SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(X) QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
( ) TRANSACTION REPORT UNDER SECTION 14 OR 15(D) OF THE EXCHANGE ACT
For the transition period from to
-------- ---------
TRIMFAST GROUP, INC.
--------------------
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Nevada 0-26675 88-0367136
------ ------- ----------
(State or other jurisdiction of (Commission File (IRS Employer
incorporation or organization) No.) Identification
No.)
777 S. Harbour Island Boulevard #780 Tampa, FL. 33602 (813) 275-0050
--------------------------------------------------------------------------------
(Address and Telephone number of principal executive offices)
Check whether the issuer has (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months, (or such
shorter period that the Registrant was required to file such report(s), and (2)
has been subject to such filing requirements for the past 90 days.
Yes(X) No( )
APPLICABLE ONLY TO CORPORATE ISSUERS
----------------------------------------
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the Latest practicable date: September 30, 2000
CLASS Outstanding at September 30, 2000
---------------------------- ----------------------------
Common stock $.001 Par Value 5,223,638
<PAGE>
TRIMFAST GROUP, INC. AND SUBSIDIARIES
PART I: FINANCIAL INFORMATION PAGE
----
Accountants Review Report 3
Consolidated Balance Sheets as of
September 30, 2000 and 1999 (Unaudited)
and December 31, 1999 (Unaudited and restated) 4
Consolidated Statements of Operations for
One Year Ending December 31, 1999 (Unaudited and
restated) and the Three and Nine Month Periods
Ending September 30, 2000 and 1999 (Unaudited) 5
Consolidated Statement of Cash Flows
for the Nine Months Ending September 30, 2000
and 1999 (Unaudited) 6
Consolidated Statement of Changes in Stockholders'
Equity for the one year ended December 31, 1998 and
1999 (Unaudited and Restated) and for the Nine Months
Ended September 30, 2000 (Unaudited) 7-8
Notes to Consolidated Financial Statements
(Unaudited) as of September 30, 2000 9-14
Management Discussion and Analysis of Financial
Condition and Results of Operations 15-16
PART II: OTHER INFORMATION AND SIGNATURES
Item 1. Legal Proceedings 16-17
Item 2. Changes in Securities and Use of Proceeds 17
Item 3. Defaults Upon Senior Securities. 17
Item 5. Other Information 18
Signatures 19
2
<PAGE>
JOHN P. SEMMENS CPA A PROFESSIONAL CORPORATION
24501 DEL PRADO SUITE A DANA POINT, CALIFORNIA 92629
TEL: (949) 496-8800 FAX: (949) 443-0642
Trimfast Group, Inc.
Tampa, Fl. 33602
November 13, 2000
Gentlemen,
We have reviewed the accompanying balance sheet of Trimfast Group, Inc. and its
subsidiaries as of September 30, 2000, and the related statements of income,
retained earnings and cash flows for the three and nine months then ended, in
accordance with Statements on Standards for Accounting and Review Services
issued by the American Institute of Certified Public Accountants. All infor-
mation included in these financial statements is the representation of the
management of Trimfast Group, Inc.
A review consists principally of inquires of company personnel and analytical
procedures applied to financial data. It is substantially less in scope than an
audit in accordance with generally accepted auditing standards, the objective of
which is the expression of an opinion regarding the financial statements taken
as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the accompanying financial statements in order for them to be in
conformity with generally accepted accounting principles.
As discussed in the December 31, 1999 financial statements, certain conditions
indicate that the Company may be unable to continue as a going concern. The
accompanying financial statements do not include any adjustments to the finan-
cial statements that might be necessary should the Company be unable to continue
as a going concern.
Respectfully submitted,
/s/ John P. Semmens, CPA
----------------------------
John P. Semmens CPA
3
<PAGE>
<TABLE>
<CAPTION>
TRIMFAST GROUP, INC.
