartal 32-33." The projects are overseen by
management.
Management intends to hire additional qualified employees only
as business conditions warrant and as funds are available. In such
cases, compensation to management will be consistent with
prevailing wages for the services rendered. The Company does not
anticipate in the immediate future to offer any employee a bonus,
profit sharing or deferred compensation plan. The Company has
entered into two employment contracts, one with President and
C.E.O., Vassili Oxenuk, and the second with Secretary/Director,
Kirill Mendelson.
Pursuant to the terms of Mr. Oxenuk's agreement, the Company
is to pay his monthly personal expenses, which are not to exceed
$180,000 per year. Payment is made through Mr. Oxenuk's Citibank
Visa and Citibank MasterCard accounts. At the end of each year,
the Company will issue to Mr. Oxenuk a Form 1099 reporting, for tax
purposes, the total amount paid to him during the year, with the
exception of reimbursable business expenses. As part of Mr.
Oxenuk's compensation, the Company provides housing for Mr. Oxenuk
and his family and pays all expenses related to the property. This
amounts to approximately $3,000 per month.
Pursuant to the terms of Mr. Mendelson's agreement, he is to
receive an annual salary of $60,000. In addition, Mr. Mendelson is
to receive a bonus in the amount of 270,000 shares of the Company's
common stock.
Facilities
The Company's principal place of business and corporate
offices are located at 3980 Howard Hughes Parkway Suite 340 Las
Vegas, Nevada 89109. The facilities consist of approximately 1500
square feet of office space and is leased for a term of five years
at the rate of $3,974 per month. The Company believes that its
current principal offices are adequate for the immediate future.
The Company uses as its Moscow representative office the
facilities acquired from OFS and OIL located at Nauchny Proezd 12
Office #28, Moscow, Russia 117802. The facilities consist of
approximately 6,173 square feet and are leased for a term of one
year. The lease includes an automatic renewal of the lease term
unless the Company otherwise notifies the lessor. The facilities
are leased at the rate of $12,190.00 per month.
The Company's Sochi representative office is located at
Gagarina Street 5 Sochi Russia 354065. The facilities consist of
approximately 1,076 square feet and are leased for a term of one
year. The lease includes an automatic renewal of the lease term
unless the Company otherwise notifies the lessor. The facilities
are leased at the rate of $1,627.00 per month.
Litigation
The Company is not a party to any material pending legal
proceedings and no such action by, or to the best of its knowledge,
against the Company has been threatened.
ITEM 2. Management's Discussion and Analysis or Plan of Operation
The following information should be read in conjunction with
the financial statements and notes thereto appearing elsewhere in
the Form 10-SB.
Overview
Although the Company has been in existence since 1923, it was
inactive with no business operations for several years until
approximately November 1998. Oxir-Private was created on May 19,
1998 and had only minimal operations prior to merging with and into
the Company. Financial information presented herein is that for
Oxir-Private and the Company from May 19, 1998 through June 30,
1999. The Company has elected a fiscal year ending June 30.
Results of Operations
For the fiscal year ended June 30, 1999 and the
period commencing on May 19, 1998 and ended June 30, 1999,
the Company had no revenue from sales. During this period, the
Company's primary business activity has been managing funds for
private and corporate clients in stock and money markets and
engaging in various trading activities for Company accounts in the
United States markets. For the period ended June 30, 1999,
trading activities resulted in the Company realizing a
$1,694,087 gain on the sale of marketable securities and a
net unrealized gain on marketable securities of $1,725,464.
During this period, the Company had general and administrative
expenses of $474,583, consisting primarily of
$135,657 in operating expenses for the Las Vegas facilities,
$88,723 in professional services, $98,055 in salaries,
$37,503 in housing expenses, $35,266 in travel expenses, $19,810
in utilities, $15,800 in public relations expenses and $9,575 in
Medical expenses. Also, the Company had an interest expense of
$84,900.
Income before taxes for the fiscal year ended June 30 1999
was $2,785,873, primarily generated by the Company's
trading activities. The Company's tax liability as of June
30, 1999 was $948,894, consisting of $398,760 in current income
taxes due and $550,134 in deferred income taxes. Deferred
income taxes are based upon unrealized gains due to market
appreciation of the Company's marketable securities. For the
fiscal year ended June 30, 1999, net income was $1,836,979,
or $.11 per share.
Liquidity and Capital Resources
The Company has satisfied its initial working capital needs
from the sale for cash of its common stock and from income
generated by the Company's trading activities. Working
capital at June 30, 1999 was $505,938, consisting primarily
of investments in trading securities of $4,672,246. This
was primarily offset by the debt on the Company's margin
accounts of $1,981,464, provision for taxes and deferred tax
liability of $948,894, client funds payable of $1,252,131,
representing funds invested with the Company in a trading account
managed by the Company. Net cash provided by operating
activities for the fiscal year ended June 30, 1999 was
$2,838,112, primarily attributed to the $1,836,979 net
income and $948,894 increase in provision for income taxes.
During the fiscal year ended June 30, 1999, the
Company's net cash used by investing activities was $1,548,483,
attributed to the $1,977,764 increase in trading securities and
$844,044 for the design and construction of office facilities and
the purchase of office equipment, and partially offset by the
$1,273,325 increase in margin account balance. During this
same period, the Company's net cash used by financing activities
was $1,237,002, primarily attributed the $2,337,867
advance to Oxir Investments Ltd., which funds were used for
investing in the condominium development in Moscow, Russia. Also,
the Company expended $250,000 related to the acquisition of the
controlling block of the Company's shares by the Company's
President. During this period, the Company realized $1,103,000
from the issuance of common stock for cash.
The Company anticipates meeting its working capital needs
during the next twelve months primarily with revenues from trading
activities in its marketable securities. The Company believes that
it has adequate cash reserves to meet any routine contingency
during the next twelve months. Management anticipates that the
Company will be able to fund internally any future project or
acquisition during the next twelve months. The Company does not
foresee a need for additional financing unless internal funding is
not adequate for a particular project or acquisition.
As of June 30, 1999 , the Company had total assets of
$8.765,153 and total stockholders' equity of $4,335,748.
Further, the Company had $52,627 in cash and cash
equivalents and $4,672,246 in investments in trading
securities.
In the event outside funding is necessary, the Company will
investigate the possibility of interim financing, either debt or
equity, to provide capital. Although management has not made any
arrangements or definitive agreements, the Company would consider
private funding or the private placement of its securities and/or
a public offering. If the Company experiences a substantial delay
in developing its projects and is unable to secure financing from
the sale of its securities or from private lenders, the
continuation of the Company as a going concern would be seriously
jeopardized. Management believes that it will have, or will be
able to raise sufficient funding to complete each project it has
commenced. However, additional funding may be required for growth
and the financing of future larger projects.
Plan of Operation
During the next twelve months, the Company will continue to
seek new investment opportunities and continue to develop its
existing projects. The real estate project at Leninski prospect
116 has been broken up into smaller sub-projects, including a
fitness center, restaurant/health bar and a beauty salon located in
the building. All of the sub-projects have equal priority and
the Company is fully responsible for all sub-projects. All of the
projects are in effect, except for the beauty and fitness center,
which will remain under construction until approximately December
1999 and is expected to be fully operational by mid 2000. The
approximate cost of the projects is $600,000 and management
anticipates a return of approximately 40% per year. Construction
is expected to commence in July of this year, with an anticipated
completion date of December 1999.
It is anticipated that the Leninski Prospect 128, the
Company's second real estate project, will be completed in the
fourth quarter of 2000. The Company anticipates that its total
investment in this project will be approximately $2,200,000, which
the Company believes can be provided for internally. As of the
date hereof, approximately twenty percent (20%) of the Leninski
Prospect 128 has been pre-sold.
In June 1999, Oxir Internet Solutions finalized its
programming and database preparation for the launching of books,
audio, video and CD's sales. The virtual reality store should
be fully operational by January 2000. By February 2000 the
Company intends to add a health and drug store. By June
2000 the Company anticipates opening a sporting goods and team
sports store. In the next 12 months the Company is also planning
to put a server and all necessary equipment in Las Vegas, Nevada to
provide Web-hosting and Web-design services to the general public.
In addition, the Company is planning to lease its web page both in
Russia and the United States for both American and Russian firms to
sell and promote their products.
Management anticipates that due to the Company becoming a
publicly traded entity, its reputation will be enhanced in the
Eastern European market. Management believes that this public
exposure will increase the amount of funds that are transferred by
its clients to the Company's account for the purpose of asset
management.
The Company does not anticipate making any significant capital
expenditure on its present office facilities or equipment. There
are no current plans for the Company to become engaged in
manufacturing of any products. Management does not anticipate
hiring additional employees until warranted by business conditions
and availability of funds.
The Company anticipates meeting its working capital needs
during the next twelve months primarily with revenues from trading
activities in its marketable securities and possibly by interim
financing to provide working capital if necessary. The Company is
also contemplating making a public offering of its securities to
fund future projects. Management has not entered into any new
arrangements or definitive agreements for a private placement of
securities and/or a public offering. If the Company's operations
are not adequate to fund its operations and it is unable to secure
financing from the sale of its securities or from private lenders,
the Company could experience losses which could curtail the
Company's current operations and future projects. The continuation
of the Company as a going concern is directly dependent upon the
success of its future operations and ability to obtain
additional financing.
Recent Accounting Pronouncements
The Financial Accounting Standards Board has issued Statement
of Financial Accounting Standard ("SFAS") No. 128, "Earnings Per
Share" and Statement of Financial Accounting Standards No. 129
"Disclosures of Information About an Entity's Capital Structure."
SFAS No. 128 provides a different method of calculating earnings
per share than is currently used in accordance with Accounting
Principles Board Opinion No. 15, "Earnings Per Share." SFAS No. 128
provides for the calculation of "Basic" and "Dilutive" earnings per
share. Basic earnings per share includes no dilution and is
computed by dividing income available to common shareholders by the
weighted average number of common shares outstanding for the
period. Diluted earnings per share reflects the potential dilution
of securities that could share in the earnings of an entity,
similar to fully diluted earnings per share. SFAS No. 129
establishes standards for disclosing information about an entity's
capital structure. SFAS No. 128 and SFAS No. 129 are effective for
financial statements issued for periods ending after December 15,
1997. Their implementation did not have a material effect on the
financial statements.
The Financial Accounting Standards Board has also issued SFAS
No. 130, "Reporting Comprehensive Income" and SFAS No. 131,
"Disclosures about Segments of an Enterprise and Related
Information." SFAS No. 130 establishes standards for reporting and
display of comprehensive income, its components and accumulated
balances. Comprehensive income is defined to include all changes
in equity except those resulting from investments by owners and
distributors to owners. Among other disclosures, SFAS No. 130
requires that all items that are required to be recognized under
current accounting standards as components of comprehensive income
be reported in a financial statement that displays with the same
prominence as other financial statements. SFAS No. 131 supersedes
SFAS No. 14 "Financial Reporting for Segments of a Business
Enterprise." SFAS No. 131 establishes standards on the way that
public companies report financial information about operating
segments in annual financial statements and requires reporting of
selected information about operating segments in interim financial
statements issued to the public. It also establishes standards for
disclosure regarding products and services, geographic areas and
major customers. SFAS No. 131 defines operating segments as
components of a company about which separate financial information
is available that is evaluated regularly by the chief operating
decision maker in deciding how to allocate resources and in
assessing performance.
SFAS 130 and 131 are effective for financial statements for
periods beginning after December 15, 1997 and requires comparative
information for earlier years to be restated. Adoption of these
statements had no material effect on the Company's financial
statements.
