<PAGE>2
As filed with the Securities and Exchange Commission on August , 1996
Commission File Number
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-1
REGISTRATION STATEMENT
Under
The Securities Act of 1933
TRINITY WORKS, INC.
TEXAS 94-6615349
(State or other (Primary Standard Industrial (I.R.S. Employer
jurisdictions Classification Code Number) Indemnification Number)
of incorporation
or organization)
12201 Technology Boulevard
Suite 145
Austin, Texas 78727
Telephone: (512) 249-1099
(Address and telephone number of registrant's
principal executive offices and principal place of business.)
Mark Castleman
12201 Technology Boulevard
Suite 145
Austin, Texas 78727
Telephone: (512) 249-1099
(Name, address and telephone number of agent for service.)
with copies to:
Jody M. Walker
Attorney At Law
7841 South Garfield
Way Littleton, Colorado
80122
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 133, check the following box: | x |
<PAGE 3>
<TABLE>
CALCULATION OF REGISTRATION FEE
========================================================================
<CAPTION>
Title of each Proposed Proposed Amount of
class of Amount to be offering aggregate registration
securities registered price offering price fee,<F3>
- ------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Shares,<F1>
$.001 par value 104,000 $2.50 $260,000 $89.66
A Warrants 100,000 $.001<F2> $100 $3.45
Common Shares<F4>
100,000 $4.00 $400,000 $137.93
B Warrants 100,000 $.001<F2> $100 $.03
Common Shares <F4>
100,000 $6.00 $600,000 $206.90
C Warrants 250,000 $.001<F2> $250 $.09
Common Shares <F4>
250,000 $10.00 $1,000,000 $344.83
Common Shares<F5>
1,208,984 $2.50 $3,022,460 $1,042.23
- ------------------------------------------------------------------------
Total $5,282,910 $1,825.12
========================================================================
<FN>
<F1>Represents Common Shares necessary to effect the
distribution described in the Registration Statement.
<F2>Estimated solely for purposes of calculating the registration
fee. <F3>Represents 1/29 of 1% of the value of the Common Shares
being registered.
<F4>Represents Common Shares underlying the A, B, and C Warrants
being registered hereunder on behalf of the Selling Security Holders.
<F5>Represents Common Shares being registered hereunder on behalf of
the Selling Security Holders.
</TABLE>
The registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the
registrant shall file a further amendment which specifically states that this
registration statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until the registration statement
shall become effective on such date as the Commission, acting pursuant to said
Section 8(a), may determine.
<PAGE> 4
<TABLE>
<CAPTION>
TRINITY WORKS, INC.
Cross Reference Sheet between Items of Form S-1
and Prospectus Pursuant to 501(b) of Regulation S-K.
<S> <C>
Items in Form S-1 Location in
Prospectus
1. Forepart of the Registration Statement
and Outside Front Cover Page of
Prospectus Outside Front Cover Page.
2. Inside Front and Outside Back Inside Front Cover Page;
Cover Pages of Prospectus Outside Back Cover Page;
3. Summary Information & Risk Factors Prospectus Summary;
Risk Factors.
4. Use of Proceeds Use of Proceeds
5. Determination of Offering Price Not Applicable
6. Dilution Not Applicable
7. Selling Security Holders Selling Security Holders
8. Plan of Distribution Inside Front Cover Page;
Prospectus Summary; The
Distribution
9. Description of Common Stock Outside Front Cover Page
to be Registered Prospectus Summary;
Description of Securities
10. Interest of Named Experts Interest of Named Experts
and Counsel and Counsel.
11. Information with Respect to The Corporation; Legal
the Registrant Proceedings; Market
Information of Common
Shares; Financial Statements;
Selected Financial Data;
Management's Discussion and
Analysis of Financial
Condition, Management;
Certain Relationships and
Related Transactions;
Principal Shareholders.
12. Statement as to Indemnification Management - Indemnification.
</TABLE>
<PAGE> 5
PRELIMINARY PROSPECTUS DATED AUGUST 7, 1996
SUBJECT TO COMPLETION
104,000 Common Shares to be distributed
1,208,894 Common Shares on behalf of Selling Security Holders
100,000 A Warrants
100,000 Common Shares underlying the A Warrants
100,000 B Warrants
100,000 Common Shares underlying the B Warrants
250,000 C Warrants
250,000 Common Shares underlying the C Warrants
TRINITY WORKS, INC.
Common Stock ($.001 Par Value)
As more fully set forth herein, Pratt, Wylce & Lords, Ltd., a Nevada
corporation ("Pratt"), proposes to distribute (the "Distribution") on or
about , 1996 as a dividend to its shareholders of record at the close
of business on January 5, 1996 (the "Record Date"), one share of the
common stock, par value $.001 per share (the "Common Shares") of Trinity Works,
Inc., a Texas corporation (the "Corporation"), for each twenty shares of
Pratt common stock, par value $.001 per share (the "Pratt Common Stock"),
held by each Pratt shareholder on the Record Date. Pratt will distribute
104,000 Common Shares (29.89% of the 348,000 shares of Common Stock owned by
it), which represents 4.21% of the Corporation's outstanding Common Stock on the
Record Date. The Distribution will be made by Pratt without the payment of
any consideration by its shareholders. No fractional shares will be
distributed. See "The Distribution." The Common Shares of the Corporation
owned by Pratt that are not being distributed are being registered for sale by
Pratt as a selling shareholder. The expenses of the Distribution are estimated
to be $34,825.12 and are to be paid by the Corporation.
Additionally, the Corporation is registering 1,208,984 Common Shares on
behalf of its selling security holders. The Corporation is
registering 100,000 A and B Warrants and the stock underlying said A and
B Warrants on behalf of its selling security holders. The A and B
Warrants are exercisable into one Common Share each at the purchase
price of $4.00 and $6.00, respectively. The A and B Warrants shall be
effective for a period of two years from the date of issuance and shall be
redeemable by the Corporation at $.001 per A and B Warrant upon thirty days
notice. The Corporation is registering 250,000 C Warrants and the stock
underlying said C Warrants on behalf of its selling security holders. The C
Warrants are exercisable into one Common Share each at the purchase price of
$10.00. The C Warrants shall be effective for a period of three years from
the date of issuance and shall be redeemable by the Corporation at $.001 per
C Warrant upon thirty days notice.
Prior to the date hereof, there has been no trading market for the Common
Stock of the Corporation. The Corporation has agreed to use its best
efforts to apply for the quotation of its Common Stock on the National
Association of Securities Dealers Automated Quotation System ("NASDAQ"). There
can be no assurance, however, that the Common Stock will be quoted, that an
active trading and/or a liquid market will develop or, if developed, that
it will be maintained.
<PAGE> 6
There are material risks in connection with the purchase of the securities.
See Risk Factors, page 12
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold
nor may offers to buy be accepted prior to the time the registration
statement becomes effective. This prospectus shall not constitute an offer
to sell or the solicitation of an offer to buy nor shall there be any sales
of these securities in any State in which such offer, solicitation or sale
would be unlawful prior to registration or qualification under the securities
laws of any state.
Available Information
The Corporation has filed with the Securities and Exchange Commission
(the "Commission"), Washington, D.C. office, a Registration Statement on Form
S-1 (Registration No. ) under the Securities Act of 1933, as
amended (the "Securities Act"), for the registration of the securities
offered hereby. This Prospectus omits certain of the information contained
in the Registration Statement, and reference is hereby made to the
Registration Statement and exhibits and schedules relating thereto for
further information with respect to the Corporation and the securities to
which this Prospectus relates. Statements contained herein concerning the
provisions of any document are not necessarily complete and, in each
instance, reference is made to the copy of such document filed as an exhibit
to the Registration Statement. Each such statement is qualified in its
entirety by such reference. Items of information omitted from this
Prospectus but contained in the Registration Statement may be inspected
without charge at the Public Reference Room of the Commission, 450 Fifth
Street, N.W., Judiciary Plaza, Washington, D.C. 20549 and copies of such
material can be obtained from the Public Reference Section of the Commission,
Washington, D.C. 20549 at prescribed rates.
Upon consummation of this offering and the Distribution, the Corporation
will become subject to the informational requirements of the Securities
Exchange Act of 1934, as amended, and in accordance therewith file reports and
other information with the Securities and Exchange Commission. The reports
and other information filed by the Corporation can be inspected and copied
at the public reference facilities maintained by the Commission in Washington,
D.C. and at the Chicago Regional Office, Northwestern Atrium Center, 500
W. Madison Street, Suite 1400, Chicago, Illinois 60621-2511 and the New
York Regional Office, 7 World Trade Center, New York, New York
10048. Copies of such material can be obtained from the Public Reference
Section of the Commission, Washington, D.C. 20549 at prescribed rates.
<Page 7>
Reports to Security Holders
The Corporation will furnish to shareholders: (i) an annual report
containing financial information examined and reported upon by its certified
public accountants; (ii) unaudited financial statements for each of the first
three quarters of the fiscal year; and (iii) additional information
concerning the business and operations of the Corporation deemed
appropriate by the Board of Directors.
The approximate date on which this Prospectus is first being sent to
holders of Pratt Common Stock is , 1996.
<PAGE> 8
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------
TABLE OF CONTENTS
- ---------------------------------------------------------------------------
<S> <C>
PROSPECTUS SUMMARY 9
RISK FACTORS 12
THE DISTRIBUTION 16
SELLING SECURITY HOLDERS 17
USE OF PROCEEDS 19
THE CORPORATION 20
BUSINESS ACTIVITIES 21
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION 24
Trends and Uncertainties
Capital and Source of Liquidity
Results of Operations
CERTAIN TRANSACTIONS 26
MANAGEMENT 27
Officers and Directors
Remuneration
Indemnification
SHARES ELIGIBLE FOR FUTURE SALE 31
NASDAQ LISTING 32
PRINCIPAL SHAREHOLDERS 33
DESCRIPTION OF SECURITIES 34
LEGAL MATTERS 36
LEGAL PROCEEDINGS 36
EXPERTS 36
INTERESTS OF NAMED EXPERTS AND COUNSEL 36
</TABLE>
<PAGE> 9
- --------------------------------------------------------------------------
PROSPECTUS SUMMARY
- --------------------------------------------------------------------------
The following summary is qualified in its entirety by the more detailed
information, financial statements and notes to the financial statements
including the notes thereto appearing elsewhere in this Prospectus.
The Corporation. The Corporation was incorporated in Texas on August 1,
1994. The Corporation was authorized to issue Fifty Million
(50,000,000) Common Shares, $.001 par value. The Board of Directors
of the Corporation has authorized a dividend distribution of 100,000 A
Warrants on a pro rata basis to the shareholders of record as of October
15, 1995. The A Warrants shall be exercisable for a period of two
years from issuance. The A Warrants shall exercisable into Common Shares
of the Corporation at the exercise price of $4.00 per Common Share. The
Board of Directors of the Corporation has also authorized a dividend
distribution of 100,000 B Warrants on a pro rata basis to the shareholders
of record as of October 15, 1995. The B Warrants shall be exercisable
for a period of two years from issuance. The B Warrants shall be
exercisable into Common Shares of the Corporation at the exercisable price
of $6.00 per Common Shares. The Board of Directors of the Corporation
has also authorized a dividend distribution of 250,000 C Warrants on a pro rata
basis to the shareholders of record as of October 15, 1995. The C Warrants
shall be exercisable for a period of three years from issuance. The C Warrants
shall be exercisable into Common Shares of the Corporation at the exercisable
price of $10.00 per Common Share.
The Corporation's executive offices are located at 12201 Technology
Boulevard Suite 145, Austin, Texas 78727. Telephone No. (512) 249-
1099. These offices consist of 2997 square feet on a month to
month lease for $2,216 per month.
The operations and objectives of the Corporation are to manufacture and
sell performance and productivity enhancement products for desktop computer
systems and networks.
The Distribution.
<TABLE>
<S> <C>
Securities Being Distributed 104,000 of the Corporation's
Common Shares.
Purpose of Distribution To enhance the Corporation's
ability to raise additional
capital, if necessary,
in the future.
Shares of Common Stock
Outstanding
After Distribution 2,760,602 Common Shares.
<PAGE> 10
Distributing Corporation Pratt, Wylce & Lords, Ltd., a
Nevada corporation.
Distribution Ratio One Common Share for
approximately every twenty five
shares of Pratt Common Stock
owned of record on January 5,
1996 (the "Record Date").
Use of Proceeds The securities to which this
Prospectus relates are being
distributed to holders of Pratt
Common Stock as a dividend
and neither the Corporation nor
Pratt will receive any cash or
other proceeds in connection
with the Distribution.
Additionally this Prospectus
relates to securities being
registered on behalf of selling
security holders and the
Corporation will not receive
any cash or other proceeds in
connection with the subsequent
sale. Any proceeds received
from the subsequent exercise of
the A, B and C Warrants shall
be used as working capital and
to expand operations.
Certain Factors to be Considered See "Risk Factors."
Absence of Dividends;
Dividend Policy The Corporation does not
currently intend to pay regular
cash dividends on its Common
Shares; such policy will be
reviewed by the Corporation's Board
of Directors from time to time
in light of, among other things,
the Corporation's earnings and
financial position. See "Risk
Factors."
Transfer Agent The Corporation shall act as its
own Transfer Agent until after
completion of the Distribution.
Selected Financial Information. The selected financial information
presented below under the captions and "Balance Sheet" as of the years
ended January 31, 1996 and 1995 and "Statement of Operations" for the
years ended January 31, 1996 and 1995 are derived from the audited
<PAGE> 11
financial statements of the Corporation. The selected financial
information present below under the captions "Balance Sheet" as of April 30,
1996 and the Statement of Operations for the six months ended April 30,
1996 and 1995 is derived from the unaudited financial statements of the
Corporation.
The Balance Sheet and Statement of Operations have not been audited by
independent certified public accountants however, in the opinion of
management, all adjustments (which include only normal recurring
adjustments) have been made in order to present fairly the operations for
this period. See "Management's Discussion and Analysis of Financial
Condition" and "Financial Statements."
</TABLE>
<TABLE>
BALANCE SHEET
<CAPTION>
January 31, January 31, April 30,
1996 1995 1996
<S> <C> <C> <C>
Total Assets $521,668 $132,748 $741,443
------------ ----------- -----------
Total Liabilities $211,075 $173,056 $288,598
Total Stockholders'
Equity (Deficit) $310,593 $(40,308) $452,845
------------ ------------ -----------
Total Liabilities &
Stockholders' Equity $521,668 $608,614 $741,443
============ ============ ===========
</TABLE>
<TABLE>
STATEMENT OF OPERATIONS
<CAPTION>
For Six For
Six For Year For Year Months Months
Ended Ended Ended Ended
Jan. 31 Jan 31, April 30, April
30,
1996 1995 1996
1995
<S> <C> <C> <C> <C>
Revenues from continuing
operations $203,015 $7,519 $491,756 $26,589
Income (Loss) from
continuing operations
(920,208) (36,308) 145,619 176
<PAGE> 12
Nonoperating Income
(Expense) (10,795) (5,000) (3,367) (3,000)
Provision (Credit) For
Income Taxes - - - -
Net income (loss)
(931,003) (41,308) $142,252 (2,824)
Net income (loss) per common
share of outstanding stock
$ (0.53) $ (0.03) $0.06 $(0.00)
</TABLE>
- -------------------------------------------------------------------------
RISK FACTORS
- -------------------------------------------------------------------------
In analyzing this offering, prospective investors should read this entire
Prospectus and carefully consider, among other things, the following Risk
Factors:
No Diversification. The Corporation manufactures and sells performance
and productivity enhancement products for desktop computer systems and
networks. Therefore, the Corporation's financial viability will depend
almost exclusively on its ability to generate revenues from its operation,
and the Corporation will not have the benefit of reducing its financial risks
by relying on revenues derived from other operations.
Uncertainty of Future Financial Results. The Corporation has experienced
accumulated losses from operations to date and future financial results are
uncertain. As such, there can be no assurance that the Corporation can be
operated in a profitable manner. Profitability depends upon many factors,
including the success of the Corporation's marketing program, the maintenance
or reduction of expense levels and the success of the Corporation's business
activities. The Corporation has accumulated losses from operations as of
April 30, 1996 of $830,059. Lacking future profitable operations, the
Corporation will require additional capital. Even if the Corporation obtains
future financing or revenues to expand operations, increased production or
marketing expenses would adversely affect liquidity of the Corporation.
See FINANCIAL STATEMENTS.
Liquidity Dependent on Additional Capital and Debt Financing. On a long
term basis, liquidity is dependent on increased revenues from operations and
additional infusions of capital and debt financing. The Corporation
believes that additional capital and debt financing in the short term will
allow the Corporation to increase its marketing and sales efforts and
thereafter result in increased revenue and greater liquidity in the long term.
However, there can be no assurance that the Corporation will be able to obtain
additional equity or debt financing in the future, if at all.
No Ability to Control Affairs of the Corporation. The majority shareholders
and the officers and directors of the Corporation as a group own over 65% of all
of the outstanding common shares of the Corporation. As a result, these
individuals have the ability to control the affairs of the Corporation.
See MANAGEMENT and PRINCIPAL SHAREHOLDERS.
<PAGE> 13
Dependence on Key Individuals. The future success of the Corporation is
highly dependent upon the Corporation's ability to attract and retain
qualified key employees. The Corporation has not yet entered into
definitive employment agreements with any such individuals. The inability
to attract and retain these individuals for the long term would have a
material impact upon the business of the Corporation. See CORPORATION -
Employees and MANAGEMENT.
Lack of Experience of Management. The financial success of the
Corporation is partly dependent upon the management expertise and judgment
of its officers regarding the promotion of its products. The current
officer has prior management experience with large and small businesses,
however, does not have prior experience in the specific type of products
being promoted by the Corporation. Two of the Directors, Michael
Castleman, Jr. and Kent Bradshaw, each have limited prior experience in
the specific type of products being promoted by the Corporation. The officers
and directors will have the exclusive authority to manage and control and make
all decisions regarding the business and affairs of the Corporation. There can
be no assurance that management will be able to successfully conduct the
operations of the Corporation due to this lack of experience.
The current officer of the Corporation devotes all of his time to the affairs
of the Corporation. The remaining directors spend as much time as deemed
necessary on the corporate business affairs (estimated to be approximately
60% of their time) but are not required nor expected to devote their entire
time or efforts to the Corporation's business and affairs.
Conflicts of Interest. Some of the directors of the Corporation are
currently principals of other businesses. As a result, conflicts of interest
may arise. The directors shall immediately notify the other directors of any
possible conflict which may arise due to their involvement with other
businesses. The interested directors in any conflict shall refrain from
voting on any matter in which a conflict of interest has arisen. The
Corporation has adopted a policy that any transactions with directors, officers
or entities of which they are also officers or directors or in which they have a
financial interest, will only be on terms which are fair and reasonable to
the Corporation and approved by a majority of the disinterested directors of
the Corporation's Board of Directors. For further discussion see Management
- - Conflicts of Interest Policy. There can be no assurance that such other
activities will not interfere with the officers' and directors' ability to
discharge their obligation herein.
Competition. There is significant competition in the computer industry.
