As filed with the Securities
and Exchange Commission on
May 12, 2000 Registration
No. 000-26377
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
AMENDMENT NO. 2
to
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES OF SMALL
BUSINESS ISSUERS
Under Section 12(b) or (g) of the Securities Exchange Act of 1934
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 offices) (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)
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OXIR INVESTMENTS, INC.
FORM 10-SB
TABLE OF CONTENTS
PAGE
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PART I
<S> <C> <C>
ITEM 1. Description of Business............................................................ 3
ITEM 2. Management's Discussion and Analysis or
Plan of Operation................................................................ 28
ITEM 3. Description of Property............................................................ 34
ITEM 4. Security Ownership of Certain Beneficial
Owners and Management............................................................ 35
ITEM 5. Directors, Executive Officers, Promoters
and Control Persons.............................................................. 36
ITEM 6. Executive Compensation............................................................. 39
ITEM 7. Certain Relationships and Related Transactions..................................... 39
ITEM 8. Description of Securities.......................................................... 41
PART II
ITEM 1. Market Price of and Dividends on Registrant's
Common Equity and Other Shareholder Matters...................................... 42
ITEM 2. Legal Proceedings.................................................................. 44
ITEM 3. Changes in and Disagreements with Accountants...................................... 44
ITEM 4. Recent Sales of Unregistered Securities............................................ 44
ITEM 5. Indemnification of Directors and Officers.......................................... 46
PART F/S
Financial Statements................................................................................. 48
PART III
ITEM 1. Index to Exhibits.................................................................. S-1
ITEM 2. Description of Exhibits............................................................ S-1
Signatures........................................................................................... S-2
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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. (the "Company") was incorporated in the State of
California on November 2, 1923 as Monte Regio Corporation with the stated
purpose of engaging 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. on November 11, 1998.
In November, 1998 the Company consummated a merger with Oxir
Investments, Inc., a California corporation ("Oxir-Private"), which was formed
in order to pursue international investment opportunities in real estate,
technology, and industrial business, particularly in the United States and
Russia, and to introduce eastern European opportunities to the United States.
The Company was the surviving corporation of the merger. In association with the
merger, the Company changed its name to Oxir Investments, Inc.
In May 1999, Vassili I. Oxenuk, the President, Chief Executive Officer,
Director and principal stockholder of the Company, purchased Oxir Financial
Services, Ltd., a British Virgin Islands corporation ("OFS"), and Oxir
Investments, Ltd., a British Virgin Islands corporation ("OIL"). At the time of
the purchase by Mr. Oxenuk, OFS engaged exclusively in trading securities for
its own account and for its clients, and OIL engaged in real estate development
and investment in technological and industrial projects in Russia. On June 29,
1999, the Company purchased all of the issued and outstanding shares of each of
OFS and OIL from Mr. Oxenuk for 5,270,000 shares of the Company's common stock.
Upon the Company's purchase of OFS and OIL, each became a wholly-owned
subsidiary of the Company. OFS, OIL and the Company were under common control at
the time of the merger and, therefore, the acquisitions have been accounted for
at historical costs in a manner similar to a pooling of interests.
On August 2, 1999, Oxir Internet Solutions, Inc. ("OIS") was
incorporated under the laws of the State of Nevada as a majority owned (51%)
subsidiary of the Company, with the balance of 49% owned by management and
employees. OIS was formed to develop e-commerce in Russia.
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In addition to OIS, OIL and OFS, the Company also has the following
wholly-owned subsidiaries: Oxir Internet Solutions (Russia) ("OIS-Russia") and
JSC "Oxir Consulting", which started its operations during the first quarter of
2000. "OIS-Russia" is handling all the contracts for purchasing and reselling of
products, shipping and customer service for the Company's on-line store. See
Part I, Item 1, "Description of Business - Internet Solutions." "Oxir
Consulting" signed its first three contracts to provide accounting services.
Additionally, the Company is seeking final Russian registration of four other
Russian subsidiaries: JSC "Oxir Insurance", JSC "Oxir Fitness Club", " Oxir
Imperial" and "Oxir Informtour" . As of March 31, 2000, these subsidiaries had
not instituted operations.
Through its subsidiaries, the Company operates in three areas:
1. Through OIS, the Company is implementing an Internet shop and
web-hosting center in Moscow, Russia.
2. Through OFS, the Company offers a variety of financial
services such as asset management and financial consulting to
its non-U.S. clients with an emphasis on asset management. In
addition to full-time financial management services, the
Company helps its clients to define their financial goals,
tolerance for market risks and investment objectives.
3. Through OIL, the Company is an active participant in a number
of real estate projects including the construction of a
high-rise apartment complex in Moscow, Russia.
Internet Solutions
Through OIS, the Company is providing Internet services consisting of
on-line sales (e-commerce), set-up and support, and web-site hosting, primarily
to Russian clients. Additional services provided are on-line payment systems,
web-site advertising and promotion, and data security.
Based on the quarterly Gallup Media report dated October 1999 and
reports given during the Internet Marketing Fall 1999 conference in Moscow
(December 15-17, 1999), the number of Internet users in Russia is estimated at
between 2.5 and 3 million. In addition to the Russian-based market, management
believes that a viable market exits with the Russian speaking population
residing in the United States, Israel, Canada, Australia and a number of
European countries.
Online-Sales
OIS has developed and implemented an on-line sales system. The
Company's web site (http://www.oxiris.com) (the "Web Site") currently offers
books and audio-video products to the Russian- speaking consumer for sale. The
Web Site was launched in February 2000 and the Company has begun to create a
customer base.
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As of April 21, 2000, OIS has written agreements with the following
book manufacturers and distributors: "Top Kniga" dated February 10,2000;
"Publishing house Priboy" dated February 4, 2000; "Midiks" dated April 12, 2000;
"Urist-Gardarika" dated April 17, 2000; "Book Club Terra" dated April 17, 2000;
"B.S.G.-Press" dated April 19, 2000; and "Eksmo-Press" dated February 29, 2000,
allowing the Company to offer products of these entities on-line. The contracts
provide for the delivery of books and other goods, priced by the seller and
payable in Russian rubles. The agreements are subject to Russian law and
disputes are to be settled by arbitration. Similar agreements have been signed
with video and audio distributors: "Savva Group Entertainment Video" dated April
4, 2000; "Home Collection" dated April 14, 2000; "Varus Video" dated April 17,
2000 and "Kvadro-Traid" dated April 13, 2000. The Company is seeking additional
agreements with publishing houses and merchandise wholesalers and manufacturers
in order to expand the types of products offered on the Web Site.
Payment for Goods and Services
The Company has contracted with CyberCash to provide confirmation of
credit card payments for goods and services purchased via the Web Site.
Confirmation or declination of a transaction is received within 40 seconds. Upon
approval of a transaction, the product is shipped to the purchaser. The Company
pays CyberCash a per transaction cost of 2.5% of the transaction, with a minimum
cost of $0.50 per transaction. Credit card payments are made in U.S.
dollars.>
The Company also accepts payment in Russian rubles. Ruble paying customers
have the following options:
o Pay cash to a courier on delivery. The online customer
inputs the desired time of delivery. As soon as the
order is completed, the Company contacts the courier, who
contacts the customer by either phone or e-mail to
confirm the time of delivery. The courier delivers the
order, accepts the money and leaves a receipt. The
courier then remits the payment to the Company. All
couriers will be under contract to the Company. See Part
I, Item 1, "Description of Business - Internet Solutions
- Delivery of Goods."
o Prepayment made according to invoice. After completing
an order, the customer prints out an automatically
generated invoice and a money transfer form. The
completed form is taken to the Russian Savings Bank with
branch offices throughout Russia. The payment is sent by
the bank to the Company referenced with the customer's
order number. As soon as the money is received, the
customer is sent the order by a choice of either mail or
courier.
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Under each of the plans listed above, the customers have the capability
to track their order status on-line. All shipping charges are paid by the
customers with the exception of Moscow deliveries that are delivered free of
charge.
The Company does not intend to convert ruble payments received from
Russian customers to U.S. Dollars. Instead, the Company intends to use all ruble
payments to pay Russian suppliers, to cover current expenses and to pay taxes
within the territory of the Russian Federation.
Delivery of Goods and Services
OIS delivers goods using several methods:
* Express Delivery provided by "United Parcel Service (Rus),"
pursuant to an agreement dated February 23, 2000, and "EMS
Garantpost" pursuant to an agreement dated April 2000. These
couriers provide express delivery, within one to eight days,
for goods delivered in Russia, the Commonwealth of Independent
States ("CIS"), the United States, Canada, and Israel.
* Traditional Delivery into foreign countries is provided
by the Department of Russian Federal Mail Service
("International Postal Service"), pursuant to an
agreement dated April 20, 2000. Delivery is usually
within 15 days to CIS, and 21 days to the United States,
Canada and Israel. Delivery within the Russian
Federation is contracted through the Department of
Russian Federal Mail Service ("Moscow Postal Service"),
pursuant to an agreement dated April 19, 2000. Delivery
is usually within seven days throughout Russia.
For deliveries within the Moscow area, the Company has its own delivery
service. Deliveries within Moscow are made within 24 hours of complete
processing of an order.
Currently, product inventories are maintained by each of the product
suppliers. Each supplier provides the Company daily an accurate update of their
stock and the on-line store manager updates product availability on a daily
basis. The manager receives the orders placed on-line within 12 hours and then
fills the orders using a supplier priority system. If the main supplier does not
carry a particular item ordered, the manager will continue down a priority
supplier list until the order is complete. The items are then purchased from the
suppliers and delivered to the Company's sorting warehouse located in Moscow,
Russia. See Part I, Item 3, "Description of Property." The procurement process
varies depending on the type of product. For example, video and audio products
may be obtained from the supplier within 48 hours while certain literature
products take up to six days). When all items on an order are received by the
Company, they are packaged and shipped using the customer's selected delivery
method.
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The Company currently sells movie titles in VHS format. The Company
expects that the majority of movie titles will be Western-produced movies dubbed
or subtitled in Russian, but less than 30 percent of the offered movie titles
are expected to be Russian productions. During the next year the Company expects
to add approximately 80 to 100 new movie titles monthly. The average price per
video will be 90 to 120 rubles (approximately $3.00 to $4.00), depending on the
film category. The price of the movies has been determined by agreements with
the Company's suppliers.
At present, the Web Site offers approximately 1200 audio CDs ranging in
price from $3 for economic versions of Russian productions to $15 for CDs
manufactured by Western standards.
The number of book titles currently for sale at the Web Site is
approximately 35,000. The prices vary according to type of literature. For
example, popular fiction titles sell for 40 to 100 rubles (approximately $1.40
to $4.00), while specialty titles such as technical multi-volume reference books
may be sold for up to 3000 rubles (approximately $105). OIS plans to increase
its book offerings to 40,000 in the future.
The Company intends to create an opportunity for a variety of Russian
businesses to sell their goods 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 intends to obtain
deposits from the business equal to two or three weeks of expected revenues.
Web-Hosting
Through its project known as "Webhosting.Russia," (http://www.wh.ru),
OIS intends to offer web-hosting services involving the provision of web sites
and/or servers to its clients. The Company's main web site
(http://www.oxiris.net) contains a link to Webhosting.Russia. The Company plans
to offer two types of services to its web-hosting clients: co-location and
virtual server.
Co-location
Under this approach, the client's equipment is used on the Company's
premises. The client defines the configuration of its server and the Company's
technical personnel provide support services and data backup. With this
alternative, the client does not have the expense of installing a high-speed
Internet connection at their location and maintaining its equipment. The Company
also provides uninterrupted power supply systems that protect the client's
servers in case of power failures. This option is important to clients who
expect a heavy volume of Internet traffic to their web-site. The Company intends
to charge a fee of $200 per month for co-location services.
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Virtual Server
A client who plans to implement a relatively small Internet web-site
(i.e. several hundred megabytes of content without complex interactive features)
and expects a minor traffic load (less than 1,000 hits per day) may decide to
choose this option. Under this alternative, the client's web-site is hosted on
the Company servers. The Company provides the database connectivity and also
supports a limited number of e-mail accounts.
The Company intends to charge a fee of $15 to $95 per month for virtual
site hosting. This fee structure is based on the cost to the Company of
web-hosting, including the costs of maintaining the servers, providing
connectivity and maintaining e-mail accounts. The Company's competitors in
Russia, such as Demos and Zenon, have prices starting at $15 and $20 per month,
respectively.
Virtual site owners have the option of using the WebSiteMaster System,
designed and developed by OIS, which allows them to administer their web-sites
by means of a regular browser. Using the WebSiteMaster, clients are able to
manage users and e-mail addresses and review the statistical data on the site
visitors. Using these data, the clients can plan their Internet activity, such
as advertising, and analyze the results.
Most Russian Internet traffic meets at one point, called M9-IX (a point
of mutual exchange of IP-traffic located on Moscow Intertown Phone Station
(MIPS-9)). The Company's Internet center will be connected to the M9-IX traffic
exchange node by fiber optic channel (single mode fiber, approximate length 3
kilometers) in the second quarter of 2000. As a result, the Company can offer
its clients a fast and reliable channel connection speed.
In April 2000, OIS began assigning its Internet-related contracts to
OIS-Russia, a wholly owned subsidiary of the Company. See Part I, Item 1,
"Description of Business - Business Development."
Equity Market Investing and Asset Management
Through OFS, the Company manages funds of private and corporate
non-U.S. clients in the stock markets of the United States. Currently, the
majority of the Company's clients are concentrated in Russia. Neither the
Company nor OFS provide financial or investment advice to any citizen or
resident of the United States.
OFS has opened on-line trading accounts with Datek, Charles Schwab and
E-Trade. All trades conducted by the Company on behalf of itself and its clients
are directed through these brokers. The Company's only relationship with these
brokers is as a client. The Company has two principal types of accounts: (i) one
solely owned Company account with Datek Online; and (ii) two customers' fund
accounts with E-Trade and Charles Schwab. Direct satellite links to information
centers permit the Company's fund managers to obtain stock market data on-line.
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Currently, neither OFS nor the Company are licensed in the U.S. as
securities broker-dealers, agents, or investment advisors, and neither provides
any such services within the U.S. The Company anticipates that it will address
this issue and apply for licensing in the U.S. at some future date, although
there can be no assurance that this will occur. Until this process is completed
the Company has no intention to provide any form of financial services in the
United States. In January 2000 the Company adopted a policy of holding less that
40% of its total assets in the form of securities.
For its own account, 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
assets managers consider a variety of fundamental and technical investment
criteria in selecting the companies in which to invest. The Company's primary
trader is Michael Smirnov, the Company's Chief Financial Officer and a director,
who was certified as a trader with a Diploma of the First Category in 1994 by
the Ministry of Finance of the Russian Federation. Mr. Smirnov is the only
person trading for the Company.
For an individual client desiring to participate in on-line trading,
OFS provides the following services:
* Consultancy Services. OFS representatives consult clients about
problems that can arise in their relationships with on-line brokers. This
includes an explanation of the terms and conditions set forth in customer
agreements of on-line brokers and the risks associated with on-line trading. The
Company also assists clients in negotiating settlements of disputes and
conflicts with brokers. Additionally, the Company helps the clients choose
appropriate trading software and familiarizes them with the functional
capabilities of their chosen trading programs.
* Analytical Research. The Company offers recommendations to clients
regarding stock purchases and financial instruments.
* Portfolio Management. The Company also provides asset and portfolio
management for its clients. The following steps are followed to form a
portfolio:
(1) Obtaining an understanding of the risk tolerance of the
client.
(2) Screening the market for stocks that have the
characteristics that meet the clients' needs.
(3) Establishing the following parameters of each prospective
investment:
* The business should be understandable. Analysts
must know the business and the markets in which
they compete.
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* The business should have favorable long-term
prospects.
* The business should have a good management history,
in the opinion of OFS's analysts.
(4) Stock Evaluation. The Company uses traditional
fundamental valuation techniques in evaluating an
investment.
Russian Real Estate Development Project
The Company, through OIL, is an investor in a high-rise apartment
complex in Moscow, Russia (the "Project"). In 1994, 1995 and 1996, the Moscow
city government authorized a Russian construction company, "Kvartal 32-33", to
coordinate construction of five high-rise apartment buildings in two housing
blocks in Moscow. The goal of the Project is to provide modern housing,
comparable to European standards, by building high-rise apartment complexes
located at Leninski Prospect 116-1, Leninski Prospect 128-1, Leninski Prospect
98-1, Udaltzova Street 5-1, and Udaltzova Street 27-1.
The Project is being financed by private investors, including the
Company, "Kvartal 32-33," Zarubezhtsvetmet, a Russian exporter of non-ferrous
metal, DTD Trading House, a Nizhnevartovsk (Russia) oil company, and Kvazar, a
Russian publishing company. As of March 31, 2000, the Company has invested
$3,847,585 in the Project. The Company's investment is estimated by the
developer to be less than 10% of the total Project.
Management believes that the Company's return on investment will be
realized in two stages. During the first stage, OIL received unimproved space in
the building at Leninski Prospect 116-1. The Company intends to develop this
space into a Fitness Center offering a workout area, fitness bar, sauna, massage
parlor, tanning salon, beauty salon, restaurant and a liquor bar, to be operated
by OIL (the "Complex"). The Complex offers 741 square meters (7,974 square feet)
in area. The restaurant will be designed to host up to 40 people, the fitness
center will be designed to host 30 people and the salon will be designed to host
8 people.
OIL also received a five-bedroom apartment in Moscow measuring 267
square meters (2,820 square feet), which was used by the Company's President,
Chief Executive Officer, director and principal shareholder, Mr. Oxenuk. In
April 2000, Mr. Oxenuk agreed to pay the Company a total of $1,790,465, which
includes $563,300 (apartment appraisal cost), $50,000 (the cost of two
underground garages) and $ 1,177,165 (tenant improvement cost) over the next
fifteen years as compensation for the apartment. See Part I, Item 7,"Certain
Relationships and Related Transactions."
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The second stage of the Project entails the completion of the building,
located at Leninski Prospect 128-1. It is expected to be completed in the first
quarter of 2001. A total of 1,290 square meters (13,890 square feet) of
undeveloped space in this building has been assigned to OIL by the developer.
This unimproved space consists of the following: (1) 440 square meters (4,812
square feet) on the first floor; (2) two one-bedroom apartments, each 105 square
meters (1,130 square feet); (3) two two-bedroom apartments, each 148 square
meters (1,590 square feet); and (4) two three- bedroom apartments of 163 and 175
square meters (1,755 and 1,880 square feet, respectively). The Company intends
to sell the apartments, although there can be no assurance that this will occur.
Marketing
Trade Shows
In 1999, the Company participated in Russian business forums and trade
shows. The Company attended the 2nd Russian Conference "E-commerce "1999", held
November 11 and 12, 1999, in St. Petersburg, Russia. The Company also attended
the [email protected] -"real business in a new world," December 7, 1999
in Moscow, and the 3rd Conference "Internet Marketing, Fall 99" in Moscow. In
March 2000, the Company participated and co- sponsored the Fourth Russian
Internet Forum (RIF). The Company's officers presented three reports. The thesis
of all the reports can be found at the RIF web site (www.rif.ru). By
participating in shows and exhibitions, the Company intends to promote its
services and products to the Russian speaking community.
The Internet
The Company has created an interactive web-site (http://www.oxir.com),
containing information about its major lines of business. The Web-Site has links
to the Company's current projects.
In order to determine the most effective way of reaching consumers, the
Company will initially use the Internet media to focus on banner advertising. By
the end of the second quarter 2000, the Company expects to display banners in
banner exchange nets, namely RLE (Russian Link Exchange) and in the major
Russian search engines such as Rambler, Yandex, Aport, Atrus, and List. Paper
Publications
The Company regularly places advertisements in such business guides as
Moscow Yellow Pages, Russian Yellow Pages, Stolitsa Kontakt!, Moscow-Address,
and Golden Business of Moscow. The Company employs a marketing strategy that
involves advertising in international and local publications such as "Global
Review", "The Economist", "Expert", "Banks and Technologies" , "Moya Moskva",
"Kompaniya", "Gorod Aeroport", "Transaero-flight UN", and "Moscow News." The
E-shop advertisement is published monthly in "Internet" and "Mir Internet".
Besides paid advertisements, non-commercial materials were published in Russian
newspapers and magazines, such as: "Kompaniya", "Mir Internet", "Dengy",
"Kommersant-Vlast'" and newspapers: "Izvestia", "Segodnya", "Kommersant-Daily",
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"Trud", "Vremya", "Moscow News", "Rossiyskaya Gazeta", "Komsomolskaya Pravda",
"Ekonomika y zhizn'".
Television and Radio
In Sochi, Russia, a television program in the series "Business by All
Rules" featured the activities of the Company and Mr. Vassili Oxenuk, its
President, Chairman of the Board of Directors, Chief Executive Officer and
principal stockholder. The Company intends to advertise its e-commerce project
on CTC, a Russian television station, and plans to do radio advertising on
"Avtoradio-Narodnaya marka."
Other Media
The Company has entered into an agreement with Aeroflot Company
representing the interests of Aeroflot whereby Aeroflot will place the Oxir logo
and advertisements on air ticket envelopes for the first and business class
passengers for regular Aeroflot flights to major Russian cities and
international flights to the United States, Canada and Germany. The agreement is
for a period of three months during which Aeroflot will distribute 68,000 ticket
envelopes (14,000 within Russia; 10,000 on flights to Canada; 30,000 on flights
to USA; and 14,000 on flights to Germany). The Company has paid Aeroflot USD
$8,206.
The Company also uses advertisement billboards in strategic areas of
Moscow, including the major international airport in Russia, Sheremetievo.
The Company places monthly the advertisement of its services on Moscow
ATM receipts (128 automatic teller machines using the credit cards of all the
major Russian payment systems such as Visa, Master Card, American Express, etc.)
The circulation of the Company advertisements amounts to 800,000 receipts
monthly.
Competition
The Company has many competitors in the areas of Internet access,
financial services and real estate development. 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.
Internet
Those entities in direct competition with OIS's e-commerce business in
Russia are Ozon (http://www.o3.ru/), Mistral (http://www.mistral.ru), Books of
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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.
Several online shops offer books, videotapes and CDs for Russian
speaking customers outside of Russia. They include Russian Shopping Club
(http://www.russianshopping.com), Sverdlov.com (http://www.sverdlov.com),
Kniga.com (http://www.kniga.com) and Dom Knigi (http:.www.domknigi.com). The
Company believes that these competitors have a limited selection of goods and
relatively high prices in comparison to the Company's site. The Company also
believes that it competes favorably with these other companies in its terms and
cost of delivery.
Because the Company's existing competitors are registered as Russian
businesses, they are unable to establish foreign merchant accounts which would
enable them to process credit card payments by respectable and reliable American
paying systems. As a result, they are forced to use credit card payment systems
developed in Russia (for instance, Assist). Management believes that its use of
the CyberCash processing system gives it an advantage over competitors because
CyberCash is the most widely know credit card processing on the Internet.
The Company also plans to employ the traditional payment methods of
cash on delivery and wire transfers. In addition to providing a selection of
payment methods, the Company also offers a wide selection of products and
services and delivery options.
With these features the Web Site aims to attract Russian Internet
shoppers and retain their business as repeat customers. According to the
quarterly report published by Gallup Media in October 1999, and reports given
during the Internet Marketing Fall 1999 conference in Moscow (December 15-17,
1999), the number of Internet users in Russia is estimated at between 2.5 and 3
million. The majority of users (83%) is male and between the ages of 20 and 30
(67%). Based on market research conducted by OIS, Russian Internet users, who
responded to an on-line questionnaire, indicated the following preference for
payment methods: (1) cash on delivery (49%); (2) credit cards (44%); (3) bank
account transfers (17%); and (4) payment forward (13%). OIS has taken these
demographics into consideration in tailoring its on-line store contents and the
other choices it makes available to its customers. Financial Services
The principal competitors to OFS, the Company's financial services
subsidiary which provides 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 the experience and
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expertise of its personnel in dealing in the Russian economy and knowledge of
the U.S. securities markets. The Company also offers smaller initial minimum
investments and is price competitive for its services.
Real Estate
In the real estate development market in Moscow, Russia, the Company's
main competitors are Holding Conti, Golden Keys, Centre 2000 and MIAN. These
companies are promoting projects that are comparable to the Company's Project.
Holding Conti currently has a project named "Glebovo Complex" located on
Begovaya Street. The cost per square meter of this property is between USD
$2,200 and USD $2,500. Golden Keys has a complex located on 1 Minskaya Street.
Golden Keys' prices per square meter of this property range from USD $2,000 to
USD $2,800. Centre 2000's property on 11 Pozharski Pereulok is priced between
USD $2,300 and USD $2,700 per square meter. MIAN has three different properties.
The property located on 15/2 Krylatskie Hills sells for USD $1,500 to USD $2,350
per square meter. The cost per square meter of the property on 10/2 Obydenski
Pereulok starts at USD$2,300. The prices for the property on 29 Novy Arbat
Street start at USD$2,900 per square meter.
By comparison, the condominiums at 116-1 Leninski Prospect were sold
for USD $1,900, USD $2,100 and USD $2,150 per square meter. The condominiums in
128 Leninski Prospect, the Company's second project, are priced at construction
stage between USD $1,180 and USD $1,680 per square meter. In addition to price,
the Company's strategy is to stress the location of its projects; the amenities
provided to residents including full fitness and beauty facilities, restaurant,
and day care, the security system, and the properties' modern technology
construction. Further, the Company's property has no structural bearing walls
within the buildings. This allows residents to determine the layout of their
unit.
Doing Business in Russia
Management believes that the Company has an advantage as a foreign
resident entity, which includes being subject to United States taxation instead
of Russian, a developed business network, and certain forms of both legal and
financial protection and guarantees from Russian and Moscow governments.
However, an unstable Russian economy makes it difficult to predict the Company's
success.
Under Russian Federal law, an American company operating in Russia is
not subject to taxation in Russia on certain categories of income. Categories of
income which are tax exempt at their source include those not directly connected
with a non-resident company's commercial activity. This includes interest
received from bank deposits, loan or lease agreements and stock dividends. A
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non-resident company may be exempted from tax on income received as a result of
the company's commercial activity in Russia if such activity is indicated in the
agreement between the United States and the Russian Federation of June 17, 1992.
Guarantees provided by the government to non-resident companies are enumerated
in Russian Federal law. Under this law non-resident companies have the right to:
* Legal defense of foreign investors' activities in the Russian
Federation.
* Use of different forms of investments in the territory of the
Russian Federation.
* Assignment of rights and duties to third persons.
* Compensation in the event of property nationalization and
confiscation.
* Guarantee against an adverse change in legislation of the
Russian Federation.
* Appropriate settlement of disputes which may arise in
connection with investments and business activity of a foreign
investor in the territory of the Russian Federation.
* Use in the territory of the Russian Federation and transfer
abroad of income, profits and other legally received funds.
* Free export from the Russian Federation property and
information initially brought into the country as foreign
investment.
* Acquisition of securities.
* Participation in privatization.
* Utilization of land, natural resources, buildings and other
real property.
Many of the Company's competitors are subject to other Russian taxes
because they are Russian companies.
All of the Company's sales, reselling, web hosting, web design and
e-commerce in Russian is done by Oxir-Russia.
Patents, Trademarks and Licensing Agreements
The Company has filed a trademark for its logo in the Russian
Federation, but has not registered any trademarks in the United States.
Currently, the Company has no patent or licensing agreements except for standard
software license agreements with Oracle, Red Hat, Microsoft, CyberCash and
Apache Group, among others.
Research and Development
The Company develops its own software for the creation of web
applications. The Company also develops its own system to create Internet
stores. At present, five programmers, a systems analyst and a database
administrator are involved in this development process.
The application server is in itself a platform for the convenient and
effective creation of dynamic Internet sites such as online stores and
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information portals. Currently the programs are developed on the Win32 and Linux
platforms. In the near future, the programs will be transferred to the Solaris
SPARC and Solaris Intel systems. Since the fall of 1999, the Company's Web Site
has been operating on the already developed software programs.
The system for creating on-line stores is composed of a web application
server and a database (Oracle 8), designed for the rapid launching and effective
operation of e-commerce web-sites. The database consists of catalogue modules,
designed for the support of the store's online display, and back-office
operations such as client order processing, inventory support, delivery and
accounting preparation. At present, this is the system used to operate the Web
Site.
The Company also develops its own software for web-hosting management.
Presently, four programmers are involved in this development process, primarily
UNIX coding. The management systems, intended to simplify clients' access to the
information concerning audience of their sites and/or content management, were
launched in the fall of 1999. The development is carried out with open source
software, which is free from licensing fees like Linux operation system and GCC
C/C++ language compiler.
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
Presently, the Company employs 83 people among the Moscow (25
employees) and Sochi (4 employees) representative offices, Oxir Internet
Solutions, Inc. - Moscow representative office of the Nevada Corporation(29
employees), OXIRIS (16 employees), Oxir Consulting (8 employees) and the Las
Vegas corporate office (4 employees). Three employees allocate their time
between more than one of the Company's divisions. In addition to its full-time
employees, the Company occasionally uses the services of consultants on a
contract basis.