The FASB has also issued SFAS No 132. "Employers' Disclosures
about Pensions and other Postretirement Benefits," which
standardizes the disclosure requirements for pensions and other
Postretirement benefits and requires additional information on
changes in the benefit obligations and fair values of plan assets
that will facilitate financial analysis. SFAS No. 132 is effective
for years beginning after December 15, 1997 and requires
comparative information for earlier years to be restated, unless
such information is not readily available. Adoption of this
statement did not have a material impact on the Company's financial
statements.
In June 1998, the FASB issued SFAS No. 133, "Accounting for
Derivative Instruments and Hedging Activities" which requires
companies to record derivatives as assets or liabilities, measured
at fair market value. Gains or losses resulting from changes in
the values of those derivatives would be accounted for depending on
the use of the derivative and whether it qualifies for hedge
accounting. The key criterion for hedge accounting is that the
hedging relationship must be highly effective in achieving
offsetting changes in fair value or cash flows. SFAS No. 133 is
effective for all fiscal quarters of fiscal years beginning after
June 15, 1999. Management believes the adoption of this statement
will have no material impact on the Company's financial statements.
Inflation
In the opinion of management, inflation has not had a material
effect on the operations of the Company.
<PAGE>
Year 2000
Year 2000 issues may arise if computer programs have been
written using two digits (rather than four) to define the
applicable year. In such case, programs that have time-sensitive
logic may recognize a date using "00" as the year 1900 rather than
the year 2000, which could result in miscalculations or system
failures.
The Company has completed its assessment of the Year 2000
issue, including both technology and non-technology systems,
and believes that any costs of addressing the issue will not have
a material adverse impact on its financial position. The Company
believes that its existing computer systems and software will not
need to be upgraded to mitigate the Year 2000 issues. Prior to
purchasing its technology systems, the Company received
confirmation form its vendors that the systems are year 2000
compliant. Currently, the Company's technology system is equipped
with an ASUS P2B-F motherboard and SuperMicro P6DGE motherboard
with the latest BIOS versions. The Company's servers are
functioning under LinuxREdHat 5.2 operational system and its www
servers use the Apache / 1.3.6 Unix mod. The Company's principal
officers use Windows 2000 and Windows NT4 SP5. The Company does
not have any significant non-information technology or systems.
The Company has not incurred any material costs associated
with its assessment of the Year 2000 problem. In the event that
Year 2000 issues impact the Company's accounting operations and
other operations aided by its computer system, the Company
believes, as part of a contingency plan to be developed,
that it has adequate personnel to perform those functions manually
until such time that any Year 2000 issues are resolved.
Although the Company has not fully developed a contingency plan, it
anticipates having a full plan in place by January 2000.
The Company believes that third parties with whom it has
material relationships will not materially be affected by the Year
2000 issues, although the Company has not contacted these
parties directly. These third parties are relatively small
entities which do not rely heavily on information technology ("IT")
systems and non-IT systems for their operations. However, if the
Company and third parties upon which it relies are unable to
address any Year 2000 issues in a timely manner, it could result in
a material financial risk to the Company, including loss of revenue
and substantial unanticipated costs. Accordingly, the Company
plans to devote all resources required to resolve any significant
Year 2000 issues in a timely manner.
The Company is cognizant that Year 2000 compliance problems
could undermine the general infrastructure necessary to support its
operations. The Company depends on third party Internet Service
Providers, or ISPs, or hosting centers to provide connections to
the Internet. Any interruption of service from ISPs or hosting
centers to provide connections could result in a temporary
interruption of the operation of the Company's web site. Any
interruption in the security, access, monitoring or power systems
at the ISPs or hosting centers could result in an interruption of
services. Moreover, it is difficult to predict what effect year
2000 compliance problems will have on the integrity and stability
of the Internet.
Should the Company identify any problem with respect to its
year 2000 readiness, it will seek to develop a remedy, test the
proposed remedy and prepare a contingency plan, if necessary. We
do not have any material contracts with external contractors to
assist us in completing our year 2000 compliance effort. In
addition, no employees have been hired or reassigned to complete
our year 2000 compliance.
Risk Factors and Cautionary Statements
This Registration Statement contains certain forward-looking
statements. The Company wishes to advise readers that actual
results may differ substantially from such forward-looking
statements. Forward-looking statements involve risks and
uncertainties that could cause actual results to differ materially
from those expressed in or implied by the statements, including,
but not limited to, the following: the possible success of the
Company's varied projects, the volatility of the financial markets
in which the Company invests, the ability of the Company to fund
its current and future projects and its ability to meet its cash
and working capital needs, and other risks detailed in the
Company's periodic report filings with the Securities and Exchange
Commission.
ITEM 3. Description of Property
Starting from September 1997 through February 28, 1999, the
Company, together with OIL and OFS invested $2,030,023 into
construction of the high-rise elite apartment complex in Moscow.
The Company has applied its revenues from this investment to
purchase the Fitness and Entertainment Center in one of the
apartment buildings of the above-mentioned complex. The total
approximate investment in this venture is $600,000. The property
was purchased for cash, therefore there are no mortgages. There
are no limitations on the ownership and no liens on the property.
The Fitness and Entertainment Center will include workout
area, fitness bar, sauna, massage parlor, tanning salon, beauty
salon, billiard room, restaurant and a liquor bar. The floor space
is approximately 7,432 square feet. The center is designed to host
300 people. It is currently undergoing the initial construction
stage and is scheduled to open by the summer of 2000.
ITEM 4. Security Ownership of Certain Beneficial Owners and
Management
The following table sets forth information, to the best of the
Company's knowledge, as of November 2, 1999,< with respect
to each person known by the Company to own beneficially more than
5% of the outstanding Common Stock, each director and all directors
and officers as a group.
Name and Address Amount and Nature of Percent
of Beneficial Owner Beneficial Ownership of Class(1)
Vassili I. Oxenuk 12,449,319 58.8%
3980 Howard Hughes Pkwy.
Suite 340
Las Vegas, NV 89109
Michael Y. Smirnov 1,350,000 6.4%
3980 Howard Hughes Pkwy.
Suite 340
Las Vegas, NV 89109
Kirill M. Mendelson 270,000 1.3%
3980 Howard Hughes Pkwy.
Suite 340
Las Vegas, NV 89109
Alexander Sarkissian 270,000 1.3%
3980 Howard Hughes Pkwy.
Suite 340
Las Vegas, NV 89109
Inna Batrakova 300,000 1.4%
3980 Howard Hughes Pkwy.
Suite 340
Las Vegas, NV 89109
All directors and officers 14,639,319 69.2%
a group ( 5 persons)
* Director and/or executive officer
Note: Unless otherwise indicated in the footnotes below, the
Company has been advised that each person above has sole
voting power over the shares indicated above.
(1) Based upon 21,182,200 shares of Common Stock
outstanding on
November 2, 1999.
ITEM 5. Directors, Executive Officers, Promoters and Control
Persons
Executive Officers and Directors
The executive officers and directors of the Company are as
follows:
Name Age Position
Vassili I Oxenuk 35 President, CEO, Chairman
and Director
Michael Smirnov 32 Vice President, CFO and
Director
Alexander Sarkisian, Ph.D. 51 Vice President
Kirill M. Mendelson 28 Secretary, Treasurer and
Director
Inna Batrakova 24 Vice President of
Communications and Director
All directors hold office until the next annual meeting of
stockholders and until their successors have been duly elected and
qualified. Directors will be elected at the annual meetings to
serve for one year terms. There are no agreements with respect to
the election of directors. The Company has not compensated its
directors for service on the Board of Directors or any committee
thereof. Any non-employee director of the Company shall be
reimbursed for expenses incurred for attendance at meetings of the
Board of Directors and any committee of the Board of Directors. The
Executive Committee of the Board of Directors, to the extent
permitted under California law, exercises all of the power and
authority of the Board of Directors in the management of the
business and affairs of the Company between meetings of the Board
of Directors. Each executive officer is appointed by and serves at
the discretion of the Board of Directors.
None of the officers and/or directors of the Company are
officers or directors of any other publicly traded corporation, nor
have any of the directors and/or officers, nor have any of the
affiliates or promoters of the Company filed any bankruptcy
petition, been convicted in or been the subject of any pending
criminal proceedings, or the subject or any order, judgment, or
decree involving the violation of any state or federal securities
laws within the past five years.
The business experience of each of the persons listed above
during the past five years is as follows:
Vassili I. Oxenuk, President, CEO, Chairman
Mr. Oxenuk is a graduate of the Moscow State University
Mathematics Boarding School for Gifted Children and the Mojaysky
Military Academy, from which he graduated with a Masters Degree
in informational systems and mathematical support. His career
experiences include Analytical Researcher for the Russian Central
Military Intelligence Agency. Mr. Oxenuk started his
entrepreneurial activities in 1990 by establishing a lumber export
company, "UNYS". In 1991 he broadened his export-import activity
to include audio-video products by establishing OxMoSe
Company in Leipzig, Germany. The company created a joint venture
in Russia for retail sales of consumer electronics, operations of
nightclubs, restaurants, discos as well as production lines for
milk and soft drink bottling. In 1995, the company
decided to sell its businesses and used the proceeds of the sale to
start a financial services company. This company was registered as
OXIR Financial Services Ltd. in British Virgin Islands, and
made investments in the equities markets. In May of 1998 Mr.
Oxenuk incorporated a new company, OXIR Investments Inc., in the
state of California that was later merged with the Company. Mr.
Oxenuk is currently pursuing his Doctoral Degree in Business
Administration at Kennedy-Western University, a non accredited
institution.
Michael Smirnov, Vice President, CFO, Director
Mr. Smirnov graduated from Mojaysky Military Academy
in 1989 with a Masters Degree in information systems
mathematical support and was the 1986 winner of the Student
Olympiad. His experience includes Analytical Researcher for
Russian Central Military Intelligence from 1989 to 1995 as well
as
investment and trading experience in world equity markets.
He is certified as a trader by the Russian Stock Exchange. In
1995 he accepted a position as Financial Analyst Manager for
OxMoSe. At the end of 1995, OxMoSe was dissolved and Mr. Smirnov
transferred to an identical position with OXIR Financial Services
Ltd. Since the inception of OXIR Investments Inc. he has been a
Director, CFO, Vice President, and a leading trader for OXIR
Investments, Inc. Mr. Smirnov has significant work experience in
world stock exchanges and is certified as a trader of the highest
category by the Russian Stock exchange. Presently, Mr. Smirnov is
currently pursuing his Doctoral Degree in Business
Administration at Kennedy-Western University, a non accredited
institution.
Alexander Sarkisian, Ph.D., Vice President.
Dr. Sarkisian, has a Ph.D. in economics and graduated from
Moscow State Aviation Institute (Technical University), at which he
is presently a professor of international business. From
1986 through 1991, Dr. Sarkisian was Vice President of
economic affairs at the state scientific production amalgamation
Phazotron. Dr. Sarkisian was Vice President of the International
Association "International Dialog from 1992 to 1994 and served as
Chairman of the Board of the Regionsotsbank, engaged in the
collecting and processing communal fees in Moscow, Russia from 1995
to 1998. In addition to the above Dr. Sarkisian presently serves
as the Chairman of the Board of the following companies: Stenholm
Invest ApS, Denmark, a Danish investment company (Chairman since
1997); Imkor (Chairman since 1994); ASPEKT Ltd (Chairman since
1991). Furthermore, Dr. Sarkisian conducts lectures at the Moscow
State Aviation Institute (Technical University), Military
Production Academy, and at the Courses of Crisis Management on the
subject of International Investment, Decision Making Theory and
Management.
