Winmax Trading Grp, Inc (WNMX) - Description of business

Symbol:	WNMX
SIC:	7374 - Services-Computer Processing and Data Preparation
Type:	PINK-SHEET
State location:	A0
State of Inc:	FL
Phone:	877-693-3130
Fax:	877-305-4171
Web Site:	www.winmaxtradinggroup.com
Full Time Employees:	6
Business Address:	48 Wall Street 11th Floor New York, NY 10005 United States
Mailing Address:	5920 MACLEOD TRAIL SUITE 800 CALGARY A0 T2H OK2

HOW WE ARE ORGANIZED

We were incorporated in the state of Florida on September 26, 1996 to engage in commodities futures trading. From approximately November 1996 until October 2000, we managed a commodities futures investment fund, the Winmax Alpha Fund Limited Partnership, and we were the general partner of that fund which was closed in the year 2000. From October 2000 until May 2001, we had no significant operations or business plan. In June of 2001, our sole officer and director, Ralph Pistor, sold 100,000 shares of common stock that he owned and which represented a majority of our then outstanding common stock, to Gerald Sklar. In connection with the purchase of the 100,000 shares of common stock by Gerald Sklar, the following occurred: o Ralph Pistor resigned as our sole officer and director; o Gerald Sklar became our President and Director; o We appointed different management to fill existing vacancies on our Board of Directors; and o We adopted a new corporate strategy, which is described below.

In March 2002, we affected a one (1) for twenty (20) reverse stock split.

Our wholly owned subsidiaries are: o Winmax Media, Inc., a Florida Corporation, which provides internet and media services to various clients; o The Gemstore of New York , Inc., a New York corporation, which holds the lease to the retail store in Manhattan, New York; o The Gemstore.com, Inc., a Florida Corporation, which holds the Universal Resource Locator (URL), www.thegemstore.com ; o bnettv, Inc. a New York corporation, which provides video streaming services to various clients; o bnettv.com, Inc, an Alberta corporation, which provides video streaming services to various clients; o The Gemstore, Inc., an Alberta corporation, which facilitates the e-commerce transactions for the Gemstore o Winmax media, Inc., an Alberta corporation, which provides Internet and media services to various clients o The Gemstore Group Inc. an Alberta corporation, which provides services for our Canadian operations.

BUSINESS OVERVIEW

OUR CORPORATE STRATEGY

Beginning in June 2001, our corporate strategy has been to: (a) establish a web development, design, web casting, Internet solutions and e-commerce business; (b) acquire gemstone raw materials and/or minerals and to arrange for the finishing and marketing of the gemstone material and finished jewelry through our Internet website at www.thegemstore.com, and (c) advance money to prospect and possibly produce gemstone material. In 2001, we acquired an inventory of gemstones and pieces of finished jewelry.

In December 2003 we decided to abandon any interests in or financing of prospecting possible gemstone material as described in (b) above. In approximately August 2003, we commenced a strategy of opening Retail Merchandising Units to finish and market gemstone material and finished jewelry through our Internet website at www.thegemstore.com. From approximately August 2003 to March 2004, we operated 12 Retail Merchandising Units in the United States and Canada and 1 in-line retail store in Manhatten, New York as test markets; however, in 2004 we re-assessed the viability of these locations, and during 2004 and 2005 we closed all but one Retail Merchandising Unit, which remains operational.

In January 2006, we effected the incorporation of Sapphire Media, LLC ("Sapphire Media") in Florida as our wholly owned subsidiary to provide consulting and investor relations services to small and medium sized companies. To date, Sapphire Media has not performed any services.

Our corporate strategy going forward is to further develop our (a) web development, design, web casting, Internet solutions, e-commerce business and Wireless Application Protocols, including a Wireless Application Protocol micro site portal (b) acquire gemstone raw materials and/or minerals and to arrange for the finishing and marketing of the gemstone material and finished jewelry through our Internet website at www.thegemstore.com, (c) to increase the number of our Retail Merchandising Units.