Because the Company acts as an investor in, rather than a developer of,
construction projects in Russia, it is not necessary for the Company to maintain
a staff for these projects. All construction and affiliated jobs relating to the
Project are carried out by the Project developer. The Project is overseen by the
Company's 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.
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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 $4,158 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 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 $15,184 per month
and consist of 790 square meters (8500 square feet).
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.
Litigation
The Company is not a party to any material pending litigation and, to
the best of its knowledge, no such action has been overtly threatened against
the Company.
Risk Factors Relating to the Company's Business
An investment in the Company's common stock involves a high degree of risk,
including the risks described below. Each of these risks could materially
adversely affect the business, operating results and financial condition of the
Company.
Risk Factors Relating to the Company Generally
High Volatility of Russian Economy and Foreign Operations
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. Management believes that worldwide
consumers generally have a low confidence level in Russian financial
institutions. Russia does not currently have a developed credit card system or a
highly developed telecommunications infrastructure. This may lead to overloaded
lines, slow speed of electronic traffic, and a potential for break-downs.
Renewed financial or political crisis in Russia could have a severely negative
impact on the Company's operations. Also, the state of technology of the Russian
telecommunications industry causes the Company to experience time delays and
added expenses. The Company's foreign operations are also subject to other risks
of doing business abroad, including fluctuations in the value of currencies
(which may affect demand for products priced in U.S. dollars and Russian rubles
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as well as local labor and supply costs), import duties, changes to import and
export regulations (including quotas), possible restrictions on the repatriation
of capital and earnings, labor or civil unrest, long payment cycles, greater
difficulty in collecting accounts receivable and the burdens and cost of
compliance with a variety of foreign laws, changes in citizenship requirements
for purposes of doing business and government expropriation of operations and/or
assets. There can be no assurance that foreign governments will not adopt
regulations or take other actions that would have a direct or indirect adverse
impact on the business or market opportunities of the Company or that the
political, cultural or economic climate outside the United States will be
favorable to the Company's operations and growth strategy. Such actions or
developments could have a material adverse effect on the Company's business,
financial condition and results of operations.
Limited Operating History
The Company has a limited operating history and is 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. There can be 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
success of the Company will be affected by expenses, operational difficulties
and other factors frequently encountered in the development of a business
enterprise in a competitive environment, many of which may be beyond the
Company's control. See Part I, Item 2, "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and Item 1, "Description of
Business."
No Assurance of Profitability
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 can be no
assurance that the Company will ever achieve significant revenues or profitable
operations. See Part I, Item 2, "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and the Financial Statements and
Notes thereto.
Mr. Oxenuk, the Company's President, Chief Executive Officer, Director
and the principal stockholder, beneficially owns approximately 59% of the
Company's outstanding common stock as of February 28, 2000. As a result, Mr.
Oxenuk possesses significant influence over the Company on matters including the
election of directors. This concentration of share ownership may: (i) delay or
prevent a change in control of the Company; (ii) impede a merger, consolidation,
takeover, or other business involving the Company; or (iii) discourage a
potential acquirer from making a tender offer or otherwise attempting to obtain
control of the Company.
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Possible Difficulties in Future Funding
In the past, the Company has financed much of its operations with
profits from its investments in the securities markets. It is unlikely that this
funding source will be sufficient to satisfy the Company's future, increasing
financing demands. Accordingly, the Company may have to seek funding from
outside sources. There can be no assurance that outside funding will be
available to the Company at the time and in the amount to satisfy the Company's
needs, or, that if such funds are available, they will be available on terms
favorable to the Company. The Company may also consider selling new securities,
either privately or publicly to raise funds. If the Company issues additional
shares of common stock, current shareholders may experience immediate and
substantial dilution in their ownership of Company shares. In the event the
Company issues securities or instruments other than common stock, it may be
required to issue such instruments with greater rights than that currently
possessed by holders of the Company's common stock.
Absence of Prior Public Market for the Common Stock
Prior to the effectiveness of this Registration Statement there has
been no public market of the Company's common stock. There is no assurance that
an active trading market will develop or be sustained.
Competition
The Internet, financial services and real estate development industries
are characterized by intense competition. The Company will compete with other
e-commerce web sites, financial services and real estate development companies
in its targeting of Russian speaking customers. Based upon its knowledge and
assessment of these industries, the Company considers the following to be its
primary competitors in each industry:
Industry Competitor
- -------- ----------
Financial Services 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)
Infoline (http://svn.edunet.ru/stocks/)
Internet Services Ozon (http://www.o3.ru/)
Mistral (http://www.mistral.ru)
Books of Russia (http://www.books.ru)
Knorus (http://www.book.ru)
Y Sitina (http://www.kvest.com
Web Hosting Rinet (http://www.rinet.ru)
CNT (http://www.cnt.ru)
Russian Express (http://www.express.ru)
Zenon N.S.P. (http://www.zenon.net)
Real Estate Development Holding Conti
Golden Keys
Centre 2000
Mian
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Some of these competitors have substantially greater financial
resources than the Company. These entities generally may be able to accept more
risk than the Company prudently can manage, including risk with respect to the
creditworthiness of purchasers or risk related to geographic or other
concentration of investment.
Risks Relating to OIS and E-commerce Business
Maintenance of Rapid Technology Change
OIS, one of the Company's subsidiaries, operates the Web Site which
engages in e-commerce offerings to Russian-speaking individuals on the Internet.
This is 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.
Dependence Upon Uninterrupted Technology Failures Operations
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 adversely 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 lasted more than an hour.
The Company is developing a disaster recovery plan to minimize these risks. In
the summer of 2000, the Company intends to purchase and install the powerful APC
Uninterrupted Power Supply system (UPS) Silcon DP300E/60, and in the fall of
2000, the company will purchase and install the Wilson 60 diesel power
generator. This will decrease server down-time in case of a power failure.
Presently, the Company's server data is stored using RAID5 technology. Backup of
the Company's server data is performed regularly using high reliability HP
SureStore DLT40 tape systems. The Company is planning to purchase a reserve
server to function as a back-up data server in case the main server
malfunctions.
Susceptibility to On-line 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.
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Additionally, the Company may be required to make significant expenditures and
expend considerable effort and time to protect against security breaches.
Risks Associated With Use of Domain Names
The Company owns the rights to various Web domain names, including
"Oxir.com", "Oxiris.com", "Oxiris.net" and "Oxiris.ru." Governmental agencies
typically regulate domain names. These regulations are subject to change. The
Company may be unable to prevent third parties from acquiring domain names that
are similar to, infringe upon or diminish the value of its trademarks and other
proprietary rights.
Dependence on Increased Use of the Internet
The Company's future success will depend greatly on increased use of
the Internet by individuals and businesses for advertising, marketing, providing
services and conducting business. Commercial use of the Internet in Russia is
currently at an early stage of development and the future of the Internet in
Russia is not clear. In addition, it is not clear how effective advertising on
the Internet is in generating business as compared to more traditional types of
advertising such as print, television, and radio. Because a significant portion
of the Company's business depends on the success of OIS, its Internet
subsidiary, the Company's business will suffer if commercial use of the Internet
fails to grow in the future.
Necessity to Establish and Maintain Brand Names
The Company believes that establishing and maintaining brand names is
essential to expanding the Company's Internet business and attracting new
customers. The Company also believes that the importance of brand name
recognition will increase in the future because of the growing number of
Internet companies that will need to differentiate themselves. Promotion and
enhancement of the Company's brand names will depend largely on its ability to
provide consistently high-quality products and services. If the Company is
unable to provide high-quality products and services, the value of its brand
name may suffer.
On-line Commerce Security Risks
A significant barrier to online commerce and communications is the
secure transmission of confidential information over public networks. The
Company relies on CyberCash encryption and authentication technology as well on
encryption and authentication technology licensed from other companies (for
auxiliary operations) to provide the security and authentication necessary to
effect secure transmission of confidential information, such as customer credit
card numbers. There can be no assurance that advances in computer capabilities,
new discoveries in the filed of cryptography, or other events or developments
will not result in a compromise or breach of the algorithms used by the Company
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to protect customer transaction data. If any such compromise of the Company's
security were to occur, it could have a material adverse effect on the Company's
reputation, business, prospects, financial condition and results of operations.
A party who is able to circumvent the Company's security measures could
misappropriate proprietary information or cause interruptions in the Company's
operations. The Company may be required to expend significant capital and other
resources to protect against such security breaches or to alleviate problems
caused by such breaches. Concerns over the security of the Internet and other
on-line transactions and the privacy of users may also inhibit the growth of the
Internet and other on--line services generally, and the Web in particular,
especially as a means of conducting commercial transactions. To the extent that
the activities of the Company or third party contractors involve the storage or
transmission of proprietary information, such as credit card numbers, security
breaches could damage the Company's reputation and expose the Company to a risk
of loss or litigation and possible liability. There can be no assurance that the
Company's security measures will prevent security breaches or that failure to
prevent such security breaches will not have a material adverse effect on the
Company's business, prospects, financial condition and results of operations.
Risks Relating to OFS and Securities Trading
Inherent Risks Associated With 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.
Possibility of Wide Fluctuations in the Value of Some Company
Assets
A portion of the Company's assets include equity securities of both
publicly traded and privately owned companies. In particular, the Company owns a
significant number of shares of common stock in publicly traded companies. The
market price and valuations of the shares of these and other companies may
fluctuate due to market conditions and other conditions over which the Company
has no control. Fluctuations in the market price and valuations of the
securities that the Company holds in other companies may result in fluctuations
of the market price of the Company's common stock and may reduce the amount of
working capital available to the Company.
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Risk of Being Deemed an Investment Company
Because some of the Company's equity investments in other entities or
businesses may constitute investment securities, it is possible that the Company
might become subject to registration under the Investment Company Act of 1940
(the "1940 Act"). Generally, a company may be deemed to be an investment company
if it owns investment securities with a value exceeding 40% of its total assets,
subject to certain exclusions. Investment companies are subject to registration
under, and compliance with, the 1940 Act unless a particular exclusion or "safe
harbor" applies. If the Company were deemed to be an investment company, it
would become subject to the requirements of the 1940 Act. As a consequence, it
would be prohibited from engaging in business or issuing its securities as it
has in the past and might be subject to civil and criminal penalties for
noncompliance. In addition, certain of the Company's contracts might be
voidable, and a court-appointed receiver could take control of the Company and
liquidate its business.
Although the Company's investment securities currently comprise less
than 40% of its assets, fluctuations in the value of these securities or of the
Company's other assets may cause this limit to be exceeded. This would require
the Company to attempt to reduce its investment securities as a percentage of
its total assets. This reduction can be attempted in a number of ways, including
the disposition of investment securities and the acquisition of non-investment
security assets. If the Company sells its investment securities, it may sell
them sooner than it otherwise would. These sales may be at depressed prices and
the Company may never realize anticipated benefits from, or may incur losses on,
these investments. Some investments may not be sold due to contractual or legal
restrictions or the inability to locate a suitable buyer. Moreover, the Company
may incur tax liabilities when it sells assets. The Company may also be unable
to purchase additional investment securities that may be important to its
operating strategy. If the Company decides to acquire non- investment security
assets, it may not be able to identify and acquire suitable assets and
businesses.
Risks of Investing in Small to Medium Capitalization Companies
Investing in the securities of small to medium capitalization companies
involves greater risk and the possibility of greater portfolio price volatility.
Historically, small market capitalization stocks and stocks of recently
organized companies have been more volatile in price than the larger market
capitalization stocks included in the S&P 500 Index. Among the reasons for the
greater price volatility of these small company and unseasoned stocks are the
less certain growth prospects of smaller firms and the lower degree of liquidity
in the markets for such stocks.
Risk of Investing in Fixed Income Securities
When interest rates decline, the market value of fixed income
securities tends to increase. Conversely, when interest rates increase, the
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market value of fixed income securities tends to decline. Volatility of a
security's market value will differ depending upon the security's duration, the
issuer and the type of instrument. Investments in fixed income securities are
subject to the risk that the issuer could default on its obligations and the
Company could sustain losses on such investments.
Risks of Derivative Transactions
The Company's transactions, if any, in options, futures, options on
futures, swap transactions, structured securities and currency forward contracts
involve certain risks, including a possible lack of correlation between changes
in the value of hedging instruments and the portfolio assets being hedged, the
potential illiquidity of the markets for derivative instruments, the risks
arising from the margin requirements and related leverage factors associated
with such transactions. The use of these management techniques to seek to
increase total return may be regarded as a speculative practice and involves the
risk of loss if the Company is incorrect in its expectation of fluctuations in
securities prices, interest rates or currency prices.
Risks Related to OIL and Real Estate Development
General Risks
Real property investments are subject to varying degrees of risk. The
effective yields available from equity investments in real estate depend in
large part on the amount of income generated and expenses incurred. The
Company's income and ability to make distributions to its shareholders is
dependent upon the ability of its properties to generate income in excess of
operating expenses, debt service and necessary capital expenditures. Income from
multifamily and retail properties may be adversely affected by the general
economic climate, local real estate conditions (such as an oversupply of, or a
reduction in demand for, apartments and retail space), the attractiveness of the
properties to tenants and shoppers, the quality and philosophy of management,
the ability of the owner to provide adequate maintenance and (with respect to
the apartments) insurance, and increased operating costs (including real estate
taxes). In addition, income from properties and real estate values also are
affected by such factors as the costs of governmental regulation, including
zoning, tenants' rights and tax laws, the potential for liability under
applicable laws, interest rate levels and the availability of financing.
Although the Company intends to sell the apartments owned by it in the second
phase of the Project and to operate the Complex itself, there can be no
assurance that it will be able to do so. In that event, the Company's income
would be adversely affected if a significant number of tenants were unable to
pay rent or if apartments or retail space could not be rented on favorable
terms. Certain significant expenditures associated with each equity investment
in a property (such as mortgage payments, if any, real estate taxes and
maintenance costs) generally are not reduced when circumstances cause a
reduction in income from the property.
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Illiquidity of Real Estate
Real estate investments are relatively illiquid and, therefore, tend to
limit the ability of the Company to vary its portfolio promptly in response to
changes in economic or other conditions.
Changes in Laws
Increases in real estate taxes and income, service or transfer taxes
cannot always be passed through to tenants in the form of higher rents, and may
adversely affect the Company's funds from operations and its ability to make
distributions to its shareholders. Similarly, changes in laws increasing the
potential liability for environmental conditions existing on properties or
increasing the restrictions on environmental discharges or other conditions, as
well as changes in laws affecting construction and safety requirements, may
result in significant unanticipated expenditures, which would adversely affect
the Company's results of operations.
Acquisition of Properties Under Construction
The Company is currently an investor in the Project, a Russian real
estate project under construction. To the extent that the Company invests in or
acquires property on which improvements are to be constructed or completed, the
Company may be subject to certain risks from the developer's inability to
control construction costs or to build in conformity with plans, specifications
and timetables. The developer's failure to perform its obligations may
necessitate legal action by the Company to rescind its investment in the
Project, to compel performance or to seek damages. Any such legal action would
result in increased costs to the Company. In any case in which improvements are
to be constructed or completed or in which a property is not yet in operation,
the Company will be subject to additional risk, including the risk of delay in
completion and in receipt of income from the use or sale of the property.
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
Financial information presented herein pertains to the Company as of
May 19, 1998 through its fiscal year ended June 30, 1999 and 1998 and for the
six month period ended December 31, 1999. The Company has elected a fiscal year
ending June 30.
Results of Operations
For the fiscal year ended June 30, 1999.
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Because the Company reinstated its operations only in November 1998,
there is no financial information for the previous fiscal year that ended June
30, 1998. For the fiscal year ended June 30, 1999, the Company had no revenue
from sales. During fiscal year ended June 30, 1999, the Company's primary
business activity was 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 through OFS. For the fiscal year 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 fiscal year ended June 30, 1999, 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
interest expenses 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.
For the three and six months ended December 31, 1999 compared to the
three and six months ended December 31, 1998.
Net income for the three month ("second quarter") and six month ("first
half") periods ended December 31, 1999 was $1,226,000 ($.06 per share) and
$1,573,660 ($.07 per share), respectively, compared to $1,154,881 ($.07) per
share) and $1,034,519 ($.10 per share) for the second quarter and first half of
1998, respectively. The Company had no revenue from sales during the second
quarter or first half of 1999 or 1998. The 6% increase in net income for the
second quarter of 1999 is attributed primarily to the 141% increase in net
realized gains on marketable securities from $375,475 in the 1998 second quarter
to $905,272 in the 1999 second quarter. This gain was partially offset by the
21% decrease in net unrealized gain on marketable securities, from $1,250,375 in
1998 to $985,513 in the 1999 period, due to management's decision to sell a
portion of the Company's marketable securities. During the second quarter of
1999, total costs and expenses increased 101% from the second quarter of 1998,
primarily attributed to the 87% increase in general and administrative expenses
due to opening offices in Las Vegas, Nevada and Moscow, Russia, and the 286%
increase in depreciation expense related to the Las Vegas and Moscow offices.
The Company's income tax obligation increased 11% from $316,298 in the second
quarter of 1998 to $350,000 for the second quarter of 1999, based on pre-tax
capital gains. The Company pays taxes in both Russia and the United States.
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The 52% increase in net income for the first half of 1999 is attributed
primarily to the 386% increase in net realized gain on marketable securities
from $375,475 in the first half of 1998 to $1,824,086 in the first half of 1999.
Also, net unrealized gain on marketable securities increased 16% to $1,451,040
in the first half of 1999 from $1,250,375 in the first half of 1998. During the
first half of 1999, total costs and expenses increased 480% compared to the 1998
period. General and administrative expenses increased 375% during the first half
of 1999, depreciation expense increased 542% and rent expense increased 235% due
to opening the Las Vegas and Moscow offices. The Company's income tax obligation
increased 15% from $316,298 in the first half of 1998 to $362,606 for the first
half of 1999.
Interest expense for the second quarter and first half of 1999
increased 128% and 516%, respectively, when compared to the second quarter and
first half of 1998. This increase reflects interest paid on the Company's margin
accounts and the mortgage on real property located in Las Vegas.
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. See Part II, Item 4, "Recent Sales of Unregistered
Securities." 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, and 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 of 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 OIL , which funds were used for investing
in the Project.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.
Total cash and cash equivalents at December 31, 1999 was $48,617
compared to $52,627 at June 30, 1999. Also at December 31, 1999, the Company had
$4,937,524 in investments in trading securities compared to $4,672,246 at June
30, 1999. The 6% increase is due primarily to market appreciation.
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<PAGE>
Net cash provided by operating activities for the second quarter and
first six months of 1999 was $1,632,015 and $2,575,583, respectively, compared
to $2,733,069 and $2,509,184 for the 1998 periods. The 40% decrease during the
second quarter of 1999 is primarily attributed to the $1,202,125 increase in
accrued liabilities in the 1998 period compared to the $6,389 decrease in 1999.
This was due to the purchase of property and equipment. The 3% increase during
the first six months of 1999 is primarily attributed to the increase in net
income and depreciation expense; and the issuance of stock for services valued
at $300,000. Offsetting the increase in net cash provided for the first half of
1999 was the $1,202,125 increase in accrued liabilities in the first half of
1998 compared to and increase of only $252,992 in first half of 1999. This was
due to the purchase of property and equipment in the first half of 1998.
Net cash used by investing activities for the second quarter and first
half of 1999 was $1,854,248 and $2,736,873, respectively, compared to $2,715,527
and $2,818,190 for the comparable 1998 periods. These results are primarily
attributed to the purchase of property and equipment.
Net cash provided by financing activities was $157,595 and $157,280 for
the second quarter and first half of 1999, respectively, compared to $0 and
$350,000 provided in the first half of 1998. This reflects the issuance of the
Company's stock for $600,000 cash during the first half of 1998 and $250,000 in
costs related to the issuance.
At December 31, 1999 the Company had total assets of $11,229,880 and
stockholders' equity of $6,367,408. In comparison, at June 30, 1999, the Company
had total assets of $8,765,153 and total stockholders' equity of $4,335,748.
Working capital was $333,163 at December 31, 1999, compared to $505,938 at June
30, 1999.
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.
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
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<PAGE>
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
Complex has been divided by the Company 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. The beauty and fitness center will be under
construction until approximately October 2000 and are expected to be fully
operational by December 2000. The approximate cost of the Complex is $960,000,
allocated as follows: Fitness Center ($475,000), Restaurant ($255,000), Beauty
Salon ($230,000) .
It is anticipated that 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 internally.
In February 2000, OIS finalized its programming and database
preparation for the launching of book, audio and video sales. The virtual
reality store is fully operational and is increasing the sales volume every
month.
The Company does not anticipate making any significant capital
expenditures for 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. Management has not entered into any 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.
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<PAGE>
Recent Accounting Pronouncements
In June 1999, 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.
Year 2000
The Year 2000 issue results from an industry-wide practice of
representing years with only two digits instead of four. Beginning in the year
2000, date code fields need to accept four digit entries to distinguish
twenty-first century dates from twentieth century dates (2000 or 1900). As a
result, computer systems and/or software used by many companies needed to be
upgraded to comply with such Year 2000 requirements. Through March 31, 2000, the
Company has not experienced any significant problems associated with the Year
2000 issue. As of March 31, 2000, the Company has not been made aware of, nor
has it experienced, date related problems with any third-party software.
Although it appears that the Year 2000 issue will not have a significant adverse
effect on the Company, the Company continues to monitor the Year 2000 compliance
of its internal systems. Undetected errors in its internal systems that may be
discovered in the future could have a material adverse effect on its business,
operating results or financial condition.
Risk Factors and Forward Looking Statements
This Registration Statement contains certain forward-looking
statements. The Company wishes to advise readers that actual results may differ
materially from such forward-looking statements. Forward-looking statements
involve substantial risks and uncertainties that could cause actual results to
differ materially from those expressed in or implied by the statements, and
which may be beyond the Company's control, including, but not limited to, the
following: the possible success of the Company's varied projects and
subsidiaries, 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, the industries in which
the Company operates, and other risks detailed in the Company's periodic report
filings with the Securities and Exchange Commission. Any statements contained in
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<PAGE>
this Registration Statement that are not statements of historical fact may be
deemed to be forward-looking statements. Without limiting the generality of the
foregoing, words such as "may," "will," "expect," "anticipate," "intend,"
"could," "estimate," or "continue," or the negative or other variations thereof
or comparable terminology are intended to identify forward- looking statements.
ITEM 3. Description of Property
As of March 31, 2000, the Company has invested $3,261,706 into the
construction of the Project in Moscow. The Company has applied approximately
$1,069,460 from this investment to develop the Complex in one of the apartment
buildings constructed in the Project. There are no limitations on the ownership
and no liens on the property.
The Complex will include a workout area, fitness bar, sauna, massage
parlor, tanning salon, beauty salon, restaurant and a liquor bar. The floor
space is approximately 7,974 square feet. It is currently undergoing the initial
construction stage and is scheduled to open by December 2000.
The Company maintains a sorting warehouse located in Moscow, Russia
consisting of 66 square meters (2260 square feet) with a daily capacity of
15,000 items. The facility is leased for a term of one year with a right for
automatic renewal.
On April 1, 1999, the Company purchased a single-family house in Las
Vegas, Nevada for the price of $362,000 for Mr. Oxenuk and his family to occupy.
The Company paid $164,514 as a down payment with the balance mortgaged with
GreenPoint Mortgage Company. As of March 31, 2000, the Company has paid $1,369
and $206,631 is remaining to be paid on the mortgage principal. The mortgage is
secured by a first lien on the single-family home and surrounding property.
The Company's principal place of business and corporate offices are
located at 3980 Howard Hughes Parkway Suite 340 Las Vegas, Nevada 89109. The
facility consists of approximately 1500 square feet of office space and is
leased for a term of five years at the rate of $4,158 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 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 $15,184 per month
and consist of 790 square meters or 8500 square feet.
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.
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<PAGE>
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 March 31, 2000 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.
<TABLE>
<CAPTION>
Name and Address Amount and Nature of Percent
of Beneficial Owner Beneficial Ownership of Class(1)
- ------------------- -------------------- -----------
<S> <C> <C>
Vassili I. Oxenuk 12,449,319 58.8%
3980 Howard Hughes Pkwy.
Suite 340
Las Vegas, NV 89109
EC Venture Capital Ltd. (2) 5,000,000 23.6%
3980 Howard Hughes Pkwy.
Suite 340
Las Vegas, NV 89109
Vladimir N. Kishenin (2) 5,000,000 23.6%
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 69.1%
a group ( 5 persons)
</TABLE>
* 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 21,190,200 shares of Common Stock outstanding on
March 31, 2000.
(2) Mr. Kishenin owns a controlling interest in EC Venture
Capital Ltd. and therefore may be deemed to be a beneficial
owner of such shares.
ITEM 5. Directors, Executive Officers, Promoters and Control
Persons
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<PAGE>
Executive Officers and Directors
The executive officers and directors of the Company are as follows:
Name Age Position
---- --- --------
Vassili I Oxenuk 36 President, CEO, Chairman
and Director
Michael Smirnov 32 Vice President, CFO and
Director
Alexander Sarkisian, Ph.D. 52 Vice President
Kirill M. Mendelson 29 Secretary, Treasurer and
Director
Inna Batrakova 25 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, officers, 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, Chief Executive Officer and Chairman
Mr. Oxenuk is a graduate of the Moscow State University Mathematics
Boarding School for Gifted Children and the Mojaysky Military Academy in Russia,
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. From 1991 to 1995, Mr. Oxenuk
established OxMoSe Company ("OxMoSe") in Leipzig, Germany, which created a joint
venture in Russia for retail sales of consumer electronics, as well as
production lines for milk and soft drink bottling. In May 1998, Mr. Oxenuk
formed OXIR-Private, a California corporation, that subsequently merged with the
Company. Mr. Oxenuk is currently pursuing his Doctoral Degree in Business
Administration at Kennedy-Western University, a non accredited institution.
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<PAGE>
Michael Smirnov, Vice President, Chief Financial Officer and Director
Mr. Smirnov graduated from the Mojaysky Military Academy in Russia in
1989 with a Masters Degree in information systems mathematical support. His
experience includes Analytical Researcher for the Russian Central Military
Intelligence from 1989 to 1995 as well as investment and trading experience in
world equity markets. He was certified as a trader with a Diploma of the First
Category in 1994 by the Ministry of Finance of the Russian Federation. 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 OFS. Since the merger of the Company with Oxir-Private, Mr. Smirnov has
served the Company as Director, Chief Financial Officer, Vice President, and the
Company's sole trader. 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 the 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. Dr. Sarkisian presently
serves as the Chairman of the Board of: Stenholm Invest ApS, Denmark, a Danish
investment company (Chairman since 1997); Imkor (Chairman since 1994); and
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. He received his BS with a minor in Business Administration from the
University of Nevada Las Vegas, NV in 1995. From June 1995 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 the Baltic Republics. He joined Oxir-Private in September
1998.
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
her honors bachelor degree in Linguistics and Practical Psychology. Ms.
Batrakova also acquired a certified diploma of the Interpreter's faculty at the
same
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<PAGE>
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-Private in February 1997 and accepted the
position of Administrative Assistant at its representative office in Moscow. In
November 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 has entered into an employment contract with its President
and Chief Executive Officer and director, Mr. Oxenuk, and with Mr. Mendelson,
its Secretary/Treasurer and Director. Mr. Oxenuk's agreement provides that the
Company will pay his monthly personal expenses, which are not to exceed $120,000
per year. Payment is made through Mr. Oxenuk's Citibank Visa and Citibank
MasterCard accounts. 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 in Las Vegas, Nevada for
the price of $362,000 for Mr. Oxenuk and his family to occupy. The Company paid
$164,514 as a down payment with the balance mortgaged with GreenPoint Mortgage
Company.From July 1, 1999 to March 31, 2000, the Company has paid $23,752 as
compensations for Mr. Oxenuk's housing costs and related expenses.
Mr. Mendelson's agreement provides that the Company will pay an annual
salary of $40,000. In addition, the Company issued to Mr. Mendelson 270,000
shares of the Company's common stock as a cost of the original merger.
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.
<TABLE>
<CAPTION>
Summary Compensation Table
Other All
Annual Other
Name and Fiscal Compen- Compen-
Principal Position Year Salary Bonus sation sation
- ------------------ ---- ------ ----- ------ ------
<S> <C> <C> <C> <C> <C>
Vassili I. Oxenuk, 1999* $64,465 $ -0- $ -0- $5,228
President, C.E.O. 2000** $91,614 $ -0- $ -0- $ 23,752
</TABLE>
- ---------------
* From July 1, 1998 through June 30, 1999 ** From July 1, 1999 through
March 31, 2000.