Kirill Mendelson, Secretary, Treasurer, Director
Mr. Mendelson attended the Moscow Medical Academy in Russia
from 1988 to 1991 and was a Member of the Honor Student Roll
> in 1989 and 1990. He received his BS with a minor in business
from the University of Las Vegas, NV in 1995 where he was on the
Dean's Honor List. From June 1991 to March 1998, he was Vice
President of Marketing for Europe and Russia and Executive Director
for US Direct Inc., a Las Vegas, Nevada company engaged in
pursuing business opportunities in emerging markets. His
responsibilities included consulting for and negotiating
contracts, joint ventures, and export and import trade in
Russia, Ukraine and Baltic Republics. While with US Direct, he
consummated a number of sales of casino gaming equipment
to casinos in two districts of Russia. He arranged for the
placement of a DMSO topical gel called Dabso, used for the
treatment of arthritis, in the over-the-counter market of Moscow
and Rostov-on-Don. In July 1986, Mr. Mendelson started working
as a trainee for the Computer Store Inc. In January 1991 at the
age of 20, he became a partner, co-owner and manager of the store.
Mr. Mendelson trained and supervised 12 employees in sales and
repairs of office equipment until May 1991.
Inna Batrakova, Vice President of Communications, Director
Ms. Batrakova graduated from the Pyatigorsk State Linguistic
University with major in English and Psychology. Upon graduation
Ms. Batrakova was awarded honors bachelor degree in Linguistics and
Practical Psychology. Ms. Batrakova also acquired a certified
diploma of the Interpreter's faculty at the same University.
Currently Ms. Batrakova is pursuing her Masters Degree in
Business Administration at Kennedy-Western University, a non
accredited institution. Ms. Batrakova started her career with
Oxir Investments, Inc. in February of 1997 and accepted the
position of a an administrative assistant at its representative
office in Moscow. In November of 1997 Ms. Batrakova was promoted
to the position of the executive administrative assistant and,
in December 1998, she became Vice President of Communications.
Presently her responsibilities include coordinating corporate
communications with the Company's clients, the media and other
business entities, as well as setting up a liaison structure for
the implementation of new marketing programs. She also directs and
coordinates all public communications for the Company, including
soliciting media coverage and media relationships, development of
corporate brochures, newsletters and press releases.
ITEM 6. Executive Compensation
The Company does not have a bonus, profit sharing, or deferred
compensation plan for the benefit of its employees, officers or
directors. As of February 28, 1999, no employee of the Company has
earned in excess of $100,000 per annum.
The Company has entered into two employment contracts, one
with President and C.E.O., Vassili I. Oxenuk, and the second with
Secretary/Director, Kirill Mendelson. Mr. Oxenuk's agreement
provides that the Company will pay his monthly personal expenses,
which are not to exceed $180,000 per year. Payment is made through
Mr. Oxenuk's Citibank Visa and Citibank MasterCard accounts. At
the end of each year, the Company will issue to Mr. Oxenuk a Form
1099 reporting, for tax purposes, the total amount paid to him
during the year, with the exception of reimbursable business
expenses. Additionally, the Company is to provide housing for
Mr. Oxenuk and his family and to pay all expenses related to the
property. On April 1, 1999, the Company purchased a single-
family house for the price of $362,000 for Mr. Oxenuk to occupy.
The Company paid $164,514 as a down payment with the balance
mortgaged with GreenPoint Mortgage Company. For the fiscal year
ended June 30, 1999, the Company paid a total of $9,864 for Mr.
Oxenuk's housing costs and related expenses.
Mr. Mendelson's agreement provides that the Company will pay
an annual salary of $60,000. In addition, the Company issued to
Mr. Mendelson 270,000 shares of the Company's common stock.
The following table sets forth all cash compensation paid by
the Company for services rendered to the Company for the fiscal
year ended June 30, 1999, to the Company's Chief Executive
Officer. No executive officer of the Company has earned a salary
greater than $100,000 annually for the period depicted.
Summary Compensation Table
Other All
Annual Other
Name and Compen- Compen-
Principal Position Year Salary Bonus sation sation
Vassili I. Oxenuk, 1999 $52,187 $ -0- $ -0- $9,864
President, C.E.O. 2000* 17,837 -0- -0- 8,400
_______________
* For the first three months of fiscal 2000 ended
September 30, 1999.
ITEM 7. Certain Relationships and Related Transactions
During the Company's inception, there have been no
transactions between the Company and any officer, director, nominee
for election as director, or any shareholder owning greater than
five percent (5%) of the Company's outstanding shares, nor any
member of the above referenced individuals' immediate family,
except as set forth below.
In June 1999, the Company finalized two
separate agreements to acquire, through tax free exchange of
shares, 100% of the issued and outstanding shares of OXIR Financial
Services, Ltd. ("OFS"), a British Virgin Islands corporation, and
100% of the issued and outstanding shares of OXIR Investment, Ltd.
("OIL"), a British Virgin Islands corporation. Vassili I Oxenuk,
the Company's President and C.E.O., was the sole shareholder of
both OFS and OIL. Under the terms of the agreements, Mr. Oxenuk
received an aggregate of 5,000,000 shares of the Company's
common stock. Mr. Oxenuk did not participate in the
Company's Board of Directors decision to make the acquisitions and
the transactions were negotiated on an arms length basis. The
Company did not receive an independent valuation of either OFS or
OIL.
The Company's officers and directors are subject to the
doctrine of corporate opportunities only insofar as it applies to
business opportunities in which the Company has indicated an
interest, either through its proposed business plan or by way of an
express statement of interest contained in the Company's minutes.
If directors are presented with business opportunities that may
conflict with business interests identified by the Company, such
opportunities must be promptly disclosed to the Board of Directors
and made available to the Company. In the event the Board shall
reject an opportunity so presented and only in that event, any of
the Company's officers and directors may avail themselves of such
an opportunity. Every effort will be made to resolve any conflicts
that may arise in favor of the Company. There can be no assurance,
however, that these efforts will be successful.
ITEM 8. Description of Securities
Common Stock
The Company is authorized to issue 50,000,000 shares of Common
Stock, no par value, of which 21,182,200 shares are issued and
outstanding as of
November 2, 1999. On November 25, 1998,
the Company effected a forward stock split of its then issued and
outstanding shares of Common Stock on a three (3) shares for one
(1) share basis. All references to the Company's Common Stock
herein are in post-split shares. All shares of Common Stock have
equal rights and privileges with respect to voting, liquidation and
dividend rights. Each share of Common Stock entitles the holder
thereof to (i) one non-cumulative vote for each share held of
record on all matters submitted to a vote of the stockholders; (ii)
to participate equally and to receive any and all such dividends as
may be declared by the Board of Directors out of funds legally
available therefore; and (iii) to participate pro rata in any
distribution of assets available for distribution upon liquidation
of the Company. Stockholders of the Company have no preemptive
rights to acquire additional shares of Common Stock or any other
securities. The Common Stock is not subject to redemption and
carries no subscription or conversion rights. All outstanding
shares of Common Stock are fully paid and non-assessable.
PART II
ITEM 1. Market Price of And Dividends on the Registrant's Common
Equity and Other Shareholder Matters
Prior to the filing of this registration statement, no shares
of the Company's Common Stock have been registered with the
Securities and Exchange Commission (the "Commission") or any state
securities agency of authority. The Company intends to make an
application to the NASD for the Company's shares to be quoted on
the OTC Bulletin Board. The Company's application to the NASD will
consist of current corporate information, financial statements and
other documents as required by Rule 15c2-11 of the Securities
Exchange Act of 1934, as amended. Inclusion on the OTC Bulletin
Board permits price quotations for the Company's shares to be
published by such service. The Company is not aware of any
established trading market for its common stock nor is there any
record of any reported trades in the public market in recent years.
Although the Company intends to submit its application to the OTC
Bulletin Board contemporaneously with the filing of this
registration statement, the Company does not anticipate its shares
to be traded in the public market until the registration statement
becomes effective. Except for the application to the OTC Bulletin
Board, there are no plans, proposals, arrangements or
understandings with any person concerning the development of a
trading market in any of the Company's securities. Because to date
there has been no meaningful trading market for the Company's
Common Stock, historical price information is being omitted.
In the event a public market for the Company's shares does
develop, the ability of an individual shareholder to trade their
shares in a particular state may be subject to various rules and
regulations of that state. A number of states require that an
issuer's securities be registered in their state or appropriately
exempted from registration before the securities are permitted to
trade in that state. Presently, the Company has no plans to
register its securities in any particular state. Further, most
likely the Company's shares will be subject to the provisions of
Section 15(g) and Rule 15g-9 of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), commonly referred to as the
"penny stock" rule. Section 15(g) sets forth certain requirements
for transactions in penny stocks and Rule 15g-9(d)(1) incorporates
the definition of penny stock as that used in Rule 3a51-1 of the
Exchange Act.
The Commission generally defines penny stock to be any equity
security that has a market price less than $5.00 per share, subject
to certain exceptions. Rule 3a51-1 provides that any equity
security is considered to be a penny stock unless that security is:
registered and traded on a national securities exchange meeting
specified criteria set by the Commission; authorized for quotation
on The NASDAQ Stock Market; issued by a registered investment
company; excluded from the definition on the basis of price (at
least $5.00 per share) or the issuer's net tangible assets; or
exempted from the definition by the Commission. If the Company's
shares are deemed to be a penny stock, trading in the shares will
be subject to additional sales practice requirements on broker-
dealers who sell penny stocks to persons other than established
customers and accredited investors, generally persons with assets
in excess of $1,000,000 or annual income exceeding $200,000, or
$300,000 together with their spouse.
For transactions covered by these rules, broker-dealers must
make a special suitability determination for the purchase of such
securities and must have received the purchaser's written consent
to the transaction prior to the purchase. Additionally, for any
transaction involving a penny stock, unless exempt, the rules
require the delivery, prior to the first transaction, of a risk
disclosure document relating to the penny stock market. A broker-
dealer also must disclose the commissions payable to both the
broker-dealer and the registered representative, and current
quotations for the securities. Finally, monthly statements must be
sent disclosing recent price information for the penny stocks held
in the account and information on the limited market in penny
stocks. Consequently, these rules may restrict the ability of
broker-dealers to trade and/or maintain a market in the Company's
Common Stock and may affect the ability of shareholders to sell
their shares.
As of November 2, 1999, 1999 there were 185
holders of record of the Company's Common Stock, which figure does
not take into account those shareholders whose certificates are
held in the name of broker-dealers or other nominees.
As of November 2, 1999, the Company has issued and
outstanding 21,182,200 shares of common stock. Of this total,
19,758,919 shares were deemed "restricted securities" as defined by
the Act and certificates representing such shares bear an
appropriate restrictive legend.
Of the Company's total outstanding shares, 1,350,681 shares
may be sold, transferred or otherwise traded in the public market
without restriction, unless held by an affiliate or controlling
shareholder of the Company. None of these shares have been
identified as being held by affiliates.
Of the total restricted shares outstanding, approximately
12,149,319 became eligible to be sold pursuant to Rule 144
on September 2, 1999, subject to the volume and other limitations
set forth under Rule 144. The balance of the restricted shares
become eligible to be sold under Rule 144 at follows: 2,317,600
shares on January 5, 2000; 2,000 shares on February 27, 1999;
1,000 shares on April 29, 2000; 270,000 shares on March 1,
2000, and 5,600,000 on June 29, 2000.
In general, under Rule 144 as currently in effect, a person
(or persons whose shares are aggregated) who has beneficially owned
restricted shares of the Company for at least one year, including
any person who may be deemed to be an "affiliate" of the Company
(as the term "affiliate" is defined under the Act), is entitled to
sell, within any three-month period, an amount of shares that does
not exceed the greater of (i) the average weekly trading volume in
the Company's Common Stock, as reported through the automated
quotation system of a registered securities association, during the
four calendar weeks preceding such sale or (ii) 1% of the shares
then outstanding. A person who is not deemed to be an "affiliate"
of the Company and has not been an affiliate for the most recent
three months, and who has held restricted shares for at least two
years would be entitled to sell such shares without regard to the
resale limitations of Rule 144.
