Document:

Unassociated Document

     

     

    Exhibit
      10.2

     

     

    

      ASSET
        PURCHASE AGREEMENT

      Between

      VEMICS,
        INC.

      and

      E
        LEARNING DESKTOP VENTURES, INC.

      

      This
        ASSET PURCHASE AGREEMENT ("Agreement") is entered into as of January 25,
        2007
        ("Effective Date"), by and between Vemics, Inc., a Nevada Corporation whose
        address is 523 Avalon Gardens Drive, Nanuet, New York 10954 ("Vemics''),
        and E
        Learning Desktop Ventures Inc., a Canadian Corporation whose address is 2301
        Haines Rd # 201, Mississauga ON Canada ("EL Desktop").

      

      1.
         Sale
        of business assets.
        

      

      	(a)  	
              Sale.
                On the terms and subject to the conditions set forth herein, EL
                

            

      Desktop
        shall sell, convey, transfer, assign, and deliver to Vemics, and Vemics shall
        purchase, acquire and accept, as provided for and subject to the limitations
        set
        forth herein, all of EL Desktop's assets, contracts, agreements, properties,
        business, intellectual property, copyrights, patents, trademarks, leases
        and
        goodwill of every kind and description, wherever located, including but not
        limited to those set forth on or as provided for in Exhibit A (Asset List)
        and
        Exhibits A-I through A-5 (Contracts), all as they exist upon the consummation
        of
        closing (collectively, the "Assets"). Vemics shall have the option (exercisable
        in its sole and absolute discretion) to accept or reject the sale, conveyance,
        transfer assignment and/or delivery of any EL Desktop assets, contracts,
        agreements, properties, business, intellectual property, copyrights, patents,
        trademarks, leases and goodwill, including but not limited to any of the
        leases
        listed in Exhibit B herein; any such items so rejected by Vemics shall be
        retained by EL Desktop and shall not be included within the Assets. With
        respect
        to all EL Desktop assets, contracts, agreements, properties, business,
        intellectual property, copyrights, patents, trademarks, leases and goodwill,
        including but not limited to any of the leases listed in Exhibit B herein
        that
        EL Desktop obtains after the Effective Date, within 10 days of entering into
        or
        otherwise obtaining such assets, contracts, agreements, properties, business,
        intellectual property, copyrights, patents, trademarks, leases and goodwill,
        including but not limited to any of the leases listed in Exhibit B, EL Desktop
        shall provide written notice thereof to Vemics, which notice shall be
        accompanied by a complete and correct copy of the assets, contracts, agreements,
        properties, business, intellectual property, copyrights, patents, trademarks,
        leases and goodwill, including but not limited to any of the leases listed
        in
        Exhibit B; Vemics shall have 30 days after receipt of all of the foregoing
        from
        EL Desktop to accept or reject the assignment of such assets, contracts,
        agreements, properties, business, intellectual property, copyrights, patents,
        trademarks, leases and goodwill, including but not limited to any of the
        leases
        listed in Exhibit B.

       

      Desktop
        must reveal to and notify Vemics, in writing, of all revenue-generating
        contracts, agreements, memoranda of agreements and other business arrangements
        that EL Desktop has entered into and/or will enter into in the future ("New
        Contracts"). Such notice shall be provided by EL Desktop to Vemics within
        15
        days of the first to occur of (i) the parties' execution and delivery of,
        or
        (ii) EL Desktop's direct or indirect receipt of any income, payments or other
        compensation from, any such New Contracts. Upon written demand of Vemics,
        EL
        Desktop will assign to Vemics, at no additional cost or expense, any or all
        such
        New Contracts. These New Contracts shall include but not be limited to the
        contracts attached hereto as Exhibits A-1 through A-5 (the "Contracts").
        EL
        Desktop shall be under a continuing on-going obligation now and in the future
        to
        reveal and notify Vemics of any such New Contracts, and its failure to do
        so
        shall be a material breach of this Agreement. EL Desktop represents and warrants
        to Vemics that (1) all contracts being assigned to Vemics under this Agreement
        (including the Contracts) are in full force and effect and are valid and
        enforceable in accordance with their terms, (2) no party to any such contract
        is
        in breach in any manner whatsoever of its liabilities, duties and/or obligations
        under such contract and (3) such contracts are fully assignable to Vemics
        as
        written without the need of any consents or approvals.

      

      (c)
         No
        Assumption of liabilities.
        Vemics
        shall not now and/or in the future 

      assume,
        pay, perform, or discharge any debts, obligations, contracts, agreements,
        leases
        and liabilities of EL Desktop of any kind, character, or description, whether
        accrued, absolute, contingent, or otherwise (regardless of whether reflected
        or
        reserved against on EL Desktop's balance sheets, books of account, and records);
        provided, however, that, subject to the terms and conditions of this Agreement,
        Vemics shall assume and agree to discharge and perform, when due, any those
        debts, obligations and liabilities arising entirely after the Closing Date
        under
        those contracts, agreements and leases included in the Assets (excluding
        any
        debts, obligations and/or liabilities accruing, arising out of or relating
        to
        any breach or default by EL Desktop on or prior to the Closing Date under
        any
        such contracts, agreements and leases included in the Assets). EL Desktop
        agrees
        to fully pay or otherwise satisfy when due, and to indemnify, hold harmless
        and
        defend Vemics from and against, all claims, debts, liabilities, obligations,
        duties, defense costs (including reasonable attorneys' fees), judgments and
        other expenses arising out of those debts, obligations, contracts, agreements,
        leases and/or liabilities of EL Desktop not specifically assumed by Vemics
        under
        this Agreement.

      

      (d)
         Assurance.
        EL
        Desktop warrants and represents that Vemics shall not be 

      subjected
        to any liability to any third party as the result of this Agreement, except
        as
        otherwise provided in Section 1(c) with respect to debts, obligations and
        liabilities arising entirely after closing under those contracts, agreements
        and
        leases included in the Assets.

      

      (e)
         Conveyances.
        The
        sale, conveyance, transfer, assignment, and delivery of 

      the
        Assets shall be effected by deeds, bills of sale, endorsements, assignments,
        drafts, checks, and other instruments of transfer and conveyance, in form
        and
        substance acceptable to Vemics (collectively, the "Closing Documents'', which
        shall be executed and delivered by EL Desktop at closing.

      

      (f)
         Additional
        documents.
        EL
        Desktop shall, at any one or more times after the 

      Closing
        Date, upon Vemics' request, execute, acknowledge, and deliver all further
        deeds,
        assignments, transfers, conveyances, powers of attorney, and assurances,
        and do
        all other acts and things, that are required or appropriate to assign, transfer,
        grant, convey, assure, and confirm to Vemics, or to its successors and assigns,
        or to aid and assist in collecting and reducing to possession, any of or
        all the
        Assets to Vemics, and/or any of or all the obligations of EL Desktop to be
        assigned to, and assumed, paid, performed, and/or discharged by Vemics pursuant
        to this Agreement.

      2.
         Composition
        of purchase price.
        On the
        terms and subject to the conditions herein set forth, Vemics shall issue
        and
        deliver to EL Desktop on the Closing Date:

      

      (a)
         Common
        stock.
        At
        closing, Vemics will issue to EL Desktop an aggregate 

      of
        one
        million one hundred eleven thousand one hundred twelve (1,111,112) restricted
        shares (the "Shares") of Vemics common stock, with a par value of $.00I per
        share (the "Common Stock"), all of which Shares shall be registered in the
        name
        of EL Desktop. With respect to said Shares, (i) at closing stock certificates
        representing one million (1,000,000) restricted shares of Common Stock will
        be
        delivered by Vemics to EL Desktop, and (ii) at closing stock certificates
        representing the remaining one hundred eleven thousand one hundred twelve
        (111,112) restricted shares of Common Stock (the "Escrowed Shares") will
        be
        presented by Vemics to EL Desktop along with a blank stock power relating
        to
        said Escrowed Shares, and thereupon EL Desktop will sign the stock power
        in
        blank (with a signature guaranty) and deliver said signed stock power and
        said
        stock certificates representing the Escrowed Shares to Vemics to be held
        in
        escrow pursuant to this Agreement. Vemics will hold said stock power and
        Escrowed Shares in escrow to offset any losses, debts, obligations or
        liabilities which may be borne or incurred by Vemics due to, arising out
        of or
        otherwise relating to any breach or violation of this Agreement (including
        without limitation Section 1(c) of this Agreement) by EL Desktop (collectively,
        "Losses"). If by July 16, 2007, Vemics has not borne or incurred any Losses,
        and
        EL Desktop is not in breach or violation of any term and condition of this
        Agreement (including without limitation Section 1(c) of this Agreement),
        then,
        subject to the terms and conditions of this Agreement, the Escrowed Stock
        will
        be released by Vemics to EL Desktop. If on or prior to July 16, 2007, Vemics
        has
        borne or incurred any Losses, or EL Desktop is in breach or violation of
        any
        term and condition of this Agreement (including without limitation Section
        1(c)
        of this Agreement), then on July 16, 2007, Vemics shall so notify EL Desktop,
        and may offset its Losses and any other damages incurred or to be incurred
        by
        Vemics as a result thereof on a dollar-for-dollar basis against the Escrowed
        Shares, in which event each such Escrowed Share shall be valued at the average
        of the closing prices of Vemics Common Stock over the 30 trading days
        immediately preceding July 16, 2007, as reported in the pink sheets or, if
        Vemics Common Stock is traded on an exchange, as reported by such exchange
        (if
        Vemics Common Stock is not traded in the pink sheets or on an exchange an
        any
        date during said 30 trading days, each Escrowed Shares shall be valued at
        US$.90); provided, however, in the event any such Losses and/or other damages
        have not been liquidated on or prior to July 16, 2007 (including without
        limitation any Losses or damages which may be reasonably anticipated by Vemics
        to be incurred after July 16, 2007), then, for purposes of any such offset,
        on
        July 16, 2007, Vemics may make a reasonable estimate of the amount of such
        unliquidated Losses and/or other damages which Vemics may incur. In the event
        of
        any such offset by Vemics, the Escrowed Shares as to which the offset is
        applied
        (rounded up to the next whole share) shall be deemed repurchased by Vemics
        from
        - EL Desktop and to thereupon become authorized but unissued shares, and
        any
        Escrowed Shares as to which the offset is not applied shall, subject to the
        terns and conditions of this Agreement, be released and delivered to EL
        Desktop.

      

      (b)
         Common
        stock bonus - Warrant and Additional Warrant.

      

      (1) Warrant.
        Subject
        to the provisions of this Section, on February 28, 

      2008,
        Vemics will issue to EL Desktop a warrant for restricted shares of Vemics
        Common
        Stock, not to exceed 750,000 restricted shares of Vemics' Common Stock, with
        a
        strike price of US$.90 per share of Common Stock and a term of 5 (five) years,
        which warrant shall be in the form attached hereto as Exhibit C (the "Warrant").
        The number of restricted shares of Vemics Common Stock to be subject to the
        Warrant will be based on the amount of net revenue received by Vemics which
        is
        generated by E. James Pennington ("Pennington") as an employee of Vemics
        between
        the Closing Date and February 28, 2008, according to the matrix below; provided,
        however, that no Warrant shall be issued if the amount of net revenue received
        by Vemics which is generated by the International Education Solutions Division
        directed by E James Pennington between the Closing Date and February 28,
        2008,
        is not at least US$975,000:

      

      Target
        Net Revenue:   US$1,500,000

      Date
        to
        Reach Target Net Revenue: February
        28, 2008

      

      

      
        	
                 

                 

                %
                  of Target Net

                Revenue
                  Reached

              	
                 

                Percentage
                  of

                Warrant
                  which will be

                exercisable

              	
                 

                 

                Number
                  of shares which will be

                exercisable
                  under the Warrant

              
	
                Less
                  than 65%

              	
                -0-%
                  (no Warrant to be issued)

              	
                -0-
                  shares (no warrant to be issued)

              
	
                65%

              	
                45%

              	
                337,500
                  shares

              
	
                75%

              	
                60%

              	
                450,000
                  shares

              
	
                85%

              	
                75%

              	
                562,500
                  shares

              
	
                95% .

              	
                90%

              	
                675,000
                  shares

              
	
                100%
                  or more

              	
                100%

              	
                750,000
                  shares

              

      

      

      (2) Additional
        Warrant.

      

      	(i)  	
              Subject
                to the provisions of this Section, on February 28, 2008, Vemics will
                

            

      issue
        to
        EL Desktop an additional warrant for 750,000 restricted shares of Vemics
        Common
        Stock, with a strike price equal to 90% of the average of the closing prices
        of
        Vemics Common Stock over the 30 trading days immediately preceding February
        28,
        2008 (as reported in the pink sheets or, if Vemics Common Stock is traded
        on an
        exchange, as reported by such exchange) (if Vemics Common Stock is not traded
        in
        the pink sheets or on an exchange an any date during said 30 trading days,
        a
        share of Vemics Common Stock shall be valued at US$.90 so that the strike
        price
        would be US$.81), if the amount of net revenue received by Verities which
        is
        generated by Pennington as an employee of Vemics between the Closing Date
        and
        February 28, 2008, is US$2,250,000 or more. If Vemics does, or is obligated
        to,
        issue such an additional warrant to EL Desktop pursuant to this Section
        2(b)(2)(i), then no additional warrant shall be issued or issuable pursuant
        to
        Section 2(b)(2)(ii).

      

      	(ii)  	
              Subject
                to the provisions of this subsection, if Vemics does not and is not
                

            

      obligated
        to issue an additional warrant to EL Desktop pursuant to Section 2(b)(2)(i),
        then on February 28, 2009, Vemics will issue to EL Desktop an additional
        warrant
        for 750,000 restricted shares of Vemics Common Stock, with a strike price
        equal
        to 90% of the average of the closing prices of Vemics Common Stock over the
        thirty trading days immediately preceding February 28, 2009 (as reported
        in the
        pink sheets or, if Vemics Common Stock is traded on an exchange, as reported
        by
        such exchange) (if Vemics Common Stock is not traded in the pink sheets or
        on an
        exchange an any date during said 30 trading days, a share of Vemics Common
        Stock
        shall be valued at US$.90 so that the strike price would be US$.81), if the
        amount of Vemics' net revenue which is generated by Pennington as an employee
        of
        Vemics between March 1, 2008 and February 28, 2009, is US$3,000,000 or
        more.

      

      	(iii)  	
              Any
                additional warrant issued by Vemics pursuant to this Section 2(b)(2)
                

            

      (an
        "Additional Warrant") shall be for a term of 5 (five) years, and shall be
        in
        substantially the same form as the Warrant attached hereto as Exhibit C.
        In the
        event any stock split, reverse stock split, recapitalization, merger,
        consolidation, conversion, or similar transaction to which Vemics is a party
        occurs prior to the issuance of any Additional Warrant, then, notwithstanding
        Sections

      2(b)(2)(i)
        and (ii) above, Vemics may, in ifs reasonable discretion, appropriately adjust
        the strike price and/or number, class or type of shares to be received upon
        exercise of the Additional Warrant as if the Additional Warrant had been
        issued
        immediately prior to such event or transaction.

      

      (c)
         Restrictions
        and Rights.
        The
        following provisions shall apply to the Vemics Shares, the Warrant, Additional
        Warrant and the Additional Shares (as defined below):

      

      (1) The
        Shares are not, and if and when issued neither (i) the Warrant and any

      securities
        issued upon exercise of the Warrant, (ii) the Additional Warrant and any
        securities upon exercise of the Additional Warrant, nor (iv) the Additional
        Shares will be, registered under the Securities Act of 1933, as amended
        ("Securities Act"), or under any state "blue sky" laws (collectively, "State
        Acts"). The Shares are, and if and when issued (i) the Warrant and any
        securities issued upon exercise of the Warrant, (ii) the Additional Warrant
        and
        any securities upon exercise of the Additional Warrant, and (iii) the Additional
        Shares will be, "restricted securities," as that term is defined in U.S.
        Securities and Exchange Commission ("SEC") Rule 144, and may not be sold,
        assigned, transferred or otherwise disposed of unless registered under the
        Securities Act and all applicable State Acts or unless exemptions from such
        registration requirements are available for such transaction.

      

      	(2)  	
              The
                certificate or certificates evidencing the Vemics Shares (including
                any
                

            

      Escrowed
        Shares) to be delivered to EL Desktop, or, if and when issued, evidencing
        (i)
        the Warrant and any securities issued upon exercise of the Warrant, (ii)
        the
        Additional Warrant and any securities issued upon exercise of the Additional
        Warrant, and (iii) the Additional Shares, will bear a restrictive legend
        substantially in the following form as long as applicable:

      

      "THE
        SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
        ACT
        OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAW. THESE SECURITIES
        HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO DISTRIBUTION OR
        RESALE,
        AND MAY NOT BE SOLD, MORTGAGED, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED
        WITHOUT AN EFFECTIVE REGISTRATION STATEMENT COVERING THESE SECURITIES UNDER
        THE
        ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL IN
        FORM
        AND SUBSTANCE SATISFACTORY TO THE COMPANY THAT REGISTRATION OF THESE SECURITIES
        IS NOT REQUIRED UNDER THE ACT OR UNDER APPLICABLE STATE SECURITIES
        LAWS."

      

      	(3)  	
              (1)
                If, at any time after the first anniversary of the Closing Date,
                Vemics
                

            

      files
        a
        registration statement under the Securities Act for purposes of a public
        offering of securities of the Vemics for its own account, it shall notify
        EL
        Desktop in writing (the "Company Notice"). EL Desktop shall have the right
        (the
        "Piggyback Right"), subject to the limitations set forth in this Section,
        to
        include in any such registration statement all or any portion of the Vemics'
        Shares and Additional Shares then held by EL Desktop. In order to exercise
        the
        Piggyback Right, EL Desktop shall give written notice to Vemics (the "Piggyback
        Notice") no later than fifteen (15) days following the date on which the
        Vemics
        gives the Company Notice. The Piggyback Notice shall set forth the number
        of
        Vemics' Shares and Additional Shares that EL Desktop desires to include in
        the
        registration statement. All expenses of any such registration will be paid
        by
        the Vemics.

      

      	(ii)  	
              If
                the registration statement under which Vemics gives a notice
                

            

      under
        this Section is for an underwritten offering, Vemics shall so advise the
        EL
        Desktop in the Company Notice. In such event, the right of any EL Desktop
        to be
        included in a registration pursuant to this Section shall be conditioned
        upon EL
        Desktop's participation in such underwritten offering and the inclusion of
        EL
        Desktop's Vemics' Shares and Additional Shares in the underwritten offering
        to
        the extent provided herein. All holders of Vemics' Shares and Additional
        Shares
        proposing to distribute their shares by means of such underwritten offering
        (including without limitation EL Desktop) shall enter into an underwriting
        agreement in customary form with the underwriter or underwriters selected
        for
        such underwriting by Vemics. Notwithstanding any other provision of this
        Agreement, if the underwriter determines in good faith that marketing or
        other
        factors require a limitation of the number of shares to be underwritten,
        the
        number of shares that may be included in the underwriting shall be allocated,
        first, to Vemics; second, if and to the extent permitted by the underwriter,
        to
        EL Desktop with respect to the Vemics' Shares and Additional Shares; and
        third,
        if and to the extent permitted by the underwrite, to any other stockholder
        of
        Vemics (i.e., other than EL Desktop) on a pro rata basis. No such reduction
        shall reduce the securities being offered by Vemics for its own account to
        be
        included in the registration and underwriting. If EL Desktop disapproves
        of the
        terms of any such underwriting, EL Desktop may elect to withdraw therefrom
        by
        written notice to Vemics and the underwriter, delivered at least twenty (20)
        business days prior to the effective date of the registration
        statement.

      

      (iii)
         Vemics
        shall have the right to terminate or withdraw any 

      registration
        initiated by it under this Section prior to the effectiveness of such
        registration whether or not EL Desktop has elected to include securities
        in such
        registration.

      

      (4)
         With
        a
        view to making available to EL Desktop the benefits of SEC Rule 

      144
        and
        any other rule or regulation of the SEC that may at any time permit EL Desktop
        to sell securities of Vemics to the public without registration, Vemics agrees
        to use reasonable efforts, after the first anniversary of Closing Date and
        so
        long as the EL Desktop owns any Vemics' Shares or Additional Shares, to:
        (i)
        make and keep available adequate current public information with respect
        to
        Vemics, as those terms are understood and defined in SEC Rule 144; (ii) to
        file
        with the SEC in a timely manner all reports and other documents required
        of
        Vemics under the Securities Exchange Act of 1934, as amended (the "Exchange
        Act") (at any time after Vemics has become subject to such reporting
        requirements); and (iii) furnish to any EL Desktop forthwith upon request
        (A) to
        the extent accurate, a written statement by the Company that it has complied
        with the reporting requirements of SEC Rule 144, the Securities Act, and
        the
        Exchange Act, or that it qualifies as a registrant whose securities may be
        resold pursuant to Form S-3 (at any time after Vemics so qualifies); and
        (B) to
        the extent accurate, a copy of the most recent annual or quarterly report
        of
        Vemics and such other reports and documents so filed by Vemics.