INTERIM CONSOLIDATED BALANCE SHEET
AS OF DECEMBER 31, 1999 (Unaudited) AND SEPTEMBER 30, 1999 and 2000 (Unaudited)
ASSETS
CURRENT ASSETS
DECEMBER 31, 1999 SEPTEMBER 30, 1999 SEPTEMBER 30, 2000
(UNAUDITED) (UNAUDITED) (UNAUDITED)
-------------------- -------------------- ---------------------
<S> <C> <C> <C>
Cash $35,858 $59,092 $6,927
Short-term investments 8,406 $41,220 $0
Accounts Receivable- Trade 88,281 318,407 57,046
Accounts Receivable- Other 279,250 512,278 281,251
Inventory 281,313 377,270 371,058
-------------------- -------------------- ---------------------
Total Current Assets 693,108 1,308,267 716,282
PROPERTY AND EQUIPMENT - NET 1,417,381 1,459,270 1,623,174
OTHER ASSETS
Prepaid expenses 42,857 50,000 31,395
Deposits 15,200 15,000 115,985
Other long term investments 0 2,187,500
Cash surrender value of life insurance 12,636 12,646 12,636
Software - Net 210,814 228,705 213,355
Goodwill - Net 52,754 54,708 2,337,382
-------------------- -------------------- ---------------------
Total Other Assets 334,261 361,059 4,898,253
-------------------- -------------------- ---------------------
TOTAL ASSETS $2,444,750 $3,128,596 $7,237,709
==================== ==================== =====================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses $718,362 $926,612 $1,116,571
Income taxes payable 20,600 20,600 20,600
Notes and loans payable 218,675 33,881 1,746,613
Stock Repurchase Commitment 1,278,750 0 0
Convertible debentures 1,000,000 1,000,000 1,900,000
-------------------- -------------------- ---------------------
Total Current Liabilities 3,236,387 1,981,093 4,783,784
LONG TERM LIABILITIES
Notes and loans payable 0 0 63,718
-------------------- -------------------- ---------------------
Total Long Term Liabilities 0 0 63,718
-------------------- -------------------- ---------------------
TOTAL LIABILITIES 3,236,387 1,981,093 4,847,502
-------------------- -------------------- ---------------------
REDEEMABLE PREFERRED STOCK
Preferred Stock, Class A, $0.01 par value; 20,000,000
shares authorized 15,000 shares issued and outstanding
as of September 30, 1999, December 31, 1999 and
September 30, 2000 1,923,051 0 2,313,051
STOCKHOLDERS' EQUITY
Preferred Stock, Class B, $ 0.01 par value;
20,000,000 shares authorized; none issued and
outstanding 0 150 0
Common Stock, $0.001 par value; 100,000,000 shares
authorized 4,501,682; 4,540,978 and 5,223,638 shares
issued and outstanding as of December 31, 1999,
September 30, 1999 and 2000 respectively 4,501 4,541 5,207
Common Stock to be issued (20,000 shares) as of
December 31, 1999 and September 30, 2000 and
(8,000 shares) as of September 30, 1999 20 8 20
Additional Paid-in capital 7,187,947 6,936,610 14,858,317
Accumulated deficit (9,319,794) (4,370,622) (12,658,262)
Other comprehensive loss (21,737) 0 (1,562,500)
Less cost of treasury stock (139,547)
Less common stock subscriptions receivable (90,625) (925,312) (90,625)
Less common stock shares issued as security deposit (475,000) (358,325) (475,000)
-------------------- -------------------- ---------------------
Total Stockholders' Equity (2,714,688) 1,147,503 77,156
-------------------- -------------------- ---------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $2,444,750 $3,128,596 $7,237,709
==================== ==================== =====================
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
4
<PAGE>
<TABLE>
<CAPTION>
TRIMFAST GROUP, INC.