OUR REVENUE SEGMENTS Our principal revenue segments consist of the following: o Web development, design, web casting, Internet solutions and e-commerce; and o Sale of gemstone material and finished jewelry at our Internet website, www.thegemstore.com, and through our one Retail Merchandising Unit located in Manhattan, New York.

We will attempt to develop an additional possible revenue segment through Sapphire Media's offering of investor relations services.

OUR PRINCIPAL PRODUCTS/SERVICES/DISTRIBUTION METHODS AND MARKETS

Web Development, Multimedia and Internet Services Our Web Development, Multimedia and Internet services are accomplished through our in-house employees or through outside consultants whom we hire on an "as needed" basis. For the year ended December 31, 2005, approximately 54% of our revenues were derived from sales in web development, multimedia and Internet solutions. The remaining 46% was from gem sales.

Our services in this area include:

Winmax Media Winmax Media, our web development subsidiary, focuses on building multimedia products that are both elegant and intelligent while meeting customer's needs by delivering clear branding messages. Winmax Media's web casting unit, Bnettv.com, is a full service video production streaming company that produces both client-commissioned and in-house video and multimedia. Winmax Media's services include: web and graphic design, programming (coldfusion, actionscript, javascript, php, vb, sql, html, xml, shell script, and various other dynamic computer languages), production and editing of corporate videos, production of commercials for the internet, live video streaming, CD production, and corporate brochures. We have also developed and provide a series of re-usable objects in Java to provide functionality to small and medium-sized corporate Intranets. These services include scheduling, contact, project, time sheet, billing, file sharing, and administrative modules.

Winmax Internet Solutions Winmax Internet Solutions is our Information Technology subsidiary that manages data center operations including: Internet web hosting of in-house and client domains; o Monitoring security and technical operations to ensure maximum uptime, custom application development using cold fusion to integrate database's (such as SQL) for dynamic web content; o Provision of virtual servers for offsite security; and o Provision of networking and application support to both internal and external clients.

In addition, Winmax Internet Solutions provides business-to-business extranet services. Extranet is a closed system that runs over the Internet that has password protection to prevent data/information from being viewed by the general public. Through this subsidiary, we allow our customers to off-load technical services and maintain worldwide access to their proprietary information so they may focus on their core business.

Winmax Internet Solutions also develops and maintains accounting and inventory programs for each of our subsidiaries and divisions.

TheGemstore and the Gemstore.com Since 2003, we have engaged in the Internet marketing and retailing of gemstones, jewelry and accessories. During 2003 and 2004, we established 13 RMU's on a test basis for the sale of gemstones, jewelry and accessories; however, after assessing the viability of these test locations, we closed all but one Retail Merchandising Unit, which is currently operational in New York, New York. We will continually assess the viability of opening additional locations.

Our other gemstone related business operated from August 2002 to present, as follows:

(i) the development of our website located at www.thegemstore.com through which we sell our finished jewelry products as well as retail outlets; and, (ii) our wholly owned subsidiary, Global Gemstone and Jewelry Inc., obtained gemstone inventory in 2002 and creates our custom-made jewelry in Chang Mai, Thailand. The finished product is made available through our website, private parties, and our one Retail Merchandising Unit.

OUR CUSTOMERS Our multi media services and Internet solutions have a potential for a wide range of customers, which consist primarily of emerging growth companies. For the year ended December 31, 2005, approximately 46% of our revenue was derived from our Retail Merchandising Units and approximately 54% from web development, multimedia and Internet Solutions sales. Because we operated 12 Retail Merchandising Units during our fiscal year 2005, and now we have only one, our revenues will be negatively impacted.

DEPENDENCY UPON ONE OR A FEW CUSTOMERS For the years ended December 31, 2004 and 2005, approximately 48% and 54% of our revenues, respectively, were from one client, Immtech Pharmaceuticals, Inc. These revenues were generated by our web and media division. Should Immtech Pharmaceuticals no longer require our services, our revenues will be negatively impacted.

We market and intend to market gemstones to a wide array of consumers through our website and do not expect to become dependent upon either a single or a few major customers for this aspect of our business.

OUR BILLING PRACTICES Web Development and Internet Services We typically require payment in advance of rendering our website development and Internet services; however, in some cases we receive payment on completion.

