A. Corporate Organization

As used herein the terms "Xray" and "XRAYMEDIA " refers to XRAYMEDIA, Inc., a Minnesota corporation, its subsidiaries and predecessors, unless the

context indicates otherwise.

On November 15, 2003 the name was changed from XRAYMEDIA.COM Inc., to  XRAYMEDIA, Inc., to better reflect the company as a traditional advertising agency

rather then continuing to use the negative connotation of .com being attached to  the corporate name.

On June 28, 2000 the name was changed from e-bidd.com, inc., to  XRAYMEDIA.com inc. to avoid a potential conflict with another totally separate  and unrelated company by a similar name, www.Ebid.com,that also operated as  an Internet auction site.

XRAYMEDIA has had several previous names in the past including: Image Photo Systems, Inc., AJA Merchant Banking Corporation, Cyberguides International, Inc., Digital Reporting, Inc., and Port Industries, Inc.

Although XRAYMEDIA was initially formed to conduct any lawful activity, XRAYMEDIA is a Media Solutions Company offering a variety of integrated products and services through its website, including media buying and selling, live media negotiating technology, web, logo and print ad design services,  public relations and investor relations services, as well additional media technology  to be announced as implemented. Through affiliations with Media Industry leaders  is positioned to capitalize on the migration of advertising sales and real-time  Internet negotiating technology as well as other related media based activity,  to the internet through Business to Business Media solutions.

XRAYMEDIA was originally incorporated in Minnesota on November 27, 1968, as Port Industries, Inc., and operated as a real estate development company.

Port Industries, Inc. commenced bankruptcy proceedings under Chapter XI in May, 1974 and emerged from bankruptcy in April, 1976. As a result of the bankruptcy, all

assets were distributed and the debtor's rights were formally discharged. Port Industries, Inc. remained inactive from 1976 until 1994.

On March 1, 1994, Port Industries, Inc. entered into an agreement of merger with Digital Reporting, Inc., a Delaware corporation, engaged in the business of corporate acquisitions. Upon the effective date of the merger Port Industries, Inc., issued 720 shares (1,800 shares prior to stock splits) of its common stock in exchange for all of the outstanding shares of Digital Reporting, Inc., whose operations were nominal since its inception, and became the sole surviving corporation under its post-merger name, Digital Reporting, Inc.

In September 1997, Digital Reporting, Inc. acquired all of the outstanding common shares Cyberguides International, Inc., a Delaware corporation, in exchange for 3,500 restricted shares of Digital Reporting, Inc.'s common stock. Accordingly, Digital Reporting, Inc. changed its name to Cyberguides International, Inc. and operated a web page on the Internet that contained a database of general information about public companies. Cyberguides International, Inc. then merged with Corp Reports.com whose principal business activity was similar to that of Cyberguides International, Inc., the operation of a web page in the early days of the Internet that contained a database of public companies annual reports.

In February, 1998 A.J. Alda & Associates acquired a majority interest in Cyberguides International, Inc. by purchasing approximately 1,140 restricted common shares of its stock. Mr. A.J. Alda was then appointed director, president, and chief executive officer of Cyberguides International, Inc. which changed its name to AJA Merchant Banking Corporation and operated as a public merchant banking corporation. AJA Merchant Banking Corporation, also in the business of corporate acquisitions, entered into preliminary negotiations with a printed circuit board manufacturer in the Minneapolis - St. Paul, Minnesota area to build a prototype circuit board but failed to reach the development or production stage.

On December 4, 1998, AJA Merchant Banking Corporation changed its name to Image Photo Systems, Inc. and began developing 3D picture viewers for children. Image

Photo Systems, Inc. developed a prototype 3D picture viewer, but failed to reach the manufacturing, production, or sales stage. In 1999, the officers and directors associated with the acquisition of Image Photo Systems, Inc. resigned.

In July, 1999 Image Photo Systems, Inc., under new management, entered into an Agreement with Laurier Limited, whereby it acquired its current operations as an Internet auction site and licensor of Auction and Ad Serving Software and Laurier Limited received 10,000,000 restricted shares of Image Photo Systems, Inc. stock. In September 1999, Image Photo Systems, Inc. changed its name to e-bidd.com, Inc. Subsequently, the Laurier transaction was reversed. (See below).

