September 28, 2000
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.
Form 10-KSB for the fiscal year ended June 30, 2000
File No. 0-26377
Ladies and Gentlemen:
We represent Oxir Investments, Inc. (the "Company"). The enclosed Form
10-KSB, which has been filed electronically in accordance with Regulation S-T,
has been revised in response to the oral comments of William C-L Friar delivered
to me on September 15, 2000 to the Company's Amendment No. 4 to Form 10-SB,
filed with the Commission on September 7, 2000. Unless otherwise defined herein,
capitalized terms and other terms used repeatedly throughout this letter shall
have the same meaning set forth in the Form 10-KSB.
Value of House: The value of Mr. Oxenuk's interest in the Las Vegas,
Nevada house purchased for him by the Company is reflected in the Form 10-KSB.
See Part I, Item 2, "Properties," and Part III, Item 10, "Executive
Compensation," and Part III, Item 12, "Certain Relationships and Related
Transactions."
Payment for Moscow Apartment: The payment terms for the apartment in
Moscow have been disclosed. See Part I, Item 1, "Business - Russian Real Estate
Development Project" and Part III, Item 12, "Certain Relationships and Related
Transactions."
We believe the foregoing and the Form 10-KSB 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,
By: /s/ Mario V. Mirabelli
--------------------------
Mario V. Mirabelli
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-KSB
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the fiscal year ended June 30, 2000
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the transition period from _____________ to _______________
Commission File No. 000-26377
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 registered under Section 12(b) of the Exchange Act:
Title of each class Name of each exchange on which registered
------------------- -----------------------------------------
N/A N/A
Securities registered under Section 12(g) of the Exchange Act:
Common Stock, no par value
(Title of Class)
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Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. [X] Yes [ ] No
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [ ]
State issuer's revenues for its most recent fiscal year: $ 769,326
State the aggregate market value of the voting and non-voting common equity held
by non-affiliates computed by reference to the price at which the common equity
was sold, or the average bid and asked price of such common equity, as of a
specified date within the past 60 days. (See definition of affiliate in Rule
12b-2 of the Exchange Act.) NA
(ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)
Check whether the issuer has filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court. [ ] Yes [X] No
(APPLICABLE ONLY TO CORPORATE REGISTRANTS)
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date. 21,189,000 as of September 22, 2000.
DOCUMENTS INCORPORATED BY REFERENCE
If the following documents are incorporated by reference, briefly described them
and identify the part of the Form 10-KSB (e.g., Part I, Part II, etc.) into
which the document is incorporated: (1) any annual report to security holders;
(2) any proxy or information statement; and (3) any prospectus filed pursuant to
Rule 424(b) or (c) of the Securities Act of 1933 ("Securities Act"). The listed
documents should be clearly described for identification purposes (e.g., annual
report to security holders for fiscal year ended December 24, 1990).
Transitional Small Business Disclosure Format (Check one): Yes ____; No __x__
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PART I
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,
Chairman of the Board of Directors 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, no par value (the "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.
In addition to OIS, OIL and OFS, the Company also owns 51% of the
outstanding stock of JSC "Oxir Consulting", which started its operations during
the first quarter of 2000. An additional 39% of JSC "Oxir Consulting" is owned
by OIS. JSC "Oxir Consulting" has entered into three contracts to provide
accounting services. In November 1999, OIS purchased "ISTAR-S," a Russian
private company. "ISTAR-S" subsequently changed its name to OXIRIS. OXIRIS is
responsible for the purchase and resale of products, shipping and customer
service for the Company's on-line store. See Part I, Item 1, "Description of
Business - Internet Solutions." 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." The owners and
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the percentage ownership of JSC "Oxir Insurance Corporation" will be: the
Company (49%) and Mr. Oxenuk, the Company's President, Chief Executive Officer,
Director and principal stockholder (51%). The owners and the percentage
ownership of JSC "Oxir Informtour" will be: the Company (60%) and OIS (40%). As
of June 30, 2000, these subsidiaries had not instituted operations.
Through its subsidiaries, the Company operates in three areas:
1. Through OIS, the Company operates 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
online 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 online sales system. The Company's
web site (http://www.oxiris.com) (the "Web Site") currently offers books and
audio-video products, software, household supplies and cleaning agents and
electronics to Russian- speaking consumers for sale. The Web Site was launched
in February 2000 and the Company has begun to create a customer base.
As of July 31, 2000, OIS has written agreements with the following book
manufacturers and distributors: "Master Kniga" dated May 4, 2000; "Sparrk" dated
April 25, 2000; "Publishing House Infra-M" dated April 20, 2000; "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
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"Eksmo-Press" dated February 29, 2000, allowing the Company to offer products of
these entities online. 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: "Katakombus"
dated May 29, 2000; "Yuliksis" dated May 25, 2000; "Video Marketing" dated May
11, 2000; "Viking Video" dated April 24, 2000; "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. Additional agreements
for the provision of household supplies and cleaning agents and software were
completed with "Perfume-Light" and "Laksti" on May 19, 2000 and July 13, 2000,
respectively. 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.
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.
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Delivery of Goods and Services
OIS delivers goods using several methods:
o 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.
o 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 2, "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.
The Company currently sells approximately 3300 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 900 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 42,000. The prices vary according to type of literature. For
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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).
The assortment of household products, available on the Web Site since
May 2000, comprises a large number of home cleaning agents with an average price
of $4, home appliances and electronics ranging in price from $20 and up.
In June 2000, the Company launched three more departments dealing with
computer software, consumer electronics and toys. The software products comprise
470 items with an average cost of $20; 59 items are offered in the consumer
electronics department and over 500 items are offered in the toys department.
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.
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
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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 Web SiteMaster System,
designed and developed by OIS, which allows them to administer their web sites
by means of a regular browser. Using the Web SiteMaster, 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 October 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 online.
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
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trader is Michael Smirnov, the Company's Vice President, Chief Financial Officer
and 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:
o The business should be understandable. Analysts must know the
business and the markets in which they compete.
o The business should have favorable long-term prospects.
o 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.