Gemstone Sales Internet sales are paid in advance by credit card or other pre-payment forms. All other sales will be paid for in advance. Retail sales are paid by cash, debit card, or credit card.

GEOGRAPHIC MARKETS Web Development/Internet Services Our web development and Internet services are offered in Asia, Europe and throughout North America, including the United States, and Canada.

Gemstone Services These services will be offered throughout the world by Internet, through direct contact with buyers, and through our retail outlet located in New York.

COMPETITIVE BUSINESS CONDITIONS The web development, media, Internet, and investor relations services and gemstone business are increasingly competitive with hundreds of competitors on the Internet alone. In addition, barriers to market entry are relatively low and new competitors can establish new sites at comparatively low cost and choose from a variety of market-ready software. As a result, we expect competition to become increasingly intensified in the future. Competition is rapidly evolving and very competitive and there are no assurances that we can keep pace with the intense competition in this market. Our competitors have substantially longer operating histories, greater name recognition, larger customer bases, and greater financial and technical resources than us. Accordingly, these companies are able to conduct extensive marketing campaigns that we are financially unable to accomplish. In addition, these companies may offer more attractive pricing and payment terms. There are no assurances we will be able to overcome the competitive advantages of our competitors.

SUPPLIERS

Web Development/Internet Services We supply our own services in-house and/or through contract consultants.

Gemstone Sales/Services We acquire gemstone raw materials, minerals, jewelry and accessories from third parties

SOURCES AND AVAILABILITY OF RAW MATERIALS Web Development Internet and Investor Relations Services We do not use raw materials in this aspect of our business.

Gemstone Business We use raw materials purchased from a variety of different suppliers located worldwide, but usually from suppliers located in Africa, Southeast Asia and Eastern Europe. We do not anticipate any shortage of raw materials.

PATENTS, TRADEMARKS AND LICENSES

We have no patents, trademarks or licenses regarding any aspects of our business.

REGULATORY MATTERS

Web Development and Internet Services We are not aware of any governmental regulations pertaining to this aspect of our business that will have a material impact; however, due to the increasing popularity and use of the Internet, it is possible that additional laws and regulations may be adopted with respect to the Internet, covering issues such as: - - content - - privacy - - access to adult content by minors - - pricing - - bulk e-mail - - encryption standards - - consumer protection - - electronic commerce - - taxation - - copyright infringement - - other intellectual property issues

Our gemstone business also involves use of the Internet. We cannot predict the impact, if any, that future regulatory changes or developments may have on our business, financial condition, or results of operation. Changes in the regulatory environment relating to the Internet access industry may increase our costs or limit our ability to offer our services.

Gemstone Business Our gemstone related business activities are governed by a variety of governmental laws and regulations, including import/export and tax laws in Thailand, Sri Lanka, Vietnam, Poland, United States, Canada and Europe. We are not aware of any additional legislation or proposed legislation, which would have a material effect upon our operations.

Investor Relations Services Because our investor relations services are impacted by Securities and Exchange Commission regulations, we must adhere to all such applicable laws.

Tax Matters

Our Canadian subsidiaries, The Gemstore, Inc., Winmax Media, Inc., bnettv.com, Inc. and Winmax Capital Group Inc., have not filed corporate tax returns with the government of Canada for each year from 2001 to 2005; however, none of these companies have earned a taxable profit during those years. Corporate tax returns in this regard are typically filed only when companies earn a taxable profit or upon a request or demand to file, which we have not received. Our Canadian subsidiaries have filed the appropriate payroll tax filings for each year from 2001 to 2005. We have made payroll tax payments during these years; however, certain amounts are under dispute with the Canadian government. Our Canadian subsidiaries have also filed the appropriate goods and services tax filings; however, we have requested refunds due to tax payments on goods and services, which we claim exceed taxes on corporate sales. These refunds also are under dispute.