On June 28, 2000 the name was changed from e-bidd.com, inc., to XRAYMEDIA.com inc. to avoid a potential conflict with another totally separate and unrelated company by a similar name, www.Ebid.com, that also operated as an Internet auction site.

As of September 30, 2000, the Company had not received the software license from Laurier Limited for which 10,000,000 shares of common stock had been issued. Because of this default, the company has reversed the asset and related stockholders' equity amounts originally recorded in this transaction retroactively to Dec. 31, 1999.

 

The company had been in development of its own Media Auction software with separate modules being acquired from other sources. On December 18, 2000, in a 2nd Level Public Access program XRAYMEDIA had opened its media auction site for qualified media buyers and sellers to test. During that time, protocols for credit approval and confirmation of inventory had been applied and checked repeatedly for robustness. XRAYMEDIA intended to officially launch that media auction software before the year-end of 2001.

On May 29th 2001 The Company announced that it has acquired from a European Company called TS4U LTD a breakthrough, dynamically interactive streaming-auction / inventory implementing software system. The transaction allows for XRAYMEDIA to retain ownership of the revised software "XRMD System" with all the necessary Advertising/Media Industry categories and database structures required for the launch of its Media Auction. Under the terms of the Agreement XRAYMEDIA is not to sell, license or distribute the software to any t hird parties for business use at anytime. The deal also calls for the TS4U LTD not to compete in the Advertising/Media Industry worldwide. XRAYMEDIA

Can only use the technology for the Advertising/Media Industry worldwide. The company then proceeded to make the necessary changes to the software to launch a full real-time advertising/media inventory negotiating system for the media industry.

XRAYMEDIA is a traditional advertising agency that has developed leading edge live negotiating technology. From August 21st 2001 through to today, XRAYMEDIA has successfully launched three applications of the company’s Live Negotiating Technology. Available via two web-applications, the current release of XRAYMEDIA’s proprietary technology is featured within the Live Media Marketplace v5.1.1, and the Live Open Marketplace v5.2.

 

Recently diversified in its services XRAYMEDIA has announced the launch of The Screenwriter Dig, as well as the North American debut of the Asian Woman Magazine series, both direct results of strategic partnerships formed over the past 12 months. Complimenting the flurry of new activity for the Company, XRAYMEDIA has released a revised Corporate website highlighting the Company’s main areas of focus.

On November 15, 2004 the company released the latest version of the LMM v5.1.1 (LMM), featuring live negotiating capabilities. The system gives all registered buyers and sellers flexibility and negotiating power, enabling the general public to negotiate advertising purchases in real-time, via a powerful and cost effective platform. As an online tool, the LMM gives clients the ability to instantly find and negotiate with new media opportunities worldwide. The LMM provides a 128-bit encrypted secure forum for private, one-on-one, and one-to-many negotiations while dynamically loading and matching inventory changes and instantly updating new opportunities. The system is available for Private-labeled in-house use and live general public negotiations. All media trading activity takes place on each user’s private "Media Trading Floor" screen. Users can enter new media buy and sell orders, and negotiate choosing currencies from around the world. The live updating technology automatically creates "Media Matches" with "Media Orders" appearing on the user’s personal "Media Trading Floor". These matches are "Media Orders" placed by other users that match the users' Media Buy and/or Sell Order criterion. Once these matches are generated, all users can review the details and begin to negotiate in real-time. At any point both negotiating parties agree upon a price and close the deal online, simultaneously deleting the sold media orders from the screens of all other users. Recent additions to the LMM include the Media Tracker, and Media Navigator; both designed to further enhance the user’s real-time experience with live statistics and system information. With no sign up fees or monthly charges, the LMM is available to buyers and/or sellers of all media. XRAYMEDIA’s LMM maximizes its registered users' reach to find the optimum market price for any given media inventory without compromising the seller's proprietary pricing information or identity if they so choose.