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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 June 30, 2000, the Company has invested
$4,103,214 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 Mr. Oxenuk, the Company's
President, Chief Executive Officer, Chairman of the Board of Directors and
principal stockholder. In April 2000, Mr. Oxenuk agreed to pay the Company a
total of $1,790,465, which includes $563,300 (apartment appraisal cost verified
by an independent third party government entity), $50,000 (the cost of two
underground garages) and $ 1,177,165 (tenant improvement cost), to be paid over
the next fifteen years No regular payments are required to be made; payments and
the amount of any such payments may be made in Mr. Oxenuk's discretion. No
interest is to be paid on the purchase price. Payment to the Company may be in
the form of cash or shares of the Company's Common Stock. Should Mr. Oxenuk
decide to make payment with the Company's Common Stock, the value of such shares
shall be equal to the closing price of the Company's shares in the public market
on the date of such payment or, if there is no public market for the shares, the
book value per share.See Part III, Item 12,"Certain Relationships and Related
Transactions."
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 663.8 square meters (7,145 square feet) of
undeveloped space in this building has been assigned to OIL by the developer.
This unimproved space consists of the following: (1) two three-bedroom
apartments, 151 square meters (1,626 square feet) and 156 square meters (1,680
square feet), respectively; and (2) two four-bedroom apartments of 176 and 180
square meters (1,899 and 1,940 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
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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.
The Company displays its 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",
"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. Oxenuk, its President,
Chief Executive Officer, Chairman of the Board of Directors 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 $8,206.
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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 approximately 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
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 known 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
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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 online 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, t believes it can
compete in the financial services business because of the experience and
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 $2,200
and $2,500. Golden Keys has a complex located on 1 Minskaya Street. Golden Keys'
prices per square meter of this property range from $2,000 to $2,800. Centre
2000's property on 11 Pozharski Pereulok is priced between $2,300 and $2,700 per
square meter. MIAN has three different properties. The property located on 15/2
Krylatskie Hills sells for $1,500 to $2,350 per square meter. The cost per
square meter of the property on 10/2 Obydenski Pereulok starts at $2,300. The
prices for the property on 29 Novy Arbat Street start at $2,900 per square
meter.
By comparison, the condominiums at 116-1 Leninski Prospect were sold
for $1,900, $2,100 and $2,150 per square meter. The condominiums in 128 Leninski
Prospect, the Company's second project, are priced at construction stage between
$1,380 and $1,890 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.
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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 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:
o Legal defense of foreign investors' activities in the Russian
Federation.
o Use of different forms of investments in the territory of the Russian
Federation.
o Assignment of rights and duties to third persons.
o Compensation in the event of property nationalization and confiscation.
o Guarantee against an adverse change in legislation of the Russian
Federation.
o 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.
o Use in the territory of the Russian Federation and transfer abroad of
income, profits and other legally received funds.
o Free export from the Russian Federation property and information
initially brought into the country as foreign investment.
o Acquisition of securities.
o Participation in privatization.
o 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 are done by OXIRIS.
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.
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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
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
As of June 30, 2000, the Company employs 105 people between the Moscow
(30 employees) and Sochi (4 employees) representative offices, Oxir Internet
Solutions, Inc. - Moscow representative office of the Nevada corporation (33
employees), OXIRIS (23 employees), Oxir Consulting (11 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 Company's management
oversees the Project.
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 1,500 square feet of office space and are
leased for a term of five years at the rate of $4,063 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 (8,500 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
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 2. Description of Property
As of June 30, 2000, the Company has invested $4,103,214 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 (2,260 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.
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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 June 30, 2000, the Company has paid $1,711
and $206,173 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 was unable to qualify for the mortgage because it was newly formed in
1998, accordingly the mortgage was obtained in the name of Mr. Oxenuk. The value
of the use of the house to Mr. Oxenuk was $29,761 for the fiscal year ended June
30, 2000. In the event Mr.Oxenuk no longer occupies the property and/or is no
longer associated with the Company as an officer and director, Mr. Oxenuk will
have the option to purchase the property from the Company for an amount equal to
balance owing on the mortgage, subject to terms to be negotiated in good faith
between him and the Company. The purchase may be made in the form of cash or
shares of the Company's Common Stock, in Mr. Oxenuk's discretion. Should Mr.
Oxenuk decide to make payment with the Company's Common Stock, the value of such
shares shall be equal to the closing price in the public market on the date that
Mr. Oxenuk exercises his option or, if there is no public market for the shares,
the book value per share. If Mr. Oxenuk elects not to purchase the property,
legal title to the property will remain with the Company.
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 1,500 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 8,500 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.
Item 3. 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 4. Submission of Matters to a Vote of Security Holders
During the fourth quarter of the Company's fiscal year, no matters were
submitted to a vote of security holders.
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PART II
Item 5. Market for Common Equity and Related Stockholder Matters
Upon the effectiveness of the Company's Form 10-SB Registration
Statement (the "Registration Statement"), a portion of the Company's Common
Stock could be publicly traded. However, the Company is not yet registered to
trade on an exchange. The Company intends to initiate trading of its Common
Stock on the Over The Counter - Bulletin Board ("OTC-BB") and has submitted an
application to the OTC-BB for ______ trading, but there can be no assurance that
the Company it will be able to do so. 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.
Except for the application to the OTC-BB, 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.
As of June 30, 2000, there were 180 holders of record of the Company's
Common Stock. As of June 30, 2000, the Company has issued and outstanding
21,189,000 shares of Common Stock. Of this total, approximately 19,944,378
shares were deemed "restricted securities" as defined by the Securities Exchange
Act of 1934, as amended (the "Exchange Act") and certificates representing such
shares bear an appropriate restrictive legend.
Of the Company's total outstanding shares, upon the effectiveness of
the Registration Statement, approximately 1,244,622 shares were eligible to be
sold, transferred or otherwise traded in the public market without restriction,
unless held by an affiliate or controlling stockholder of the Company. None of
these shares have been identified as being held by affiliates.