Dividend Policy
The Company has not declared or paid cash dividends or made
distributions in the past, and the Company does not anticipate that
it will pay cash dividends or make distributions in the foreseeable
future. The Company currently intends to retain and invest future
earnings to finance its operations.
ITEM 2. Legal Proceedings
There are presently no material pending legal proceedings to
which the Company or any of its subsidiaries is a party or to which
any of its property is subject and, to the best of its knowledge,
no such actions against the Company are contemplated or threatened.
ITEM 3. Changes in and Disagreements With Accountants
There have been no changes in or disagreements with
accountants.
ITEM 4. Recent Sales of Unregistered Securities
From January 4 to April 29, 1999, the Company issued for cash
100,600 shares of its common stock to an aggregate of five persons
at the price of $5.00 per share, or an aggregate of $503,000.
Four of the purchasers are persons that are non United States
residents, and the fifth is an entity located in Las Vegas,
Nevada. The proceeds from the issuances were used for general
corporate operating purposes and investments.
On January 4, 1999, the Company issued 1,350,000 shares of
common stock to the Company's Vice President and C.F.O. in exchange
for certain trading securities. These securities consisted of
27 publicly traded stocks, most of which are listed on the New York
Stock Exchange or the Nasdaq National Stock Market. The value of
the securities at the time of transfer was $1,201,812. This
transaction was valued at predecessor cost, at $.70 per share, or
an aggregate of $939,764. On the same date, the Company issued
270,000 shares of common stock to Kirill M. Mendelson, the
Company's Secretary/Treasurer. No value was assigned to the
transaction because the shares were treated as Mr. Mendelson's
initial signing bonus and were deemed founders shares in connection
with the Company's merger in November 1998.
Also on January 4, 1999, the Company issued 600,000 to
Vassili I. Oxenuk a director and President of the Company in
exchange for the initial cash investment received from Oxir
Investment Ltd. This transaction was valued at $1.00 per share, or
$600,000. The shares were subsequently returned to the Company and
reissued on June 29, 1999, 300,000 shares to Mr. Oxenuk and 300,000
shares to Inna Batrakova, a director and officer of the Company.
This represented a gift of 300,000 shares from Mr. Oxenuk to
Ms. Batrakova.
Also, on June 29, 1999 Vladimir N. Kishenin and four other
members of his family received 5,000,000 shares as a gift from
Vassili Oxenuk. Mr. Oxenuk and/or his designee, was to receive the
5,000,000 shares as a compensation resulting from the sale of his
offshore companies, OIL and OFS, to the Company. Mr. Oxenuk's
decision to transfer his shares was based on his prior business
activities with Mr. Kishenin and a close personal relationship with
Mr. Kishenin's family. In connection with the acquisitions, an
additional 270,000 shares were issued to Alexander Sarkisian, a
director and officer of the Company, for services related to the
transaction. The 5,270,000 were valued at $706,005 which was the
predecessor cost of the assets acquired.
In September 1999, the Company issued 60,000 shares to First
Liberty Investments, Inc. as part of its compensation for providing
consulting and investment banking services to the Company. The
shares were valued at $5.00 per share. In October 1999, the
Company issued a total of 31,600 shares to two persons for the cash
purchase price of $5.00 per share.
None of the issuances of shares set forth above were
registered with the Commission under the Securities Act of 1933, as
amended, because the transactions were believed to be exempt form
registration requirements under Section 4(2) of the Act.
ITEM 5. Indemnification of Directors and Officers
As permitted by the provisions of the California Corporations
Code (the "Code"), the Company has the power to indemnify any
person who was or is a party, or is threatened to be made a party
to any proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that such person is or was an
agent of the corporation. This indemnification shall be against
any expenses, judgments, fines, settlements and other amounts
actually and reasonably incurred in connection with such
proceeding, if such person acted in good faith and in a manner such
person reasonably believed to be in the best interests of the
Company and, in the case of a criminal proceeding, had no
reasonable cause to believe the conduct of such person was
unlawful.
The term "agent" means any person who is or was a director,
officer, employee or other agent of the Company, or is or was
serving at the request of the Company as a director, officer,
employee or agent of another foreign or domestic corporation,
partnership, joint venture, trust or other enterprise, or was a
director, officer, employee or agent of a foreign or domestic
corporation which was a predecessor corporation of the Company or
of another enterprise at the request of such predecessor
corporation. The term "expenses" includes, without limitation,
attorneys' fees and any expenses of establishing a right
to indemnification under the Code.
This indemnification does not apply to an action by or in the
right of the Company to procure a judgment in its favor. The
termination of any proceeding by judgment, order, settlement,
conviction or upon a plea of nolo contendere or its equivalent
shall not, of itself, create a presumption that the person did not
act in good faith and in a manner which the person reasonably
believed to be in the best interests of the corporation or that the
person had reasonable cause to believe that the person's conduct
was unlawful.
No indemnification shall be made in respect of any claim,
issue or matter as to which such person shall have been adjudged to
be liable to the Company in the performance of such person's duty
to the Company, unless and only to the extent that the court in
which such proceeding is or was pending shall determine upon
application that, in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnity for the
expenses which such court shall determine. No indemnification
shall be made for amounts paid in settling or otherwise disposing
of a threatened or pending action, with or without court approval,
or for expenses incurred in defending a threatened or pending
action which is settled or otherwise disposed of without court
approval.
To the extent that an agent of the Company has been successful
on the merits in defense of any proceeding referred to above, or in
defense of any claim, issue, or matter therein, the agent shall be
indemnified against expenses actually and reasonably incurred by
the agent in connection therewith. Otherwise, indemnification
shall be made only if authorized in the specific case, upon a
determination that indemnification is proper in the circumstances,
by the majority vote of the Board of Directors, or by the court in
which such proceeding is or was pending.
Expenses incurred in defending any proceeding may be advanced
by the Company prior to the final disposition of such proceeding
upon receipt of an undertaking by or on behalf of the agent to
repay such amount unless it shall be determined ultimately that the
agent is entitled to be indemnified as authorized by the Code.
The Code also permits a corporation to purchase and maintain
insurance on behalf of any agent of the corporation against any
liability asserted against or incurred by the agent in such
capacity or arising out of the agent's status as such whether or
not the corporation would have the power to indemnify the agent
against such liability under the provisions of the Code.
Presently, the Company does not carry such insurance.
Transfer Agent
The Company has designated Pacific Stock Transfer Company,
P.,O. Box 93385, Las Vegas, Nevada 89193, as its transfer agent.
PART F/S
The Company's financial statements for the
fiscal year
ended June 30, 1999 and the period from inception through June 30,
1999 have been examined to the extent indicated in their
reports by Jones, Jensen & Company, independent certified public
accountants, and have been prepared in accordance with generally
accepted accounting principles and pursuant to Regulation S-B as
promulgated by the Securities and Exchange Commission and are
included herein in response to Part F/S of this
Form 10-SB. Financial statements for two subsidiaries of the
Company, Oxir Investments Limited and Oxir Financial Services
Limited, are also included.
OXIR INVESTMENTS, INC. AND SUBSIDIARIES
(A Development Stage Company)
CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1999
C O N T E N T S
Independent Auditors' Report . . . . . . . . . . . . . . . . . . F-3
Consolidated Balance Sheet . . . . . . . . . . . . . . . . . . . F-4
Consolidated Income Statements . . . . . . . . . . . . . . . . . F-6
Consolidated Statements of Stockholders' Equity. . . . . . . . . F-7
Consolidated Statements of Cash Flows. . . . . . . . . . . . . . F-8
Notes to the Consolidated Financial Statements . . . . . . . . . F-10
INDEPENDENT AUDITORS' REPORT
To the Board of Directors
OXIR Investments, Inc. and Subsidiaries
(A Development Stage Company)
Las Vegas, Nevada
We have audited the accompanying consolidated balance sheet of
OXIR Investments, Inc. and Subsidiaries (a development stage
company) as of June 30, 1999 and the related consolidated
statements of income, stockholders' equity and cash flows for
the year ended June 30, 1999 and from inception on May 19, 1998
through June 30, 1999 and 1998. These consolidated financial
statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the consolidated financial statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the
consolidated financial statements. An audit also includes
assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
consolidated financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred
to above present fairly, in all material respects the financial
position of OXIR Investments, Inc. and Subsidiaries (a
development stage company) as of June 30, 1999 and the results
of its operations and its cash flows for the year ended June
30, 1999 and from inception on May 19, 1998 through June 30,
1999 and 1998, in conformity with generally accepted accounting
principles.