The Corporation will be competing with established companies and other
entities (many of which may possess substantially greater resources than
the Corporation). Almost all of the companies with which the Corporation
competes are substantially larger, have more substantial histories,
backgrounds, experience and records of successful operations, greater
financial, technical, marketing and other resources, more employees and
more extensive facilities than the Corporation now has, or will have in the
foreseeable future. It is also likely that other competitors will emerge in
the near future. The Corporation shall compete on the basis of quality and on
<PAGE> 14
public taste in addition to a price basis. Inability to compete successfully
might result in increased costs, reduced yields and additional risks to the
investors herein. See THE CORPORATION - Competition.
Benefit to Management. Although currently the officers and directors have
received minimal compensation and common shares for their services, the
Corporation may, in the future, compensate the Corporation's management
with substantial salaries and other benefits. Even though no compensation
plan has been proposed or agreed upon, the payment of future salaries and
the costs of these benefits may be a burden on the Corporation and may be
a factor in limiting or preventing the Corporation from achieving
profitable operations in the future. However, the Corporation would not
continue to compensate management with such substantial salaries and other
benefits under circumstances where to do so would have a material negative
effect on the Corporation's financial condition. See MANAGEMENT -
Remuneration.
Arbitrarily Determined Warrant Exercise Price. The exercise price of the A ,
B and C Warrants being registered on behalf of the Selling Security holders
was established arbitrarily by the Corporation with no direct relationship
to the original offering price or the Corporation's assets, book value,
shareholder's equity or any other recognized criterion of value.
Accordingly, the A, B and C Warrants can be considered to have little or no
value at the present time.
No Assurance of Public Market for Securities. There is no market for the
securities of the Corporation and there can be no assurance that an
established trading market (or any public market) will develop at the
conclusion of this offering, or that if developed, it would be sustained, or
that the securities distributed hereunder may be resold at their original
book value price or at any other price. Any market for the securities of the
Corporation that may develop will, in all likelihood, be a substantially
limited one.
Effect of Future Sales of Common Shares and Uncertainty of Market
Development. Upon completion of the distribution and a successful
completion of the registration of warrants herein the Corporation will
have 2,760,602 common shares outstanding, of which the A, B and C Warrants
and underlying Shares registered in this offering will be freely tradable
without restriction or further registration under the Securities Act of
1933 (the "Securities Act"). Upon the effective date of this Registration
Statement, 1,312,984 of the currently 2,760,602 restricted Shares subject
to certain limitations of Rule 144 of the Securities Act will become
available for public sale. This does not include any Common Shares
underlying the A, B or C Warrants. No assurance can be given that the
availability of such Common Shares for sale will not have an adverse impact
on the market price of the Corporation's Common Shares, should one develop.
Prior to this offering, there has been no public market for any securities
of this Corporation. Management of the Corporation cannot predict to what
extent a secondary market in the Common Shares will develop and provide
liquidity for holders of the Common Shares. See SALE OF SHARES PURSUANT
TO RULE 144 and MARKET INFORMATION ON COMMON SHARES.
<PAGE> 15
Possible Restrictions to Sales of Corporation Securities. Until the
Corporation obtains a listing on NASDAQ, if ever, the Corporation's
securities may be covered by a Rule 15c2-6 under the Securities Exchange
Act of 1934 that imposes additional sales practice requirements on
broker dealers who sell such securities to persons other than established
customers and accredited investors (generally institutions with assets in
excess of $5,000,000 or individuals with net worth in excess of $1,000,000
or annual income exceeding $200,000 or $300,000 jointly with their spouse).
For transactions covered by the rule, the broker-dealer must make a special
suitability determination of the purchaser and have received the purchaser's
written agreement to the transaction prior to the sale. In order to approve
a person's account for transactions in designated securities, the broker or
dealer must (i) obtain information concerning the person's financial
situation, investment experience and investment objectives; (ii) reasonably
determined, based on the information required by paragraph (i) that
transactions in designated securities are suitable for the person and that
the person has sufficient knowledge and experience in financial matters that
the person reasonably may be expected to be capable of evaluating the rights
of transactions in designated securities; and (iii) deliver to the person a
written statement setting forth the basis on which the broker or dealer made
the determination required by paragraph (ii) in this section, stating in a
highlighted format that it is unlawful for the broker or dealer to effect a
transaction in a designated security subject to the provisions of paragraph
(ii) of this section unless the broker or dealer has received, prior to the
transaction, a written agreement to the transaction from the person; and
stating in a highlighted format immediately preceding the customer signature
line that the broker or dealer is required to provide the person with the
written statement and the person should not sign and return the written
statement to the broker or dealer if it does not accurately reflect the
person's financial situation, investment experience and investment objectives
and obtain from the person a manually signed and dated copy of the written
statement. A designated security means any equity security
other than a security (i) registered, or approved for registration upon
notice of issuance on a national securities exchange that makes transaction
reports available pursuant to 17 CFR 11Aa3-1 (ii) authorized or approved for
authorization upon notice of issuance, for quotation in the NASDAQ
system; or . . . (iv) whose issuer has net tangible assets in excess of
$2,000,000 demonstrated by financial statements dated less than fifteen
months previously that the broker or dealer has reviewed and has a
reasonable basis to believe are true and complete in relation to the date
of the transaction with the person. Consequently, the rule may affect the
ability of broker-dealers to sell the Corporation's securities and also may
affect the ability of purchasers in this offering to sell their shares in the
secondary market. See NASDAQ Listing - Broker-Dealer Sales of Corporation's
Securities.
Lack of Dividends. There can be no assurance that the continued operations
of the Corporation will result in any further revenues or will be profitable.
At the present time, the Corporation intends to use any earnings which may be
generated to finance the growth of the Corporation's business. Accordingly,
while payment of dividends rests within the discretion of the Board of
<PAGE> 16
Directors, the Corporation does not presently intend to pay dividends and
there can be no assurance that dividends will ever be paid. See DIVIDEND
POLICY.
Vulnerability to Fluctuations in Economy. Demand for the Corporation's
proposed products is dependent on, among other things, general economic
conditions which are cyclical in nature. Prolonged recessionary periods
may be damaging to the Corporation.
- ----------------------------------------------------------------------------
THE DISTRIBUTION
- ----------------------------------------------------------------------------
After careful study and review, the Board of Directors of Pratt determined
that it would be in the best interests of Pratt and its shareholders to
distribute a portion of the Corporation's Common Shares held by Pratt to
its shareholders. In addition, the Corporation and Pratt determined that
such a distribution would be in the best interests of the Corporation.
Pratt shareholder's may realize economic benefits from the sale of any
Common Stock distribution if a market for the Corporation's Common Stock
develops, although there can be no assurances that any such market will
result. Pratt and the Corporation believe that the distribution to
Pratt's shareholders, which will result in an increased shareholder base of
the Corporation, will be an advantage to the Corporation at such time as
the Corporation may require additional capital and/or make application to
NASDAQ. The increased shareholder base of approximately 1,321
shareholders represents an increase in potential future purchasers of
additional stock in any subsequent offering or in the stock market if these
individuals are satisfied with the performance of the Corporation's
operations.
Accordingly, after obtaining the approval of the independent directors on
Pratt's Board of Directors, the Board of Directors of Pratt declared a
dividend pursuant to which, on or about , 1996,
104,000 shares of the issued and outstanding Common Stock of the
Corporation, constituting 29.89% of the shares of Common Stock owned
by Pratt, will be distributed to the shareholders of record of Pratt as
of January 5, 1996 on the basis of one share of Common Stock for each
twenty five shares of Pratt Common Stock held. The Common Shares are
being distributed by Pratt as a dividend to holders of Pratt Common
Stock and neither the Corporation nor Pratt will receive any cash or other
proceeds in connection with the Distribution. No fractional Common Shares
will be issued. Pratt had approximately 1,321 shareholders of record on the
Record Date. The Pratt Common Stock is quoted on over-the-counter under
the symbol "PWLS".
In order to comply with certain provisions of Texas corporate law, on August
1, 1996 (the "Payment Date') Pratt deposited the Common Shares to
be distributed with Florida Atlantic Stock Transfer, Inc. (the "Depositary").
The Depositary will hold such Common Shares for the benefit of Pratt
shareholders on the Record Date. The terms of the agreement with the
<PAGE> 17
Depositary provides that the Common Shares will be released promptly after
the Registration Statement to which this Prospectus relates is declared
effective by the Commission. However, if the Registration Statement is
not declared effective prior to July 31, 1997, then, unless such date
is changed by notice to the Depositary from the Corporation, the
Depositary shall return all such Common Shares to Pratt without effecting the
distribution.
- ---------------------------------------------------------------------------
SELLING SECURITY HOLDERS
- ---------------------------------------------------------------------------
The Corporation shall register pursuant to this prospectus 1,208,984
Common Shares currently outstanding for the account of the following
individuals or entities. The percentage owned prior to and after the
offering reflects all of the then outstanding common shares. The amount and
percentage owned after the offering assumes the sale of all of the Common
Shares being registered on behalf of the selling shareholders.
<TABLE>
<CAPTION>
Name Amount Total % Owned Amount % Owned
Being Number Prior to Owned After
Registered of Shares Offering After Offering
Offering
<S> <C> <C> <C> <C> <C>
John Baer 3,000 3,000 .11% 0 0%
Steve Bell 3,000 3,000 .11% 0 0%
Tom Brennan 15,000 15,000 .61% 0 0%
Ed Carlow 5,000 5,000 .20% 0 0%
Sue Castleman 8,333 8,333 .30% 0 0%
Pagogh Cho 3,000 3,000 .11% 0 0%
Jonathan Ceck
Al Damalak 7,000 7,000 .25% 0 0%
Pauline Darosa 4,000 4,000 .145% 0 0%
William DeMayo
Murray Trachter 3,000 3,000 .11% 0 0%
Gerald Dooher 5,000 5,000 .20% 0 0%
Terrence Dooher 5,000 5,000 .20% 0 0%
Del/Peggy Dugan 3,000 3,000 .11% 0 0%
John Dunbar 3,000 3,000 .11% 0 0%
Stuart Dupe 3,000 3,000 .11% 0 0%
James Early 16,667 16,667 .60% 0 0%
Ora Elliott 3,000 3,000 .11% 0 0%
Charles & Judith Franklin
3,000 3,000 .11% 0 0%
Randall Geist 9,000 9,000 .33% 0 0%
Dr. Bob Gerner 10,000 10,000 .36% 0 0%
Lynn Gjertsen 3,000 3,000 .11% 0 0%
Charles Gluck 3,000 3,000 .11% 0 0%
All American Way, Inc.
Profit Sharing Plan
12,000 12,000 .435% 0 0%
<PAGE> 18
Ken Gregory 3,000 3,000 .11% 0 0%
James Haines 3,334 3,334 .12% 0 0%
Kim & Gavin Hart 3,000 3,000 .11% 0 0%
Richard Hinkle 3,000 3,000 .11% 0 0%
Brian Hughes 1,000 1,000 .036% 0 0%
Robert & Eleanor Hughes
6,000 6,000 .217% 0 0%
Robert Hunt IRA 3,000 3,000 .11% 0 0%
Cliff Jaebker 6,200 6,200 .225% 0 0%
Grant Johnson 3,000 3,000 .11% 0 0%
Virginia Junkin 4,000 4,000 .145% 0 0%
Alan/Patti Katz 3,000 3,000 .11% 0 0%
Larry Konfirst 6,000 6,000 .11% 0 0%
John Lawson 15,000 15,000 .543% 0 0%
Rosella Lawson 3,000 3,000 .11% 0 0%
Kevin McGarry 3,000 3,000 .11% 0 0%
John McKissach
John Santry 3,000 3,000 .11% 0 0%
Ronald Montano 7,334 7,334 .266% 0 0%
Blake Mosher 20,000 20,000 .724% 0 0%
Bowman Najmi 7,000 7,000 .25% 0 0%
Johathan Pace 8,000 8,000 .29% 0 0%
E. & W. Paton 9,000 9,000 .326% 0 0%
Scott/M. Rader 3,000 3,000 .11% 0 0%
Al Ridenger 35,000 35,000 1.27% 0 0%
Al Ridenger, Jr. 3,000 3,000 .11% 0 0%
Jerry & Sarah Robertson
3,000 3,000 .11% 0 0%
Jay Rydman 4,000 4,000 .145% 0 0%
Manuez Sanchez 7,000 7,000 .25% 0 0%
Carol Sarwar 4,000 4,000 .145% 0 0%
P. & S. Schaefer 7,000 7,000 .25% 0 0%
Mary Jane & Vic Sohle
1,000 1,000 .036% 0 0%
Derek Steele
Rick Pease 3,000 3,000 .18% 0 0%
Nancy Stiehl 3,000 3,000 .11% 0 0%
Karyn Sussman 7,000 7,000 .25% 0 0%
Mitsao Tatsugawa 3,000 3,000 .11% 0 0%
William Taylor 6,000 6,000 .24% 0 0%
L. & L. Turrel 60,000 60,000 2.17% 0 0%
John Watson 6,000 6,000 .24% 0 0%
Harry Welch 40,000 40,000 1.45% 0 0%
2422 Brazoria 3,000 3,000 .11% 0 0%
John Wilson 27,000 27,000 .98% 0 0%
Howard Witzel 40,000 40,000 1.45% 0 0%
Johnny Wong 3,000 3,000 .11% 0 0%
Shane Yost 3,734 3,734 .135% 0 0%
Breaux Castleman32,000 32,000 1.16% 0 0%
<PAGE> 19
James Early 20,000 20,000 .724% 0 0%
Dick Galley 80,000 80,000 2.90% 0 0%
Kent Bradshaw<F1>
32,300 323,000 11.70% 290,700 10.53%
Mark Castleman<F2>
96,246 962,464 34.86% 866,218 31.38%
Mike Castleman<F3>
32,300 323,000 11.70% 290,700 10.53%
Clint Clark
87,000 87,000 3.15% 0 0%
Darrell Daugherty
6,536 6,536 .24% 0 0%
Darrell Hughes 40,000 40,000 1.45% 0 0%
Jonathan Avedikian
20,000 20,000 0 0%
Matt Casteman 20,000 20,000 0 0%
David Avedikian 2,000 2,000 .036% 0 0%
Pratt, Wylce &
Lords, Ltd.<F4>
244,000 244,000 8.84% 0 0%
<FN>
<F1>Kent Bradshaw was previously a Director of the Corporation.
<F2> Mark Castleman is currently the sole officer and a Director of
the Corporation.
<F3> Mike Castleman is currently a Director of the Corporation.
<F4> Pratt, Wylce & Lords, Ltd. is distributing 104,000 of its common
shares to its shareholders. These common shares are being registered
in this offering.
The Corporation shall register pursuant to this prospectus the common
shares underlying 100,000 A Warrants, 100,000 B Warrants and 250,000 C
Warrants currently outstanding for the account of the following
individuals or entities. The percentage owned prior to and after the
offering reflects all of the then outstanding warrants. The amount and
percentage owned after the offering assumes the sale of all of the A, B and C
Warrants and does not include any Common Shares underlying the A, B and C
Warrants being registered on behalf of the selling security holders.
</TABLE>
<TABLE>
<CAPTION>
Name and Amount Total Number Of % Amount %
Being Registered Warrants Owned Owned Owned
Registered Owned Prior to After After
Offering Offering
Offering <S> <C> <C> <C> <C>
Mark Castleman
- 60,000 A Warrants 60,000 60% 0 0%
- 60,000 B Warrants 60,000 60% 0 0%
- 150,000 C Warrants 150,000 60% 0 0%
<PAGE> 20
Kent Bradshaw
- - 20,000 A Warrants 20,000 20% 0 0%
-20,000 B Warrants 20,000 20% 0 0%
-50,000 C Warrants 50,000 20% 0 0%
Mike Castleman
- - 20,000 A Warrants 20,000 20% 0 0%
-20,000 B Warrants 20,000 20% 0 0%
-50,000 C Warrants 50,000 20% 0 0%
</TABLE>
- ------------------------------------------------------------------------
USE OF PROCEEDS
- ------------------------------------------------------------------------
The securities to which this Prospectus relates are being distributed to
holders of Pratt Common Stock as a dividend and neither the Corporation
nor Pratt will receive any cash or other proceeds in connection with the
Distribution.
Additionally, securities are being registered on behalf of the selling
security holders and the Corporation will not receive any cash or other
proceeds in connection with the subsequent sale. Any proceeds received
from the subsequent exercise of the A, B or C Warrants shall be used as
working capital and to expand operations. If all of the A, B or C
Warrants are exercised, the proceeds shall be utilized over a twelve month
period.
- --------------------------------------------------------------------------
THE CORPORATION
- --------------------------------------------------------------------------
The Corporation. The Corporation was incorporated in Texas on August
1, 1994. The Corporation was authorized to issue Fifty Million
(50,000,000) Common Shares, $.001 par value. The Board of Directors
of the Corporation has authorized a dividend distribution of 100,000 A
Warrants on a pro rata basis to the shareholders of record as of October
15, 1995. The A Warrants shall be exercisable for a period of two
years from issuance. The A Warrants shall exercisable into Common Shares
of the Corporation at the exercise price of $4.00 per Common Share. The
Board of Directors of the Corporation has also authorized a dividend
distribution of 100,000 B Warrants on a pro rata basis to the shareholders
of record as of October 15, 1995. The B Warrants shall be exercisable
for a period of two years from issuance. The B Warrants shall be exercisable
into Common Shares of the Corporation at the exercisable price of $6.00
per Common Shares. The Board of Directors of the Corporation has also
authorized a dividend distribution of 250,000 C Warrants on a pro rata
basis to the shareholders of record as of October 15, 1995. The C
<PAGE> 21
Warrants shall be exercisable for a period of two years from issuance. The
C Warrants shall be exercisable into Common Shares of the Corporation at
the exercisable price of $10.00 per Common Shares.
The Corporation's executive offices are located at 1931 E. Ben White
Boulevard, Suite 900, Austin, Texas 78741. Telephone No. (512) 249-
1099. These offices consist of 2,997 square feet on a month to
month lease for $2,216 per month.
There are presently outstanding 2,760,602 Common Shares, 100,000 A
Warrants, 100,000 B Warrants and 250,000 C Warrants.
Business Objective. The operations and objectives of the Corporation are
to manufacture and sell performance and productivity enhancement products
for desktop computer.
Employees. As of the date of this prospectus, the Corporation has nine full
time employees and no part time employees The Corporation will, as
operations demand, sub-contract the balance of its personnel through
independent contractors or hire additional employees.
Competition. There is significant competition in the computer industry,
The Corporation will be competing with established companies and other
entities (many of which may possess substantially greater resources than
the Corporation). Almost all of the companies with which the Corporation
competes are substantially larger, have more substantial histories,
backgrounds, experience and records of successful operations, greater
financial, technical, marketing and other resources, more employees and
more extensive facilities than the Corporation now has, or will have in the
foreseeable future. It is also likely that other competitors will emerge in
the near future. The Corporation shall compete on the basis of quality and
on public taste in addition to a price basis.