Of the total remaining outstanding shares, approximately 16,149,400
became eligible to be sold pursuant to Rule 144 subject to the volume and other
limitations set forth under Rule 144 as of September 25, 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 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.
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Recent Sales of Unregistered Securities
Since July 1, 1999, the Company issued shares of its Common Stock in a
private placement to the following investors in the following amounts:
Name No. of Shares Purchase Price Month Purchased
---- ------------- -------------- ---------------
Evgeni Shaposhnikov 1,600 $ 8,000 October 1999
VAM Investment, Ltd. 30,000 $ 150,000 October 1999
VAM Investment, Ltd. 8,000 $ 40,000 February 2000
------- ----------
TOTAL: 39,600 $ 198,000
The private placements were 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 with Mr. Oxenuk and/or the
Company. The Company determined that each person was sophisticated and capable
of assuming the risks of investing in the Company or had a preexisting
relationship with Mr. Oxenuk and/or the Company by obtaining a completed
purchaser questionnaire from the purchasers and the Company's preexisting
knowledge of such purchaser. The proceeds from the issuances were used for
general corporate operating purposes and investments. The offerings were
conducted by the Company. The Company did not use an underwriter in connection
with the offerings. The purchasers were the only persons contacted in
association with the offering. No general solicitation or general advertising
was made. The Company presented the purchasers with a private placement
memorandum summarizing the Company and the risks involved in any investment. The
Company presented the purchasers with the information required to be delivered
pursuant to Rule 502 promulgated under Regulation D because the private
placement memorandum provided information regarding its business and financial
information sufficient to permit the offeree to assess the risks of such an
investment equivalent to that presented in a registration statement.
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 January 2000, the Company repurchased 1,200 shares from a stockholder
for $6,000. The shares were retired.
None of the issuances of shares set forth above were registered with
the Securities and Exchange Commission (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.
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Item 6. 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
The Company continues to pursue strategic alternatives to maximize the
value of its portfolio of businesses. Some of these alternatives have included,
and will continue to include, selective acquisitions, establishment of new
projects and the launch of new subsidiaries. The Company has provided, and may
from time to time in the future provide, information to interested parties
regarding portions of its businesses for such purposes.
Financial information presented herein pertains to the Company for its
fiscal years ended June 30, 2000 and 1999. The Company has elected a fiscal year
ending June 30.
Results of Operations
For the fiscal year ended June 30, 2000
The Company incurred sales during the year ended June 30,
2000. The sales consisted of books and other products retailed through the
Company's Internet subsidiary OIS. For the fiscal year ended June 30, 2000, the
Company had $18,882 in revenue from sales compared to no revenue from sales in
the previous year. During the fiscal year ended June 30, 2000, 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 OIL. For the fiscal year
ended June 30, 2000, trading activities resulted in the Company realizing a gain
of $836,275 on the sale of marketable securities and a net unrealized gain of
$28,814, a decrease compared with the previous fiscal year of $857,812 and
$1,696,650, respectively. This decrease reflects the downturn of high-tech
stocks in the U.S. market during the fiscal year.
The Company's general and administrative expenses during the fiscal
year ended June 30, 2000 increased by $2,011,492 to $2,486,075 . The increase is
the result of the Company's expanded operations in Moscow, Russia and in Las
Vegas, Nevada. The Company also incurred $204,167 of depreciation expense on its
fixed assets and rent expense of $257,647 on its office facilities. Interest
expense for 2000 increased from the previous year by $10,863 to $95,763. These
changes reflect the interest paid on the Company's margin accounts.
The financial statement for June 30, 2000 also reflects a full years
activity compared to seven months for June 30, 1999. The Company recognized a
deferred tax benefit of $942,495 for the decreased realized gains in marketable
securities which had been recorded as unrealized gains in the prior year and the
net operating loss of $1,236,763 1,579,399 ($.06 per share) in the year ended
June 30, 2000.
A tax provision has been made for the third quarter of 2000 and the
fiscal year ending June 30, 2000 based on pre-tax capital gains.
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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 5, "Market for Common Equity and Related
Stockholder Matters - Recent Sales of Unregistered Securities." Total cash and
cash equivalents at June 30, 2000 was $64,705 compared to $52,627 at June 30,
1999. Also at June 30, 2000, the Company had $56,928 in investments in trading
securities compared to $4,672,246 at June 30, 1999. The $4,615,318 decrease is
due to sale of securities to finance the Company's expansion.
Net cash used by operating activities for the fiscal year 2000 was
$1,426,385 while net cash provided for the fiscal year 1999 was $2,838,112. The
299% decrease during period ended June 30, 2000 is primarily attributed to the
$1,236,763 net loss for the year 2000 compared to the $1,836,979 net income for
the year 1999, increase in depreciation expense, as well as the issuance of
stock for services valued at $300,000 and increase in clients funds payable for
the Company's managed investment portfolio. Offsetting the decrease is a change
in provision for income taxes for fiscal year 2000.
During the fiscal year ended June 30, 2000, the Company's net cash
provided by investing activities was $1,248,085 compared to $1,548,483 cash used
in the fiscal year ended June 30, 1999. This was attributed to the $4,615, 318
decrease in trading securities and partially offset by the $1,924,906 decrease
in margin account balance and $1,442,327 used for the purchase of property and
equipment.
During the fiscal year ended June 30, 2000, the Company's net cash
provided by financing activities was $190,378 compared to $1,237,002 cash used
in fiscal year ended June 30, 1999. This was primarily attributed to the
$2,337,867 advance to OIL, which funds were used for investing in the Project in
1999. During the fiscal year ended June 30, 2000 the Company realized $198,000
from the issuance of Common Stock for cash.
At June 30, 2000 the Company had total assets of $5,471,765 and
stockholders' equity of $5,119,436 . 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 ($21,231 ) at June 30, 2000, compared to
$505,938 at June 30, 1999.