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<PAGE>
ITEM 7. Certain Relationships and Related Transactions
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 OFS , a British Virgin Islands corporation, and OIL , a British Virgin
Islands corporation, from Mr. Oxenuk, the Company's President, Chief Executive
Officer, Director and the principal shareholder. 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, however, the transactions were not
negotiated on an arms length basis. The Company did not receive an independent
valuation of either OFS or OIL.
Pursuant to Mr. Oxenuk's employment agreement, on April 1, 1999, the
Company purchased a single-family house in Las Vegas, Nevada for the price of
$362,000 for Mr. Oxenuk and his family to occupy. The Company paid $164,514 as a
down payment with the balance mortgaged with GreenPoint Mortgage Company. As of
March 31, 2000, for a period of nine months, the Company has paid $23,752 as
compensation for Mr. Oxenuk's housing costs and related expenses. The amount due
on the mortgage principal as of March 31, 2000 was $206,631. See Part I, Item 6,
"Executive Compensation."
On January 4, 1999, the Company issued 1,350,000 shares of common stock
to Mr. Smirnov, the Company's Vice President and Chief Financial Officer, in
exchange for 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 Mr. Mendelson, the
Company's Secretary/Treasurer and director. No value was assigned to the
transaction because the shares were treated as stock issuance costs 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 shares to Mr.
Oxenuk in exchange for $600,000. The shares were subsequently returned to the
Company. On June 29, 1999, the Company reissued the shares: 300,000 to Mr.
Oxenuk and 300,000 to Ms. Batrakova, Vice President of Communications and a
director.
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<PAGE>
In March 1999, 270,000 shares were issued to Mr. Sarkisian, Vice
President and a director of the Company, for services related to Mr. Sarkisian's
employment by the Company.
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, 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 21,190,200 shares are issued and outstanding as of March
15, 2000.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)
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)
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.
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<PAGE>
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. There
is currently no public trading market for the Company's securities and the
Company is not aware of a prior trading market. In 1972, the Company engaged in
an intrastate exempt offering in California. The shares offered pursuant to that
offering were restricted but such restrictions have expired. Accordingly, upon
the effectiveness of this Registration Statement, the Company's common stock may
be publicly traded.
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 this 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 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
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<PAGE>
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 March 31, 2000 there were 181 holders of record of the Company's
Common Stock. As of March 31, 2000, the Company has issued and outstanding
21,190,200 shares of common stock. Of this total, approximately 19,945,578
shares were deemed "restricted securities" as defined by the Exchange Act and
certificates representing such shares bear an appropriate restrictive legend.
Of the Company's total outstanding shares, upon the effectiveness of
this registration statement, approximately 1,244,622 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 remaining outstanding shares, upon the effectiveness of
their registration statement, 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 will
become eligible to be sold under Rule 144 at follows: 1,000 shares on April 29,
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
Exchange Act), is entitled to sell, within any three-month period, an amount of
shares that
-39-
<PAGE>
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
On January 4, 1999, the Company issued 1,350,000 shares of common stock
to Mr. Smirnov, the Company's Vice President and Chief Financial Officer, 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 Mr. Mendelson, the Company's
Secretary/Treasurer and director, pursuant to the terms of Mr. Mendelson's
employment agreement. See Part I, Item 6, "Executive Compensation." No value was
assigned to the transaction because the shares were treated as stock issuance
costs 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 shares to Mr.
Oxenuk, the Company's President, Chief Executive Officer, Director and its
principal shareholder, for $600,000. The shares were subsequently returned to
the Company and, on June 29, 1999, the Company reissued the shares: 300,000 to
Mr. Oxenuk and 300,000 to Ms. Batrakova, the Company's Vice President of
Communications and a director.
-40-
<PAGE>
From January 4 to April 29, 1999, the Company issued 100,600 shares of
its common stock in a private placement to five investors at the price of $5.00
per share, or an aggregate of $503,000. The private placement was conducted
pursuant to Rule 504. To the best knowledge of the Company, the investors were
either accredited investors or had a preexisting personal or business
relationship wilth Mr. Oxenuk and/or the Company. The proceeds from the
issuances were used for general corporate operating purposes and investments. In
connection with his purchase, each purchaser completed a purchaser questionnaire
making certain representations to the Company. The Company presented each
purchaser with a private placement memorandum summarizing the Company and the
risks involved in any investment.
In March 1999, 270,000 shares were issued to Mr. Sarkisian, Vice
President and a director of the Company, for services related to Mr. Sarkisian's
employment by the Company.
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
investors in a private placement for the cash purchase price of $5.00 per share,
and a total aggregate purchase price of $158,000. The private placement was
conducted pursuant to Rule 504. To the best knowledge of the Company, the
investors were accredited investors or had a preexisting personal or business
relationship with Mr. Oxenuk and/or the Company. In connection with his
purchase, each purchaser completed a purchaser questionnaire making certain
representations to the Company. The Company presented each purchaser with a
private placement memorandum summarizing the Company and the risks involved in
any investment.
None of the issuances of shares set forth above were registered with
the Commission under the Securities Act of 1933, as amended (the "Securities
Act"), because the transactions were believed to be exempt from such
registration pursuant to the exemptions provided by Section 4(2) of the
Securities Act and/or Regulation D promulgated thereunder.
-41-
<PAGE>
ITEM 5. Indemnification of Directors and Officers
As permitted by the provisions of the California General Corporation
Law (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
-42-
<PAGE>
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.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers or persons controlling the
registrant pursuant to the foregoing provisions, the registrant has been
informed that in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the Securities Act, and
is therefore unenforceable.
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 the two
subsidiaries of the Company, Oxir Investments Limited and Oxir Financial
Services Limited, are also included.
-43-
<PAGE>
OXIR INVESTMENTS, INC. AND SUBSIDIARIES
(A Development Stage Company)
CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1999
F - 1
<PAGE>
<TABLE>
<CAPTION>
C O N T E N T S
<S> <C>
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
</TABLE>
F - 2
<PAGE>
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.
/s/Jones, Jensen & Company
- --------------------------
Jones, Jensen & Company
Salt Lake City, Utah
September 29, 1999
F - 3
<PAGE>
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
=================
The accompanying notes are an integral part of these
consolidated financial statements.
F - 4
<PAGE>
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
==========
The accompanying notes are an integral part of these
consolidated financial statements.
F - 5
<PAGE>
<TABLE>
<CAPTION>
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
------------ ------------ ------------
<S> <C> <C> <C>
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
=========== =============
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
F - 6
<PAGE>
<TABLE>
<CAPTION>
OXIR INVESTMENTS, INC. AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Statements of Stockholders' Equity
Common Stock Retained
Shares Amount Earnings
---------- ----------- ------------
<S> <C> <C> <C>
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
========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
F - 7
<PAGE>
<TABLE>
<CAPTION>
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
---------- ---------- ----------
<S> <C> <C> <C>
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
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
F - 8
<PAGE>
<TABLE>
<CAPTION>
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
<S> <C> <C> <C>
Cash paid for:
Interest $78,160 $ -- $78,160
Income taxes $ -- $ -- $ --
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
F - 9
<PAGE>
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.
F - 10
<PAGE>
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
F - 11
<PAGE>
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.
F - 12
<PAGE>
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.
F - 13
<PAGE>
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.
F - 14
<PAGE>
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:
F - 15
<PAGE>
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:
<TABLE>
<CAPTION>
1999
------------------
<S> <C>
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)
==================
</TABLE>
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.
F - 16
<PAGE>
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:
<TABLE>
<CAPTION>
1999
------------------
<S> <C>
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
==================
</TABLE>
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.
F - 17
<PAGE>
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.
<TABLE>
<CAPTION>
Proforma
OXIR OXIR OXIR Adjustments
Investments Investments Financial Increase Proforma
Inc. Ltd. Services, Ltd. (Decrease) Consolidated
-------------- -------------- -------------- ----------- -------------
<S> <C> <C> <C> <C> <C>
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
============== ============== ============== =========== =============
</TABLE>
F - 18
<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.
F - 19
<PAGE>
OXIR INVESTMENTS, INC. AND SUBSIDIARIES
(A Development Stage Company)
CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999 and June 30, 1999
F - 1
<PAGE>
OXIR INVESTMENTS, INC. AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Balance Sheets
ASSETS
------
December 31, June 30,
1999 1999
----------- -----------
(Unaudited)
CURRENT ASSETS
Cash and cash equivalents $ 48,617 $ 52,627
Investment in trading securities 4,937,524 4,672,246
Prepaid expenses 3,969 3,978
----------- -----------
Total Current Assets 4,990,110 4,728,851
----------- -----------
PROPERTY AND EQUIPMENT 5,928,621 4,013,222
----------- -----------
OTHER ASSETS
Investment 300,000 --
Related party receivable 8,080 8,080
Deposits 3,069 15,000
----------- -----------
Total Other Assets 311,149 23,080
----------- -----------
TOTAL ASSETS $11,229,880 $ 8,765,153
=========== ===========
The accompanying notes are an integral part of these
consolidated financial statements.
F - 2
<PAGE>
<TABLE>
<CAPTION>
OXIR INVESTMENTS, INC. AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Balance Sheets (Continued)
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
December 31, June 30,
1999 1999
----------- -----------
(Unaudited)
CURRENT LIABILITIES
<S> <C> <C>
Accounts payable $ 48,715 $ 39,121
Margin account 1,814,327 1,981,464
Client funds payable 1,493,461 1,252,131
Provision for income taxes 515,250 398,760
Deferred tax liability 783,644 550,134
Current portion - mortgage payable 1,550 1,303
----------- -----------
Total Current Liabilities 4,656,947 4,222,913
----------- -----------
LONG-TERM LIABILITY
Mortgage payable 205,525 206,492
----------- -----------
Total Long-Term Liability 205,525 206,492
----------- -----------
Total Liabilities 4,862,472 4,429,405
----------- -----------
COMMITMENTS
STOCKHOLDERS' EQUITY
Common stock: 50,000,000 shares authorized of no
par value, 21,182,200 and 21,090,600 shares issued
and outstanding, respectively 2,956,769 2,498,769
Retained earnings 3,410,639 1,836,979
----------- -----------
Total Stockholders' Equity 6,367,408 4,335,748
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $11,229,880 $ 8,765,153
=========== ===========
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
F - 3
<PAGE>
<TABLE>
<CAPTION>
OXIR INVESTMENTS, INC. AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Income Statements
(Unaudited)
From
Inception on
For the For the May 19,
Six Months Ended Three Months Ended 1998 Through
December 31, December 31, December 31,
1999 1998 1999 1998 1999
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
SALES $ -- $ -- $ -- $ -- $ --
COST OF GOODS SOLD -- -- -- -- --
------------ ------------ ------------ ------------ ------------
GROSS MARGIN -- -- -- -- --
------------ ------------ ------------ ------------ ------------
COSTS AND EXPENSES
Depreciation expense 89,069 13,869 51,716 13,392 129,244
Rent expense 28,067 8,383 8,254 8,383 62,215
General and administrative 1,133,964 238,531 222,316 118,646 1,608,547
------------ ------------ ------------ ------------ ------------
Total Costs and Expenses 1,251,100 260,783 282.286 140,421 1,800,006
------------ ------------ ------------ ------------ ------------
Net Loss From Operations (1,251,100) (260,783) (282,286) (140,421) (1,800,006)
------------ ------------ ------------ ------------ ------------
OTHER INCOME (EXPENSE)
Interest expense (87,760) (14,250) (32,499) (14,250) (172,660)
Net realized gain on sale of
marketable securities 1,824,086 375,475 905,272 375,475 3,518,173
Net unrealized gain on
marketable securities 1,451,040 1,250,375 985,513 1,250,375 3,176,504
Dividends -- -- -- -- 128
------------ ------------ ------------ ------------ ------------
Total Other Income (Expense) 3,187,366 1,611,600 1,858,286 1,611,600 6,522,145
------------ ------------ ------------ ------------ ------------
INCOME BEFORE TAXES 1,936,266 1,350,817 1,576,000 1,471,179 4,722,139
------------ ------------ ------------ ------------ ------------
INCOME TAX 362,606 316,298 350,000 316,298 1,311,500
------------ ------------ ------------ ------------ ------------
NET INCOME $ 1,573,660 $ 1,034,519 $ 1,226,000 $ 1,154,881 $ 3,410,639
============ ============ ============ ============ ============
BASIC INCOME PER SHARE $ 0.07 $ 0.10 $ 0.06 $ 0.07
============ ============ ============ ============
WEIGHTED AVERAGE NUMBER
OF SHARES OUTSTANDING 21,128,074 10,200,490 21,170,000 15,720,000
============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
F - 4
<PAGE>
<TABLE>
<CAPTION>
OXIR INVESTMENTS, INC. AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Statements of Stockholders' Equity
Common Stock Retained
Shares Amount Earnings
---------- ----------- -----------
<S> <C> <C> <C>
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
Common stock issued for services
at $5.00 per share (unaudited) 60,000 300,000 --
Common stock issued for cash at
$5.00 per share (unaudited) 31,600 158,000 --
Net income for the six months ended
December 31, 1999 (unaudited) -- -- 1,573,660
---------- ----------- -----------
Balance, December 31, 1999 (unaudited) 21,182,200 $ 2,956,769 $ 3,410,639
========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
F - 5
<PAGE>
<TABLE>
OXIR INVESTMENTS, INC. AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Statements of Cash Flows
(Unaudited)
<CAPTION>
Inception on
For the For the May 19,
Six Months Ended Three Months Ended 1998 Through
December 31, December 31, December 31,
1999 1998 1999 1998 1999
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING
ACTIVITIES
Net income $ 1,573,660 $ 1,034,519 $ 1,226,000 $ 1,154,881 $ 3,410,639
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation expense 89,069 13,869 51,716 13,392 129,244
Stock issued for services 300,000 -- -- -- 300,000
Changes in assets and liabilities:
(Increase) decrease in prepaid
expenses 9 -- -- -- (3,969)
(Increase) in related party receivables -- -- -- -- (8,080)
(Increase) decrease in deposits 11,931 (81,667) 11,931 33,333 (3,069)
Increase (decrease) in accounts
payable (2,078) 24,040 11,363 13,040 30,302
Increase (decrease) in accrued
liabilities 252,992 1,202,125 (6,389) 1,202,125 259,732
Increase in provision for income taxes 350,000 316,298 337,394 316,298 1,298,894
------------ ------------ ------------ ------------ ------------
Net Cash Provided by Operating
Activities 2,575,583 2,509,184 1,632,015 2,733,069 5,413,693
------------ ------------ ------------ ------------ ------------
CASH FLOWS FROM INVESTING
ACTIVITIES
Investment in bank (300,000) -- -- -- (300,000)
(Increase) decrease in trading securities (265,278) (2,325,850) (1,912,121) (2,325,850) (2,243,040)
Increase (decrease) in margin account (167,137) 981,112 263,918 981,112 1,106,188
Purchase of property and equipment (2,004,458) (1,473,452) (206,045) (1,370,789) (2,848,502)
------------ ------------ ------------ ------------ ------------
Net Cash Used by Investing
Activities (2,736,873) (2,818,190) (1,854,248) (2,715,527) (4,285,354)
------------ ------------ ------------ ------------ ------------
CASH FLOWS FROM FINANCING
ACTIVITIES
Proceeds from notes payable -- -- -- -- 208,000
Payments on notes payable (720) -- (405) -- (925)
Stock issuance costs -- (250,000) -- -- (250,000)
Common stock issued for cash 158,000 600,000 158,000 -- 1,261,000
Advances to related parties -- -- -- -- (2,337,867)
Cash from subsidiaries -- -- -- -- 40,070
------------ ------------ ------------ ------------ ------------
Net Cash Provided (Used) by
Financing Activities $ 157,280 $ 350,000 $ 157,595 $ -- $(1,079,722)
------------ ------------ ------------ ------------ ------------
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
F - 6
<PAGE>
<TABLE>
<CAPTION>
From
Inception on
For the For the May 19,
Six Months Ended Three Months Ended 1998 Through
December 31, December 31, December 31,
1999 1998 1999 1998 1999
------------- -------------- -------------- -------------- ----------------
<S> <C> <C> <C> <C> <C>
NET (DECREASE) INCREASE IN CASH
AND CASH EQUIVALENTS $ (4,010) $ 40,994 $ (64,638) $ 17,542 $ 48,617
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 52,627 - 113,255 23,452 -
-------------- -------------- -------------- -------------- ----------------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ 48,617 $ 40,994 $ 48,617 $ 40,994 $ 48,617
============== ============== ============== ============== ===============
SUPPLEMENTAL CASH FLOW
INFORMATION
Cash paid for:
Interest $ 76,098 $ 14,250 $ 32,837 $ 14,250 $ 154,258
Income taxes $ - $ - $ - $ - $ -
Schedule of Non-Cash Activities:
Common stock issued for services $ 300,000 $ - $ - $ - $ 300,000
Common stock issued for trading
securities $ - $ 939,764 $ - $ - $ 939,764
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
F - 7
<PAGE>
OXIR INVESTMENTS, INC. AND SUBSIDIARIES
(A Development Stage Company)
Notes to the Consolidated Financial Statements
December 31, 1999
NOTE 1 - CONDENSED FINANCIAL STATEMENTS
The accompanying consolidated financial statements have been
prepared by the Company without audit. In the opinion of
management, all adjustments (which include only normal recurring
adjustments) necessary to present fairly the financial position,
results of operations and cash flows at December 31, 1999 and 1998
and for all periods presented have been made.
Certain information and footnote disclosures normally included in
consolidated financial statements prepared in accordance with
generally accepted accounting principles have been condensed or
omitted. It is suggested that these condensed consolidated
financial statements be read in conjunction with the consolidated
financial statements and notes thereto included in the Company's
June 30, 1999 audited consolidated financial statements. The
results of operations for periods ended December 31, 1999 and 1998
are not necessarily indicative of the operating results for the
full years.
F - 8
<PAGE>
OXIR INVESTMENT LIMITED
FINANCIAL STATEMENTS
June 30, 1999
F - 1
<PAGE>
<TABLE>
<CAPTION>
C O N T E N T S
<S> <C>
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
</TABLE>
F - 2
<PAGE>
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.
/s/Jones, Jensen & Company
- --------------------------
Jones, Jensen & Company
Salt Lake City, Utah
September 29, 1999
F - 3
<PAGE>
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
==========
The accompanying notes are an integral part of these
financial statements.
F - 4
<PAGE>
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
===========
The accompanying notes are an integral part of these
financial statements.
F - 5
<PAGE>
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
=========
The accompanying notes are an integral part of these
financial statements.
F - 6
<PAGE>
<TABLE>
<CAPTION>
OXIR INVESTMENT LIMITED
Statement of Stockholders' Equity
Additional
Common Stock Paid-In Retained
Shares Amount Capital Earnings
--------- --------- --------- ------------
<S> <C> <C> <C> <C>
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
========= --------- --------- ------------
</TABLE>
The accompanying notes are an integral part of these
financial statements.
F - 7
<PAGE>
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 $ --
The accompanying notes are an integral part of these
financial statements.
F - 8
<PAGE>
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.
F - 9
<PAGE>
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.
F - 10
<PAGE>
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.
F - 11
<PAGE>
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.
F - 12
<PAGE>
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.
F - 13
<PAGE>
OXIR FINANCIAL SERVICES LIMITED
FINANCIAL STATEMENTS
June 30, 1999
F - 1
<PAGE>
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
F - 2
<PAGE>
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.
/s/Jones, Jensen & Company
- --------------------------
Jones, Jensen & Company
Salt Lake City, Utah
September 29, 1999
F - 3
<PAGE>
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
=================
The accompanying notes are an integral part of these
financial statements.
F - 4
<PAGE>
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
=================
The accompanying notes are an integral part of these
financial statements.
F - 5
<PAGE>
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
=================
The accompanying notes are an integral part of these
financial statements.
F - 6
<PAGE>
<TABLE>
OXIR FINANCIAL SERVICES LIMITED
Statement of Stockholders' Equity
<CAPTION>
Additional
Common Stock Paid-In Retained
Shares Amount Capital Earnings
----- ------- ------- -------------
<S> <C> <C> <C> <C>
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
===== ======= ======= ===========
</TABLE>
The accompanying notes are an integral part of these
financial statements.
F - 7
<PAGE>
<TABLE>
OXIR FINANCIAL SERVICES LIMITED
Statement of Cash Flows
<CAPTION>
For the
Year Ended
June 30,
1999
-----------------
<S> <C>
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 $ -
</TABLE>
The accompanying notes are an integral part of these
financial statements.
F - 8
<PAGE>
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.
F - 9
<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.
F - 10
<PAGE>
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.
F - 11
<PAGE>
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
<TABLE>
<CAPTION>
Property and equipment at June 30, 1999 consisted of the
following:
<S> <C>
Construction in progress $ 1,869,093
Total 1,869,093
Less accumulated depreciation (34,613 )
Property and Equipment - Net $ 1,834,480
</TABLE>
Depreciation expense for the year ended June 30, 1999 was $27,695.
F - 12
<PAGE>
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.
F - 13
<PAGE>
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 with Kirill Mendelson (Revised)
10.3 Employment Agreement with Vassili Oxenuk
10.4 Purchase and Sale Agreement with B.S.G. Press Company
Limited
10.5 Contract on Provision of Express Port Services with
EMS Garantpost
10.6 Purchase and Sale Agreement with Home Collection
Company Limited
10.7 Purchase and Sale Contract with ZAO Izdatelskii dom
Priboy
10.8 Contract with ZAO Izdatelstvo Exmo-Press
10.9 Sale and Purchase Agreement with Jurist-Gardarika
10.10 Purchase and Sale Agreement with Midix
10.11 Agreement with Moscow Post Office
10.12 Purchase and Sale Agreement with Quadro Trade Company
Limited
10.13 Purchase and Sale Agreement with Savva Group
Entertainment Video Company Limited
10.14 Sale and Purchase Agreement with Terra Knizhniv Club
10.15 Contract on Delivery of Printed Production with Top
Kniga
10.16 Agreement on Provision of Express Delivery Transport
and Expedition Services with United Parcel Services
10.17 Contract with Varus Video
27. Financial Data Schedule
- ----------------
* Filed Previously
2. Description of Exhibits
See Item I above.
S - 1
<PAGE>
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: May 12, 2000 By: /s/ Vassili I. Oxenuk
---------------------
Vassili I. Oxenuk
President and Chief
Executive Officer
S - 2
EMPLOYMENT AGREEMENT
Employment Agreement, between OXIR Investments, Inc., (the "Company") and Kirill
Mendelson (the "Employee").
1. For good consideration the Company employs the Employee on the following
terms and conditions.
2. Term of Employment: Subject to the provisions for termination set forth below
the employment shall begin on September 1, 1998.
3. Salary: The Company shall pay the Employee a salary of $ 40,000 dollars per
year and other considerations, for the services of the Employee. The salary is
due on the first of every month and payable through the company's payroll.
4. As a signing bonus Mr. Mendelson is to receive 2% (two percent) of the entire
companies stock. As of September 1, 1998 this number is equal to 270,000 (two
hundred seventy thousand) shares and is calculated based on 13,500,000.00
outstanding shares.
5. Duties and Position: The Company hires the Employee in the capacity of
Secretary and Treasurer. The Employee's duties may be reasonably modified at the
Company's direction from time to time.
6. Confidentiality of Proprietary Information: Employee agrees, during or after
the term of this employment, not to reveal confidential information, or trade
secrets, to any person, firm, corporation, or entity. Should Employee reveal or
threaten to reveal this information the Company shall be entitled to an
injunction restraining the Employee from disclosing same, or from rendering any
services to any entity to whom said information has been or is threatened to be
disclosed. The right to secure an injunction is not exclusive, and the Company
may pursue any other remedies it has against the Employee for a breach or
threatened breach of this condition, including the recovery of damages from the
Employee.
7. Reimbursement of Expenses: The Employee may incur reasonable expenses for
furthering the Company's business, including expenses for entertainment, travel
and similar items. The Company shall reimburse Employee for all business
expenses after the Employee presents an itemized account of expenditures,
pursuant to Company policy.
8. Vacation: The Employee shall be entitled to a yearly vacation of forty days
at full pay.
<PAGE>
9. Automobile: The Employee shall be provided with the Company car that he is
allowed to use after "regular business hours". The company takes an obligation
of paying for insurance coverage, repair and maintenance for this car.
10. Disability: If Employee cannot perform the duties because of illness or
incapacity for a period of more than 12 weeks, the compensation otherwise due
during said illness or incapacity will be reduced by 50 percent. The Employee's
full compensation will be reinstated upon return to work. However, if the
Employee is absent from work for any reason for a continuous period of over 12
months, the Company may terminate the Employee's employment, and the Company's
obligations under this agreement will cease on that date.
11. Termination of Agreement: The Company may terminate this agreement at any
time upon 14 days written notice to the Employee. If the Company requests, the
Employee will continue to perform his/her duties and be paid his/her regular
salary up to the date of termination. In addition, the Company will pay the
Employee on the date of termination a severance allowance of $20,000 less taxes
and social security required to be withheld. Without cause, the Employee may
terminate employment upon 14 days written notice to the Company. Employee may be
required to perform his/her duties. Employee will be paid the regular salary to
date of termination but shall not receive a severance allowance. Notwithstanding
anything to the contrary contained in this agreement, the Company may terminate
the Employee's employment upon 14 days notice to the Employee should any of the
following events occur:
a) The sale of substantially all of the Company's assets to a single
purchaser or group of associated purchasers; or
b) The sale, exchange, or other disposition, in one transaction of the
majority of the Company's outstanding corporate shares, or
c) The Company's decision to terminate its business and liquidate its
assets;
d) Bankruptcy or Chapter 11 Reorganization.
12. Death Benefit: Should Employee die during the term of employment the Company
shall pay to Employee's estate any compensation due through the end of the month
in which death occurred plus severance in the amount of $60,000 dollars,
13. Assistance in Litigation: Employee shall upon reasonable notice, furnish
such information and proper assistance to the Company as, it may reasonably
require in connection with any litigation in which it is, or may become, a party
either during or after employment.
<PAGE>
14. Effect of Prior Agreements: This agreement supersedes any prior agreement
between the Company or any predecessor of the Company and the Employee, except
that this agreement shall not affect or operate to reduce any benefit or
compensation inuring to the Employee of a kind elsewhere provided and not
expressly provided in this agreement.
15. Settlement by Arbitration: Any claim or controversy that arises out of or
relates to this agreement or the breach of it, shall be settled by arbitration
in accordance with the rules of the American Arbitration Association. Judgment
upon the award rendered may be entered in any court with jurisdiction.
16. Limited Effect of Waiver by Company. Should Company waive breach of any
provision of this agreement by the Employee, that waiver will not operate or be
construed as a waiver of further breach by the Employee.
17. Severability: If for any reason, any provision of this agreement is held
invalid. all other provisions of this agreement shall remain in effect. If this
agreement is held invalid or cannot be enforced, then to the full extent
permitted by law any prior agreement between the Company (or any predecessor
thereof) and the Employee shall be deemed reinstated as if this agreement had
not been executed.
18. Assumption of Agreement by Company's Successors and Assignees: The Company's
rights and obligations under this agreement will inure to the benefit and be
binding upon the Company's successors and assignees.
19. Oral Modifications Not Binding: This instrument is the entire agreement of
the Company and the Employee. Oral changes shall have no effect it may be
altered only by a written agreement signed by the party against whom enforcement
of any waiver, change, modification, extension or discharge is sought.
Signed this First day of September 1998.
SIGNATURE SIGNATURE
/s/Vassili Oxenuk President /s/Kirill Mendelson
- --------------------------- -------------------
Vassili Oxenuk Kirill Mendelson
OXIR INVESTMENTS, INC.
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into
this 29th day of June, 1998, by and between Oxir Investments, Inc., a California
corporation doing business in the State of Nevada and having its principal place
of business at 3980 Howard Hughes Pkwy. #340, Las Vegas, Nevada 89109
(hereinafter the "Company"), and Vassili Oxenuk, an individual (hereinafter
"Employee").
1. Employment. In consideration of the mutual covenants and conditions
herein contained, the Company agrees to employ Employee and Employee agrees to
be so employed in the capacity of President and Chief Executive Officer and to
faithfully perform the duties assigned to him to the best of his ability, devote
his full and undivided time to the transaction of the Company's business and
abide by the terms and conditions set forth herein.
2. Term of Employment. Employment under this Agreement shall commence
on the date hereof and shall continue for a period of five (5) years
unless sooner terminated as provided herein.
3. Scope of Employment. Employee shall at all times discharge his
duties to the furtherance of the business of the Company and to
perform faithfully to the best of his ability all assignments of
work given to him by the Company. Employee's duties shall consist of
the following:
(a) Hold the executive offices of President and Chief Executive Officer
of the Company and assume all responsibilities normally associated with
such offices and as set forth in the Company's by-laws.
(b) To act on behalf of the Company with its ordinary business and
related transactions and to have the power and authority to bind the
Company in all proper business transactions involving the Company.