INTERIM CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE ONE YEAR ENDED DECEMBER 31, 1999 (Unaudited)
AND THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1999 and 2000 (Unaudited)
FOR THE ONE
YEAR FOR THE THREE MONTHS ENDED FOR THE NINE MONTHS ENDED
DECEMBER 31, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
1999 1999 2000 1999 2000
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
-------------- --------------- --------------- -------------- ---------------
<S> <C> <C> <C> <C> <C>
NET SALES 631,388 207,201 306,162 581,337 1,108,061
COST OF SALES 396,072 89,925 220,284 408,495 1,055,514
-------------- --------------- --------------- -------------- ---------------
GROSS PROFIT 235,316 117,276 85,878 172,842 52,546
-------------- --------------- --------------- -------------- ---------------
OPERATING EXPENSES
Salaries and other compensation 1,094,575 208,215 289,049 505,372 795,479
Commissions 5,235 14,302 4,801 18,117 159,651
Depreciation and amortization 78,211 54,202 419,545 54,202 520,719
Professional fees 5,513,080 505,576 130,518 1,467,900 341,574
Bad debt expense 293,977 102,723 0 102,723 42,944
Selling, general and
administrative expenses 1,023,931 249,593 198,980 623,451 1,044,286
Travel and entertainment 149,908 54,240 36,414 132,249 131,344
-------------- --------------- --------------- -------------- ---------------
Total Operating Expenses 8,158,917 1,188,851 1,079,307 2,904,014 3,035,997
-------------- --------------- --------------- -------------- ---------------
INCOME FROM OPERATIONS (7,923,601) (1,071,575) (993,429) (2,731,172) (2,983,450)
-------------- --------------- --------------- -------------- ---------------
OTHER INCOME (EXPENSE)
Realized gain on sale of
trading securities - net (1,957) 499 0 499 (7,776)
Unrealized gain on sale of
trading securities- net 0 0 (18,549) 0
Gain (Loss) on disposal of
equipment 2,250 0 (15,211) 0 (15,211)
Write-off of leasehold
improvements (2,476) 0 0 0 0
Interest expense (302,408) (354,569) 0 (354,569) (250,000)
------------- --------------- -------------- -------------- ---------------
Total Other Income
(Expense) (304,591) (354,070) (15,211) (372,619) (272,987)
------------- --------------- -------------- ------------ ---------------
NET INCOME/ (LOSS) (8,228,192) (1,425,645) (1,008,639) (3,103,791) (3,256,437)
============ =============== ============== ============== ===============
EXTRAORDINARY ITEM
Loss on extinguishment of debt (150,979) 0 0 0 0
-------------- --------------- --------------- -------------- ---------------
NET LOSS (8,379,171) (1,425,645) (1,008,639) (3,103,791) (3,256,437)
============= =============== =============== ============== ===============
OTHER COMPREHENSIVE LOSS, NET OF TAX
Unrealized (loss) gain on
available for-sale securities -
net (21,737) 0 (3,781,250) 0 (1,562,500)
------------- --------------- --------------- -------------- ---------------
Comprehensive (loss) income (8,400,908) (1,425,645) (4,789,889) (3,103,791) (4,818,937)
============= =============== =============== ============== ===============
NET LOSS PER COMMON SHARE -
BASIC AND DILUTETD (2.02) (0.31) (0.20) (0.77) (0.66)
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING - BASIC AND
DILUTED 4,119,893 4,574,887 5,129,110 4,028,972 4,949,704
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
5
<PAGE>
<TABLE>
<CAPTION>
TRIMFAST GROUP, INC.
INTERIM CONSOLIDATED STATEMENT OF CASHFLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 2000 (Unaudited)
FOR THE NINE MONTHS ENDED
SEPTEMBER 30, 1999 SEPTEMBER 30, 2000
(UNAUDITED) (UNAUDITED)
-------------------- ---------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) (3,103,791) (3,256,437)
Adjustments to reconcile net income (loss)
to net cash flows from operating activities:
Depreciation and amortization 54,202 520,719
Bad debt expense 6,498 42,944
Unrealized gain on short term investments (18,459) 0
Issuance of common stock for professional
services 1,238,505 152,344
Increase in liquidated damages 0 270,000
Changes in operating assets and liabilities
(Increase) decrease in :
Accounts receivable (472,796) 31,235
Prepaid expenses (50,000) 11,462
Inventory (188,533) (89,745)
Increase (decrease) in :
Accounts payable and other liabilities 300,845 398,209
-------------------- --------------------
Total adjustments 870,262 1,337,168
-------------------- --------------------
Net cash (used in) provided by operating (2,233,529) (1,919,269)
activities
-------------------- --------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
(Increase) decrease in :
Short term investments (25,923) 8,406
Due from employees 5,800 0
Property and equipment (1,764,682) (65,198)
Due from affiliate 5,945 0
Cash surrender value of life insurance (4,529) 0
Deposits (4,381) (100,785)
-------------------- --------------------
Net cash (used in) provided by investing
activities (1,787,770) (157,577)
-------------------- --------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings 961,781 466,741
Purchase of treasury stock (116,013) 0
Proceeds from issuance of common stock 1,628,942 1,000,000
Proceeds from issuance of preferred stock 1,500,040 0
Due to stockholder/ officer 0 581,174
-------------------- --------------------
Net cash provided by (used in) financing
activities 3,974,750 2,047,915
-------------------- --------------------
CHANGE IN CASH AND CASH EQUIVALENTS (46,549) (28,931)
CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR 105,641 35,858
-------------------- --------------------
CASH AND CASH EQUIVALENTS - PERIOD END 59,092 6,927
==================== ====================
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
6
<PAGE>
<TABLE>
<CAPTION>
TRIMFAST GROUP, INC.