      

      (d)
         Cash
        or Additional Shares.
        Vemics
        shall pay to EL Desktop Creditors up to US$250,000 in cash to satisfy any
        outstanding debts, liabilities or obligations to EL Desktop's present creditors
        (collectively, the "Cash Payments") identified in "Exhibit D " (collectively
        the
        "EL Desktop Creditors") with payment to be made to EL Desktop Creditors on
        before the date indicated on said "Exhibit D". This Section 2(d) is subject
        to
        Section I (c) above, and in the event of any inconsistency, Section 1(c)
        shall
        control. Any such Cash Payments so made by Vemics will be used by EL Desktop
        to
        satisfy its current financial obligations, and Vemics may require a final
        determination of what these financial obligations are prior to making any
        such
        Cash Payment. Exhibit D is a list prepared by EL Desktop of its current
        financial obligations. No Cash Payments so made by Vemics will be paid, directly
        or indirectly, by EL Desktop to the management or shareholders of EL Desktop,
        except for such monies as are due for back salaries, expenses and documented
        loans made to EL Desktop (excluding direct equity investments made by, and
        any
        convertible debentures held by, management or shareholders of EL Desktop,
        which
        shall not be paid or otherwise satisfied, in whole or in part, directly or
        indirectly, with any such Cash Payments by Vemics). If on or before September
        15, 2007, Vemics has not made Cash Payments aggregating US$250,000 pursuant
        to
        this Section 2(d), then on September 16, 2007, Vemics will issue to EL Desktop
        such number of additional restricted shares (the "Additional Shares") of
        Vemics
        Common Stock, registered in the name of EL Desktop and rounded up to the
        next
        whole share, as shall have an aggregate value equal to the difference between
        US$250,000 and the dollar amount of the aggregate Cash Payments (if any)
        made by
        Vemics on or prior to September 15, 2007. For this purpose, each Additional
        Share shall be valued at the average of the closing prices of Vemics Common
        Stock over the 30 trading days immediately preceding September 16, 2007,
        as
        reported in the pink sheets or, if Vemics Common Stock is traded on an exchange,
        as reported by such exchange (if Vemics Common Stock is not traded in the
        pink
        sheets or on an exchange an any date during said 30 trading days, each Escrowed
        Shares shall be valued at US$.90).

      

      (e)
         Excluded
        property. Vemics
        shall not acquire, and EL Desktop shall retain, all assets and property of
        EL
        Desktop which are not assigned to Vemics pursuant to this
        Agreement.

      

      (f)
         Transfer
        of Lease Interests.
        EL
        Desktop covenants and agrees that it will offer to transfer to Vemics, for
        no
        additional consideration, any lease or leasehold interest in the properties
        it
        has in its possession now (referred to in Exhibit B.) or in the future (at
        which
        time Vemics will have sole option whether to accept or reject said lease
        interest). With respect to all leases and leasehold interests currently held
        by
        EL Desktop (referred to in Exhibit B), Vemics shall furnish an estoppel
        certificate from each lessor under such leases, whereby the lessors will
        verify
        that each of the leases is not in default and is in full force and effect
        as of
        the date of closing. Such estoppel certificate shall contain a provision
        whereby
        the lessor consents to the transfer. With respect to all leases and leasehold
        interests currently held by EL Desktop (referred to in Exhibit B), Vemics
        will
        accept or reject such assignment at closing. With respect to all leases and
        leasehold interests that EL Desktop obtains after the Effective Date, within
        10
        days of entering into or otherwise obtaining such lease or leasehold interest,
        EL Desktop shall provide written notice thereof to Vemics, which notice shall
        be
        accompanied by a complete and correct copy of the applicable lease and any
        other
        documents and agreements related thereto, along with an estoppel certificate
        as
        described above in this Section 2(f) from the applicable lessor; Vemics shall
        have 30 days after receipt of all of the foregoing from EL Desktop to accept
        or
        reject the assignment of such new lease or leasehold interest.

      

      (g)
         Vemics
        ' account.
        From
        and after the Effective Date, all operations relating to EL Desktop's Assets
        to
        be conveyed to Vemics shall be for the account, and shall accrue to the benefit,
        of Vemics.

      

      3.
         Representations
        and warranties of EL Desktop.
        EL
        Desktop hereby represents and warrants to Vemics as follows:

      

      (a)
         Duly
        organized.
        EL
        Desktop is a corporation duly organized and validly existing in good standing
        under the laws of Canada, and is entitled to own or lease its properties
        and to
        carry on its business as and in the places where such properties are now
        owned,
        leased, or operated and such business is now conducted.

      

      (b)
         Subsidiary
        corporations. EL
        Desktop has no subsidiary corporations.

      

      (c)
         Leases.
        Exhibit
        B is a list and brief description of all material leases and agreements under
        which EL Desktop leases, holds, and operates real property or significant
        items
        of personal property. All such leases and agreements are assignable except
        as
        stated therein, and no material adverse claim against, or defect in, the
        interest purportedly leased or given under or by any such instrument exists.
        EL
        Desktop is not in default with respect to any instrument on such list. EL
        Desktop owns outright and has good and marketable title to all the assets
        and
        properties listed in Exhibit A, Exhibit A-1 through Exhibit A-5, and Exhibit
        B.

      

      (d)
         Intangible
        property.
        Exhibit
        E is a list of all material United States and Canadian patents, patent
        applications, and trademarks owned by or registered in the name of EL Desktop
        or
        in which EL Desktop has any rights, and in each case a brief description
        of the
        nature of such rights. EL Desktop is not a licensor in respect of any United
        States or Canadian patents, trademarks, trade names, and applications therefor,
        except as stated in such list.

      

      (e)
         Insurance.
        Exhibit
        F contains a brief description of all material policies of fire, liability,
        and
        other forms of insurance held by EL Desktop.

      

      (f)
         Authorization.
        EL
        Desktop's Board of Directors have approved this Agreement and the transactions
        contemplated herein, and have authorized the execution and delivery of this
        Agreement by EL Desktop. This Agreement and the transactions contemplated
        herein, including the conveyance, assignment, transfer, and delivery of the
        Assets of EL Desktop, have been consented to in writing by the shareholders
        of
        record of EL Desktop who are entitled to vote thereon. This Agreement and
        the
        transactions contemplated herein have been authorized and approved by all
        necessary corporate action of EL Desktop.

      

      

      This
        Agreement constitutes the legal, valid and binding obligation of EL Desktop,
        enforceable against EL Desktop in accordance with its terms. When executed
        and
        delivered by EL Desktop, the Closing Documents will constitute the legal,
        valid
        and binding obligations of EL Desktop, enforceable against EL Desktop in
        accordance with their respective terms.

      

      (g)
         EL
        Desktop has the Legal right, power, authority and ability to execute and
        deliver
        this Agreement and the Closing Documents and to perform its obligations
        thereunder, including without limitation to transfer all of the Assets to
        Vemics. EL Desktop hereby certifies that its intellectual property, patents,
        copyrights, and trademarks do not and will not infringe upon or misappropriate
        any intellectual property, copyright, patent, right of publicity or privacy
        (including but not limited to defamation), trade secret, trademark, or other
        proprietary rights of any third party. In addition, EL Desktop hereby certifies
        that none of its Assets are subject to any lien or encumbrance by any third
        party. EL Desktop also certifies that the Contracts referenced herein are
        in
        good standing and that EL Desktop is in full performance and compliance with
        said Contracts and said Contracts are not subject to any right, setoff or
        encumbrance by any third party.

      

      (h)
         EL
        Desktop's performance of this Agreement will not conflict with any other
        contract or other agreement to which EL Desktop is a party or otherwise
        bound.

      

      (i)
         EL
        Desktop warrants that none of the Assets are subject to any lien or encumbrance
        of any kind in favor of any lender or other person.

      

      (j)
         EL
        Desktop agrees to indemnify, hold harmless and defend Vemics from and against
        all claims, defense costs (including reasonable attorneys' fees), judgments
        and
        other expenses arising out of the breach of any provisions of this Agreement
        by
        EL Desktop.

      

      (k)
         EL
        Desktop is acquiring the Shares, the Warrant, the Additional Warrant and
        the
        Additional Shares for its own account and will not sell, assign, transfer,
        or
        otherwise dispose of any of the Shares, the Warrant (or any securities issued
        upon exercise of the Warrant), the Additional Warrant (or any securities
        issued
        upon exercise of the Additional Warrant), any of the Additional Shares
        (collectively, the "Vemics Securities"), or any interest in any of the Vemics
        Securities, without registration under the Securities Act, and all applicable
        State Acts, except in a transaction which is exempt from such registration
        requirements. EL Desktop has no pm-existing plan or proposal to, and EL Desktop
        has not and will not within the one-year period following the Closing Date,
        distribute or adopt a plan or proposal to distribute any or all of the Vemics
        Securities to its shareholders and/or other persons, whether in connection
        with
        a dissolution of EL Desktop or otherwise, without the prior written consent
        of
        Vemics or unless such Vemics Securities have been registered under the
        Securities Act and all applicable State Acts.

      

      EL
        Desktop has such knowledge and experience in financial and business matters
        as
        to be capable of evaluating the merits and risk of an investment in the Vemics
        Securities, and has obtained, in its judgment, sufficient information from
        Vemics to evaluate the merits and risks of an investment in the Vemics
        Securities. EL Desktop has been provided the opportunity to obtain information
        and documents concerning Vemics and the Vemics Securities, and has been given
        the opportunity to ask questions of and receive answers from, the directors
        and
        officers of Vemics concerning Vemics and the Vemics Securities and other
        matters
        pertaining to this investment. EL Desktop acknowledges and agrees that it
        has
        obtained from EL Desktop, and has reviewed, those documents listed on Exhibit
        G
        (the "Vemics Disclosure Documents"). EL Desktop is aware of the risks inherent
        in an investment in Vemics, and specifically the risks of an investment in
        the
        Vemics Securities (including without limitation the risks referred to in
        the
        Vemics Disclosure Documents). In addition, EL Desktop is aware and acknowledges
        that there can be no assurance of the future viability or profitability of
        Vemics, nor can there be any assurance relating to the current or future
        value
        of the Vemics Common Stock or any of the other Vemics Securities.

      

      
        	 	
                4.
                  

              	
                Representations
                  and warranties of Vemics Vemics represents and warrants to EL Desktop
                  as
                  follows:

              

      

      

      (a)
         Duly
        organized.
        Vemics
        is a corporation duly organized and validly 

      existing
        in good standing under the laws of Nevada, and is entitled to own or lease
        its
        properties and to carry on its business as and in the places where such
        properties are now owned, leased, or operated and such business is now
        conducted.

      

      	(b)  	
              Securities.
                The Shares and any Additional Shares, when issued and
                

            

      delivered
        as provided herein, will be Vemics' duly authorized, validly issued and
        outstanding, fully paid and non-assessable shares of Vemics Common Stock.
        The
        Warrant and the Additional Warrant, if and when issued and delivered as provided
        herein, will be Vemics' duly authorized, validly issued and outstanding,
        warrants, and if and when any securities are issued upon any exercise of
        the
        Warrant or the Additional Warrant, such securities will be the duly authorized,
        validly issued and outstanding, fully paid and non-assessable securities
        of
        Vemics.

      

      (c)
         Authorization.
        Vemics'
        Board of Directors has approved this and authorized 

      this
        Agreement.

      

      5.
         No
        assumption of liabilities by Vemics

      

      (a)
         Except
        as
        otherwise provided in Section 1(c), EL Desktop acknowledges 

      that
        Vemics is acquiring EL Desktop's Assets hereunder without any assumption
        of EL
        Desktop's liabilities. EL Desktop covenants that it shall fully and timely
        satisfy all its present liabilities to creditors.

      

      (b)
         EL
        Desktop will hold Vemics harmless against all claims for products, 

      service,
        and professional liability against EL Desktop arising out of sales of products
        or services rendered by EL Desktop.

      

      (c)
         EL
        Desktop represents that it has disclosed all its debts, liabilities and

      obligations
        to Vemics, and that EL Desktop has no undisclosed liabilities.

      

      (d)
         EL
        Desktop has paid or will pay or fully provide for all Canadian, United

      States
        and state income and other taxes which relate to the conduct of its business
        through the Closing Date. EL Desktop represents that there is no pending
        tax
        claim or dispute on taxes which might result in a lien against EL Desktop's
        Assets.

      

      (e)
         Bulk
        sales law.
        The
        parties hereby waive EL Desktop's compliance with the 

      provisions
        of any applicable bulk sales laws. EL Desktop shall hold a sufficient amount
        of
        the cash in trust to pay all its creditors as and when their claims come
        due,
        and hold and save Vemics harmless against any loss, damage or expense, including
        reasonable attorneys' fees and court costs, incurred by Vemics as a result
        of or
        attributable to the parties' failure to comply with such
        provisions.

      

      (f)
         Division
        of taxation notice.
        EL
        Desktop shall cooperate with Vemics and 

      give
        all
        required information to the Canadian Division of Taxation as required by
        the
        Canadian Division of Taxation, and shall cooperate with Vemics and give all
        required information to Vemics and the Internal Revenue Services as required
        by
        the Internal Revenue Code, and shall timely complete and execute such tax
        returns, forms, notices and/or reports as may be required in connection with
        the
        foregoing.

      

      (g)
         Licensing.
        EL
        Desktop will comply with all United States and Canadian 

      laws
        regarding licensing and import/export restrictions of technology.

      

      6.
         Excepted
        transactions. None.

      

      7.
         Access
        to records.
        (a)
        Available material. Before the Closing Date, each party's officers and
        accredited representatives shall each have full access to the other party's
        plants, properties, books, accounts, and records of every kind, including,
        without limitation, the other party's monthly balance sheets and income and
        operating statements, and each will furnish the other with all additional
        financial and operating data and other information as to its business and
        properties that is from time to time reasonably requested. Each party shall
        authorize and direct its respective independent auditors to make available
        to
        the other party before the Closing Date any information, including access
        to
        work papers, requested by such party. Before the Closing Date, each party
        may
        also have representatives present at the taking of inventories by the
        other.

      

      (b)
         Unavailable
        material.
        None.

      

      (c)
         Confidentiality.
        Vemics
        and EL Desktop mutually acknowledge that, 

      pursuant
        to their respective rights to inspect the other's plants, properties, books,
        accounts and records, and EL Desktop's receipt of the Vemics Disclosure
        Documents, as provided in this Agreement, they may become privy to the other's
        Confidential Information, and that communication of such Confidential
        Information to third parties (whether such communication is authorized by
        Vemics
        or EL Desktop respectively or otherwise), or the unauthorized use of one
        party's
        Confidential Information by the other party, could damage the other's business
        after the transaction is completed. Vemics and EL Desktop therefore mutually
        agree to take reasonable steps to insure that such Confidential Information
        about the other, obtained by Vemics or EL Desktop respectively, or any of
        their
        respective employees, officers, agents, attorneys, or other accredited
        representatives, shall remain confidential, shall not be used by them except
        as
        authorized by this Agreement, and not be disclosed or revealed to third parties;
        provided, however, that it is agreed that Vemics may use and disclose any
        Confidential Information of EL Desktop that is included among the Assets
        acquired by Vemics pursuant to this Agreement. "Confidential Information"
        includes information not ordinarily known by noncompany personnel, including
        customer lists, supplier lists, trade secrets, channels of distribution,
        pricing
        policy and records, inventory records, and all other information normally
        understood to be confidential or otherwise designated as such by EL Desktop
        or
        Vemics respectively.

      

      8.
         (a)
         Closing
        date.
        The
        closing under this Agreement shall take place at 523 Avalon Gardens, Nanuet,
        NY
        10954, Eastern Daylight Time, on January 25, 2007, at 10:00 AM, or such other
        date as shall be mutually agreed upon by Vemics and EL Desktop (the "Closing
        Date").

      

      (b)
         Payment.
        All
        payments required to be made under this Agreement shall be 

      made
        in
        the time period prescribed in this Agreement All stock to be issued to EL
        Desktop shall be issued on the applicable dates set forth herein, subject
        to the
        escrow provision set forth herein.

      

      (c)
         All
        Assets shall be transferred to Vemics on the Closing Date of this 

      transaction
        or, with respect to Assets which may arise after the Closing Date, at such
        future date as set forth herein.

      

      9.
         Approval
        of Vemics' Board of Directors.
        Vemics
        had previously called a meeting of its Board of Directors at which time the
        Board of Directors of Vemics approved this Agreement and its execution,
        delivery, and performance by Vemics.

      

      10.
         Employment
        of E. James Pennington

      

      (a)
         Principal.
        Vemics
        affirms that it intends to employ Pennington in a 

      principal
        executive capacity from and after the Closing Date, as Senior Vice President
        International Sales, and EL Desktop hereby affirms that it is its understanding
        that Pennington intends to enter into the Vemics' employment in such a capacity
        from and after the Closing Date. After closing, Pennington will receive
        compensation of US$120,000.00 per annum, plus bonuses and commissions to
        be
        determined, as shall be set forth in a separate Employment Agreement between
        Vemics and Pennington to be executed and delivered at closing (the "Employment
        Agreement"). The Employment Agreement will have a term of 3 years, and will
        contain such other terms and conditions, including, but not limited to,
        appropriate non-competition, non-solicitation, and non-disclosure provisions
        as
        are usual and customary. This Employment Agreement shall be substantially
        in the
        form attached hereto as Exhibit H.

      

      	(c)  	
              Right
                to terminate.
                If Pennington should die on or before the Closing Date,
                

            

      Vemics
        may terminate this Agreement by giving EL Desktop written notice on or before
        the Closing Date of Vemics' exercise of such termination rights. If Vemics
        does
        not exercise its option to terminate, EL Desktop may terminate this Agreement
        by
        giving written notice to Vemics on or before the Closing Date. It shall be
        a
        condition precedent to Vemics obligation to close under this Agreement that
        Pennington executed and delivers the Employment Agreement on or before the
        Closing Date.

      

      11.
         Survival
        of representations and warranties.
        EL
        Desktop's representations and warranties made in this Agreement shall survive
        for a period of 24 months after the Closing Date, except for the representation
        and warranty contained in Sections 1(c), 1(d), 5 and 14 (relating, in general,
        to EL Desktop's debts, liabilities and obligations not being assumed by Vemics),
        which shall continue to survive until all debts, liabilities and obligations
        are
        satisfied in full by EL Desktop and all applicable preference periods have
        expired.

      Vemics'
        representations and warranties made in this Agreement shall not survive the
        Closing Date, and Vemics shall not have any subsequent liability with regard
        thereto.

      

      12.
         Consent
        of third party.
        (a)
        Assignments. To the extent that the assignment of any contract, license,
        lease,
        commitment, sales order, purchase order or any other Asset to be assigned
        to
        Vemics requires the consent of a third party, this Agreement shall not
        constitute an agreement to assign the same if an attempted assignment would
        constitute a breach thereof. EL Desktop will diligently pursue and use its
        best
        efforts to obtain any required consent of the third parties to the assignment
        to
        Vemics of any such contracts, licenses, leases, commitments, sales orders,
        purchase orders or other Assets of EL Desktop. If such consent is not obtained
        prior to the Closing Date, EL Desktop will cooperate with Vemics in any
        reasonable arrangement designed to provide for Vemics the benefits under
        any
        such contracts, licenses, leases, commitments, sales orders, purchase orders
        or
        other Asset, including enforcement, at the cost and for the benefit of Vemics,
        of all EL Desktop's rights against the third party arising out of a breach
        or
        cancellation by such third party or otherwise.

      

      (b)
         Accounts
        receivable.
        Vemics
        may collect for its account all EL Desktop 

      receivables
        and other items that are transferred to Vemics, and may endorse EL Desktop's
        name on all checks received on account of such items. EL Desktop shall deliver
        to Vemics all cash or other property EL Desktop receives for such
        items.

      

      13.
         Fees
        and expenses.
        Each
        party shall pay their own fees and expenses incurred in preparing this
        Agreement, carrying it into effect, and consummating the transactions
        contemplated hereby.

      

      14.
         Waiver
        of compliance with bulk sale requirements.
        Vemics
        waives EL Desktop's compliance provisions with the provisions of the bulk
        sales
        law as enacted in any applicable jurisdiction. EL Desktop, however, shall
        indemnify and hold Vemics harmless from all debts, liabilities and obligations
        of EL Desktop which are not assumed by Vemics under this Agreement, and from
        any
        and all liabilities resulting from noncompliance with the bulk sales law,
        including, but not limited to, all costs and expenses incurred in connection
        with the defense or settlement of any such liability or obligation (including
        without limitation reasonable attorneys fees).

      

      15.
         (a)
         Assignment
        of agreement.
        This
        Agreement shall not be assignable by either party except with the other's
        written consent, which shall not be unreasonably withheld, conditioned or
        delayed.

      

      	(b)  	
              Third
                parties.
                Nothing in this Agreement, expressed or implied, is intended
                

            

      to
        confer
        upon any person, other than the parties hereto and their successors and
        permitted assigns, any rights or remedies under or by reason of this
        Agreement

      

      16.
         Brokerage.
        Each
        party represents and warrants to the other that there are no rights to or
        claims
        for brokerage commissions or finders' fees in connection with the transactions
        contemplated by this agreement, insofar as such rights or claims are alleged
        to
        be based on arrangements or agreements made by it or on its behalf, and each
        of
        the parties agrees to indemnify the other against and hold it harmless from
        all
        liabilities arising from any such right or claim (including, without limitation,
        cost of counsel fees in connection therewith).

