American Interactive Media, Inc., has made significant progress in positioning itself to compete effectively in the dynamic Internet access hardware and proprietary software market. The webPASSPORT™, AIM's premier product that makes the Internet as friendly and engaging for consumers as television, has recently been unveiled to the market to an enthusiastic reception. It is designed to deliver Internet access, E-Mail, and printing capabilities to the 93 percent of American households that own a television set and a standard telephone at a price below $300, eclipsing the competitive offering of WebTV with a product that serves a potential market nearly twice as large, with a device that costs less to manufacture, has more features, and provides your company with high margins.

More specifically, American Interactive has:

• Received its first shipment of 5,000 units from Mitac, Inc., a $3.0 billion manufacturer of consumer electronic and computer products serving such industry greats as IBM and Compaq. Mitac has built a state of the art facility with a capacity in excess of 1 million units annually to support your company.

• Entered into an agreement with FutureNet OnLine, Inc., a direct marketing company to sell our system under a private label arrangement The first order to FutureNet, $1 million plus, has been shipped.

• Entered into an agreement with SpryNet, a nationwide direct Internet access service from CompuServe. PC Magazine rated SpryNet "Best Internet Service Provider ranked above AT&T World Net, NetCom, MCI Internet and America OnLine's Global Network Navigator." The SpryNet network provides local access to more than twice the potential market as compared to WebTV.

• Completed its first acquisition, The Brief Exchange Legal Network, Inc. Software packages are currently being mailed to attorneys in California, New York and Washington. In the next l2 months, your company plans to provide similar services to doctors, chiropractors, accountants and insurance brokers

From a marketing perspective, your company has:

• Established its sales and marketing organization, sized to service more than 10,000 retail outlets nationwide.

• Signed a production and media agreement with Tyee Productions to produce a webPASSPORT™ promotional infomercial that will be broadcast during the first quarter of 1997. Tyee has produced successful infomercials that introduce products such as Direct TV, Apple's "Performa" computer and NordicTrack.

• Signed marketing agreements with The White House, Harpers, New York Times, The Golf Channel, Sportsline, the Comedy Channel, Bingo Zone, American Airlines, World Kid's Network, the Discovery Channel, PC Quote, the Smithsonian, and many others. The Company's webPASSPORT™ Network, which features all of this content and much more, will be preloaded in every box that AIM ships. In addition, AIM will continue to develop "value added" content to address the specific needs of numerous vertical markets.

• Contracted to debut the webPASSPORT™ system at the all important Consumer Electronics Show which will be held in Las Vegas on January 7-12. You are, of course, welcome to join the company at this event.

In other areas of operations, your company has:

• Retained Deloitte & Touche LLP to serve as the Company's auditors.

• Retained Ogilvy Adams & Rinehart, one of the nation's most prominent public relations firms with offices nationwide.

• Signed a long-term lease for office space at the Cherry Tree Corporate Center in Cherry Hill, New Jersey.

• Strengthened its management team with the hiring of Phil Flournoy as Vice-President of Engineering. Phil, former software engineer for Commodore, has assembled a dedicated team of software and hardware engineers that are developing software upgrades such as fax, telephony, and Real Audio and who are developing additional hardware designs, addressing the needs of the cable, telephone and consumer markets.

Significantly, during this whole period of laying the corporate foundation, our financial position remains sound, reflecting the success of additional financing and the willingness of farsighted investors' willingness to continue to commit new capital to our venture.

As the nation races toward a new millennium, the management of American Interactive Media, Inc. firmly believes that its products and services will be an integral part of how American households see the world around them. 1997 will be a pivotal point in the Company's development and we have every confidence that it will be a most successful year.