4. Compensation. All compensation below shall be in addition to any and
all applicable sales commissions and bonuses in accordance with the standard
payroll policies and practices of the Company and as otherwise set forth herein
or as hereinafter established by the Company:
(a) Initial Salary. Commencing the date hereof and through the term of
employment set forth in paragraph 2 above, the Company agrees to pay
Employee as compensation for his services the base salary of $120,000
per annum, payable in equal semi-monthly installments. The Company
agrees to consider the salary increase upon accumulation of greater
assets.
(b) Incentive Bonus Plan. As further compensation, the Company agrees
to compensate the Employee yearly in such amounts and under such terms
as set forth below:
<TABLE>
<CAPTION>
- -------------------------------- ----------------------------------------------------------------------------
<S> <C> <C>
20 % of book value With book value less than 10 million dollars
- -------------------------------- ----------------------------------------------------------------------------
15 % of book value With book value more than 10 million dollars, less than 50 million dollars
- -------------------------------- ----------------------------------------------------------------------------
10 % of book value With book value more than 50 million dollars, less than 200 million dollars
- -------------------------------- ----------------------------------------------------------------------------
5 % of book value With book value more than 200 million dollars
- -------------------------------- ----------------------------------------------------------------------------
</TABLE>
<PAGE>
The payment will be performed on a quarterly basis in the form of the
Company stock, based on the stock closing price on the last day of the
Quarter. The Employee has the option of taking the dollar equivalent of
the compensation.
(c) Severance. In the event the Company is acquired by another person
or entity, merged or liquidated whereby the current management and/or
shareholders of the Company are no longer in control, the Company will
negotiate its compensation.
(d) Other Incentive Programs. Employee shall be eligible to participate
in any incentive performance program instituted by the Company to the
full extent permitted to all other employees of the Company
5. Other Benefits.
(a) General. In addition to the salary and bonuses provided in
paragraph 4 above, Employee shall be entitled to receive such other
benefits as are generally available to other employees of the Company,
including but not limited to a major medical hospitalization policy and
a disability.
(b) Expense Reimbursement. Employee may incur expenses while performing
duties for the Company under the terms of this Agreement, including
expenses for travel, entertainment and similar items. The Company
agrees to reimburse Employee for all reasonable business expenses
incurred by Employee in connection with the business of the Company,
upon submission by Employee of an expense report with such
substantiating vouchers as the Company may require.
(c) Vacation. Employee shall be entitled to an annual vacation of six
(6) weeks, at full pay and pursuant to the Company's employee policies
regarding vacations during the term of this Agreement. Should Employee
not use all of his vacation time in any one calendar year, the unused
portion may not be carried forward into subsequent years.
(d) Illness or Incapacity. Employee is entitled to absence because of
illness or incapacity of no more than a total of four (4) weeks each
year. . For purposes of this Agreement, "illness" is defined as absence
from the work place. In case this absence is extended over the two day
period, the doctors' care and attention, as well as confirmation is
required. If Employee is unable to perform his duties because of
illness or incapacity for more that a total of four (4) weeks in any
single year, the compensation otherwise due Employee under this
Agreement shall be reduced by fifty percent (50%) as of the start of
the fifth week (on a cumulative basis) of such absence. Employee's full
compensation will be reinstated when he returns to work and is able to
discharge his duties. Notwithstanding anything to the contrary, the
Company may terminate this Agreement at any time after the Employee is
absent from his employment, for whatever cause, for a continuous period
of more than three (3) months, and previous obligations of the Company
shall thereupon terminate.
(e) Life Insurance. Upon the execution of this Agreement, the Company
agrees to purchase for Employee a term life insurance policy payable to
the Employee or his designee as beneficiary in the amount of
$1,000,000. In the event this Agreement is terminated or Employee
leaves the employment of the Company for any reason, Employee will have
the option of transferring ownership of the life insurance policy to a
person or entity of Employee's choice and to a beneficiary of his
choice. Thereafter, Employee will be responsible for all future
premiums due on the life insurance policy.
<PAGE>
6. Performance.
(a) Confidential Information. Employee acknowledges that, in the course
of his employment hereunder, he will become acquainted with
confidential and proprietary information belonging to the Company. This
information relates to the management, products and customers of the
Company and includes all information disclosed to Employee or known,
learned, created or observed as a consequence of his employment not
generally known in the relevant trade about the Company's business
activities, products, processes and services, including trade secrets,
research and development programs, business plans, customer lists,
potential customers lists, marketing and sales. Employee agrees that at
any time during or after his employment he will not, without the prior
written consent of the Company, directly or indirectly, disclose,
furnish, publish, make accessible to others or make any use of such
confidential information except as may be required in the course of his
employment hereunder.
(b) Protection of Company Property. All records, files, manuals, lists
of customers, blanks, forms, materials, supplies, computer programs and
other materials furnished to the Employee by the Company, used by him
on its behalf, or generated or obtained by him during the course of his
employment shall be and remain the property of the Company. Employee
shall be deemed the bailee thereof for the use and benefit of the
Company and shall safely keep and preserve such property, except as
consumed in the normal business operations of the Company. Employee
acknowledges that this property is confidential and is not readily
accessible to the Company's competitors. Upon termination of employment
hereunder, the Employee shall immediately deliver to the Company or its
authorized representative all such property, including all copies,
remaining in the Employee's possession or control.
(c) Disclosure of Information. Employee agrees to promptly disclose to
the Company all discoveries, marketing or research developments,
techniques, know-how, and data, whether patentable or capable of being
registered under similar statutes, made or conceived or reduced to
practice or learned by Employee, either alone or jointly with others,
during the period of his employment resulting from tasks assigned to
him by the Company, resulting in any way from his employment by the
Company, related in any way to the business of the Company, or
resulting from the use of premises owned, leased or contracted for by
the Company.
(d) Inventions. All inventions by Employee or to which he has an
interest made during the term of this Agreement shall be the sole
property of the Company and the Company shall be the sole owner of all
patents, copyrights and other rights in connection therewith. Employee
shall assign to the Company or to persons designated by the Company,
any rights that Employee may have or may acquire in such inventions.
Employee shall assist the Company in every proper manner, at the
Company's expense, to obtain and from time to time enforce all patents,
copyrights and other rights and protections relating to said
inventions, and shall execute all necessary documents for use in
applying for and obtaining such patents, copyrights, and other rights
and protections.
<PAGE>
7. Employee Covenants. Employee hereby covenants and agrees as follows:
(a) During the term of this Agreement Employee agrees that he will not
own a material interest in, operate, join, control, participate in or
be connected with as an officer, employee, agent, independent
contractor, partner, controlling shareholder or principal of any
corporation, partnership, proprietorship, firm, association, person or
other entity producing, designing, providing, soliciting orders for
selling, distributing or marketing products, goods, equipment and/or
services which directly competes with the business of the Company.
(b) For one (1) year following the termination of Employee's
employment, if such termination is at the election of Employee or if
Employee is terminated by the Company with cause (as defined in
paragraph 8(b) below), Employee agrees not to undertake any employment
or activity, or own, operate, manage, control or participate in any
business entity or activity located within the United States, either
directly or indirectly, which is directly or indirectly competitive
with the Company's business or any of its affiliates wherein the loyal
and complete fulfillment of the duties of the competitive employment or
activity would call upon Employee to reveal, to make judgments on or
otherwise to use any confidential business information or trade secrets
of the Company's business to which Employee had access by reason of the
Company's business.
(c) During the term of this Agreement and for one (1) year following
termination of Employee's employment, if such termination is at the
election of Employee or if Employee is terminated by the Company with
cause (as defined in paragraph 8(b) below), Employee agrees not to
divulge, furnish, publish or use for his personal benefit or for the
direct or indirect benefit of any other person or business entity,
other that the Company or any of its subsidiaries or affiliates, any
confidential or proprietary information of the Company or any of its
subsidiaries or affiliates, including, without limitation, any business
methods, systems, customers, suppliers, procedures, techniques,
research, knowledge or processes used or developed by the Company or
any such subsidiary or affiliates.
(d) During the period that Employee is employed by the Company and for
one (1) year following his termination as an employee of the Company,
if such termination is at the election of Employee or if Employee is
terminated by the Company with cause (as defined in paragraph 8(b)
below, Employee agrees that he will not directly, either for himself or
for any other person, firm, corporation or entity whose products or
primary business activities are in direct competition with the Company,
divert or take away or attempt to divert or take away, call or solicit
or attempt to call or solicit any of the Company's customers or
patrons, including but not limited to those upon whom he called on or
who he solicited or to whom he catered or with whom he became
acquainted while engage with the Company in its business.
(e) During the term of Employee's employment with the Company, Employee
agrees that he will not undertake planning for or organization of, any
business activity competitive with the Company's business or combine or
conspire with other employees or representatives of the Company's
business for the purpose of organizing any such competitive business
activity whereby that activity has a financial remuneration impact for
Employee.
(f) During the period that Employee is employed by the Company and for
one (1) year following his termination as an employee of the Company,
Employee agrees that he will not, directly or indirectly or by action
in concert with others, induce or influence, or seek to induce or
influence, any person who is engaged as an employee, agent, independent
contractor or otherwise by the Company, to terminate their employment
or engagement with the Company.
<PAGE>
(g) The covenants of this paragraph 7 shall be construed as separate
covenants covering their subject matter in each of the separate
counties and states in which the Company may operate or transact
business within the United States or in any foreign country, and, to
the extent that any covenant shall be judicially unenforceable in any
one or more of said counties, states or foreign countries, said
covenant shall not be affected with respect to each other county, state
or foreign country, and each covenant with respect to each county,
state and foreign country shall be construed as sovereign and
independent.
8. Termination of Employment.
(a) Termination. The term of Employee's employment shall terminate upon
the occurrence of any of the following: (i) Death of Employee; (ii) in
the event any illness or accident renders Employee totally disabled,
Company's obligations under this Agreement shall terminate three (3)
months after the determination of total disability; (iii) termination
of Employee's employment by the Company's Board of Directors for cause
as defined in subparagraph (b) below; (iv) a merger, consolidation, or
acquisition involving the Company in which the Company is not, in
effect or in fact, the surviving entity, or the transfer of all or
substantially all of the assets of the Company, or the voluntary or
involuntary dissolution of the Company; (v) upon the date specified by
Employee in a written notice to the Company of Employee's resignation
provided that Employee shall specify a date not less than thirty (30)
days from the date Employee submits to the Company the letter of
resignation; (vi) thirty (30) days after the Company gives written
notice of termination of Employee without cause; or (vii) upon the
expiration of this Agreement unless otherwise extended in writing by
the parties.
(b) Definition of Cause. As used herein, the term "cause" shall mean
(i) Employee's willful breach or neglect of the duties and obligations
required of him either expressly or implied by the terms of this
Agreement; (ii) in the event Employee is convicted of or enters a plea
of guilty or nolo contendere to an act of dishonesty, an act involving
public ridicule or moral turpitude, or an act constituting a felony; or
(iii) any other conduct on the part of Employee which would make his
retention by the Company prejudicial to the Company's best interests in
the judgment of a majority of the Board of Directors.
(c) Termination - Nonexclusive Remedy. Termination of Employee's
employment by the Company shall be without prejudice to any other
remedy to which the Company may be entitled either at law, in equity or
under this Agreement.
<PAGE>
(d) Compensation Upon Termination. If the Company should terminate
Employee without cause during the term of this Agreement, the Company
shall pay to Employee an amount equal to his total salary otherwise due
under the balance of the five (5) year term of this Agreement.
9. Miscellaneous.
(a) Non-Waiver. Failure on the part of either party to complain of any
action or non-action, breach or default on the part of the other party,
regardless of how long the same may continue, shall never be deemed to
be a waiver of any rights or remedies hereunder, at law or in equity.
It is further agreed to by the parties hereto that a waiver at any time
of any provision hereof shall not be construed as a waiver at any
subsequent time of the same or any other provision.
(b) Notices. Any notice required or permitted hereunder shall be given
in writing and shall be deemed effective upon personal delivery or five
(5) days after deposit in the United States Mail, by registered or
certified mail, postage prepaid, duly addressed to the other party.
(c) Parties in Interest. This Agreement shall inure to the benefit of
and be binding upon the parties hereto and their respective successors
and assigns. Nothing in this Agreement is intended to confer expressly
or by implication upon any other person, any rights or remedies under
or by reason of this Agreement.
(d) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed as an original and
together, shall constitute one document.
(e) Severability. The parties hereto agree and affirm that none of the
provisions herein is dependent upon the validity of the provision, and
if any part of this Agreement is deemed to be unenforceable, the
remainder of the Agreement shall remain in full force and effect.
(f) Entire Agreement. This Agreement constitutes the entire agreement
between the parties pertaining to the subject matter hereof and fully
supersedes any and all prior agreements between the parties hereto
respecting Employee's employment.
(g) Headings. Headings used herein are provided for the convenience of
reference only and do not constitute a part of this Agreement.
(h) Governing Law. This Agreement shall be governed by the laws of the
State of Nevada. Any action to enforce the provisions of this Agreement
shall be brought in a court of competent jurisdiction within the State
of Nevada and in no other place.
(i) Assignability. The rights and duties of Employee under this
Agreement shall not be subject to alienation, assignment or transfer,
whether voluntary or involuntary. The Company, however, may assign this
Agreement to any entity that may succeed to the business and assets of
the Company, and any such successor corporation may similarly assign
this Agreement.
<PAGE>
(j) Costs and Expenses. In the event of any controversy, claim or
dispute between the parties hereto arising out of or relating to this
Agreement, the prevailing party shall be entitled to recover from the
other party its reasonable expenses including payment of a reasonable
attorneys' fee.
(k) Amendment. This Agreement shall not be amended except by an
instrument in writing and signed on behalf of each of the parties
hereto. No amendment shall be made which substantially and adversely
changes the terms hereof.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement in a manner legally binding upon them as of the date first written
above.
"Company" "Employee"
Oxir Investments, Inc.
Kirill Mendelson Vassili Oxenuk
Director
Michael Smirnov
Director
Inna Batrakova
Director
May _____, 2000
<PAGE>
United States Securities and Exchange Commission
450 5th Street, NW
Washington, DC 20549
Attn: William C-L Friar
Senior Financial Analyst
Re: Oxir Investments, Inc.
Amendment No. 2 to Form 10-SB
File No. 0-26377
Ladies and Gentlemen:
We represent Oxir Investments, Inc. (the "Company"). The enclosed
Amendment No. 2 to Form 10-SB, which has been filed electronically in accordance
with Regulation S-T, has been revised in response to the January 7, 2000
correspondence from your staff to Vassili Oxenuk concerning the Company's
Amendment No. 1 to Form 10-SB filed with the Commission on November 9, 1999 and
to update the information described therein.
Numbers utilized below correspond to those set forth in the comment
letter and unless otherwise defined herein, capitalized terms and other terms
used repeatedly throughout the Amendment shall have the same meaning as in the
Form 10-SB.
Business Development
1. In November 1998 the Company merged with Oxir-Private in order to avail
itself of Oxir-Private's contacts and opportunities in Russia. The disclosure
regarding the merger has been clarified. See page 3.
2. The date of Oxir-Private's incorporation has been deleted from the
Amendment.
3. References to Oxir Private, OFS, OIS, OIL and the Company have been
revised throughout the Form 10-SB.
4. Comment complied with. See Part I, Item 1, "Description of Business -
Equity Market Investing and Asset Management."
5. Comment complied with. See Part I, Item 1, "Description of Business -
Equity Market Investing and Asset Management."
6. Comment complied with. See Part I, Item 1, "Description of Business -
Equity Market Investing and Asset Management."
Equity Market Investing and Asset Management
7. More specific references have been provided throughout Part I, Item 1,
"Description of Business."
8. Comment complied with. See Part I, Item 1, "Description of Business -
Equity Market Investing and Asset Management."
9. Comment complied with throughout the Form 10-SB.
Russian Real Estate Development Projects
<PAGE>
10. Details regarding the Project have been disclosed. See Part I,
Item 1, "Description of Business - Russian Real Estate
Development Project." However, since the Project has not been
completed, information such as the average cost per square
meter is not yet available. The Company has disclosed the
Company's total investment in the Project and its development
of the Complex.
11. The total cost of the Project has not been determined because
the Project is not completed. The Company made an investment
of $3,261,706 in the Project. As a partial return on that
investment, the Company was granted a portion of the Project
by the developer. The Company has chosen to develop its
portion of the Project into the Complex. These facts have been
disclosed in the Amendment.
12. Comment complied with. See Part I, Item 1, "Description of
Business - Russian Real Estate Development Project."
13. References to "more attractive prices" have been deleted from
the Form 10-SB. Cost comparison between the cost of other
similar apartment units and those of the Project has been
provided.
14. The last paragraph has been deleted. Risk factors are
described in Part I, Item 1, "Description of Business - Risk
Factors."
Internet Solutions
15. Comment complied with. See Part I, Item 1, "Description of
Business - Internet Solutions."
16. Comment complied with. See Part I, Item 1, "Description of
Business - Internet Solutions - Payment for Goods and
Services."
17. Comment complied with. See Part I, Item 1, "Description of
Business - Internet Solutions - Delivery of Goods and
Services."
<PAGE>
18. Comment complied with. See Part I, Item 1, "Description of
Business - Internet Solutions - Delivery of Goods and
Services."
19. Information regarding the opening of local warehouses
internationally has been deleted.
20. Credit card payments to the Company are outlined in Part I,
Item 1, "Description of Business - Internet Solutions -
Payment for Goods and Services."
21. The number of projected book offerings has been adjusted to
40,000. The price to be charged to customers is based upon the
price that the Company receives from its suppliers, which will
be adjusted from time to time. The Company intends to price
its products competitively. See Part I, Item 1, "Description
of Business - Internet Solutions - Delivery of Goods and
Services."
22. Comment complied with. The Company's research and development
budget is disclosed in Part I, Item I, "Description of
Business - Research and Development." The Company's licensing
arrangements are disclosed in Part I, Item I, "Description of
Business - Patents, Trademarks and Licensing Agreements." None
of the Company's license agreements are material.
23. The Company has contacted various providers in order to
conclude that web-hosting services cost, on average, $25 to
$30 per month. The Company intends to charge a fee of $15 to
$95 per month to users of the virtual web-hosting services.
This fee structure is based upon a price comparison of similar
services from the most popular providers of web-site hosting.
See Part I, Item 1, "Description of Business - Internet
Solutions - Virtual Server."
24. Web-hosting services differ substantially from Internet
stores, and the creation of mailing lists is not a primary
goal of the Company. Under the "traditional approach," a
client receives a standard set of services that allow the
client to transfer previously prepared information to the
Internet. The Company's approach is to allow the client to
create its own web site which is maintained on the Company's
server and to provide back-up power and support to a heavily
used web site. The client may maintain an Internet store on
its web site which is maintained and/or supported by the
Company.
25. Reference to the Company's capability to upgrade the system as
needed, be independent of the terms and conditions enforced by
the licensed producers of the existing software and to sell
the final product as shrink wrapped software has been deleted
from the Amendment.
<PAGE>
26. Copies of the relevant publications are provided
supplementally. The Company is not relying upon data compiled
by any market data analysis firm.
27. The paragraphs concerning Internet shopping statistics have
been deleted. A statement regarding Internet shopping
statistics is contained in Part I, Item 1, "Description of
Business - Internet Solutions." A discussion of the Company's
marketing efforts has been included.
28. Comment complied with. Copies of advertisements are provided
supplementally. See Part I, Item 1, "Description of Business -
Marketing - Television and Radio."
29. Descriptive terms such as "major business forum and trade
show" have been deleted.
30. Comment complied with. See Part I, Item 1, "Description of
Business - Competition."
31. Comment complied with. Aspects of Russian taxation have been
addressed in a new section. See Part I, Item 1, "Description
of Business - Competition - Doing Business in Russia."
32. Comment complied with. See Part I, Item 1, "Description of
Business - Competition - Real Estate."
33. Comment complied with. The language regarding "the pitfalls
typically experienced by start ups" has been deleted.
34. Comment complied with. See Part I, Item 1, "Description of
Business - Competition - Internet."
35. Comment complied with. Information regarding the establishment
of a "merchant account" has been deleted. Details regarding
the Company's payment systems is contained in Part I, Item 1,
"Description of Business - Internet Solutions - Payment for
Goods and Services."
36. Comment complied with. See Part I, Item 1, "Description of
Business - Competition - Internet."
37. Comment complied with. See Part I, Item 1, "Description of
Business - Risk Factors."
38. Comment complied with. See Part I, Item 1, "Description of
Business - Risk Factors."
39. Comment complied with. See Part I, Item 1, "Description of
Business - Risk Factors."
40. Comment complied with. See Part I, Item 1, "Description of
Business - Research and Development."
41. Comment complied with. See Part I, Item 6, "Executive
Compensation."
42. Comment noted.
<PAGE>
43. Comment complied with. See Part I, Item 6, "Certain
Relationships and Related Transactions."
44. Comment complied with. See Part I, Item 7, "Certain
Relationships and Related Transactions."
45. Comment complied with. See Part I, Item 7, "Certain
Relationships and Related Transactions."
46. Comment complied with. There has been no trading in, and there
is no public market for, the Company's common stock. See Part
II, Item 1, "Market Price of and Dividends on Registrant's
Common Equity and Other Shareholder Matters."
47. The Company is not aware of any broker-dealers holding shares
of the Company's common stock on behalf of stockholders. This
information has been deleted.
48. Comment complied with. The Company's offerings were conducted
pursuant to Rule 504 of Regulation D and Section 4(2) of the
Securities Act of 1933, as amended. The Company has identified
the class to whom the securities were sold. The Company did
not distinguish between foreign and domestic investors. To the
best knowledge of the Company, each investor was an accredited
investor. Each investor was given a private placement
memorandum, which included a comprehensive business plan and
the Company's audited financial statements. A copy of these
documents will be filed supplementally.
49. [Accounting comment]
50. [Accounting comment] Comment complied with. The financial
statements have been revised and updated.
51. [Accounting comment]
52. [Accounting comment]
53. [Accounting comment]
54. [Accounting comment]
<PAGE>
We believe the foregoing and the revised preliminary proxy materials
fully responds to the staff's comments. If you have any further questions or
comments please do not hesitate to call Kelly Matthews Gerber (202-861-1694) or
me.
Sincerely,
Mario V. Mirabelli
PURCHASE AND SALE AGREEMENT #05-04/00 P
Moscow City April 19, 2000
[B.S.G.] Company Limited in the person of Director Mr. Gantman A.I. acting under
the Articles of Association, hereinafter referred to as the [Seller] and
[Oxiris] Closed Joint Stock Company, hereinafter referred to as the [Buyer], in
the person of Mr. Dolgov V.A., acting under the Articles of Association, have
concluded this Agreement for the following:
1. Subject of Agreement
1.1 The Seller shall be responsible for transfer of the Goods (books) and the
Buyer shall be responsible for payment for the Goods in accordance with
the Seller's price list.
1.2 The Goods transfer shall be effected by reason of oral or written order
of the Buyer. The Goods quantity and range shall be specified in waybills
accompanying each lot.
2. Goods Price
2.1 The price for Goods shall be established in Russian Rubles and is determined
by the Seller's price list. 2.2 The price for Goods shall be fixed in invoices
and waybills accompanying each lot. 2.3 The price for Goods shall include the
value of goods and packing.
3. Responsibilities and Rights of Parties
3.1 The Seller responsibilities and rights include the following:
3.1.1 The Seller shall be responsible for delivery of Goods with duly
quality complying with certificates, other technical documents
and sanitary standards and rules, to the Buyer in event of their
availability in stock at the Sellers' warehouses against the
order placed by the Buyer no later than 24 hours from the moment
of order receipt.
3.1.2 The Seller shall be responsible for replacement of defective
Goods within 5 (five) days from the moment of receipt of
information about such Goods from the Buyer. The Goods shall be
deemed defective if they have obvious or hidden defects and also
the Goods returned by any third party in connection with defects
occurred due to the fault of the Buyer, that were not specified
at the time of transfer, and the Goods with the contents that
does not meet the requirements of active legislation.
3.1.3 In event of absence of Goods at the Sellers' warehouses, the
latter shall inform the Buyer during 24 hours about possible
delivery date.
3.1.4 The Seller shall be responsible for making of shipping
documents.
3.1.5 The Seller shall be responsible for provision of quality
guarantees for the Goods within the limits of manufacturer
guarantees.
3.1.6 The Seller shall be responsible for provision of information
once in a week on availability of the Goods at its warehouse in
accordance with the price list to the Buyer in electronic form.
<PAGE>
3.2 The Buyer responsibilities and rights include the following:
3.2.1 The Buyer shall accept the Goods from the Seller on condition of
self-pickup from the Seller's warehouse in Moscow.
3.2.2 The Buyer shall be responsible for inspection during Goods acceptance
procedure against quantity and range; for making and signing of
appropriate documents and informing the Seller about any deficiencies
revealed during acceptance procedure. The Buyer shall have the right to
deny acceptance of Goods in an event of their noncompliance with the
range specified in order or quantity.
4. Goods Value and Settlement Procedure
4.1 The Goods lot value shall be established in Russian Rubles and defined as
the quantity of corresponding name items multiplied by their price as set
forth in Section 2.1.
4.2 The payment date shall be deemed the date of receipt of funds at the
Seller's settlement account.
4.3 The Buyer shall pay for the Goods by remittance of funds to the Seller's
settlement account according to order and invoice by way of 100%
prepayment with the remaining amount to be remitted within _____ days
from the Goods receipt date.
4.4 By approval of the parties cash payment shall be acceptable in compliance
with the Russian Federation legislation.
5. Liability of Parties
5.1 In event of nonfulfilment by any of the parties under this Agreement any
provision hereof, disputable issues shall be settled on the basis of
mutual agreements. In event of inability to reach agreement the case
shall be transferred for settlement to the International Arbitration
Court at the Commerce and Industry Chamber, the City of Moscow.
6. Agreement Term and Its Termination Procedure
6.1 This Agreement shall be effective from the moment of its signing by
authorized persons of the parties.
6.2 The term of this Agreement shall be equal to one calendar year. The term
shall be automatically renewed for each successive period unless either
of the parties elects not to renew by giving not less than one months'
prior written notice to the other about termination of the Agreement or
its reviewing.
6.3 This Agreement may be terminated on the wish of either of the parties on
condition of not less than one months' prior written notice.
<PAGE>
7. Force Majeure
7.1 In an event of circumstances caused by direct or indirect force majeure
events including, without limitation, flood, fire, earthquake, epidemics,
military conflicts, overturns, terrorist attacks, civil disturbances,
strikes, regulations, orders or other administrative interference from
the government or any other decrees, administrative or governmental
restrictions affecting performance of responsibilities under this
Agreement or other circumstances beyond the reasonable control of
parties, the terms of performance of these responsibilities shall be
proportionately extended for the time of duration of these circumstances,
if they significantly affect the timely execution of the whole Agreement
or any part thereof which is subject to execution after onset of force
majeure circumstances. Both parties shall immediately notify each other
in writing about commencement and cessation of force majeure
circumstances hindering fulfillment of responsibilities under this
Agreement. The party referring to force majeure circumstances shall
provide the confirming document of competent state authority.
8. Other Conditions
8.1 The Agreement can be changed and amended by written approval of the
parties signed by their authorized representatives. 8.2 The parties agree
to maintain strict confidentiality with respect to the conditions of this
Agreement and any information pertaining to conduct of business by the
other party in connection with this Agreement and will not make any
public declarations regarding these conditions except prior written
permission of the other party.
8.3 This Agreement including Addendums supersedes any preliminary agreements,
regulations, written and oral representations relating to the subject
matter hereof.
8.4 During two working days from the signature date of this Agreement, the
parties present their responsible persons (one from each party) for the
purpose of technical interaction for data exchange between information
systems of the Seller and the Buyer.
8.5 Within two weeks from the signature date of this Agreement, the parties'
working groups under the management of responsible persons shall approve
all the details of technical interaction for exchange of information
about the Goods and prepare the Protocol on information exchange and
update procedures, which shall be approved by authorized representatives
of both parties and shall be an integral part of this Agreement.
<PAGE>
9. Parties' Addresses and Information
<TABLE>
<CAPTION>
SELLER BUYER
<S> <C>
Company full name: Company full name:
[B.S.G. Press] Company Limited [Oxiris] Closed Joint Stock Company
Legal address: Legal address:
12 Scientific Drive, Moscow ZIP Code 117802
Telephone: +7(095) 207-5362 Telephone: +7(095) 334-4411
Fax: +7(095) 281-9926 Fax: +7(095) 937-5060
Bank name: Bank name:
[Meschanskoye] Branch, Savings Bank of Russian [EuroWestSibBank]Joint Stock Commercial Bank
Federation 7811/0706 Settlement account: 40702810700030000049
Settlement account: 40702810838090105045 BIK: 044585726
BIK: 044525342 Correspondent account: 30101810000000000726
Correspondent account: 30101810600000000342 TIN: 7706200205
TIN: 7716138980 OKONKh 71100, 71200
OKONKh 71100 OKPO 51260913
OKPO 47278292
Managing Director
[Oxiris] Closed Joint Stock Company
(Signature) /s/Gantman A.I. (Signature) /s/Dolgov V.A.