      

      17.
         Notices.
        All
        notices and other communications ("Notices') to be given hereunder by either
        party to the other shall be in writing and delivered personally or sent by
        registered or certified mail, postage prepaid,

      

      if
        to
        Vemics, addressed to:

      Fred
        Zolla, President

      Vemics,
        inc.

      523
        Avalon Gardens Drive 

      Nanuet,
        New York 10954

      

      And
        if to
        EL Desktop:

      E.
        James
        Pennington, President 

      E
        Learning Desktop Ventures Inc 

      2301
        Haines Rd # 201

      Mississauga
        ON Canada

      

      The
        address for delivery of Notices may be changed by any party upon furnishing
        to
        the other the new address for Notices in accordance with the provisions of
        this
        paragraph.

      

      18.
         Entire
        agreement.
        This
        Agreement, and the Closing Documents, contains the entire agreement between
        the
        parties with respect to the transactions contemplated herein, and is intended
        by
        the parties to be an integration of all of the promises, agreements, conditions,
        understandings, warran-ties, representations and covenants between the parties
        hereto with respect to the subject matter hereof All Exhibits referred to
        in
        this Agreement and attached hereto are hereby incorporated herein by reference.
        Each party has caused to be included herein all representations and warranties
        that it considers material for the purposes of the transactions contemplated
        hereby, based upon investigations which each of them has made of the other's
        business and affairs. The representations and warranties contained herein
        constitute all the representations and warranties upon which the parties
        have
        relied. Nothing contained in this Agreement, any Closing Document, nor any
        of
        the exhibits referred to herein or any other instrument or document furnished
        by
        either party to the other after the Closing Date in relation to this
        transaction, contains or will contain any untrue statement of any material
        fact
        or omits or will omit to state any material fact required to be stated in
        order
        to make such statement, document, or other instrument not
        misleading.

      

      19.
         Execution.
        This
        Agreement is being executed and delivered by the parties as of the Effective
        Date.

      

      20.
         Governing
        law.
        This
        Agreement shall be governed by and construed in accordance with the internal
        laws of the State of New York, without giving effect to the principles of
        choice
        of law or conflicts of law.

      

      21.
         Severability
        of provisions. The
        invalidity or unenforceability of any term, phrase, clause, paragraph,
        restriction, covenant, agreement or other provision hereof shall in no way
        affect the validity or enforcement of any other provision, or any part
        thereof.

      

      22.
         Headings.
         The
        captions and titles in this Agreement are for convenience and reference only,
        and shall not be used to define, limit, or otherwise construe its teams and
        provisions.

      

      23.
         Counterparts.
        This
        Agreement may be executed in any number of counterparts, each of which shall
        be
        deemed an original, but all of which shall constitute one and the same
        instrument.

      

      24.
         Actions
        necessary to complete transaction.
        Each
        party hereby agrees to execute and deliver all such other documents or
        instruments and to take any action that is reasonably required to effectuate
        the
        transactions contemplated by this Agreement.

      

      25.
         Non-waiver.
        No
        delay or failure by either party to exercise any right hereunder, and no
        partial
        or single exercise of any such right, shall constitute a waiver of that or
        any
        other right, or release the other party from any claims arising out of or
        connected with this Agreement, unless otherwise expressly provided
        herein..

      

      26.
         Binding
        effect.
        This
        Agreement shall be binding upon and inure to the benefit of the parties hereto
        and their respective successors and permitted assigns.

      

      27.
         Time
        of essence.
        Time is
        of the essence of this Agreement.

      In
        witness whereof the parties have caused this Agreement to be duly executed
        by
        their respective officers.

      

      VEMICS:      EL
        DESKTOP:

      Vemics,
        Inc.      E
        Learning Desktop Ventures Inc.

      

      

      By____________________________  by__________________________

      Fred
        Zolla, President    
        E. James
        Pennington, President

      

      Exhibits:
        A Asset
        List 

      A-1
        through A-5 Contracts

      B Leases

      C Warrant

      D Current
        Financial Obligations

      E Patents

      F Insurance

      G Vemics
        Disclosure Documents

      H Employment
        Agreement

      

      G:\159\7-26-07
        Docs\Asset Purchase Agreement.do

      

      cUnassociated Document

     

    
      
Exhibit
        10.3

       

       

      

        THE
          SECURITY REPRESENTED HEREBY, AND THE SECURITIES ISSUABLE UPON CONVERSION
          OR
          REDEMPTION HEREOF, HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
          1933 OR
          ANY STATE SECURITIES LAWS AND NEITHER SUCH SECURITIES NOR ANY INTEREST
          THEREIN
          MAY BE OFFERED, SOLD, TRANSFERRED, ENCUMBERED OR OTHERWISE DISPOSED OF
          EXCEPT
          PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT OR SUCH
          LAWS OR
          AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT AND SUCH LAWS WHICH, IN THE
          OPINION OF COUNSEL FOR THE HOLDER, WHICH COUNSEL AND OPINION ARE REASONABLY
          SATISFACTORY TO COUNSEL FOR THIS COMPANY, IS AVAILABLE.

        

        

        VEMICS,
          INC.

        

        SECURED
          CONVERTIBLE PROMISSORY NOTE 

        BRIDGE
          FUNDING

        

        

        

        US$445,000       December
          2, 2005

        

         

        

        FOR
          VALUE
          RECEIVED, Vemics, Inc., a corporation duly organized and validly existing
          under
          the laws of the state of Nevada (the “Company”),
          promises to pay to Valiant
          Holding Co.
          the
          registered holder of this secured convertible promissory note (“Note”)
          and
          its successors and assigns (the “Holder”),
          the
          principal sum of Four
          Hundred Forty Five Thousand Dollars
          ($445,000) (“Loan
          Proceeds”)
          (see
          Exhibit “B”) in accordance with the terms hereof, and interest on the principal
          sum outstanding in accordance with the terms hereof. Accrual of interest
          on the
          outstanding principal amount shall commence on the date hereof and shall
          continue until payment in full of the outstanding principal amount has
          been made
          or duly provided for, or until the entire outstanding principal amount
          of the
          Note has been converted. 

        

        This
          Note
          has been issued pursuant to a subscription agreement executed by the Holder,
          dated of even date herewith, in the aggregate principal amount of $445,000
          (collectively, the “Subscription
          Agreement”).
          The
          Loan Proceeds shall be paid to the Company as follows: (i) $282,000 payable
          on
          the date hereof, and (ii) $163,000 payable within 5 days from the date
          hereof.

        

        The
          following is a statement of the rights of the Holder of this Note and the
          terms
          and conditions to which this Note is subject, and to which the Holder,
          by
          acceptance of this Note, agrees:

        

        1.  Principal
          Repayment; Prepayment.
          The
          outstanding principal amount of this Note and any and all accrued but unpaid
          interest thereon shall be payable on or before November 31, 2006 (the
“Maturity
          Date”),
          unless this Note has been converted or redeemed as described below. The
          Company
          will have the option to extend this note for one twelve month
          period.

        

          2. Interest.
            The
            Holder is entitled to receive interest on the outstanding principal amount
            of
            this Note at the rate of
            twelve
            percent (10.0%) per annum.
            Interest shall be due and payable on the Maturity Date. In the event
            of this
            note being extended by the company, interest on any and all extensions
            will
            include a 12% interest on the original principle amount for the extended
            period.

        

        3. Ranking
          and Security Agreement.
          The
          obligations of the Company under this Note shall rank senior to any and
          all
          indebtedness of the Company currently existing and incurred hereafter.
          The
          Company, Holder and the Company’s wholly-owned subsidiary, First Asia Fuel
          Corporation, shall enter into a Security Agreement in form and substance
          substantially in the form attached hereto as Exhibit
          A.

        

        4. Conversion.

        

        (a) Optional
          Conversion.
          From
          and after the date hereof, Holder may elect, at its option, to convert
          all or
          any portion of the outstanding principal amount of this Note, and all accrued
          interest thereon, into shares of common stock of the Company (“Common Stock”),
          at the Conversion Price. 

         

         

        (b) Conversion
          Price.
          For
          purposes of this Note, the “Conversion
          Price”
shall
          mean, with respect to a conversion of the outstanding
          principal amount of this Note,
          plus
          accrued but unpaid interest thereon, into shares of Common Stock, the price
          per
          share of Common Stock equal to 75% of the market price of the Company’s Common
          Stock on the day immediately prior to conversion. For purposes hereof “Market
          Price” shall be the average closing sale price of the Company’s Common Stock
          during each of the ten trading days prior to a conversion date. The Conversion
          Price and the number of shares of Common Stock into which the outstanding
          principal amount of this Note may convert shall be subject to adjustment
          from
          time to time in accordance with Section 4 hereof. 

         

        (c) Mechanics
          of Conversion.
          Upon
          any conversion of the outstanding principal amount of this Note, (i) such
          principal amount converted shall be converted and such converted portion
          of this
          Note shall become fully paid and satisfied, (ii) the Holder shall surrender
          and
          deliver this Note, duly endorsed, to the
          Company’s
          office
          or such other address which the
          Company
          shall
          designate against delivery of the certificates representing the new securities
          of the
          Company; (iii) the Company shall promptly deliver a duly executed Note
          to the
          Holder in the principal amount, if any, that remains outstanding after
          any such
          conversion; and (iv) in
          exchange for all or any portion of the surrendered Note described in clause
          (ii)
          of this Section 4(c), the
          Company
          shall
          provide the Holder with irrevocable instructions addressed to the
          Company’s
          transfer and exchange agent, as applicable, to issue such number of shares
          of
          Common Stock.

        

        (d)  Issue
          Taxes.
          The
          Holder shall pay any and all issue and other taxes that may be payable
          with
          respect to any issue or delivery of shares of Common Stock on conversion
          of this
          Note pursuant hereto; provided,
          however,
          that
          the Holder shall not be obligated to pay any transfer taxes resulting from
          any
          transfer requested by any holder in connection with any such
          conversion.

        (e)  Elimination
          of Fractional Interests.
          No
          fractional shares of Common Stock shall be issued upon conversion of this
          Note,
          nor shall the Company be required to pay cash in lieu of fractional interests,
          it being the intent of the parties that all fractional interests shall
          be
          eliminated and that all issuances of the Common Stock shall be rounded
          up to the
          nearest whole share.

         

        5. Redemption. The
          Company may redeem this Note at anytime upon thirty (30) days prior written
          notice at a redemption price of 100% of the principal amount of the Note
          plus
          accrued and unpaid interest. During such thirty day notice period Holder
          may
          convert all or any portion of this Note in accordance with Section 4
          hereof.

        

        6. Rights
          upon Liquidation, Dissolution or Winding Up. In
          the
          event of any liquidation, dissolution or winding up of the Company, either
          voluntary or involuntary, the holders of the Notes shall be entitled to
          receive,
          prior and in preference to any distribution of any of the assets of the
          Company
          or to the holders of any equity security of the Company, an amount equal
          to the
          unpaid and unconverted principal face amount of their Notes and any accrued
          and
          unpaid interest thereon. 

        

        7. Affirmative
          Covenants of the Company.
          The
          Company hereby agrees that, so long as the Note remains outstanding and
          unpaid,
          or any other amount is owing to the Holder hereunder, the Company
          will:

        

        (a) Corporate
          Existence and Qualification.
          Take
          the necessary steps to preserve its corporate existence and its right to
          conduct
          business in all states in which the nature of its business requires
          qualification to do business. 

        

        (b) Books
          of Account.
          Keep
          its books of account in accordance with good accounting practices.

        

        (c) Insurance.
          Maintain insurance with responsible and reputable insurance companies or
          associations, as determined by the Company in its sole but reasonable
          discretion, in such amounts and covering such risks as is usually carried
          by
          companies engaged in similar businesses and owning similar properties in
          the
          same general areas in which the Company operates.

        

        (d) Preservation
          of Properties; Compliance with Law.
          Maintain and preserve all of its properties that are used or that are useful
          in
          the conduct of its business in good working order and condition, ordinary
          wear
          and tear excepted and comply with the charter and bylaws or other organizational
          or governing documents of the Company, and any law, treaty, rule or regulation,
          or determination of an arbitrator or a court or other governmental authority,
          in
          each case applicable to or binding upon the Company or any of its property
          or to
          which each the Company or any of its property is subject.

        

          (e) Taxes.
          Duly
          pay and discharge all taxes or other claims, which might become a lien
          upon any
          of its property except to the extent that any thereof are being in good
          faith
          appropriately contested with adequate reserves provided therefor.

        

        (f) Reservation
          of Shares.
          The
          Company shall at all times have authorized, and reserved for the purpose
          of
          issuance, a sufficient number of shares of Common Stock and issuable upon
          conversion of this Note and exercise of the Warrants to provide for the
          issuance
          of all of such shares. Prior to complete conversion of this Notes and exercise
          of the Warrants, the Company shall not reduce the number of shares of Common
          Stock reserved for issuance hereunder without the written consent of the
          Holder
          except for a reduction proportionate to a reverse stock split effected
          for a
          business purpose other than affecting the requirements of this Section,
          which
          reverse stock split affects all shares of Common Stock equally. 

        

        (g) Use
          of Proceeds.
          The
          proceeds of the Notes will be used for working capital purposes.

        

        (h) Financial
          Information.
          For so
          long as the Company is not filing periodic reports with the Securities
          and
          Exchange Commission pursuant to Section 13 or Section 15 of the Exchange
          Act,
          the Company shall deliver to the Holder, as soon as available after the
          end of
          each fiscal year of the Company, the audited financial statements of the
          Company
          for such fiscal year then ended, together with the written opinion of the
          auditor rendered in connection therewith. With respect to such financial
          statements, if for any fiscal year, the Company shall have any subsidiary
          whose
          accounts are consolidated with those of the Company, then in respect of
          such
          period, the financial statements delivered pursuant to the foregoing section
          shall be the consolidated and consolidating financial statements of the
          Company
          and all such consolidated subsidiaries. 

         

        8. Negative
          Covenants of the Company.
          The
          Company hereby agrees that, so long as all or any portion of this Note
          remains
          outstanding and unpaid it will not, nor will it permit any of its subsidiaries,
          if any, without the consent of the Holder (as defined in Section 16 hereof),
          to:

        

        (a) Indebtedness
          for Borrowed Money.
          Incur,
          or permit to exist, any Indebtedness (as defined below) for borrowed money
          in
          excess of $50,000 during each fiscal year of the Company, with rights superior
          to Holder, except in the ordinary course of the Company’s business. For purposes
          of this Note, “Indebtedness”
shall
          mean (a) all obligations of the Company for borrowed money or with respect
          to
          deposits or advances of any kind, (b) all obligations of the Company evidenced
          by bonds, debentures, notes or other similar instruments, (c) all obligations
          of
          the Company for the deferred purchase price of property or services, except
          current accounts payable arising in the ordinary course of business and
          not
          overdue beyond such period as is commercially reasonable for the Company’s
          business, (d) all obligations of the Company under conditional sale or
          other
          title retention agreements relating to property purchased by the Company,
          (e)
          all payment obligations of the Company with respect to interest rate or
          currency
          protection agreements, (f) all obligations of the Company as an account
          party
          under any letter of credit or in respect of bankers’ acceptances, (g) all
          obligations of any third party secured by property or assets of such Person
          (regardless of whether or not the Company is liable for repayment of such
          obligations), except for obligations to secure Indebtedness incurred within
          the
          limitations of this Section 8(a); (h) all guarantees of the Company and
          (i) the
          redemption price of all redeemable preferred stock of the Company, but
          only to
          the extent that such stock is redeemable at the option of the holder or
          requires
          sinking fund or similar payments at any time prior to the Maturity
          Date.

        

        (b) Mergers,
          Acquisitions and Sales of Assets.
          Enter
          into any merger or consolidation or liquidate, windup or dissolve itself
          or
          sell, transfer or lease or otherwise dispose of all or any substantial
          part of
          its assets or technologies (other than sales of inventory and obsolescent
          equipment in the ordinary course of business); except: (i) if the Company
          is the
          surviving corporation and a change in control has not occurred, (ii) that
          any
          subsidiary of the Company may merge into or consolidate with any other
          subsidiary which is wholly-owned by the Company, and (iii) any subsidiary
          which
          is wholly-owned by the Company may merge with or consolidate into the Company
          provided that the Company is the surviving corporation.

        

        (c) Loans;
          Lend or
          advance money, credit or property to (by capital contribution, loan, purchase
          or
          otherwise) any firm, corporation, or other Person except (i) investments
          in
          United States Government obligations, certificates of deposit of any banking
          institution with combined capital and surplus of at least $200,000,000;
          (iii)
          accounts receivable arising out of sales in the ordinary course of business;
          and
          (iv) loans to subsidiaries, if any. The Company may enter into an acquisition
          or
          merger deemed beneficial by the board of directors with mutual consent
          of the
          Holder of this note.

        

        (d) Dividends
          and Distributions.
          Pay
          dividends or make any other distribution on shares of the capital stock
          of the
          Company.

        

        (e) Liens.
          Create,
          assume or permit to exist, any lien on any of its property or assets now
          owned
          or hereafter acquired except (i) liens in favor of the Holder; (ii) liens
          granted to secure Indebtedness incurred within the limitations of Section
          8(a)
          hereof; (iii) liens incidental to the conduct of its business or the ownership
          of its property and assets which were not incurred in connection with the
          borrowing of money or the obtaining of advances or credit and which do
          not
          materially impair the use thereof in the operation of its business; (iv)
          liens
          for taxes or other governmental charges which are not delinquent or which
          are
          being contested in good faith and for which a reserve shall have been
          established in accordance with generally accepted accounting principles;
          and (v)
          purchase money liens granted to secure the unpaid purchase price of any
          fixed
          assets purchased within the limitations of Section 8(h) hereof.

        

        (f) Contingent
          Liabilities.
          Assume,
          endorse, be or become liable for or guarantee the obligations of any Person,
          contingently or otherwise, excluding however, the endorsement of negotiable
          instruments for deposit or collection in the ordinary course of business
          or
          guarantees of the Company made within the limitations of Section 8(a)
          hereof.

        

        (g) Sales
          of Receivables; Sale - Leasebacks.
          Sell,
          discount or otherwise dispose of notes, accounts receivable or other obligations
          owing to the Company, with or without recourse, except for the purpose
          of
          collection in the ordinary course of business; or sell any asset pursuant
          to an
          arrangement to thereafter lease such asset from the purchaser
          thereof.

        

        (h) Capital
          Expenditures; Capitalized Leases.
          Expend
          in the aggregate for the Company and all its subsidiaries in excess of
          $50,000
          in any fiscal year for Capital Expenditures (as defined below), including
          payments made on account of Capitalized Leases (as defined below). Except
          as
          defined in the business plan (Attached as Exhibit “C”) as part of the
          operational build out of the company and expansion of its office and technical
          infrastrure, which will require Capital Expenditures and / or Capitlized
          Leases,
          for purposes of the foregoing, Capital Expenditures shall include payments
          made
          on account of any deferred purchase price or on account of any indebtedness
          incurred to finance any such purchase price not defined in the business
          plan as
          of the date of this note. “Capital
          Expenditures”
shall
          mean for any period, the aggregate amount of all payments made by any Person
          directly or indirectly for the purpose of acquiring, constructing or maintaining
          fixed assets, real property or equipment which, in accordance with generally
          accepted accounting principles, would be added as a debit to the fixed
          asset
          account of such Person, including, without limitation, all amounts paid
          or
          payable with respect to Capitalized Lease Obligations and interest which
          are
          required to be capitalized in accordance with generally accepted accounting
          principles. “Capitalized
          Lease”
shall
          mean any lease the obligations to pay rent or other amounts under which
          constitute Capitalized Lease Obligations. “Capitalized
          Lease Obligations”
shall
          mean as to any Person, the obligations of such Person to pay rent or other
          amounts under a lease of (or other agreement conveying the right to use)
          real
          and/or personal property which obligations are required to be classified
          and
          accounted for as a capital lease on a balance sheet of such Person under
          generally accepted accounting principles and, for purposes of this Note,
          the
          amount of such obligations shall be the capitalized amount thereof, determined
          in accordance with generally accepted accounting principles.

        

        (i) Nature
          of Business.
          Materially alter the nature of the Company’s business or otherwise engage in any
          business other than the business engaged in or proposed to be engaged in
          on the
          date of this Note.

        

        (j) Stock
          of Subsidiaries.
          Sell or
          otherwise dispose of any subsidiary, if any, or permit a subsidiary, if
          any, to
          issue any additional shares of its capital stock except pro rata to its
          stockholders.

        

        (k) ERISA.
          (i)
          Terminate any plan (“Plan”)
          of a
          type described in Section 402l(a) of the Employee Retirement Income Security
          Act
          of l974, as amended from time to time (“ERISA”)
          in
          respect of which the Company is an “employer” as defined in Section 3(5) of
          ERISA so as to result in any material liability to the Pension Benefit
          Guaranty
          Corporation (the “PBGC”)
          established pursuant to Subtitle A of Title IV of ERISA, (ii) engage in
          or
          permit any person to engage in any “prohibited transaction” (as defined in
          Section 406 of ERISA or Section 4975 of the Internal Revenue Code of 1954,
          as
          amended) involving any Plan which would subject the Company to any material
          tax,
          penalty or other liability, (iii) incur or suffer to exist any material
          “accumulated funding deficiency” (as defined in Section 302 of ERISA), whether
          or not waived, involving any Plan, or (iv) allow or suffer to exist any
          event or
          condition, which presents a material risk of incurring a material liability
          to
          the PBGC by reason of termination of any Plan.