Consulting Agreement. On October 25, 1995, the Corporation entered into
a consulting agreement on with Pratt, Wylce & Lords, Ltd. ("Pratt") to
assist the Corporation in its capitalization and the obtainment of
additional financing. To date, Pratt provided consulting services regarding
capital structuring, initial equity financing, and preparation of a
registration statement. The term of the agreement is for one year from
October 25, 1995, unless extended. To date, Pratt has received
348,000 Common Shares valued at $1.50 per common share which represents
12.61% of the currently outstanding common stock of the Corporation.
As a result, Pratt would be deemed to be an affiliate of the Corporation.
Subsequent to the distribution pursuant to this registration statement,
Pratt shall be a nonaffiliate owning 8.84% of the total outstanding common
shares of the Corporation. In addition, Pratt will receive total cash
compensation of $95,000, of which $75,000 has been received to date.
<PAGE>22
- --------------------------------------------------------------------------
BUSINESS ACTIVITIES
- --------------------------------------------------------------------------
General. The operations and objectives of the Corporation are to
manufacture and sell performance and productivity enhancement
products for desktop computer.
Products.
The Trinity PowerPak r. The Trinity PowerPak is currently offered
for several Power Macintosh (PowerPC) and 68040 (Motorola) based
systems. The PowerPak is a customizable module capable of stacking
over an existing clock signal to the CPU. This enables the CPU to
operate at a higher rate or frequency. The level off acceleration varies
depending upon the CPU type and relative marking for acceleration existing
within the individual microprocessors.
The Trinity PowerPak exists in two forms. One version offers a fixed
signal upgrade to the system enabling the system to achieve a higher fixed
frequency level. The other PowerPak known as the Universal PowerPak is
a variable speed module where the user has the ability to change the
relative clock setting depending upon the capabilities of the system and
microprocessor which are being modified.
The structural and active components of the PowerPaks comply with the
applied patent technology. The Corporation designed all of these
components parts and the dies and molds for these parts are all wholly owned
by the Corporation. Availability of these parts is immediate from several
suppliers and the cost (after tooling) is inexpensive.
Only one part in the fixed speed PowerPak is not directly produced by the
Corporation which represents one of the twelve parts in the PowerPak. On
site production serves to protect product availability. The Corporation
has been successful in maintaining sales relationships because the
Corporation is capable of producing high quantities on demand without
concern for the availability of component parts in the market.
CPU Stacker. The CPU Stacker will be compliant with the applied patent
technology. It has a customized connector socket designed by the
Corporation which stacks on top of the existing microprocessor in the
targeted system whether PowerPC or Intel based. Through this interface,
the Stacker is able to override the existing CPU and operate a new more
powerful CPU or multiple CPUs in its place. The CPU Stacker will vary in
its secondary level components such as cache RAM (Random Access Memory).
On top of the socket interface, the Stacker will have a PCB to redirect
signal traces and accommodate the new microprocessor and other system level
components. The socket and PCB will be manufactured by the
Corporation while some of the board level components will be purchased
in the market.
<PAGE> 23
The PowerPC components are available through two sources: IBM
Microelectronics and Motorola Semiconductor Group. X86 compatible
components are available from Intel, AMD, Cyrix, IBM and NEXGen. All
of these companies offer or are currently developing Pentium compatible
microprocessors.
Advertising. The Corporation's advertising campaign with specifically
target the potential users of upgrade systems. Current advertisements for
the Trinity PowerPak appear in MacWorld, MacUser and MacWeek magazines.
Retail outlets include Comp USA, Computer City and Radio Shack Intl and mail
order publications like MacMall and MacZone also market the Corporation's
product.
While the PC market is drastically different in comparison to the Macintosh
market, the relative approach to the market through the trade publications
is similar. The Corporation places advertisements in relevant industry
publications like PCWeek, PC Computing, etc. In addition, the PC mail
order catalogs are offered by the mail-order firms currently marketing the
Corporation's product. PCMall, PCZone, and PC Connection represent several
catalogs which carry the PCStacker products.
Distribution. Distribution for the current products occurs through national
distributors, TechData Corporation and Micro Central, Inc. Product is
readily available to the smallest retail center in the most remote
region of the market as well as the larger "superstore" chains. Higher volume
resellers purchase product directly through the Corporation.
Servicing. The Corporation will train and authorize major and minor
resellers in the installation of the Corporation's product. Authorized
installation centers will be identified for the end user. The end users
will receive direct financial incentive in the form of an installation
voucher for having the product installed by an authorized installation site.
The Corporation expects this option will reduce the quantity of failed
installations by inadequately trained end users.
The direct servicing of the product on the component level will be
performed by the Corporation at on-site facilities. Field Technicians and
Application Engineers will be made available to volume resellers for
specific training in value added features and on site technical repair for
OEM (Original Equipment Manufacturers).
Sales. The Corporation will employ an inside sales group and strategic
sales team. The inside sales group responds to the needs of the VARs
(Value Added Resellers) which operate on a local level, and the distributors
that will channel the product to these resellers. This group will deliver
necessary technical information to the distributors, independent resale
outlets and the individual outlets of the national channels. The members
of this team will possess significant consumer knowledge for the specified
market and partner with the marketing team to understand the local market at
the point of purchase. Inside sales will make sure that the channels of
distribution are operating efficiently and effectively for the resale
outlets.
<PAGE> 24
The strategic sales group or will interface with the nationally established
outlets as well as local VARs, respond to their sales needs, and develop sales
strategies specific to the their national or local goals. This team will be
responsible for generating sales forecasts and understanding national sales
trends.
The Corporation made sales in excess of 10% of its net sales to unrelated
parties for the year ended January 31, 1996 to two companies aggregating
$128,105 (63%). Additionally, the Corporation had open uncollateralized
accounts receivable from these customers aggregating $12,445 January 31,
1996. The Corporation's major customers in 1996 consist of mail order
companies who include a description of the Corporation's products in
their advertisements in various computer related publications. The
Corporation is charged for its share of the advertising costs and such billings
are offset against accounts receivable from sales to these customers.
- --------------------------------------------------------------------------
MANAGEMENT'S DISCUSSION
OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
- --------------------------------------------------------------------------
Trends and Uncertainties. Inasmuch as a major portion of the
Corporation's activities is the manufacture and sale of performance and
productivity enhancement products for desktop computer systems and
networks, the Corporation's business operations may be adversely
affected by competitors and prolonged recessionary periods. The sale
of the Corporation's products is not considered seasonal.
The continuation of obtaining additional types of new business and
markets is uncertain and the continued success of any of the
Corporation's new marketing strategies for generating revenue is
uncertain.
In addition, the future exercise of any of the A, B or C Warrants is
uncertain based on the current financial condition of the Corporation. The
lack of future exercise of the A, B or C Warrants registered hereunder would
negatively impact the Corporation's ability to successfully expand
operations.
Capital and Source of Liquidity. The Corporation currently has no
material commitments for capital expenditures.
Plan of Operation. The Corporation has planned capital expenditures as
discussed in "Business Activities". The Corporation intends to use future
revenue and proceeds from future sales of its equity securities. There can
be no guarantee that the Corporation will be able to obtain the additional
funds from any of the sources listed and will not make the proposed
acquisitions if said funds are not available.
<PAGE> 25
Based on its established channels of distribution, its recent marketing and
current and projected sales levels, the Corporation should begin to have
positive cash flow from operations in the fourth quarter of 1996 and
management is of the opinion that the Corporation will be able to generate
sufficient cash flows to support these operations during fiscal year 1996.
The Corporation is currently financing its sales with a combination of cash
generated from internal operations and additional equity financing. The
Corporation has recently raised $1,219,403 in the private placement of its
Common Shares. The Corporation shall pursue additional equity or debt
financing, if necessary, to continue or expand operations.
For the three months ended April 30, 1996, the Corporation purchased
$9,785 of equipment. As a result, the Corporation had net cash used in
investing activities of $9,785 for the three months ended April 30,
1996.
For the year ended January 31, 1996, the Corporation utilized $14,705
in the purchase of plant and equipment. This resulted in net cash used in
investing activities of $14,705 for the year ended January 31, 1996.
For the year ended January 31, 1995, the Corporation utilized $43,404 in
the purchase of plant and equipment and had an increase in intangible
assets of $13,664. This resulted in net cash used in investing activities
of $57,068 for the year ended January 31, 1995.
For the three months ended April 30, 1996, the Corporation had $0.00 cash
provided by financing activities.
For the year ended January 31, 1996, the Corporation received $629,404 from
the sale of its Common Shares and repaid officer loans of $967. As a result,
the Corporation had net cash provided by financing activities of $628,437 for
the year months ended January 31, 1996.
For the year ended January 31, 1995, the Corporation received $1,000
from the sale of its Common Shares and had an increase in officer loans of
$1,600. Additionally, the Corporation received $150,000 in proceeds from
investor notes. As a result, the Corporation had net cash provided by
financing activities of $152,600 for the year ended January 31, 1995.
On a long term basis, liquidity is dependent on increased revenues from
operations and additional infusions of capital and debt financing. The
Corporation believes that additional capital and debt financing in the
short term will allow the Corporation to increase its marketing and sales
efforts and thereafter result in increased revenue and greater liquidity in
the long term. However, there can be no assurance that the Corporation
will be able to obtain additional equity or debt financing in the future,
if at all.
Results of Operations. The Corporation had a net income from operations
of $145,619 for the three months ended April 30, 1996. Sales increased
from $26,589 for the three months ended April 30, 1995 to $491,756 for the
same period in 1996. Cost of sales increased from $5,109 to $151,438 for
those same period due to increased operations. General and
<PAGE> 26
administrative costs increase from $21,304 for the three months ended April
30, 1995 to $194,699 for the three months ended April 30, 1996 due to
management's attempt to obtain further capitalization and increased
operations. As a result, the Corporation had net cash used in operations
of $297,390 for the three months ended April 30, 1996 compared to net cash
provided by operations of $1,756 for the three months ended April 30,
1995.
The Corporation made sales in excess of 10% of its net sales to unrelated
parties for the year ended January 31, 1996 to two companies aggregating
$128,105 (63%). Additionally, the Corporation had open uncollateralized
accounts receivable from these customers aggregating $12,445 January 31,
1996. The Corporation's major customers in 1996 consist of mail order
and "superstore" companies who include a description of the Corporation's
products in their advertisements in various computer related publications. The
Corporation is charged for its share of the advertising costs and such billings
are offset against accounts receivable from sales to these customers.
The Corporation had a net loss from operations of $920,208 for the year ended
January 31, 1996 compared to a net loss of $36,308 for the year
ended January 31, 1995. Sales increased from $7,519 for the year ended
January 31, 1995 to $203,015 for the year ended January 31, 1996. Cost
of sales increased from $3,501 for the year ended January 31, 1995 to
$81,052 for the year ended January 31, 1996 due to increased operations.
General and administrative costs increased substantially from $35,092 for
the year ended January 31, 1995 to $1,026,134 for the year ended January
31, 1996 mainly due legal and consulting fees of $779,916 and to
increased operations. Research and development increased from $5,234
for the year ended January 31, 1995 to $16,037 for the year ended January
31, 1996. The Corporation had no major customers during the year ended
January 31, 1995.
The Corporation is seeking to lower its operating expenses while
expanding operations and increasing its customer base and operating
revenues. The Corporation is focusing on decreasing administrative
costs. However, increased marketing expenses will probably occur in
future periods as the Corporation attempts to further increase its
marketing and sales efforts.
- --------------------------------------------------------------------------
CERTAIN TRANSACTIONS
- --------------------------------------------------------------------------
Related Party Transactions. During the year ended January 31, 1995, an
officer and director of the Corporation made advances to the Corporation
aggregating $1,600. During the year ended January 31, 1996, $967 of this
debt was repaid in cash.
Consulting Agreement. The Corporation has entered into a consulting
agreement with Pratt, Wylce & Lords, Ltd. ("Pratt") to assist the
<PAGE> 27
Corporation in its capitalization and the obtainment of additional financing.
As partial payment for consulting services, the Corporation issued
348,000 of its Common Shares to Pratt, of which 104,000 Common Shares are
to be registered and distributed to Pratt shareholders. Additionally,
87,000 Common Shares were issued to Clinton Clark. In addition,
Pratt has received cash compensation of $75,000.
Distribution of Securities. On October 15, 1995, the Board of Directors
authorized the distribution of 100,000 each of A and B and 250,000 C
Warrants exercisable as follows:
$4.00 plus one A Warrant for each Common Share;
$6.00 plus one B Warrant for each Common Share; and
$10.00 plus one C Warrant for each Common Share.
The A and B Warrants are exercisable for a period of two years from the
date of issuance and the C Warrants are exercisable for a period of three
years from the date of issuance. All of the Warrants are callable with
30 days notice at a price of $.001 per Warrant.
These distributions were made to the owners of record of Common Shares
on the books of the Corporation as of October 15, 1995.
The A, B and C Warrants and the Common Shares underlying said A, B
and C Warrants are being registered in this offering.
Lockup Agreement. Pursuant to a written agreement on August, 1996, the
principal shareholders and officer and directors (Mark Castleman, Kent
Bradshaw and Michael Castleman) who received A, B and C Warrants issued
them pursuant to the Special Meeting of the Board of Directors held on
October 15, 1995 have agreed as follows:
In the event the shareholder exercises any warrants, the stock issued to the
shareholder pursuant to the exercise shall be locked in and restricted from
trading for a period of two years. A notice is to be placed on the face of
each stock certificate covered by the terms of the Agreement stating that the
transfer of the stock evidenced by the certificate is restricted until twenty
four (24) months from the date of issuance. The shareholder also agrees
not to sell or otherwise transfer their interest in the warrants except to an
underwriter or other market makers in the stock once a market is
established. The shareholder further agrees that the total value in cash, or
other consideration, paid by the buyer to the seller shall not exceed $.01 per
warrant.
- ---------------------------------------------------------------------------
MANAGEMENT
- ----------------------------------------------------------------------------
Officers and Directors. Pursuant to the Articles of Incorporation, each
Director shall serve until the annual meeting of the stockholders, or until
his successor is elected and qualified. It is the intent of the Corporation
to support the election of a majority of "outside" directors at such meeting.
<PAGE> 28
Directors may only be removed for "cause". The term of office of each officer
of the Corporation is at the pleasure of the Corporation's Board.
The principal executive officers and directors of the Corporation will be as
follows:
<TABLE>
<CAPTION>
Name Position Term(s) of Office
<S> <C> <C>
Mark Castleman, age 27 President, Secretary Inception to
Treasurer and Director present
Michael Castleman, Jr., Director Inception to
age 30 present
</TABLE>
Resumes:
Mark Castleman. Mr. Castleman is currently President, Secretary and a
Director of the Corporation. Mr. Castleman received a B.S. in
Architecture from the University of Texas, Austin in 1993. From 1993 to
December, 1994, Mr. Castleman served as facilities project manager for
Advanced Micro Devices, Inc. where he worked as an architect.
Michael Castleman, Jr. Mr. Castleman received his bachelor's degree from
the University of Colorado in 1991. From 1991 to 1994, Mr. Castleman
managed the Dallas/Fort Worth office of American Metro Study. American
Metro Study maintains the largest database of residential real estate
information in the United States. From June, 1994 to present, Mr.
Castleman has been vice-president of Business Solutions, Inc. and is
responsible for business development and marketing.
Remuneration. Since inception, other than Mark Castleman who receives a
monthly salary of $5,000 per month, no cash compensation has been paid by
the Corporation to its officer and directors, during which there were one
(1) officer and three (3) directors (Kent Bradshaw resigned as a Director in
early 1996 to pursue other business opportunities):
The Board of Directors and shareholders have approved a Non-Statutory
Stock Option Plan to attract and retain persons of experience and ability
and whose services are considered valuable and to encourage the sense of
proprietorship in such persons and to stimulate the active interest of such
persons in the development and success of the Corporation.
1. Persons Eligible to Participate in Non-Statutory Stock Option Plan.
The persons eligible for participation in the Plan as recipients of Non
statutory Stock Options ("NSOs") shall include full-time and part-time
employees (as determined by the Committee) and officers of the
Corporation or of an Affiliated Corporation. In addition, directors of
the Corporation or any Affiliated Corporation who are not employees of the
Corporation or an Affiliated Corporation and any attorney, consultant or
other adviser to the Corporation or any Affiliated Corporation shall be
<PAGE> 29
eligible to participate in the Plan. For all purposes of the Plan, any
director who is not also a common law employee and is granted an option under
the Plan shall be considered an "employee" until the effective date of the
director's resignation or removal from the Board of Directors, including
removal due to death or disability. The Committee shall have full power
to designate, from among eligible individuals, the persons to whom NSOs
may be granted. A person who has been granted an NSO hereunder may be
granted an additional NSO or NSOs, if the Committee shall so determine.
The granting of an NSO shall not be construed as a contract of employment
or as entitling the recipient thereof to any rights of continued employment.
2. Common Shares Reserved for the Plan. Subject to adjustment, a
total of 500,000 Common Shares, $.001 par value of the Corporation shall
be subject to the Plan. The Common Shares subject to the Plan shall
consist of unissued shares or previously issued shares reacquired and
held by the Corporation or any Affiliated Corporation, and such amount of
shares shall be and is hereby reserved for sale for such purpose. Any of
such shares which may remain unsold and which are not subject to
outstanding NSOs at the termination of the Plan shall cease to be reserved
for the purpose of the Plan, but until termination of the Plan, the
Corporation shall at all times reserve a sufficient number of shares to
meet the requirements of the Plan. Should any NSO expire or be canceled
prior to its exercise in full, the unexercised shares theretofore subject
to such NSO may again be subjected to an NSO under the Plan.
3. Option Price. The purchase price of each Common Share placed
under NSO shall not be less than Eighty Five percent (85%) of the fair
market value of such share on the date the NSO is granted. The fair market
value of a share on a particular date shall be deemed to be the average of
either (i) the highest and lowest prices at which shares were sold on the date
of grant, if traded on a national securities exchange, (ii) the high and low
prices reported in the consolidated reporting system, if traded on a "last
sale reported" system, such as NASDAQ, for over the counter securities, or
(iii) the high bid and high asked price for other over-the-counter securities.
If no transactions in the Common Shares occur on the date of grant, the fair
market value shall be determined as of the next earliest day for which reports
or quotations are available. If the common shares are not then quoted on any
exchange or in any quotation medium at the time the option is granted, then
the Board of Directors or Committee will use its discretion in selecting a
good faith value believed to represent fair market value based on factors then
known to them. The cash proceeds from the sale of Common
Shares are to be added to the general funds of the Corporation.
4. Exercise Period. (a) The NSO exercise period shall be a term of
not more than ten (10) years from the date of granting of each NSO and
shall automatically terminate:
(i) Upon termination of the optionee's employment with the
Corporation for cause;
(ii) At the expiration of twelve (12) months from the date of
termination of the optionee's employment with the Corporation for any
reason other than death, without cause; provided, that if the optionee dies
<PAGE> 30
within such nine-month period, subclause (iii) below shall apply; or
(iii) At the expiration of fifteen (15) months after the date of
death of the optionee.
(b) "Employment with the Corporation" as used in the Plan
shall include employment with any Affiliated Corporation, and NSOs granted
under the Plan shall not be affected by an employee's transfer of
employment among the Corporation and any Parent or Subsidiary thereof. An
optionee's employment with the Corporation shall not be deemed
interrupted or terminated by a bona fide leave of absence (such as
sabbatical leave or employment by the Government) duly approved, military
leave or sick leave.