In the next twelve months the Company anticipates meeting its working
capital needs primarily with revenues from its operating and investing
activities or, if necessary, from borrowings. The Company has restructured its
cash demands and no longer has commitment to invest in additional real estate
projects with the exception of ongoing Complex construction. The Company's
Internet operations are functioning at the brake even level. Any funds to be
raised will be used to expand ongoing businesses but those businesses will
function without any additional capital. Management is seeking agreements for
additional sales of securities, either through a private placement or a public
offering. Management also has plans to sell investment properties in Leninski
128 project in Moscow, Russia once the building is completed in the first
quarter of 2001. There can be no assurance that the Company will be able to
successfully secure funds either from the sale of its securities or from loans,
or that such funds may be available on terms favorable to the Company. 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 a cash flow shortage, which could curtail the Company's
operations. There can be no assurance that the Company will be able to obtain
financing.
In the opinion of management, inflation has not had a material effect
on the operations of the Company.
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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
Company has restructured its cash demands and no longer has commitment to invest
in additional real estate projects with the exception of ongoing Complex
construction. 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 Project. 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 March 2001 and are
expected to be fully operational by June 2001. 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 first quarter of 2001.
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. In addition to book, audio and video sales, the goods offered by OIS have
been expanded to include software, household supplies and cleaning agents and
electronics. The Company's Internet operations are functioning at the brake even
level.
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 its operating and investing
activities or, if necessary, from borrowings. Management is seeking agreements
for additional sales of the Company's securities, either through a private
placement or a public offering. Any funds to be raised will be used to expand
ongoing businesses but those businesses will function without any additional
capital. Management also has plans to sell investment properties in Leninski 128
project in Moscow, Russia once the building is completed in the first quarter of
2001. There can be no assurance that the Company will be able to successfully
secure funds either from the sale of its securities or from loans, or that such
funds may be available on terms favorable to the Company. 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 a cash flow shortage, which could curtail the Company's
operations. The continuation of the Company as a going concern is directly
dependent upon the success of its future operations and ability to obtain
additional financing.
Recent Accounting Pronouncements
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.
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Inflation
In the opinion of management, inflation has not had a material effect
on the operations of the Company.
Forward Looking Statements
This Report 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 Commission. Any
statements contained in this Report 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 7. Financial Statements
The financial statements required by this Item are included herewith as
a separate section of this Report, commencing on Page F-1.
OXIR INVESTMENTS, INC. AND SUBSIDIARIES
(A Development Stage Company)
CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2000
<PAGE>
C O N T E N T S
Independent Auditors...................................................... F-3
Consolidated Balance Sheet................................................ F-4
Consolidated Statements of Operations......................................F-6
Consolidated Statements of Stockholders' Equity........................... F-7
Consolidated Statements of Cash Flows..................................... F-9
Notes to the Consolidated Financial Statements........................... F-11
<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, 2000 and the
related consolidated statements of income, stockholders' equity and cash flows
for the years ended June 30, 2000 and 1999 and from inception on May 19, 1998
through June 30, 2000. 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, 2000 and the
results of their operations and their cash flows for the years ended June 30,
2000 and 1999 and from inception on May 19, 1998 through June 30, 2000 in
conformity with generally accepted accounting principles.
The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 9 to the
consolidated financial statements, the Company is a development stage company
with no significant operating results to date, which raises substantial doubt
about its ability to continue as a going concern. Management's plans in regard
to these matters are also described in Note 9. The financial statements do not
include any adjustments that might result for the outcome of the uncertainty.
By: /s/ HJ & Associates, LLC
----------------------------
HJ & Associates, LLC
Salt Lake City, Utah
September 27, 2000
<PAGE>
OXIR INVESTMENTS, INC. AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Balance Sheet
ASSETS
June 30,
2000
----------
CURRENT ASSETS
Cash and cash equivalents $ 64,705
Investment in trading securities (Note 3) 56,928
Prepaid expenses 4,724
----------
Total Current Assets 126,357
----------
PROPERTY AND EQUIPMENT (Note 4) 5,251,382
----------
OTHER ASSETS
Income tax receivable 75,000
Related party receivable 4,026
Deposits 15,000
----------
Total Other Assets 94,026
----------
TOTAL ASSETS $5,471,765
==========
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 (Continued)
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
June 30,
2000
----------
CURRENT LIABILITIES
Accounts payable $ 78,564
Margin account (Note 6) 56,558
Client funds payable 11,034
Current portion - mortgage payable (Note 8) 1,432
----------
Total Current Liabilities 147,588
----------
LONG-TERM LIABILITY
Mortgage payable (Note 8) 204,741
----------
Total Long-Term Liability 204,741
----------
Total Liabilities 352,329
----------
COMMITMENTS (Note 5)
STOCKHOLDERS' EQUITY
Common stock: 50,000,000 shares authorized of no
par value, 21,189,000 shares issued and outstanding 4,519,220
Retained earnings 600,216
----------
Total Stockholders' Equity 5,119,436
----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $5,471,765
==========
The accompanying notes are an integral part of these consolidated
financial statements.