INTERIM CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY
FOR THE ONE YEAR PERIODS ENDED DECEMBER 31, 1998 and 1999 (Unaudited)
AND THE NINE MONTHS ENDED SEPETMBER 30, 2000 (Unaudited)
SHARES
COMMON STOCK ISSUED
AND COMMON ADDITIONAL PREFERRED STOCK OTHER AS A
STOCK TO BE ISSUED PAID IN ISSUED ACCUMULATED COMP. SECURITY SHARES TREASURY
SHARES AMOUNT CAPITAL SHARES AMOUNT DEFICIT LOSS DEPOSIT ADVANCED STOCK TOTAL
--------- ------ ---------- ------- ----- --------- ------- ------- ------ ----- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE JANUARY 1, 1998 1,286,625 $1,287 ($287) - - ($151,846) - - - - ($150,846)
Issuance of common stock 63,924 $64 $187,736 - - - - - - - $187,800
for cash
Issuance of common stock
in exchange to related
party in exchange for
$40,000 debt 19,500 $19 $39,981 - - - - - - - $40,000
HLHK equity at August 12,
1998 817,749 $818 $441,083 - - (1,122,218) - - - - ($680,317)
Reclassification pursuant
to recapitalization - - ($1,122,218) - - 1,122,218 - - - - $0
Common stock issued to
employees 500 - - - - - - - - - $0
Common stock issued to
attorney for services 5,000 $5 ($5) - - - - - - - $0
Common stock issued in
exchange for debt of HLHK
principal stockholder 75,000 $75 $491,123 - - - - - - - $491,198
Issuance of common stock
in exchange for
stockholder loans 70,358 $70 $126,574 - - - - - - - $126,644
Compensation to principal
stockholder - - $762,000 - - - - - - - $762,000
Purchase of treasury stock
at cost - - - - - - - - -(23,534) ($23,534)
Net income 1998 - - - - - (739,974) - - - - ($739,974)
--------- ------ ---------- ------- ----- --------- ------- ------- ------ ------ ---------
Balance, December 31, 1998 2,338,656 $2,338 $925,987 - - ($891,820) - - -(23,534) $12,971
========= ====== ========== ======= ===== ========= ======= ======= ====== ====== =========
Issuance of common stock
for cash 1,058,005 $1,058 $1,659,817 - - - - - (90,625) - 1,570,250
Issuance of common stock
in exchange for
consulting and other
professional services 918,300 $918 $4,744,143 - - - - - - - $4,745,061
Issuance of common stock
to employees 104,900 $105 $500,075 - - - - - - - $500,180
Issuance of convertible
debentures - - $250,000 - - - - - - - $250,000
Issuance of Preferred Stock - - $1,499,890 15,000 150 - - - - - $1,500,040
Issuance of common stock
option - - $413,780 - - - - - - - $413,780
Return of common stock in
repayment of debt (50,000) ($50) ($399,950) - - - - - - - ($400,000)
Issuance of common stock
as a security deposit for
inventory line of credit 100,000 $100 $474,900 - - - - (475,000) - - $0
Issuance of common stock
in exchange for loans 51,821 $52 $272,956 - - - - - - - $273,008
Purchase and sale of
treasury stock - net - - - - - (48,803) - - - 23,534 ($25,269)
Unrealized losses on
available-for-sale
securities - - - - - - ($21,737) - - - ($21,737)
Commitment to repurchase
shares of treasury stock - - (1,278,750) - - - - - - - ($1,278,750)
Reclassification of
preferred to redeemable
preferred stock - - ($1,874,901) (15,000)( $150) - - - - - ($1,875,051)
Net Loss 1999 - - - - - (8,379,171) - - - - ($8,379,171)
--------- ------ ---------- ------- ----- --------- ------- ------- ------ ----- ---------
Balance,December 31, 1999 4,521,682 4,521 7,187,947 0 0 (9,319,794) (21,737)(475,000)(90,625) 0 (2,714,688)
========= ====== ========== ======= ===== ========= ======= ======= ====== ===== =========
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
TRIMFAST GROUP, INC.