Taking its live negotiating technology to the next level, XRAYMEDIA has now expanded the scope of its signature operating system. Currently, available through private licensing opportunities, the Live Open Marketplace (LOM) enables registered system users to buy and sell virtually anything they desire. With diverse listings from vehicles and jewelry, to books and antiques, the LOM provides a global online community marketplace for all to use. Further upgrades to the LOM include the implementation of new video and image components, which allow its users to thoroughly evaluate merchandise, and other such offerings, before initiating live negotiations . Similar in concept to that of eBay, the XRAYMEDIA system is essentially a technologically advanced auction, capable of accommodating the comprehensive online marketplace needs of the public at large. The Company's registered users can easily find and immediately negotiate on what they want, as XRAYMEDIA’s live negotiating technology enables consumers to negotiate the best possible price, with several vendors, simultaneously, in real-time. Auctions are currently employed by companies like eBay, who in back in 2002, had users list over 638 million items within eBay's marketplace, a 51% increase from the prior year alone. EBay’s net revenues totaled $1.21 billion in 2002, with the value of items sold for that year totaling $15 billion proving out the business model. eBay makes its money primarily from listing, feature, and final value fees collected from registered users who make use of the company's website to conduct their transactions. In 2003, eBay's success continued, as the company generated net revenues of $2.17 billion, representing a 78% increase over the previous year.

The Company has created an opportunity for all, in effect, to form their own virtual storefront, allowing sellers the chance to make money by selling their new or used goods, at a price that they deem appropriate. XRAYMEDIA’s live negotiating technology provides the next level of Internet purchasing power, instant access to thousands of items while sorting, matching and real-time simultaneous negotiations for all registered users. By creating a private licensing business opportunity for this technology application, XRAYMEDIA has created a new potential revenue stream, as interested entrepreneurs approach the company looking to private label, their own open marketplace. Setting the stage for dynamic live negotiations for any item listed in the system's inventory; the Company will build a series of private labeled e-commerce websites, all connected through its real-time tracking system and pointed towards a central live negotiating marketplace, the LOM. While each private labeled site will represent its own online storefront, or virtual marketplace, all users are still able to enjoy the benefits of a comprehensive, common goods and service listing base, for all online marketplace transactions.

 

 

From the first day of the revised Live Media Marketplace v3.0 launch with the new corporate trade modules XRAYMEDIA has amassed a substantial amount of corporate trade transactions through its corporate trade partners and affiliates. Trade volumes reached a peak of approximately $55,000,000.00 in corporate trade transactions from its partners in the Live Media Marketplace v3.0. As one of the partners by contract, XRAYMEDIA received goods in consideration for use of their marketplace, which will be liquidated and realized as soon as practicable. Based on Accounting Principles Generally Accepted in the United States the “Corporate Trade Transactions Fees” to date will not be reflected in the financial statements until the company has liquidated the goods. The Company is in the process of selling all the goods for cash to an unrelated party.

XRAYMEDIA has received several joint venture opportunities, over the past year. The Company has been selective in its consideration of these various proposals, and has chosen to move forward with those deemed to be inline with XRAYMEDIA’s global interests. The first such project is simply called The Screenwriter Dig (TSD). Born out of XRAYMEDIA’s established partnership with Hollywood entertainment conglomerate, Relativity Management, XRAYMEDIA sponsors this contest quest to find quality scripts and pitches for potential further development by famous producer, and contest host, Mark Canton. In his two decades of experience in the entertainment industry, Mark Canton has help ed bring more than 300 pictures to the silver screen. Canton initially joined Warner Bros. in 1980. He rose to Senior Vice President in 1983 and by 1985 was named President of Worldwide Theatrical Production. During his tenure at Warner Bros., Mr. Canton was instrumental in developing - among others - the Batman , Lethal Weapon , and National Lampoon's Vacation franchises. Entertainment remains one of America's largest exports. Box office records are broken nearly every year and television-advertising revenues are at all-time highs. Revenues from all sources of media and entertainment (film, music, video games, publishing, etc.) are expected to reach $571 billion by 2006 ( Price Waterhouse Coopers ). Since the birth of the industry, Hollywood, as a city and an institution, has represented a gateway to fame, excitement and intrigue that appeals to many people worldwide. Over the course of this competition, launched April 12, 2005, XRAYMEDIA will provide the online expertise and infrastructure for The Screenwriter Dig, while Mark Canton brings creative expertise as well as access to the major motion picture studios and television networks. Through The Screenwriter Dig, writers from all over the country and world are given the chance to have their screenplays, teleplays and television and film pitches read by Mark Canton and his creative staff. At the end of the year one of each type of project (i.e., film script, TV pitch, etc.) will be chosen for further development and submission to a studio for production consideration. By opening the doors to a seasoned Hollywood producer like Mark Canton, aspiring filmmakers who traditionally would never get the attention of a producer of Mark Canton's caliber, now have a means by which to showcase their talents.