Board of Directors Compensation. Members of the Board of Directors may receive
an amount yet to be determined annually for their participation and will be
required to attend a minimum of four meetings per fiscal year. All expenses
for meeting attendance or out of pocket expenses connected directly with
their Board representation will be reimbursed by the Corporation. Director
liability insurance may be provided to all members of the Board of Directors.
No differentiation is made in the compensation of "outside directors" and those
officers of the Corporation serving in that capacity.
Indemnification. The Corporation shall indemnify to the fullest extent
permitted by, and in the manner permissible under the laws of the State of
Texas, any person made, or threatened to be made, a party to an action or
proceeding, whether criminal, civil, administrative or investigative, by
reason of the fact that he is or was a director or officer of the
Corporation, or served any other enterprise as director, officer or employee
at the request of the Corporation. The Board of Directors, in its
discretion, shall have the power on behalf of the Corporation to indemnify
any person, other than a director or officer, made a party to any action,
suit or proceeding by reason of the fact that he/she is or was an employee of
the Corporation.
Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers and controlling persons of the Corporation,
the Corporation has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment
by the Corporation of expenses incurred or paid by a director, officer or
controlling person of the Corporation in the successful defense of any
action, suit or proceedings) is asserted by such director, officer, or
controlling person in connection with any securities being registered, the
Corporation will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication
of such issues.
<PAGE> 31
INDEMNIFICATION OF OFFICERS OR PERSONS CONTROLLING THE
CORPORATION FOR LIABILITIES ARISING UNDER THE SECURITIES ACT OF
1933, IS HELD TO BE AGAINST PUBLIC POLICY BY THE SECURITIES AND
EXCHANGE COMMISSION AND IS THEREFORE UNENFORCEABLE.
Conflicts of Interest Policy. The Corporation has adopted a policy that any
transactions with directors, officers or entities of which they are also
officers or directors or in which they have a financial interest, will only be
on terms fair and reasonable to the Corporation (based on competitive bids, if
appropriate, or on terms similar contracts with the Corporation by
unaffiliated entities) and approved by a majority of the disinterested
directors of the Corporation's Board of Directors. The Board of Directors
resolved that the Bylaws of the Corporation shall be amended to provide
that no such transactions by the Corporation shall be either void or voidable
solely because of such relationship or interest of directors or officers or
solely because such directors are present at the meeting of the Board of
Directors of the Corporation or a committee thereof which approves such
transactions, or solely because their votes are counted for such purpose if:
(i) the fact of such common directorship or financial interest is disclosed
or known by the Board of Directors or committee and noted in the minutes,
and the Board or committee authorizes, approves or ratifies the contract or
transaction in good faith by a vote for that purpose without counting the
vote or votes of such interested directors; or (ii) the fact of such common
directorship or financial interest is disclosed to or known by the
shareholders entitled to vote and they approve or ratify the contract or
transaction in good faith by a majority vote or written consent of
shareholders holding a majority of the Common Shares entitled to vote (the
votes of the common or interested directors or officers shall not be counted
in any such vote of shareholders), or (iii) the contract or transaction is
fair and reasonable to the Corporation based on competitive bids, if
appropriate, and/or on terms consistent with similar contracts with the
Corporation by unaffiliated entities at the time it is authorized or approved.
In addition, interested directors may be counted in determining the presence
of a quorum at a meeting of the Board of Directors of the Corporation or a
committee thereof which approves such transactions.
Currently, there are only two directors. The directors are brothers
who are also majority shareholders. As a result, until such time as
additional directors are appointed or elected to the Board of Directors, and
even though the directors are aware of their fiduciary duty to the
shareholders, there can be no assurance that the utilization of the policy
will result in the resolution of any conflict of interest.
- --------------------------------------------------------------------------
SHARES ELIGIBLE FOR FUTURE SALE
- --------------------------------------------------------------------------
Upon completion of the Distribution, the Corporation will have 2,760,602
Common Shares outstanding, 1,208,984 of which are being registered
on behalf of selling security holders in this offering. This does not
include any Common Shares issued upon exercise of the A, B or C
<PAGE> 32
Warrants currently being registered on behalf of selling security holders. Of
these shares, 104,000 shares distributed in the Distribution will be freely
tradable without restriction or further registration under the Securities
Act, except for any shares purchased by an existing "affiliate" of the
Corporation, which will be subject to the resale limitations of Rule 144
under the Securities Act. The remaining shares, as well as other securities
which may be issued, in the future, in private transactions pursuant to an
exemption from the Securities Act are "restricted securities" and may be sold
in compliance with Rule 144 adopted under the Securities Act of 1933, as
amended. Rule 144 provides, in essence, that a person who has held
restricted securities for a period of two years may sell every three months
in a brokerage transaction or with a market maker an amount equal to the
greater of 1% of the Corporation's outstanding shares or the average weekly
trading volume, if any, of the shares during the four calendar weeks
preceding the sale. The amount of "restricted securities" which a person who
is not an affiliate of the Corporation may sell is not so limited:
nonaffiliates may each sell without limitation shares held for three years.
Sales under Rule 144 may, in the future, depress the price of the
Corporation's Common Shares in the over-the-counter market, should a
market develop.
Prior to this offering there has been no public market for the Common
Shares of the Corporation. The effect, if any, of a public trading market
or the availability of shares for sale at prevailing market prices cannot
be predicted. Nevertheless, sales of substantial amounts of Common Shares
in the public market could adversely effect prevailing market prices.
- --------------------------------------------------------------------------
NASDAQ LISTING
- --------------------------------------------------------------------------
Criteria for NASDAQ Listing. Prior to the date hereof, there has been no
trading market for the Common Shares of the Corporation. The Corporation
has agreed to use its best efforts to apply for the quotation of its Common
Shares on the National Association of Securities Dealers Automated Quotation
System ("NASDAQ"). The Corporation will not meet the proposed criteria as of
the completion of the offering. In order to obtain the NASDAQ listing, the
Corporation must meet the following criteria:
(i) have total assets in excess of $4,000,000; (ii) have net equity in excess
of $2,000,000; (iii) become a reporting Corporation under the Securities
Exchange Act of 1934; (iv) have a minimum of 300 shareholders; (v) have a
public float of at least 100,000 shares and (vi) have a bid price of $3.00.
The Corporation hopes to meet (i) and (ii) upon the exercise of the Warrants
being registered in this offering. There can be no assurance that any
Warrants will, in fact, be exercised. Additionally, the Corporation shall
file a Form 8-A under the Securities Exchange Act of 1934 immediately after
the effective date of this registration statement to meet the requirements of
(iii). After the effective date of this registration statement, the
Corporation shall meet the criteria in (iv). Immediately after the effective
<PAGE> 33
date of this registration statement, the Corporation shall apply for the
quotation of its Common Shares on the over-the-counter market. There can be
no assurance, however, that the Common Shares will be quoted, that an active
trading and/or a liquid market will develop or, if developed, that it will be
maintained. The Corporation does not intend to apply for quotation of its
Common Shares on NASDAQ until it meets the above criteria.
Broker-Dealer Sales of Corporation Securities. Until the Corporation
successfully obtains a listing on the NASDAQ quotation system, if ever, the
Corporation's securities may be covered by Rule 15c2-6 under the
Securities Exchange Act of 1934 that imposes additional sales practice
requirements on broker-dealers who sell such securities to persons other
than established customers and accredited investors (generally
institutions with assets in excess of $5,000,000 or individuals with net
worth in excess of $1,000,000 or annual income exceeding $200,000 or
$300,000 jointly with their spouse). For transactions covered by the rule, the
broker-dealer must make a special suitability determination of the purchaser and
have received the purchaser's written agreement to the transaction prior to
the sale. In order to approve a person's account for transactions in
designated securities, the broker or dealer must (i) obtain information
concerning the person's financial situation, investment experience and
investment objectives; (ii) reasonably determine, based on the information
required by paragraph (i) that transactions in designated securities are
suitable for the person and that the person has sufficient knowledge and
experience in financial matters that the person reasonably may be expected to be
capable of evaluating the rights of transactions in designated securities; and
(iii) deliver to the person a written statement setting forth the basis on which
the broker or dealer made the determination required by paragraph (ii) in this
section, stating in a highlighted format that it is unlawful for the broker or
dealer to effect a transaction in a designated security subject to the
provisions of paragraph (ii) of this section unless the broker or dealer has
received, prior to the transaction, a written agreement to the transaction
from the person; and stating in a highlighted format immediately preceding the
customer signature line that the broker or dealer is required to provide the
person with the written statement and the person should not sign and return
the written statement to the broker or dealer if it does not accurately
reflect the person's financial situation, investment experience and investment
objectives and obtain from the person a manually signed and dated copy of
the written statement. A designated security means any equity security other
than a security (i) registered, or approved for registration upon notice of
issuance on a national securities exchange that makes transaction reports
available pursuant to 17 CFR 11Aa3-1 (ii) authorized or approved for
authorization upon notice of issuance, for quotation in the NASDAQ
system; or . . . (iv) whose issuer has net tangible assets in excess of
$2,000,000 demonstrated by financial statements dated less than fifteen
months previously that the broker or dealer has reviewed and has a
reasonable basis to believe are true and complete in relation to the date of
the transaction with the person. Consequently, the rule may affect the
ability of broker-dealers to sell the Corporation's securities and also may
affect the ability of purchasers in this offering to sell their shares in the
secondary market.
<PAGE>34
- ----------------------------------------------------------------------------
PRINCIPAL SHAREHOLDERS
- ----------------------------------------------------------------------------
There are currently 2,760,602 Common Shares outstanding. The following
tabulates holdings of shares of the Corporation by each person who, subject to
the above, at the date of this Prospectus, holds of record or is known by
management to own beneficially more than 5.0% of the Common Shares
and, in addition, by all directors and officers of the Corporation
individually and as a group.
<TABLE>
<CAPTION>
Shareholdings at Date of
This Prospectus
Amount
Amount of Common
Name and Address of of Common Shares Owned
Beneficial Owner Shares Owned % Offering %
- ----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Mark Castleman 962,464 34.86% 866,218 31.38%
12201 Technology Boulevard
Suite 145
Austin, Texas 78727
Michael Castleman 323,000 11.70% 290,700 10.53%
12201 Technology Boulevard
Suite 145
Austin, Texas 78727
Kent Bradshaw 323,000 11.70% 290,700 10.53%
12201 Technology Boulevard
Suite 145
Austin, Texas 78727
Pratt, Wylce & Lords 348,000 10.26% 244,000 8.84%
10 Office Park Road, #22
Hilton Head Island, SC 29938
All Directors & Officers
as a group (2 persons) 1,285,464 46.56% 1,156,918 41.91%
</TABLE>
There are currently 100,000 A Warrants outstanding. The following
tabulates holdings of A Warrants of the Corporation by each person who,
subject to the above, at the date of this Prospectus, holds of record or
is known by management to own beneficially more than 5.0% of the Common
Shares and, in addition, by all directors and officers of the Corporation
individually and as a group.
<PAGE>35
<TABLE>
<CAPTION>
Name Total Number Of % Amount %
A Warrants Owned Owned Owned
Owned Prior to After After
Offering Offering Offering
<S> <C> <C> <C> <C>
Mark Castleman 60,000 60% 0 0%
Michael Castleman 20,000 20% 0 0%
Kent Bradshaw 20,000 20% 0 0%
All Officers and
Directors
As a Group (two) 80,000 80% 0 0%
</TABLE>
There are currently 100,000 B Warrants outstanding. The following
tabulates holdings of B Warrants of the Corporation by each person who,
subject to the above, at the date of this Prospectus, holds of record or
is known by management to own beneficially more than 5.0% of the Common
Shares and, in addition, by all directors and officers of the Corporation
individually and as a group.
<TABLE>
<CAPTION>
Name Total Number Of % Amount %
B Warrants Owned Owned Owned
Owned Prior to After After
Offering Offering Offering
<S> <C> <C> <C> <C>
Mark Castleman 60,000 60% 0 0%
Michael Castleman 20,000 20% 0 0%
Kent Bradshaw 20,000 20% 0 0%
All Officers and
Directors
As a Group (two) 80,000 80% 0 0%
</TABLE>
There are currently 250,000 C Warrants outstanding. The following
tabulates holdings of C Warrants of the Corporation by each person who,
subject to the above, at the date of this Prospectus, holds of record or
is known by management to own beneficially more than 5.0% of the Common
Shares and, in addition, by all directors and officers of the Corporation
individually and as a group.
<PAGE>36
<TABLE>
<CAPTION>
Name Total Number Of % Amount %
C Warrants Owned Owned Owned
Owned Prior to After After
Offering Offering Offering
<S> <C> <C> <C> <C>
Mark Castleman 150,000 60% 0 0%
Michael Castleman 50,000 20% 0 0%
Kent Bradshaw 50,000 20% 0 0%
All Officers and
Directors
As a Group (two) 200,000 70% 0 0%
</TABLE>
- --------------------------------------------------------------------------
DESCRIPTION OF SECURITIES
- --------------------------------------------------------------------------
Qualification. The following statements constitute brief summaries of the
Corporation's Certificate of Incorporation and Bylaws, as amended. Such
summaries do not purport to be complete and are qualified in their entirety
by reference to the full text of the Certificate of Incorporation and Bylaws.
The Corporation's Articles of Incorporation authorize it to issue up to
50,000,000 Common Shares, $.001 par value per Common Share .
Common Shares purchased in this offering will be fully paid and non-
assessable.
Common Stock. Holders of Common Shares of the Corporation are
entitled to cast one vote for each share held at all shareholders meetings
for all purposes. Upon liquidation or dissolution, each outstanding Common
Share will be entitled to share equally in the assets of the Corporation
legally available for distribution to shareholders after the payment of all
debts and other liabilities. Common Shares are not redeemable, have no
conversion rights and carry no preemptive or other rights to subscribe to or
purchase additional Common Shares in the event of a subsequent offering. All
outstanding Common Shares are, and the Common Shares offered
hereby will be when issued, fully paid and non-assessable.
There are no limitations or restrictions upon the rights of the Board of
Directors to declare dividends out of any funds legally available therefor.
The Corporation has not paid dividends to date and it is not anticipated
that any dividends will be paid in the foreseeable future. The Board of
Directors initially may follow a policy of retaining earnings, if any, to
finance the future growth of the Corporation. Accordingly, future
<PAGE>37
dividends, if any, will depend upon, among other considerations, the
Corporation's need for working capital and its financial conditions at the
time.
A Warrants. The Board of Directors of the Corporation has authorized
a dividend distribution of 100,000 A Warrants on a pro rata basis to the
shareholders of record as of October 15, 1995. The A Warrants are
exercisable for a period of two years from issuance. The A Warrants
shall be exercisable into Common Shares of the Corporation at the
exercise price of $4.00 per Common Share. The A Warrants will be callable
with 30 days notice for a price of $.001 per A Warrant.
B Warrants. The Board of Directors of the Corporation has authorized a
dividend distribution of 100,000 B Warrants on a pro rata basis to the
shareholders of record as of October 15, 1995. The B Warrants are
exercisable for a period of two years from issuance. The B Warrants
shall be exercisable into Common Shares of the Corporation at the
exercise price of $6.00 per Common Share. The B Warrants will be callable
with 30 days notice for a price of $.001 per B Warrant.
C Warrants. The Board of Directors of the Corporation has authorized a
dividend distribution of 250,000 C Warrants on a pro rata basis to the
shareholders of record as of October 15, 1995. The C Warrants are
exercisable for a period of three years from issuance. The C Warrants
shall be exercisable into Common Shares of the Corporation at the
exercise price of $10.00 per Common Share. The C Warrants will be
callable with 30 days notice for a price of $.001 per C Warrant.
Transfer Agent. The Corporation shall act as its own transfer agent until after
the completion of the offering.
- ---------------------------------------------------------------------------
LEGAL MATTERS
- ---------------------------------------------------------------------------
The due issuance of the Common Shares offered hereby will be opined
upon for the Corporation by Jody M. Walker, Attorney At Law in which opinion
Counsel will rely on the validity of the Certificate and Articles of
Incorporation issued by the State of Texas, as amended and the representations
by the management of the Corporation that appropriate action under Texas law
has been taken by the Corporation.
- -------------------------------------------------------------------------
LEGAL PROCEEDINGS
- -------------------------------------------------------------------------
The Corporation is not involved in any legal proceedings as of the date
of this Prospectus.
<PAGE> 38
- -------------------------------------------------------------------------
EXPERT
- -------------------------------------------------------------------------
The audited financial statements included in this Prospectus have been so
included in reliance on the report of Winter, Scheifley & Associates
P.C., Certified Public Accountants, on the authority of such firm as
experts in auditing and accounting.
- -------------------------------------------------------------------------
INTERESTS OF NAMED
EXPERTS AND COUNSEL
- -------------------------------------------------------------------------
None of the experts or counsel named in the Prospectus are affiliated
with the Corporation.
<PAGE> 39
REPORT OF INDEPENDENT AUDITORS
Shareholders and Board of Directors
Trinity Works, Inc.
We have audited the accompanying balance sheets of Trinity Works,
Inc. as of January 31, 1996 and 1995 the related statements of
operations, stockholders' equity, and cash flows for each of the
two years then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is
to express an opinion on these financial statements based on our
audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant
estimates by management, as well as evaluating the overall
financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of
Trinity Works, Inc. as of January 31, 1996 and 1995, and the
results of its operations, and its cash flows for each of the two
years then ended, in conformity with generally accepted accounting
principles.
Winter, Scheifley & Associates, P.C.
Certified Public Accountants
Englewood, Colorado
March 15, 1996
<PAGE> 40
Trinity Works, Inc.
Balance Sheet
January 31, 1996 and 1995
ASSETS
Current assets: 1996 1995
Cash $ 317,029 $ -
Accounts receivable, trade 24,870 7,055
Inventories 123,696 74,145
---------- --------
-Total current assets 465,595 81,200
Property and equipment, at cost, net of
accumulated depreciation of $18,935 and $5,374 42,471 38,030
Intangible assets, net of accumulated
amortization of $1,512 and $146 12,152 13,518
Deposits 1,450 -
---------- --------
$ 521,668 $132,748
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Equipment leases payable $ 917 $ -
Accounts payable 38,508 14,889
Accrued expenses 18,637 6,567
Advances from officer 633 1,600
---------- ----------
Total current liabilities 58,695 23,056
Equipment leases - non-current 2,380 -
Notes payable - directors 150,000 150,000
Commitments (Note 5)
Stockholders' equity:
Common stock, $.001 par value,
50,000,000 shares authorized,
2,469,602 issued and outstanding 2,470 1,615
Additional paid-in capital 474,901 (615)
Accumulated deficit (166,778) (41,308)
---------- ----------
310,593 (40,308)
---------- ----------
$ 521,668 $132,748
========== ==========
See accompanying notes to financial statements.
<PAGE> 41
Trinity Works, Inc.