Jones, Jensen & Company
Salt Lake City, Utah
September 29, 1999
OXIR INVESTMENTS, INC. AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Balance Sheet
ASSETS
June 30,
1999
CURRENT ASSETS
Cash and cash equivalents $ 52,627
Investment in trading securities (Note 3) 4,672,246
Prepaid expenses 3,978
Total Current Assets 4,728,851
PROPERTY AND EQUIPMENT (Note 4) 4,013,222
OTHER ASSETS
Related party receivable 8,080
Deposits 15,000
Total Other Assets 23,080
TOTAL ASSETS $ 8,765,153
OXIR INVESTMENTS, INC. AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Balance Sheet
LIABILITIES AND STOCKHOLDERS' EQUITY
June 30,
1999
CURRENT LIABILITIES
Accounts payable $ 39,121
Margin account (Note 6) 1,981,464
Client funds payable (Note 9) 1,252,131
Provision for income taxes (Note 7) 398,760
Deferred tax liability (Note 7) 550,134
Current portion - mortgage payable (Note 8) 1,303
Total Current Liabilities 4,222,913
LONG-TERM LIABILITY
Mortgage payable (Note 8) 206,492
Total Long-Term Liability 206,492
Total Liabilities 4,429,405
COMMITMENTS (Note 5)
STOCKHOLDERS' EQUITY
Common stock: 50,000,000 shares authorized of no
par value, 21,090,600 shares issued and outstanding 2,498,769
Retained earnings 1,836,979
Total Stockholders' Equity 4,335,748
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 8,765,153
OXIR INVESTMENTS, INC. AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Income Statements
From
Inception on
For the May 19, 1998
Year Ended Through
June 30, June 30,
1999 1998 1999
SALES $ - $ - $ -
COST OF GOODS SOLD - - -
GROSS MARGIN - - -
COSTS AND EXPENSES
Depreciation expense 40,175 - 40,175
Rent expense 34,148 - 34,148
General and administrative 474,583 - 474,583
Total Costs and Expenses 548,906 - 548,906
Net Loss From Operations (548,906) - (548,906)
OTHER INCOME (EXPENSE)
Interest expense (84,900) - (84,900)
Realized gain on sale of
marketable securities 1,694,087 - 1,694,087
Net unrealized gain on
marketable securities 1,725,464 - 1,725,464
Dividends 128 - 128
Total Other Income (Expense) 3,334,779 - 3,334,779
INCOME BEFORE TAXES 2,785,873 - 2,785,873
INCOME TAX (Note 7) 948,894 - 948,894
NET INCOME $ 1,836,979 $ - $ 1,836,979
BASIC INCOME PER SHARE $ 0.11 $ -
FULLY DILUTED INCOME
PER SHARE $ 0.11 $ -
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING 16,648,300 13,500,000
OXIR INVESTMENTS, INC. AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Statements of Stockholders' Equity
Common Stock Retained
Shares Amount Earnings
Balance at inception - $ - $ -
Net income from inception on May 19,
1998 through June 30, 1998 - - -
Balance, June 30, 1998 - - -
Shares issued to founders at
predecessor cost of $0.00 per share 13,770,000 - -
Shares issued for trading securities
at $0.70 per share 1,350,000 939,764 -
Common stock issued for cash at
$1.00 per share 600,000 600,000 -
Stock issuance costs - (250,000) -
Common stock issued for cash
at $5.00 per share 100,600 503,000 -
Common stock issued for related
party acquisitions, recorded at
predecessor cost 5,270,000 706,005 -
Net income for the year ended
June 30, 1999 - - 1,836,979
Balance, June 30, 1999 21,090,600 $ 2,498,769 $ 1,836,979
OXIR INVESTMENTS, INC. AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Statements of Cash Flows
From
Inception on
For the May 19, 1998
Year Ended Through
June 30, June 30,
1999 1998 1999
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 1,836,979 $ - $ 1,836,979
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation expense 40,175 - 40,175
Changes in assets and liabilities:
(Increase) in prepaid expenses (3,978) - (3,978)
(Increase) in related party receivables (8,080) - (8,080)
(Increase) in deposits (15,000) - (15,000)
Increase in accounts payable 32,382 - 32,382
Increase in accrued liabilities 6,740 - 6,740
Increase in provision for income taxes 948,894 - 948,894
Net Cash Provided by Operating
Activities 2,838,112 - 2,838,112
CASH FLOWS FROM INVESTING ACTIVITIES
(Increase) in trading securities (1,977,764) - (1,977,764)
Increase in margin account 1,273,325 - 1,273,325
Purchase of property and equipment (844,044) - (844,044)
Net Cash Used by Investing Activities (1,548,483) - (1,548,483)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from notes payable 208,000 - 208,000
Payments on notes payable (205) - (205)
Stock issuance costs (250,000) - (250,000)
Common stock issued for cash 1,103,000 - 1,103,000
Advances to related parties (2,337,867) - (2,337,867)
Cash from subsidiaries 40,070 - 40,070
Net Cash Used by Financing Activities (1,237,002) - (1,237,002)
NET INCREASE IN CASH AND CASH
EQUIVALENTS 52,627 - 52,627
CASH AND CASH EQUIVALENTS AT BEGINNING
OF PERIOD - - -
CASH AND CASH EQUIVALENTS AT END
OF PERIOD $ 52,627 $ - $ 52,627
<PAGE>
OXIR INVESTMENTS, INC. AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Statements of Cash Flows (Continued)
From
Inception on
For the May 19, 1998
Year Ended Through
June 30, June 30,
1999 1998 1999
SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid for:
Interest $ 78,160 $ - $ 78,160
Income taxes $ - $ - $ -
OXIR INVESTMENTS, INC. AND SUBSIDIARIES
(A Development Stage Company)
Notes to the Consolidated Financial Statements
June 30, 1999
NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS
Oxir Investments, Inc. a California corporation, was
incorporated on November 2, 1923 as Monte Regio Corporation
with the stated purpose to engage in the business of real
estate development. The Company continued in that endeavor
for several years then discontinued operations. On March
1, 1972, the Company changed its name to Precision
Resources, Inc. The Company remained dormant with no
business activity until September 1998. The Company
changed its name to Oxenuk, Inc. after reinstating business
operations on November 11, 1998, and again changed it name
to OXIR Investments, Inc. on November 25, 1998.
In 1998, Oxenuk, Inc. initiated negotiations to merge with
Oxir Investments, Inc., a private California company
incorporated on May 19, 1998 (Oxir). The merger was
consummated on November 25, 1998, at which time Oxenuk,
Inc. the surviving corporation adopted the name of Oxir
Investments, Inc. Under the terms of the merger, Oxir was
dissolved.
Oxir was originally founded for the purpose of pursuing
investment opportunities in real estate, technology and
industrial businesses in the United States and
internationally, particularly in Russia.
On June 29, 1999, the Company executed an agreement to
acquire, through a tax free exchange of shares, 100% of the
issued and outstanding shares of OXIR Financial Services,
Ltd. (OFS), a British Virgin Islands corporation,
incorporated on March 30, 1995. OFS is actively involved
in trading activities in the equity markets.
On June 29, 1999, the Company executed an agreement to
acquire, through a tax free exchange of shares, 100% of the
issued and outstanding shares of OXIR Investment, Ltd.
(OIL), a British Virgin Islands corporation, incorporated
on May 5, 1997. OIL is involved in direct investment
activities, such as real estate development projects in
Russia.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Accounting Method
The Company's financial statements are prepared using the
accrual method of accounting. The Company has elected a
fiscal year ending June 30.
b. Basic Income Per Share
The computation of basic income per share of common stock
is based on the weighted average number of shares
outstanding during the period of the financial statements.
OXIR INVESTMENTS, INC. AND SUBSIDIARIES
(A Development Stage Company)
Notes to the Consolidated Financial Statements
June 30, 1999
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
c. Financial Instruments
The following methods and assumptions were used by the
Company to estimate the fair values of financial
instruments as disclosed herein:
Cash and equivalents: The Company considers all highly
liquid investments with a maturity of three months or less
when purchased to be cash equivalents.
Investment securities: For trading securities, the
carrying amounts approximate fair value, which is based on
quoted market prices.
d. Income Taxes
Income taxes are provided for the tax effects of
transactions reported in the financial statements and
consist of taxes currently due plus deferred taxes related
primarily to unrealized gains on trading securities for
financial and income tax reporting. The deferred tax
liability represents the future tax return consequences of
those differences, which will either be taxable or
deductible when the securities are sold.
e. Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires
management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual
results could differ from those estimates.
f. Property and Equipment
Property and equipment are recorded at cost. Major
additions and improvements are capitalized. Minor
replacements, maintenance and repairs that do not increase
the useful life of the assets are expensed as incurred.
Depreciation of property and equipment is determined using
the straight-line method over the expected useful lives of
the assets as follows:
Description Useful Lives
Buildings 29.5 years
Leasehold improvements 10 years
Furniture, fixtures and equipment 7 years
Automobiles 5 years
Computer equipment 5 years
OXIR INVESTMENTS, INC. AND SUBSIDIARIES
(A Development Stage Company)
Notes to the Consolidated Financial Statements
June 30, 1999
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
g. Deposits
The Company has given a refundable deposit on its office
lease. This deposit is in the form of a 5-year certificate
of deposit bearing interest at 5.4%. The interest is for
the benefit of the Company.
h. Advertising
The Company follows the policy of charging the costs of
advertising to expense as incurred.
i. Concentrations of Risk
Trading Securities
The Company purchases trading securities using a margin
account. The securities purchased are subject to market
swings and valuations.
Foreign Operations
The Company intends to conduct activities in Russia, a
country, with a developing economy. Russia has experienced
recently, or is experiencing currently, economic or
political instability. Hyperinflation, volatile exchange
rates and rapid political and legal change, often
accompanied by military insurrection, have been common in
this and certain other emerging markets in which the
Company may conduct operations. The Company may be
materially adversely affected by possible political or
economic instability in Russia. The risks include, but are
not limited to terrorism, military repression,
expropriation, changing fiscal regimes, extreme
fluctuations in currency exchange rates, high rates of
inflation and the absence of industrial and economic
infrastructure. Changes in investment policies or shifts
in the prevailing political climate in which the Company
conducts business activities could adversely affect the
Company's business. Operations may be affected in varying
degrees by government regulations with respect to
production restrictions, price controls, export controls,
income and other taxes, expropriation of property,
maintenance of claims, environmental legislation, labor,
welfare benefit policies, land use, land claims of local
residents, water use and mine safety. The effect of these
factors cannot be accurately predicted.
Margin Account
The Company maintains a margin account which balance of
$1,981,464 is 42% of the trading securities balance of
$4,672,246. In the event of a market turndown, the value
of the trading securities may not be sufficient to pay off
the margin account.
OXIR INVESTMENTS, INC. AND SUBSIDIARIES
(A Development Stage Company)
Notes to the Consolidated Financial Statements
June 30, 1999
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
j. Change in Accounting Principle
The Financial Accounting Standards Board has issued
Statement of Financial Accounting Standards ("SFAS") No.
128, "Earnings Per Share" and Statement of Financial
Accounting Standards No. 129 "Disclosures of Information
About an Entity's Capital Structure." SFAS No. 128
provides a different method of calculating earnings per
share than was previously used in accordance with APB
Opinion No. 15, "Earning Per Share." SFAS No. 128 provides
for the calculation of "Basic" and "Dilutive" earnings per
share. Basic earnings per share includes no dilution and
is computed by dividing income available to common
shareholders by the weighted average number of common
shares outstanding for the period. Diluted earnings per
share reflects the potential dilution of securities that
could share in the earnings of an entity, similar to fully
diluted earnings per share. SFAS No. 129 establishes
standards for disclosing information about an entity's
capital structure. SFAS No. 128 and SFAS No. 129 are
effective for financial statements issued for periods
ending after December 15, 1997. In fiscal 1998, the
Company adopted SFAS No. 128, which did not have a material
impact on the Company's financial statements. The
implementation of SFAS No. 129 did not have a material
effect on the Company's financial statements.
The Financial Accounting Standards Board has also issued
SFAS No. 130, "Reporting Comprehensive Income" and SFAS No.
131, "Disclosures about Segments of an Enterprise and
Related Information." SFAS No. 130 establishes standards
for reporting and display of comprehensive income, its
components and accumulated balances. Comprehensive income
is defined to include all changes in equity except those
resulting from investments by owners and distributions to
owners. Among other disclosures, SFAS No. 130 requires
that all items that are required to be recognized under
current accounting standards as components of comprehensive
income be reported in a financial statement that displays
with the same prominence as other financial statements.
SFAS No. 131 supersedes SFAS No. 14 "Financial Reporting
for Segments of a Business Enterprise." SFAS No. 131
establishes standards on the way that public companies
report financial information about operating segments in
annual financial statements and requires reporting of
selected information about operating segments in interim
financial statements issued to the public. It also
establishes standards for disclosure regarding products and
services, geographic areas and major customers. SFAS No.
131 defines operating segments as components of a company
about which separate financial information is available
that is evaluated regularly by the chief operating decision
maker in deciding how to allocate resources and in
assessing performance.
SFAS No. 130 and 131 are effective for financial statements
for periods beginning after December 15, 1997 and requires
comparative information for earlier years to be restated.
Implementation of SFAS No. 130 and 131 did not have a
material effect on the Company's financial statements.
OXIR INVESTMENTS, INC. AND SUBSIDIARIES
(A Development Stage Company)
Notes to the Consolidated Financial Statements
June 30, 1999
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
j. Change in Accounting Principle (Continued)
In February 1998, the Financial Accounting Standards Board
("FASB") issued Statement of Financial Accounting Standard
("SFAS") No 132. "Employers' Disclosures about Pensions and
other Postretirement Benefits" which standardizes the
disclosure requirements for pensions and other
Postretirement benefits and requires additional information
on changes in the benefit obligations and fair values of
plan assets that will facilitate financial analysis. SFAS
No. 132 is effective for years beginning after December 15,
1997 and requires comparative information for earlier years
to be restated, unless such information is not readily
available. The adoption of this statement had no material
impact on the Company's financial statement.
In June 1998, the FASB issued SFAS No. 133, "Accounting for
Derivative Instruments and Hedging Activities" which
requires companies to record derivatives as assets or
liabilities, measured at fair market value. Gains or
losses resulting from changes in the values of those
derivatives would be accounted for depending on the use of
the derivative and whether it qualifies for hedge
accounting. The key criterion for hedge accounting is that
the hedging relationship must be highly effective in
achieving offsetting changes in fair value or cash flows.