        

        (l) Accounting
          Changes.
          Make,
          or permit any subsidiary to make any change in their accounting treatment
          or
          financial reporting practices except as required or permitted by generally
          accepted accounting principles in effect from time to time.

        

        (m) Transactions
          with Affiliates.
          Directly or indirectly, purchase, acquire or lease any property from, or
          sell,
          transfer or lease any property to, or enter into any other transaction,
          with any
          Affiliate (as defined below) except in the ordinary course of business
          and at
          prices and on terms not less favorable to it than those which would have
          been
          obtained in an arm’s-length transaction with a non-affiliated third party.
“Affiliate”
          as
          applied to any Person, shall mean any other Person directly or indirectly
          through one or more intermediaries controlling, controlled by, or under
          common
          control with, that Person. For the purposes of this definition, “control”
(including with correlative meanings, the terms “controlling,” “controlled by”
and “under common control with”), as applied to any Person, means the
          possession, directly or indirectly, of the power to direct or cause the
          direction of the management and policies of that Person, whether through
          the
          ownership of voting securities or by contract or otherwise.

        

        9. Events
          of Default.
          The
          Note shall become immediately due and payable at the option of the Holder,
          without notice or demand, upon any one or more of the following events
          or
          occurrences (“Events
          of Default”):

         

        (a) if
          any
          portion of the Note is not paid when due;

         

        (b) if
          any
          representation or warranty of the Company made in this Note, the Transaction
          Documents (as defined in the Holder Subscription Agreement), or in any
          certificate, report or other financial statement or other instrument or
          document
          delivered pursuant hereto, or any notice, certificate, demand or request
          delivered to the Holder pursuant to this Note, the Transaction Documents
          (as
          defined in the Holder Subscription Agreement), or any other document proves
          to
          be false or misleading in any material respect as of the time when the
          same is
          made;

         

        (c) if
          the
          Company consummates a transaction which would cause this Note or any exercise
          of
          any Holder’s rights under this Notes and the Warrants (i) to constitute a
          non-exempt prohibited transaction under ERISA, (ii) to violate a state
          statute
          regulating governmental plans or (iii) otherwise to subject the Company
          to
          liability for violation of ERISA or such state statute;

         

        (d) if
          any
          final judgment for the payment of money is rendered against the Company
          and the
          Company does not discharge the same or cause it to be discharged or vacated
          within one hundred twenty (120) days from the entry thereof, or does not
          appeal
          therefrom or from the order, decree or process upon which or pursuant to
          which
          said judgment was granted, based or entered, and does not secure a stay
          of
          execution pending such appeal within one hundred twenty (120) days after
          the
          entry thereof;

         

        (e) subject
          to the provisions of Section 7(f) hereof, if any taxes are not paid before
          delinquency;

         

        (f) if
          the
          Company makes an assignment for the benefit of creditors or if the Company
          generally does not pay its debts as they become due;

         

        (g) if
          a
          receiver, liquidator or trustee of the Company is appointed or if the Company
          is
          adjudicated a bankrupt or insolvent, or if any petition for bankruptcy,
          reorganization or arrangement pursuant to federal bankruptcy law, or any
          similar
          federal or state law, is filed by or against, consented to, or acquiesced
          in, by
          the Company or if any proceeding for the dissolution or liquidation of
          the
          Company is instituted; however, if such appointment, adjudication, petition
          or
          proceeding is involuntary and is not consented to by the Company, upon
          the same
          not being discharged, stayed or dismissed within 60 days;

         

        (h) if
          the
          Company defaults under any other mortgage or security agreement covering
          any
          part of its property;

         

        (i) except
          for specific defaults set forth in this Section 9, if the Company defaults
          in
          the observance or performance of any other term, agreement or condition
          of this
          Note, the Transaction Documents (as defined in the Subscription Agreement),
          and
          the Company fails to remedy such default within thirty (30) days after
          notice by
          the Holder to the Company of such default, or, if such default is of such
          a
          nature that it cannot with due diligence be cured within said thirty (30)
          day
          period, if the Company fails, within said thirty (30) days, to commence
          all
          steps necessary to cure such default, and fails to complete such cure within
          ninety (90) days after the end of such thirty (30) day period; and

         

        (j) if
          any of
          the following exist uncured for forty-five (45) days following written
          notice to
          the Company in any the Transaction Documents (as defined in the Subscription
          Agreement): (i) the failure of any representation or warranty made by the
          Company to be true and correct in all material respects or (ii) the Company
          fails to provide the Holder with the written certifications and evidence
          referred to in this Note.

         

        10. Holder
          Not Deemed a Stockholder.
          No
          Holder, as such, of this Note shall be entitled (prior to conversion or
          redemption of this Note into Common Stock, and only then to the extent
          of such
          conversion) to vote or receive dividends or be deemed the holder of shares
          of
          the Company for any purpose, nor shall anything contained in this Note
          be
          construed to confer upon the Holder hereof, as such, any of the rights
          at law of
          a stockholder of the Company prior to the issuance to the holder of this
          Note of
          the shares of Common Stock which the Holder is then entitled to receive
          upon the
          due conversion of all or a portion of this Note. Notwithstanding the foregoing,
          the Company will provide the Holder with copies of the same notices and
          other
          information given to the stockholders of the Company generally,
          contemporaneously with the giving thereof to the stockholders.

        

        11. Confidential
          Information.
          The
          Holder agrees that it will keep confidential and will not disclose, divulge
          or
          use for any purpose, other than to monitor its investment in the Company,
          any
          confidential information obtained from the Company pursuant to the terms
          of this
          Agreement, including without limitation information provided pursuant to
          Section
          7(h), unless such confidential information (i) is known or becomes known
          to the
          public in general (other than as a result of a breach of this Section 11
          by the
          Holder), (ii) is or has been independently developed or conceived by the
          Holder
          without use of the Company's confidential information or (iii) is or has
          been
          made known or disclosed to the Holder by a third party without a breach
          of any
          obligation of confidentiality such third party may have to the Company;
          provided,
          however,
          that
          the Holder may disclose confidential information to its attorneys, accountants,
          consultants, and other professionals to the extent necessary to obtain
          their
          services in connection with monitoring its investment in the Company or
          as may
          be required by law, provided that the Holder takes reasonable steps to
          minimize
          the extent of any such required disclosure. 

        

        12. Mutilated,
          Destroyed, Lost or Stolen Notes.
          In case
          this Note shall become mutilated or defaced, or be destroyed, lost or stolen,
          the Company shall execute and deliver a new note of like principal amount
          in
          exchange and substitution for the mutilated or defaced Note, or in lieu
          of and
          in substitution for the destroyed, lost or stolen Note. In the case of
          a
          mutilated or defaced Note, the Holder shall surrender such Note to the
          Company.
          In the case of any destroyed, lost or stolen Note, the Holder shall furnish
          to
          the Company (a) evidence to its satisfaction of the destruction, loss or
          theft
          of such Note and (b) such security or indemnity as may be reasonably required
          by
          the Company to hold the Company harmless.

        

        13. Waiver
          of Demand, Presentment, Etc. The
          Company hereby expressly waives demand and presentment for payment, notice
          of
          nonpayment, protest, notice of protest, notice of dishonor, default and
          nonpayment, notice of acceleration or intent to accelerate, bringing of
          suit and
          diligence in taking any action to collect amounts called for hereunder,
          and all
          rights of set-off, defenses, deduction or counterclaim with respect to
          any
          amount owing hereunder, and shall be directly and primarily liable for
          the
          payment of all sums owing and to be owing hereunder, regardless of and
          without
          any notice, diligence, act or omission as or with respect to the collection
          of
          any amount called for hereunder.

        

        14. Payment.
          Except
          as otherwise provided for herein, all payments
          with respect to this Note shall be made in lawful currency of the United
          States
          of America, at the option of the Holder, (i) at the principal office of
          the
          Holder, located at The Chrysler Building, 405 Lexington Avenue, 26th Floor,
          New
          York, NY 10174, or such other place or places as may be reasonably specified
          by
          the Holder of this Note in a written notice to the Company at least ten
          (10)
          business days before a given payment date, or (ii) by mailing a good check
          in
          the proper amount to the Holder at least two days prior to the due date
          of each
          payment or otherwise transferring funds so as to be received by the Holder
          on
          the due date of each such payment; provided,
          however,
          that
          the Company shall make payment by wire transfer to an account such Holder
          may
          specify in writing to the Company at least two days prior to the due date
          of
          each payment. Payment
          shall be credited first to the accrued interest then due and payable and
          the
          remainder applied to principal. The Holder shall keep a record of each
          payment
          of principal and interest with respect thereto. 

        

        15. Assignment.
          The
          rights and obligations of the Company and the Holder of this Note shall
          be
          binding upon, and inure to the benefit of, the permitted successors, assigns,
          heirs, administrators and transferees of the parties hereto. Notwithstanding
          the
          foregoing, the Holder may not assign, pledge or otherwise transfer this
          Note
          without the prior written consent of the Company. Interest and principal
          are
          payable only to the registered Holder of this Note in the Note
          Register.

        

        16. Waiver
          and Amendment.
          Any
          provision of this Note, including, without limitation, the due date hereof,
          and
          the observance of any term hereof, may be amended, waived or modified (either
          generally or in a particular instance and either retroactively or prospectively)
          only with the written consent of the Company and the Holder. 

        

        17. Notices.
          Any
          notice, request or other communication required or permitted hereunder
          shall be
          in writing and shall be deemed to have been duly given if personally delivered
          or mailed by registered or certified mail, postage prepaid, or delivered
          by
          facsimile transmission, to the Company at the address or facsimile number
          set
          forth herein or to the Holder at its address or facsimile number set forth
          in
          the records of the Company. Any party hereto may by notice so given change
          its
          address for future notice hereunder. Notice shall conclusively be deemed
          to have
          been given when personally delivered or when deposited in the mail in the
          manner
          set forth above and shall be deemed to have been received when delivered
          or, if
          notice is given by facsimile transmission, when delivered with confirmation
          of
          receipt.

        

        18. Governing
          Law; Jurisdiction.
          This
          Note, and all matters arising directly or indirectly here from, shall be
          governed by and construed in accordance with the laws of the Nevada,
          notwithstanding the choice of law or conflicts of law principles thereof.
          Each
          of the parties hereto hereby (i) irrevocably consents and submits to the
          sole
          exclusive jurisdiction of the United States District Court for the District
          of
          New Jersey (and of the appropriate appellate courts therefrom) in connection
          with any suit, action or other proceeding arising out of or relating to
          this
          Note, (ii) irrevocably waives, to the fullest extent permitted by law,
          any
          objection that it may now or hereafter have to the laying of the venue
          of any
          such suit, action or proceeding in any such court or that any such suit,
          action
          or proceeding which is brought in any such court has been brought in an
          inconvenient forum, and (iii) agrees that service of any summons, complaint,
          notice or other process relating to such suit, action or other proceeding
          may be
          effected in the manner provided by Section 17.

        

        19. Severability.
          If one
          or more provisions of this Note are held to be unenforceable under applicable
          law, such provisions shall be excluded from this Note, and the balance
          of this
          Note shall be interpreted as if such provisions were so excluded and shall
          be
          enforceable in accordance with its terms.

        

        20. Headings.
          Section
          headings in this Note are for convenience only, and shall not be used in
          the
          construction of this Note.

        

        [SIGNATURE
          PAGE FOLLOWS]

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

        IN
          WITNESS WHEREOF,
          the
          Company has caused this Note to be issued as of the date first above
          written.

        

        

        VEMICS,
          INC.

        

        By:
          _________________________

        Name:
          

        Title:
          

        

        
          
            
              {00008077.DOC.1}

            

            
            

          

          
            
            

            
              

            

          

          
            
            

            
            

          

        

        EXHIBIT
          A

         

        

        JOINT
          SECURITY AGREEMENT

        

        

        THIS
          JOINT SECURITY AGREEMENT (this
          “Agreement”),
          dated
          as of December 2, 2005 (the “Effective
          Date”),
          is
          made by and among Vemics,
          Inc.,
          a
          Nevada corporation (the “Company”
or
          “Debtor”),
          and
Valiant
          Holding Company, Inc.
          (the
“Secured
          Party”).
          

        

        WHEREAS,
          the Secured Party is purchasing from the Company for Four Hundred Forty-Five
          Thousand Dollars ($445,000), a Twelve secured promissory note dated of
          even date
          herewith (the “Note”);
          and

         

        WHEREAS,
          the obligation of the Secured Party to purchase the Note is conditioned
          upon,
          among other things, the execution and delivery of this Agreement by the
          Debtor
          to the Secured Party.

        

        NOW,
          THEREFORE, the Debtors and the Secured Party agree as follows:

        

        1. Definitions
          and Incorporation by Reference.
          Capitalized terms used but not defined in this Agreement shall have the
          meanings
          assigned to such terms in the Note. In addition, terms not defined in this
          Agreement or the Note that are defined in the Nevada Uniform Commercial
          Code
          (the “Code”)
          shall
          have the same meaning in this Agreement as in the Code. 

        

        2. Grant
          of Security Interest.
          The
          Debtors hereby grant to the Secured Party a lien and security interest
          in the
          Collateral (as defined in Section 3 below) to secure the payment and performance
          of all of the Obligations (as defined in Section 4 below). The lien and
          security
          interest granted to the Secured Party under this Agreement shall constitute
          a
          priority lien and security interest senior to all other liens and security
          interests, subject to the current lien and security interest held by Valiant
          Holding Company, Inc. The Debtor shall not grant any liens or security
          interests
          in and to the Collateral which shall be senior to or have a priority over
          the
          lien and security interest granted to Secured Party hereunder.

        

        3. Collateral.
          Each of
          the Debtors hereby grant to the Secured Party a security interest in all
          of
          Debtors’ right, title and interest in all property and interests of Debtors,
          tangible or intangible, whether now or hereafter existing, wherever located,
          including: 

        

        
          	 	
                  (a)

                	
                  Accounts,
                    including but not limited to, all accounts, all rights of the
                    Debtors to
                    payment for goods sold or leased or for services rendered, all
                    accounts
                    receivable of the Debtors; all obligations owing to the Debtors
                    evidenced
                    by an instrument or chattel paper; all obligations owing to the
                    Debtors of
                    any kind or nature, including all writings, if any, evidencing
                    the same,
                    including all instruments, drafts, acceptances and chattel paper;
                    any and
                    all proceeds of any of the foregoing. Further included within
                    the term
                    “Accounts” are all right, title and interest of Debtors in and any
                    security and liens with respect to any Account, and all Accounts,
                    Documents and Contract Rights of Debtors as defined in the Uniform
                    Commercial Code as enacted in the State of Nevada (the “Uniform Commercial
                    Code”); and 

                

        

        

        
          	 	
                  (b)

                	
                  Investment
                    Property, including all of the Debtors’ investment property (as defined in
                    the Uniform Commercial Code) and all of the Debtors’ other securities
                    (whether certificated or uncertificated), security entitlements,
                    financial
                    assets, securities accounts, commodity contracts, and commodity
                    accounts
                    (as each such term is defined in the Uniform Commercial Code),
                    including
                    all substitutions and additions thereto, all dividends, distributions
                    and
                    sums distributable or payable from, upon or in respect of such
                    property,
                    and all rights and privileges incident to such
                    property.

                

        

        

        
          	 	
                  (c)

                	
                  Instruments
                    and Chattel Paper, including all instruments and chattel paper
                    as defined
                    in the Uniform Commercial Code and all proceeds thereof;
                    and

                

        

        

        
          	 	
                  (d)

                	
                  Intellectual
                    Property, including any and all rights to licensing agreements;
                    and
                    

                

        

        

        
          	 	
                  (e)

                	
                  General
                    Intangibles, including but not limited to, all general intangibles
                    as
                    defined in the Uniform Commercial Code and all proceeds thereof,
                    including
                    without limitation, any and all rights of Debtors to any refund
                    of any tax
                    assessed against Debtors or paid by Debtors, loss carry-back
                    tax refunds,
                    insurance premium rebates, unearned premiums, insurance proceeds,
                    chooses
                    in action, names, trade names, goodwill, trade secrets, computer
                    programs,
                    computer records, data, computer software, customer lists, patents,
                    patent
                    rights, patent applications, patents pending, patent licenses
                    or
                    assignments, development ideas and concepts, licenses, permits,
                    franchises, literary rights, rights to performance, trademarks,
                    trademark
                    applications, trademark rights, logos, intellectual property,
                    copyrights,
                    proprietary or other processes, drawings, designs, diagrams,
                    plans,
                    reports, charts, catalogs, manuals, research, literature, proposals
                    and
                    other reproductions on paper or otherwise, of any and all concepts
                    or
                    ideas, whether or not related to the business or operations of
                    Debtors;
                    and 

                

        

        

        
          	 	
                  (f)

                	
                  Equipment
                    as defined in the Uniform Commercial Code, including but not
                    limited to,
                    all equipment, vehicles, machinery, tools, furniture, fixtures,
                    trade
                    fixtures and parts. Further included within the term “Equipment” is all
                    tangible personal property utilized in the conduct of the Debtors’
                    business and all additions, accessions, substitutions, components,
                    and
                    replacements thereto, therefor and thereof and all proceeds thereof;
                    and
                    

                

        

        

        
          	 	
                  (g)

                	
                  Inventory
                    as defined in the Uniform Commercial Code, including without
                    limitation,
                    all raw materials and other materials and supplies, work-in-progress
                    and
                    finished goods and any products made or processed therefrom and
                    all
                    substances, if any, commingled therewith or added thereto;
                    and

                

        

        

        
          	 	
                  (h)

                	
                  all
                    products and proceeds of the above, including insurance proceeds
                    (collectively, the “Collateral”).
                    

                

        

        

        4. Obligations.
          The
          security interest granted pursuant to this Agreement secures the payment
          and
          performance of the following indebtedness, liabilities and obligations
          (collectively, the “Obligations”):

        

        (a) All
          indebtedness, liabilities and obligations of the Company to the Secured
          Party
          arising under the Note; and

        

        (b) All
          indebtedness, liabilities and obligations of the Debtor now or hereafter
          existing under this Agreement; and

        

        (c) the
          payment and performance of all debts, liabilities and obligations of Debtor
          to
          Secured Party, fixed or contingent, joint or several, now existing or hereafter
          arising, including but not limited to all obligations of Debtor now or
          hereafter
          existing under this Agreement, the Note and any other agreement or document
          executed in connection with any of the foregoing.

        

        5. Representations,
          Warranties and Covenants.
          Each of
          the Debtors hereby represent, warrant and covenant as follows:

        

        5.1 Power
          and Authority.
          The
          Debtors have full power and authority to enter into this Agreement, grant
          to the
          Secured Party a valid security interest in the Collateral and perform all
          of its
          obligations under this Agreement, no further action by the Debtors being
          necessary. The execution, delivery and performance by the Debtors of this
          Agreement does not conflict with, or constitute a breach or default under,
          any
          judgment, indenture, loan agreement contract or other agreement or instrument
          to
          which the Debtors are a party or by which the Debtors or any of its property
          is
          bound.

        

        5.2 Governmental
          Authorization.
          No
          authorization, consent or approval or other action by, and no notice to
          or other
          filing with, any governmental authority or regulatory body is required
          for the
          grant by the Debtors of the security interest granted pursuant to this
          Agreement, the due execution and delivery by the Debtors of this Agreement
          or
          the performance by the Debtors of any of its obligations under this
          Agreement.

        

        5.3 Title
          to Collateral.
          Subject
          to the security interest granted by this Agreement (the “Existing
          Liens”),
          the
          Debtors are the owners and holders of all the Collateral, free and clear
          of any
          security interest, lien, charge, encumbrance or other adverse claim, and
          the
          Debtors will defend all of the Collateral (whether now owned or hereafter
          acquired) against all claims and demands of all persons at any time claiming
          the
          same or any interest therein, and will take all steps to maintain the security
          interest of the Secured Party as a valid and fully perfected lien first
          in
          priority to all other Liens, in each case subject only to any additional
          Liens
          granted which shall be expressly subject and subordinated to the Lien granted
          to
          the Secured Party hereunder.

        

        5.4 Place
          of Business and Name.
          The
          Debtors’ chief place of business is at the address set forth next to such
          Debtors’ signature below. No Debtor shall have changed its name, except as
          indicated below the Debtors’ signature below. No Debtor will change its name or
          the location of its chief place of business, without the prior written
          consent
          of the Secured Party, which shall not be unreasonably withheld.