With the potential to generate significant revenues, for XRAYMEDIA, The Screenwriter Dig has features nominal fees ranging from $10.00 up to $29.00 per submission. Overall cash flow is conservatively projected at over $8,000,000 for the first year of the competition alone. Increases of 25% for each subsequent year are expected in future TSD contest.

XRAYMEDIA has partnered exclusively with the Asian Woman Media Group to represent all North American and International advertising for the company’s five magazines. Currently published by, AIM International, one of the largest Asian print publishers in the UK, the Asian Woman Media Group is bringing five established magazines, all geared towards the South Asian demographic, to North America. These leading publications include Asian Woman, as well as Asian Bride wedding magazine. Both of these premier periodicals are the first Asian publications to be certified by the Audit Bureau of Circulation (ABC). An International regulatory body established since, 1914, the, the ABC is a non-profit organization auditing publications in accordance with recognized standards, which govern, among other things, how publishers report their circulation statistics. Asian Woman is the best selling Asian magazine in the UK, Europe and even the world; and Asian Bride remains the fourth biggest mainstream bridal title in the UK since 2002. Well known throughout the South Asian community, Asian Woman, one of the company's benchmark publications, has a circulation of over 1 million readers alone. With widespread appeal, these magazines have already garnered 23% readership from outside the Asian community. XRAYMEDIA's exclusive rights will be initially focused on bringing North American advertising content to both Asian Woman and Asian Bride magazines. With a current fee structure that allocates 50% of all generated ad-sales revenues to XRAYMEDIA, the Company has initiated a marketing plan to be rolled-out, first across all major North American markets and then Internationally as the magazine’s reach grows.

 

 

XRAYMEDIA

B. DESCRIPTION OF BUSINESS MODEL

EXECUTIVE SUMMARY

John Hagel of McKinsey coined the term “infomediaries” to describe intermediaries who sell information about a market, creating a platform on which buyers and sellers can do business. Many Internet researchers now believe that perhaps the most profitable pure Internet companies, as well as the most influential, will be business-to-business infomediaries, who will have the ability to re-organize entire industries. Red Herring , an Internet aficionado magazine, recently called the emergence of "Internet Infomediaries" the next bastion of economic activity to profoundly impact the Internet. Infomediaries represent a new category of entrepreneurs. Through the development of its online SuperPortal - and more specifically, its Live Negotiating Technology - XRAYMEDIA has membership in this rare category.

XRAYMEDIA’s objective is   to become a premiere media company, encompassing everything from advertising to entertainment. As part of the fifth-fastest growing sector in the US economy, industry experts anticipate a 6.3 percent compound annual growth rate in media spending, over the next few years with an upsurge in 2006 and 2007. PricewaterhouseCoopers forecasts that global entertainment and media spending will reach a record $1.4 Trillion by 2007, with advertising capturing $375 billion of that market.The traditional process of buying media as well as various products or goods is usually cumbersome and time-consuming for buyers, and can serve to effectively shrink sellers’ consumer base.

Consumers spent an average of 3,599 hours using media in 2002; this represents an increase of 1.8 percent over 2001. Veronis Suhler and Stevenson forecast that the average time consumers spend with media will swell to 3, 874 hours, a compound annual growth rate of 1.5 percent. Consumers appeared to favor both satellite and cable television as their media of choice in 2002, with total television viewing accounting for 47.3 percent of the average consumers time spent with media. Consumer spending on online content also rose by a dramatic 95% in 2002, totaling $1.3 billion, the majority of these revenues can be attributed to annual subscriptions, accounting for 41 percent of online sales.

Currently, there is a scattered presence of online auction sites. Sites such as eBay.com have made the online auction famous. In terms of business-to-business eCommerce services for buying and selling premiumgoods and/or services, major competitors have included Onemediaplace, Reuters, Marketron. These companies generated substantial traffic and have reported several millions in revenue with their media auctions and Internet media buying services, signaling the desire among media professionals for a coherent and convenient way to conduct business.

XRAYMEDIA breaks new ground, as the Company remains the only business to host a Live Negotiating Marketplace with real-time negotiating technology. XRAYMEDIA is positioned to surpass any potential competition by offering the services of a traditional advertising agency, and by supplementing these services with an all-encompassing services package - as presented at XRAYMEDIA’s SuperPortal located at www.xraymedia.com .