SFAS No. 133 is effective for all fiscal quarters of fiscal
years beginning after June 15, 1999. Management believes
the adoption of this statement will have no material impact
on the Company's financial statements.
k. Principles of Consolidation
The consolidated financial statements include the accounts
of OXIR Financial Services, Ltd., OXIR Investment, Ltd. and
OXIR Investments, Inc. All significant intercompany
accounts and transactions have been eliminated.
NOTE 3 - INVESTMENT IN TRADING SECURITIES
The Company has a diverse portfolio of investments in
marketable equity securities. Management determines the
appropriate classification of the securities at the time
they are acquired and evaluates the appropriateness of such
classifications at each balance sheet date. All securities
owned are held for resale in anticipation of short-term
fluctuations in market prices, and are therefore classified
as trading securities. Trading securities, consisting
primarily of actively traded equity securities, are stated
at fair value. Realized and unrealized gains and losses
are included in income.
OXIR INVESTMENTS, INC. AND SUBSIDIARIES
(A Development Stage Company)
Notes to the Consolidated Financial Statements
June 30, 1999
NOTE 3 - INVESTMENT IN TRADING SECURITIES (Continued)
A summary of investment earnings recognized as other income
during the period from July 1, 1998 through June 30, 1999
is as follows:
Trading Securities
Realized gains (losses), net $ 1,694,087
Unrealized gains (losses), net 1,725,464
$ 3,419,551
NOTE 4 - PROPERTY AND EQUIPMENT
Property and equipment at June 30, 1999 consisted of the following:
Construction in progress $ 3,261,706
Leasehold improvements 94,216
Furniture and fixtures 230,680
Automobiles 35,240
Equipment 171,956
House 320,000
Total 4,113,798
Less accumulated depreciation (100,576)
Property and Equipment - Net $ 4,013,222
Depreciation expense for the year ended June 30, 1999 was $40,175.
NOTE 5 - COMMITMENTS
a. Employment Agreement
The Company has entered into an Employment Agreement with
an officer which requires payment of an annual salary of
$60,000 per year. The Company has also agreed to pay a
death benefit to the officer's estate in the amount of
$60,000 in the event of his death. If the contract is
terminated, the Company has agreed to pay the officer
$20,000.
b. Lease Agreement
The Company has leased an office space under a 60-month
operating lease. The Company has placed a $10,000 deposit
in a Citibank CD which becomes refundable at the end of the
lease term of 60 months. Accrued interest on the CD is for
the benefit of the Company. The rents to be paid under the
terms of the lease described above is summarized as
follows:
OXIR INVESTMENTS, INC. AND SUBSIDIARIES
(A Development Stage Company)
Notes to the Consolidated Financial Statements
June 30, 1999
NOTE 5 - COMMITMENTS (Continued)
During the Year
Ended
June 30, Amount
2000 $ 45,589
2001 45,589
2002 45,589
2003 45,589
2004 20,892
Total due $ 203,248
NOTE 6 - MARGIN ACCOUNT
The Company buys and sells equity securities using a margin
account. In the course of buying and selling the
securities, the Company has incurred a liability to the
brokerage firm. The balance of $1,981,464 carries an
interest rate of 6.75% and is collateralized by the
securities held in the account.
NOTE 7 - INCOME TAX MATTERS
The net deferred tax liability consisted of the following
components as of June 30, 1999:
1999
Deferred tax assets $ -
Deferred tax liabilities relating to:
Net unrealized gains on trading securities (550,134)
Net deferred tax liability $ (550,134)
The components giving rise to the net deferred tax
liability described above have been included in the
accompanying balance sheet as of June 30, 1999 as follows:
1999
Current assets $ -
Current liabilities (550,134)
$ (550,134)
Realization of deferred tax assets is dependent upon
sufficient future taxable income during the period that
deductible temporary differences are expected to be
available to reduce taxable income.
OXIR INVESTMENTS, INC. AND SUBSIDIARIES
(A Development Stage Company)
Notes to the Consolidated Financial Statements
June 30, 1999
NOTE 7 - INCOME TAX MATTERS (Continued)
The provision for income taxes from inception on May 19,
1998 through June 30, 1999 consisted of the following:
1999
Current income taxes $ 398,760
Deferred income taxes 550,134
Income tax expense $ 948,894
NOTE 8 - MORTGAGE PAYABLE
The Company had the following long-term debt at June 30, 1999:
Mortgage payable to Greenpoint Mortgage, bearing interest
at 9.50%, requiring monthly payments of $1,749, due
April 2029, secured by a house. $ 207,795
Less current portion (1,303)
Long-Term Debt $ 206,492
Future maturities of long-term debt are as follows:
2000 $ 1,303
2001 1,432
2002 1,575
2003 1,731
2004 1,903
Thereafter 199,851
$ 207,795
NOTE 9 - CLIENT FUNDS PAYABLE
Certain parties related to shareholders of the Company have
invested funds with the Company in a trading account. The
value of the funds due back these parties is $1,252,131.
Funds are invested per agreement whereby the investor
agrees to pay a commission to the Company according to the
performance level of the investments. Invested funds are
held for an indefinite period according to the terms of the
individual contracts. These funds are unsecured and hold
no guarantee either expressed or implied by the Company.
OXIR INVESTMENTS, INC. AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Proforma Income Statement
June 30, 1999
(Unaudited)
NOTE 10 - CONSOLIDATED PROFORMA INCOME STATEMENT
On June 29, 1999, the Company closed on an acquisition
agreement which provided for the acquisition of 100% of
the outstanding capital stock of OXIR Investments Limited
(OIL) and OXIR Financial Services Limited (OFS), both
British Virgin Islands companies and related to the
Company through common ownership. Pursuant to this
agreement, the Company issued 5,000,000 shares of its
authorized but previously unissued common stock to the
related party. All said shares issued are deemed
"restricted securities" as defined by Rule 144 of the
Securities Act of 1933 as amended and are exempt from
registration. The following is an unaudited proforma
consolidated income statement, an audited consolidated
balance sheet has been included in the main body of the
financial statements.
Proforma
OXIR OXIR OXIR Adjustments
Investments Investments Financial Increase Proforma
Inc. Ltd Services, (Decrease)Consolidated
Ltd
SALES $ - $ - $ - $ - $ -
COSTS OF GOODS SOLD - - - - -
GROSS MARGIN - - - - -
COSTS AND EXPENSES
Depreciation expense 40,175 23,782 27,695 - 91,652
Rent expense 34,148 12,000 12,000 - 58,148
General and administrative 474,583 24,837 115,056 - 614,476
Total Costs and Expenses 548,906 60,619 154,751 - 764,276
Net Loss From Operations(548,906) (60,619) (154,751) - (764,276)
OTHER INCOME (EXPENSE)
Interest expense (84,900) (45,212) - - (130,112)
Commissions - 41,638 41,638 - 83,276
Realized gain on sale of
marketable securities 1,694,087 259,173 - - 1,953,260
Net unrealized gain on
marketable securities 1,725,464 428,416 - - 2,153,880
Dividends 128 2,132 - - 2,260
Total Other Income
(Expense) 3,334,779 686,147 41,638 - 4,062,564
INCOME (LOSS) BEFORE TAXES 2,785,873 625,528 (113,113) - 3,298,288
INCOME TAX 948,894 - - - 948,894
NET INCOME (LOSS) $1,836,979 $625,528 $(113,113) $ - $ 2,349,394
<PAGE>
OXIR INVESTMENTS, INC. AND SUBSIDIARIES
(A Development Stage Company)
Notes to the Consolidated Financial Statements
June 30, 1999
NOTE 11 - SUBSEQUENT EVENTS
Purchase of Shares in Russian Bank
On August 11, 1999, the Company purchased 5% of the shares
of stock of EURPZAPSIBBANK, Ltd., a commerce bank in the
Russian Federation for $300,000. The investment will be
accounted for at the lower of cost or market.
Formation of OIS
On August 2, 1999, the Company incorporated OXIR Internet
Solutions, Inc. (OIS) which was previously an internal
project of the Company. OIS was formed primarily for the
purpose of engaging in the marketing and sale of products
and services over the internet or some other medium. Upon
incorporation, the Company owned 100% of the issued and
outstanding shares of OIS.
OXIR INVESTMENT LIMITED
FINANCIAL STATEMENTS
June 30, 1999
C O N T E N T S
Independent Auditors' Report . . . . . . . . . . . . . . . . . . . F-3
Balance Sheet. . . . . . . . . . . . . . . . . . . . . . . . . . . F-4
Income Statement . . . . . . . . . . . . . . . . . . . . . . . . . F-6
Statement of Stockholders' Equity. . . . . . . . . . . . . . . . . F-7
Statement of Cash Flows. . . . . . . . . . . . . . . . . . . . . . F-8
Notes to the Financial Statements. . . . . . . . . . . . . . . . . F-9
INDEPENDENT AUDITORS' REPORT
To the Board of Directors
Oxir Investment Limited
Las Vegas, Nevada
We have audited the accompanying balance sheet of Oxir
Investment Limited as of June 30, 1999 and the related
statements of income, stockholders' equity and cash flows for
the year ended June 30, 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 Oxir Investment Limited as of June 30, 1999 and the results
of its operations and its cash flows for the year ended June
30, 1999, in conformity with generally accepted accounting
principles.
Jones, Jensen & Company
Salt Lake City, Utah
September 29, 1999
OXIR INVESTMENT LIMITED
Balance Sheet
ASSETS
June 30,
1999
CURRENT ASSETS
Cash and cash equivalents $ 39,193
Investment in trading securities (Note 3) 1,754,718
Total Current Assets 1,793,911
PROPERTY AND EQUIPMENT (Note 4) 1,374,874
TOTAL ASSETS $ 3,168,785
OXIR INVESTMENT LIMITED
Balance Sheet (Continued)
LIABILITIES AND STOCKHOLDERS' EQUITY
June 30,
1999
CURRENT LIABILITIES
Related party payable (Note 2) $ 1,668,439
Margin account (Note 5) 708,139
Client funds payable (Note 6) 626,066
Total Current Liabilities 3,002,644
Total Liabilities 3,002,644
STOCKHOLDERS' EQUITY
Common stock: 50,000 shares authorized of $1.00
par value, 2 shares issued and outstanding 2
Additional paid-in capital (2)
Retained earnings 166,141
Total Stockholders' Equity 166,141
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 3,168,785
OXIR INVESTMENT LIMITED
Income Statement
For the
Year Ended
June 30,
1999
REVENUES
Net realized gain on sale of marketable securities $ 259,173
Net unrealized gain on marketable securities 428,416
TOTAL REVENUES 687,589
COSTS AND EXPENSES
Depreciation expense 23,782
General and administrative 36,837
Total Costs and Expenses 60,619
Net Loss From Operations 626,970
OTHER INCOME (EXPENSE)
Interest expense (45,212)
Commissions 41,638
Dividends 2,132
Total Other Income (Expense) (1,442)
INCOME BEFORE TAXES 625,528
INCOME TAX (Note 2) -
NET INCOME $ 625,528
BASIC INCOME PER SHARE $ 312,764
FULLY DILUTED INCOME PER SHARE $ 312,764
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING 2
OXIR INVESTMENT LIMITED
Statement of Stockholders' Equity
Additional
Common Stock Paid-In Retained
Shares Amount Capital Earnings
Balance, June 30, 1998 2 $ 2 $ (2) $(459,387)
Net income for the year ended
June 30, 1999 - - - 625,528
Balance, June 30, 1999 2 $ 2 $ (2) $ 166,141
OXIR INVESTMENT LIMITED
Statement of Cash Flows
For the
Year Ended
June 30,
1999
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 625,528
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation expense 23,782
Net Cash Provided by Operating Activities 649,310
CASH FLOWS FROM INVESTING ACTIVITIES
(Increase) in trading securities (1,383,847)
Increase in margin account 708,139
Purchase of property and equipment (1,341,456)
Net Cash Used by Investing Activities (2,017,164)
CASH FLOWS FROM FINANCING ACTIVITIES
Advances from related parties 1,405,415
Net Cash Used by Financing Activities 1,405,415
NET INCREASE IN CASH AND CASH EQUIVALENTS 37,561
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 1,632
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 39,193
SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid for:
Interest $ 45,212
Income taxes $ -
OXIR INVESTMENT LIMITED
Notes to the Financial Statements
June 30, 1999
NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS
Oxir Investment Limited, a British Virgin Islands company,
was incorporated on May 5, 1997 with the stated purpose to
engage in direct investment activities such as real estate
development projects in Russia and in marketable
securities.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Accounting Method
The Company's financial statements are prepared using the
accrual method of accounting. The Company has elected a
fiscal year ending June 30.
b. Basic Income Per Share
The computation of basic income per share of common stock
is based on the weighted average number of shares
outstanding during the period of the financial statements.
c. Financial Instruments
The following methods and assumptions were used by the
Company to estimate the fair values of financial
instruments as disclosed herein.