-------------- ---------------
(Seal) (Seal)
April 19, 2000 April 19, 2000
Protocol to the Agreement # __________ of 2000
</TABLE>
<PAGE>
Provided Information Format Specification
1. Provided data format (database type):_________________________________
2. Transmitted information update format:________________________________
3. Updated information transmission method:______________________________
4. General goods information:
4.1 [|X|] Literary work title in Russian
4.2 [ ] Literary work title in English
4.3 [|X|] Author(s) full name(s) in Russian
4.4 [ ] Author(s) full name(s) in English
4.5 [ ] Original language
4.6 [ ] Translation language
4.7 [|X|] Publication year
4.8 [|X|] Publisher, city
4.9 [|X|] Number of pages
4.10 [|X|] Binding type
4.11 [ ] BBK
4.12 [ ] Universal Decimal Classification (UDC)
4.13 [|X|] ISBN
4.14 [ ] Dimensions
4.15 [ ] Weight
4.16 [ ] Annotation
5. Goods commercial information:
5.1 [|X|] Goods price
5.2 [ ] Goods availability at warehouse
SELLER BUYER
[B.S.G. Press] Company Limited
- ------------------------------
(Signature) /s/Gantman A.I. (Signature) /s/Dolgov V.A.
---------------- ----------------
Grantman A. I. Dolgov V. A.
(Seal) (Seal)
Contract # 920801
On Provision of Express Post Services
Moscow 2000
--------------- ----------
In accordance with the law of the Russian Federation of July 17,
1999[On postal service] No. 176 - FZ OOO [EMS Garantpost], in the person of
general director Semenov A. M., named hereinafter as [EMS]from one part, and
private company [Oxiris], in the person of general director Dolgov V. A., named
hereinafter as [the Sender], from the other part, have concluded the present
contract concerning the following.
<PAGE>
1. Subject
1.1. EMS undertakes to provide services on reception, processing,
shipment and delivery of international and domestic items of the Sender's mail
through the express post net of EMS, as indicated in Appendices 2 and 3 to the
present contract, and also additional services, namely: providing courier to
receive items of mail after telephone call; providing packing material available
from EMS; putting accompanying documents in order.
1.2. The Sender undertakes to pay services indicated in item 1.1. in
accordance with tariffs specified in Appendices 1, 1.1, 4 to the present
contract.
1.3. Monthly amount of items of mail, which is planned by The Sender to
be transferred within the frames of the present contract, is (in units of items
of mail): to 20 to 50 ___to 1000 to 300 to 500 more than 500.
As an item of mail, one should consider every separately packed unit of
correspondence (goods) sent to a specified address.
2. EMS 's Commitments
Within the frames of the present contract, EMS undertakes:
2.1. To receive items of mail of the Sender at reception windows of
[EMS Garantpost], which addresses are indicated in Appendix 4 to the present
contract, or with the help of courier.
2.2. To guarantee shipment and delivery of items of mail of the Sender
in accordance with addressee's data (postal address, surname, name and
patronymic name of recipient or name of organization, telephone), as specified
by the Sender in the address label.
2.3. EMS guarantees to keep items of mail completely intact and to keep
communication in secret.
2.4. In case the addressee is absent at the moment of delivery of an
item of mail, EMS leaves for the addressee a notice with indication of the place
and time, where he can receive the item of mail. If the addressee does not come
to get the item of mail within 14 calendar days, it will be returned back to the
Sender.
2.5. To give to the Sender's representative, after the Sender pays the
sum indicated in item 7.1. of the present contract, the client card with
indication thereon of number, date of contract conclusion and the Sender's name.
Reception of items of mail of the Sender, in accordance with items 1.1. and 2.1.
of the present contract, is implemented only, when the client card is presented.
<PAGE>
3. Sender's Commitments
Within the frames of the present contract, the Sender undertakes:
3.1. To provide EMS with items of mail to be sent, which are packed in
accordance with the type of enclosure, sending conditions and sending duration,
the packing excluding the possibility of enclosure damage while processing and
sending, of access thereto without packing breach, of damage of other items of
mail of doing any harm to workers of postal service.
3.2. To legalize items of mail in accordance with the rules of filling
in accompanying documents (address labels), as enclosed by EMS to the present
contract. EMS has the right to refuse to accept an item of mail in case of
improper putting accompanying documents in order. While putting items of
international mail in order, to provide on EMS's request the documents required
to perform Customs legalization.
3.3. Not to provide for sending parcels with enclosures forbidden to be
sent (weapon, explosive, flammable and radioactive substances etc.).
3.4. To notify EMS in due time on change of own postal and bank
details. 4. Parties' Responsibility
4.1. In accordance with the present contract, EMS is responsible only
to The Sender.
4.2. In case of loss of an item of mail or of loss of enclosure (part
of enclosure) through EMS's fault, EMS refund to The Sender the sum in an amount
of two tariffs for sending this item of mail.
4.3. Damage, loss of enclosure (part of enclosure) is fixed while
handing to an addressee in the presence EMS's worker. In this case the statement
on the loss (damage) of the enclosure is compiled.
4.4. Claims connected with non - execution or improper execution by EMS
of its commitments in accordance with the contract can be laid within the
following periods: |X| for items of domestic mail - within 6 months since the
date of reception of the item of mail; |X| for items of international mail -
within 3 months since the date of reception of the item of mail.
4.5. EMS is released from the responsibility in cases foreseen by the
legislation. Including:
4.5.1. EMS bears no responsibility for loss or damage of enclosure, if
the integrity of packing and seals (leads) was not infringed, and also if the
fact of the loss of enclosure (part of enclosure) was established after handing
the item of mail to an addressee.
<PAGE>
4.5.2EMS bears no responsibility for indirect losses or profit missed
by The Sender of whatever origin thereof.
4.5.3. EMS bears no responsibility for partial or complete non -
execution of the commitments in accordance with the present contract, if non -
execution of these commitments is a consequence of circumstances of force
majeure (war, rebellion, earthquake, resolution of state authorities etc.). EMS
undertakes to inform The Sender on approach of similar circumstances in written
form in possibly shortest time.
5. Limits of Weight and Overall Dimensions
Parcels of weight of up to 31.5 kg and of overall dimensions not
exceeding 150 cm for any of dimensions and 300 cm for the sum of the length and
the largest circumference taken in any direction except for the length are
accepted for sending. Delivery of parcels with weight and overall dimensions
exceeding the above - mentions ones is implemented, if such a possibility
exists, for any particular case after mutual consultations.
6. Insurance
In accordance with the Sender's desire, the item of mail may be insured
against risks during shipment and storage. Postal Insurance Group (PIG) at
tariffs indicated in appendix 5 implements insurance of items of express mails.
7. Settlements
Settlements with EMS are implemented in the following manner:
7.1. The Sender, who has concluded contract with EMS, remits to EMS's
settlement account preliminary sum in an amount of 5000 (five thousand) rubles.
After cancellation of the present contract, in case of lacking of the Sender's
debt to EMS, EMS pays back The Sender the rest of the sum on its account.
7.2. EMS sends to the Sender bill for actually provided services every
month.
7.3. Settling the bills presented by EMS to the Sender is implemented
within three banking days since the day of bill reception.
7.4. In case of non - payment within the period as indicated in item
7.3. the Sender is imposed with the fine in an amount of 0.15 % for each day of
payment delay.
8. Service Suspension
8.1. EMS has the right to suspend the acceptance of items of the
Sender's mail in the following cases:
8.1.1. In case of the Sender's non - payment of EMS's bills within 10
days since the day of bill reception;
8.1.2. In case it is impossible to deliver to the Sender bills to the
postal address as indicated in the present contract.
8.2. EMS resumes to accept items of the Sender's mail after the Sender
has made payments as indicated in items 7.1., 7.2. and 7.4. of the present
contract.
8.3. In case the Sender has lost the client card, EMS suspends
acceptance of the Sender's mail items to the moment of reception of a new client
card.
<PAGE>
9. Terms of validity of the contract.
- -------------------------------------
9.1. The present contract comes into force since the moment of signing
and is valid within 1 year. After expiration of a calendar year, the contract
shall automatically be extended for the next year, if none of the parties
refuses to extend the term of validity of the contract, having notified thereon
the other party in written form not later than 1 month before the expiration of
the term of validity of the contract.
9.2. The contract may be canceled before the expiration of the term of
its validity by mutual agreement of the parties or in an unilateral manner in
case of failure to execute by one of the party the commitments in accordance
with this contract with a preliminary notification of the other party not later
than one month before the cancellation of the contract.
9.3. The contract is made in duplicate, both copies having the same
force. All changes and appendices to text of the present contract are
implemented only in written form and should be signed and stamped by both
parties.
10. Coordination of the Contract
EMS and the Sender appoint from their parts a person, who coordinates
all matters associated with implementation of the present contract: from the
part of EMS Cherezov Maksim, from the part of The Sender Zavitaev Maksim.
<PAGE>
11. Settlement of Arguments
Vexed questions, which cannot be settled in the course of negotiations,
are settled in accordance with the valid legislation.
12. Legal and Postal Addresses of Parties
12.1. Legal Addresses of Parties
[EMS] [The Sender]
OOO [EMS Garantpost] ZAO [OXIRIS]
113105, Moscow 117802, Moscow, Nauchny passage, 12
Varshavskoye chaussee,
building 33, office 302
12.1. Postal addresses
of parties
[EMS] [The Sender]
OOO [EMS Garantpost] ZAO [OXIRIS]
113105, Moscow 117802, Moscow, Nauchny passage, 12
Varshavskoye chaussee, 33 tel.: 120 - 5086
tel / fax: 111 - 01 - 82,
fax: 956 - 2654
12.3. Bank Details
- ------------------
OOO [EMS Garantpost]
INN 7724069257 ZAO [OXIRIS] INN 7706200205
Rouble account: Rouble account:
No. 40702810900000006601 No. 407028103000000001990
AIKB [NOMOS - BANK], Moscow, AKB [Russkii bankirskii dom]
BIK 044585998 BIK 044585400
correspondent account correspondent account
30101810100000000998 30101810300000000400
The contract was signed:
for [EMS Garantpost] for ZAO [OXIRIS]
general director general director
(Signature) A.M. Semenov (Signature) V. A. Dolgov
(Seal) (Seal )
<PAGE>
<TABLE>
<CAPTION>
Appendix No. 1
--------------
TARIFFS OF [EMS GARANTPOST]
for clearings
for sending items of express mail abroad.
(in rubles, VAT included)
Tariffs are valid for all populated areas of the net of EMS Garantpost in
Russia.
- ---------------- -------------- -------------- -------------- -------------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Weight (kg) Zone 1 Zone 2 Zone 3 Zone 4 Zone 5 Zone 6
- ---------------- -------------- -------------- -------------- -------------- -------------- -------------
DOCUMENTS
- ---------------- -------------- -------------- -------------- -------------- -------------- -------------
0.1 512 730 768 1004 1095 1278
- ---------------- -------------- -------------- -------------- -------------- -------------- -------------
0.5 689 821 839 1095 1107 1369
- ---------------- -------------- -------------- -------------- -------------- -------------- -------------
1 748 948 986 Q1278 1369 1643
- ---------------- -------------- -------------- -------------- -------------- -------------- -------------
1.5 857 1095 1187 1496 1552 1917
- ---------------- -------------- -------------- -------------- -------------- -------------- -------------
2 969 1243 1369 1717 1734 2191
- ---------------------------------------------------------------------------------------------------------
PARCELS (enclosure of goods)
- ---------------- -------------- -------------- -------------- -------------- -------------- -------------
0.1 730 913 1004 1187 1278 1460
- ---------------- -------------- -------------- -------------- -------------- -------------- -------------
0.5 821 1039 1095 1369 1375 1643
- ---------------- -------------- -------------- -------------- -------------- -------------- -------------
1 1004 1169 1278 1552 1643 1917
- ---------------- -------------- -------------- -------------- -------------- -------------- -------------
1.5 1151 1313 1460 1734 1826 2101
- ---------------- -------------- -------------- -------------- -------------- -------------- -------------
2 1278 1425 1643 1917 2099 2464
- ---------------- -------------- -------------- -------------- -------------- -------------- -------------
3 1460 1552 1826 2099 2464 2921
- ---------------- -------------- -------------- -------------- -------------- -------------- -------------
4 1587 1678 2008 2373 2738 3286
- ---------------- -------------- -------------- -------------- -------------- -------------- -------------
5 1717 1861 2247 2738 3103 3742
- ---------------- -------------- -------------- -------------- -------------- -------------- -------------
6 1843 2043 2500 3103 3468 4199
- ---------------- -------------- -------------- -------------- -------------- -------------- -------------
7 1973 2226 2756 3468 3834 4564
- ---------------- -------------- -------------- -------------- -------------- -------------- -------------
8 2099 2408 3012 3834 4199 4929
- ---------------- -------------- -------------- -------------- -------------- -------------- -------------
9 2226 2591 3268 4051 4455 5294
- ---------------- -------------- -------------- -------------- -------------- -------------- -------------
10 2355 2774 3524 4272 4711 5659
- ---------------- -------------- -------------- -------------- -------------- -------------- -------------
11 3483 3866 3707 4400 4064 6034
- ---------------- -------------- -------------- -------------- -------------- -------------- -------------
12 2612 2956 3890 4711 5220 6389
- ---------------- -------------- -------------- -------------- -------------- -------------- -------------
13 2738 3047 4072 4929 5477 6698
- ---------------- -------------- -------------- -------------- -------------- -------------- -------------
14 2847 3139 4255 34590 5733 7011
- ---------------- -------------- -------------- -------------- -------------- -------------- -------------
15 2956 3230 4437 5368 5989 7320
- ---------------- -------------- -------------- -------------- -------------- -------------- -------------
16 3047 3321 4620 5586 6245 7629
- ---------------- -------------- -------------- -------------- -------------- -------------- -------------
17 3138 3412 4803 5804 6501 7938
- ---------------- -------------- -------------- -------------- -------------- -------------- -------------
18 3229 3503 4986 6022 6757 8247
- ---------------- -------------- -------------- -------------- -------------- -------------- -------------
19 3320 3594 5169 6240 7013 8556
- ---------------- -------------- -------------- -------------- -------------- -------------- -------------
20 3411 3685 5352 6458 7269 8865
- ---------------- -------------- -------------- -------------- -------------- -------------- -------------
21 3502 3776 5535 6676 7525 9174
- ---------------- -------------- -------------- -------------- -------------- -------------- -------------
<PAGE>
22 3593 3867 5718 6894 7781 9483
- ---------------- -------------- -------------- -------------- -------------- -------------- -------------
23 3684 3958 5901 7112 8037 9792
- ---------------- -------------- -------------- -------------- -------------- -------------- -------------
24 3776 4040 6081 7330 8303 10101
- ---------------- -------------- -------------- -------------- -------------- -------------- -------------
25 3866 4140 6267 7548 8549 10410
- ---------------- -------------- -------------- -------------- -------------- -------------- -------------
26 3957 4231 6450 7766 8805 10719
- ---------------- -------------- -------------- -------------- -------------- -------------- -------------
27 4048 4322 6633 7984 9061 11028
- ---------------- -------------- -------------- -------------- -------------- -------------- -------------
28 4139 4413 6816 8202 9317 11337
- ---------------- -------------- -------------- -------------- -------------- -------------- -------------
29 4230 4504 6999 8420 9573 11646
- ---------------- -------------- -------------- -------------- -------------- -------------- -------------
30 4321 4595 7182 8638 9829 11955
- ---------------- -------------- -------------- -------------- -------------- -------------- -------------
31 4412 4686 7365 8856 10085 12264
- ---------------- -------------- -------------- -------------- -------------- -------------- -------------
31.5 4503 4777 7548 9074 10341 12573
- ---------------- -------------- -------------- -------------- -------------- -------------- -------------
STANDARD PRIVILEGE TARIFFS
for contract clients of [EMS Garantpost].
- ------------------------ ------ -------------- -------------- -------------- -------------- -------------
Number of items of 1 - 101 - 500 501 - 1000 1001 - 2000 2001 - 5000 More than
mail per month, 100 5000
pieces.
- ------------------------ ------ -------------- -------------- -------------- -------------- -------------
Privilege tariffs (% 100 95 90 85 80 75
of standard ones).
- ------------------------ ------ -------------- -------------- -------------- -------------- -------------
</TABLE>
<PAGE>
Appendix No. 1.1.
-----------------
<TABLE>
<CAPTION>
TARIFFS OF [EMS GARANTPOST]
for clearings
for sending items by express mail from Moscow to cities of Russia.
(in rubles, VAT included)
- -------------- ------------ ------------ ------------ ------------ ------------ ------------ ------------
Weight (kg) Moscow St. Zone 1 Zone 2 Zone 3 Zone 4 Zone 5
Petersburg
- -------------- ------------ ------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
0.1 96 168 359 359 359 403 430
- -------------- ------------ ------------ ------------ ------------ ------------ ------------ ------------
0.5 96 180 386 386 403 430 474
- -------------- ------------ ------------ ------------ ------------ ------------ ------------ ------------
1 96 207 403 416 430 458 502
- -------------- ------------ ------------ ------------ ------------ ------------ ------------ ------------
2 96 259 458 474 502 530 618
- -------------- ------------ ------------ ------------ ------------ ------------ ------------ ------------
3 96 311 516 530 574 602 731
- -------------- ------------ ------------ ------------ ------------ ------------ ------------ ------------
4 96 363 574 588 646 674 847
- -------------- ------------ ------------ ------------ ------------ ------------ ------------ ------------
5 96 415 632 646 718 746 963
- -------------- ------------ ------------ ------------ ------------ ------------ ------------ ------------
6 115 467 690 704 790 818 1079
- -------------- ------------ ------------ ------------ ------------ ------------ ------------ ------------
7 134 519 748 762 862 890 1195
- -------------- ------------ ------------ ------------ ------------ ------------ ------------ ------------
8 153 571 806 820 934 962 1311
- -------------- ------------ ------------ ------------ ------------ ------------ ------------ ------------
9 172 623 864 878 1006 1034 1427
- -------------- ------------ ------------ ------------ ------------ ------------ ------------ ------------
10 191 675 922 936 1078 1106 1543
- -------------- ------------ ------------ ------------ ------------ ------------ ------------ ------------
11 210 727 980 994 1150 1178 1659
- -------------- ------------ ------------ ------------ ------------ ------------ ------------ ------------
12 229 779 1038 1052 1222 1250 1775
- -------------- ------------ ------------ ------------ ------------ ------------ ------------ ------------
13 248 831 1096 1110 1294 1322 1891
- -------------- ------------ ------------ ------------ ------------ ------------ ------------ ------------
14 267 883 1154 1168 1366 1394 2007
- -------------- ------------ ------------ ------------ ------------ ------------ ------------ ------------
15 286 935 1212 1226 1438 1466 2123
- -------------- ------------ ------------ ------------ ------------ ------------ ------------ ------------
16 305 987 1270 1284 1510 1538 2239
- -------------- ------------ ------------ ------------ ------------ ------------ ------------ ------------
17 324 1039 1328 1342 1582 1610 2355
- -------------- ------------ ------------ ------------ ------------ ------------ ------------ ------------
18 343 1091 1386 1400 1654 1682 2471
- -------------- ------------ ------------ ------------ ------------ ------------ ------------ ------------
19 362 1143 1444 1458 1726 1754 2587
- -------------- ------------ ------------ ------------ ------------ ------------ ------------ ------------
20 381 1195 1502 1516 1798 1826 2703
- -------------- ------------ ------------ ------------ ------------ ------------ ------------ ------------
21 400 1247 1560 1574 1870 1989 2819
- -------------- ------------ ------------ ------------ ------------ ------------ ------------ ------------
22 419 1299 1618 1632 1942 1970 2935
- -------------- ------------ ------------ ------------ ------------ ------------ ------------ ------------
<PAGE>
23 438 1351 1676 1690 2014 2042 3051
- -------------- ------------ ------------ ------------ ------------ ------------ ------------ ------------
24 457 1403 1734 1748 2086 2114 3167
- -------------- ------------ ------------ ------------ ------------ ------------ ------------ ------------
25 476 1455 1792 1806 2158 2186 3283
- -------------- ------------ ------------ ------------ ------------ ------------ ------------ ------------
26 495 1507 1850 1864 2230 2258 3399
- -------------- ------------ ------------ ------------ ------------ ------------ ------------ ------------
27 514 1559 1908 1922 2302 2330 3515
- -------------- ------------ ------------ ------------ ------------ ------------ ------------ ------------
28 533 1611 1966 1980 2374 2402 3631
- -------------- ------------ ------------ ------------ ------------ ------------ ------------ ------------
29 552 1663 2024 2038 2446 2474 3747
- -------------- ------------ ------------ ------------ ------------ ------------ ------------ ------------
30 571 1715 2082 2096 2518 2546 3863
- -------------- ------------ ------------ ------------ ------------ ------------ ------------ ------------
31 590 1767 2140 2154 2590 2618 3979
- -------------- ------------ ------------ ------------ ------------ ------------ ------------ ------------
31.5 609 1819 2198 2212 2662 2690 4095
- -------------- ------------ ------------ ------------ ------------ ------------ ------------ ------------
List of served cities of Russia is presented in appendix 3.
STANDARD PRIVILEGE TARIFFS for contract clients of [EMS Garantpost].
- ---------------- -------------- -------------- -------------- -------------- -------------- -------------
Number of 1 - 100 101 - 500 501 - 1000 1001 - 2000 2001 - 5000 More than
items of mail 5000
per month,
pieces.
- ---------------- -------------- -------------- -------------- -------------- -------------- -------------
Privilege 100 95 90 85 80 75
tariffs (% of
standard
ones).
- ---------------- -------------- -------------- -------------- -------------- -------------- -------------
</TABLE>
PURCHASE AND SALE AGREEMENT #2/4-00
Moscow City April 14, 2000
[Home Collection] Company Limited in the person of Managing Director Mr. Nikolai
N. Cherviakov acting under the Articles of Association, hereinafter referred to
as the [Seller] and [Oxiris] Closed Joint Stock Company, hereinafter referred to
as the [Buyer], in the person of Mr. Dolgov V.A., acting under the Articles of
Association, have concluded this Agreement for the following:
1. Subject of Agreement
1.1 The Seller shall be responsible for transfer of the Goods (video
products) and the Buyer undertakes the obligation to pay for the Goods in
accordance with the Seller's price list.
1.2 The Goods transfer shall be effected by reason of oral or written order
of the Buyer (transmitted by fax message or other means). The Goods
quantity and range shall be specified in waybills accompanying each lot.
2. Goods Price
2.1 The price for Goods shall be established in Russian Rubles and indicated
in waybills and invoices accompanying each lot.
3. Responsibilities and Rights of Parties
3.1 The Seller responsibilities and rights include the following:
3.1.1 The Seller shall be responsible for delivery of Goods with duly
quality to the Buyer in event of their availability in stock at
the Sellers' warehouses against the order placed by the Buyer no
later that 24 hours from the moment of order receipt.
3.1.2 The Seller shall be responsible for replacement of defective
Goods and also the Goods that do not comply with the Buyer's
order within 5 (five) days from the moment of receipt of
information about such Goods from the Buyer. The Goods shall be
deemed defective if they have obvious or hidden defects and also
the Goods returned by any third party in connection with defects
occurred due to the fault of the Buyer, that were not specified
at the time of transfer, and the Goods with the contents that
does not meet the requirements of active legislation.
3.1.3 In event of absence of Goods at the Sellers' warehouses, the
latter shall inform the Buyer during 24 hours about possible
delivery date.
3.1.4 The Seller shall be responsible for making of shipping
documents.
3.1.5 The Seller shall be responsible for ensuring quality guarantees
for the Goods within the limits provided by manufacturer
guarantees.
3.1.6 The Seller guarantees the Goods transferred under this Agreement
to be in lawful turnover and that they do not infringe any third
party intellectual property rights.
3.2 The Buyer responsibilities and rights include the following:
3.2.1 The Buyer shall accept the Goods from the Seller on condition of
self-pickup from the Seller's warehouse in Moscow.
3.2.2 The Buyer shall be responsible for inspection during Goods
acceptance procedure against quantity and range; for making and
signing of appropriate documents and informing the Seller about
any deficiencies revealed during acceptance procedure. The Buyer
shall have the right to deny acceptance of Goods in an event of
their noncompliance with the range specified in order or
quantity.
<PAGE>
4. Settlement Procedure
4.1 The Buyer shall pay for the Goods by remittance of funds to the Seller's
settlement account or cash department on the basis of invoices drawn on
the Buyer's order.
4.2 The Buyer shall have the right to make advance payment to the Seller's
settlement account proceeding from the assumed Goods purchase volume.
5. Liability of Parties
5.1 In event of nonfulfilment by any of the parties under this Agreement any
provision hereof, disputable issues shall be settled on the basis of
mutual agreements. In event of inability to reach agreement the case
shall be transferred for settlement to the International Arbitration
Court at the Commerce and Industry Chamber, the City of Moscow.
6. Agreement Term and Its Termination Procedure
6.1 This Agreement shall be effective from the moment of its signing by
authorized persons of the parties.
6.2 The term of this Agreement shall be equal to one calendar year. The term
shall be automatically renewed for each successive period unless either
of the parties elects not to renew by giving not less than one months'
prior written notice to the other about termination of the Agreement or
its reviewing.
6.3 This Agreement may be terminated on the wish of either of the parties on
condition of not less than one months' prior written notice.
7. Force Majeure
7.1 In an event of circumstances caused by direct or indirect force majeure
events including, without limitation, flood, fire, earthquake, epidemics,
military conflicts, overturns, terrorist attacks, civil disturbances,
strikes, regulations, orders or other administrative interference from
the government or any other decrees, administrative or governmental
restrictions affecting performance of responsibilities under this
Agreement or other circumstances beyond the reasonable control of
parties, the terms of performance of these responsibilities shall be
proportionately extended for the time of duration of these circumstances,
if they significantly affect the timely execution of the whole Agreement
or any part thereof which is subject to execution after onset of force
majeure circumstances. Both parties shall immediately notify each other
in writing about commencement and cessation of force majeure
circumstances hindering fulfillment of responsibilities under this
Agreement. The party referring to force majeure circumstances shall
provide the confirming document of competent state authority.
<PAGE>
8. Other Conditions
8.1 The Agreement can be changed and amended by written approval of the
parties signed by their authorized representatives.
8.2 Within two weeks from the signature date of this Agreement, the parties
approve and make out as an Addendum to this Agreement
the details of technical interaction for exchange of information about
the Goods (warehouses stock and the Seller's updated price lists).
9. Parties' Addresses and Information
<TABLE>
<CAPTION>
SELLER BUYER
----------- ---------
<S> <C>
Company full name: Company full name:
[Home Collection]Company Limited [Oxiris]Closed Joint Stock Company
Legal address: Legal address:
4 Moscow 800th Anniversary St.,
Suite 2, management office 12 Scientific Drive, Moscow ZIP Code 117802
Telephone: +7(095) 334-4411
Moscow ZIP Code 127427 Fax: +7(095) 937-5060
Telephone: +7(095) 366-7892 366-6922 Bank name:
Fax: [EuroWestSibBank]Joint Stock Commercial Bank
Bank name: Settlement account: 40702810700030000049
[Capital Express]Joint
Stock Commercial Bank BIK: 044585726
Settlement account:
40702810500000000243 Correspondent account: 30101810000000000726
BIK: 044579682 TIN: 7706200205
Correspondent account:
30101810800000000682 OKONKh 71100, 71200
TIN: 7713157712 OKPO 51260913
OKONKh 71100, 71200
OKPO 47631966
(Signature) (Signature)
(Seal) (Seal)
</TABLE>
PURCHASE & SALES CONTRACT #02-02/00-KP
Moscow February 04, 2000
ZAO [Izdatelskii dom Priboy]in the person of General Director Kuzin V.
N. acting on the basis of the Charter, hereinafter named as[the Vendor], on one
part, and ZAO [OXIRIS] in the person of General Director Dolgov V. A. acting on
the basis of the Charter, hereinafter named as[the Purchaser], on the other
part, have concluded the present contract on the following:
1. SUBJECT OF THE CONTRACT
1.1. The Vendor undertakes to transfer into the proprietary right, and
the Purchaser undertakes to pay under conditions of the present contract for the
goods (articles of book - printing) foreseen by the wholesale price - list of
the Vendor.
1.2. The goods transfer shall be carried out on the basis of a
Purchaser's demand in written form (sent by fax). Amount and assortment of the
goods are fixed in waybills accompanying each lot of the goods.
2. PRICE OF THE GOODS.
2.1. The value of the goods unit is indicated in Appendix #1,
comprising an inherent part of the present contract. The price change is allowed
during the period of validity of the contract. The party making a decision on
changing shall notify the other party thereon in written form not later than 14
(fourteen) days prior to the actual price change. The price change is fixed in
the Supplement and agreed by the parties.
<PAGE>
2.2. The price of the goods includes the value of the goods and
packing.