THE XRAYMEDIA MISSION

XRAYMEDIA is positioned to become an industry leader, providing cutting edge live negotiating technology to multiple industries through its premiere business-to-business web site.

Central to XRAYMEDIA is its unique live negotiating technology; under years of development this technology has been solely deployed in media industry. Available to the global community, 24 hours a day, 7 days a week, XRAYMEDIA now releases this proprietary technology to virtually every industry worldwide, with video and image components allowing users to thoroughly evaluate merchandise, and other such offerings, before initiating live negotiations. XRAYMEDIA proudly releases one of the most powerful technologies in live Internet negotiating for online marketplaces today.

 

 

The company believes that:

Currently, significant untapped opportunities exist in the area of eCommerce

An Online SuperPortal has the ability to replace outdated and inefficient methods of Internet transacting that is, selling and purchasing online

An Internet SuperPortal can replace outdated and inefficient methods of accessing an Advertising Agency, a Media Buying Firm, a Public Relations department, a Marketing firm, and Design Services;

There are opportunities to garner income from cooperative relationships between subscribing outlets, agencies, agencies offering services through the XRAYMEDIA SuperPortal, and XRAYMEDIA itself.

XRAYMEDIA has assembled the partners and technology to enable it to expand on its vision: XRAYMEDIA's mission is to provide an Online SuperPortal site to the general business community and professionals alike. This will make all markets more accessible and user-friendly to national and local system-users alike, by streamlining and centralizing the process of buying media, as well as goods. Sellers can avail themselves of a broader, more global marketplace.

We have a common goal of bringing new efficiencies to the online marketplace. By doing so, we can increase corporate billing and profitability prospects, creating better results and generating additional revenue for all involved.

THE INDUSTRY

The Internet is changing historically staid industries by enabling them to operate with unprecedented efficiency. Previously fragmented enterprises - from paper to chemicals - are establishing centralized marketplaces online. As the technology underlying eCommerce solutions improves, the level of trust in the security of online commerce systems increases. The impact of this trend cannot be overstated: both individuals and businesses are beginning to exploit the convenience and immediacy of online eCommerce options. Just as commerce is central to real-world business practices, eCommerce is the core of Internet purchasing. Online marketplaces provide business solutions: they are instant and global forums for trade. The online auction is an increasingly popular venue for both businesses and individuals.

The Internet auction - defined as an exchange of products or inventory through online communication channels and computer applications for a specific community of practice - represents a particularly timely and exciting growth opportunity. According to Jupiter Communications, online business-to-consumer auctions moved $3.2 billion worth of merchandise annually as of 2002; this figure can be added to further sales conducted person-to-person. A survey conducted by PricewaterhouseCoopers found that online advertising revenues surpassed the $1.0 billion mark for the first time in the third quarter of 1999, and a recent survey on online spending indicates that online auctions accounted for $644 million in the first quarter of 2000 (Harris Interactive) and has grown substantially since.

 

THE XRAYMEDIA ONLINE SUPERPORTAL

Our first milestone - completed in its test phase on October 24, 2000 - was to create an online presence: XRAYMEDIA’s Online SuperPortal. The SuperPortal is divided into three distinct sub portals (Corporate Culture, Media Services, and Community Resources). Each sub portal is designed to deliver a specific objective in making the practice of buying and selling media, or entertainment a convenient and cohesive process. As we grow, both as a site and as a company, we will expand to include a full set of services and tools for the industry professional.

THE XRAYMEDIA OPPORTUNITY

XRAYMEDIA streamlines the existing process of buying and selling online; allowing professionals to use new methods for transactions, such as Live Negotiations. This means that buyers and sellers are eager to use our services, and that the company is more likely to secure a significant long-term revenue stream. XRAYMEDIA will be the first and only Internet site that integrates Live Negotiating Technology with a network of best-of-breed media products and services tailored to the needs of all industries around the world in a single facility. The Online SuperPortal supplies buyers and sellers with a more proficient and cost effective way to buy and sell their media or goods. Our Live Negotiating technology provides an efficient means of executing every thing from media schedules for advertising agencies and direct advertisers, to inventory tracking for the s users. To this essential function for professionals and the general business community, XRAYMEDIA adds a vast array of other tools and services. The Online SuperPortal is a full-service, convenient, and efficient resource for the general business community and industry professionals alike.