Cash and equivalents: The company considers all highly
liquid investments with a maturity of three months or less
when purchased to be cash equivalents.
Investment securities: For trading securities, the
carrying amounts approximate fair value, which is based on
quoted market prices.
d. Income Taxes
The Company, incorporated in the British Virgin Islands, is
not subject to an income based tax, but rather is assessed
an annual flat fee. For this reason, no income tax has
been reported.
e. Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires
management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual
results could differ from those estimates.
OXIR INVESTMENT LIMITED
Notes to the Financial Statements
June 30, 1999
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
f. Property and Equipment
Property and equipment are recorded at cost. Major
additions and improvements are capitalized. Minor
replacements, maintenance and repairs that do not increase
the useful life of the assets are expensed as incurred.
Depreciation of property and equipment is determined using
the straight-line method over the expected useful lives of
the assets as follows:
Description Useful Lives
Buildings 29.5 years
Computer equipment 5 years
g. Advertising
The Company follows the policy of charging the costs of
advertising to expense as incurred.
h. Concentrations of Risk
Foreign Operations
The Company intends to conduct activities in Russia, a
country, with a developing economy. Russia has experienced
recently, or is experiencing currently, economic or
political instability. Hyperinflation, volatile exchange
rates and rapid political and legal change, often
accompanied by military insurrection, have been common in
this and certain other emerging markets in which the
Company may conduct operations. The Company may be
materially adversely affected by possible political or
economic instability in Russia. The risks include, but are
not limited to terrorism, military repression,
expropriation, changing fiscal regimes, extreme
fluctuations in currency exchange rates, high rates of
inflation and the absence of industrial and economic
infrastructure. Changes in investment policies or shifts
in the prevailing political climate in which the Company
conducts business activities could adversely affect the
Company's business. Operations may be affected in varying
degrees by government regulations with respect to
production restrictions, price controls, export controls,
income and other taxes, expropriation of property,
maintenance of claims, environmental legislation, labor,
welfare benefit policies, land use, land claims of local
residents, water use and mine safety. The effect of these
factors cannot be accurately predicted.
Margin Account
The Company maintains a margin account which balance of
$708,139 is 40% of the trading securities balance of
$1,754,718. In the event of a market turndown, the value
of the trading securities may not be sufficient to pay off
the margin account.
OXIR INVESTMENT LIMITED
Notes to the Financial Statements
June 30, 1999
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
i. Change in Accounting Principle
The Financial Accounting Standards Board has issued
Statement of Financial Accounting Standards ("SFAS") No.
128, "Earnings Per Share" and Statement of Financial
Accounting Standards No. 129 "Disclosures of Information
About an Entity's Capital Structure." SFAS No. 128
provides a different method of calculating earnings per
share than was previously used in accordance with APB
Opinion No. 15, "Earning Per Share." SFAS No. 128 provides
for the calculation of "Basic" and "Dilutive" earnings per
share. Basic earnings per share includes no dilution and
is computed by dividing income available to common
shareholders by the weighted average number of common
shares outstanding for the period. Diluted earnings per
share reflects the potential dilution of securities that
could share in the earnings of an entity, similar to fully
diluted earnings per share. SFAS No. 129 establishes
standards for disclosing information about an entity's
capital structure. SFAS No. 128 and SFAS No. 129 are
effective for financial statements issued for periods
ending after December 15, 1997. In fiscal 1998, the
Company adopted SFAS No. 128, which did not have a material
impact on the Company's financial statements. The
implementation of SFAS No. 129 did not have a material
effect on the Company's financial statements.
The Financial Accounting Standards Board has also issued
SFAS No. 130, "Reporting Comprehensive Income" and SFAS No.
131, "Disclosures about Segments of an Enterprise and
Related Information." SFAS No. 130 establishes standards
for reporting and display of comprehensive income, its
components and accumulated balances. Comprehensive income
is defined to include all changes in equity except those
resulting from investments by owners and distributions to
owners. Among other disclosures, SFAS No. 130 requires
that all items that are required to be recognized under
current accounting standards as components of comprehensive
income be reported in a financial statement that displays
with the same prominence as other financial statements.
SFAS No. 131 supersedes SFAS No. 14 "Financial Reporting
for Segments of a Business Enterprise." SFAS No. 131
establishes standards on the way that public companies
report financial information about operating segments in
annual financial statements and requires reporting of
selected information about operating segments in interim
financial statements issued to the public. It also
establishes standards for disclosure regarding products and
services, geographic areas and major customers. SFAS No.
131 defines operating segments as components of a company
about which separate financial information is available
that is evaluated regularly by the chief operating decision
maker in deciding how to allocate resources and in
assessing performance.
SFAS No. 130 and 131 are effective for financial statements
for periods beginning after December 15, 1997 and requires
comparative information for earlier years to be restated.
Implementation of SFAS No. 130 and 131 did not have a
material effect on the Company's financial statements.
OXIR INVESTMENT LIMITED
Notes to the Financial Statements
June 30, 1999
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
i. Change in Accounting Principle (Continued)
In February 1998, the Financial Accounting Standards Board
("FASB") issued Statement of Financial Accounting Standard
("SFAS") No 132. "Employers' Disclosures about Pensions and
other Postretirement Benefits" which standardizes the
disclosure requirements for pensions and other
Postretirement benefits and requires additional information
on changes in the benefit obligations and fair values of
plan assets that will facilitate financial analysis. SFAS
No. 132 is effective for years beginning after December 15,
1997 and requires comparative information for earlier years
to be restated, unless such information is not readily
available. The adoption of this statement had no material
impact on the Company's financial statement.
In June 1998, the FASB issued SFAS No. 133, "Accounting for
Derivative Instruments and Hedging Activities" which
requires companies to record derivatives as assets or
liabilities, measured at fair market value. Gains or
losses resulting from changes in the values of those
derivatives would be accounted for depending on the use of
the derivative and whether it qualifies for hedge
accounting. The key criterion for hedge accounting is that
the hedging relationship must be highly effective in
achieving offsetting changes in fair value or cash flows.
SFAS No. 133 is effective for all fiscal quarters of fiscal
years beginning after June 15, 1999. Management believes
the adoption of this statement will have no material impact
on the Company's financial statements.
j. Related Party Payable
The Company has received advances totaling $1,668,439 as of
June 30, 1999 from Oxir Investment, Inc. its parent
company. The advances are non-interest bearing and due
upon demand.
NOTE 3 - INVESTMENT IN TRADING SECURITIES
The company has a diverse portfolio of investments in
marketable equity securities. Management determines the
appropriate classification of the securities at the time
they are acquired and evaluates the appropriateness of such
classifications at each balance sheet date. All securities
owned are held for resale in anticipation of short-term
fluctuations in market prices, and are therefore classified
as trading securities. Trading securities, consisting
primarily of actively traded equity securities, are stated
at fair value. Realized and unrealized gains and losses
are included in income.
OXIR INVESTMENT LIMITED
Notes to the Financial Statements
June 30, 1999
NOTE 3 - INVESTMENT IN TRADING SECURITIES (Continued)
A summary of investment earnings recognized as revenues
during the period from July 1, 1998 through June 30, 1999
is as follows:
Trading Securities
Realized gains (losses), net $ 259,173
Unrealized gains (losses), net 428,416
$ 687,589
NOTE 4 - PROPERTY AND EQUIPMENT
Property and equipment at June 30, 1999 consisted of the following:
Construction in progress $ 1,392,613
Equipment 8,050
Total 1,400,663
Less accumulated depreciation (25,789)
Property and Equipment - Net $ 1,374,874
Depreciation expense for the year ended June 30, 1999 was $23,782.
NOTE 5 - MARGIN ACCOUNT
The Company buys and sells equity securities using a margin
account. In the course of buying and selling the
securities, the Company has incurred a liability to the
brokerage firm. The balance of $708,139 carries an
interest rate of 6.75% and is collateralized by the
securities held in the account.
NOTE 6 - CLIENT FUNDS PAYABLE
Certain parties related to shareholders of the Company have
invested funds with the Company in a trading account. The
value of the funds due back these parties is $626,066.
Funds are invested per agreement whereby the investor
agrees to pay a commission to the Company according to the
performance level of the investments. Invested funds are
held for an indefinite period according to the terms of the
individual contracts. These funds are unsecured and hold
no guarantee either expressed or implied by the Company.
OXIR FINANCIAL SERVICES LIMITED
FINANCIAL STATEMENTS
June 30, 1999
C O N T E N T S
Independent Auditors' Report . . . . . . . . . . . . . . . . . . . F-3
Balance Sheet. . . . . . . . . . . . . . . . . . . . . . . . . . . F-4
Statement of Operations. . . . . . . . . . . . . . . . . . . . . . F-6
Statement of Stockholders' Equity. . . . . . . . . . . . . . . . . F-7
Statement of Cash Flows. . . . . . . . . . . . . . . . . . . . . . F-8
Notes to the Financial Statements. . . . . . . . . . . . . . . . . F-9
INDEPENDENT AUDITORS' REPORT
To the Board of Directors
Oxir Financial Services Limited
Las Vegas, Nevada
We have audited the accompanying balance sheet of Oxir
Financial Services Limited as of June 30, 1999 and the related
statements of operations, stockholders' equity and cash flows
for the year ended June 30, 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 Oxir Financial Services Limited as of June 30, 1999 and the
results of its operations and its cash flows for the year ended
June 30, 1999, in conformity with generally accepted accounting
principles.