3. RESPONSIBILITIES AND RIGHTS OF THE PARTIES
3.1. Responsibilities and rights of the Vendor:
3.1.1. The Vendor undertakes to provide the Purchaser with the goods of
proper quality, corresponding to certificates, other technical documentation and
sanitary standards and regulations, in case it is available in the Vendor's
warehouses, with respect to the Purchaser's order presented, not later than 72
hours after the moment of order reception.
3.1.2. The Vendor undertakes to provide data on novelties and
remainders in the warehouses through e - mail every month.
3.1.3. The Vendor undertakes to perform exchange of inferior goods and
also the goods not corresponding to the Purchaser's request within 5 (five) days
since the moment of reception of evidence on such goods from the Purchaser.
As inferior goods, one should consider the goods with obvious or
concealed defects and also the goods returned by the third persons in connection
with presence of defects therein, which appeared through the Vendor's fault and
were not stipulated for by him while delivering.
3.1.4. In case of lacking of the goods in the Vendor's warehouses, the
Vendor undertakes to inform the Purchaser within 24 hours on the probable
delivery date.
3.1.5. The Vendor undertakes to compile documentation accompanying the
goods.
3.1.6. The Vendor undertakes to provide quality guarantee for the goods
within the limits of manufacturer's guaranties.
3.2. Responsibilities and rights of the Purchaser:
3.2.1. The Purchaser shall accept the goods from the Vendor under
conditions of self - transporting from the Vendor's warehouse. 3.2.2. The
Purchaser shall perform checking while receiving the goods with respect to
quantity, quality and assortment, put in order and sign corresponding documents,
inform The Vendor on the goods defects found in the course of reception of the
goods. The Purchaser has the right to refuse to accept the goods, in case it
does not correspond to request's assortment, quality or quantity.
<PAGE>
4. SETTLEMENT PROCEDURE
4.1. The Purchaser pays full amount due for the ordered goods through
remittance of cash into the settlement account of the Vendor with payment delay
of not later than 30 days since the day of delivery.
4.2. The Vendor guarantees issue of books in accordance with prices of
small wholesale, which are foreseen by the Vendor's price - list, if the order
sum will exceed 1500 rubles, in case the order sum exceeds 5000 rubles, the
discount of 5 % of the order sum is envisaged.
5. RESPONSIBILITIES OF THE PARTIES
5.1. In case of non-execution of any of provisions of the present
contract by one of the parties, the vexed questions are settled on the basis of
mutual agreements. In case of failure to reach an agreement, the matter will be
transferred to be settled by the Court of arbitration of the city of Moscow.
5.2. In case of delay of payment for the goods delivered, the Purchaser
is imposed with a fine in an amount of 0.1 % of the value of delivery for each
day of delay.
6. CONTRACT VALIDITY AND TERMINATION
6.1. The contract comes into force since the moment of signing it by
parties' authorized persons.
6.2. The term of validity of the present contract is determined to be
equal to one calendar year. The validity of the contract is automatically
prolonged for each next period after expiration of the term of validity, if none
of the parties notified the other party in written form on cessation of the term
of validity or revision thereof a month before ending of the term of validity.
6.3. The present contract may be canceled in accordance to will of any
of the parties on condition of notification of the other party in written form
not later than one month before the moment of the contract cancellation.
<PAGE>
7. FORCE MAJEURE
7.1. In case of approach of circumstances of force majeure caused
directly or indirectly by appearance of, for example, flood, fire, earthquake,
epidemic, military conflicts, military coup d'Etat, acts of terrorism, civil
disturbances, strike, regulations, orders or other administrative interference
from the part of government, or some other instructions, administrative or
governmental restrictions producing effect on the execution of commitments in
accordance with the present contract or other commitments beyond the reasonable
parties' control, the terms of execution of these commitments are proportionally
shifted for the period of validity of these circumstances, when they
considerably influence the timely execution of the whole contract or of one or
another its part, which is subject to be executed after approach of the
circumstances of force majeure. Both parties shall immediately notify each other
in written form on the beginning and ending of circumstances of force majeure
preventing the commitments in accordance with the present contract from being
executed. The party referring to the circumstances of force majeure shall
present a document of relevant state authority to confirm them.
8. OTHER PROVISIONS.
8.1. The contract may be changed through an agreement of parties in
written form, the agreement being signed by authoritative representatives of
parties.
8.2. The parties agree to keep strict confidence in respect of terms of
the present contract and any information related to conducting business by the
other party in connection with this contract, and will not make any public
declarations in connection with these terms except for the case of receiving a
preliminary consent of the other party in written form.
8.3. The present contract, including Supplements, takes the place of
any other preliminary agreements, regulations, written and verbal arrangements
related to the subject of the present contract.
8.4. organizing the technical interaction in respect of data exchange
between information systems of the Vendor and the Purchaser. 8.5. Within two
weeks From the date of signing the present contract, the working groups of
parties under the guidance of executive officials coordinate all details of the
technical interaction in respect of data exchange on the goods and prepare
Appendix #2 on the exchange and information update procedure, the Supplement
being confirmed by authoritative representatives of both parties and being
inherent part of the present contract.
8.6. All other matters unsettled by the present contract are
regulated by the legislation in force.
<PAGE>
3. PARTIES' ADDRESSES AND BANK DETAILS:
<TABLE>
<CAPTION>
THE VENDOR THE PURCHASER
<S> <C>
Full name of the Private company Full name of the Private company
organization: [Priboy]. organization: [OXIRIS].
Legal address: 129337, Moscow, Postal address: 117246, Moscow, Nauchny
Yaroslavskoye chaussee, passage, 12, office 28.
5.
Telephone: 188 17 70 Telephone: (095) 334 42 77, 128 95
18
Fax: 188 74 56 Fax: (095) 937 50 60
Bank name: Donskoye branch, 7813, Bank name: AKB[Evrozapsibbank].
MB, AK, SB, Russian
Federation, MOSCOW.
Settlement account: 40702810638110101446 Settlement account: 40702810700030000049
BIK: 044525342 BIK: 044585726
Correspondent account: 30101810600000000342 Correspondent account: 3010181000000000726
INN: 7716105575 INN: 7706200205
OKPO: 40318143 OKPO: 51260913
OKONKh: 87100 OKONKh: 71100, 71200, 71500
General director of ZAO[OXIRIS]
(Signature) (Signature)
The Vendor Dolgov V. A.
(Seal) (Seal
</TABLE>
<PAGE>
Appendix #1 to the Contract #02-02/00 of February 04, 2000.
Price - list for the goods provided.
No. Name Price
1
The Vendor The Purchaser
(Signature) (Signature)
(Seal) (Seal)
<PAGE>
Appendix #2 to the Contract #02-02/00 of February 04, 2000
Specification of formats for the information provided.
1. Format of the data provided (data base type):
2. Format of the information update transferred:
3. Method of transferring the information update:
4. Terms of transferring the information update:
5. General information concerning the goods:
5.1. Name of the publication in Russian.
* 5.2 [ ] Name of the publication in English.
5.2. Author's (authors') surname, name and patronymic name in
Russian.
5.3. [ ] Author's (authors') surname, name and patronymic name in
English.
* 5.4. [ ] Language of the original.
5.4. [ ] Author of translation.
5.5. [ ] Year of publication.
5.6. [ ] Publishing house, city.
5.7. [ ] BBK (not available for the time being.
5.8. [ ] ISBN.
5.9. [ ] Number of pages.
5.10 [ ] Book - cover type.
5.11 [ ] Overall dimensions.
5.12. [ ] Weight.
5.13. [ ] Genre.
5.14. [ ] Annotation.
5.15. [ ] Reviews (surveys).
5.16. [ ] Extracts.
5.17. [ ] Rating ([ ] - weight coefficient, [ ] - sales amount) (no).
5.18. [ ] Imprint on the book - cover, way of obtaining:
5.19. [ ] Issue date (for announcements).
5.20. [ ] Demo - copy (for announcements).
6. Commercial information on the goods:
6.1. [ ] Price of the goods.
6.2. [ ] Availability of the goods in the warehouse.
6.3. [ ] Accessibility of the goods.
<PAGE>
* The given positions are filled in by the Purchaser.
The Vendor The Purchaser
(Signature) (Signature)
(Seal) (Seal)
Contract #03-04/00-P
February 29, 2000
ZAO[Izdatelstvo [Exmo - Press], hereinafter named as the Vendor, in the
person of Deputy Commercial Director Alimov A. B., acting on the basis of the
Power of Attorney # EP-2-2 of 05.01.2000, on one part, and ZAO [Oxiris],
hereinafter named as the Purchaser, in the person of General Director Dolgov V.
A., acting on the basis of the Charter, on the other part, have concluded the
present Contract concerning the following:
1. SUBJECT OF THE CONTRACT.
1.1. In accordance with the present contract, the Vendor undertakes to
deliver goods (production) to the Purchaser, and the Purchaser undertakes to
accept it and pay for it.
1.2. In accordance with the present contract, the Vendor delivers to
the Purchaser book production of non - advertising and non - erotic type, not
imposed by VAT in accordance with the Federal Law [On the state support of mass
- - media and book publishing in the Russian Federation] # 191-FZ, with prices and
in an amount, determined by way - bills and invoices, which are inherent
supplements of the present contract.
<PAGE>
1.3. The Purchaser acquires the proprietary right on the goods and
bears all the risks relevant thereto from the moment of dispatch of the goods
from the Vendor's warehouse.
1.4. The date of goods delivery to the Purchaser is the date of the way
- - bill.
1.5. According to parties' agreement, the goods may be delivered: by
means and at the expense of the Purchaser.
2. SETTLEMENTS OF PARTIES
2.1. The parties have agreed upon the following amount and method of
payment:
2.1.1 The Purchaser pays to the Vendor: the goods value is determined in
accordance with the made out invoice or waybill. The goods price indicated in
way - bills is firm and is not subject to changing. 2.1.2. The Purchaser pays
for the goods in accordance with invoice either on his own from his settlement
account, or through cash payment to a the Vendor representative on the basis of
a power of attorney and within the limits established by the government of the
Russian Federation.
2.1.3 The Purchaser pays for the goods within the period of not later,
than 30 (thirty) calendar days since dispatch of the goods according to
waybills.
<PAGE>
2.1.4 The Purchaser can refuse to pay in part in the following cases: a)
if he received defective goods of low quality, and also polygraphic rejects.
Financial relationships of this type are confirmed by product liability claim
reports approved by the commission, which consists of parties' representatives,
signed by authoritative representatives from both sides, and presented to the
Vendor within 3 days since reception of the goods.
2.1.5. Instead of refusal to pay in part, the Purchaser has the right on
the basis of an agreement with the Vendor to exchange defective or undelivered
goods for the same or analogous goods.
2.1.6. Ruble of the Russian Federation is considered as the currency of
payment.
3. RIGTHS AND COMMITMENTS OF PARTIES
3.1. The Vendor shall:
a) put in order the documentation required;
b) transfer the documentation to the Purchaser;
3.2. The Vendor has the right:
a) to receive indemnity for expenses incurred (shipment, customs ones)
and goods value, in accordance with the present contract;
b) to indemnify for losses caused by the Purchaser's illegitimate
actions;
3.3. The Purchaser shall:
a) accept the goods and pay for it in accordance with the present
contract; see item
b) cover to the Vendor expenses determined in item 1.5;
c) indemnify to the Vendor losses in case of refusal to execute own
commitments.
3.4. The Purchaser has the right:
a) to receive goods in accordance with the present contract, while
presenting power of attorney, which is given to a person authorized by the
Purchaser.
4. TRANSFER - ACCEPTANCE OF PRODUCTION
4.1. Transfer/acceptance of goods is implemented with the participation
of representatives of the Vendor and the Purchaser.
4.2. The goods are considered as delivered since the moment of its
direct dispatch by The Vendor and the date of waybill.
5. RESPONSIBILITY OF PARTIES
5.1. In case of non-execution or improper execution of its commitments,
the guilty party shall indemnify to the other party for losses (including the
missed profit).
5.2. In case of delay while executing their commitments, the parties
pay forfeit in amounts as follows:
a) transfer of money resources - 0.5 % of the sum not remitted in due
time for each day of delay;
5.3. Forfeit payment and indemnity for losses does not release the
guilty party from execution of commitments in accordance with the present
contract.
<PAGE>
5.4. Each of the parties can demand to cancel the contract and to
indemnify for losses, if the other party does not execute its commitments more
than once.
5.5. The contract party, for which impossibility to execute the
commitments in accordance with the contract arose due to occurrence of
unforeseen circumstances, natural calamities, military operations, shall
immediately notify in written form the other party on approach and character
(including, cessation) of such circumstances.
6. ADDITIONAL PROVISIONS
6.1. The parties recognize documents received through fax as confirming
the responsibilities on execution of the present contract.
6.2. The present contract is valid since the moment of signing it till
December 31, 2000.
6.3. On expiration of the period indicated in item 6.2., the contract
is automatically extended for an indefinite period in case of absence of
objection of one of the parties in written form.
6.4. The parties have made an agreement on the method of gross
accounting of mutual claims within a calendar period as determined by the
parties, the parties signing not less than twice a year [Statement of checking
mutual settlements], where gross value of the goods transferred for the calendar
period and gross payment for the calendar period are reflected with result
deduction for the mutual settlements at the end of the given period.
The given statement of checking mutual settlements is the final
document confirming the dates of transferring the proprietary right and gross
value of goods transferred by the Vendor to the Purchaser and payment made for
the given goods, that is, reflecting actual execution by the parties of their
commitments in accordance with items of the given contract.
The above - mentioned settlement method strengthens the Vendor's right
in an unilateral manner to reckon the sum of a payment or its fraction made for
the next lot of goods towards payment for the previous lot of goods in case of
the Purchaser's debt.
And also the Purchaser's right in an unilateral manner to demand
transferring into property the next lot of goods, if there is the Vendor's debt
for the previous lot of goods.
In this context as a lot of goods, the parties should consider book
production transferred by the Vendor into the Purchaser's property within one
calendar day in amount, assortment and sum as confirmed by way - bill and
invoice.
<PAGE>
7. OTHER PROVISIONS
7.1. All disputes in connection with the present contract are solved in
the course of negotiations, and in case of failure to reach the mutual
agreement, in the Court of Arbitration of the Russian Federation of the city of
Moscow.
7.2. In order to change (annul) the present contract, the parties have
provided for the following order. Interested party hands over its proposal in
written form to the other party. The other party shall answer it within a period
of 5 days, also in written form. In case of failure to reach an agreement, the
argument is solved in accordance with procedure as envisaged in item 7.1.
7.3. Parties' relationships not adjusted by the present contract are
settled by the valid legislation on buying and selling.
7.4. As inherent parts of the present contract the following is
enclosed thereto: a) waybills, b) invoices.
7.5. Parties addresses and bank details:
The Vendor: ZAO [Izdatelstvo [Exmo - Press], 659700, Gorno - Altaysk, Ulagashev
street, building 13, INN 0411030957, settlement account 40702810900000001047 in
KB [SDM - Bank] of the city of Moscow, correspondent account
30101810600000000685, BIK 044583685.
Deputy Commercial Director Alimov A. B.
(Signature)
(Seal)
The Purchaser: ZAO [Oxiris], 117802, Moscow, Nauchny passage, building 12,
settlement account 40702810700030000049 in KB [Evrozapsibbank] of the city of
Moscow, correspondent account 30101810000000000726, BIK 044585726, INN
7706200205.
General Director
(Signature)
(Seal)
SALES & PURCHASE AGREEMENT ? 170400/1
Moscow April 17, 2000
Limited liability company OOO "Jurist-Gardarika", represented by its Director
General J.V.Savinova, acting on the basis of the company's Charter, hereinafter
named "The Seller", and closed-end joint-stock company ZAO "OKSIRIS",
hereinafter named "The Buyer", represented by V.A.Dolgov, acting on the basis of
the Charter, entered in the present agreement on the following:
1. SUBJECT
1.1. The Seller undertakes to give over, and the Buyer undertakes to pay for, on
the basis of the present Agreement, the Goods (printed books), provided for
in the Seller's price-list.
1.2. The Goods should be given over on the basis of the oral or written order of
the Buyer. Quantity and assortment should be shown in the waybills,
provided for each shipment.
2. PRICE OF GOODS
2.1. Price of the Goods should be established in rubles and is determined
according to the Sellers price-list.
2.2. Price of the Goods should be shown in the invoices and waybills,
supplied with each shipment.
2.3. Price of the Goods includes cost of the Goods and cost of the packing.
3. RIGHTS AND OBLIGATIONS OF THE PARTIES
3.1. Rights and obligations of the Seller:
3.1.1. The Seller undertakes to deliver to the Buyer Goods of the proper
quality, conforming to the certificates, to another technical
documentation, and to the sanitary norms and rules, if those goods are
in stock at the Sellers warehouse, against a drawn order of the Buyer,
not later than in 24 hours upon receiving the order.
<PAGE>
3.1.2. The Seller undertakes to replace the poor quality Goods within 5 (five)
days from the time of receiving the notice about such Goods from the
Buyer. The Goods should be considered as being of poor quality, if they
have obvious or hidden defects, as well as the Goods, returned by the
third parties, on the grounds of having in them defects, arising due to
the Sellers fault, and not mentioned by the latter at the delivery, as
well as the Goods, the written content of which doesn't meet the
requirements of the present law.
3.1.3. In the case, when Goods are not in stock at the Seller's warehouse, the
Seller undertakes to notify the Buyer within 24 hours about possible
date of delivery.
3.1.4. The Seller undertakes to prepare the transport documentation for the
shipments.
3.1.5. The Seller undertakes to provide the quality guarantee within the
guarantees of the manufacturer.
3.1.6. The Seller undertakes, on a daily basis, to provide the Buyer with the
information about his stock, according to the price-list. Such
information should be delivered in electronic form. 3.2. Rights and
obligations of the Buyer: 3.2.1. The Buyer undertakes to accept Goods
on the condition ex-warehouse of the Seller in Moscow. 3.2.2 The Buyer
undertakes to check quality and assortment of the Goods at delivery, to
prepare and sign the appropriate papers, to notify the Seller about
defects of the Goods, revealed at delivery. The Seller shall enjoy the
right to refuse accepting Goods, in case they don't conform the order
in assortment or quantity.
<PAGE>
4. COST OF GOODS AND PAYMENT CONDITIONS
4.1. Cost of the batch of Goods is established in rubles and is calculated as a
number of units of the goods of the given title, multiplied by their cost in
accordance with 2.1. 4.2. Date of payment shall be considered the date when
funds are accepted on the Sellers account. 4.3. The Buyer should pay for the
Goods by bank transfer to the Seller's account according to the order and
invoice, in full-amount prepayment, the rest of the sum shall be transferred
within --- days after delivery.
4.4. Payment in cash is allowed on consent of the parties in accordance with the
acting Law of the RF.
5. RESPONSIBILITY OF THE PARTIES
5.1. In the case, one of the Parties fails to fulfil any provision of this
Agreement, all disputes shall be settled on the basis of mutual understanding.
If settlement can not be reached in this way, the case shall be given over to
the International Arbitrage Court at the Moscow Chamber of Commerce and
Industry, city of Moscow.
6. AGREEMENT'S TERM AND TERMINATION CONDITIONS
6.1. This Agreement shall come into force from the date of signing it by
Parties' authorised persons.
6.2. Term of validity of this Agreement is established equal to one calendar
year. Validity of this Agreement upon its extinction shall be prolonged
automatically for each subsequent period, if neither of the Parties gave no
notice in writing, in one month time before expiry date, to the other Party on
the termination of this Agreement, or on its further amendment.
6.3. This Agreement can be terminated upon the wish of one of the Parties, on
the condition that the other Party is notified not later, than in a month before
the termination date.
7. FORCE MAJEURE
7.1. In the case, the circumstances outside one's control will occur, caused
directly or indirectly by the circumstances outside one's control, caused
directly or indirectly by occurrence of, for instance, flood, fire, earthquake,
epidemic, war conflict, Coup d'Etat, acts of terrorism, civil disturbances,
strike, orders, decrees or other administrative interference of the Government,
or any other resolutions, administrative or governmental restrictions, causing
influence on fulfilment of the obligations under this Agreement, or other
circumstances outside of reasonable control of the Parties, terms of fulfilment
of these obligations shall be postponed proportionally for the period of
existence of such circumstances, if they considerably affect timely fulfilment
of the whole Agreement, or one or another of its part, subject for fulfilment
after occurrence of the circumstances of force-majeure. Both Parties should
immediately notify in writing each other on the commencement and cessation of
circumstances of force majeure, which obstruct fulfilment of the obligations
under this Agreement. The Party, referring to the circumstances of force
majeure, should provide in confirmation the document from the competent state
body.
8. MISCELANEOUS
8.1. This Agreement may be changed and supplemented by the written agreement of
the Parties, signed by the authorised representatives of the Parties.
8.2. The Parties agree to keep in strict confidence conditions of this Agreement
and any information, related to the business side of the other Party in relation
to this Agreement, and not to make any public statements, concerning these
conditions, except as upon receiving beforehand the written consent of the other
Party.
<PAGE>
8.3. This Agreement, including annexes, replaces any other preliminary
agreements, approvals, written and oral understandings, related to the subject
of this Agreement.
8.4. Within two working days from the date of signing of this Agreement each
Party delegates their senior employee (one from each side) for the purpose of
organising technical co-operation in data exchange between the informational
systems of the Seller an of the Buyer.
8.5. Within two weeks from the date of signing of this Agreement the working
groups of the Parties, under supervision of their senior employees, shall agree
upon every detail of technical co-operation on exchange of information about
Goods, and prepare the Protocol on exchange, and procedure for information
updating, which shall be approved by the authorised representatives of both
Parties and shall be considered as inseparable part of this Agreement.
9. ADDRESSES AND BANK DETAILS OF THE PARTIES
<TABLE>
<CAPTION>
THE SELLER THE BUYER
Full name Full name
<S> <C>
Of organization: OOO "Jurist-Gardarika" Of organization: ZAO "OKSIRSIS"
Juridical address : 103009, Moscow Juridical address : 117802 Moscow
Tverskaya street.,10, str.3 Nauchniy proezd 12
Telephone : (095) 261-9624 Telephone : (095) 334-4411
Fax : 261-6010 Fax : 937-5060
Name of the bank: AKB "Grinfildbank" Name of the bank: AKB "Evrozapsibbank"
Account : 40702810700000000168 Account : 40702810700030000049
BIC : 044583271 BIC : 044585726
Corresponding Corresponding
Account : 30101810700000000271 Account : 30101810000000000726
INN : 7710290931 INN : 7706200205
OKONH : 71100 OKONH : 71100, 71200
OKPO 18562603 OKPO 51260913
OOO "Jurist-Gardarika" ZAO "OKSIRSIS"
(Signature) (Signature)
Director General Director General
(Seal) (Seal)
April 17, 2000 April 17, 2000
</TABLE>
<PAGE>
Protocol to the Agreement # 170400/1 of April 17, 2000
Specification ofthe supplied information format
1. Format of the supplied information (database type):
2. Format of the updated supplied information:
3. Delivery method for updated information :
4. General information about Goods :
4.1. Russian title of the book
4.2. [x] English title of the book
4.3. [x] Name of the author(s) in Russian
4.4. [x] Name of the author(s) in English
4.5. [x] Original's language
4.6. [x] Author of translation
4.7. [x] Year of edition
4.8. [x] Publisher, city
4.9. [x] Number of pages
4.10. [x] Bounding type
4.11. [x] BBK
4.12. [x] UDK
4.13. [x] ISBN
4.14. [ ] Dimensions
4.15. [ ] Weight
4.16. [ ] Annotation
5. Commercial information about Goods
5.1. [x] Price of the Goods
5.2. [x] Information about having Goods in stock
SELLER BUYER
----------- --------------------
(Signature) (Signature)
(Seal) (Seal) /V.A.Dolgov/
PURCHASE AND SALE AGREEMENT #120300/1
Moscow City April 12, 2000
[Midix]Closed Joint Stock Company in the person of Director Mr. Budievsky G.A.
acting under the Articles of Association, hereinafter referred to as the[Seller]
and[Oxiris] Closed Joint Stock Company, hereinafter referred to as the[Buyer],
in the person of Mr. Dolgov V.A., acting under the Articles of Association, have
concluded this Agreement for the following:
1. Subject of Agreement
1.1 The Seller shall be responsible for transfer of the Goods (books) and the
Buyer shall be responsible for payment for the Goods in accordance with
the Seller's price list.
1.2 The Goods transfer shall be effected by reason of oral or written order
of the Buyer. The Goods quantity and range shall be specified in waybills
accompanying each lot.
2. Goods Price
2.1 The price for Goods shall be established in Russian Rubles and determined by
the Seller's price list. 2.2 The price for Goods shall be fixed in invoices and
waybills accompanying each lot. 2.3 The price for Goods shall include the value
of goods and packing.
3. Responsibilities and Rights of Parties
3.1 The Seller responsibilities and rights include the following:
3.1.1 The Seller shall be responsible for delivery of Goods with duly
quality complying with certificates, other technical documents
and sanitary standards and rules, to the Buyer in event of their
availability in stock at the Sellers' warehouses against the
order placed by the Buyer no later than 24 hours from the moment
of order receipt.
3.1.2 The Seller shall be responsible for replacement of defective
Goods within 5 (five) days from the moment of receipt of
information about such Goods from the Buyer. The Goods shall be
deemed defective if they have obvious or hidden defects and also
the Goods returned by any third party in connection with defects
occurred due to the fault of the Buyer, that were not specified
at the time of transfer, and the Goods with the contents that
does not meet the requirements of active legislation.
3.1.3 In event of absence of Goods at the Sellers' warehouses, the
latter shall inform the Buyer during 24 hours about possible
delivery date.
3.1.4 The Seller shall be responsible for making of shipping
documents.
3.1.5 The Seller shall be responsible for provision of quality
guarantees for the Goods within the limits of manufacturer
guarantees.
3.1.6 The Seller shall be responsible for daily provision of
information on availability of the Goods at its warehouse in
accordance with the price list to the Buyer in electronic form.
<PAGE>
3.2 The Buyer responsibilities and rights include the following:
3.2.1 The Buyer shall accept the Goods from the Seller on condition of
self-pickup from the Seller's warehouse in Moscow.
3.2.2 The Buyer shall be responsible for inspection during Goods acceptance
procedure against quantity and range; for making and signing of
appropriate documents and informing the Seller about any deficiencies
revealed during acceptance procedure. The Buyer shall have the right to
deny acceptance of Goods in an event of their noncompliance with the
range specified in order or quantity.
4. Goods Value and Settlement Procedure
4.1 The Goods lot value shall be established in Russian Rubles and defined as
the quantity of corresponding name items multiplied by their price as set
forth in Section 2.1.
4.2 The payment date shall be deemed the date of receipt of funds at the
Seller's settlement account.
4.3 The Buyer shall pay for the Goods by remittance of funds to the Seller's
settlement account according to order and invoice by way of 100%
prepayment with the remaining amount to be remitted within _____ days
from the Goods receipt date.
4.4 By approval of the parties cash payment shall be acceptable in compliance
with the Russian Federation legislation.
5. Liability of Parties
5.1 In event of nonfulfilment by any of the parties under this Agreement any
provision hereof, disputable issues shall be settled on the basis of
mutual agreements. In event of inability to reach agreement the case
shall be transferred for settlement to the International Arbitration
Court at the Commerce and Industry Chamber, the City of Moscow.
6. Agreement Term and Its Termination Procedure
6.1 This Agreement shall be effective from the moment of its signing by
authorized persons of the parties.
6.2 The term of this Agreement shall be equal to one calendar year. The term
shall be automatically renewed for each successive period unless either
of the parties elects not to renew by giving not less than one months'
prior written notice to the other about termination of the Agreement or
its reviewing.
6.3 This Agreement may be terminated on the wish of either of the parties on
condition of not less than one months' prior written notice.
7. Force Majeure
7.1 In an event of circumstances caused by direct or indirect force majeure
events including, without limitation, flood, fire, earthquake, epidemics,
military conflicts, overturns, terrorist attacks, civil disturbances,
strikes, regulations, orders or other administrative interference from
the government or any other decrees, administrative or governmental
restrictions affecting performance of responsibilities under this
Agreement or other circumstances beyond the reasonable control of
parties, the terms of performance of these responsibilities shall be
proportionately extended for the time of duration of these circumstances,
if they significantly affect the timely execution of the whole Agreement
or any part thereof which is subject to execution after onset of force
majeure circumstances. Both parties shall immediately notify each other
in writing about commencement and cessation of force majeure
circumstances hindering fulfillment of responsibilities under this
Agreement. The party referring to force majeure circumstances shall
provide the confirming document of competent state authority.
<PAGE>
8. Other Conditions
8.1 The Agreement can be changed and amended by written approval of the
parties signed by their authorized representatives. 8.2 The parties agree
to maintain strict confidentiality with respect to the conditions of this
Agreement and any information pertaining to conduct of business by the
other party in connection with this Agreement and will not make any
public declarations regarding these conditions except prior written
permission of the other party.