Statements of Operations
For The Years Ended January 31, 1996 and 1995
1996 1995
Sales $ 203,015 $ 7,519
Cost of sales 81,052 3,501
---------- ----------
Gross profit 121,963 4,018
Other costs and expenses:
General and administrative 1,026,134 35,092
Research and development 16,037 5,234
---------- ----------
1,042,171 40,326
---------- ----------
Income (loss) from operations (920,208) (36,308)
Other income and (expense):
Interest expense (12,000) (5,000)
Other 1,205 -
---------- ----------
(10,795) (5,000)
---------- ----------
Net income (loss) $ (931,003) $(41,308)
========== ==========
Earnings (loss) per share:
Net income (loss) $ (0.53) $ (0.03)
========== ==========
Weighted average shares outstanding 1,758,717 1,615,000
========== ==========
See accompanying notes to financial statements.
<PAGE> 42
Trinity Works, Inc.
Statement of Changes in Stockholders' Equity
For The Years Ended January 31, 1996 and 1995
<TABLE>
<CAPTION>
Additional
Common Paid -in Accumulated
ACTIVITY Shares Amount Capital (Deficit) Total
<S> <C> <C> <C> <C> <C>
Initial capitalization at
August 1, 1994 1,615,000 $ 1,615 $ (615) $ - $1,000
Net (loss) for the year (41,308) (41,308)
----------- ---------- ---------- ---------- --------
Balance, January 31, 1995 1,615,000 1,615 (615) (41,308) (40,308)
Sale of shares for cash at $1.50
419,602 42 628,984 629,404
Stock issued for services 435,000 435 652,065 652,500
Reclass of S corporation deficit
to paid-in capital (805,533) 805,533
Net (loss) for the year (931,003) (931,003)
----------- ---------- ----------- ----------- ---------
Balance, January 31, 1996 2,469,602 2,470 $ 474,901 $(166,778) $ 310,593
=========== ========== =========== =========== ==========
See accompanying notes to financial statements.
<PAGE> 43
Trinity Works, Inc.
Statements of Cash Flows
For The Years Ended January 31, 1996 and 1995
1996 1995
Net income (loss) $ (931,003) $(41,308)
Adjustments to reconcile net income to net
cash provided by (used in) operating activities:
Depreciation and amortization 14,927 5,520
Stock issued for services 652,500
Changes in assets and liabilities:
(Increase) decrease in receivables (17,815) (7,055)
(Increase) decrease in inventory (49,551) (74,145)
(Increase) decrease in other assets (1,450)
Increase (decrease) in accounts payable
and accrued expenses 35,689 21,456
---------- ---------
Total adjustments 634,300 (54,224)
Net cash (used in) operations (296,703) (95,532)
Cash flows from investing activities:
Increase in intangible assets (13,664)
Acquisition of plant and equipment (14,705) (43,404)
---------- ---------
Net cash (used in) for investments (14,705) (57,068)
Cash flows from financing activities:
Common stock sold for cash 629,404 1,000
Increase in officer loans 1,600
Repayment of officer loans (967)
Proceeds from investor notes 150,000
---------- ---------
Net cash provided by financing 628,437 152,600
--------- ----------
Increase (decrease) in cash 317,029 -
Cash, beginning of period
---------- ---------
Cash, end of period $ 317,029 $ -
========== ==========
See accompanying notes to financial statements.
<PAGE> 44
Trinity Works, Inc.
Statements of Cash Flows
For The Years Ended January 31, 1996 and 1995
1996 1995
Supplemental cash flow information:
Cash paid for interest $ - $ -
Cash paid for income taxes $ - $ -
Supplemental disclosure of non-cash transactions:
Common stock issued for services $ 652,500 $ -
Increase in leased equipment $ 3,297 $ -
See accompanying notes to financial statements.
<PAGE> 45
Trinity Works, Inc.
Notes to Financial Statements
Note 1 - Accounting policies
Organization
Trinity Works, Inc. is a manufacturer of computer related
products incorporated under the laws of the State of Texas during
August 1994. The Company's customers to date have been mail order
companies that stock its products and end user purchasers.
Inventories
Inventories, consisting principally of raw materials and finished
goods, are valued at the lower of cost or market on a first in -
first out basis.
Fixed assets
Fixed assets are stated at cost, less accumulated depreciation.
Depreciation is calculated under the straight line method over
the expected useful lives of the assets of from three to seven
years.
Net loss per share:
The net loss per share is computed by dividing the net loss for
the period by the weighted average number of common shares
outstanding for the period. Common stock equivalents are excluded
from the computation as their effect would be anti-dilutive.
Cash
For purposes of the statement of cash flows the Company considers
all highly liquid debt instruments purchased with a maturity of 3
months or less to be cash equivalents. At January 31, 1996 the
Company maintained $317,029 on deposit at one bank which exceeded
the $100,000 deposit insurance limit by $217,029.
Revenue recognition
The Company recognizes revenue upon shipment of goods to its
customers.
Patents and trademarks
The Company has applied for patents for certain of its products.
Patents and trademarks are amortized using the straight line
method over a period of ten years and are stated net of
accumulated amortization of $1,075 at January 31, 1996.
<PAGE> 46
Estimates
The preparation of the Company's financial statements requires
management to make estimates and assumptions that affect the
amounts reported in the financial statements and accompanying
notes. Actual results could differ from these estimates.
Advertising costs
Advertising costs are charged to operations when the advertising
first takes place. Advertising costs charged to operations were
$141,915 and $13,409 in 1996 and 1995.
Note 2 - Inventories
Inventories consisted of the following at January 31, 1996 and
1995:
1996 1995
Raw materials $ 89,920 $ 67,063
Finished goods 33,776 7,082
-------- --------
$123,696 $ 74,145
Note 3 - Fixed assets
Fixed assets consist of the following at January 31 1996 and
1995:
1996 1995
Furniture and equipment $ 5,889 $ 1,085
Computer equipment 15,410 11,718
Computer equipment (leased) 3,297 -
Molds and dies 35,816 30,601
Leasehold improvements 995 -
-------- ------ -61,677
43,404
Less: accumulated depreciation 18,935 5,374
-------- ------
$42,472 $38,030
Depreciation expense was $13,561 and $5,374 for the years ended
January 31, 1996 and 1995.
Note 4 - Notes payable - directors
During November 1994 the Company borrowed $75,000 from each of two
of the Company's directors, one of whom is an immediate family
member with the Company's president. The identical
<PAGE> 47
uncollateralized notes bear interest at prime plus 2% and are to
be repaid from operating profits of the Company beginning after
January 31, 1997.
Note 5 - Commitments
Operating leases
During March 1996, the Company entered into a lease in Austin,
Texas for its corporate office and manufacturing facility. The
lease provides for various escalations based on cost of living,
real estate taxes, etc.
Future minimum rentals under the lease are as follows:
1997: $19,442
1998: $23,330
1999: $23,330
2000: $3,888
Rent expense was $4,128 and $131 for the years ended January 31,
1996 and 1995, respectively.
Capital leases
The Company is the lessee of computer equipment under a capital
lease that expires in January 1999. The assets and liability under
the capital lease are recorded at the lower of the present value
of the minimum lease payments or the fair value of the assets.
The assets are depreciated over a three year period. Depreciation
of the assets ($75) is included in depreciation expense for the
year ended January 31, 1996.
Minimum future lease payments under the lease as of January 31,
1996 for each of the next three years and in the aggregate are as
follows.
Year ended Amount
January 31, 1997 $1,416
January 31, 1998 1,416
January 31, 1999 1,416
------
4,248
Less interest amount (951)
------
Present value of minimum payment $3,927
The interest rate on the lease amounts to 17.3% per annum.
During February 1996, the Company leased additional equipment
under similar lease terms having a fair value of $6,240.
<PAGE> 48
Note 6 - Stockholders equity
At inception, (August 1, 1994) the Company issued 1,615,002
shares of its $.001 par value common stock to three of its
officers and directors in exchange for cash of $1,000.
During October 1995 the Company entered into a one year consulting
agreement with an entity whereby the entity would provide to the
Company financial consulting services. Pursuant to the agreement
the entity agreed to assist the Company in preparing a private
placement memorandum to obtain equity or debt financing in the
amount of $600,000 and to assist the Company in completing the
offering. In exchange for these services the Company agreed to pay
$92,630 in cash and to issue 323,000 shares of its $.001 par value
common stock valued at $484,500. These amounts have been included
in general and administrative expenses in 1996 in the accompanying
Statement of Operations.
During October 1995, the Company authorized the issuance of
100,000 each of A, B, and 250,000 of C stock purchase warrants
exercisable as follows:
$ 4.00 plus one A warrant for each share of common stock
$ 6.00 plus one B warrant for each share of common stock
$10.00 plus one C warrant for each share of common stock
The warrants are exercisable for a period of 24 months from the date
of issue for the A and B warrants and 48 months for the C warrants,
and are callable with 30 days notice at a price of $.001 per warrant.
During December, 1995 the Company began offering shares of its
common stock at $1.50 per share pursuant to a private placement. The
private placement was completed in January 1996 and the Company
issued 419,602 shares of common stock for net cash proceeds aggregating
$629,404.
During the periods covered by these financial statements the Company
issued shares of common stock without registration under the
Securities Act of 1933. Although the Company believes that the sales
did not involve a public offering of its securities and that the
Company did comply with the safe harbor exemptions from
registration under section 4(2), it could be liable for recision of
the sales if such exemptions were found not to apply.
Note 7 - Income taxes
The Company had elected to be treated as an "S" corporation under the
provisions of the Internal Revenue Code and state statutes. Under
these provisions, no income tax is normally incurred at the corporate
level. Instead the shareholder includes his pro rata share of the
<PAGE> 49
corporations income or loss on his personal tax returns. During
January 1996 the number of shareholders of the Company exceeded the
maximum number of shareholders allowed for an S corporation and the
election was terminated. In addition, the Company used December 31,
as its year end for income tax purposes. Effective January 1, 1996
the Company adopted Financial Accounting Standards Board Statement
No. 109, Accounting for Income Taxes.
Of the loss for the year ended January 31, 1996 approximately
$166,778 will be available as an operating loss carryforward for the
Company expiring during 2011, and the balance will be allocated to
the shareholders.
The accumulated loss through the termination of the "S" election of
$805,533 has been reclassified to paid in capital in the accompanying
financial statements.
The Company is unable to predict future taxable income that would
enable it to utilize the deferred tax asset arising from the future
value of the net operating loss and therefore the deferred tax
asset of approximately $56,705 related thereto is fully reserved.
Note 8 - Related party transactions
During the year ended January 31, 1995 an officer and director of the
made advances to the Company aggregating $1,600. During the year
ended January 31, 1996 $967 of this debt was repaid in cash.
Note 9 - Sales to major customers
The Company made sales in excess of 10% of its net sales to unrelated
parties for the year ended January 31, 1996 to two companies
aggregating $128,105 (63%). Additionally, the Company had open
uncollateralized accounts receivable from these customers aggregating
$12,445 January 31, 1996. The Company had no major customers during
the year ended January 31, 1995.
The Company's major customers in 1996 consist of mail order companies
who include a description of the Company's products in their
advertisements in various computer related publications. The Company
is charged for its share of the advertising costs and such billings
are offset against accounts receivable from sales to these customers.
Note 10 - Stock option plan
During 1995, the Company adopted a non-statutory stock option plan
which provides for granting to the Company's officers, directors,
employees and certain other individuals who consult with or advise
the Company, options to acquire up to 500,000 shares of the Company's
common stock. The shares issuable under the plan are at a price not
less than 85% of the fair market value of the stock on the date of
grant. The exercise periods of the options are not to exceed ten
years. No options have been granted pursuant to the plan as of
January 31, 1996.
<PAGE> 50
PART II
INFORMATION NOT REQUIRED BY PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution.
Other expenses in connection with this offering which will be paid
by Trinity Works, Inc. (hereinafter in this Part II referred to as
the "Corporation") are estimated to be substantially as follows:
</TABLE>
<TABLE>
<CAPTION>
Amount
Payable
Item By
Corporation
<S> <C>
S.E.C. Registration Fees $ 1,825.12
State Securities Laws (Blue Sky) Fees and Expenses 1,500.00
Printing and Engraving Fees 5,000.00
Legal Fees 15,000.00
Accounting Fees and Expenses 10,000.00
Transfer Agent's Fees 1,500.00
Total $34,825.12
</TABLE>
Item 14. Indemnification of Officers and Directors.
Indemnification. The Corporation shall indemnify to the fullest extent
permitted by, and in the manner permissible under the laws of the State of
Texas, any person made, or threatened to be made, a party to an action or
proceeding, whether criminal, civil, administrative or investigative, by
reason of the fact that he is or was a director or officer of the
Corporation, or served any other enterprise as director, officer or employee
at the request of the Corporation. The Board of Directors, in its
discretion, shall have the power on behalf of the Corporation to indemnify
any person, other than a director or officer, made a party to any action,
suit or proceeding by reason of the fact that he/she is or was an employee of
the Corporation. The extent of the indemnification shall be determined on a
case by case basis and will be dependent on the nature of the action, suit
or proceeding and the specific facts and circumstances surrounding the
situation.
Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers and controlling persons of the Corporation,
the Corporation understands that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the Corporation of expenses incurred or paid by a director, officer or
controlling person of the Corporation in the successful defense of any action,
suit or proceedings) is asserted by such director, officer, or controlling
person in connection with any securities being registered, the Corporation
<PAGE> 51
will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issues.
Item 15. Recent Sales of Unregistered Securities.
In August, 1994, the Corporation issued 1,615,000 common shares to its officers
and directors for the cash consideration of $1,615.
On May 16, 1995, the Corporation issued 348,000 common shares to Pratt,
Wylce & Lords, Ltd. and 87,000 common shares to Clinton Clark for
consulting services pursuant to the terms of a consulting agreement filed as
an exhibit to the registration statement.
The Corporation pursued a private placement at $1.50 per common
shares and issued a total of 419,602 to the following individuals.
These issuances were made in compliance with Rule
505, Regulation D of the Securities Act of 1933 by Registrant's
management, consultants and selected broker/dealers. No commissions or
other remuneration was paid to anyone other than a NASD selected
broker/dealer. No general solicitation was utilized. There was less
than 35 nonaccredited investors. The determination of whether an
investor was accredited or nonaccredited was based on the responses in the
subscription agreement filled out by each investor.
<TABLE>
<CAPTION>
Date Amount of Amount
Issued Name Common Stock Paid
- -------- -------- ------------- --------
<S> <C> <C> <C>
12-20-95 John Baer 3,000 $4,500
12-21-95 Steve Ball 3,000 $4,500
11-30-95 Tom Brennan 15,000 $22,500
1-3-96 Ed Carlow 5,000 $7,500
Sue Castleman 8,333
12-20-95 Pagogh Cho 3,000 $4,500
Jonathan Ceck
12-13-95 Al Damalak 7,000 $10,500
12-18-95 Pauline Darosa 4,000 $6,000
6-2-96 William DeMayo 3,000 $4,500
Murray Trachter
12-15-95 Gerald Dooher 5,000 $7,500
12-2-95 Terrence Dooher 5,000 $7,500
12-16-95 Del/Peggy Dugan 3,000 $4,500
12-21-95 John Dunbar 3,000 $4,500
1-2-96 Stuart Dupee 3,000 $4,500
12-21-95 James Early 16,667
12-19-95 Ora Elliott 3,000 $4,500
<PAGE> 52
12-15-95 Charles & Judith Franklin 3,000 $4,500
12-20-95 Randall Geist 9,000 $13,500
12-18-95 Dr. Bob Gerner 10,000 $15,000
12-19-95 Lynn Gjertsen 3,000 $4,500
1-1-96 Charles Gluck 3,000 $4,500
12-18-95 All American Way, Inc.
Profit Sharing Plan 12,000 $18,000
12-19-95 Ken Gregory 3,000 $4,500
12-11-95 James Haines 3,334 $5,000
12-20-95 Kim & Gavin Hart 3,000 $4,500
12-7-95 Richard Hinkle 3,000 $4,500
12-28-95 Brian Hughes 1,000 $1,500
12-14-95 Robert & Eleanor Hughes 6,000 $9,000
12-29-95 Robert Hunt IRA 3,000 $4,500
12-12-95 Cliff Jaebker 6,200
1-4-95 Grant Johnson 3,000 $4,500
12-7-95 Virginia Junkin 4,000 $6,000
12-29-95 Alan/Patti Katz 3,000 $4,500
12-6-95 Larry Konfirst 6,000 $9,000
12-21-95 John/Rosella Lawson 15,000 $22,500
12-21-95 Rosella Lawson 3,000 $4,500
12-22-95 Kevin McGarry 3,000 $4,500
12-13-95 John McKissach
12-1-95 John Santry 3,000 $4,500
1-2-96 Ronald Montano 7,334 $10,667
12-13-95 Blake Mosher 20,000 $30,000
12-12-95 Bowman Najmi 7,000 $10,500
12-6-95 Jonathan/Melissa Pace 8,000 $12,000
12-20-95 Elaine & William Paton 9,000 $13,500
12-4-95 Scott/Marcia Rader 3,000 $4,500
12-8-95 Al Ridenger 15,000 $22,500
Al Ridenger, Jr. 3,000 $4,500
12-21-95 Jerry & Sarah Robertson 3,000 $4,500
12-10-95 Jay Rydman 4,000 $6,000
12-17-95 Manuez Sanchez 7,000 $10,500
1-2-96 Carol Sarwar 4,000 $6,000
12-11-95 Paula/Steve Schaefer 7,000 $10,500
12-11-95 Mary Jane & Vic Sohle 1,000 $1,500
Derek Steele
12-21-95 Rick Pease 3,000 $4,500
12-22-95 Nancy Stiehl 3,000 $4,500
12-20-95 Karen Sussman 7,000 $10,500
12-22-95 Mitsao Tatsugawa 3,000 $4,500
12-6-95 William Taylor 6,000 $9,000
12-5-95 Larry/Lori Turrel 40,000 $60,000
1-10-96 John Watson 6,000 $9,000
12-13-95 Harry Welch 20,000 $30,000
12-26-95 2422 Brazoria 3,000 $4,500
12-8-95 John Wilson 3,000 $4,500
12-14-95 Howard Witzel 20,000 $30,000
12-23-95 Johnny Wong 3,000 $4,500
12-11-95 Shane Yost 3,734 $5,601
<PAGE> 53
The Corporation issued Common Shares to the following employees as partial
compensation valued at $1.50 per Common Share.
1-1-96 Darrell Hughes 40,000 $60,000
1-1-96 Jonathan Avedikian 20,000 $30,000
1-1-96 Matt Casteman 20,000 $30,000
4-1-96 David Avedikian 2,000 $3,000
The Corporation issued 6,536 Common Shares to Darrell Daugherty on May 22, 1996
valued at $1.50 per Common Share.
During June, 1996, the Corporation received $590,000 by privately issuing the following
Common Shares at $2.50 per Common Share.
Breaux Castleman 32,000 $80,000
James Early 20,000 $50,000
Dick Galley 80,000 $200,000
Al Ridenger 20,000 $50,000
Larry Turel 20,000 $50,000
Howard Witzel 20,000 $50,000
John Wilson 24,000 $60,000
Harry Welch 20,000 $50,000
</TABLE>
Due to the integration rules of Section 502(a), all of the above issuances of
common stock would be deemed to be integrated and deemed to be part of
the same Regulation D offering (Section 505). As a result, the Corporation
obtained subscription agreements from all investors which indicated
whether or not the investors were accredited. There were a total
of 33 non-accredited investors. All of the above sales were made without
general solicitation. No commissions were paid to anyone other than
registered NASD broker-dealers. The total aggregate value of all of the
issuances were substantially less than $5,000,000.