F-5
<PAGE>
OXIR INVESTMENTS, INC. AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Statements of Operations
<TABLE>
<CAPTION>
From
Inception on
For the May 19,
Year Ended 1998 Through
June 30, June 30,
2000 1999 2000
------------ ------------ ------------
<S> <C> <C> <C>
SALES $ 18,812 $ -- $ 18,812
COST OF GOODS SOLD 19,507 -- 19,507
------------ ------------ ------------
GROSS MARGIN (DEFICIT) (695) -- (695)
------------ ------------ ------------
COST AND EXPENSES
Depreciation expense 204,167 40,175 244,342
Rent expense 257,647 34,148 291,795
General and administrative 2,486,075 474,583 2,960,658
------------ ------------ ------------
Total Costs and Expenses 2,947,889 548,906 3,496,795
------------ ------------ ------------
Net (Loss) From Operations (2,948,584) (548,906) (3,497,490)
------------ ------------ ------------
OTHER INCOME (EXPENSE)
Interest expense (95,763) (84,900) (180,663)
Realized gain on sale of marketable
securities 836,275 1,694,087 2,530,362
Net unrealized gain on marketable
securities 28,814 1,725,464 1,754,278
Dividends -- 128 128
------------ ------------ ------------
Total Other Income (Expense) 769,326 3,334,779 4,104,105
------------ ------------ ------------
INCOME (LOSS) BEFORE TAXES (2,179,258) 2,785,873 606,615
INCOME (TAX) BENEFIT (Note 7) 942,495 (948,894) (6,399)
------------ ------------ ------------
NET INCOME (LOSS) $ (1,236,763) $ 1,836,979 $ 600,216
============ ============ ============
BASIC INCOME (LOSS) PER SHARE $ (0.06) $ 0.11
============ ============
FULLY DILUTED INCOME (LOSS) PER
SHARE $ (0.06) $ 0.11
============ ============
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING 21,163,903 16,648,300
============ ============
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
F-6
<PAGE>
OXIR INVESTMENTS, INC. AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Statements of Stockholders' Equity
Common Stock Retained
Shares Amount Earnings
----------- ----------- -----------
Balance at inception -- $ -- $ --
Net income from inception on
May 19, 1998 through
June 30, 1998 -- -- --
----------- ----------- -----------
Balance, June 30, 1998 -- -- --
Shares issued to founders at
predecessor cost of $0.00 per
share 13,770,000 -- --
Shares issued for trading
securities at $0.70 per share 1,350,000 939,764 --
Common stock issued for
cash at $1.00 per share 600,000 600,000 --
Stock issuance costs -- (250,000) --
Common stock issued for
cash at $5.00 per share 100,600 503,000 --
Common stock issued for
related party acquisitions,
recorded at predecessor
cost 5,270,000 706,005 --
Net income for the year
ended June 30, 1999 -- -- 1,836,979
----------- ----------- -----------
Balance, June 30, 1999 21,090,600 $ 2,498,769 $ 1,836,979
----------- ----------- -----------
The accompanying notes are an integral part of these consolidated
financial statements.
F-7
<PAGE>
OXIR INVESTMENTS, INC. AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Statements of Stockholders' Equity (Continued)
Common Stock Retained
Shares Amount Earnings
----------- ----------- -----------
Balance, June 30, 1999 21,090,600 $ 2,498,769 $ 1,836,979
Common stock issued for
cash at $5.00 per share 39,600 198,000 --
Common stock issued for
services at $5.00 per share 60,000 300,000 --
Common stock retired at
$5.00 per share (1,200) (6,000) --
Contributed capital by
subsidiary -- 1,528,451 --
Net loss for the year ended
June 30, 2000 -- -- (1,236,763)
----------- ----------- -----------
Balance, June 30, 2000 21,189,000 $ 4,519,220 $ 600,216
=========== =========== ===========
The accompanying notes are an integral part of these consolidated
financial statements.
F-8
<PAGE>
OXIR INVESTMENTS, INC. AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
From
Inception on
For the May 19,
Year Ended 1998 Through
June 30, June 30,
2000 1999 2000
----------- ----------- -----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $(1,236,763) $ 1,836,979 $ 600,216
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation expense 204,167 40,175 244,342
Common stock issued for services 300,000 -- 300,000
Changes in assets and liabilities:
(Increase) in prepaid expenses (746) (3,978) (4,724)
(Increase) decrease in related party receivables 4,054 (8,080) (4,026)
(Increase) in deposits -- (15,000) (15,000)
Increase in accounts payable 79,505 32,382 111,887
Increase (decrease) in accrued liabilities (6,740) 6,740 --
Increase in client funds 254,032 -- 254,032
Increase (decrease) in provision for income taxes (1,023,894) 948,894 (75,000)
----------- ----------- -----------
Net Cash Provided (Used) by Operating Activities (1,426,385) 2,838,112 1,411,727
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Decrease (increase) in trading securities 4,615,318 (1,977,764) 2,637,554
Increase (decrease) in margin account (1,924,906) 1,273,325 (651,581)
Purchase of property and equipment (1,442,327) (844,044) (2,286,371)
----------- ----------- -----------
Net Cash (Used) Provided by Investing Activities 1,248,085 (1,548,483) (300,398)
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from notes payable -- 208,000 208,000
Payments on notes payable (1,622) (205) (1,827)
Stock issuance costs -- (250,000) (250,000)
Common stock issued for cash 198,000 1,103,000 1,301,000
Retirement of common stock (6,000) -- (6,000)
Advances to related parties -- (2,337,867) (2,337,867)
Cash from subsidiaries -- 40,070 40,070
----------- ----------- -----------
Net Cash (Used) Provided by Financing Activities 190,378 (1,237,002) (1,046,624)
----------- ----------- -----------
NET INCREASE IN CASH AND CASH EQUIVALENTS 12,078 52,627 64,705
CASH AND CASH EQUIVALENTS AT BEGINNING OF
PERIOD 52,627 -- --
----------- ----------- -----------
CASH AND CASH EQUIVALENTS AT END OF
PERIOD $ 64,705 $ 52,627 $ 64,705
=========== =========== ===========
</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)
Consolidated Statements of Cash Flows (Continued)
<TABLE>
<CAPTION>
From
Inception on
For the May 19,
Year Ended 1998 Through
June 30, June 30,
2000 1999 2000
---------- ---------- ----------
<S> <C> <C> <C>
SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid for:
Interest $ 95,763 $ 78,160 $ 173,923
Income taxes $ 81,339 $ -- $ 81,339
NON-CASH ITEMS
Common stock issued for services $ 300,000 $ -- $ 300,000
Contributed capital by subsidiary $1,528,451 $ -- $1,528,451
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
F-10
<PAGE>
OXIR INVESTMENTS, INC. AND SUBSIDIARIES
(A Development Stage Company)
Notes to the Consolidated Financial Statements
June 30, 2000
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 its 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,
and to introduce eastern European opportunities to the United
States.
On June 29, 1999, the Company executed an agreement to acquire,
through a tax fee 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.