CORPORATE STRATEGY

XRAYMEDIA intends to successfully establish its Online SuperPortal as the premiere site for the general business community and professionals. We will provide fast, efficient, and reliable information, and essential resources in a user-friendly format. Our database will capture details resulting in corporate and customer profiling, which will allow buyers, sellers, and advertisers to develop their businesses in direct response to their market.

XRAYMEDIA’s graphical interface will simplify user operations and provide required services through the Online SuperPortal by:

Enabling merchants to accept online information, securely;

Keeping implementation costs low;

Providing transaction data to the client for clearing on XRAYMEDIA’s system;

Bringing third party reporting and billing to both buyers and sellers.

The opportunity to create lateral synergies with corporations and organizations will provide income streams through sponsorships, banner advertisements, and eCommerce opportunities.

XRAYMEDIA will aggressively seek strategic partnerships, and facilitate advertising opportunities with corporations, online search portals, and organizations with revenue-enhancing prospects.

Banner ads, polling initiatives, sponsorship opportunities, and lateral promotion campaigns will produce multiple revenue streams while extracting economic value from services rendered.

XRAYMEDIA will implement business-to-business eCommerce systems such as our Live Negotiating Technology. The availability of other traditional services such as our Advertising Agency, Public Relations department, Request For Proposal (RFP), Design Services, complimented with the Company’s entertainment ventures - makes XRAYMEDIA’s Online SuperPortal a full-service online mall. The development of other resources like free web-based email and an online chat forum will further enhance the attractiveness of the site because of its convenience for a variety of functions.

 

G. Regulatory Overview (New and Existing Regulation of the Internet)

XRAYMEDIA is subject to the same federal, state and local laws as other companies conducting business on the Internet. Today there are relatively few laws specifically directed towards online services. However, due to the increasing popularity and use of the Internet and online services, it is possible that laws and regulations will be adopted with respect to the Internet or online services. These laws and regulations could cover issues such as online contracts, user privacy, freedom of expression, pricing, fraud, c ontent and quality of products and services, taxation, advertising, intellectual property rights and information security. Applicability to the Internet of existing laws governing issues such as property ownership, copyrights and other intellectual property issues, taxation, libel, obscenity and personal privacy is uncertain.

In addition, numerous states, including the State of New York, in which XRAYMEDIA's alternate place of business is located, have regulations regarding the manner in which "auctions" may be conducted and the liability of "auctioneers" in conducting such auctions. No legal determination has been made with respect to the applicability of the State of New York's regulations to XRAYMEDIA's business to date and little precedent exists in this area. One or more states may attempt to impose these regulations upon XRAYMEDIA in the

future, which could harm XRAYMEDIA's business. Several states have proposed legislation that would limit the uses of personal user information gathered online or require online services to establish privacy policies.

Changes to existing laws or the passage of new laws intended to address these issues could directly affect the way XRAYMEDIA does business or could create uncertainty in the marketplace. This could reduce demand for the services of XRAYMEDIA or increase the cost of doing business as a result of litigation costs or increased service delivery costs, or could otherwise harm XRAYMEDIA's business. In addition, because XRAYMEDIA's services are accessible worldwide, and XRAYMEDIA facilitates sales of goods to users worldwide, foreign jurisdictions may claim that XRAYMEDIA is required to comply with their laws. In some jurisdictions, XRAYMEDIA will be required to collect value-added

taxes on its fees.

H. Reports to Security Holders

XRAYMEDIA's annual report will contain audited financial statements. XRAYMEDIA is not required to deliver an annual report to security holders and will not voluntarily deliver a copy of the annual report to the security holders. XRAYMEDIA intends to, continue filing all of its required information with the Securities and Exchange Commission ("SEC").

The public may read and copy any materials that are filed by XRAYMEDIA with the SEC at the SEC's Public Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549. The Public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The statements and forms filed by XRAYMEDIA with the SEC have also been filed electronically and are available for viewing or copy on the SEC maintained Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. The Internet address for this site can be found at http://www.sec.gov. Additional information can be found concerning XRAYMEDIA on the Internet at http://www.XRAYMEDIA.com .

Risk Factors

1.           Going Concern. The Company has experienced operating losses and its ability to continue as a going concern in the future is dependent upon achieving profitability and/or securing sufficient additional capital at terms economically acceptable to the Company.