Jones, Jensen & Company
Salt Lake City, Utah
September 29, 1999
OXIR FINANCIAL SERVICES LIMITED
Balance Sheet
ASSETS
June 30,
1999
CURRENT ASSETS
Cash and cash equivalents $ 877
Total Current Assets 877
PROPERTY AND EQUIPMENT (Note 3) 1,834,480
TOTAL ASSETS $ 1,835,357
OXIR FINANCIAL SERVICES LIMITED
Balance Sheet (Continued)
LIABILITIES AND STOCKHOLDERS' EQUITY
June 30,
1999
CURRENT LIABILITIES
Related party payable (Note 2) $ 669,427
Client funds payable (Note 4) 626,066
Total Current Liabilities 1,295,493
Total Liabilities 1,295,493
STOCKHOLDERS' EQUITY
Common stock: 50,000 shares authorized of $1.00
par value, 2 shares issued and outstanding 2
Additional paid-in capital (2)
Retained earnings 539,864
Total Stockholders' Equity 539,864
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,835,357
OXIR FINANCIAL SERVICES LIMITED
Statement of Operations
For the
Year Ended
June 30,
1999
REVENUES
Commissions $ 41,638
Total Revenues 41,638
COSTS AND EXPENSES
Depreciation expense 27,695
General and administrative 127,056
Total Costs and Expenses 154,751
Net Loss From Operations (113,113)
INCOME TAX (Note 2) -
NET LOSS $ (113,113)
BASIC LOSS PER SHARE $ (56,557)
FULLY DILUTED LOSS PER SHARE $ (56,557)
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING 2
OXIR FINANCIAL SERVICES LIMITED
Statement of Stockholders' Equity
Additional
Common Stock Paid-In Retained
Shares Amount Capital Earnings
Balance, June 30, 1998 2 $ 2 $ (2) $ 652,977
Net loss for the year ended
June 30, 1999 - - - (113,113)
Balance, June 30, 1999 2 $ 2 $ (2) $ 539,864
OXIR FINANCIAL SERVICES LIMITED
Statement of Cash Flows
For the
Year Ended
June 30,
1999
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (113,113)
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation expense 27,695
Net Cash Provided by Operating Activities (85,418)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment (1,665,025)
Net Cash Used by Investing Activities (1,665,025)
CASH FLOWS FROM FINANCING ACTIVITIES
Advances to related parties 1,751,146
Net Cash Used by Financing Activities 1,751,146
NET INCREASE IN CASH AND CASH EQUIVALENTS 703
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 174
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 877
SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid for:
Interest $ -
Income taxes $ -
OXIR FINANCIAL SERVICES LIMITED
Notes to the Financial Statements
June 30, 1999
NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS
Oxir Financial Services Limited, a British Virgin Islands
company, was incorporated on March 30, 1995 with the stated
purpose to engage in any act or activity that is not
prohibited under the laws of the British Virgin Islands
including direct investment activities such as real estate
development projects in Russia.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Accounting Method
The Company's financial statements are prepared using the
accrual method of accounting. The Company has elected a
fiscal year ending June 30.
b. Basic Loss Per Share
The computation of basic loss per share of common stock is
based on the weighted average number of shares outstanding
during the period of the financial statements.
c. Cash and Equivalents
The Company considers all highly liquid investments with a
maturity of three months or less when purchased to be cash
equivalents.
d. Income Taxes
The Company, incorporated in the British Virgin Islands, is
not subject to an income based tax, but rather is assessed
an annual flat fee. For this reason, no income tax has
been reported.
e. Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires
management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual
results could differ from those estimates.
<PAGE>
OXIR FINANCIAL SERVICES LIMITED
Notes to the Financial Statements
June 30, 1999
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
f. Property and Equipment
Property and equipment are recorded at cost. Major
additions and improvements are capitalized. Minor
replacements, maintenance and repairs that do not increase
the useful life of the assets are expensed as incurred.
Depreciation of property and equipment is determined using
the straight-line method over the expected useful lives of
the assets as follows:
Description Useful Lives
Buildings 29.5 years
g. Advertising
The Company follows the policy of charging the costs of
advertising to expense as incurred.
h. Concentrations of Risk
Foreign Operations
The Company intends to conduct activities in Russia, a
country, with a developing economy. Russia has experienced
recently, or is experiencing currently, economic or
political instability. Hyperinflation, volatile exchange
rates and rapid political and legal change, often
accompanied by military insurrection, have been common in
this and certain other emerging markets in which the
Company may conduct operations. The Company may be
materially adversely affected by possible political or
economic instability in Russia. The risks include, but are
not limited to terrorism, military repression,
expropriation, changing fiscal regimes, extreme
fluctuations in currency exchange rates, high rates of
inflation and the absence of industrial and economic
infrastructure. Changes in investment policies or shifts
in the prevailing political climate in which the Company
conducts business activities could adversely affect the
Company's business. Operations may be affected in varying
degrees by government regulations with respect to
production restrictions, price controls, export controls,
income and other taxes, expropriation of property,
maintenance of claims, environmental legislation, labor,
welfare benefit policies, land use, land claims of local
residents, water use and mine safety. The effect of these
factors cannot be accurately predicted.
OXIR FINANCIAL SERVICES LIMITED
Notes to the Financial Statements
June 30, 1999
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
i. Change in Accounting Principle
The Financial Accounting Standards Board has issued
Statement of Financial Accounting Standards ("SFAS") No.
128, "Earnings Per Share" and Statement of Financial
Accounting Standards No. 129 "Disclosures of Information
About an Entity's Capital Structure." SFAS No. 128
provides a different method of calculating earnings per
share than was previously used in accordance with APB
Opinion No. 15, "Earning Per Share." SFAS No. 128 provides
for the calculation of "Basic" and "Dilutive" earnings per
share. Basic earnings per share includes no dilution and
is computed by dividing income available to common
shareholders by the weighted average number of common
shares outstanding for the period. Diluted earnings per
share reflects the potential dilution of securities that
could share in the earnings of an entity, similar to fully
diluted earnings per share. SFAS No. 129 establishes
standards for disclosing information about an entity's
capital structure. SFAS No. 128 and SFAS No. 129 are
effective for financial statements issued for periods
ending after December 15, 1997. In fiscal 1998, the
Company adopted SFAS No. 128, which did not have a material
impact on the Company's financial statements. The
implementation of SFAS No. 129 did not have a material
effect on the Company's financial statements.
The Financial Accounting Standards Board has also issued
SFAS No. 130, "Reporting Comprehensive Income" and SFAS No.
131, "Disclosures about Segments of an Enterprise and
Related Information." SFAS No. 130 establishes standards
for reporting and display of comprehensive income, its
components and accumulated balances. Comprehensive income
is defined to include all changes in equity except those
resulting from investments by owners and distributions to
owners. Among other disclosures, SFAS No. 130 requires
that all items that are required to be recognized under
current accounting standards as components of comprehensive
income be reported in a financial statement that displays
with the same prominence as other financial statements.
SFAS No. 131 supersedes SFAS No. 14 "Financial Reporting
for Segments of a Business Enterprise." SFAS No. 131
establishes standards on the way that public companies
report financial information about operating segments in
annual financial statements and requires reporting of
selected information about operating segments in interim
financial statements issued to the public. It also
establishes standards for disclosure regarding products and
services, geographic areas and major customers. SFAS No.
131 defines operating segments as components of a company
about which separate financial information is available
that is evaluated regularly by the chief operating decision
maker in deciding how to allocate resources and in
assessing performance.
SFAS No. 130 and 131 are effective for financial statements
for periods beginning after December 15, 1997 and requires
comparative information for earlier years to be restated.
Implementation of SFAS No. 130 and 131 did not have a
material effect on the Company's financial statements.
OXIR FINANCIAL SERVICES LIMITED
Notes to the Financial Statements
June 30, 1999
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
i. Change in Accounting Principle (Continued)
In February 1998, the Financial Accounting Standards Board
("FASB") issued Statement of Financial Accounting Standard
("SFAS") No 132. "Employers' Disclosures about Pensions and
other Postretirement Benefits" which standardizes the
disclosure requirements for pensions and other
Postretirement benefits and requires additional information
on changes in the benefit obligations and fair values of
plan assets that will facilitate financial analysis. SFAS
No. 132 is effective for years beginning after December 15,
1997 and requires comparative information for earlier years
to be restated, unless such information is not readily
available. The adoption of this statement had no material
impact on the Company's financial statement.
In June 1998, the FASB issued SFAS No. 133, "Accounting for
Derivative Instruments and Hedging Activities" which
requires companies to record derivatives as assets or
liabilities, measured at fair market value. Gains or
losses resulting from changes in the values of those
derivatives would be accounted for depending on the use of
the derivative and whether it qualifies for hedge
accounting. The key criterion for hedge accounting is that
the hedging relationship must be highly effective in
achieving offsetting changes in fair value or cash flows.
SFAS No. 133 is effective for all fiscal quarters of fiscal
years beginning after June 15, 1999. Management believes
the adoption of this statement will have no material impact
on the Company's financial statements.
j. Related Party Payable
The Company has received advances totaling $669,427 as of
June 30, 1999 from Oxir Investment, Inc. its parent
company. The advances are non-interest bearing and due
upon demand.
NOTE 3 - PROPERTY AND EQUIPMENT
Property and equipment at June 30, 1999 consisted of the following:
Construction in progress $ 1,869,093
Total 1,869,093
Less accumulated depreciation (34,613)
Property and Equipment - Net $ 1,834,480
Depreciation expense for the year ended June 30, 1999 was $27,695.
OXIR FINANCIAL SERVICES LIMITED
Notes to the Financial Statements
June 30, 1999
NOTE 4 - CLIENT FUNDS PAYABLE
Certain parties related to shareholders of the Company have
invested funds with the Company in a trading account. The
value of the funds due back these parties is $626,066.
Funds are invested per agreement whereby the investor
agrees to pay a commission to the Company according to the
performance level of the investments. Invested funds are
held for an indefinite period according to the terms of the
individual contracts. These funds are unsecured and hold
no guarantee either expressed or implied by the Company.
PART III
ITEM 1. Index to Exhibits
The following exhibits are filed with this Registration Statement:
Exhibit No. Exhibit Name
3.1* Articles of Incorporation and Amendments
3.2* By-Laws of Registrant
4.* See Exhibit No. 3.1, Articles of Incorporation and
amendments thereto
21.1 Subsidiaries
10.1* Agreement of Merger
10.2* Employment Agreement for Kirill Mendelson
27. Financial Data Schedule
________________
* Filed Previously
2. Description of Exhibits
See Item I above.
SIGNATURES
In accordance with Section 12 of the Securities and Exchange
Act of 1934, the registrant caused this registration statement to
be signed on its behalf by the undersigned, thereunto duly
organized.
OXIR INVESTMENTS, INC.
(Registrant)
Date: November 9, 1999 By: /S/ Vassili I. Oxenuk
Vassili I. Oxenuk
President, C.E.O.
EXHIBIT 21.1
SUBSIDIARIES OF OXIR INVESTMENTS, INC.
The following are subsidiaries of Oxir Investments, Inc., a
California corporation:
1. Oxir Investments Limited, a British Virgin Islands
company, 100% owned by Oxir Investments, Inc.
2. Oxir Financial Services Limited, a British Virgin Islands
company, 100% owned by Oxir Investments, Inc.
3. Internet Solutions, Inc., a Nevada corporation, 100%
owned by Oxir Investments, Inc.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL
INFORMATION EXTRACTED FROM THE OXIR INVESTMENTS,
INC. FINANCIAL STATEMENTS FOR THE PERIOD ENDED
JUNE 30 1999 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-START> JUL-1-1998
<PERIOD-END> JUN-30-1999
<CASH> 52,627
<SECURITIES> 4,672,246
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 4,728,851
<PP&E> 4,113,798
<DEPRECIATION> 100,576
<TOTAL-ASSETS> 8,765,153
<CURRENT-LIABILITIES> 4,222,913
<BONDS> 206,492
0
0
<COMMON> 2,498,769
<OTHER-SE> 1,836,979
<TOTAL-LIABILITY-AND-EQUITY> 8,765,153
<SALES> 0
<TOTAL-REVENUES> 3,334,779
<CGS> 0
<TOTAL-COSTS> 548,906
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 84,900
<INCOME-PRETAX> 2,785,873
<INCOME-TAX> 948,894
<INCOME-CONTINUING> 1,836,979
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,836,979
<EPS-BASIC> .11
<EPS-DILUTED> .11
</TABLE>