        

        5.5 Financing
          Statements; Related Instruments.
          No
          financing statement covering any of the Collateral or any proceeds thereof
          is on
          file in any public office in any jurisdiction, other than financing statements
          covering the Existing Liens. At the request of the Secured Party, the Debtors
          will execute and deliver to the Secured Party one or more financing statements
          in form and substance satisfactory to the Secured Party and will pay the
          cost of
          filing the same in all public offices where filing is deemed by the Secured
          Party to be necessary or desirable. The Debtors promise to pay to the Secured
          Party all fees and expenses incurred in filing financing statements and
          any
          continuation statements or amendments thereto, which fees and expenses
          shall
          become a part of the Obligations secured by this Agreement. A carbon,
          photographic or other reproduction of this Agreement or any financing statement
          covering the Collateral or any part thereof shall be sufficient as a financing
          statement.

        

        5.6 Transfers;
          Other Liens.
          Neither
          the Debtors nor their agents, servants or employees will sell, assign or
          offer
          to sell or assign or otherwise transfer the Collateral, either in whole
          or in
          part, or any interest therein without the prior written consent of the
          Secured
          Party, other than as contemplated by the Note or any other Transaction
          Document.
          The Debtors will not, without the prior written consent of the Secured
          Party,
          create or permit to exist any security interest, lien, charge, encumbrance
          or
          other adverse claim on any of the Collateral, other than the security interest
          in favor of the Secured Party created by this Agreement and the Existing
          Liens.

        

        5.7 Compliance
          with Laws.
          The
          Debtors agree to comply in all material respects with all statutes, laws,
          ordinances, rules and regulations applicable to them and to the conduct
          of their
          businesses.

        

        5.8 Taxes.
          The
          Debtors will pay promptly when due all taxes and assessments upon or with
          respect to the Collateral, the Obligations, this Agreement or any other
          instrument executed pursuant to this Agreement. The Debtors hereby authorize
          the
          Secured Party to discharge upon five (5) days prior written notice any
          taxes,
          assessments, liens, security interests or other encumbrances at any time
          levied
          or placed on the Collateral, to pay for any insurance on the Collateral
          required
          to be maintained by the Debtor hereunder, and pay for, make or provide
          for any
          maintenance, repair or preservation of the Collateral as herein required;
          provided,
          however,
          that
          the Secured Party shall be under no obligation to do so. 

        

        5.9 Schedules,
          Inspection of Books and Records.
          The
          Debtors will furnish to the Secured Party from time to time (i) statements
          and
          schedules further identifying and describing the Collateral and detailing
          sales
          or other transfers of the Collateral and payments received or accounts
          owing
          with respect to the Collateral for the periods specified by the Secured
          Party,
          and (ii) such other reports in connection with the Collateral as the Secured
          Party may reasonably request, all in reasonable detail. The Debtors will
          permit
          the Secured Party or its duly authorized representative upon reasonable
          prior
          notice to examine its books and records during business hours and shall
          furnish
          to the Secured Party such financial statements and other financial data
          as the
          Secured Party may reasonably request from time to time.

        

        5.10 Accounts.
          With
          respect to the Accounts:

        

        (a) The
          Debtors’ records concerning all Accounts are and will be kept solely in the
          State of New Jersey and at the Debtors’ chief place of business specified on the
          signature page below. The Debtors will not remove any of such records from
          such
          address without the prior written consent of the Secured Party, which shall
          not
          be unreasonably withheld. Without in any way excusing a breach by the Debtors
          of
          the foregoing sentence, if for any reason any of such records concerning
          the
          Accounts shall at any time be moved to another location or locations, the
          Debtors will promptly notify the Secured Party of any such change in the
          location of such records and will execute and deliver such financing statements
          and do such other acts and things as the Secured Party may request pursuant
          to
          Section 10 hereof.

        

        (b) Each
          item
          of Accounts is, or at such time as it becomes part of the Collateral will
          be, a
          bona fide, valid and legally enforceable obligation of the account debtor
          or
          other obligor in respect thereof, subject to no defense known to the Debtor,
          set-off or counterclaim against the Debtor and in connection with which
          there is
          no default with respect to any payment or performance on the part of the
          Debtors
          or any other party.

        

        (c) The
          Debtors will at all times keep accurate and complete records of payment
          and
          performance by the Debtors, the respective account Debtors and all other
          parties
          obligated on the Accounts.

        

        (d) The
          Debtors will immediately inform the Secured Party of any default in payment
          or
          performance by the Debtors or any account debtor or other parties obligated
          on,
          and of claims made by others in regard to, the Accounts and shall not change
          the
          terms thereof (or terminate or permit the impairment of any of its rights
          thereunder) without the prior written consent of the Secured Party, which
          shall
          not be unreasonably withheld. The Debtors will make all payments and perform
          all
          undertakings on the Debtors’ part to be paid or performed with respect to
          Accounts when due. The Debtors hereby authorize the Secured Party to cure
          any
          default in payment or performance by the Debtors with respect to the Accounts;
          provided,
          however,
          that
          the Secured Party shall be under no obligation to do so, and provided further,
          that the Secured Party’s curing of any default shall not constitute a waiver by
          the Secured Party of any default under this Agreement. The Debtors agree
          to
          reimburse the Secured Party on demand with interest at the Maximum Rate
          for any
          payment made or any expense incurred by the Secured Party pursuant to the
          foregoing authorization, and any payment made or expense incurred by the
          Secured
          Party pursuant to the foregoing authorization shall be part of the Obligations
          secured hereunder.

        

        (e) The
          Debtors shall, upon request of the Secured Party, and the Secured Party
          themselves may, in the name of the Secured Party or the Debtors, at any
          time
          (whether or not the Debtors are in default hereunder) notify the account
          debtor
          or other obligor on any item of the Accounts, of the Secured Party’s security
          interest. The Secured Party may, in its own name or the name of the Debtors,
          at
          any time after the occurrence and during the continuation of an Event of
          Default
          (as defined below), demand, sue for, collect or receive any money or property
          payable or receivable on any Accounts and settle, release, compromise,
          adjust,
          sue upon, foreclose, realize upon or otherwise enforce any item of Accounts
          as
          the Secured Party may determine, and for the purpose of realizing the Secured
          Party’s rights herein, the Secured Party may receive, open and dispose of mail
          addressed to the Debtors and endorse notes, checks, drafts, money orders,
          documents of title or other forms of payment on behalf of and in the name
          of the
          Debtors. The Secured Party may at any time in their discretion (whether
          or not
          there has occurred an Event of Default) transfer any notes, securities
          or other
          Accounts into their own names or that of their nominees and receive the
          income
          thereon and hold the same as Collateral for the Obligations or apply the
          same to
          the payment of principal or interest due on the Obligations. The Debtors
          agree
          to reimburse the Secured Party on demand with interest at the Default Rate
          for
          any payment made or any expense incurred by the Secured Party pursuant
          to the
          foregoing authorization, and any payment made or expense incurred by the
          Secured
          Party pursuant to the foregoing authorization shall be part of the obligations
          secured hereunder.

        

        6. Events
          of Default.
          The
          Debtors shall be in default under this Agreement upon the occurrence of
          any
          Event of Default as defined in the Note. 

        

        7. Rights
          and Remedies Upon Default.
          Upon
          the occurrence and during the continuation of any Event of Default, the
          Secured
          Party may accelerate all the obligations and shall have, in addition to
          all
          other rights and remedies provided herein or by applicable law, all of
          the
          rights and remedies of a secured party under the Code, including, but not
          limited to, the right to take possession of the Collateral, and the right,
          without further notice to the Debtors, to take the Collateral in satisfaction
          in
          full of obligations owing under the Note, and for those purposes the Secured
          Party may, and the Debtors hereby authorize the Secured Party to, enter
          upon any
          premises on which Collateral may be located or situated and remove the
          same
          therefrom or without removal render the same unusable and may use or dispose
          of
          the Collateral on such premises without any liability for rent, storage,
          utilities or other sums, and upon request the Debtors shall, to the extent
          practicable, assemble and make the Collateral available to the Secured
          Party at
          a place to be designated by the Secured Party, which is reasonably convenient
          to
          the Debtors and the Secured Party. The Debtors agrees that, to the extent
          notice
          of sale shall be required, at least five days, notice to the Debtors of
          the time
          and place of any public sale or the time after which any private sale or
          any
          other intended disposition is to be made shall constitute reasonable
          notification of such sale or disposition. The Secured Party shall also
          have the
          right to apply for and have a receiver appointed by a court of competent
          jurisdiction in any action taken by the Secured Party to enforce their
          rights
          and remedies hereunder, to manage, protect and preserve the Collateral
          or
          continue the operation of the business of the Debtors, and the Secured
          Party
          shall be entitled to collect all revenues and profits thereof and apply
          the same
          to the payment of all expenses and other charges of such receivership,
          including
          the compensation of the receiver, and to the payment of the obligations
          until a
          sale or other disposition of such Collateral shall be finally made and
          consummated. In the event of any disposition or collection of or any other
          realization upon all or any part of the Collateral, the Secured Party shall
          apply the proceeds of such disposition, collection or other realization
          as
          follows:

        

        (a) First,
          to
          the payment of the reasonable costs and expenses of the Secured Party in
          exercising or enforcing their rights hereunder, including, but not limited
          to,
          costs and expenses incurred in retaking, holding or preparing the Collateral
          for
          sale, lease or other disposition, and in collecting or attempting to collect
          any
          of the Collateral, and to the payment of all amounts payable to the Secured
          Party pursuant to Section 7 hereof;

        

        (b) Second,
          to the payment of the Obligations; and

        

        (c) Third,
          after payment in full of all of the obligations, the surplus, if any, shall
          be
          paid to the Debtors or to whomsoever may be lawfully entitled to receive
          such
          surplus.

        

        8. Indemnity
          and Expenses.
          The
          Debtors agree to indemnify the Secured Party from and against any and all
          claims, losses and liabilities arising out of or resulting from this Agreement
          (including, without limitation, enforcement of this Agreement or any actions
          taken by the Secured Party pursuant to Section 10 of this Agreement) except
          claims, losses or liabilities resulting from the Secured Party’ own negligence
          or willful misconduct. The Debtors will, on demand, pay to the Secured
          Party the
          amount of any and all reasonable costs and expenses, including, but not
          limited,
          to the reasonable fees and disbursements of their counsel and of any experts
          or
          agents, which the Secured Party may incur in connection with (i) the exercise
          or
          enforcement by the Secured Party of any of their rights or remedies hereunder,
          or (ii) any failure by the Debtors to perform any of the
          Obligations.

        

        9. Further
          Assurances and Power of Attorney.
          The
          Debtors will execute and deliver to the Secured Party, at the request of
          the
          Secured Party, at any time and from time to time, such financing statements
          and
          other instruments (and pay the cost of filing or recording the same in
          all
          public offices deemed necessary or desirable by the Secured Party) and
          do such
          other acts and things as the Secured Party may reasonably deem necessary
          or
          desirable in order to establish and maintain a valid security interest
          in the
          Collateral in favor of the Secured Party (free and clear of all other security
          interests, liens, charges, encumbrances and other claims, whether voluntarily
          or
          involuntarily created, except as permitted by Section 6.3 hereof) or in
          order to
          facilitate the collection of the Collateral. To effectuate the rights and
          remedies of the Secured Party hereunder, effective upon the occurrence
          of an
          Event of Default, the Debtors hereby irrevocably appoint the Secured Party
          attorney-in-fact for the Debtors in the name of the Debtors or the Secured
          Party, with full power of substitution, to sign, execute and deliver any
          and all
          instruments and documents and do any and all acts and things to the same
          extent
          as the Debtors could do, to sell, assign and transfer any Collateral, including,
          but not limited to, taking all action necessary or the preservation of
          any
          rights pertaining to the Collateral beyond reasonable care in the custody
          or
          preservation thereof. The Secured Party may exercise their rights and remedies
          with respect to the Collateral without resorting or regard to other security
          or
          sources for payment. All rights and remedies of the Secured Party hereunder
          or
          with respect to the obligations or the Collateral shall be cumulative and
          may be
          exercised singularly or concurrently.

        

        10. Assignment.
          If at
          any time or times by sale, assignment, negotiation, pledge or otherwise,
          the
          Secured Party transfers any of the obligations, such transfer shall carry
          with
          it the Secured Party’s rights and remedies under this Agreement with respect to
          the obligations transferred, and the transferee shall become vested with
          such
          rights and remedies whether or not they are specifically referred to in
          the
          transfer. If and to such extent such Secured Party retains any other
          Obligations, the Secured Party shall continue to have the rights and remedies
          herein set forth with respect thereto.

        

        11. Notices.
          Unless
          otherwise provided, any notice required or permitted under this Agreement
          shall
          be given in writing and shall be deemed effectively given upon personal
          delivery
          to the party to be notified or five days after deposit with the United
          States
          Post Office, by registered or certified mail, or two days after deposit
          with a
          nationally recognized express courier, postage prepaid and sent (i) if
          to a
          Secured Party, at the address of the Secured Party set forth in the Debtor’s
          records, or (ii) if to the Debtors, at the Debtors’ principal place of business
          or at such other address as the Debtors shall have furnished to the Secured
          Party in writing.

        

        12. Governing
          Law.
          This
          Agreement shall be governed by and construed under the laws of the State
          of
          Nevada. Whenever possible, each provision of this Agreement shall be interpreted
          in such manner as to be effective and valid under applicable law, but if
          any
          provision of this Agreement shall be prohibited or invalid under applicable
          law,
          such provision shall be ineffective only to the extent of such prohibition
          or
          invalidity, without invalidating the remainder of such provision or the
          remaining provisions of this Agreement. This Agreement shall be given a
          fair and
          reasonable construction in accordance with the intention of the parties.
          

        

        13. Action
          by Secured Party.
          All
          rights and remedies of Secured Party hereunder may be exercised by the
          Holder of
          the Note. Similarly, consent to any request by the Debtors (whether to
          modification of this Agreement, or any agreement executed in connection
          herewith) shall require consent of the Secured Party. 

        

        14. Miscellaneous.
          Neither
          this Agreement nor any provision hereof may be changed, waived discharged
          or
          terminated orally, but only by an instrument in writing signed by the party
          against which enforcement of the change, waiver, discharge or termination
          is
          sought. This Agreement shall be binding upon the Debtors and their successors
          and assigns, and all persons claiming under or through the Debtors or any
          such
          successors or assigns, and shall inure to the benefit of and be enforceable
          by
          the Secured Party and their successors and assigns.

        

        [the
          remainder of this page is intentionally left blank]

        

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

        IN
          WITNESS WHEREOF, the parties have executed this Security Agreement as of
          the day
          and year first above written.

        

        “DEBTOR”

        

        VEMICS,
          INC. 

        

        

        By:      

        Name: 

        Title: 

        

        

        

        “SECURED
          PARTY”

        

        VALIANT
          HOLDING CO.

        

        

        By:      

        Name: 

        Title: 

        

        

        

        

        

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

        Exhibit
          “B”

        

        The
          principle amount of this note is based on the following schedule of funds
          depoited by the Holder into the operating account of the Company on the
          specified dates by direct wire transfer:

        

        From     Amount   Date

        

        Chan
          Coddington   $25,000   8/24/05

        Granger
          Whitelaw   $25,000   9/01/05

        Valiant     $70,000   9/16/05

        Valiant     $27,000   9/29/05

        Valiant     $45,000   10/13/05

        Valiant     $
          5,000   10/24/05

        Valiant     $50,000   11/01/05

        Valiant     $15,000   11/18/05

        Valiant     $20,000   12/02/05

        Valiant     $163,000   12/06/05

        

        Total     $445,000

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

        Exhibit
          “C”

        

        

         

        

        

        

        [Missing
          Graphic Reference],
          INC

        

        

        

        

        

        BUSINESS
          PLAN

        EXECUTIVE
          SUMMARY1

        XXXXX25

        XXXXX27

        PROJECTIONS28

        XXXXXX31

        XXXXX32

        XXXXX34

        MANAGEMENT
          OF VEMICS37

        PRINCIPAL
          STOCKHOLDERS40

        CERTAIN
          RELATIONSHIPS AND RELATED TRANSACTIONS40

        INVESTOR
          QUALIFICATIONS43

        SUBSCRIPTION
          AGREEMENT AND PROCEDURE44

        LEGAL
          MATTERS44

        AUDITORS45

        

        
          
            
              

              
                	 	 	 

              

              

            

            
            

          

          
            
            

            
              

            

          

          
            
            

            
            

          

        

        EXECUTIVE
          SUMMARY

         

        

         

         

        Executive
          Summary

         

        

         

        
           

          Management:
            

           
 

         

         

        Chief
          Executive Officer / President

         

        Craig
          Stout

        Chief
          Operating Officer

        Brian
          Howell

         

        Chief
          Technical Officer

         

        R.
          L. Marciniak

         

        Chief
          Marketing Officer

         

        Tom
          Owens 

         

        Chief
          Financial Officer

         

        Robert
          Millar 

         

        VP
          Business Development

         

        John
          Walber 

        Executive
          Producer / Director of Instructional Design

        

        Industry:
          Real
          time
          Conferencing and Collaboration Solutions: Corporate / Consumer / Military
          and
          Government /Education and Training

        

        Number
          of Employees: 6

        

        Bank:
          Bank
          of
          New York

        Auditor:
          Demetrius
          & Company

        Law
          Firm(s): Loeb
          & Loeb 

        

        Financing
          Sought: $5
          Million (equity)

        

        Use
          of Funds:
          Expand
          marketing & sales capabilities, strengthen technical and helpdesk support
          and build administrative infrastructure

        

        Current
          Investors:
          ($3.6M)

        Private
          Investors & Personal Funds

        

        

        

        

         

        Business
          Description

         

        Vemics
          is
          a leading provider of hosted, real-time conferencing and collaboration
          applications. Vemics LiveAccessTM
          solutions combine multipoint video / voice and data technologies with industry
          specific content backed by consulting expertise and deep customer support.
          

        

        Vemics
          enables organizations large and small to collaborate and learn face-to-face,
          online from almost anywhere with little or no capital investment. We deliver
          bottom-line benefits for companies and institutions that need to expand
          collaborative reach beyond conference rooms and classrooms or need
          best-in-class
          industry specific content delivered in real-time by leading trainers,
          subject
          matter
          experts and coaches.

        

        Vemics
          turnkey solutions utilize existing or off-the shelf computer equipment
          and
          minimize or eliminate technology decisions. They encompass all of the features
          and services necessary for organizations to conduct online training, meetings
          or
          special events, with little or no capital investment and integrate fully
          with
          Microsoft’s Outlook, Outlook Calendar and Instant Messaging. 

        

        Vemics
          LiveAccess solutions are available as fully hosted and managed services
          or as
          on-premises software deployments. They adhere to industry standards for
          voice,
          video and data, can integrate easily with most currently deployed
          videoconferencing systems and can be customized for customer or industry
          specific applications.

        

         

        Reverse
          Merger

         

         

        Vemics,
          Inc. (OTCBB: VMCI.PK) 

         

        On
          November 1, 2005, Vemics, Inc. completed a share exchange and reverse merger
          transaction whereby all of the outstanding shares of Vemics were exchanged
          for
          shares of OMII Corp. OMII Corp. will be the parent entity owning 100% of
          the
          issued and outstanding shares of Vemics, Inc. In connection with the
          transaction, OMII Corp. has changed its name to “Vemics Inc.” Vemics
          shareholders currently own 80% of OMII Corporation and the Vemics management
          team is responsible for all strategic and operational functions of the
          company.

        

         

        Funding

         

        The
          Company is seeking five million dollars in equity financing that will be
          used to
          rapidly expand the Company’s marketing and sales capabilities, strengthen
          technical and helpdesk support and build administrative infrastructure.
          The goal
          of the company is to leverage the equity financing to return ten times
          plus to
          our investors within three to five years through an exit strategy consisting
          of
          merger, acquisition or roll-up into a larger company that will realize
          a
          strategy and customer base advantage in the market by acquiring
          Vemics.

         

        

         

         

        Business
          Opportunity 

         

        Live,
          face-to-face communication is essential to how people work. It creates
          immediacy, intimacy and joint focus that simply cannot be accomplished
          by other
          methods. Time and distance barriers in today’s global business environment make
          virtual collaboration tools essential to control costs, ensure timely,
          accurate
          information exchange and increase productivity. 

         

        An
          immediate opportunity exists for Vemics to provide customers with comprehensive
          conferencing, collaboration and learning solutions that include a hosted
          technology platform combined with consulting expertise, industry specific
          content and deep support. 

         

        Vemics
          has the technology platform, the industry specific content, the consulting
          expertise and the support capability to provide comprehensive solutions
          that
          will: 

         

        	§  	
                Enable
                  businesses to cost-effectively collaborate with and train their
                  workforces, suppliers, service providers and customers face-to-face,
                  in
                  real-time without heavy investment in IT infrastructure or the
                  uncertainty
                  of evolving technologies

              

         

        	§  	
                Supply
                  content providers and subject matter experts with cost-effective
                  virtual
                  delivery vehicles that will enable them to reach deeper into their
                  existing customer base and expand into currently unreachable markets
                  while
                  simultaneously reducing their cost

              

         

        	§  	
                Act
                  as catalysts for change, driving IP bandwidth usage for network
                  service
                  providers

              

         

         

        Business
          Strategy

         

        Vemics
          will move aggressively to capture market share at the top of the online
          conferencing and collaboration pyramid where the money, demand and technical
          capability currently exist for high-end, real-time learning or meeting
          solutions. Vemics will also pursue a rapidly increasing mobile and independent
          workforce which we believe has very similar characteristics to the general
          consumer market. Often this market is more technology savvy, better equipped
          and
          more willing to reach out for services that simplify work-life as well
          as
          home-life. This market will also provide a natural bridge into the general
          consumer space. 