Our United States subsidiaries, Winmax Media, Inc., bnettv, Inc., The Gemstore.com, Inc. and The Gemstore, Inc., have not filed corporate tax returns with the United States government for each year from 2001 to 2005; however, none of these companies have earned a taxable profit during those years. Additionally, state income tax returns in Florida and New York have not been filed regarding the same subsidiaries; however, no taxable profit was earned in either jurisdiction. Although we made partial payroll tax payments for the years 2004 and 2005 in the United States, Florida, and New York, we have not made the appropriate payroll tax filings to date.

Liabilities along with estimated interest and penalties have been recorded on the accounts of the Company and are reflected in the consolidated financial statements.

Because we have failed to make certain tax filings and payments as reflected above, we may be subject to civil fines and forfeitures.

COMPLIANCE WITH ENVIRONMENTAL REGULATIONS No segments of our business involve the emission of pollutants or other substances under the regulations of the Environmental Protection Agency or any similar such agency at the state, local or foreign level. Accordingly, we have no cost affiliated with environmental compliance.

EMPLOYEES

As of December 31, 2005, we had 10 employees, 6 of which are fulltime and 4 part time. Our full time employees are: o Gerald E. Sklar, our President, who directs our operations; o David M. Young, our Vice President, who is responsible for customer relations, Retail Merchandising Unit leases, and insurance; o 1 salesperson who conducts retail sales of our gemstone material and finished gemstone jewelry; and o 3 employees who handle our overall web and information technology operations

Our part-time employees consist of: o 2 computer and web programmers; and o 2 graphic designers.

We continue to have the same employees as of May 22, 2006.

RESEARCH AND DEVELOPMENT During 2004 and 2005, no funds were expended on research and development activities.

MATERIAL AGREEMENTS

Investor Relations Agreement with General Research GmgH We have a June 14, 2005 agreement with General Research GmgH, which is located in Munchen, Germany. General Research GmgH is identified in the agreement as "Consultant". The agreement provides that Consultant will conduct an investor relations program to increase our exposure to European investors, including: (a) roadshows; (b) investor presentations; (c) media coverage; (d) research reports; (e) one on one with key banking and investment fund contracts; and (f) identification of potential investors for any private placement offering of securities. In return for these services, On June 14, 2005, we issued 100,000 restricted shares of our common stock to a non-related consultant in exchange for banking service, and media presentations. We valued the shares at $0.50 per share or an aggregate of $50,000 based on the current market price of the shares. We relied upon the exemption from registration afforded by Sections 4(2) and 4(6) of the Securities Act of 1933, as amended ("Securities Act") for the offer and sale. We believed that Sections 4(2) and 4(6) were applicable because the offer and sale did not involve a public offering and there was no general solicitation or general advertising involved in the offer or sale. We placed restrictive legends on the certificates representing these securities stating that the securities were not registered under the Securities Act and are subject to restrictions on their transferability and resale. In addition we granted the same consultant: (a) a warrant to purchase 100,000 shares of our common stock with an exercise price of US-$ 1.00 per share to expire June 14 2010; and (b) a warrant to purchase an additional 100,000 shares of our common stock with an exercise price of US-$ 1.50 per share to expire June 14 2010.

Consulting Agreement with Samantha Fryer We have a July 8, 2005 agreement with Samantha Fryer, our President's Daughter-in-law, in which Samantha Fryer, who is identified in the agreement as "Consultant", will perform the following duties: (a) represent products to distributors and retailers throughout North America and other countries worldwide; (b) provide general business consulting, including development of products and the building in the retail division; (c) locate quality personnel to work in our retail division; (d) locate in-line and RMU locations for further compensation;(d) identify sources for sale and distribution of products to be sold in our retail division; and (e) such other duties as may be assigned by our board of directors or president. In return for these services, we agreed to pay Consultant 500,000 shares of our common stock issued pursuant to our S-8 registration statement; however, on January 3, 2006 that agreement was amended to provide additional compensation to Ms Fryer of 500,000 shares of our common stock. On July 8, 2005 we issued 300,000 S-8 shares to Samantha Fryer. Each share was valued at $0.663 or an aggregate of $198,900. On November 18, 2005, we issued 100,000 S-8 shares to Samantha Fryer. Each share was valued at $0.33 or an aggregate of $33,000.00. On December 19, 2005, we issued 100,000 S-8 shares to Samantha Fryer. Each share was valued at $0.15 or an aggregate of $15,000.00. The term of the agreement is 2 years. On January 3, 2006, we issued 150,000 S-8 shares to Samantha Fryer. Each share was valued at $0.24 or an aggregate of $36,000.00.