<TABLE>
<CAPTION>
Exhibit Index.
<S> <C>
(1) Not Applicable
(2) Not Applicable
(3) Articles of Incorporation, Amendments and Bylaws
(4) Specimen certificate for Common Stock - to be filed
by amendment
(5) Consent and Opinion of Jody M. Walker, Attorney At Law
regarding legality of securities registered under this
Registration Statement and to the references to such
attorney in the Prospectus filed as part of this
Registration Statement
(6) Not Applicable
(7) Not Applicable
(8) Not Applicable
(9) Not Applicable
<PAGE> 54
(10) Not Applicable
(11) Not Applicable
(12) Not Applicable
(13) Not Applicable
(14) Not Applicable
(15) Not Applicable
(16) Not Applicable
(17) Not Applicable
(18) Not Applicable
(19) Not Applicable
(20) Not Applicable
(21) Not Applicable
(22) Not Applicable
(23) Not Applicable
(24) Consent of Winter, Scheifley & Associates, P.C.,
Certified Public Accountants for the Corporation
(25) Not Applicable
(26) Not Applicable
(27) Not Applicable
(28) Not Applicable
(99.1) Consulting Agreement with Pratt, Wylce & Lords, Ltd.
(99.2) Lock Up Agreement - to be filed by amendment
Item 17. Undertaking.
The undersigned registrant hereby undertakes:
(a)(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the Registration Statement (or the most recent post-
effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the formation set forth in the Registration
Statement.
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or any
material change to such information in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
<PAGE> 55
(b) Delivery of Certificates.
The undersigned registrant hereby undertakes to provide to the
Transfer Agent at the closing, certificates in such denominations and
registered in such names as are required by the Transfer Agent to permit
prompt delivery to each purchaser.
(c) Indemnification.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the provisions set forth in the
Corporation's Articles of Incorporation or otherwise, the registrant has been
advised that in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the securities
being registered, the registrant will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the
final adjudication of such issue.
<PAGE> 56
Signatures
Pursuant to the requirements of the Securities Act of 1933, the Registrant has
duly caused this Registration Statement on Form S-1 as amended to be signed on
its behalf by undersigned, thereunto duly authorized, in the city of Austin,
State of Texas on the 7th day of August, 1996.
Trinity Works, Inc.
/s/ Mark Castleman
--------------------
By: Mark Castleman,
President
Pursuant to the requirements of the Securities Act of 1933, this Registration
on Form S-1 as amended has been signed by the following persons in the
capacities and on the dates indicated.
</TABLE>
<TABLE>
<CAPTION>
Signature Capacity Date
<S> <C> <C>
/s/ Mark Castleman 7/8/96
- --------------------------- Chief Executive Officer ----------------
Mark Castleman Chief Financial Officer
Controller/Director
/s/ Michael Castleman 7/8/96
- --------------------------- Director ----------------
Michael Castleman
</TABLE>
<PAGE> 57
<TABLE>
<CAPTION>
Exhibit Index.
<S> <C>
(1) Not Applicable
(2) Not Applicable
(3) Articles of Incorporation, Amendments and Bylaws
(4) Specimen certificate for Common Stock - to be filed
by amendment
(5) Consent and Opinion of Jody M. Walker, Attorney At Law
regarding legality of securities registered under this
Registration Statement and to the references to such
attorney in the Prospectus
filed as part of this Registration Statement
(6) Not Applicable
(7) Not Applicable
(8) Not Applicable
(9) Not Applicable
(10) Not Applicable
(11) Not Applicable
(12) Not Applicable
(13) Not Applicable
(14) Not Applicable
(15) Not Applicable
(16) Not Applicable
(17) Not Applicable
(18) Not Applicable
(19) Not Applicable
(20) Not Applicable
(21) Not Applicable
(22) Not Applicable
(23) Not Applicable
(24) Consent of Winter, Scheifley & Associates, P.C.,
Certified Public Accountants for the Corporation
(25) Not Applicable
(26) Not Applicable
(27) Not Applicable
(28) Not Applicable
(99.1) Consulting Agreement with Pratt, Wylce & Lords, Ltd.
(99.2) Lock Up Agreement - to be filed by amendment
</TABLE>
<PAGE>1
THE STATE OF TEXAS
SECRETARY OF STATE
CERTIFICATE OF INCORPORATION
OF
TRINITY WORKS, INC.
CHARTER NUMBER: 1321298-00
The undersigned, as Secretary of State of Texas, hereby certifies that the
attached Articles of Incorporation for the above named corporation have been
received in this office and are found to confirm to law.
ACCORDINGLY, the undersigned, as Secretary of State, and by virtue of the
authority vested in the Secretary by law, hereby issues this Certificate of
Incorporation.
Issuance of this Certificate of Incorporation does not authorize the use of a
corporate name in this state in violation of the rights of another under the
federal Trademark Act of 1946, the Texas trademark law, the Assumed Business or
Professional Name Act, or the common law.
Dated: August 1, 1994
Effective: August 1, 1994
Secretary of State
<PAGE>2
ARTICLES OF INCORPORATION
OF
TRINITY WORKS, INC.
ARTICLE ONE
The name of the corporation is Trinity Works, Inc.
ARTICLE TWO
The period of duration of the corporation is perpetual.
ARTICLE THREE
The purpose for which the corporation is organized is the transaction of
any and all lawful business for which corporations may be incorporated under the
Texas Business Corporation Act (the "TBCA").
ARTICLE FOUR
The aggregate number of shares which the corporation shall have authority
to issue is one hundred thousand (100,000) shares of common stock, par value
$.01 per share.
ARTICLE FIVE
The corporation will not commence business until it has received
consideration of the value of one thousand dollars ($1,000.00) for the issuance
of its shares, consisting of money, labor done or property actually received.
ARTICLE SIX
No shareholder or other person shall have any preemptive right whatsoever
to acquire additional, unissued or treasury shares of the corporation, or
securities of the corporation convertible into or carrying a right to subscribe
to or acquire shares, or any other securities or property whatsoever.
ARTICLE SEVEN
Cumulative voting shall not be permitted.
ARTICLE EIGHT
The street address of the initial registered office of the corporation and
the name of its initial registered agent are:
Registered Agent Registered Office
Mark Ballad Castleman 6000 Shepherd Mountain Cove
Suite 221
Austin, Texas 78730
ARTICLE NINE
The number of directors of the corporation shall be fixed as determined by
the Bylaws, and the number of directors constituting the initial board of
directors shall be three (3).
<PAGE>3
The name and address of the people who are to serve as directors until the first
annual meeting of the shareholders or until their successors are duly elected
and qualified are:
Name Address
Mark Ballad Castleman 6000 Shepherd Mountain Cove
Suite 221
Austin, Texas 78730
Michael S. Castleman, Jr 12415 Cobblestone
Houston, Texas 77024
Kent S. Bradshaw 12307 Queensbury
Houston, Texas 77024
ARTICLE TEN
The name and address of the sole incorporator is:
Name Address
Geoffrey A. Long Bracewell & Patterson, L.L.P.
711 Louisiana Street
Suite 2900
Houston, Texas 77002-2781
ARTICLE ELEVEN
No director of the Corporation shall be liable to the corporation or its
shareholders for monetary damages for any act or omission in the director's
capacity as a director, except to the extent that the foregoing exculpation from
liability is not permitted under the applicable provisions of the Texas
Miscellaneous Corporation Laws Act (or any successor or replacement statute) as
the same now exists or may hereafter be amended. Any repeal or modification of
the provisions of the foregoing sentence shall not adversely affect any right
or protection of a director of the corporation existing at the time of such
repeal or modification.
ARTICLE TWELVE
Section 12.1. Voting Requirement. With respect to any matter, other than
the election of directors as provided in the bylaws, including, but not limited
to, a matter for which the affirmative vote of the holders of a specified
portion of the shares of the corporation entitled to vote is required by the
TBCA, the affirmative vote of the holders of a majority of the shares of the
corporation entitled to vote on the matter shall be the act of the shareholders.
Section 12.2. Quorum Requirement. The holders of at least a majority of
the shares of the corporation issued and outstanding and entitled to vote,
represented in person or by proxy, shall constitute a quorum at any meeting of
shareholders of the corporation.
Section 12.3. Written Consent. Any action required by the TBCA to be
taken at any annual or special meeting of shareholders, or any action that may
be taken at any annual or special meeting of shareholders, may be taken without
<PAGE> 4
a meeting, without prior notice, and without a vote, if a consent or consents in
writing, setting forth the action so taken, shall be signed by the holder or
holders of all of the outstanding shares entitled to vote on such action and
shall be delivered to the corporation by delivery to its registered office in
the state of incorporation, its principal place of business, or an officer or
agent of the corporation having custody of the book in which proceedings of
meetings of shareholders are recorded.
IN WITNESS WHEREOF, I have set my hand this 1st day of August, 1994.
Geoffrey A. Long
<PAGE>5
BYLAWS
OF
TRINITY WORKS, INC.
A TEXAS CORPORATION
DATE OF ADOPTION
,19
<PAGE> 6
TABLE OF CONTENTS
Page
Article 1
Offices
Section 1.1. Registered Office . . . . . . 1
Section 1.2. Other Offices . . . . . . . . 1
Article 2
Shareholders
Section 2.1. Place of Meetings . . . . . . 1
Section 2.2. Quorum; Adjournment of Meetings 1
Section 2.3. Annual Meetings . . . . . . . 2
Section 2.4. Special Meetings . . . . . . 2
Section 2.5. Record Date . . . . . . . . . 2
Section 2.6. Notice of Meetings . . . . . 3
Section 2.7. Shareholders List . . . . . . 4
Section 2.8. Proxies . . . . . . . . . . . 4
Section 2.9. Voting; Election; Inspectors 5
Section 2.10. Conduct of Meetings. . . . . 6
Section 2.11. Treasury Stock . . . . . . . 6
Section 2.12. Action Without Meeting . . . 6
Article 3
Board of Directors
Section 3.1. Power; Number; Term of Office 7
Section 3.2. Quorum; Voting . . . . . . . 7
Section 3.3. Place of Meetings; Order of
Business . . . . . . . . . . 8
Section 3.4. First Meeting . . . . . . . . 8
Section 3.5. Regular Meetings . . . . . . 8
Section 3.6. Special Meetings . . . . . . 8
Section 3.7. Removal . . . . . . . . . . . 9
Section 3.8. Vacancies; Increased in the
Number of Directors . . . . . 9
Section 3.9. Compensation . . . . . . . . 9
Section 3.10. Action Without a Meeting;
Telephone Conference Meeting 9
Section 3.11. Approval or Ratification of
Acts or Contracts by
Shareholders. . . . . . . . . 10
<PAGE>7
ARTICLE 4
Committees
Section 4.1. Designation; Powers . . . . .10
Section 4.2. Procedure; Meetings; Quorum 11
Section 4.3. Substitution and Removal of
Members; Vacancies . . . . .11
ARTICLE 5
Officers
Section 5.1. Number, Titles and Terms of
Office . . . . . . . . . . . 11
Section 5.2. Powers and Duties of the
Chairman of the Board . . . 12
Section 5.3. Powers and Duties of the
President . . . . . . . . . 12
Section 5.4. Secretary . . . . . . . . . 12
Section 5.5. Action with Respect to
Securities of Other
Corporations . . . . . . . . 13
Section 5.6. Delegation . . . . . . . . . 13
ARTICLE 6
Capital Stock
Section 6.1. Certificate of Stock . . . . 13
Section 6.2. Transfer of Shares . . . . . 14
Section 6.3. Ownership of Shares. . . . . 14
Section 6.4. Regulation Regarding
Certificates . . . . . . . . 14
Section 6.5. Lost or Destroyed
Certificates . . . . . . . . 14
ARTICLE 7
Miscellaneous Provisions
Section 7.1. Fiscal Year . . . . . . . . 15
Section 7.2. Corporate Seal . . . . . . . 15
Section 7.3. Notice and Waiver of Notice 15
Section 7.4. Facsimile Signatures . . . . 16
Section 7.5. Reliance upon Books, Reports
and Records . . . . . . . . 16
Section 7.6. Application of Bylaws . . . 16
<PAGE> 8
ARTICLE 8
Indemnification of Officers and Directors
Section 8.1. Indemnification . . . . . . 16
Section 8.2. Nonexclusivity . . . . . . . 17
Section 8.3. Insurance . . . . . . . . . 17
Section 8.4. Witnesses . . . . . . . . . 17
ARTICLE 9
Amendments
Section 9.1. Amendments . . . . . . . . . 18
<PAGE> 9
BYLAWS
OF
TRINITY WORKS, INC.
Article 1
Offices
Section 1.1. Registered Office. The registered office of the Corporation
shall be the registered office named in the charter documents of the
Corporation, or such other office as may be designated from time to time by the
Board of Directors in the manner provided by law.
Section 1.2. Other Offices. The Corporation may also have offices at such
other places both within and without the State of Texas as the Board of
Directors may from time to time determine or the business of the Corporation may
require.
Article 2
Shareholders
Section 2.1. Place of Meetings. All meetings of the shareholders shall be
held at the principal office of the Corporation, or at such other place within
or without the State of Texas as shall be specified or fixed in the notices or
waivers of notice thereof.
Section 2.2. Quorum; Adjournment of Meetings. Unless otherwise required
by law or provided in the Articles of Incorporation of the Corporation or these
Bylaws, the holders of at least a majority of the stock issued and outstanding
and entitled to vote thereat, present in person or represented by proxy, shall
constitute a quorum at any meeting of shareholders for the transaction of
business. The shareholders present at a duly organized meeting may continue to
transact business until adjournment, notwithstanding the withdrawal of enough
shareholders to leave less than a quorum.
Directors shall be elected by a plurality of the votes of the shares
present in person or represented by proxy at the meeting and entitled to vote on
the election of directors.
Notwithstanding the other provisions of the Articles of Incorporation of
the Corporation or these Bylaws, the chairman of the meeting or the holders of a
majority of the issued and outstanding stock, present in person or represented
by proxy and entitled to vote thereat, at any meeting of shareholders whether or
not a quorum is present, shall have the power to adjourn such meeting from time
to time, without any notice other than announcement at the meeting of the time
and place of the holding of the adjourned meeting. If the adjournment is for
more than thirty (30) days, or if after the adjournment a new record date is
fixed for the adjourned meeting, a notice of the adjourned meeting shall be
<PAGE> 10
given to each shareholder of record entitled to vote at such meeting. At such
adjourned meeting at which a quorum shall be present or represented any business
may be transacted which might have been transacted at the meeting as originally
called.
Section 2.3. Annual Meeting. An annual meeting of the shareholders, for
the election of directors to succeed those whose terms expire and for the
transaction of such other business as may properly come before the meeting,
shall be held at such place (within or without the State of Texas), on such
date, and at such time as the Board of Directors shall fix and set forth in the
notice of the meeting, which date shall be within thirteen (13) months
subsequent to the last annual meeting of shareholders.
Section 2.4. Special Meetings. Unless otherwise provided in the Articles
of Incorporation of the Corporation, special meetings of the shareholders for
any purposes may be called at any time by the Chairman of the Board, by the
President, or by a majority of the Board of Directors, or by a majority of the
executive committee (if any), at such time and at such place as may be stated in
the notice of the meeting. Business transacted at a special meeting shall be
confined to the purpose(s) stated in the notice of such meeting.
Section 2.5. Record Date. For the purpose of determining shareholders
entitled to notice of or to vote at any meeting of shareholders, or any
adjournment thereof, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the purpose of any
other lawful action, the Board of Directors of the Corporation may fix a date as
the record date for any such determination of shareholders, which record date
for any such determination of shareholders, which record date shall not
precede the date on which the resolutions fixing the record date are adopted and
which record date shall not be more than sixty (60) days nor less than ten (10)
days before the date of such meeting of shareholders, nor more than sixty (60)
days prior to any other action to which such record date relates.
If the Board of Directors does not fix a record date for any meeting of the
shareholders, the record date for determining shareholders entitled to notice of
or to vote at such meeting shall be at the close of business on the day next
preceding the day on which notice is given, or, if in accordance with Article 7,
Section 7.3 of these Bylaws notice is waived, at the close of business on the
day next preceding the day on which the meeting is held. The record date
for determining shareholders for any other purpose (other than the consenting to
corporate action in writing without a meeting) shall be at the close of business
on the day on which the Board of Directors adopts the resolution relating
thereto. A determination of shareholders of record entitled to notice of or
to vote at a meeting of shareholders shall apply to any adjournment of the
meeting; provided, however, that the Board of Directors may fix a new record
date for the adjourned meeting.
For the purpose of determining the shareholders entitled to consent to
corporate action in writing without a meeting, the Board of Directors may fix a
record date, which record date shall not precede the date upon which the
resolution fixing the record date is adopted by the Board of Directors, and
<PAGE> 11
which date shall not be more than ten (10) days after the date upon which the
resolution fixing the record date is adopted by the Board of Directors. If the
Board of Directors does not fix the record date, the record date for determining
shareholders entitled to consent to corporate action in writing without a
meeting, when no prior action by the Board of Directors is necessary, shall be
the first date on which a signed written consent setting forth the action taken
or proposed to be taken is delivered to the Corporation at its registered
office in the State of Texas or at its place of business. If the Board of
Directors does not fix the record date, and prior action by the Board of
Directors is necessary, the record date for determining shareholders entitled to
consent to corporate action in writing without a meeting shall be at the
close of business on the day on which the Board of Directors adopts the
resolution taking such prior action.
Section 2.6. Notice of Meetings. Written notice of the place, date and
hour of all meetings, and, in case of a special meeting, the purpose or purposes
for which the meeting is called, shall be given by or at the direction of the
Chairman of the Board, the President, or the Secretary or the other person(s)
calling the meeting to each shareholders entitled to vote thereat not less than
ten (10) nor more than sixty (60) days before the date of the meeting. Such
notice may be delivered either personally or by mail. If mailed, notice is
given when deposited in the United States mail, postage prepaid, directed to the
shareholder at such shareholder's address as it appears on the records of the
Corporation.
Section 2.7. Shareholder List. A complete list of shareholders entitled
to vote at any meeting of shareholders, arranged in alphabetical order for
each class of stock and showing the address of each such shareholder and the
number of shares registered in the name of such shareholder, shall be open to
the examination of any shareholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten (10) days prior
to the meeting is to be held, which place shall be specified in the notice
of the meeting, or, if not so specified, at the place where the meeting is to be
held. The shareholder list shall also be produced and kept at the time and
place of the meeting during the whole time thereof, and may be inspected by any
shareholder who is present.