2.           Company with Limited History of Earnings. The Company has a limited operating history and is subject to all of the risks inherent in a developing business enterprise, including lack of cash flow and service acceptance.

3.           Development and Market Acceptance of Services. The Company’s success and growth will depend in part upon the market’s acceptance of, and the Company’s ability to deliver and support, the Company’s services.

4.           Dependence on Technology Suppliers. While the Company currently relies upon certain outside technology suppliers, the Company believes that there are numerous other outside technology suppliers that perform the same services. Accordingly, the Company believes that if current technology suppliers could not, or would not, furnish future services to the Company, the Company could obtain such services from other sources without interruption of its operations.

5.           Liquidity; Need for Additional Financing. The Company believes that it does not have the cash it needs for the next twelve months based upon its internally prepared budget and expansion plans. Further, the Company’s cash requirements are not easily predictable and there is a possibility that its budget estimates will prove to be inaccurate. If the Company is unable to generate a positive cash flow, it will be required to curtail operations substantially and seek additional capital. There is no assurance that the Company will be able to obtain additional capital if required, or if capital is available, or can be obtained on terms favorable to the Company. The Company may suffer from a lack of liquidity in the future, which could impair its short-term marketing and sales efforts and adversely affect its results of operations.

6.           Competition. Most of the Company’s competitors have substantially greater financial, technical and marketing resources than the Company. In addition, the Company’s services compete indirectly with numerous other suppliers of media services and online marketplaces. As the market for the Company’s services expands, the Company expects that additional competition will emerge and that existing competitors may commit more resources to those markets.

7.           Reliance upon Directors and Officer. The Company is primarily dependent, at the present, upon the personal efforts and abilities of its President and Director, Raymond C. Dabney, who exercises complete control over the daily management of the Company.

8.           Issuance of Additional Shares:  The Company has issued nearly its entire current authorized limit of 250 million shares and, in order to continue its growth plans, the Company needs to increase its authorized share amount. The Company is in the preliminary stage of proposing amendments to the Articles of Incorporation to increase the authorized capital of the Company from 250 millions shares of Common Stock, par value $0.001, to 750 million shares of Common Stock, par value $0.001. Additionally, the proposed amendment includes the increase in Preferred Stock from 1 million to 11 million, par value $0.001 consisting of three separate classes; 1) 5,000,000 Preferred Stock Series A, par value $0.001, convertible at a rate of 1 to 100 shares of Common Stock, with all voting rights converted at the same rate, 2) 1 million shares of Preferred Stock Series B, par value $0.001, converted at a rate of 1 to 1 share of Common Stock with all voting rights converted at the same rate., and 3) 5 million shares of Preferred Stock Series C, par value $0.001, with a conversion rate of 1 to 1 share of Common Stock with all voting rights converted at the same rate. The currently issued and outstanding shares of Preferred Stock would be designated as the type 1 described above.

 

9.           Indemnification of Officers and Directors for Securities Liabilities. The laws of the State of Minnesota provide that the Company could indemnify any Director, Officer, agent and/or employee as to those liabilities, and on those terms and conditions, as are specified in the Corporation Act of the State of Minnesota. Further, the Company may purchase and maintain insurance on behalf of such persons whether or not the corporation would have the power to indemnify such persons against the liability insured against. The foregoing could result in expenditures by the Company and prevent any recovery from such Officers, Directors, agents and employees for losses incurred by the Company as a result of their actions. Further, the Company has been advised that, in the opinion of the Securities and Exchange Commission, indemnification is against public policy as expressed in the Securities Act of 1933, as amended, and is, therefore, unenforceable.

 

10.         Cumulative Voting, Preemptive Rights and Control. There are no preemptive rights in connection with the Company’s Common Stock. Shareholders may be further diluted in their percentage ownership of the Company in the event that additional shares are issued by the Company in the future. Cumulative voting in the election of Directors is not provided for. Accordingly, the holders of a majority of the shares of  Common Stock, present in person or by proxy, will be able to elect all of the Company’s Board of Directors.

11.         No Dividends Anticipated. At the present time, the Company does not anticipate paying dividends, cash or otherwise, on its Common Stock in the foreseeable future. Future dividends will depend on earnings, if any, of the Company, its financial requirements and other factors.