        

        In
          both
          cases, Vemics will differentiate itself from the competition by supplying
          online
          collaboration and learning solutions available as hosted services enabling
          customers to continually take advantage of state-of-the-art real time
          capabilities without ever adding the burden of new technologies or major
          capital
          investment. 

        

         

        Marketing
          and Sales Strategy 

         

        Vemics
          will leverage its marketing, sales and distribution channels to “virtually
          connect” businesses and individuals that have interrelated product, service and
          education needs. Each member of the resulting “community” will have convenient,
          affordable “live access” to all other members of the community, giving each the
          ability to communicate, collaborate, market, buy or sell products, services,
          information and educational content in real-time, face-to-face without
          barriers
          of time and distance. By aggregating these communities, Vemics will build
          significant customer asset value while simultaneously creating competitive
          barriers to entry.

        

         

        Priority
          Segments

         

        Vemics
          will initially focus on the Medical, Allied Health, Financial Services,
          Pharmaceutical, and Legal segments which have required annual mandates
          for
          compliance, regulatory, licensing and / or continuing education (CE) and
          have
          interrelated product and services needs in reaching and serving their
          constituencies. We have strong alliances with a number of leading content
          providers who have earned reputations in their respective fields as
“best-in-class.” We will also engage the Retail segment which encompasses buying
          consortiums to provide live access for their buying and inventory control
          programs. Our products and services are not limited to these segments and
          will
          be horizontally distributed over time.

        

         

        Distribution
          Plan

         

        Vemics
          will use both direct and indirect sales methods and distribute its products
          and
          services to both the corporate and consumer markets. We will sell into
          two
          channels. Our primary channel will be selling indirectly through our partners
          and content providers with well established customer bases. We will use
          required
          or highly sought after educational content as the spearhead to access target
          segments. That approach will create a secondary, larger market of contacts
          that
          will successfully experience Vemics solutions firsthand. As that market
          evolves,
          Vemics will leverage those contacts to cross sell its services and solutions
          as
          outsourced alternatives for broader, more efficient and effective communication
          and collaboration. 

        

        Our
          secondary channel will be selling directly to corporations with an emphasis
          on
          medium and small sized companies with neither the manpower nor desire to
          add our
          solutions as a core competency.

        

         

        Positioning

         

        For
          business of all sizes, Vemics LiveAccess solutions provide the ability
          to
          conference, collaborate and learn in real time more quickly, conveniently
          and
          cost effectively than ever before.

        

         

        Technologies/Special
          Know-how

         

        Vemics
          is
          partnered with industry leading technology, network and content providers.
          We
          are co-developers with our technology partners and have the ability to
          develop
          proprietary middleware skins using licensed technology. We also have the
          ability
          to develop core technologies if meaningful to our success and are in the
          process
          of expanding that capability.

        We
          have
          immediate long term access to a real time collaboration technology that
          functions similarly to our core technology platform but is more suited
          to the
          on-line gaming industry which has expressed an interest in adding integrated
          audio and video to the on-line poker room services.

        

        We
          are in
          the process of filing for Patent protection for our “whole solution” process
          approach. We expect all filings to be completed by December 31,
          2005.

         

        

         

         

        Outlook
          

         

        Analysts
          predict double digit growth in the real time collaboration and rich media
          markets for the foreseeable future. What is most compelling is that the
          fuel for
          the expansion is workforce driven by the realization that the real-time
          video-enabled collaboration solutions open business potential and productivity
          gains where none were previously considered possible.

        

        Vemics
          is
          generating revenue by delivering live, virtual educational programs for
          Cannon
          Financial Institute, the premier consultants and educators to the world’s top
          wealth advisors and for the Voluntary Hospital Association, a consortium
          of over
          2,200 not-for-profit health care organizations providing industry-leading
          supply
          chain management and member network development services. These programs
          are
          currently expanding in scope and scale and are attracting interest from
          other
          leading industry players like Dearborn Financial Services, the Center for
          Fiduciary Studies, Skillmark, University of Maine, Georgetown University,
          UCLA
          Medical Center, Child Neurology Foundation, Center for Disease Control
          and
          others.

        

        Vemics
          is
          also generating revenue delivering managed collaboration services for
          IntraLinks, a leading provider of collaborative online digital workspaces
          for
          conducting secure financial transactions and document exchange. IntraLinks
          serves 150,000 users in 13,000 companies in the financial services, life
          sciences, and mergers and acquisitions markets, target markets synonymous
          Vemics
          strategy.

        

        Vemics
          has closed an annual contract with Pro Poker School.com currently under
          review
          for aggressive expansion. Vemics is hosting and managing a branded server
          that
          is delivering multiple, simultaneous session capability for on-line gaming
          instruction. 

        

        We
          are
          licensing our system to MDM-Law, one of New Jersey’s largest law firms for
          partner meetings, interviewing, resource collaboration and training between
          their offices in Ridgewood, Morristown and Newark, New Jersey, Denver Colorado
          and New York City. We are also in final discussions with several additional
          law
          firms for similar applications. 

        

        Vemics
          has delivered paid pilot programs for the U.S. Military and has sold core
          software to Sytex / Lockheed Martin for use in the Army’s Battlefield Video
          Teleconferencing Program (BVTC). Vemics is working with Sytex Lockheed
          Martin to
          identify other business opportunities.

        

        On
          December 7, 2005 Vemics in association with its strategic partner E-Parent
          will
          deliver a series of four special events to Military and civilian hospitals
          on
          the use of Neurotoxins. The individual sessions carry two credit hours
          for
          Continuing Medical Education (CME) for physicians. The program is being
          sponsored by Allegan Pharmaceutical Company. EParent represents unprecedented
          access to the medical and allied health community specifically in the area
          of
          people with disabilities and people with special medical needs. As a direct
          result of this initial program, EParent has created 38 additional programs
          that
          they anticipate will be sponsored in much the same manner as the initial
          Allegan
          project. The basic curriculum for these 38 programs has been approved by
          the
          Child Neurology Foundation for CME credit. The programs will be delivered
          live
          to doctors, nurses, administrators and other care gives throughout the
          United
          States at their homes, offices or hospitals.

        

        We
          have
          closed a deal with Summit Financial Partners a financial services firm
          in
          Summit, New Jersey providing wealth management services to high net worth
          clients and fund raising activities for non-profit organizations.

        

        Vemics
          is
          also in final negotiations with Easter Seals, Mass Mutual and several other
          potential users of our technology platform.

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

        

        

        Our
          Business. 

        

        Vemics
          is a conferencing, collaboration and learning solutions service
          provider
          - Our
          solutions deliver fully integrated audio, video and data solutions from
          a single
          browser-based user interface designed specifically to enhance meeting and
          learning effectiveness and drive business results.

        

        Vemics
          solutions are designed to perform optimally on affordable off-the-shelf
          PC and
          laptop equipment running the Microsoft WindowsXP OS - Our
          collaboration engine (Conference Server) is fully integrated with Outlook
          Calendar and Windows Messenger and has seamless directory-based access
          through
          Microsoft Active Directory and IBM Lotus Domino. 

        

        Vemics’
          core competency is our ability to provide customers complete virtual
          conferencing, meeting and learning solutions delivered either as hosted
          applications or as customer premise deployments accessible from either
          side of
          the firewall with or without guaranteed network QoS. 

        

        Any
          of the existing
          web-based business applications (WebEx, Microsoft Live Meeting, Breeze,
          Etc) and
          can be integrated with our end-to-end solutions which include:

         

        	§  	
                Up
                  to 30 fps multipoint, two-way video
                  (best-in-class)

              

        	§  	
                Wideband
                  G-722 audio

              

        	§  	
                Single
                  browser-based UI for audio, video and
                  data

              

        	§  	
                Broad
                  user-options within sessions based on individual
                  capabilities/location: Audio/video/data, audio/data, audio only,
                  phone
                  only

              

        	§  	
                Deep
                  technical and customer support

              

        	§  	
                Installation
                  and training

              

        	§  	
                Custom
                  application development

              

        	§  	
                Industry
                  specific content from best-in-class providers trained on our
                  systems

              

        	§  	
                Single
                  source supplier

              

        

        We
          provide two services:

        Our
          basic
          service
          is
          geared for conferencing and collaboration over the public Internet and
          provides
          hassle free, on demand access to dedicated virtual meeting and learning
          rooms.
          Our premier
          service
          provides
          a more robust suite of capabilities and customer control offering
          hosted virtual meeting and learning client branded
          servers.
          The services also provide for two applications, VMeeting and EClassroom.
          These
          proprietary applications are customized to replicate the same dynamic
          experience3d in a live classroom or live meeting environment. 

        

        Our
          services essentially target two broad horizontal segments: Those who access
          our service from homes or small offices over broadband connections to the
          Internet (DSL/Cable Modem) and those who access our service from corporate
          IP
          connections to the Internet. 

        

        LiveAccess
          licenses are sold by concurrent users in a “meet-me” metaphor. User licenses are
          sold by the month or by the year and can be either individual room
          configurations (basic service) or virtual server configurations (Premium
          Service) allowing for advanced features, customized branding and administrative
          control. 

        

        Clients
          can license our service by the month or longer. In many cases clients are
          introduced to our service by attending on-line, live courses, classes or
          special
          events provided by our content partners, strategic alliance partners or
          industry
          sponsors.

        

        No
          single company currently offers that range of options, services, solutions
          or
          applications within a fully hosted environment and it is not likely that
          any
          competitors will develop this ability soon. To be competitive Vemics employs
          a
          federated approach assembling “best-in-class” partnerships to provide technology
          based application specific solutions. Vemics brings together strategic
          alliances
          and personnel in the technology, network, engineering, technical support,
          marketing, branding, product deployment, market research, sales, distribution
          and content expert areas. The traction we have gained in our targeted markets
          has already created a barrier to entry that competitors will find formidable.
          

        

         

        The
          technology based solutions are accessed from a web-browser as a hosted
          monthly
          service called LiveAccess. This service, deployed as a conferencing,
          collaboration or learning application solution includes: 

         

        	·  	
                Multi-point
                  full motion, real time video and integrated audio delivered at
                  near
                  broadcast quality;

              

         

        	·  	
                Advanced
                  web collaboration tools; 

              

         

        	·  	
                Rich
                  media, presentation mode, application sharing, electronic white
                  board,
                  chat, internet browsing, polling, integration with legacy video
                  conferencing systems, dynamic send / receive documents while in
                  or out of
                  sessions, and integrated DVD/VHS;

              

         

        	·  	
                High-quality
                  30 frames per second video communication
                  technology;

              

         

        	·  	
                Up
                  to 90 participating end points in a single session with the ability
                  to
                  open up to nine audio and video channels, in any combination by
                  simply
                  pointing and clicking your mouse;

              

         

        	·  	
                IP
                  networking and engineering ;

              

         

        	·  	
                Industry
                  specific learning content; and

              

         

        	·  	
                “Best
                  in Class” - “must have” licensing and certification
                  courses.

              

         

        The
          Vemics solution is designed to assist companies in deriving more revenue
          from
          their existing client base, capture more market share from competitors
          and
          become more efficient in their overall operations. Vemics represents the
          convergence point of video, audio and data collaboration technologies within
          a
          hosted environment. We function at the very top of the emerging collaboration
          market and offer a video enabled hosted service not available through any
          other
          service provider at this time. We have modeled our subscription service
          in
          exactly the same way as other web collaboration services, except, we are
          more
          cost efficient and offer the convergence of video, audio and data for
qualified
          users
          that is not available through any other web collaboration service. (Qualified
          users are those who have a minimum configuration of a Pentium 4 computer,
          running Windows XP and a broadband connection to the
          Internet).

         

        To
          our knowledge, we are the only company that currently offers government
          (military/homeland security), businesses, SOHO users and educational
          institutions a software and standards-based, presenter-controllable system
          that
          manages a fully collaborative multi-point video and integrated audio environment
          as a completely hosted and customizable service and:

         

        	·  	
                Does
                  not require a technology decision or CapEX expenditure within the
                  enterprise

              

         

        	·  	
                Fully
                  hosted, month to month or long term commitment available, full
                  help desk
                  support, training and automatic system and technology upgrades
                  as part of
                  the monthly licensing fee

              

         

        	·  	
                Is
                  part of a solutions package that includes technology, network,
                  content,
                  facilities, instructional design, engineering, training and implementation
                  strategies;

              

         

        	·  	
                Integrates
                  live voice and full motion video (up to 30 frames per
                  second);

              

         

        	·  	
                Supports
                  data collaboration, fully integrated multi-media, application sharing
                  and
                  guided web browsing;

              

         

        	·  	
                Can
                  be launched from a browser;

              

         

        	·  	
                Operates
                  over readily available high-speed communication lines to the Internet
                  (DSL, cable modem, WiFi or T1
                  connections);

              

         

        	·  	
                Is
                  designed for use with laptop and desktop computers and interoperable
                  with
                  room-based videoconferencing systems for larger numbers of participants;
                  and

              

         

        	·  	
                Is
                  approved by the Joint Inter-operability Test Command (JITC) for
                  use on the
                  secure military communications network.

              

         

        Our
          solutions are interoperable with many pre-installed existing IP-ready
          videoconferencing systems which greatly increases the available points
          of access
          to our customers. Our solutions reach conference rooms, desktops, learning
          labs,
          homes, premier public meeting and training rooms. Through the use of the
          Vemics
          eClassroom and/or Vemics vMeeting LiveAccess applications, content can
          originate
          from Vemics enabled access points, inside the corporate firewall or proxy
          server, outside the corporate network, from home or branch offices using
          DSL, T1
          or cable modem or any other broadband connection that can reach our server.
          

         

         Our
          Strategy. Vemics
          has deployed a hosted web conferencing system with integrated audio, video
          and
          data features that can not be and is not offered through any other web
          hosted
          service to date. Our concept is to position our service as the next generation
          of web collaboration tools that replicate the dynamic found in a live business
          meeting or classroom. We will position this service in much the same way
          that
          other collaboration services sell their subscriptions. 

         

        We
          will
          be launched through a standard web browser, charge a monthly fee for usage,
          an
          upfront start-up and licensing fee, supply the essential equipment to get
          started (Camera, Microphone, Headset) all at prices equal to or below the
          present collaboration fees charged by other services that do not offer
          the
          integrated multi-point video and audio. Vemics captures recurring revenues
          across multiple markets by selling this hosted service and indirectly through
          the established distribution channels of its alliance partners and industry
          associations. Our alliance partners are content providers such as Cannon
          Financial Institute (Cannon), Exceptional Parent Foundation, Child Neurology
          Association, industry supporters and experts. We have begun delivering
          content
          for Cannon and EParent / Child Neurology Association and will expand this
          list
          in the first quarter of 2006. 

         

        Recent
          developments in the collaboration market have created opportunities for
          Vemics
          as a hosted service. The collaboration market has grown over 27% this year
          (Analysis report IDC) to more than 1.8 billion dollars. Expectations indicate
          that this rate of growth will accelerate over the next several years (Wainwright
          Report, Gartner). As the market begins to integrate on-line collaboration
          into
          its corporate culture, gains in productivity and efficiencies are realized.
          The
          need to upgrade the service to a fully functional, integrated visual
          communication system will become an overriding requirement. Vemics can
          deliver
          this upgraded service, as a hosted model, in a highly competitive financial
          offering today.

         

        Our
          alliance partner agreements provide for distribution of live interactive
          content
          delivered over a broadband internet connection that provides multi-point
          video
          and voice capabilities and a full suite of data collaboration tools within
          a
          standards based environment. In many instances, our content partners, strategic
          alliance partners and associations promote their programs or our combined
          services to their existing client base or membership as a new collaborative
          communication tool and an enhanced method of obtaining “must have” content in
          the areas of certification, licensing, compliance, continuing education
          and
          general job skills training. 

         

        On
          December 7, 2005 Vemics will deliver the first of a four part series to
          Military
          Hospitals throughout the country. The program will feature new developments
          in
          Neurotoxins and will carry two Continuing Medical Education (CME) credit
          hours.
          The program was created through our association with Exceptional Parent
          (EParent) magazine, The Child Neurology Association and sponsored by Allergan
          Pharmaceuticals. The program generated $100,000 in gross revenue for eight
          hours
          of programming. Through our strategic alliance with EParent and The Child
          Neurology Association we have created 38 two hour programs that will be
          ready
          for distribution to hospitals, doctors, nurses and administrators by the
          middle
          of the first quarter of 2006. These programs will also be sponsored by
          industry
          leaders, pharmaceutical companies and medical services companies.

         

        Our
          alliance partner agreements typically have a multi-year term and are
          automatically renewable unless either party terminates on ninety (90) days’
advance written notice. For instance, under the terms of our agreements
          with
          Cannon, we provide the technology platform, the training of their instructors
          and the migration of content onto our system. Cannon provides the marketing
          that
          generates enrollment, administrative and enrollment services and the content
          itself. We charge for the use of our system based on a special event pricing
          model or based on a monthly seat license.

         

        In
          the
          case of EParent, we have agreed to a mutually exclusive world wide arrangement
          whereby EParent has agreed that all of its CME / CEU educational programs
          will
          be delivered live over the Vemics Live Access System. Vemics has agreed
          that all
          of our activities in the Allied Health Field, specifically in the disability
          and
          special need area will go through EParent. EParent represents unprecedented
          access to this enormous market segment, which included content experts
          industry
          sponsors (Pharmaceutical companies, medical services companies, associations,
          foundations, Etc) and financial institutions who directly support this
          market.
          EParent will become one of the major “Spearhead” approaches described in our
          marketing plan included in this document.

         

        In
          addition to the live course delivery, our system has the ability to archive
          courses for later retrieval or resale. We have already converted the STC
          Series
          6 certification course consisting of twenty-four hours of on-line programming.
          We have also archived the Cannon Trust Management I course (13 two hour
          segments) and will archive the EParent series scheduled to begin in
          December.

         

        Our
          system represents the “next generation” in visual and collaborative
          communication for business and personal applications. We currently operate
          as a
          supplier to two prime military contractors. Recently we were selected to
          furnish
          core collaboration software for the BVTC (Battlefield Video Telecommunications
          Collaboration) Project. This project was awarded to Lockheed Martin through
          their SYTEX subsidiary and Vemics is working as a supplier of our core
          software
          that will serve as the foundation of this project. Ultimately front line
          war
          vehicles will be connected to command with audio, video and data when this
          project is deployed. Vemics expects to play a significant role with Lockheed
          on
          an ongoing basis. We anticipate that this relationship will grow into other
          projects and will include customization of front end user interface screens,
          tech support and other integration services. 

         

        Our
          overall strategy is to provide an education/training profile to deliver
          content
          to specific Vemics clients regardless of location and leverage that usage
          back
          into the corporation by providing similar services inside the corporate
          network/firewall. In addition, we intend to leverage the communications
          features
          of our system in the manner represented by the military opportunity. Vemics
          provides its alliance partners with an ongoing source of revenue-generating
          and
          efficiency enhancing products and services. These services include the
          ability
          to make their content more accessible to their clients through Vemics enabled
          facilities or by establishing 

         

        Vemics
          enabled facilities within the corporate network accessible by client employees
          at home, at work or on the road. Easy access to the distribution of content
          and/or information enables our alliance partners to capture market share
          from
          competitors and broaden their reach within their existing customer bases
          and
          become more efficient in operations. Our solutions are applicable across
          many
          market segments, including the government and military, and have substantial
          cost and performance flexibility that can be tailored to suit businesses
          and
          government agencies of all sizes. 

         

        Vemics
          provides aggressively priced, bundled solutions that better equip corporate
          clients to:

         

        	·  	
                enhance
                  business and workforce performance through the transfer of information
                  and
                  knowledge within an environment that replicates the dynamic of
                  a live
                  meeting or live classroom without the loss of corporate opportunity
                  or
                  incurring the cost of travel to such
                  meetings;

              

         

        	·  	
                increase
                  revenues by using visual communications to better train and equip
                  the
                  workforce to be more knowledgeable and work more
                  efficiently;

              

         

        	·  	
                capture
                  additional market share;

              

         

        	·  	
                introduce
                  new products faster and with minimal expense to clients and their
                  consumers;

              

         

        	·  	
                deploy
                  corporate strategies quickly and
                  efficiently;

              

         

        	·  	
                speed
                  communications with field personnel, partners and customers;
                  

              

         

        	·  	
                realize
                  efficiencies in operations, supply chain control and sales
                  and;

              

         

        	·  	
                control
                  travel expense while recouping lost productivity
                  time

              

         

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

        Marketing
          Plan

         

         

        Phase
          1 

         

        Phase
          1
          of the Marketing Plan is a tactical subset of the overall business plan
          and is
          designed to take immediate advantage of the market traction Vemics has
          achieved
          to date delivering both required and highly sought after educational programs
          and pilots to the Medical; Pharmaceutical; Allied Health; Legal; Financial
          Services and Military markets. 

        

        Although
          Vemics success in these markets indicates a promising strategic path to
          pursue,
          Vemics will remain agile to directional shifts in the marketplace and be
          prepared to take advantage of opportunities that may provide other paths
          to
          accelerated revenue growth without losing focus on our core client
          base.