Section 2.8. Proxies. Each shareholder entitled to vote at a meeting of
shareholders or to express consent or dissent to a corporate action in writing
without a meeting may authorize another person or persons to act for him by
proxy. Proxies for use at any meeting of shareholders shall be filed with the
Secretary, or such other officer as the Board of Directors may from time to time
determine by resolution, before or at the time tof the meeting. All proxies
shall be received and taken charge of and all ballots shall be received and
canvassed by the secretary of the meeting, who shall decide all questions
touching upon the qualification of voters, the validity of the proxies, and
the acceptance or rejection of votes, unless an inspector or inspectors shall
have been appointed by the chairman of the meeting, in which event such
inspector or inspectors shall decide all such questions.
<PAGE> 12
No proxy shall be valid after eleven (11) months from its date, unless the
proxy provides for a longer period. Each proxy shall be revocable and coupled
with an interest sufficient in law to support an irrevocable power.
Should a proxy designate two or more persons to act as proxies, unless such
instrument shall provide the contrary, a majority of such persons present at
any meeting at which their powers thereunder are to be exercised shall have and
may exercise all the powers of voting or giving consents thereby conferred, or
if only one be present, then such powers may be exercised by that one; or, if an
even number attend and a majority do not agree on any particular issue, each
proxy so attending shall be entitled to exercise such powers in respect of such
portion of the shares as is equal to the representing such shares divided by
the total number of shares represented by such proxies.
Section 2.9. Voting; Election; Inspectors. Unless otherwise required by
law or provided in the Articles of Incorporation of the Corporation, each
shareholder shall on each matter submitted to a vote at a meeting of
shareholders have one vote for each share of the stock entitled to vote which is
registered in his name on the record date for the meeting. For the
purposes hereof, each election to fill a directorship shall constitute a
separate matter.
Shares registered in the name of another corporation, domestic or foreign,
may be voted
by such officer, agent or proxy as the bylaws (or comparable body) of such
corporation may determine. Shares registered in the name of a deceased person
may be voted by the executor or administrator of such person's estate, either in
person or by proxy.
All voting, except as required by the Articles of Incorporation of the
Corporation or where otherwise required by law, may be by a voice vote;
provided, however, upon request of the chairman of the meeting or upon demand
therefor by shareholders holding a majority of the issued and outstanding stock
present in person or by proxy at any meeting a stock vote shall be taken. Every
stock vote shall be taken by written ballots, each of which shall state the
name of the shareholder or proxy voting and such other information as may be
required under the procedure established for the meeting.
All elections of directors shall be by written ballots, unless otherwise
provided in the Articles of Incorporation of the Corporation.
At any meeting at which a vote is taken by written ballots, the chairman of
the meeting may appoint one or more inspectors, each of whom shall subscribe an
oath or affirmation to execute faithfully the duties of inspector at such
meeting with strict impartiality and according to the best of such inspector's
ability. Such inspector shall receive the written ballots, count the votes,
and make and sign a certificate of the result thereof. The chairman of the
meeting may appoint any person to serve as inspector,
except no candidate for the office of director shall be appointed as an
inspector.
<PAGE> 13
Unless otherwise provided in the Articles of Incorporation of the
Corporation, cumulative voting for the election of directors shall be
prohibited.
Section 2.10. Conduct of Meetings. The meetings of the shareholders shall
be presided over by the Chairman of the Board, or, if the Chairman of the Board
is not present, by the President, or, if neither the Chairman of the Board nor
the President is present, by a chairman elected at the meeting. The Secretary
of the Corporation, if present, shall act as secretary of such meetings, or, if
the Secretary is not present, then a secretary shall be appointed by the
chairman of the meeting.
The chairman of any meeting of shareholders shall determine the order of
business and the procedure at the meeting, including such regulation of the
manner of voting and the conduct of discussion as seem to the chairman in order.
Section 2.11. Treasury Stock. The Corporation shall not vote, directly or
indirectly, shares of its own stock owned by it and such shares shall not be
counted for quorum purposes. Nothing in this Section 2.11 shall be construed as
limiting the right of the Corporation to vote stock, including but not
limited to its own stock, held by it in a fiduciary capacity.
Section 2.12. Action Without Meeting. Unless otherwise provided in the
Articles of Incorporation of the Corporation, any action permitted or required
by law, the Articles of Incorporation of the Corporation of these Bylaws to be
taken at a meeting of shareholders, may be taken without a meeting, without
prior notice and without a vote, if a consent or consents in writing, setting
forth the action so taken, shall be signed by the holders of all the outstanding
shares entitled to vote on such action and shall be delivered to the
Corporation by delivery to its registered office in the state of
incorporation, its principal place of business, or an officer or agent of the
Corporation having custody of the book in which proceedings of meetings of
shareholders are recorded. Delivery made to the Corporation's registered office
shall be by hand or by certified or registered mail, return receipt requested.
Every written consent shall bear the date of signature of each shareholder
who signs the consent, and no written consent shall be effective to take the
corporate action referred to therein unless, within sixty (60) days of the
earliest dated consent delivered in the manner required by this Section to
the Corporation by delivery to its registered office in the state of
incorporation, its principal place of business, or an officer or agent of the
Corporation having custody of the book in which proceedings of meetings of
shareholders are recorded. Delivery made to the Corporation's registered
office shall be by hand or by certified or registered mail, return receipt
requested.
<PAGE> 14
Article 3
Board of Directors
Section 3.1. Power; Number; Term of Office. The business and affairs of
the Corporation shall be managed by or under the direction of the Board of
Directors, and, subject to the restrictions imposed by law or the Articles of
Incorporation of the Corporation, the Board of Directors may exercise all the
powers of the Corporation.
The number of directors which shall constitute the whole Board of Directors
shall be determined from time to time by the Board of Directors (provided that
no decrease in the number of directors which would have the effect of shortening
the term of an incumbent director may be made by the Board of Directors). If
the Board of Directors makes no such determination, the number of directors
shall be three. Each director shall hold office for the term for which such
have been elected and qualified or until such director's earlier death,
resignation or removal.
Unless otherwise provided in the Articles of Incorporation of the
Corporation, directors need not be shareholders nor residents of the State of
Texas.
Section 3.2. Quorum; Voting. Unless otherwise provided in the Articles of
Incorporation of the Corporation, a majority of the number of directors fixed in
accordance, with Section 3.1 shall constitute a quorum for the transaction of
business of the Board of Directors and the vote of a majority of the directors
present at a meeting at which a quorum is present shall be the act of the
Board of Directors.
Section 3.3. Place of Meetings; Order of Business. The directors may hold
their meetings and may have an office and keep the books of the Corporation,
except as otherwise provided by law, in such place or places, within or without
the State of Texas of the Corporation, as the Board of Directors may from time
to time determine. At all meetings of the Board of Directors business shall be
transacted in such order as shall from time to time be determined by the
Chairman of the Board, or in the Chairman of the Board's absence by the
President or by the Board of Directors.
Section 3.4. First Meeting. Each newly elected Board of Directors may
hold its first meeting for the purpose of organization and the transaction of
business, if a quorum is present, immediately after and at the same place as the
annual meeting of the shareholders. Notice of such meeting shall not be
required. At the first meeting of the Board of Directors in each year at
which a quorum shall be present, held after the annual meeting of
shareholders, the Board of Directors shall elect the officers of the
Corporation.
Section 3.5. Regular Meetings. Regular meetings of the Board of Directors
shall be held at such times and places as shall be designated from time to time
by the Chairman of the Board, or in the Chairman of the Board's absence, by the
President, or in the President's absence, by another officer of the Corporation.
Notice of such regular meetings shall not be required.
<PAGE> 15
Section 3.6. Special Meetings. Special meetings of the Board of Directors
may be called by the Chairman of the Board, or in the Chairman of the Board's
absence, by the President, or, on the written request of any director, by the
Secretary, in each case on at least twenty-four (24) hours' personal, written,
telegraphic, cable or wireless notice to each director. Such notice, or any
waiver thereof pursuant to Article 7, Section 7.3 hereof, need not state the
purpose or purposes of such meeting, except as may otherwise be required by
law or provided for in the Articles of Incorporation of the Corporation or
these Bylaws. Meetings may be held at any time without notice if all the
directors are present or if those not present waive notice of the meeting in
writing.
Section 3.7. Removal. Any director or the entire Board of Directors may
be removed, with or without cause, by the holders of a majority of the shares
then entitled to vote an election of directors.
Section 3.8. Vacancies; Increases in the Number of Directors. Unless
otherwise provided in the Articles of Incorporation of the Corporation,
vacancies existing on the Board of Directors for any reason may be filed by the
affirmative vote of a majority of the directors then in office, although less
than a quorum, or by a sole remaining director; and any director so chosen
shall hold office until the next annual election and until such director's
successor shall have been elected and qualified, or until such director's
earlier death, resignation or removal.
Section 3.9. Compensation. Directors and members of standing committees
may receive such compensation as the Board of Directors from time to time shall
determine to be appropriate, and shall be reimbursed for all reasonable expenses
incurred in attending and returning from meetings of the Board of Directors.
Section 3.10. Action Without a Meeting; Telephone Conference Meeting.
Unless otherwise restricted by the Articles of Incorporation of the Corporation,
any action required or permitted to be taken at any meeting of the Board of
Directors or any committee designated by the Board of Directors may be taken
without a meeting if all members of the Board of Directors or committee, as the
case may be, consent thereto in writing, and the writing or writings are filed
with the minutes of proceedings of the Board of Directors or committee. Such
consent shall have the same force and effect as a unanimous vote at a
meeting, and may be stated as such in any document or instrument filed with
the Secretary of State of the state of incorporation of the Corporation.
Unless otherwise restricted by the Articles of Incorporation of the
Corporation, subject to the requirement for notice of meetings, members of the
Board of Directors, or members of any committee designated by the Board of
Directors, may participate in a meeting of such Board of Directors or committee,
as the case may be by means of a conference telephone connection or similar
communications equipment by means of which all persons participating in the
meeting shall hear each other, and participation in such a meeting shall
constitute presence in person at such meeting, except where a person
participates in the meeting for the express purpose of objecting to the
transaction if any business on the ground that the meeting is not lawfully
called or convened.
<PAGE> 16
Section 3.11. Approval or Ratification of Acts or Contracts by
Shareholders. The Board of Directors in its discretion may submit any act or
contract for approval or ratification at any annual meeting of the shareholders,
or at any special meeting of the shareholders called for the purpose of
considering any such act or contract, and any act of contract that shall be
approved or be ratified by the vote of the shareholders holding a majority of
the issued and outstanding shares of stock of the Corporation entitled to vote
and present in person or by proxy at such meeting (provided that a quorum is
present) shall be as valid and as binding upon the Corporation and upon all the
shareholders as if it has been approved or ratified by every shareholder of the
Corporation. In addition, any such act or contract may be approved or ratified
by the written consent of shareholders holding all of the issued and outstanding
shares of capital stock of the Corporation entitled to vote, and such consent
shall be as valid and binding upon the Corporation and upon all the shareholders
as if it had been approved or ratified by every shareholder of the Corporation.
Article 4
Committees
Section 4.1. Designation; Powers. The Board of Directors may, by
resolution passed by a majority of the whole board, designate one or more
committees, including, if they shall so determine, an executive committee, with
each such committee to consist of one or more of the directors of the
Corporation. Any such designated committee shall have and may exercise such
of the powers and authority of the Board of Directors in the management of
the business and affairs of the Corporation as may be provided in such
resolution, except that no such committee shall have the power or authority
of the Board of Directors in reference to amending the Articles of Incorporation
of the Corporation, adopting an agreement of merger of consolidation,
recommending to the shareholders the sale, lease, or exchange of all or
substantially all of the Corporation's property and assets, recommending to
the shareholders a dissolution of the Corporation or a revocation of a
dissolution of the Corporation, or amending, altering or repealing these
Bylaws or adopting mew bylaws for the Corporation. Any such designated
committee may authorize the seal of the Corporation to be affixed to all papers
which may require it. In addition to the above, such committee or committees
shall have such other powers and limitations of authority as may be determined
from time to time by the Board of Directors.
Section 4.2. Procedure; Meetings; Quorum. Any committee designated
pursuant to this Article 4 shall keep regular minutes of its actions and
proceedings in a book provided for that purpose and report the same to the Board
of Directors at its meeting next succeeding such action, shall fix its own rules
or procedures, and shall meet at such times and at such place or places as may
be provided by such rules, or by such committee or the Board of Directors.
Should a committee fail to fix its own rules, the provisions of these Bylaws
pertaining to the calling of meetings and conduct of business by the Board of
Directors shall apply as nearly as may be possible. At every meeting of any
such committee, the presence of a majority of all the members thereof shall
constitute a quorum, except as provided in Section 4.3 of this Article 4, and
the affirmative vote of a majority of the members present shall be necessary for
the adoption by it of any resolution.
<PAGE> 17
Section 4.3. Substitution and Removal of Members; Vacancies. The Board of
Directors may designate one or more directors as alternate members of any
committee, who may replace any absent or disqualified member at any meeting of
such committee. In the absence or disqualification of a member of a committee,
the member or members present at any meeting and not disqualified from voting,
whether or not constituting a quorum, may unanimously appoint another member of
the Board of Directors to act at the meeting in the place of the absent or
disqualified member. The Board of Directors shall have the power at any time
to remove any member(s) of a committee and to appoint other directors in lieu
of the person(s) so removed and shall also have the power to fill vacancies
in a committee.
Article 5
Officers
Section 5.1. Number, Titles and term of Office. The officers of the
Corporation shall be a Chairman of the Board, President, a Secretary, and such
other officers as the Board of Directors may from time to time elect or appoint
(including, but not limited to, a Treasurer, one or more Vice Presidents,
Assistant Secretaries and one or more Assistant Treasurers). Each officer shall
hold office until such officer's successor shall be duly elected and shall
qualify or until such officer's death or until such officer shall resign or
shall have been removed. Any number of offices may be held by the same
person, unless the Articles of Incorporation of the Corporation provide
otherwise.
Except for the Chairman of the Board, no officer need be a director.
Section 5.2. Powers and Duties of the Chairman of the Board. The Chairman
of the Board shall be the chief executive officer of the Corporation. Subject
to the control of the Board of Directors and the Executive Committee (if any),
the Chairman of the Board shall have general executive charge, management and
control of the properties, business and operations of the Corporation with all
such powers as may be reasonably incident to such responsibilities; may agree
upon and execute all leases, contracts, evidences of indebtedness and other
obligations in the name of the Corporation and may sign all certificates for
shares of capital stock of the Corporation; and shall have such other
powers and duties as designated in accordance with these Bylaws and as from
time to time may be assigned to the Chairman of the Board by the Board of
Directors. The Chairman of the Board shall preside at all meetings of the
shareholders and of the Board of Directors.
Section 5.3. Powers and Duties of the President. Unless the Board of
Directors otherwise determines, the President shall have the authority to agree
upon and execute all leases, contracts, evidences of indebtedness and other
obligations in the name of the Corporation; and, unless the Board of Directors
otherwise determines, the President shall, in the absence of the Chairman of the
Board or if there be no Chairman of the Board (should the President be a
director) preside at all meetings of the shareholders and of the Board of
Directors; and the President shall have such other powers and duties as
designated in accordance with these Bylaws and as from time to time may be
assigned to the President by the Board of Directors or the Chairman of the
Board.
<PAGE> 18
Section 5.4. Secretary. The Secretary shall keep the minutes of all
meetings of the Board of Directors and the shareholders, in books provided for
that purpose; shall attend to the giving and serving of all notices; may in the
name of the Corporation affix the seal of the Corporation to all contracts and
attest the affixation of the seal of the
Corporation thereto; may sign with the other appointed officers all certificates
for shares of capital stock of the Corporation; shall have charge of the
certificate books, transfer books and stock ledgers, and such other books and
papers as the Board of Directors may direct, all of which shall at all
reasonable times be open to inspection of any director upon application at
the office of the Corporation during business hours; shall have such other
powers and duties as designated in these Bylaws and as from time to time may be
assigned to the Secretary by the Board of Directors, the Chairman of the Board,
the President or the Vice Chairman of the Board; and shall in general perform
all acts incident to the office of Secretary, subject to the control of the
Board of Directors, the Chairman of the Board or the President.
Section 5.5. Action Without Respect to Securities of Other Corporations.
Unless otherwise directed by the Board of Directors, the Chairman of the Board
or the President, together with the Secretary shall have power to vote and
otherwise act on behalf of the Corporation, in person or by proxy, at any
meeting of security holders of any other corporation in which this Corporation
may hold securities and otherwise exercise any and all rights and powers which
this Corporation may possess by reason of its ownership of securities in such
other corporation.
Section 5.6. Delegation. For any reason that the Board of Directors may
deem sufficient, the Board of Directors may, except where otherwise provided by
statue, delegate the powers or duties of any officer to any other person, any
may authorize any officer to delegate specified duties of such office to any
other person. Any such delegation or authorization by the Board shall be
effected from time to time by resolution of the Board of Directors.
Article 6
Capital Stock
Section 6.1. Certificates of Stock. The certificates for shares of the
capital stock of the Corporation shall be in such form, not inconsistent with
that required by law and the Articles of Incorporation of the Corporation, as
shall be approved by the Board of Directors. Every holder of stock represented
by certificates shall be entitled to have a certificate signed by or in the name
of the Corporation by the Chairman of the Board or President and the Secretary
of the Corporation representing the number of shares (and, if the stock of
the Corporation shall be divided into classes or series, certifying the class
and series of such shares) owned by such shareholder which are registered in
certified form; provided, however, that any of or all the signatures on the
certificate may be facsimile. The stock record books and the blank stock
certificate books shall be kept by the Secretary or at the office of such
transfer agent or transfer agents as the Board of Directors may from time to
time determine. In case any officer, transfer agent or registrar who shall
have signed or whose facsimile signature or signatures shall have
<PAGE>19
been placed upon any such certificate or certificates shall have ceased to be
such officer, transfer agent or registrar before such certificate is issued by
the Corporation, such certificate may nevertheless be issued by the Corporation
with the same effect as if such person were such officer, transfer agent or
registrar at the date of issue. The stock certificates shall be consecutively
numbered and shall be entered in the books of the Corporation as they are issued
and shall exhibit the holder's name and number of shares.
Section 6.2. Transfer of Shares. The shares of stock of the Corporation
shall be transferable only on the books of the Corporation by the holders
thereof in person or by their duly authorized attorneys or legal representatives
upon surrender and cancellation of certificates for a like number of shares.
Upon surrender to the Corporation or a transfer agent of the Corporation of a
certificate for shares duly endorsed or accompanied by proper evidence of
succession assignment or authority to transfer, it shall be the duty of the
Corporation to issue a new certificate to the person entitled thereto, cancel
the old certificate and record the transaction upon its books.
Section 6.3. Ownership of Shares. The Corporation shall be entitled to
treat the holder of record of any share of shares of capital stock of the
Corporation as the holder in fact thereof and, accordingly, shall not be bound
to recognize any equitable or other claim to or interest in such share or shares
on the part of any other person, whether or not it shall have express or other
notice thereof, except as otherwise provided by the laws of the State of Texas.
Section 6.4. Regulations Regarding Certificates. The Board of Directors
shall have the power and authority to make all such rules and regulation as they
may deem expedient concerning the issue, transfer and registration or the
replacement of certificates for shares of capital stock of the Corporation.