8.3 This Agreement including Addendums supersedes any preliminary agreements,
regulations, written and oral representations relating to the subject
matter hereof.
8.4 During two working days from the signature date of this Agreement, the
parties present their responsible persons (one from each party) for the
purpose of technical interaction for data exchange between information
systems of the Seller and the Buyer.
8.5 Within two weeks from the signature date of this Agreement, the parties'
working groups under the management of responsible persons shall approve
all the details of technical interaction for exchange of information
about the Goods and prepare the Protocol on information exchange and
update procedures, which shall be approved by authorized representatives
of both parties and shall be an integral part of this Agreement.
9. Parties' Addresses and Information
<TABLE>
<CAPTION>
SELLER BUYER
<S> <C>
Company full name: Company full name:
[Midix]Closed Joint Stock Company [Oxiris]Closed Joint Stock Company
Legal address: 7 Ramenki St., Block 2, management office Legal address:
Moscow ZIP Code 117607 12 Scientific Drive, Moscow ZIP Code 117802
Telephone: +7(095) 955-4101 Telephone: +7(095) 334-4411
Fax: +7(095) 958-0265 Fax: +7(095) 937-5060
Bank name: Bank name:
[Alfa Bank]Open Joint Stock Company [EuroWestSibBank]Joint Stock Commercial Bank
Settlement account: 40702810200000005622 Settlement account: 40702810700030000049
BIK: 044525593 BIK: 044585726
Correspondent account: 30101810200000000593 Correspondent account: 30101810000000000726
TIN: 7729051461 TIN: 7706200205
OKONKh 71100 OKONKh 71100, 71200
OKPO 17977839 OKPO 51260913
Managing Director
[Oxiris] Closed Joint Stock Company
(Signature) Budievsky G.A. (Signature) Dolgov V.A.
(Seal) (Seal)
April 12, 2000 April 12, 2000
</TABLE>
Protocol to the Agreement # __________ of 2000
<PAGE>
Provided Information Format Specification
1. Provided data format (database type):__________________________________
2. Transmitted information update format:_________________________________
3. Updated information transmission method:_______________________________
4. General goods information:
4.1 [ ] Literary work title in Russian
4.2 [ ] Literary work title in English
4.3 [ ] Author(s) full name(s) in Russian
4.4 [ ] Author(s) full name(s) in English
4.5 [ ] Original language
4.6 [ ] Translation language
4.7 [ ] Publication year
4.8 [ ] Publisher, city
4.9 [ ] Number of pages
4.10 [ ] Binding type
4.11 [ ] BBK
4.12 [ ] Universal Decimal Classification (UDC)
4.13 [ ] ISBN
4.14 [ ] Dimensions
4.15 [ ] Weight
4.16 [ ] Annotation
5. Goods commercial information:
5.1 [ ] Goods price
5.2 [ ] Goods availability at warehouse
<PAGE>
SELLER BUYER
(Signature) /s/Budievsky G.A. (Signature) /s/Dolgov V.A.
----------------- ---------------
Budievsky G. A. Dolgov V.A.
(Seal) (Seal)
AGREEMENT # 3000/202
for provision of services in receipt and handling of mailings
Moscow April 19, 2000
[Oxiris] Closed Joint Stock Company, hereinafter referred to as the [Customer],
in the person of Managing Director Mr. Dolgov V.A., acting under the Articles of
Association, on the one part and the [Moscow Post Office], the Federal State
Unitary Communications Enterprise of the Federal Mail Communication
Administration of the City of Moscow, hereinafter referred to as the [Executor],
in the person of its Head Mr. Makarov V.B., acting under the Articles of
Association, on the other part, have concluded this Agreement for the following:
1. Subject of Agreement
The Executor provides to Customer the services in receipt, handling (insured
printed matters and parcels) hereinafter referred to as the [Mailings] and their
successive shipment to a destination and the Customer pays for the provided
services.
2. Responsibilities of Parties
2.1 The Customer responsibilities include the following:
2.1.1 Packing and registration of Mailings in accordance with the
Rules for Mail Services Provision, instructions and guidelines
of the Ministry of Communications of the Russian Federation.
2.1.2 Use of containers approved in the industry for packing of
Mailings.
2.1.3 To verify the information with the Executor each month not later
than on 5th day on Mailings number delivered in the past month.
2.1.4 To provide possibility to the Executor to control mailing
enclosures.
2.1.5 Timely and to full extent effect settlements with the Executor
for the provided services.
2.2 The Executor responsibilities include the following:
2.2.1 Timely notification of all changes in the Rules for Mail
Services Provision; instructions and guidelines of the Ministry
of Communications of the Russian Federation; [Tariffs on Mail
Services] price list; [Tables for Weight Duties Calculation for
Handling and Transportation of Parcels], etc.
2.2.2 On requirement of the Customer to conduct search of misdelivered
Mailings in accordance with the established procedure and notify
the Customer about results of this search.
2.2.3 To enter the amount of advance payment into franking machine
counters after passing of funds to the Executor's account and to
conduct reading of franking machine counters each ten days.
<PAGE>
3. Parties' Settlements
3.1 The Customer shall remit the advance payment in the amount of average
monthly value of works to the settlement account of the Executor not
later than three banking days from the billing date.
3.2 The final settlement for the provided services shall be made on the basis
of Certificate on Provided Services, signed by the parties, and the
invoice, not later than on 10th day of the month following the reporting
month with respect to received advance payment.
3.3 The payment for the mail services provided to the Customer shall be made
in accordance with the tariffs effective on the moment of such services
provision:
o for handling and resending of printed matters with declared value
according to [Tariffs on Mail Services] price list;
o for handling and resending of parcels on the basis of the Order #283 of
September 16, 1998 of [Moscow Post Office], the Federal State Unitary
Communications Enterprise of the Federal Mail Communication
Administration of the City of Moscow;
o VAT shall be levied above the established tariffs.
4. Liability of Parties
4.1 For violation of the terms of payment for provided services the Customer
shall pay the Executor the fine in size of 0.1% of the amount that is due
for remittance for each day of payment delay. The payment of fine shall
not waive the Customer's obligation to pay the principal amount.
4.2 The Executor shall be liable for loss or damage to enclosures of
registered Mailings in compliance with and to the extent stipulated by
the active Rules for Mail Services Provision.
5. Disputes Settlement
5.1 Disputes which may arise in the process of execution of this Agreement
shall be settled by way of negotiations between the parties.
5.2 In event of inability to settle disputes by way of negotiations, they
shall be transferred for settlement to the Arbitration Court of the City
of Moscow in compliance with the active legislation.
6. Force Majeure
6.1 The parties shall be released from responsibility for partial or complete
nonfulfilment of their liabilities under this Agreement, if this
nonfulfilment became consequence of force majeure circumstances, namely:
fire, embargo, epidemic, military actions, restricting act of state
authority, strike or other circumstances beyond the reasonable control of
parties the term of performance of responsibilities shall be
proportionately extended for the time of duration of these circumstances.
If the foregoing circumstances will continue for over 6 (six) months,
then each of the parties shall have the right to refuse performance of
its obligations under this Agreement in view of their inability to
perform such obligations and this party shall promptly notify the other
about commencement and cessation of the circumstances hindering
fulfillment of responsibilities.
6.2 The party delaying performance of its responsibilities shall not have the
right to refer to force majeure circumstances that commenced during such
delay.
<PAGE>
7. Addendums, Amendments and Changes
All the addendums, amendments and changes to this Agreement are its integral
parts, if they are made in writing and signed by persons authorized by the
parties.
8. Confidentiality
The parties shall take all the necessary measures to prevent disclosure of
information connected with this Agreement. Disclosure or other spreading of the
foregoing information and also its transfer to any third person shall be done in
each certain case on mutual consent of the parties.
9. Agreement Term
9.1 This Agreement shall be effective from the moment of its signing and
shall remain in full force and effect until April 19, 2001.
9.2 This Agreement may be unilaterally terminated by each of the parties on
condition of not less than one months' prior written notice.
9.3 This Agreement shall be renewed for successive calendar year, unless
either of the parties elects not to renew it by giving not less than one
months' prior written notice to the other.
9.4 This Agreement is made in two copies in Russian language with equal legal
power, each copy is kept by each party.
10. Parties' Addresses and Banking Information
<TABLE>
<CAPTION>
Customer Executor
<S> <C>
TIN: 7706200205 [Moscow Post Office]
BIK: 044585726 the Federal State Unitary Communications Enterprise of
Settlement account: 40702810700030000049 the Federal Mail Communication Administration of the
Correspondent account: 30101810000000000726 City of Moscow
at[EuroWestSibBank]Joint Stock 26 Miasnitskaya St., Moscow ZIP Code 101000
Commercial Bank TIN: 7701029593
OKPO 51260913 BIK: 044525219
OKONKh 71100 Settlement account: 4050281050017000000005
at MMB--Bank of Moscow Joint Stock Commercial Bank
Novoarbatskoye branch
Correspondent account: 30101810500000000219
OKPO 01166004
OKONKh 52100
(Signature) /s/V.A. Dolgov (Signature) /s/V.B. Makarov
-------------- ---------------
(Seal) (Seal)
</TABLE>
PURCHASE AND SALE AGREEMENT #2/04-00 P
Moscow City April 13, 2000
[Quadro Trade] Company Limited in the person of Managing Director Ms. Ivanova
I.N. acting under the Articles of Association, hereinafter referred to as
the[Seller] and [Oxiris] Closed Joint Stock Company, hereinafter referred to as
the[Buyer], in the person of Mr. Dolgov V.A., acting under the Articles of
Association, have concluded this Agreement for the following:
1. Subject of Agreement
1.1 The Seller shall be responsible for transfer of the Goods (audio
cassettes and compact discs) and the Buyer shall be responsible for
payment for the Goods in accordance with the Seller's price list.
1.2 The Goods transfer shall be effected by reason of oral or written order
of the Buyer. The Goods quantity and range shall be specified in waybills
accompanying each lot.
2. Goods Price
2.1 The price for Goods shall be established in Russian Rubles and determined by
the Seller's price list. 2.2 The price for Goods shall be fixed in invoices and
waybills accompanying each lot. 2.3 The price for Goods shall include the value
of goods and packing.
3. Responsibilities and Rights of Parties
3.1 The Seller responsibilities and rights include the following:
3.1.1 The Seller shall be responsible for delivery of Goods with duly
quality complying with certificates, other technical documents
and sanitary standards and rules, to the Buyer in event of their
availability in stock at the Sellers' warehouses against the
order placed by the Buyer no later than 24 hours from the moment
of order receipt.
3.1.2 The Seller shall be responsible for replacement of defective
Goods within 5 (five) days from the moment of receipt of
information about such Goods from the Buyer. The Goods shall be
deemed defective if they have obvious or hidden defects and also
the Goods returned by any third party in connection with defects
occurred due to the fault of the Buyer, that were not specified
at the time of transfer, and the Goods with the contents that
does not meet the requirements of active legislation.
3.1.3 In event of absence of Goods at the Sellers' warehouses, the
latter shall inform the Buyer during 24 hours about possible
delivery date.
3.1.4 The Seller shall be responsible for making of shipping
documents.
3.1.5 The Seller shall be responsible for provision of quality
guarantees for the Goods within the limits of manufacturer
guarantees.
3.1.6 The Seller shall be responsible for daily provision of
information on availability of the Goods at its warehouse in
accordance with the price list to the Buyer in electronic form.
<PAGE>
3.2 The Buyer responsibilities and rights include the following:
3.2.1 The Buyer shall accept the Goods from the Seller on condition of
self-pickup from the Seller's warehouse in Moscow.
3.2.2 The Buyer shall be responsible for inspection during Goods
acceptance procedure against quantity and range; for making and signing
of appropriate documents and informing the Seller about any deficiencies
revealed during acceptance procedure. The Buyer shall have the right to
deny acceptance of Goods in an event of their noncompliance with the
range specified in order or quantity.
4. Goods Value and Settlement Procedure
4.1 The Goods lot value shall be established in Russian Rubles and defined as
the quantity of corresponding name items multiplied by their price as set
forth in Section 2.1.
4.2 The payment date shall be deemed the date of receipt of funds at the
Seller's settlement account.
4.3 The Buyer shall pay for the Goods by remittance of funds to the Seller's
settlement account according to order and invoice with the payment delay
of 3 (three) days from the Goods receipt date.
4.4 By approval of the parties cash payment shall be acceptable in compliance
with the Russian Federation legislation.
5. Liability of Parties
5.1 In event of nonfulfilment by any of the parties under this Agreement any
provision hereof, disputable issues shall be settled on the basis of
mutual agreements. In event of inability to reach agreement the case
shall be transferred for settlement to the International Arbitration
Court at the Commerce and Industry Chamber, the City of Moscow.
6. Agreement Term and Its Termination Procedure
6.1 This Agreement shall be effective from the moment of its signing by
authorized persons of the parties.
6.2 The term of this Agreement shall be equal to one calendar year. The term
shall be automatically renewed for each successive period unless either
of the parties elects not to renew by giving not less than one months'
prior written notice to the other about termination of the Agreement or
its reviewing.
6.3 This Agreement may be terminated on the wish of either of the parties on
condition of not less than one months' prior written notice.
7. Force Majeure
7.1 In an event of circumstances caused by direct or indirect force majeure
events including, without limitation, flood, fire, earthquake, epidemics,
military conflicts, overturns, terrorist attacks, civil disturbances,
strikes, regulations, orders or other administrative interference from
the government or any other decrees, administrative or governmental
restrictions affecting performance of responsibilities under this
Agreement or other circumstances beyond the reasonable control of
parties, the terms of performance of these responsibilities shall be
proportionately extended for the time of duration of these circumstances,
if they significantly affect the timely execution of the whole Agreement
or any part thereof which is subject to execution after onset of force
majeure circumstances. Both parties shall immediately notify each other
in writing about commencement and cessation of force majeure
circumstances hindering fulfillment of responsibilities under this
Agreement. The party referring to force majeure circumstances shall
provide the confirming document of competent state authority.
<PAGE>
8. Other Conditions
8.1 The Agreement can be changed and amended by written approval of the
parties signed by their authorized representatives.
8.2 The parties agree to maintain strict confidentiality with respect to
conditions of this Agreement and any information pertaining to conduction
of business by the other party in connection with this Agreement and will
not make any public declarations regarding these conditions except prior
written permission of the other party.
8.3 This Agreement including Addendums supersedes any preliminary agreements,
regulations, written and oral representations relating to the subject
matter hereof.
8.4 During two working days from the signature date of this Agreement, the
parties present their responsible persons (one from each party) for the
purpose of technical interaction for data exchange between information
systems of the Seller and the Buyer.
8.5 Within two weeks from the signature date of this Agreement, the parties'
working groups under the management of responsible persons shall approve
all the details of technical interaction for exchange of information
about the Goods and prepare the Protocol on information exchange and
update procedures, which shall be approved by authorized representatives
of both parties and shall be an integral part of this Agreement.
9. Parties' Addresses and Information
<TABLE>
<CAPTION>
SELLER BUYER
<S> <C>
Company full name: Company full name:
[Quadro Trade]Company Limited [Oxiris]Closed Joint Stock Company
Legal address: 1/1 Nemansky Drive, Legal address:
Moscow ZIP Code 123181 12 Scientific Drive, Moscow ZIP Code 117802
Telephone: +7(095) 452-0051 Telephone: +7(095) 334-4411
Fax: +7(095) 452-4398 Fax: +7(095) 937-5060
Bank name: Bank name:
[Russian General Bank]Commercial Bank [EuroWestSibBank]Joint Stock Commercial Bank
Settlement account: 40702810000000004001 Settlement account: 40702810700030000049
BIK: 044583942 BIK: 044585726
Correspondent account: 30101810000000000942 Correspondent account: 30101810000000000726
TIN: 7734175783 TIN: 7706200205
OKONKh 71100 OKONKh 71100, 71200
OKPO 48536750 OKPO 51260913
Managing Director Managing Director
[Quadro Trade]Company Limited [Oxiris]Closed Joint Stock Company
(Signature) /s/Ivanova I.N. (Signature) /s/Dolgov V.A.
--------------- ----------------
(Seal) (Seal)
Protocol to the Agreement # __________ of 2000
</TABLE>
Provided Information Format Specification
1. Provided data format (database type):__________________________________
2. Transmitted information update format:_________________________________
3. Updated information transmission method:_______________________________
4. General goods information:
4.1 [|X|] Work title in Russian
4.2 [|X|] Work title in English
4.3 [|X|] Author(s) full name(s) in Russian 4.4 [|X|] Author(s) full
name(s) in English 4.5 [ ] Original language 4.6 [ ] Translation author
4.7 [ ] Release year 4.8 [ ] Copyright owner 4.9 [ ] Record duration 4.10
[ ] Dimensions 4.11 [ ] Weight 4.12 [ ] Annotation
5. Goods commercial information:
5.1 [|X|] Goods price
5.2 [|X|] Goods availability at warehouse
<PAGE>
SELLER BUYER
[Quadro Trade] Company Limited
(Signature) /s/Ivanova I.N. (Signature) /s/Dolgov V.A.
--------------- ---------------
(Seal) (Seal)
PURCHASE AND SALE AGREEMENT #01-04/00
Moscow City April 4, 2000
[Savva Group Entertainment Video] Company Limited in the person of Executive
Director Mr. Sorochkin S.B. acting under the Articles of Association,
hereinafter referred to as the [Seller] and [Oxiris] Closed Joint Stock Company,
hereinafter referred to as the [Buyer], in the person of Mr. Dolgov V.A., acting
under the Articles of Association, have concluded this Agreement for the
following:
1. Subject of Agreement
1.1 The Seller undertakes the obligation to transfer the Goods (video
products) and the Buyer undertakes the obligation to pay for the Goods in
accordance with the Seller's price list.
1.2 The Goods transfer shall be effected on the basis of oral or written
order of the Buyer (transmitted by fax message or other means). The Goods
quantity and range shall be specified in waybills accompanying each lot.
2. Goods Price
2.1 The price for Goods shall be established in Russian Rubles and indicated
in waybills and invoices accompanying each lot.
3. Responsibilities and Rights of Parties
3.1 The Seller responsibilities and rights include the following:
3.1.1 The Seller shall be responsible for delivery of Goods with duly
quality to the Buyer in event of their availability in stock at
the Sellers' warehouses against the order placed by the Buyer no
later that 24 hours from the moment of order receipt.
3.1.2 The Seller shall be responsible for replacement of defective
Goods and also the Goods that do not comply with the Buyer's
order within 5 (five) days from the moment of receipt of
information about such Goods from the Buyer. The Goods shall be
deemed defective if they have obvious or hidden defects and also
the Goods returned by any third party in connection with defects
occurred due to the fault of the Buyer, that were not specified
at the time of transfer, and the Goods with the contents that
does not meet the requirements of active legislation.
3.1.3 In event of absence of Goods at the Sellers' warehouses, the
latter shall inform the Buyer during 24 hours about possible
delivery date.
3.1.4 The Seller shall be responsible for making of shipping
documents.
3.1.5 The Seller shall be responsible for ensuring quality guarantees
for the Goods within the limits provided by manufacturer
guarantees.
3.1.6 The Seller guarantees the Goods transferred under this Agreement
to be in lawful turnover and that they do not infringe any third
party intellectual property rights.
3.2 The Buyer responsibilities and rights include the following:
3.2.1 The Buyer shall accept the Goods from the Seller on condition of
self-pickup from the Seller's warehouse in Moscow.
3.2.2 The Buyer shall be responsible for inspection during Goods
acceptance procedure against quantity and range; for making and signing
of appropriate documents and informing the Seller about any deficiencies
revealed during acceptance procedure. The Buyer shall have the right to
deny acceptance of Goods in an event of their noncompliance with the
range specified in order or quantity.
4. Settlement Procedure
4.1 The Buyer shall pay for the Goods by remittance of funds to the Seller's
settlement account or cash department on the basis of invoices drawn on
the Buyer's order.
4.2 The Buyer shall have the right to make advance payment to the Seller's
settlement account proceeding from the assumed Goods purchase volume.
5. Liability of Parties
5.1 In event of nonfulfilment by any of the parties under this Agreement any
provision hereof, disputable issues shall be settled on the basis of
mutual agreements. In event of inability to reach agreement the case
shall be transferred for settlement to the International Arbitration
Court at the Commerce and Industry Chamber, the City of Moscow.
<PAGE>
6. Agreement Term and Its Termination Procedure
6.1 This Agreement shall be effective from the moment of its signing by
authorized persons of the parties.
6.2 The term of this Agreement shall be equal to one calendar year. The term
shall be automatically renewed for each successive period unless either
of the parties elects not to renew by giving not less than one months'
prior written notice to the other about termination of the Agreement or
its reviewing.
6.3 This Agreement may be terminated on the wish of either of the parties on
condition of not less than one months' prior written notice.
7. Force Majeure
7.1 In an event of circumstances caused by direct or indirect force majeure
events including, without limitation, flood, fire, earthquake, epidemics,
military conflicts, overturns, terrorist attacks, civil disturbances,
strikes, regulations, orders or other administrative interference from
the government or any other decrees, administrative or governmental
restrictions affecting performance of responsibilities under this
Agreement or other circumstances beyond the reasonable control of
parties, the terms of performance of these responsibilities shall be
proportionately extended for the time of duration of these circumstances,
if they significantly affect the timely execution of the whole Agreement
or any part thereof which is subject to execution after onset of force
majeure circumstances. Both parties shall immediately notify each other
in writing about commencement and cessation of force majeure
circumstances hindering fulfillment of responsibilities under this
Agreement. The party referring to force majeure circumstances shall
provide the confirming document of competent state authority.
8. Other Conditions
8.1 The Agreement can be changed and amended by written approval of the
parties signed by their authorized representatives. 8.2 Within two weeks
from the signature date of this Agreement, the parties approve and make
out as an Addendum to this Agreement the details of technical interaction
for exchange of information about the Goods (warehouses stock and the
Seller's updated price lists).
9. Parties' Addresses and Information
<TABLE>
<CAPTION>
SELLER BUYER
- ------ -----
<S> <C>
[Savva Group Entertainment Video]Company Limited [Oxiris]Closed Joint Stock Company
12 Bolshoi Kupavensky Drive, Block 1 12 Scientific Drive, Moscow ZIP Code 117802
Moscow ZIP Code 105568 Bank name:[EuroWestSibBank]Joint Stock Commercial
TIN: 7719174584 Bank
Settlement account: 40702810700000001431 at[Credit Settlement account: 40702810700030000049
Trust]Commercial Bank BIK: 044585726
Correspondent account: 30101810700000000352 Correspondent account: 30101810000000000726
BIK: 044583352 TIN: 7706200205
OKONKh: 13145 OKONKh 71100, 71200
OKPO: 18323620 OKPO 51260913
(Signature) /s/Sorochkin S.B. (Signature) /s/Dolgov V.A.
---------------- --------------
Sorochkin S.B. Dolgov V.A.
(Seal) (Seal)
April 4, 2000 April 4, 2000
</TABLE>
PURCHASE AND SALE AGREEMENT #01-04/00
Moscow City April 4, 2000
[Savva Group Entertainment Video] Company Limited in the person of Executive
Director Mr. Sorochkin S.B. acting under the Articles of Association,
hereinafter referred to as the [Seller] and [Oxiris] Closed Joint Stock Company,
hereinafter referred to as the [Buyer], in the person of Mr. Dolgov V.A., acting
under the Articles of Association, have concluded this Agreement for the
following:
1. Subject of Agreement
1.1 The Seller undertakes the obligation to transfer the Goods (video
products) and the Buyer undertakes the obligation to pay for the Goods in
accordance with the Seller's price list.
1.2 The Goods transfer shall be effected on the basis of oral or written
order of the Buyer (transmitted by fax message or other means). The Goods
quantity and range shall be specified in waybills accompanying each lot.
<PAGE>
2. Goods Price
2.1 The price for Goods shall be established in Russian Rubles and indicated
in waybills and invoices accompanying each lot.
3. Responsibilities and Rights of Parties
3.1 The Seller responsibilities and rights include the following:
3.1.1 The Seller shall be responsible for delivery of Goods with duly
quality to the Buyer in event of their availability in stock at
the Sellers' warehouses against the order placed by the Buyer no
later that 24 hours from the moment of order receipt.
3.1.2 The Seller shall be responsible for replacement of defective
Goods and also the Goods that do not comply with the Buyer's
order within 5 (five) days from the moment of receipt of
information about such Goods from the Buyer. The Goods shall be
deemed defective if they have obvious or hidden defects and also
the Goods returned by any third party in connection with defects
occurred due to the fault of the Buyer, that were not specified
at the time of transfer, and the Goods with the contents that
does not meet the requirements of active legislation.
3.1.3 In event of absence of Goods at the Sellers' warehouses, the
latter shall inform the Buyer during 24 hours about possible
delivery date.
3.1.4 The Seller shall be responsible for making of shipping
documents.
<PAGE>
3.1.5 The Seller shall be responsible for ensuring quality guarantees
for the Goods within the limits provided by manufacturer
guarantees.
3.1.6 The Seller guarantees the Goods transferred under this Agreement
to be in lawful turnover and that they do not infringe any third
party intellectual property rights.
3.2 The Buyer responsibilities and rights include the following:
3.2.1 The Buyer shall accept the Goods from the Seller on condition of
self-pickup from the Seller's warehouse in Moscow.
3.2.2 The Buyer shall be responsible for inspection during Goods
acceptance procedure against quantity and range; for making and signing
of appropriate documents and informing the Seller about any deficiencies
revealed during acceptance procedure. The Buyer shall have the right to
deny acceptance of Goods in an event of their noncompliance with the
range specified in order or quantity.
4. Settlement Procedure
4.1 The Buyer shall pay for the Goods by remittance of funds to the Seller's
settlement account or cash department on the basis of invoices drawn on
the Buyer's order.
4.2 The Buyer shall have the right to make advance payment to the Seller's
settlement account proceeding from the assumed Goods purchase volume.
5. Liability of Parties
5.1 In event of nonfulfilment by any of the parties under this Agreement any
provision hereof, disputable issues shall be settled on the basis of
mutual agreements. In event of inability to reach agreement the case
shall be transferred for settlement to the International Arbitration
Court at the Commerce and Industry Chamber, the City of Moscow.
6. Agreement Term and Its Termination Procedure
6.1 This Agreement shall be effective from the moment of its signing by
authorized persons of the parties.
6.2 The term of this Agreement shall be equal to one calendar year. The term
shall be automatically renewed for each successive period unless either
of the parties elects not to renew by giving not less than one months'
prior written notice to the other about termination of the Agreement or
its reviewing.
6.3 This Agreement may be terminated on the wish of either of the parties on
condition of not less than one months' prior written notice.
7. Force Majeure
7.1 In an event of circumstances caused by direct or indirect force majeure
events including, without limitation, flood, fire, earthquake, epidemics,
military conflicts, overturns, terrorist attacks, civil disturbances,
strikes, regulations, orders or other administrative interference from
the government or any other decrees, administrative or governmental
restrictions affecting performance of responsibilities under this
Agreement or other circumstances beyond the reasonable control of
parties, the terms of performance of these responsibilities shall be
proportionately extended for the time of duration of these circumstances,
if they significantly affect the timely execution of the whole Agreement
or any part thereof which is subject to execution after onset of force
majeure circumstances. Both parties shall immediately notify each other
in writing about commencement and cessation of force majeure
circumstances hindering fulfillment of responsibilities under this
Agreement. The party referring to force majeure circumstances shall
provide the confirming document of competent state authority.
<PAGE>
8. Other Conditions
8.1 The Agreement can be changed and amended by written approval of the
parties signed by their authorized representatives.
8.2 Within two weeks from the signature date of this Agreement, the parties
approve and make out as an Addendum to this Agreement the details of
technical interaction for exchange of information about the Goods
(warehouses stock and the Seller's updated price lists).
9. Parties' Addresses and Information
<TABLE>
<CAPTION>
SELLER BUYER
<S> <C>
[Savva Group Entertainment Video]Company Limited [Oxiris]Closed Joint Stock Company
12 Bolshoi Kupavensky Drive, Block 1 12 Scientific Drive, Moscow ZIP Code 117802
Moscow ZIP Code 105568 Bank name:[EuroWestSibBank]Joint Stock Commercial
TIN: 7719174584 Bank
Settlement account: 40702810700000001431 at[Credit Settlement account: 40702810700030000049
Trust]Commercial Bank BIK: 044585726
Correspondent account: 30101810700000000352 Correspondent account: 30101810000000000726
BIK: 044583352 TIN: 7706200205
OKONKh: 13145 OKONKh 71100, 71200
OKPO: 18323620 OKPO 51260913
(Signature) Sorochkin S.B. (Signature) Dolgov V.A.