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.
In addition to OIS, OIL and OFS, the Company has acquired various
Russian legal entities. OXIR owns 51% of the outstanding stock of
JSC "Oxir Consulting", which was established under Russian
registration rules in November 1999. An additional 39% of JSC
"Oxir Consulting" is owned by OIS. JSC "Oxir Consulting" was
established to provide various consulting services. In November
1999, OIS purchased "ISTAR-S," a Russian private company.
"ISTAR-S" subsequently changed its name to OXIRIS on November 12,
1999. OXIRIS is responsible for the purchase and resale of
products, shipping and customer service for the Company's on-line
store.
F-11
<PAGE>
OXIR INVESTMENTS, INC. AND SUBSIDIARIES
(A Development Stage Company)
Notes to the Consolidated Financial Statements
June 30, 2000
NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS (Continued)
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." The Company
OXIR will own 60% of Oxir Informtour and OIS will own 40%. OXIR
will own 49% of Oxir Insurance Corporation. Oxir Investment
Limited will own 100% of Oxir Fitness Club and Oxir Imperial. As
of June 30, 2000, these subsidiaries had not instituted
corporations.
Oxenuk, Inc., OFS, OIL and OIS were all acquired form a
significant shareholder of the Company. Accordingly, they were
recorded at this cost in the financial statement.
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 (Loss) Per Share
The computation of basic income (loss) per share of common stock
is based on the weighted average number of shares outstanding
during the period of the financial statements.
<TABLE>
<CAPTION>
June 30,
---------------------------------------
2000 1999
----------------- -----------------
<S> <C> <C>
Numerator - income (loss) $ ( 1,236,763) $ 1,836,979
Denominator - weighted average number of
shares outstanding 21,163,903 16,648,300
----------------- -----------------
Income (loss) per share $ (0.06) $ (0.11)
================= =================
</TABLE>
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.
F-12
<PAGE>
OXIR INVESTMENTS, INC. AND SUBSIDIARIES
(A Development Stage Company)
Notes to the Consolidated Financial Statements
June 30, 2000
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
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. Current tax benefits are a result of market value
decreasing from values at the beginning of the year. 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
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.
F-13
<PAGE>
OXIR INVESTMENTS, INC. AND SUBSIDIARIES
(A Development Stage Company)
Notes to the Consolidated Financial Statements
June 30, 2000
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
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 $56,558 is
99% of the trading securities balance of $56,928. In the event of
a market turndown, the value of the trading securities may not be
sufficient to pay off the margin account.
j. Change in Accounting Principle
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.
F-14
<PAGE>
OXIR INVESTMENTS, INC. AND SUBSIDIARIES
(A Development Stage Company)
Notes to the Consolidated Financial Statements
June 30, 2000
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
k. Principles of Consolidation
The consolidated financial statements include the accounts of OXIR
Financial Services, Ltd., OXIR Investment, Ltd. and OXIR
Investments, Inc. and Oxir Internet Solutions. 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. A summary of investment earnings or (loss)
recognized as other income during the period from July 1, 1999
through June 30, 2000 is as follows:
Trading Securities
Realized gains (losses), net $ 836,275
Unrealized gains (losses), net 28,814
-----------------
$ 865,089
NOTE 4 - PROPERTY AND EQUIPMENT
Property and equipment at June 30, 2000 consisted of the
following:
Construction in progress $ 4,103,214
Leasehold improvements 94,216
Furniture and fixtures 498,590
Automobiles 35,240
Equipment 444,514
House 320,000
-----------------
Total 5,495,774
Less accumulated depreciation (244,342)
-----------------
Property and Equipment - Net $ 5,251,382
=================
Depreciation expense for the years ended June 30, 2000 and 1999
was $204,167 and $40,175, respectively.
F-15
<PAGE>
OXIR INVESTMENTS, INC. AND SUBSIDIARIES
(A Development Stage Company)
Notes to the Consolidated Financial Statements
June 30, 2000
NOTE 5 - COMMITMENTS
a. Employment Agreement
The Company has entered into employment contracts with its
President, Chief Executive Officer and Chairman of the Board of
Directors, (CEO) and with its Secretary/Treasurer and Director.
The CEO'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 Visa and MasterCard accounts.
Additionally, the Company is to provide housing for the CEO 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 for the price of $320,000 for the CEO 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 June 30, 2000, the Company has paid $29,761 as
compensations for housing costs and related expenses, including
mortgage payments, utilities and maintenance fees. The value of
the use of the house was $29,761 for the fiscal year ended June
30, 2000. In the event the CEO no longer occupies the property
and/or are no longer associated with Oxir as an officer and
director, he will have the option to purchase the property from
the Company for an amount equal to the balance owing on the
mortgage, subject to terms to be negotiated in good faith between
him and the Company. Payment may be in the form of cash or in
shares of Oxir Investments, Inc. common stock. Should the CEO
decide to make payment with the Company's shares, the value of
such shares shall be equal to the closing price in the public
market on the date that the CEO exercises his option or, if there
is no public market for the shares, the book value per share. If
the CEO elects not to purchase the property, legal and beneficial
title to the property will remain with the Company.
The Secretary's agreement provides that the Company will pay an
annual salary of $60,000. In addition, the Company issued to him
270,000 shares of the Company's common stock as a cost of the
original merger.
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 rent to be paid under the terms of the lease
described above is summarized as follows:
During the Year
Ended
June 30, Amount
-------- ------
2001 $ 45,589
2002 45,589
2003 45,589
2004 20,892
-------------------
Total due $ 157,659
===================
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 $56,558 carries an interest rate of 7.75% to 10.25% and
is collateralized by the securities held in the account.