         

         

         

        Marketing
          Strategy

         

        Vemics
          will continue to build on its successes in live online
          conferencing and collaboration by using required and highly sought after
          educational programs, delivered via its unique, integrated technology platform,
          as a “spearhead” to drive early business into highly defined vertical markets.

        

        This
          approach will create a secondary, larger market of prospects that will
          have
          successfully experienced Vemics technology and educational services firsthand
          -
          a market that will be predisposed to consider other, broader uses for Vemics
          solutions. 

        

        Vemics
          will leverage those prospects, cross selling its technology, services and
          solutions as outsourced alternatives for more efficient and effective
          conferencing and collaboration.

        

        Tactics

         

        Build,
          monitor and evolve Vemics revenue targets

         

        Create
          target market segmentation models based on what we know

         

        Hone
          positional messages and product offerings to market strategies and 

         

        marketing
          programs

         

        Develop
          and expand online content with existing providers

         

        Expand
          content provider and subject matter expert base

         

        Ensure
          that current tactical plans are aligned and extensible into a future expansion
          of the marketing plan

         

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

         

        The
          spearhead model

         

        Over
          the
          next year, we will put marketing efforts and dollars primarily into the
          "spearhead" markets and programs as defined in this document.

        The
          goal
          of the spearhead model is to use professional education and certification
          courses and events to drive trials and adoption by specific verticals.
          We will
          leverage the accounts and relationships built to drive additional Vemics
          programs and revenue.

         

         

         

        The
          players

         

        To
          visualize the spearhead model, it is necessary to understand its
          components.

         

        [Missing
          Graphic Reference]

         

        The
          Players

        The
          players in this model are quite simple. Underneath this simple model is
          a more
          complex set of relationships, agreements, and efforts.

         

        Vemics

         

        Vemics
          contributors include all staff, consultants, independent marketing agents
          and
          channel resellers involved in either lead generation or the execution of
          programs to generate revenue.

         

        Content
          Providers

         

        Content
          providers are organizations that create professional education programs
          and
          courses and provide the instructors and subject matter experts for constituent
          customers. They are also the organizations that have the existing business
          relationships with the audiences and sponsors that Vemics will capitalize
          on as
          an immediate source of “qualified” leads.

         

        Vertical
          Industry Sponsors

         

        Vertical
          industry sponsors are intermediaries who have a vested interest in ensuring
          that
          their company, products and services are affiliated with the educational
          or
          informational programs being offered through Vemics by the content providers.
          As
          such, they will provide the funding necessary to produce and deliver accredited
          content to target audiences, free of charge, in return for exposure to
          those
          audiences.

        Sponsors
          are also target customers, that Vemics will market to, for additional
          sponsorships as well as alternative uses of Vemics technology and services.
          Finally, sponsors are potential strategic alliance partners that can provide
          valuable contacts and customer bases of qualified leads.

         

        

         

         

        Audience
          members and their management

         

        The
          audience members and their management are the universe of people who are
          recipients of the course or program presented during an event by the content
          provider as well as the recipients of communication message(s) permitted
          during
          events from program sponsors. Audience member management should be considered
          a
          separate subset of this group requiring separate marketing or sales initiatives.
          

         

        

         

         

        Influencers

         

        Influencers
          are people and organizations who interact with and advise content providers,
          vertical industry sponsors, and audience members and their management.
          Influencers can include analysts, press, industry gurus as well as the
          IT
          people, individual instructors, and individual students who may have a
          "stand
          out" experience or unusually strong influence on one of the recipients
          of Vemics
          messages.

         

        Dollar
          Source and Flow

         

        This
          section is an overview of the dollar flow. 

         

        [Missing
          Graphic Reference]

         

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

         

        Marketing
          Message Flow

         

        The
          spearhead model has generalized flows for marketing communication. These
          flows
          lay the groundwork for justifying specific marketing deliverables, how
          they are
          delivered, the messages within them, and the audiences they are
          for.

         

         [Missing
          Graphic Reference]

         

        Marketing
          Message Flow

         

        Vemics
          to
          Content Providers

         

        Vemics
          has key value messages and calls to action for existing and potential content
          providers designed to help them understand how Vemics services and solutions
          can
          expand their market share by reaching new audiences and creating additional
          cost
          and convenience values for existing audiences.

         

        

         

         

        Vemics
          to
          Vertical Industry Sponsors

         

        Vemics
          has key value messages and calls to action for existing and potential sponsors
          to describe awareness creation opportunities available to them through
          the
          sponsorship of educational and informational programs targeted to specific
          audiences of high interest.

         

        

         

         

        Content
          Providers to Vertical Industry Sponsors

         

        Content
          providers also have key value messages and calls to action for existing
          and
          potential sponsors that describe online solutions for live, instructor-led
          programs that provide revenue generating opportunities and awareness creation
          for both.

        Vemics
          will help content providers craft and deliver these messages during Phase
          I.
          Later, we will create programs that make content providers able to do this
          independent of Vemics.

         

        

         

         

        Content
          providers to audience and audience's management

         

        Content
          providers have key value messages and calls to action for existing and
          potential
          audience members and the audience member's management announcing either
          direct
          or sponsored courses or events available live and online.

        Vemics
          will help content providers craft and deliver these messages during Phase
          I.
          Later, we will create programs that make content providers able to do this
          independent of Vemics.

         

        

         

         

        Vemics
          to
          Influencers

         

        Vemics
          will work with PR, IR and analyst firms to create documentation of and
          promulgate positive stories about our offerings, our customer successes,
          and the
          personal experiences and benefits to specific individuals and
          firms.

        We
          will
          use individual influencers in programs to convince new leads and prospects
          to
          move ahead in the lead and sales cycles as appropriate and needed.

         

         

         

        Spearhead
          model: Justifications and future goals

         

        Professional
          education has been chosen as the spearhead versus another kind of communication
          for the following reasons:

         

        Existing
          relationships and market traction

         

        There
          is
          an exceptionally quick and simple ROI on remote instruction of professional
          courses and events for all constituents

         

        Alliances
          with content providers supply Vemics an existing customer base eager for
          alternatives to both self paced learning solutions and traditional classroom
          solutions that require travel

         

        Content
          providers and subject matter experts are eager to find similar alternatives
          for
          market share expansion

         

        Learners
          (and the work force in general) need solutions that shorten learning cycles
          and
          lower cost while retaining face-to-face instructor contact

         

        The
          spearhead approach circumvents IT blockers by going directly to an application
          ready now for these solutions. 

         

        Spearhead
          applications are especially suited to multipoint interactive video, online
          solutions, and mobility.

         

        

         

        Opportunities

         

        The
          spearhead model, successfully executed with proper customer relations,
          installed-base marketing and education, affords Vemics many opportunities.
          Building upon Vemics’ success in the spearhead markets, we will follow-through
          with alternate offerings to all the players in the value chain. Spearhead
          activities create exposure, referral, and cost-justification opportunities
          within sponsors and audience participants for additional professional education,
          event, or hosted visual communication services

        

        Spearhead
          targets include:

         

        The
          audience

         

        The
          audience's management

         

        The
          content provider

         

        Sponsors

         

        Vemics
          IMA and reseller channels

         

        Analysts
          covering and writing about the whole process

         

         

         

         

        Positioning
          Vemics for Success

         

        Businesses
          of all sizes need to communicate, collaborate and learn more quickly than
          ever
          before just to stay competitive. They need to eliminate the time and distance
          barriers of the global economy and they need to have live access to team
          members, associates, customers, suppliers and subject matter experts in
          real
          time as if they were all in the same room. They need to do it easily,
          conveniently and cost effectively. And they need to do it now!

        The
          marketplace for real time conferencing and collaboration is fragmented,
          consolidating and in general confusing to prospects because there are so
          many
          different approaches to resolving customer needs. 

        Currently,
          Vemics technology and service solutions offer the closest thing to a “silver
          bullet” solution that exists in the marketplace today. 

        

        Vemics
          has identified a significant opportunity and will leverage on that opportunity
          by clearly articulating our proprietary point-of-view which significantly
          differentiates us from other technologies and services in the market.

         

         

         

        Point
          of View

         

         

        There
          is
          a significant market ready to use real-time, visually enhanced conferencing
          and
          collaboration tools to improve business performance 

         

        The
          market wants service based technology solution 

         

        A
          technology based solution must provide the overall result that move businesses
          forward at a price they can afford without a major investment in technology
          upgrades or infrastructure

         

        Integrated
          video, audio and data collaboration tools are a key differentiator that
          will
          increasingly influence the decision making process 

         

        Providing
          industry specific “must have” content that is required to maintain your right to
          work in the areas of continuing education, certification, licensing or
          industry
          designations and delivered in real time with integrated voice, video and
          data
          collaboration capability is a niche that can be immediately exploited and
          leveraged in several directions

         

        Reduces
          cost and cycle time for business
          training
          / learning

         

        Leads
          to
          better individual performance and advancement

         

        ROI
          can
          be mapped to better organizational results

         

        Increases
          market size and share for content
          providers 

         

        

         

         

        Positioning
          and Message

         

         

        Corporate
          / Enterprise Clients

         

        For
          business of all sizes, Vemics LiveAccess solutions provide the ability
          to
          conference, collaborate and learn in real time more quickly, conveniently
          and
          cost effectively than ever before.

         

        

         

         

        Content
          Providers

         

        For
          content providers who need to expand service offerings and market reach,
          Vemics
          LiveAccess solutions deliver the ability to bring real time instructor-led
          training and consulting to vastly larger audiences at a much lower costs
          than
          with traditional methods.

         

        

         

         

        Vertical
          Industry Sponsors

         

        For
          industry sponsors who need to reach their specific target audience with
          high
          impact educational and marketing messages, Vemics LiveAccess solutions
          deliver
          the ability to bring real time instructor / presenter-led content and
          communications to vastly larger audiences at a much lower costs than with
          traditional methods.

         

        

         

         

        End
          Users
          (Learning)

         

        For
          business professionals with required training and professional development
          needs, Vemics LiveAccess solutions deliver the ability to obtain best-in-class
          industry specific content delivered in real-time by leading trainers, subject
          matter experts and coaches more quickly, conveniently and at a much lower
          costs
          than traditional classroom instruction.

         

        

         

         

        End
          Users
          (General)

         

        For
          businesses with a need to speed information flow, reduce the cycle time
          for
          training or enrich the overall quality of communication, Vemics LiveAccess
          solutions deliver the ability to conference, collaborate and learn in real
          time
          more quickly, conveniently and at a much lower costs than ever
          before.

         

         

         

        Value
          Proposition

         

        The
          benefit to the audience minus the cost = the value

        Vemics
          customers will achieve competitive organizational payback through our ability
          to
          provide real time conferencing and collaboration solutions that help speed
          information flow, enhance communication and learning while reducing or
          eliminating the costs associated with time and distance. 

         

         

         

        Product
          / Service

         

        Vemics
          LiveAccessTM
          (Process
          Patent Pending, as of December 31, 2005) is a hosted, customizable, online
          service solution that integrates multipoint video, voice and data technologies
          with industry specific content backed by consulting expertise, deep customer
          support and network expertise.

         

         

         

        Target
          Markets

         

         

        Mid-size
          organizations: Companies
          with multi-sites growing rapidly and under constant pressure to increase
          productivity of the work force in a global and ever shrinking economy.
          

         

        Professional
          Organizations:
          Ranging
          from financial services, legal, medical to pharmaceutical and business
          consulting—these organizations provide high value added products, services and
          information and need to leverage time and distance to increase operational
          efficiencies and better service their customers

         

        Large
          organizations:
          Business
          Units / Departments of national and global organizations with highly mobile
          and
          dispersed workforces that need to leverage time and distance to increase
          operational efficiencies and better service their customers

         

        Small
          Office / Home Office: Small
          businesses or individuals that need to leverage time and distance to increase
          operational efficiencies and better service their customers. 

         

        Consumer:
          General
          consumer market looking for ways to stay in touch with friends and family
          more
          intimately than possible with non-visual communication solutions. 

         

        

         

        Vemics
          provides direct benefits to its clients in the following
          areas:

         

         

        Clients
          achieve immediate payback on investment

         

        Clients
          realize improved employee productivity

         

        The
          quality of employee life is enhanced by visually connecting them to home
          while
          on the road for extended periods of time

         

        Clients
          realize increased competitiveness through faster information flow, enhanced
          learning capabilities, lower operating costs and faster time to
          market

         

        Key
          reasons why clients do business with us:

         

         

        Turnkey
          technology and service based solutions

         

        Access
          to
          unparalleled real time conferencing and collaboration expertise

         

        Superior
          client centric service culture

         

        Access
          to
“Must Have” content and information

         

        

         

        Vemics’
          competitive advantage:

         

         

        Vemics
          has superior real time video and audio technology

         

        Vemics
          addresses customer needs at the application level with the expertise and
          the
          commitment to provide best in class technologies, content, services and
          solutions

         

        There
          are
          no up front technology investment costs with Vemics

         

         

         

        The
          Vemics Message:

         

         

        Tone:
          Consultative, direct,
          focused, simple, capable and professional

         

        Image:
          Contemporary, clean, forward looking, technologically advanced

         

         

        Situational
          Analysis

         

         

        Sales
          and Marketing approach 

         

        This
          plan
          builds on this "today's practical reality" and prepares for tomorrow
          by:

         

        Analyzing
          and documenting what is really going on in the industry and with our
          business

         

        Building
          short-term activities and messages that can be expanded and improved later
          on

         

        Initiating
          and preparing for the future growth of more formal and larger marketing
          programs
          that:

         

        Scale
          these early activities as much as possible 

         

        Inject
          additional markets and approaches "to come in behind the
          spearhead."

        

         

        Company
          Strengths and Weaknesses: 

         

         

        Strengths:

         

         

        Strong
          Management team with diverse cross-disciplinary expertise

         

        Capability
          to utilize, modify, develop or integrate voice, video and data technologies
          to
          provide convenient, cost effective, information and content-rich solutions
          for
          both learning and meetings horizontally across markets

         

        Only
          single-source supplier of turnkey hosted and managed solutions that
          provide:

         

        technology
          platform with integrated high-quality voice/video (VoIP) and data collaboration
          tools

         

        best-in-class
          information and content delivered by leading experts across key vertical
          markets
          such as Medical, Pharmaceutical, Financial and Retail

         

        deep
          technical and customer support

         

        Key
          relationships with leading technology, content and IP / WiFi network
          provider

        

         

         

        Weaknesses:

         

         

        	1.  	
                Just
                  beginning to establish market awareness of Company, Products Services
                  and
                  Solutions

              

         

        	2.  	
                Capital
                  required to fund market research efforts that will define additional
                  market / segment targets

              

         

        	3.  	
                Staffing
                  needs will increase rapidly and align with revenue
                  projections

              

         

        Currently
          dependant on single “Next Generation” technology platform. Vemics anticipates
          adding additional technology platforms or creating derivative platforms
          as
          client requirement dictate.

         

         

         

        Core
          Competencies

         

         

        	1.  	
                Strong
                  services heritage in both learning and voice / video / data enabled
                  meetings

              

         

        Strong
          ability to identify and partner with organizations supplying best-in-class
          information and learning content either required or highly desirable for
          advancement or strategic competitive advantage

         

        Strong
          ability to identify and partner with organizations supplying best-in-class
          voice, video, data collaboration and network technology

         

        Strong
          ability to design products / services that provide collaborative learning
          and
          meeting solutions integrating content, technology and deep technical and
          customer support

         

        Strong
          ability to leverage the value of deep technical and customer support especially
          when technology falls short (value)

         

        Strong
          credibility of the management team in the distance learning, video conferencing,
          web collaboration, marketing, new product deployments and public market
          management

         

        Sales
          / Marketing Capabilities

         

         

        	1.  	
                Ability
                  to mine and leverage partners’ customer bases to distribute custom,
                  application specific learning and meeting solutions (indirect
                  sales)

              

         

        Ability
          to leverage independent marketing agents (IMAs) to build channels of
          distribution (indirect sales)

         

        Ability
          to cross sell solutions among different but related or synergistic vertical
          markets (direct / personal selling)

         

        Ability
          to create communities and markets of mutual interest

         

         

         

        Current
          Market Dynamics

         

        The
          online collaboration market is highly fragmented for a number of reasons:
          

         

        There
          are
          a large number of web collaborations services, all doing essentially the
          same
          thing. Early incumbent vendors (WebEx) and newer, larger players' (Microsoft
          LiveMeeting) have achieved a level of branding and awareness that has
          pre-educated the market to the benefits of web collaboration services.
          The
          missing element in the on-line collaboration market is the integrated audio
          and
          high quality, real time video. Vemics is positioned to directly address
          this gap
          created by the existing service providers.

         

        The
          approach of the incumbent players is focused very horizontally, the message
          is
          about meetings, and the value of high-touch multipoint video collaboration
          is
          not a focus, yet highly desirable by the end user community.

         

        There
          is
          little focus on vertical content or a consultative sale and success process
          for
          professional education and events.

         

        There
          is
          focus on vertical markets and demos of how to use their vanilla offerings
          in
          these markets.

         

        But
          there
          is little focus on specialized needs and content delivery for the spearhead
          verticals Vemics will attack.

        Vemics
          can go where "they" aren't:

         

        Leverage
          category awareness funded by early incumbents and 800 pound
          gorillas

         

        Use
          an
          early lead in standards-based multi-point video as a key
          differentiator

         

        Using
          our
          spearhead approach, peel off a substantial sub-set of the market whose
          vertical
          needs are not met by the incumbents 

         

        With
          high
          customer satisfaction in spearhead verticals, Vemics can build service-level
          and
          solution loyalty that will expand spearhead clients and their network of
          contacts into ongoing "after the spearhead" opportunities.

        

        Competition 

         

        We
          have
          many competitors in the collaboration and communications market. We
          differentiate ourselves technologically from our competitors by focusing
          on the
          dynamics of live in-person meeting and learning sessions by combining high
          quality video conferencing and a full suite of data and web conferencing
          tools
          into one seamless service. Our competitors also try to replicate this live
          meeting or classroom environment but are limited by the commitment to their
          technologies. For instance, video conferencing does not include data
          collaboration tools, and web conferencing does not include high quality
          audio
          and video required to replicate the true dynamic of a live classroom or
          live
          meeting environment. Our service includes video/audio and data collaboration
          tools in a converged computer based environment.

         

        The
          unique feature set of our system allows the teacher or session leader to
          see and
          hear student/participants live and in real time; participants/students
          can see
          and hear the teacher/conference leader live and in real time; and
          students/participants can see and hear each other live and in real time
          while
          the entire group has access to a complete suite of data collaboration tools,
          such as electronic white board, application sharing, presentation mode,
          rich
          media mode, web browsing, polling, on-line testing and public or private
          chat,
          to further enhance the experience. We also differentiate our hosted service
          technologically, by providing solutions that are complete with customizable
          user
          interface technology, network, learning content, consulting, training,
          installation, implementation strategies and support for hosted or
          customer-managed deployment either inside or outside the corporate firewall.
          We
          have received positive feedback from customers who have used competing
          products
          when they compare features, functions, quality and ability to connect in
          a
          multipoint environment.

         

        We
          operate in a highly competitive market and many of our existing and potential
          competitors have longer operating histories, greater name recognition and
          greater financial, technical and marketing resources than we have. Our
          principal
          current competitors are WebEx, Centra, Polycom, Tandberg, Macromedia and
          Microsoft Live Meeting. While none of our competitors currently offer hosted
          end-to-end video-enabled solutions, they do offer similar web collaboration
          products and may offer hosted end-to-end video enabled solutions in the
          future.
          Vemics estimates a 12 to 18 month lead on the collaboration market. The
          barrier
          to entry is the ownership of the client or user base by providing outstanding,
          high quality service and value added features such as content and customized
          application user interface screens. We feel the client base we will continue
          to
          build will become a valuable commodity as more collaboration users migrate
          to
          our service from the competitors listed as the integration of real time,
          multi-point video become a desirable feature.

         

        Our
          theory is that the collaboration market is emerging and growing exponentially
          at
          a very basic level. This growth is centered on the ability to connect anywhere,
          anytime through any computer. This ability has generated the growth spurt
          of the
          market. The trade off to this anywhere, anytime service is a limited amount
          of
          features and functions. Video and integrated audio is taking a substantial
          minor
          role to the sharing of data in the web collaboration market today. As more
          users
          become acquainted and accustomed with the current service, the technology
          principles will take effect. Simply stated this is the principle that compels
          technology users to move forward and demand more. More features, performance,
          speed, applications and functions will be required and in fact, demanded.
          One of
          these key elements that analysis are already pointing to is the true replication
          of a live meeting or live classroom environment with the integration or
          convergence of high quality video and integrated audio. Vemics can deliver
          this
          service right now, in a hosted environment, at extremely competitive rates
          in
          comparison to the competition. 

         

        Although
          the collaboration and communications market is highly competitive, we believe
          that we have an advantage over our competitors because we have actual experience
          developing and implementing solutions. The experience of our senior management
          team brings together a unique mix of distance education, video conferencing
          and
          web conferencing technologies, asynchronous and synchronous learning designs,
          network services, corporate training, new product introductions, sales
          and
          operations. Vemics is in its fifth year, our management team has substantial
          experience in video conferencing, network solutions and distance learning.
          In
          addition, we believe that the price for our services is extremely competitive.
          