Consulting Agreement with MJD Corp We have a July 8, 2005 agreement with MJD Corp, which is located in Staten Island, New York, and is identified in the agreement as "Consultant". The agreement provides that the Consultant will: (a) represent concepts and products to industry representatives throughout North America and other countries worldwide; (b) provide representation for us, our products and services, personnel and various others that may arise from time to time; (c) locate top quality areas for us to promote our products and image, and to fuel our growth; (d) identify outsources for distribution and other partners necessary in the processing and finishing the content proposed; and (e) such other duties as may be assigned by our board of directors or president. In return for these services we paid to the Consultant 1,250,000 of our restricted common stock on July 11, 2005. The term of the agreement is 3 years.

Consulting Agreement with Anthony Sklar We have a July 8, 2005 agreement with Anthony Sklar, our President's son, who is identified in the agreement as "Consultant". The agreement provides that the Consultant will: (a) represent our divisions and products to potential clients, distributors, retailers throughout North America, and other countries worldwide; (b ) provide general business consulting, including but not limited to developing products; (c) locate top quality management to help fuel our growth; (d) identify outsources for distribution, manufacturing and other partners necessary in the processing and finishing of the our products; (e)provide retail-merchandising services throughout North America and other countries worldwide; and (f) such other duties as may be assigned by our Board of Directors or President. In return for these services we agree to pay Consultant 700,000 shares of our common stock registered on our S-8 Registration Statement. However, on January 3, 2006 that agreement was amended to provide additional compensation to Anthony Sklar of 700,000 shares of our common stock. On July 8th 2005 we issued 250,000 S-8 shares to Anthony Sklar. Each share was valued at $0.663 or an aggregate of $165,750. On September 6, 2005, we issued 50,000 S-8 shares to Anthony Sklar. Each share was valued at $0.65 or an aggregate of $32,500.00. On October 18, 2005, we issued 50,000 S-8 shares to Anthony Sklar. Each share was valued at $0.49 or an aggregate of $24,500.00. On November 18, 2005, we issued 150,000 S-8 shares to Anthony Sklar. Each share was valued at $0.33 or an aggregate of $49,500.00. On December 19, 2005, we issued 150,000 S-8 shares to Anthony Sklar. Each share was valued at $0.15 or an aggregate of $22,500.00. The term of the agreement is 3 years. On January 3, 2006, we issued 150,000 S-8 shares to Anthony Sklar. Each share was valued at $0.24 or an aggregate of $36,000.00. On March 3, 2006, we issued 100,000 S-8 shares to Anthony Sklar. Each share was valued at $0.21 or an aggregate of $21,000.00.

Consulting Agreement with Gioacchino Bonsangue We have a July 8, 2005 agreement Gioacchino Bonsangue, who is located in Staten Island, New York, and is identified in the agreement as "Consultant". The agreement provides that the Consultant will: (a) represent concepts and products to industry representatives throughout North America and other countries worldwide; (b) provide representation for us, our products and services, personnel and various others that may arise from time to time; (c) locate top quality areas for us to promote our products and image, and to fuel our growth; (d) identify outsources for distribution and other partners necessary in the processing and finishing the content proposed; and (e) such other duties as may be assigned by our board of directors or president. In return for these services we paid to the Consultant 1,250,000 of our restricted common stock on July 11, 2005. The term of the agreement is 3 years.

Integrated Reports To Security Holders We are subject to the informational requirements of the Securities Exchange Act of 1934. Accordingly, we file annual, quarterly and other reports and information with the Securities and Exchange Commission. You may read and copy these reports in Washington, D.C. Our filings are also available to the public from commercial document retrieval services and the Internet world wide website maintained by the Securities and Exchange Commission at www.sec.gov.