F-16
<PAGE>
OXIR INVESTMENTS, INC. AND SUBSIDIARIES
(A Development Stage Company)
Notes to the Consolidated Financial Statements
June 30, 2000
NOTE 7 - INCOME TAX MATTERS
A previous deferred tax liability of $948,894 is eliminated due to
the loss for the current period. A further benefit due to some
valuations of prior period income is also included. The benefit is
determined using a 39% tax calculation is made as follows:
Current loss before taxes $ 2,179,258
Add non deductible items 81,390
Taxable Loss 2,260,648
Tax rate 39%
------------
881,652
Additional benefit due to
non-taxable items tax in prior year 830,153
39%
323,760
Total Benefit $ 1,205,412
============
It is unknown as to the Company's ability to fully utilize this
benefit, therefore, we have limited the use of this benefit to the
actual refund anticipated and not this tax benefit of 1,205,412
from the loss that has been generated. This is determined in the
following manner:
Prior deferred benefit (June 30, 2000) $ 948,894
Additional refund determined (June 30,2000) 75,000
------------
Total tax benefit 1,023,894
Less taxes paid previously in current year (81,399)
------------
Income benefit per income statement $ 942,495
(June 30, 2000) ============
No other benefit or liability has been established since the
ability to generate income has not been demonstrated.
NOTE 8 - MORTGAGE PAYABLE
The Company had the following long-term debt at June 30, 2000:
Mortgage payable to Greenpoint Mortgage, bearing interest
at 9.50%, requiring monthly payments of $1,749, due
April 2029, secured by residential property. $ 206,173
------------
Less current portion (1,432)
------------
Long-Term Debt $ 204,741
============
F-17
<PAGE>
OXIR INVESTMENTS, INC. AND SUBSIDIARIES
(A Development Stage Company)
Notes to the Consolidated Financial Statements
June 30, 2000
NOTE 8 - MORTGAGE PAYABLE (Continued)
Future maturities of long-term debt are as follows:
2001 $ 1,432
2002 1,575
2003 1,731
2004 1,903
2005 2,114
Thereafter 197,418
-------------------
$ 206,173
===================
NOTE 9 - GOING CONCERN
The Company's financial statements are prepared using generally
accepted accounting principles applicable to a going concern which
contemplates the realization of assets and liquidation of
liabilities in the normal course of business. The Company has not
yet established an ongoing source of revenues sufficient to cover
its operating costs and allow it to continue as a going concern.
The ability of the Company to continue as a going concern is
dependent on the Companys ability to establish an ongoing source
of revenues or obtaining adequate capital to fund operating losses
until it becomes profitable. If the Company is unable to establish
an ongoing source of revenues or obtain adequate capital, it could
be forced to cease operations.
In order to continue as a going concern, develop a reliable source
of revenues, and achieve a profitable level of operations, the
Company will need, among other things, additional capital
resources. Management's plans to continue as a going concern
include raising additional capital through sales of common stock,
the proceeds of which would be used to continue to develop its
existing projects which include a real estate, financial and
computer systems activities. Other plans may include the raising
of additional capital and the continued development of its current
and planned operations. Private placements and other sources are
being considered. However, management cannot provide any
assurances that the Company will be successful in accomplishing
any of its plans.
The ability of the Company to continue as a going concern is
dependent upon its ability to successfully accomplish the plans
described in the preceding paragraph and eventually secure other
sources of financing and attain profitable operations. The
accompanying financial statements do not include any adjustments
that might be necessary if the Company is unable to continue as a
going concern.
F-18
<PAGE>
Item 8. Changes in and Disagreements With Accountants on Accounting and
Financial Disclosure
There have been no changes in or disagreements with accountants.
23
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PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons;
Compliance With Section 16(a) of the Exchange Act
Executive Officers and Directors
The executive officers and directors of the Company are:
Name Age Position
---- --- --------
Vassili I. Oxenuk 36 President, CEO,
Chairman of the Board of Directors
Michael Y. Smirnov 33 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 of the Board
of Directors
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
24
<PAGE>
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.
Michael Y. 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.
25
<PAGE>
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 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.
Section 16(a) Beneficial Ownership Reporting Compliance
Pursuant to Section 16(a) of the Exchange Act, the Company's directors,
executive officers and any person holding 10.0% or more of its Common Stock are
required to report their beneficial ownership and any changes therein to the
Commission. Specific due dates for these reports have been established and the
Company is required to report herein any failure to file such reports by those
due dates. Based solely on review of the copies of such reports furnished to the
Company or written representations that no other reports were required, the
Company believes that, during its fiscal year ended June 30, 2000, its executive
officers, directors and greater than 10.0% beneficial owners complied with all
applicable Section 16(a) filing requirements with the exception of the filing of
Forms 3, which were not timely filed.
Item 10. Executive Compensation
The Company has entered into employment contracts with Mr. Oxenuk, its
President, Chief Executive Officer and Chairman of the Board of Directors, 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 Visa and
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. As of June 30, 2000, the Company has paid $1,711 and $206,173 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 value of the
use of the house to Mr. Oxenuk was $29,761 for the fiscal year ended June 30,
2000. In the event Mr. Oxenuk no longer occupies the property and/or is no
longer associated with the Company as an officer and director, Mr. Oxenuk will
have the option to purchase the property from the Company for an amount equal to
balance owing on the mortgage, subject to terms to be negotiated in good faith
between him and the Company. The purchase may be made in the form of cash or
shares of the Company's Common Stock, in Mr. Oxenuk's discretion. Should Mr.
Oxenuk decide to make payment with the Company's Common Stock, the value of such
shares shall be equal to the closing price in the public market on the date that
Mr. Oxenuk exercises his option or, if there is no public market for the shares,
the book value per share. If Mr. Oxenuk elects not to purchase the property,
legal title to the property will remain with the Company.
26
<PAGE>
Mr. Mendelson's agreement provides that the Company will pay an annual
salary of $60,000. In addition, the Company issued to Mr. Mendelson 270,000
shares of the Company's Common Stock 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 years ended June 30,
2000 and 1999, to the Company's Chief Executive Officer. With the exception of
Mr. Oxenuk, no executive officer of the Company earned a salary greater than
$100,000 annually for the period depicted.