         

        Recent
          Developments

         

        We
          began
          delivering a limited schedule of live virtual programs for both STC and
          Cannon
          Financial Institute in June 2004, with Cannon teaching its 9-part “Comprehensive
          Wealth Management Program” and STC offering twice-monthly Series 6 and Series 86
          programs. During this limited schedule we were able to adjust our platform,
          instructional design and deep support areas of the company to address real
          world
          experience. 

         

        We
          expanded the content offerings of Cannon Financial Institute in the Fall
          of
          2005. Cannon offered its flagship “Trust Management Certification” program using
          the Vemics system. Cannon enrolled 23 senior level bankers from some of
          the
          largest financial institutions in the country. The program typified our
          entire
          focus on content delivery. The content was available to end users at home,
          from
          branch officers, from corporate headquarters, inside or outside of the
          corporate
          firewall using DSL, Cable or T1 connections. The program won the 2005 LOLA
          award
          for best use of interactive video in an education and training program.
          The
          success of this program has moved Cannon to expand their offering by designing
          several additional courses and their highly regarded mentoring and coaching
          series for 2006.

         

        We
          moved
          our corporate headquarters to larger facilities to accommodate our anticipated
          staffing increase after the completion of this Offering. We are currently
          located in 3000 square feet of office space, expandable to 6000 square
          feet. Our
          offices are located at 65 East Route 4, Riveredge, New Jersey.

         

        Based
          on
          our successful delivery of the initial live virtual programs that we have
          experienced with STC and Cannon, we expect to expand their course offerings,
          intensify our joint marketing efforts and attract additional content providers
          into our network. Our future success will be based on our ability to replicate
          the early success we have had with assisting content providers to extend
          their
          reach into their existing client base by using the Vemics LiveAccess service.
          Based on previous experience the opportunity to present content providers
          with
          the ability to reach deeper into their existing client base and capture
          additional market share is an attractive value added proposition. In addition,
          the clients taking courses from our content partners become target prospects
          as
          they experience the ability of the system to deliver content, collaboration
          and
          meetings far in advance of any service they have previously used. We also
          assist
          content providers by offering their clients or prospective clients greater
          flexibility in accessing live classroom instruction through use of our
          service,
          which can provide service inside or outside the corporate firewall, at
          home, on
          the road or virtually anywhere you can connect to the Internet and access
          our
          servers with a broadband connection. 

         

        We
          have
          recently announced the launch of our application service provider (ASP)
          and
          managed service provider (MSP) service. We have installed increased server
          capacity at the co-location center at the Equinox facility in Newark, New
          Jersey, Reston, VA and Richmond, VA. The system became available for general
          use
          on February 1, 2005. We used these facilities as redundant back up for
          our
          service, which can originate from any of the three locations. 

         

        On
          December 16, 2004, we received notification that we were approved to begin
          the
          pilot program at Fort Monmouth, New Jersey for Military training and
          Communication. The direct result of this pilot was our involvement with
          Lockheed
          Martin / SYTEX in the BVTC program (see below), JITC approval of our system
          for
          use on the secure military network and the installation of our system in
          fifteen
          military medical facilities for the initial delivery of our CME course
          sponsored
          by Allergan Pharmaceuticals on December 7, 2005. We expect our position
          with the
          military to increase during 2006 in the areas of advanced communications,
          education and training. 

         

        In
          June,
          2005 Vemics won a military bid with a prime contractor partner, Lockheed
          Martin
          for deployment of the Vemics core system in the BVTC program (Battlefield
          Video
          Telecommunication Collaboration). The initial order was place for $216,000.
          We
          expect three additional orders during 2006. In addition, this project is
          anticipated to generate additional revenue in the areas of integration
          services,
          training and customization. We expect to continue our relationship with
          Lockheed
          Martin as this project grows and to become involved in other projects both
          non-military and military in nature. 

         

        In
          May,
          2005 we completed a pilot program with The University of Maryland University
          College the largest supplier of academic programs to the US Government
          and
          Military. This pilot linked twenty graduate level students from Fort Gordon,
          GA
          to the University center as part of their final exam dissertation. The
          event
          took place on a Saturday and ran for more than ten hours. The success prompted
          UMUC to begin the process of integrating our service into select courses
          and
          programs for the next semester. This group was the first graduating class
          with
          certification in Homeland Security.

         

        Currently
          we are serving the following companies with our hosted LiveAccess service:
          Beckmann Laboratories, Interlinks, The Voluntary Hospital Association,
          MDMC Law
          Offices, Summit Financial Services, EParent, and Child Neurology
          Foundation.

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

        PROJECTIONS

        In
          connection with the Offering, we prepared certain projections of our future
          operating performance which are set forth below (the “Projections”). The
          Projections were not prepared with a view toward compliance with standards
          established by the American Institute of Certified Public Accountants (“AICPA”)
          nor is the projected financial information intended to be presented in
          a manner
          consistent with financial statements prepared in accordance with generally
          accepted accounting principles. We do not intend to update or otherwise
          revise
          these Projections to reflect circumstances existing after the date hereof
          or to
          reflect the occurrence of future events, even in the event that the assumptions
          underlying the Projections are shown to be in error. Furthermore, such
          Projections have not been examined, reviewed, or compiled by independent
          certified public accountants.

         

        The
          principal assumptions underlying the Projections are set forth immediately
          following such Projections and should be read in conjunction therewith.
          Such
          assumptions may not be realized, and are subject to significant business,
          economic and competitive uncertainties and contingencies, many of which
          are
          beyond our control. Consequently, the inclusion of the Projections should
          not be
          regarded as a representation or warranty of Vemics, or any other person,
          that
          the Projections will be realized. Actual results may vary materially from
          those
          presented below. Given that such Projections are subject to significant
          uncertainty, none of Vemics, management, the Placement Agent or any other
          person
          assumes any responsibility for their accuracy. Investors are cautioned
          not to
          place undue reliance upon the Projections.

         

        PROJECTED
          STATEMENTS OF OPERATIONS AND RETAINED EARNINGS/(DEFICITS)

         

        
          	
                  Vemics
                    Inc

                	 	 	 
	
                  3
                    year Profit & Loss Projection 2006 - 2008

                	 	 	 
	 	 	 	 
	
                  Revenue

                	
                  2006
                    TOTAL

                	
                  2007
                    TOTAL

                	
                  2008
                    TOTAL

                
	
                  Education
                    Course revenue 

                	
                  $544,500

                	
                  $550,000

                	
                  $913,000

                
	
                  Special
                    Event revenue 

                	
                  $843,750

                	
                  $2,250,000

                	
                  $3,093,750

                
	
                  LiveAccess
                    Basic recurring revenue

                	
                  $881,157

                	
                  $2,713,882

                	
                  $5,107,014

                
	
                  LiveAccess
                    Basic one-time setup revenue

                	
                  $299,000

                	
                  $598,000

                	
                  $1,010,620

                
	
                  LiveAccess
                    Premium one-time setup revenue

                	
                  $568,100

                	
                  $1,300,650

                	
                  $2,010,775

                
	
                  LiveAccess
                    Premium branding revenue

                	
                  $380,000

                	
                  $870,000

                	
                  $1,345,000

                
	
                  LiveAccess
                    Premium recurring revenue

                	
                  $1,473,451

                	
                  $5,234,044

                	
                  $10,089,546

                
	
                  Monthly
                    Subtotals

                	
                  $5,197,458

                	
                  $13,879,576

                	
                  $25,156,206

                
	
                  Cost
                    of Sales

                	
                  $1,721,059

                	
                  $4,742,328

                	
                  $9,319,635

                
	
                  Gross
                    Profit

                	
                  $3,476,399

                	
                  $9,137,248

                	
                  $15,836,571

                
	 	 	 	 
	
                  Operating
                    Expenses

                	
                  $4,965,572

                	
                  $6,650,571

                	
                  $7,245,965

                
	 	 	
                   

                	
                   

                
	
                  Gross
                    Profit

                	
                  $3,476,399
                    

                	
                  $9,137,248
                    

                	
                  $15,836,571
                    

                
	
                  Total
                    Expenses

                	
                  ($4,965,572)

                	
                  ($6,650,571)

                	
                  ($7,245,965)

                
	
                  Net
                    Profit (EBITA)

                	
                  ($1,489,173)

                	
                  $2,486,676
                    

                	
                  $8,590,606
                    

                

        

         

         

        

         

        Assumptions

         

        Revenues

         

        The
          revenue projections above assume that business users and/or individual
          small
          business consumers will become users within the projected period as a result
          of
          our strategy of providing the “next generation” of converged visual
          communications products with enhanced audio, video and data collaboration
          features equal to or below market prices driven by a co-marketing outreach
          to
          potential users. Our plan is to reach these potential users with a marketing
          message either directly from Vemics or in conjunction with our strategic
          partners. 

        

        Education
          courses 

        Education
          courses are a series of individual programs that require the participant
          to
          complete all sessions in order to obtain the information necessary to complete
          the course, receive certification, and take the final test, etc.

        

        Vemics
          will charge $25.00 per hour per site (regardless of the number of participants
          at each site), three hour minimum per site, with an average of 23 sites
          (based
          on current actual experience). Vemics also charges two hours per site @
          $150.00
          per hour for set-up, training and help desk support. Vemics also charges
          $150.00
          per hour for technical monitoring @ $1250.00 per hour. There is no additional
          charge for instructor training or instructional design consulting for the
          course
          supplied by Vemics.

        

        

        
          	
                  Number
                    of endpoints per course

                	
                  23

                
	
                  Number
                    of unique deliveries of course per day

                	
                  1

                
	
                  Number
                    of hours per each unique course

                	
                  3

                
	
                  Number
                    of days per week course held

                	
                  1

                
	
                  Number
                    of weeks course runs

                	
                  12

                
	
                  Total
                    endpoint hours per each instance of course

                	
                  828

                
	
                  Total
                    endpoint hours per month for this course

                	
                  276

                
	
                  Setup
                    and Training Revenue Calculations

                	 
	
                  Number
                    of unique endpoints per course

                	
                  23

                
	
                  Number
                    of hours of setup needed per endpoint

                	
                  2

                
	
                  List
                    price of setup and training per hour

                	
                  $150

                
	
                  Revenue
                    for setup and training per course

                	
                  $6,900

                
	
                  Student
                    Hour Revenue Calculations

                	 
	
                  Revenue
                    booked per student hour

                	
                  $25

                
	
                  Total
                    revenue per course delivered

                	
                  $20,700

                
	
                  Monitor
                    Hour Revenue Calculations

                	 
	
                  Number
                    of monitor hours per course

                	
                  36

                
	
                  Revenue
                    per monitor hour

                	
                  $150

                
	
                  Total
                    revenue for monitoring this course

                	
                  $5,400

                

        

        

        Live
          Access Basic

        

        This
          hosted service can be licensed on a month-to-month basis with a minimum
          of two
          end points. Discounts are given for number of end point licenses and length
          of
          time. A one tome set up fee of $299.00 is charged for each license which
          includes a start-up kit (Camera, Microphone, Headset) end point license,
          software download, up to one hour of installation assistance, training
          and help
          desk support. Additional Help Desk support can be purchased on an as needed
          basis @ $150.00 per hour.

        

        For
          the
          purpose of this financial model the assumption was $179.00 per end point,
          one
          year contract, 10 end point licenses per client (Based on current experience).
          License fees are payable three months in advance. Vemics assumes an 8%
          attrition
          rate after the first three months. Clients are permitted to cancel contracts
          before the expiration of the term and are re-billed at appropriate open
          rates.

        

        LiveAccess
          Premier

        

        Premier
          is our flag ship service offering. It offers great flexibility to end users.
          The
          service is based on a dedicated hosted server which includes, client branding,
          full administrative control and a high degree of security.

        

        The
          service is sold with a minimum of 25 end point licenses. Vemics charges
          $299.00
          per end point license as a one time set-up fee. This fee, similar to the
          Live
          Access Basic service includes a start-up kit (Camera, Microphone, Headset)
          25
          hours of help desk support and training, 25 user end licenses and training.
          A
          fee of $5,000 is charged for client branding which also includes up to
          5 hours
          of administrative technical training. $169 per end point license is charges
          per
          month, payable three months in advance with a one year minimum contract.
          Premium
          contracts are non-cancelable. A monthly hosting fee of $500.00 is also
          charged
          for this service.

        

        Special
          Events

        

        Special
          Events are generally one time events or a series of events that do not
          require
          participants to attend any or all of the individual sessions. Many Special
          Events carry two hours of Continuing Education Credits and designed to
          deliver
          concentrated information to large audiences in a short time period.

        

        Vemics
          charges $5625 per finished hour, with a two hour minimum for this service.
          Vemics limits the end point participation to a maximum of 30 sites. Any
          number
          of participants may attend each site based on the facility capacity and
          available equipment to handle larger audiences. Vemics charges $299.000
          per end
          point for start-up kits, up to one hour of help desk support and training
          of the
          site administrator. Additional fees may be charged for Pan - Zoom - Tilt
          Cameras, upgraded sound system, additional help desk support and
          training.

        

        Included
          in the per hour price is presenter training, instructional design consulting
          and
          technical monitoring during the actual session.

        

         

        Expenses

         

        The
          projections regarding our costs of operations take into account projected
          expense of hosting and maintaining required bandwidth at the servers. We
          have
          also assumed proportionate build-out of management, sales, operations,
          accounting, technical and administrative personnel to support the revenue
          growth. In addition, we have assumed increases in general and administrative
          expenses in the areas of benefits, operations, equipment, office space,
          infrastructure, marketing, web site development and public relations. It
          is our
          plan to lease office equipment, servers, computers and other equipment
          wherever
          possible as we build-out our technical and administrative support
          infrastructure

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

        MANAGEMENT
          OF VEMICS

         

        Directors
          and Executive Officers

         

        Our
          executive officers and directors and their respective ages and positions
          with
          Vemics are set forth below. Vemics currently has three members of its Board
          of
          Directors. Two of these members are insiders and one member is an outsider.
          The
          current board of directors will be expanded to include four additional
          outside
          members during the first quarter of 2006

         

        Name Age Position

         

        Fred
          Zolla 54 Chief
          Executive Officer, Chairman of the Board

         

        Chan
          Coddington 72 Director

         

        Dr.
          Lee
          Olsen  Director

         

        Fred
          Zolla, CEO and Chairman. Mr.
          Zolla
          has been our Chief Executive Officer and Chairman of the Board since July
          2001.
          Prior to joining Vemics, Mr. Zolla served as the Chief Operating Officer
          for a
          public company, Educational Video Conferencing, Inc.,
          in
          the
          technology and distance learning fields. Mr. Zolla was formerly the President
          of
          Distance Learning Associates, the first content aggregator in the K-12
          and
          corporate distributed learning space in the United States. In 1996 he served
          on
          the White House Committee for technology in education chaired by then
          vice-president Al Gore. A business, technology and distance learning content
          professional for the past 22 years, Mr. Zolla spent his early career in
          the
          advertising and newspaper industries. Mr. Zolla holds a Masters in Leadership
          and Communications from Trinity University.

         

        F.
          Chandler Coddington, Jr. (Director).
          Mr.
          Coddington has served as a director of Vemics since 2002. Mr. Coddington
          has 46
          years of experience in the insurance and retail/agency brokerage business.
          He
          has served in several chairmanship posts, including Travelers, St. Paul,
          Cigna,
          Connecticut General Life Insurance Company. He is also active in many local
          non-profit endeavors, including United Way, Overlook Hospital, Chamber
          of
          Commerce, and the YMCA. Mr. Coddington holds a Bachelor of Science degree
          from
          the University of Maine. 

         

        Dr.
          Lee Olsen To Come

         

        

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

        The
          balance of our management team:

         

        

         

        Craig
          Stout , Chief Operating Officer - 

         

         

        Craig
          Stout has 20 years of operational and corporate finance experience across
          multiple industries. Mr.
          Stout
          began his career in a London based position with Elders IXL as part of
          the
          strategic business development group. During his time with Elders IXL he
          was
          part of the European acquisition team which identified businesses of strategic
          value to Elders interests, initiated acquisitions and developed the execution
          plans focused on integrating these new businesses into the Elders corporate
          structure.

         

         

        After
          leaving Elders in the early nineties Mr. Stout has run several successful
          businesses in the finance, eCommerce and technology industries. For the
          past
          five years he has been a consultant to companies wishing to accelerate
          and/or
          their growth through strategic acquisitions, restructuring and refinancing.
          Most
          recently, prior to joining the Vemics’ team, Mr. Stout consulted to the
          international Re Insurance firm Renaissance Reinsurance, working on operation
          projects including assisting in managing the conversion to Sarbanes Oxley
          compliance. Stout brings a strong analytical, operational and management
          background to the Vemics team which will be essential in the transition
          from
          private, development stage to public and fully operational stage.

         

        

         

        R.L.
          Marciniak, Chief Marketing Officer. Mr.
          Marciniak has been our Chief Operating Officer and President since 2002.
          Prior
          to joining Vemics, Mr. Marciniak was a co-founder of Providea, a leading
          video
          communication solutions provider, and he served as Vice-President, Marketing
          and
          as a member of the senior management team where he was closely involved
          with
          strategic planning and sourcing capital. He is a graduate of Rochester
          Institute
          of Technology with a Bachelor of Science Degree in Management and a Masters
          Degree in Communication Design.

         

        Brian
          Howell, Chief Technology Officer.
          Mr.
          Howell has served as our Chief Technology Officer since 2002. Prior to
          joining
          Vemics, Mr. Howell was involved in several other start-ups in the areas
          of Web
          collaboration, PC virus protection, and low latency QOS IP routers. Mr.
          Howell
          managed the “Living Lab” at PictureTel Corporation for 16 years where he
          contributed to significant technological advances in the marketplace including
          development of the first integrated Rollabout Videoconferencing System,
          MCU, and
          PC-based videophone.

         

        Robert
          Millar ,
          Vice President, Business Development. Mr.
          Millar has served as a director of Vemics from 2003 through September 2005.
          Mr.
          Millar joined Vemics as a full time employee on July 1, 2005. Prior to
          joining
          Vemics, Mr. Millar served as the Senior Vice President of Smartstream
          Technologies, Inc. Prior to joining Smartstream, Mr. Millar was the Senior
          Vice
          President - Alliance & Marketing of Zoologic, Inc. from 2001 to 2002. Mr.
          Millar has over twenty years of management experience with small and
          Fortune 500-size companies in global multiple sales distribution channel
          marketing, national account programs, strategic alliances and acquisitions,
          corporate communications, training, start-up operations, and client support
          in
          several industries. He has created and executed marketing plans for companies
          in
          the ASP/network services, reconciliation systems, business process automation
          software, corporate actions software, web-based financial software, e-learning,
          internet services, banking, securities, insurance, application software,
          network
          services, computer, office products, and retail industries. Mr. Millar
          is a
          graduate of Rutgers University.

        

         

        John
          Walber, Executive Producer, Director of Instructional Design.
Mr.
          Walber has served as our Director of Instructional Design since 2003. Prior
          to
          joining Vemics, Mr. Walber served as Chief Operating Officer of HorizonLive,
          Inc. where he was responsible for all aspects of the start-up e-learning
          platform company. Mr. Walber also served as Vice President Telco Sales
          for
          General Instrument Corporation where he developed and implemented marketing
          and
          sales strategies targeted at Regional Bell Operating Companies, GTE and
          other
          independent telephone companies. 

         

        Thomas
          Owens, CPA, (Interim CFO). Mr.
          Owens
          has served as our Interim Chief Financial Officer since 2003. Prior to
          joining
          us, Mr. Owens was a sole practitioner. Prior to opening his own practice,
          Mr.
          Owens was a partner in the accounting and consulting firm of Demetrius
& Co.
          where he was responsible developing financial plans, identifying misallocated
          funds and fraudulent expenditures and assisting clients to realign internal
          operations. Prior to Demetrius, Mr. Owens spent 5 years in the audit department
          of Deloitte & Touche specializing in the small to medium size business
          market. He holds a BS degree in accounting from Fordham University and
          an MBA
          degree from Pace University.

         

         

         

        PRINCIPAL
          STOCKHOLDERS

        The
          following table sets forth information concerning the beneficial ownership
          of
          the shares of our common stock by our executive officers and directors
          as of
          December 31, 2004 (adjusted to give effect to the 500-for-1 stock split
          effected
          on December 15, 2004), and as adjusted to give effect to the sale of 3,000,000
          Units in this Offering.

         

        
          	 
	
                  Name

                   

                	
                  Number

                   

                
	 	 
	
                  Fred
                    Zolla

                	
                  2,719,783

                
	
                  R.L.
                    Marciniak

                	
                  2,050,752

                
	
                  Brian
                    Howell

                	
                  1,214,572

                
	
                  Chan
                    Coddington

                	
                  4,472,087

                
	
                  Robert
                    Millar

                	
                  296,590

                
	
                  Executive
                    officers and 

                  directors
                    as a group (5 Persons)

                	
                   

                  10,753,784

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00128-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00128-of-00352.parquet"}]]