Section 6.5. Lost or Destroyed Certificates. The Board of Directors may
determine the conditions upon which the Corporation may issue a new certificate
of stock in place of a certificate theretofore issued by it which is alleged to
have been lost, stolen or destroyed and may require the owner of such
certificate or such owner's legal representative to give bond, with surety
sufficient to indemnify the Corporation and each transfer agent and registrar
against any and all losses or claims which may arise by reason of the alleged
loss, theft or destruction of any such certificate or the issuance of such
new certificate in the place of the one so lost, stolen or destroyed.
Article 7
Miscellaneous Provisions
Section 7.1. Fiscal Year. The fiscal year of the Corporation shall begin
on the first day of January of each year.
Section 7.2. Corporate Seal. The corporate seal shall be circular in form
and shall have inscribed thereon the name of the Corporation and the state of
its incorporation, which seal shall be in the charge of the Secretary and shall
be affixed to certificates of stock, debentures, bonds, and other documents, in
accordance with the direction of the Board of Directors or a committee thereof,
and as may be required by law; however, the Secretary may, if the Secretary
deems it expedient, have a facsimile of the corporate seal inscribed on any
such certificates of stock, debentures, bonds, contract or other documents.
<PAGE>20
Section 7.3. Notice and Waiver of Notice. Whenever any notice is
required to be given by law, the Articles of Incorporation of the
Corporation or under the provisions of these Bylaws, said notice shall
be deemed to be sufficient if given (i) by telegraphic, cable or wireless
transmission (including by telecopy or facsimile transmission) or (ii)
by deposit of the same in a post office box or by delivery to an overnight
courier service company in a sealed prepaid wrapper addressed to the
person entitled thereto at such person's post office address, as it appears
on the records of the Corporation, and such notice shall be deemed to have
been given on the day of such transmission or mailing or delivery to courier,
as the case may be.
Whenever notice is required to be given by law, the Articles of
Incorporation of the Corporation or under any of the provisions of these
Bylaws, a written waiver thereof, signed by the person entitled to notice,
whether before or after the time stated therein, shall be deemed equivalent
to notice. Attendance of a person, including without limitation a director,
at a meeting shall constitute a waiver of notice of such meeting, except
when the person attends a meeting for the express purpose of objecting,
at the beginning of the meeting, to the transaction of any business because
the meeting is not lawfully called or convened. Neither the business to be
transacted at, nor the purpose of, any regular or special meeting of the
shareholders, directors, or members of a committee of directors need to
be specified in any written waiver of notice unless so required by the
Articles of Incorporation of the Corporation or these Bylaws.
Section 7.4. Facsimile Signatures. In addition to the provisions for the
use of facsimile signatures elsewhere specifically authorized in these Bylaws,
facsimile signatures of any officer or officers of the Corporation may be used
whenever and as authorized by the Board of Directors.
Section 7.5. Reliance upon Books, Reports and Records. A member of the
Board of Directors, or a member of any committee designated by the Board of
Directors, shall, in the performance of such person's duties, be protected to
the fullest extent permitted by law in relying upon the records of the
Corporation and upon information, opinion, reports or statements presented to
the Corporation.
Section 7.6. Application of Bylaws. In the event that any provisions of
these Bylaws is or may be in conflict with any law of the United States, of the
State of Texas or of any other governmental body or power having jurisdiction
over this Corporation, or over the subject matter to which such provision of
these Bylaws applies, or may apply, such provision of these Bylaws shall be
inoperative to the extent only that the operation thereof unavoidably
conflicts with such law, and shall in all other respects be in full force
and effect.
Article 8
Indemnification of Officers and Directors
Section 8.1. Indemnification. As permitted by Section G of Article 2.02-1
of the Texas Business Corporation Act or any successor statute (the
"Indemnification Article"), the Corporation hereby:
<PAGE> 21
(a) makes mandatory the indemnification permitted under Section B of
the Indemnification Article as contemplated by Section G thereof;
(b) makes mandatory its payment or reimbursement of the reasonable
expenses incurred by a former or present director who was, is, or is
threatened to be made a named defendant or respondent in a proceeding
upon such director's compliance with the requirements of Section K
of the Indemnification Article; and
(c) extends the mandatory indemnification referred to in Section
8.1(a) above and the mandatory payment or reimbursement of expenses
referred to in Section 8.1(b) above (i) to all former or present officers
of the Corporation and (ii) to all persons who are or were serving at
the request of the Corporation as a director, officer, partner or trustee
of another foreign or domestic corporation, partnership, joint venture,
trust or employee benefit plan, to the same extent that the Corporation
is obligated to indemnify and pay or reimburse expenses to directors.
Section 8.2. Nonexclusivity. The indemnification provided by this
Article shall not be deemed exclusive of any other rights to which the
person indemnified may be entitled under any bylaw, agreement,
authorization of shareholders or disinterested directors or otherwise,
both as to action in such person's official capacity and as to action in
another capacity while holding such office, and shall continue as to a
person who has ceased to be a director, officer, employee or agent and
shall inure to the benefit of such person.
<PAGE>1
Jody M. Walker
Attorney At Law
7841 South Garfield Way
Littleton, Colorado 80122
Telephone: (303) 850-7637
Facsimile: (303) 220-9902
August 20, 1996
Re: OPINION RE: LEGALITY AND CONSENT OF COUNSEL TO
USE OF NAME IN THE REGISTRATION STATEMENT ON FORM S-1
OF TRINITY WORKS, INC.
I am securities counsel for the above mentioned corporation and I have
prepared the registration statement on Form S-1. I hereby consent to the
inclusion and reference to my name in the Registration Statement on Form
S-1 for Trinity Works, Inc.
It is my opinion that the securities of the Trinity Works, Inc. and which are
registered with the Securities and Exchange Commission pursuant to Form
S-1 Registration Statement of Trinity Works, Inc. have been legally issued
and will be, when distributed and/or sold, legally issued, fully paid and
non-assessable.
Very truly yours,
/s/ Jody M. Walker
- --------------------------------------------
Jody M. Walker
<PAGE>1
REPORT OF INDEPENDENT CERTIFIED ACCOUNTANT
We consent to the use, in this Registration Statement of Trinity Works,
Inc., our report dated March 15, 1996 appearing in the prospectus, which is
a part of such Registration Statement.
/s/ Winter, Scheifley & Associates, P.C.
-------------------------------------------------
Winter, Scheifley & Associates, P.C.
<PAGE>1
CONSULTING AGREEMENT
This Consulting Agreement is entered into between Pratt, Wylce & Lords,
Ltd. a Nevada Corporation (PWL) and Trinity Works, Inc. (Client), (the
"Agreement") with reference to the following facts.
Client has expressed a desire to enter into this Agreement with PWL for
PWL to provide consulting services through which Client will become a
publicly traded company (the "Services") PWL is in the business of
providing such services and desires to enter into an Agreement with Client
to provide such "Services". This Agreement is for the purpose of defining
the services provided and the rights and responsibilities of both parties.
1. SERVICES PROVIDED BY PWL
1. PWL agrees to prepare or cause to be prepared a suitable business plan
for Client. This business plan will be prepared in a format acceptable to the
securities industry and will be prepared from information provided by Client
(optional)
2. PWL will recommend a structure for Client's entry into the public
market. This structure will be approved by Client. The structure will
include distribution to shareholders, creditors, and other parties and will
include agreed upon capital formation requirements of Client.
3. PWL will prepare, through its securities counsel, a Private Placement
Memorandum or other private bridge financing in the amount of a minimum
of $300,000 and a maximum of $600,000. PWL will also use its contacts
and sources on a best efforts basis to locate suitable licensed sources to
assist in the completion of the PPM.
4. PWL will, if requested, provide or arrange to be provided, such
accounting services as necessary to complete audits of Client's books in
order to proceed with the preparation and filing of the registration. (Clients
expense)
5. PWL will prepare and file, through its securities counsel, a Registration
Statement on Form S1 with the Securities and Exchange Commission
(SEC). Securities to be registered in said registration include the stock
issued to PWL, and other such stock as agreed upon by both parties.
6. Upon the effectiveness of the Registration Statement, PWL agrees to
distribute to its shareholders up to 40% of the voting common shares it
receives from Client as set forth herein.
<PAGE>2
7. PWL will prepare such packaging and promotional materials as PWL
and Client deem necessary as outlined in Exhibit C. Client will approve all
materials prior to completion.
8. PWL will prepare a form 15c2-11 and coordinate its distribution to the
brokerage community at its own expense for the purpose of establishing a
market for the stock and arrange a listing on the Over the Counter Market.
9. PWL agrees to use its expertise and business contacts to arrange for the
establishment of a market for Client's stock once the Statement of
Registration is effective and the stock distribution complete. "Market" is
defined as a listing on the Over the Counter Market (either NASDAQ or
Bulletin Board) with a minimum of 3 market makers quoting the stock.
10. PWL agrees to use its expertise and business contacts to arrange for the
continued promotion of Client's stock. This promotion will be evidenced
by the implementation of a financial relations program created by PWL and
described in Exhibit C and paid for by Client according to the fees disclosed
in this agreement.
11. PWL agrees to arrange for the inclusion of the Company in either
Moody's company listing services for the purpose of expanding the
marketability of the stock. PWL will obtain the application for the Client
and assist the Client in preparing the applications. PWL will pay the initial
fees on behalf of the client.
12. PWL agrees to provide consulting services on as needed basis to Client
for a period of 1 year from this Agreement at no additional cost to client and
will make itself available to render advice to Client concerning but not
limited to shareholder relations, market strategy, broker relations and
additional capitalization and any other subjects as may fall under the services
provided within this contract.
2. RESPONSIBILITIES OF CLIENT
1. Client agrees to provide PWL such financial, business and other material
and information about Client, its products, services, contracts, litigation,
patents, trademarks and other such business matters which PWL may
request and which PWL considers to be important and material information
for the completion of this contract.
2. Client agrees to provide PWL or its attorneys and accountants all
material requested in order to prepare a registration document. These
materials include but are not limited to articles of incorporation and all
amendments thereto, by laws of the corporation, its minutes and resolutions
of all shareholders and board of directors meetings, a copy of the share
register showing the names, addresses and social security number of
shareholders and the dates of issuance and the numbers of shares owned by
each resume for each officer and director of the corporation and audited
financial statements providing balance sheets for the two previous years and
Statement of Operations for the three previous years.
<PAGE>3
3. Client agrees to provide PWL with monthly financial statements Balance
Sheets and Profit and Loss statements utilizing "GAP" accounting until the
effective date of the registration and the Client also agrees to notify PWL of
any changes in the status or nature of its business, any litigation, or any
other developments that may require further disclosure in the registration or
other documents.
3. CASH COMPENSATION
PWL will receive a total fee equal to $95,000 for the above services
rendered which includes any and all expenses by PWL in accordance with
this Agreement,:
Development of corporate and capitalization structure, preparation of
registrations including all attorneys fees, preparation of 15c211,
establishment of initial markets. (items 2,5,8,9) $95,000
Packaging of Corporation & Stock Promotion (item 7 & 10) basic
$negotiable
Registration with Moody's (item 11) $included
Provide Consulting Services for 12 months $included
Cash fees to PWL are to be paid $75,000 upon the funding of the minimum
amount of the Private Placement as indicated in item 1.3 and the balance
upon closing the Private Placement.
4. ADDITIONAL CONSIDERATION
In addition to the above cash consideration, PWL will receive from Client
348,000 shares of common stock in Client (the Stock). Said amount of
stock is based upon the structure as indicated in Exhibit B.
Stock will be paid to PWL the execution of this agreement.
5. REPRESENTATIONS BY PWL
1. PWL represents warrants and convenants the following:
2. PWL is a corporation duly organized and existing under
the laws of Nevada and is in good standing with the jurisdiction of its
incorporation.
3. PWL will disclose to Client all material facts and circumstances which
may affect its ability to perform its undertaking herein.
4. PWL will cooperate in a prompt and professional manner with Client,
its attorneys, accounts and agents in the performance of this Agreement.
<PAGE>4
6. REPRESENTATIONS OF CLIENT
1. Client represents warrants and covenants the following:
2. Corporation will cooperate fully with PWL in executing the
responsibilities required under this contract so that PWL may fulfill its
responsibilities in a timely manner.
3. Client will not circumvent this Agreement either directly or indirectly nor
will it interfere with, impair, delay or cause PWL to perform work not
described in this Agreement.
4. Client and each of its subsidiaries is a corporation duly organized and
existing under the laws of its state of incorporation and is in good standing
with the jurisdiction of its incorporation in each state where it is required to
be qualified to do business.
5. Client's articles of incorporation and bylaws delivered pursuant to this
Agreement are true and complete copies of same and have been duly
adopted.
6. Client will cooperate in a prompt and professional manner with PWL,
its attorneys, accountants and agents during the performance of the
obligations due under this Agreement.
7. Client represents that no person has acted as a finder or investment
advisor in connection with the transactions contemplated in this letter other
than those listed on Exhibit A, and Client will indemnify PWL with respect
to any claim for a finders fee in connection with this Agreement. Client
represents that no officer, director or stockholder of the company is a
member of the NASD, and employee or associated member of the NASD,
or an employee or associated person or member of the NASD. Client
represents that is separately has disclosed to PWL all potential conflicts of
interest involving officers, directors, principal stockholders and/or
employees.
7. CONFIDENTIALITY
PWL agrees that all information received from Client shall be treated as
confidential information and PWL shall not share such information with any
other person or entity, except the SEC, attorneys and accountants, without
the express written consent of Client, unless such disclosure will not cause
damages to Client.
Client agrees not to divulge each and any named source (lending,
institutions, investors, individuals, Brokers, etc.) which have been
introduced by PWL for a period of one year from the execution of this
Agreement. Furthermore, Client agrees not to circumvent, either directly or
indirectly, the relationship that each PWL has with said sources.
<PAGE>5
8. NOTICES
Any notices from either party to the other shall be deemed received on the
date such notice is personally delivered. Any notice sent by fax
transmission shall be deemed received by the other party on the day it has
been transmitted. Any notice sent by mail by either party to the other shall
be deemed received on the third business day after is has been deposited at a
United States Post Office. For purposes of delivering or sending notice to
the parties to this Agreement such notices shall be delivered or sent as
follows:
If notice is delivered to PWL: If notice is to be
delivered to Client:
Pratt, Wylce & Lords, Ltd. Trinity Works, Inc.
804 Colorado Blvd. 1931 East Ben White Blvd
PO Box 1427 Suite 900
Idaho Springs, CO 80452 Austin, TX 78741
Telephone # 303-567-0839 Phone # 512-440-7852
Fax # 303-567-0841 Fax # 512-440-7143
9. ENTIRE AGREEMENT
Neither party has made any representations to the other which are not
specifically set forth in this Agreement. There are no oral other agreements
between the parties which have been entered into prior or
contemporaneously with the formation of this Agreement. All oral
promises, agreements, representations, statements and warranties
hereinafter asserted by one party against the other shall be deemed to have
been waived by such party asserting that they were made and this
Agreement shall supersede all prior negotiations, statements representations,
warranties and agreements made or entered into between the parties to this
Agreement.
10. NO ASSIGNMENT
Neither party may assign any benefit due or delegate performance under this
Agreement without the express written consent of the other party except as
noted herein: Jody M Walker atty.-at-Law shall contract with the Client and
shall be paid by PWL for the preparation and filing of the S1 registration.
11. GOVERNING LAW
This Agreement shall be governed by and construed in accordance with the
laws of the State of Colorado. It shall also be construed as if the parties
participated equally in its negotiation and drafting. The Agreement shall not
be construed against one party over another party.
<PAGE>6
12. ATTORNEYS FEES
In any action concerning the enforcement, breach, or interpretation of this
Agreement, the prevailing party shall be entitled to recover its costs of suit
and reasonable attorneys fees from the other party, in addition to any other
relief granted by the court.
13. WAIVER
The waiver of any provision of this Agreement by either party shall not be
deemed to be a continuing waiver of any other provision of this Agreement
by either party.
14. SEVERABILITY
If any provision of this Agreement or any subsequent modifications hereof
are found to be unenforceable by a court of competent jurisdiction, the
remaining provisions shall continue to remain in full force and effect.
15. AUTHORITY TO ENTER INTO AGREEMENT
The individuals signing this Agreement below represent to each other that
they have the authority to bind their respective corporations to the terms and
conditions of this Agreement. The individuals shall not, however have
personal liability by executing this officers of the Client and PWL
respectively.
Dated this 25th of October, 1995 Dated this 25th of
October, 1995
Pratt, Wylce, & Lords, Ltd. Trinity Works, Inc.
by by
President President
<PAGE>7
EXHIBIT A
The following individuals will be compensated by Pratt, Wylce, & Lords,
Ltd. in the amounts shown:
Clinton Clark $17,500
Alan Filson $20,000
Alan Filson 25,000 Shares
The following individuals will be compensated by Trinity Works, Inc. in
the
amounts shown.
Clinton Clark 87,000 Shares
The above compensation is the total compensation to the above named
parties unless disclosed in writing.
<PAGE>8
EXHIBIT B
Trinity Works, Inc. and PWL will mutually agree upon the following
reorganization plan Alternate reorganization structures may also be chosen
with the approval of both parties.
Trinity Works, Inc. will reorganize its corporate structure as follows:
Trinity Works, Inc. will authorize the issuance of 50,000,000 of common
stock and adjust the total issued and outstanding to provide current
shareholders with 1,615,000 shares. The Board of Directors will then
approve the following:
The issuance of 348,000 shares of common stock to Pratt, Wylce & Lords,
Ltd. and 87,000 common shares to Clinton Clark as compensation pursuant
to this agreement.
The distribution of 100,000 A Common stock purchase Warrants
exercisable at $4.00, 100,000 B Common stock purchase Warrants
exercisable at $6.00 and 25,000 Class C common stock purchase warrants
exercisable at $10.00. The warrants will be distributed pro rata to
shareholders of record following the issuance of the 1,615,000 shares as
previously mentioned.
The authorization and issuance of 400,000 shares of common stock subject
to a Private Placement Memorandum. Said shares shall be sold at a rate of
$1.50 per share.
<PAGE>9
EXHIBIT C
CORPORATE PACKAGE
- - 1-2 sided, 2 color Corporate Profile (5000 reprints)
- - 1-11 x 14 bi-fold full color Corporate Profile with 2-
1/4 page pictures. (3000 reprints)
- - Full Color Glossy pocket folder (1000 reprints)
- - 5 Minute Corporate Video
- - Card Deck mailing to 100,000 US investors plus 50,000
US brokers
- - Utilization of a publicist provided by PWL from the
effective date of the registration to the end of the
contract.
Financial relations and promotions will be implemented by Pratt, Wylce &
Lords, Ltd.'s. Financial Relations Manager.
NOTE: Additional financial relations may be required in order to complete
capitalization. If so, additional financial relations work may be required.
This work will include but may not be limited to the following:
Press Releases strategically placed in Investors Business Daily
Full page Corporate profiles in Financial World or other similar
publications.
Additional mass distribution, direct response mailings by a "stock deck" or
other similar instrument.
Other lead generation, financial relations packages as agreed upon by Client
and PWL.
Approximate cost Approximately 5% of the exercise price of the Warrants
to be exercised.
All financial relations and broker relations work will be done with the
approval of PWL and Client.