(Seal) (Seal)
April 4, 2000 April 4, 2000
</TABLE>
SALES & PURCHASE AGREEMENT ? 170400/2
Moscow April 17, 2000
Limited liability company OOO "Terra Knizhniy Club", represented by its Director
General G.V.Kozhevnikov, acting on the basis of the company's Charter,
hereinafter named as "The Seller", and closed-end joint stock company ZAO
"OKSIRIS", hereinafter named as "The Buyer", represented by V.A.Dolgov, acting
on the basis of the Charter, have made the present agreement on the following:
1. SUBJECT
1.1. The Seller undertakes to give over, and the Buyer undertakes to pay for, on
the basis of the present Agreement, the Goods (printed books), provided for
in the Seller's price-list.
1.2. The Goods should be given over on the basis of the written or oral order of
the Buyer. Quantity and assortment should be shown in the waybills,
provided for each shipment.
2. PRICE OF GOODS
2.1. Price of the Goods should be established in rubles and is determined
according to the Sellers price-list.
<PAGE>
2.2. Price of the Goods should be shown in the invoices and waybills, supplied
with each shipment.
2.3. Price of the Goods includes cost of the Goods and cost of the packing.
3. RIGHTS AND OBLIGATIONS OF THE PARTIES
3.1. Rights and obligations of the Seller:
3.1.1. The Seller undertakes to deliver to the Buyer Goods of the proper
quality, conforming to the certificates, to another technical
documentation, and to the sanitary norms and rules, if those goods are
in stock at the Sellers warehouse, against a drawn order of the Buyer,
not later than in 24 hours upon receiving the order.
3.1.2. The Seller undertakes to replace the poor quality Goods within 5 (five)
days from the time of receiving the notice about such Goods from the
Buyer. The Goods should be considered as being of poor quality, if they
have obvious or hidden defects, as well as the Goods, returned by the
third parties, on the grounds of having in them defects, arising due to
the Sellers fault, and not mentioned by the latter at the delivery, as
well as the Goods, the written content of which doesn't meet the
requirements of the present law.
3.1.3. In the case, when Goods are not in stock at a Seller's warehouse, the
Seller undertakes to notify the Buyer within 24 hours about possible
date of delivery.
3.1.4. The Seller undertakes to prepare the transport documentation for the
shipments.
3.1.5. The Seller undertakes to provide the quality guarantee within the
guarantees of the manufacturer.
3.1.6. The Seller undertakes, on a weekly basis, to provide the Buyer with the
information about his stock, according to the price-list. Such
information should be delivered in electronic form.
3.2. Rights and obligations of the Buyer:
3.2.1. The Buyer undertakes to accept Goods on the condition ex-warehouse of
the Seller in Moscow.
3.2.2 The Buyer undertakes to check quality and assortment of the Goods at
delivery, to prepare and sign the appropriate papers, to notify the
Seller about defects of the Goods, revealed at delivery. The Seller
shall enjoy the right to refuse accepting Goods, in case they don't
conform the order in assortment or quantity.
4. COST OF GOODS AND PAYMENT CONDITIONS
4.1. Cost of the batch of Goods is established in rubles and is calculated
as a number of units of the goods of the given title, multiplied by
their cost in accordance with 2.1.
4.2. Date of payment shall be considered the date when funds are accepted on
the Sellers account.
4.3. The Buyer should pay for the Goods by bank transfer to the Seller's
account according to the order and invoice, in 50 % prepayment, the
rest of the sum shall be transferred within 5 days after delivery.
4.4. Payment in cash is allowed on consent of the parties in accordance with
the acting Law of the RF.
5. RESPONSIBILITY OF THE PARTIES
5.1. In the case, one of the Parties fails to fulfil any provision of this
Agreement, all disputes shall be settled on the basis of mutual
understanding. If settlement can not be reached in this way, the case
shall be given over to the International Arbitrage Court at the Moscow
Chamber of Commerce and Industry, city of Moscow.
6. AGREEMENT'S TERM AND TERMINATION CONDITIONS
6.1. This Agreement shall come into force from the date, when the authorised
persons of the Parties sign it.
<PAGE>
6.2. Term of validity of this Agreement is established equal to one calendar
year. Validity of this Agreement upon its extinction shall be prolonged
automatically for each subsequent period, if neither of the Parties
gave no notice in writing, in one month time before expiry date, to the
other Party on the termination of this Agreement, or on its further
amendment.
6.3. This Agreement can be terminated upon the wish of one of the Parties,
on the condition that the other Party is notified not later, than in a
month before the termination date.
7. FORCE-MAJEURE
7.1. In the case, the circumstances outside one's control will occur, caused
directly or indirectly by the circumstances outside one's control,
caused directly or indirectly by occurrence of, for instance, flood,
fire, earthquake, epidemic, war conflict, Coup d'Etat, acts of
terrorism, civil disturbances, strike, orders, decrees or other
administrative interference of the Government, or any other
resolutions, administrative or governmental restrictions, causing
influence on fulfilment of the obligations under this Agreement, or
other circumstances outside of reasonable control of the Parties, terms
of fulfilment of these obligations shall be postponed proportionally
for the period of existence of such circumstances, if they considerably
affect timely fulfilment of the whole Agreement, or one or another of
its part, subject for fulfilment after occurrence of the circumstances
of force-majeure. Both Parties should immediately notify in writing
each other on the commencement and cessation of circumstances of force
majeure, which obstruct fulfilment of the obligations under this
Agreement. The Party, referring to the circumstances of force majeure,
should provide in confirmation the document from the competent state
body.
8. MISCELENEOUS
8.1. This Agreement may be changed and supplemented by the written agreement of
the Parties, signed by the authorised representatives of the Parties.
8.2. The Parties agree to keep in strict confidence conditions of this Agreement
and any information, related to the business side of the other Party in
relation to this Agreement, and not to make any public statements,
concerning these conditions, except as upon receiving beforehand the
written consent of the other Party.
8.3. This Agreement, including annexes, replaces any other preliminary
agreements, approvals, written and oral understandings, related to the
subject of this Agreement.
8.4. Within two working days from the date of signing of this Agreement each
Party delegates their senior employee (one from each side) for the purpose
of organising technical co-operation in data exchange between the
informational systems of the Seller an of the Buyer.
8.5. Within two weeks from the date of signing of this Agreement the working
groups of the Parties, under supervision of their senior employees, shall
agree upon every detail of technical co-operation on exchange of
information about Goods, and prepare the Protocol on exchange, and
procedure for information updating, which shall be approved by the
authorised representatives of both Parties and shall be considered as
inseparable part of this Agreement.
9. ADDRESSES AND BANK DETAILS OF THE PARTIES
<TABLE>
<CAPTION>
THE SELLER THE BUYER
Full name Full name
<S> <C>
Of organization: OOO "Terra Knizhniy Club" Of organization: ZAO "OKSIRSIS"
Juridical address : 109280, Moscow Juridical address : 117802 Moscow
Avtozavodskaya street.,10, str.2 Nauchniy proezd 12
Telephone : (095) 737-0478 Telephone : (095) 334-4411
Fax : Fax : 937-5060
Name of the bank: AKB "Westdeutche Name of the bank: AKB "Evrozapsibbank"
Landesbank Vostok"
Account : 40702810100000000051 Account : 40702810700030000049
BIC : 044525247 BIC : 044585726
Corresponding Corresponding
Account : 30101810200000000247 Account : 30101810000000000726
INN : 7725088326 INN : 7706200205
OKONH : 87100, 71100 OKONH : 71100, 71200
OKPO : 47611604 OKPO : 51260913
OOO "Terra Knizhniy Club" ZAO "OKSIRSIS"
(Signature) (Signature)
(Seal) (Seal)
Director General Director General
April 17, 2000 April 17, 2000
</TABLE>
<PAGE>
Protocol to the Agreement # 170400/2 of April 17, 2000
Specification of the supplied information format
1. Format of the supplied information (database type):
2. Format of the updated supplied information:
3. Delivery method for updated information :
4. General information about Goods :
4.1. [x]Russian title of the book
4.2. [ ] English title of the book
4.3. [x] Name of the author(s) in Russian
4.4. [ ] Name of the author(s) in English
4.5. [ ] Original's language
4.6. [ ] Author of translation
4.7. [ ] Year of edition
4.8. [ ] Publisher, city
4.9. [ ] Number of pages
4.10. [ ] Bounding type
4.11. [ ] BBK
4.12. [ ] UDK
4.13. [ ] ISBN
4.14. [ ] Dimensions
4.15. [ ] Weight
4.16. [ ] Annotation
5. Commercial information about Goods
5.1. [x] Price of the Goods
5.2. [x] Information about having Goods in stock
SELLER BUYER
(Signature) (Signature) /s/V.A.Dolgov
------------ ---------------
(Seal) (Seal)
CONTRACT ON DELIVERY
Of Printed Production # 05-02/00-p
Novosibirsk February 10, 2000
Limited liability company [Top-Kniga] hereinafter named as [The Vendor], in the
person of General Director Lyamin Georgii Aleksandrovich, acting on the basis of
the Charter, on one part, and ZAO [OXIRIS], hereinafter named as [the
Purchaser], in the person of General Director Dolgov V. A., acting on the basis
of Power of Attorney, on the other part, have concluded the present Contract on
the following:
1. SUBJECT OF THE CONTRACT
1.1. The Vendor undertakes to transfer into the proprietary right of
the Purchaser printed production named hereinafter as goods, and the Purchaser
undertakes to accept it and pay for it in an amount and within a period of time,
as foreseen by the present contract.
1.2. Assortment, quantity and price of the goods are indicated in
invoices, which are inherent parts of the present contract.
2. PRICE AND SETTLEMENT PROCEDURE
2.1. Prices for the goods are determined by the Vendor on his own and
indicated in invoices.
2.2. Payment for the goods is performed in rubles of the Russian
Federation. As the date of payment, one should consider either the date of
entering of money resources into the Vendor settlement account or the date on
the cash credit - order.
2.3. The Purchaser performs payment for the goods within the period of
time as follows:
- Pre-payment 100 %.
The parties for each delivery of goods may additionally agree terms of
payment.
2.4. Any form of payment is allowed, including mutual reckoning.
3. DELIVERY CONDITIONS
3.1. The delivery of goods is implemented: - in case of delivery within
one city - in the Vendor's warehouse, by self - delivery; - in case of delivery
to another town, the date of transferring the goods to either transport company
- - conveyer or organization of communication is considered as the date of
delivery;
the statement of goods delivery is signed by both parties and stamped.
3.3. Transfer of risk of casual destruction or damage is established
since the moment of goods reception at the Vendor's warehouse or since moment of
goods transfer by the Vendor to transport company or organization of
communication for sending.
3.4. Acceptance of the goods in respect of quantity is performed either
in the Vendor's warehouse or at the moment of goods reception from a Transport
Company. While transferring the goods in package or in packing, checking of the
package contents is not performed at the place of transferring the goods.
Checking the quantity and quality of goods with opening the package is
implemented in a manner and within the period of time, as established by valid
instructions # P-6 of 15.06.65, # P-7 of 25.04.66. Of all drawbacks revealed,
The Purchaser informs the Vendor in written form within the period of time, as
established by above - mentioned instructions.
3.4. Certification of the goods is within the Vendor's responsibility.
The quality of goods should correspond to valid normative - technical
documentation for this branch of activity in Russian Federation. The defective
goods is subject to be exchanged or to be re - accounted in respect of payment
sums, if the rejects were formed not through the Purchaser's fault.
3.5. The Vendor transfer to the Purchaser the goods in package
corresponding to goods safety and other conditions, as required for storage and
shipment.
4. RESPONSIBILITY, FORCE MAJEURE
4.1. For infringement of item 2.3. of the present contract, the
Purchaser pays forfeit in an amount of 0.5 % of the sum of payment delayed per
each calendar day of delay. The payment of forfeit does not release from
execution of the commitments in accordance with the contract.
4.2. In case of inopportune (within more than 3 days since the moment
of reception of information from the Purchaser) exchange of defective goods or
payment re - calculation, the Vendor pays to the Purchaser forfeit in an amount
of the value of the defective goods.
4.3. In other respects not foreseen by the present contract, the
parties bear responsibility in accordance with the valid legislation of the
Russian Federation.
4.4. The arguments in connection with the contract are settled in a
voluntary manner, and in case of failure to reach an agreement - in the Court of
arbitration at the whereabouts of respondent.
4.5. The parties are released from mutual responsibility in case of
approaching circumstances of force - majeure, namely: natural calamities,
accidents or transport strike, military actions, legislative regulations
preventing the contract from being executed. Each party immediately notifies the
other party on the approach of such circumstances or cessation thereof. In this
case, execution in accordance with the contract suspends for the period of
validity of force - majeure circumstances.
<PAGE>
5. TERM OF CONTRACT VALIDITY. OTHER PROVISIONS
5.1. The contract comes into force since the moment of signing and is
valid till December 31, 2000 or to the final settlement of parties. The contract
is considered as prolonged, if none of the parties informs in written form on
the intention to cancel the contract. The contract may be canceled in unilateral
manner 30 days before the cancellation date supposed, after execution of mutual
settlements in respect of deliveries.
5.2. The contract is considered as concluded and is valid in the form
of facsimile copy having necessary signatures and seals on a condition, that the
original will be further sent to The Vendor by post within 3 days.
5.3. The parties undertake to inform each other on requisite changes
within 3 days. Losses caused by non - execution of this provision are completely
indemnified to the party, which has incurred them.
5.4.
ADDRESSES, BANK DETAILS AND SIGNATURES OF PARTIES
<TABLE>
<CAPTION>
THE VENDOR: THE PURCHASER:
- ----------- --------------
<S> <C>
OOO[TOP-Kniga] ZAO[OXIRIS]
Novosibirsk - 8, legal address: 117802, Moscow, Nauchny passage,
K. Libknekht street, 125 building 12
settlement account 40702810544050180176 settlement account 40702810700030000049
in Novosibirsk bank CB RF in KB[Evrozapsibbank], Moscow
Novosibirsk correspondent account 301018100000000726
BIK 045004641 BIK 044585726
correspondent account 30101810500000000641 INN 7706200205
INN 5405164630 OKONKh code 71100, 71200, 71500
OKONKh code 71500 OKPO code 51260913
OKPO code 41373724 postal address: Moscow,. Nauchny passage, 117802,
postal address: 630117, Novosibirsk, Arbuzov building 12, office 28
street, 1 / 1 telephone 334 44 11
tel. / fax: 36 - 10 - 26 fax 937 50 60
General director of General director of
OOO[Top - kniga] ZAO[OXIRIS]
(Lyamin G. A.) (Dolgov V. A.)
(Signature) (Signature)
(Seal) (Seal)
</TABLE>
Agreement No. P - 043 / 00
AGREEMENT
ON PROVISION OF EXPRESS DELIVERY TRANSPORT & EXPEDITION SERVICES
Moscow February 23, 2000
Present agreement has been concluded between OOO [United Parcel service
(RUS)] in the person of general director Shatskikh Ivan Viktorovich, acting on
the basis of the Company's Charter, hereinafter named as UPS, and ZAO [Oxiris]
in the person of general director Dolgov V. A., hereinafter named as Client, on
the following:
1. SUBJECT
1.1. UPS provides the Client, within the period of validity of the
present agreement, with the complex of transport - expedition services of
express - delivery of documents and cargoes (hereinafter express - cargoes) in
accordance with the principle of [from door to door] to various destination
points in countries served by UPS.
2. GENERAL
2.1. UPS accepts for sending express - cargoes of documentary and
documentary free type.
2.2. Conditions of shipments carried out by UPS are governed by
regulations of Convention on the Unification of Rules of International Shipment
of Cargoes by Aircraft of October 12, 1929, Additional Protocol for the
Convention mentioned of September 28, 1955 and Convention concerning the
Agreement on International Road Shipment of Cargoes of May 19, 1956, on which
basis the [Conditions of shipment] of UPS listed in way - bill were developed.
2.3. The present agreement and way - bill with listed Conditions of
shipment of UPS, which is put in order while transporting any separate express -
cargo, are inherent parts of each other, which allow to determine will of
parties, which have concluded the present agreement.
2.4. Express - cargoes not forbidden by the Conditions of shipment of
UPS and legislation of countries of dispatch, transit and destination are
accepted for sending.
2.5. UPS has the right to check correspondence of the cargo description
provided by Client in the way - bill and accompanying documents to its real
contents.
2.6. UPS has the right to delay express - cargoes, the contents of
which is forbidden to be sent, and also destroy or permit to destroy express -
cargoes, the contents of which may cause damage of other cargoes, creates danger
to life and health of UPS workers or third persons, if this danger cannot be
eliminated by other means.
<PAGE>
3. UPS OBLIGATIONS
3.1. UPS takes all reasonable measures to deliver express - cargoes to
a destination point within the shortest periods of time.
3.2. UPS provides all sent and received cargoes to a Custom
legalization in accordance with the Russian legislation.
3.3. Acceptance of express cargoes for sending is implemented by UPS
courier in the time and place agreed by the parties in advance.
3.4. At Client's request, UPS presents information on goods delivery.
3.5. UPS for gratis provides Client with air craft way - bills,
standard packing and reference materials as required.
4. UPS RESPONSIBILITIES
4.1. In case of loss or damage of an item of mail of non - documentary
type through the fault of UPS, UPS indemnifies to Client the cargo value,
however, in an amount not exceeding the sum equivalent to 100 USA dollars.
4.2. Client may increase the limiting amount of indemnity for losses
occurred through the fault of UPS to an equivalent of 50,000 USA dollars per one
place of express cargo of non - documentary type. To do it, he can make a
corresponding entry to the column [Declared Value of Shipment for Insurance
Only], undertaking at the same time the obligations for additional payments for
the value declared in accordance with tariffs of UPS.
4.3. Provisions as per items 4.1., 4.2. are not applied to express -
cargoes of documentary type.
4.4. UPS bears no responsibility for loss or damage of cargo forbidden
to be sent, including the case, when such a cargo was accepted for sending by
mistake.
5. CLIENT OBLIGATIONS
5.1. Client guarantees readiness of the cargo, availability and
correctness of filling in accompanying documents as required.
5.2. Client bears responsibility for correctness of information
concerning sender, recipient, value and contents of the express - cargo.
5.3. Client bears responsibility for packing the express - cargo, which
ensures its safe keeping in the course of shipment.
5.4. Client guarantees to pay bills for UPS services in accordance with
provisions of section 6.
<PAGE>
6. TARIFFS AND TERMS OF PAYMENT
6.1. Payment for UPS services is implemented in accordance with valid
tariffs. The valid tariffs do not VAT and sales tax, in case they are
applicable. The valid tariffs may undergo changing, on which UPS undertakes to
inform Client in advance.
6.2. Payment of bills for UPS services is implemented through a bank
remittance in Russian rubles at a rate of the Central Bank of the Russian
Federation at the date of payment plus three percents. Bills are subject to be
paid within 7 calendar days.
6.3. While paying for UPS services by cash or through credit card,
settlements are carried out at a rate established by UPS for the date of
payment.
6.4. Terms of payment for shipment by recipient or the third person are
coordinated by the Supplement, which is inherent part of the present agreement.
6.5. Fine for delay of Client's payment for UPS services in accordance
with the present agreement is equal to 0.5 % per one calendar day of delay.
6.6. In case of Client's non - payment bills for UPS services within 30
calendar days, UPS has the right to suspend providing services in Accordance
with the present agreement, until the payment has been made.
7. FORCE MAJEURE
7.1. None of the parties bears any responsibility to the other party
for delay or non - execution of obligations, which are caused by circumstances
of force majeure, which occurred against of parties' will and desire, and which
could not be foreseen or avoided, including declared or actual war, civil
disturbances, epidemics, blockade, embargo, and also earthquakes, floods, fires
and other natural calamities.
7.2. The party, which cannot execute its obligations due to
circumstances of force majeure, shall immediately notify the other party on the
circumstances specified.
7.3. In connection with occurred circumstances of force majeure, the
parties shall sign the statement on termination of validity of the present
agreement or coordinate joint actions towards overcoming unfavorable
consequences of the circumstances specified.
<PAGE>
8. ORDER OF ARGUMENT EXAMINATION.
8.1. Arguments, which may appear in the course of execution of the
present agreement and corresponding additional agreements, are settled between
the parties in the course of negotiations.
8.2. All disagreements and arguments arisen ion the course of execution
of the present agreement and corresponding additional agreements and unsettled
in the course of negotiations are subject to be transferred for examination to
the Court of arbitration of the Russian Federation.
9. VALIDITY AND TERMINATION OF THE AGREEMENT
9.1. The present agreement comes into force since the moment of its
signing by both parties. The agreement is concluded for the period of 1 year and
automatically prolonged for the next period, if none of the parties notifies in
written form on its will to cease the agreement not later than 1 month before
the expiration of the term of validity of the agreement.
10. LEGAL ADDRESSES AND BANK DETAILS
OF THE PARTIES.
<TABLE>
<CAPTION>
UPS: Client:
- ----- -------
<S> <C>
OOO[united Parcel Service (RUS)] ZAO[OXIRIS]
Russia, 123557, Moscow, B. Tishinskii lane, 117802, Moscow,
building 8 / 2. Nauchny passage, 12
INN 7707280394 INN 7706200205
Settlement account 40702810500700701026 Settlement account 40702810700030000049
in KB[Sitibank T / O](OOO), Moscow in KB[Evrozapsibbank]
BIK 044525202 BIK 044585726
Correspondent account 30101810300000000202 Correspondent account 30101810000000000726
Currency account 40702840300700701018 OKPO 51260913
in KB[Sitibank T / O](OOO), Moscow OKONKh 71100, 71200, 71500
Correspondent account 36087478 in Citibank New York
SWIFT CITIRUMX
<PAGE>
9. SIGNATURES OF THE PARTIES.
UPS: Client:
General director General director
OOO[United Parcel Service (RUS)]
(Signature) /s/Shatskikh I. V. (Signature) /s/Dolgov V. A.
------------------ ---------------
(Seal) (Seal)
</TABLE>
Contract # 64
Moscow April 17, 2000
Joint Venture [Varus Video] (AOZT), hereinafter named as [Vendor], in
the person of chairman of the Board of directors Kononenko G. Ya., acting on the
basis of the Company's Charter and Order No. 16 issued on 27.04.93, on one part,
and ZAO[Oxiris], hereinafter named as[Purchaser], in the person of general
director Dolgov V. A., acting on the basis of the Company's Charter, on the
other part, have concluded the present contract concerning the following:
1. SUBJECT OF THE CONTRACT.
1.1. Vendor undertakes to deliver, and Purchaser undertakes to pay for
under conditions in accordance with the present contract the goods (magnetic
video phonograms in cassettes of the VHS format of the television standard of
PAL with record of feature films and programs) foreseen by Vendor's price -
list.
1.2. Goods delivery will be performed on the basis of verbal or through
fax sent request of Purchaser. Quantity, range, price of the goods are fixed in
way - bills accompanying each lot of the goods.
1.3. The parties recognize that the territory for further distribution
of goods is the territory of the Russian Federation and states of CIS.
2. COST OF GOODS AND PAYMENT PROCEDURE
2.1. Cost of each lot of the goods delivered by Vendor for sales within
the frames of the present contract is indicated in way - bills.
2.2. Payment for the goods to be delivered is implemented in Russian
roubles, in the form of cash payment or clearing, after the parties has agreed
on assortment and volume of the lot of goods.
<PAGE>
3. TERMS AND DELIVERY PROCEDURE
3.1. Goods are delivered to Purchaser from Vendor's warehouse, only
after money has been remitted to a Vendor's cash or settlement account.
3.2. The fact of acceptance of goods is confirmed by parties' signing
the way - bill.
3.3. Purchaser has the right to refuse to accept the goods, in case it
does not correspond to request's assortment.
4. QUALITY OF GOODS
4.1. Goods supplied should correspond to standards of the manufacturing
factory in respect of quality and completeness.
5. PACKAGE AND PACKING PROCEDURE
5.1. Goods should be packed into package (packing) ensuring its
identity and complete safety from damage and losses of any type during shipment
and storage.
6. COMMITMENTS OF PARTIES
6.1. Vendor shall:
6.1.1. Transfer to Purchaser the goods in amount, assortment, at a
price and within periods of time, as determined by provisions of the present
contract.
6.1.2. Perform exchange of inferior goods and also goods not
corresponding to provisions of the present contract or Purchaser's request
within ten days since the moment of reception of information on such goods from
Purchaser.
As inferior goods, one should consider the goods with obvious or
concealed defects and also the goods returned by the third persons in connection
with presence of defects therein, which appeared through Vendor's fault and were
not stipulated for by him while delivering.
6.2. Purchaser shall:
6.2.1. Accept the goods in the presence of Vendor's representative at
the address indicated in item 3.1. of the present contract.
6.2.2. Pay for the sold goods in accordance with provisions of the
present contract.
6.2.3. Return the goods with observation of the following procedure:
- goods return in connection with the defects present therein is
implemented with the help of a separate way - bill with indication [defect
present]. In this case the cassette should be stopped at the place, where the
defect was found, and the defect description should be inserted to the cassette
case.
<PAGE>
7. RESPONSIBILITY OF PARTIES
7.1. Vendor's responsibility:
7.1.1. In case the inferior goods or goods not corresponding to
provisions of the present contract or Purchaser's request are delivered, Vendor
shall for gratis exchange the goods for goods of high quality or goods
corresponding to provisions of the present contract or Purchaser's request
within the period of time as established by the present contract, or
proportionally decrease purchase price of the goods, after parties' agreement
has been reached in written form.
All expenses incurred by Purchaser in connection with either exchange
or return of the inferior goods to Vendor or elimination of revealed drawbacks
by Purchaser are imposed upon Vendor.
7.2. Purchaser's responsibility:
7.2.1. In case Purchaser refuses to accept the goods delivered to him
within the terms agreed by parties, he shall indemnify to Vendor all expenses
incurred in this case, however, not more than 10 % of the value of the not
accepted lot of goods.
8. SETTLEMENT OF ARGUMENTS AND DISAGREEMENTS
8.1. All arguments and disagreements arisen in connection with
execution of the present contract by parties will be settled in the course of
negotiations between Vendor and Purchaser. If the agreement is not reached in
the course of negotiations, disagreements will be settled in the Court of
arbitration in accordance with the procedure established.
9. ADDITIONAL PROVISIONS
9.1. Vendor has the right to produce and distribute videocassettes,
which are the goods in the meaning of the present contract. If any claims in
respect of the goods appear from the part of third persons, Vendor undertakes to
eliminate them and bears full responsibility, in case material losses have
appeared.
All changes and supplements to the present contract are legalized in
written form and signed by both parties. 9.2. The present contract is
made in duplicate, both copies having the same legal force, one copy
for each of the parties. 9.3. The present contract comes into force
since the day of signing it and is valid till December 31, 2000.
<PAGE>
<TABLE>
<CAPTION>
10. PARTIES' LEGAL ADDRESSES AND BANK DETAILS
<S> <C>
Full name of the SP [Varus Video] Full name of the Private company
organization: (AOZT). organization: [OXIRIS].
Legal address: 109456, Moscow, 1st Legal address: 117802, Moscow, Nauchny
Veshnyakovskii lane, passage, 12.
building 1.
Telephone: Telephone: (095) 334 44 11
Fax: Fax: (095) 937 50 60
Bank name: Volgogradskoye OSB No. Bank name: AKB[Evrozapsibbank].
7976 / 0847 in MB AK
SB, Russian Federation.
Settlement account: 40702810238240101473 Settlement account: 40702810700030000049
BIK: 044525342 BIK: 044585726
Correspondent account: 30101810600000000342 Correspondent account: 3010181000000000726
INN: 7721003561 INN: 7706200205
OKONKh: OKONKh: 71100, 71200
OKPO: OKPO: 51260913
(Signature) (Signature)
(Seal) (Seal)
</TABLE>
EXHIBIT 21.1
SUBSIDIARIES OF OXIR INVESTMENTS, INC.
The following are subsidiaries of Oxir Investments, Inc., a
California corporation:
1. Oxir Investment, Ltd., a British Virgin Islands company,
100% owned by Oxir Investments, Inc.
2. Oxir Financial Services Ltd., a British Virgin Islands
company, 100% owned by Oxir Investments, Inc.
3. Internet Solutions, Inc., a Nevada corporation, 100%
owned by Oxir Investments, Inc.
4. Oxir Internet Solutions, Inc., a Nevada corporation, 100%
owned by Oxir Investments, Inc.
5. Oxir Internet Solutions (Russia), a Russian corporation,
100% owned by Oxir Investments, Inc.
6. Oxir Insurance, Inc., a Russian joint stock corporation,
100% owned by Oxir Investments, Inc.
7. Oxir Consulting, a Russian joint stock corporation, 100%
owned by Oxir Investments, Inc.
8. Oxir Fitness Club, a Russian joint stock corporation,
100% owned by Oxir Investments, Inc.
9. Oxir Imperial, a Russian joint stock corporation, 100%
owned by Oxir Investments, Inc.
10. Oxir Informtour, a Russian joint stock corporation, 100%
owned by Oxir Investments, Inc.
S - 3
<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.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-START> JUL-01-1998
<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>