Summary Compensation Table
Other All
Annual Other
Name and Fiscal Compen- Compen-
Principal Position Year Salary (1) Bonus sation sation
------------------ ---- ---------- ----- ------ ------
Vassili I. Oxenuk, 1999* $64,465 $ -0- $ -0- $169,742(2)
President, C.E.O. 2000** $99,989 $ -0- $ -0- $ 29,761(3)
------------------
*From July 1, 1998 through June 30, 1999
** From July 1, 1999 through June 30, 2000.
(1) Includes $64,465 and $99,989 for the fiscal years ended June 30, 1999 and
2000, respectively, consisting solely of Mr. Oxenuk's monthly personal
expenses charged to his Citibank Visa and Mastercard accounts.
(2) Includes $164,514 paid by the Company as a down payment for a single family
home in Las Vegas, Nevada.
(3) Compensation for Mr. Oxenuk's housing costs and related expenses, including
mortgage payments, utilities and maintenance fees.
Item 11. Security Ownership of Certain Beneficial Owners and Management
The following table sets forth information, to the best of the
Company's knowledge, as of June 30, 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.
27
<PAGE>
Name and Address Amount and Nature of Percent
of Beneficial Owner Beneficial Ownership of Class(1)
Vassili I. Oxenuk* 12,449,319 58.8%
3980 Howard Hughes Pkwy.
Suite 340
Las Vegas, NV 89109
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 Sarkisian, Ph.D* 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)
*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 21,189,000 shares of Common Stock outstanding on June 30,
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.
28
<PAGE>
Item 12. Certain Relationships and Related Transactions
There have been no transactions between the Company and any officer,
director, nominee for election as director, or any stockholder 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,
Chairman of the Board of Directors and the principal stockholder. 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
June 30, 2000, the Company has paid $1,711 and $206,173 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 value of the use of the house
to Mr. Oxenuk was $29,761 for the fiscal year ended June 30, 2000. In the event
Mr. Oxenuk no longer occupies the property and/or is no longer associated with
the Company as an officer and director, Mr. Oxenuk will have the option to
purchase the property from the Company for an amount equal to balance owing on
the mortgage, subject to terms to be negotiated in good faith between him and
the Company. The purchase may be made in the form of cash or shares of the
Company's Common Stock, in Mr. Oxenuk's discretion. Should Mr. Oxenuk decide to
make payment with the Company's Common Stock, the value of such shares shall be
equal to the closing price in the public market on the date that Mr. Oxenuk
exercises his option or, if there is no public market for the shares, the book
value per share. If Mr. Oxenuk elects not to purchase the property, legal title
to the property will remain with the Company. See Part III, Item 10, "Executive
Compensation."
On January 4, 1999, the Company issued 1,350,000 shares of Common Stock
to Mr. Smirnov, the Company's Vice President, Chief Financial Officer and
Director, 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. On June 29, 1999, Mr. Oxenuk transferred
300,000 shares to Ms. Batrakova, Vice President of Communications and Director,
as a gift.
In March 1999, 270,000 shares were issued to Mr. Sarkisian, the
Company's Vice President, for services related to Mr. Sarkisian's employment by
the Company.
29
<PAGE>
OIL also received a five-bedroom apartment in Moscow measuring 267
square meters (2,820 square feet), which was used by Mr. Oxenuk, the Company's
President, Chief Executive Officer, Chairman of the Board of Directors and
principal stockholder. In April 2000, Mr. Oxenuk agreed to pay the Company a
total of $1,790,465, which includes $563,300 (apartment appraisal cost verified
by an independent third party government entity), $50,000 (the cost of two
underground garages) and $ 1,177,165 (tenant improvement cost), to be paid over
the next fifteen years No regular payments are required to be made; payments and
the amount of any such payments may be made in Mr. Oxenuk's discretion. No
interest is to be paid on the purchase price. Payment to the Company may be in
the form of cash or shares of the Company's Common Stock. Should Mr. Oxenuk
decide to make payment with the Company's Common Stock, the value of such shares
shall be equal to the closing price of the Company's shares in the public market
on the date of such payment or, if there is no public market for the shares, the
book value per share.
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 13. Exhibits and Reports on Form 8-K
Except as otherwise indicated, the following exhibits are filed with
this Report by reference to the Company's Registration Statement, filed with the
Commission:
Exhibit
No. Exhibit Name
------- ------------
3.1 Articles of Incorporation and Amendments
3.2 By-Laws of Registrant
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
30
<PAGE>
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
10.18 Contract with Yuliksis
10.19 Contract with Publishing House INFRA-M
10.20 Contract with Katakombus
10.21 Contract with Laksti
10.22 Contract with Master-Kniga
10.23 Contract with Perfume-Light
10.24 Contract with Sparrk
10.25 Contract with Viking Video
10.26 Contract with Amrus Trading Company
10.27 Contract with Video Marketing
21.1 Subsidiaries
27.1 Financial Data Schedule*
*Filed herewith
31
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant caused this Report to be signed on its behalf by the undersigned,
thereunto duly organized.
OXIR INVESTMENTS, INC.
(Registrant)
Date: September 28, 2000 By: /s/ Vassili I. Oxenuk
---------------------
Vassili I. Oxenuk
President, Chief Executive Officer,
Chairman of the Board of Directors
In accordance with the Exchange Act, this Report has been signed below
by the following persons on behalf of the registrant and in the capacities and
on the dates indicated.
OXIR INVESTMENTS, INC.
(Registrant)
Date: September 28, 2000 By: /s/ Vassili I. Oxenuk
---------------------
Vassili I. Oxenuk
President, Chief Executive Officer,
Chairman of the Board of Directors
Date: September 28, 2000 By: /s/ Michael Y. Smirnov
----------------------
Michael Y. Smirnov
Vice President, Chief Financial
Officer and Director
Date: September 28, 2000 By: /s/ Kirill M. Mendelson
-----------------------
Kirill M. Mendelson
Secretary, Treasurer and Director
Date: September 28, 2000 By: /s/ Inna Batrakova
------------------
Inna Batrakova
Vice President of Communications
and Director
32