INTERIM CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY
FOR THE ONE YEAR PERIODS ENDED DECEMBER 31, 1998 and 1999 (Unaudited)
AND THE NINE MONTHS ENDED SEPETMBER 30, 2000 (Unaudited)
COMMON
STOCK AND
COMMON PREFERRED SHARES
STOCK TO BE ADDITIONAL STOCK OTHER ISSUED AS A
ISSUED PAID-IN ISSUED ACCUMULATED COMP. SECURITY SHARES TREASURY
SHARES AMOUNT CAPITAL SHARES AMOUNT DEFICIT LOSS DEPOSIT ADVANCED STOCK TOTAL
--------- ------ ---------- ----- ----- -------- ----------- ------- ------ ---- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Issuance of common stock
for professional services 25,000 $25 $84,350 - - - - - - - $84,375
Preferred series A
dividends - - - - - (120,000) - - - - ($120,000)
Issuance of common stock
as settlement 30,000 $30 $67,767 - - - - - - - $67,797
Conversion of convertible
debenture 112,776 $113 $99,887 - - - - - - - $100,000
Issuance of common stock
for acquistion of
Nutrition Clubstores 570,000 $570 $2,778,180 - - - - - - - $2,778,750
Return of common stock
from cancelled contracts (40,000) ($40) ($37,929) - - 37,969 - - - - $0
Securities issued for
acquisitioin of Max Muscle 7,500 $8 $19,365 - - - - - - - $19,373
Contributed capital - - $3,750,000 - - - - - - - $3,750,000
Unrealized loss on
available-for-sale
securities - - - - - - ($1,562,500) - - - ($1,562,500)
Settlement on share
repurchase commitment - - $658,750 - - - - - - - $658,750
Beneficial conversion on
convertible debenture - - $250,000 - - - - - - - $250,000
Sale of securities held
for sale - - - - - - $21,737 - - - $21,737
Net Loss as of September
30, 2000 - - - - - (3,256,437) - - - - (3,256,437)
--------- ------ ---------- ----- ----- ---------- ---------- ------- ------ ---- ----------
Balance September 30, 2000 5,226,958 $5,227 $14,858,317 0 $0($12,658,262)($1,562,500)($475,000)($90,625) $0 $77,157
========= ====== ========== ===== ===== ========== ========== ======= ====== ==== ==========
</TABLE>
8
<PAGE>
TrimFast Group, Inc. and Subsidiaries
Notes to Interim Consolidated Financial Statements
As of September 30, 2000
(Unaudited)
NOTE 1 - BASIS OF PRESENTATION
-----------------------------------
The accompanying unaudited consolidated financial statements
have been prepared in accordance with generally accepted accounting principles
and the rules and regulations of the Securities and Exchange Commission for
interim financial information. Accordingly, they do not include all the
information and footnotes necessary for a comprehensive presentation of
financial position and results of operation.
It is management's opinion, however that all material adjustments (consisting of
normal recurring adjustments) have been made which are necessary for a fair
financial statements presentation. The results for the interim period are not
necessarily indicative of the results to be expected for the year.
For further information, refer to the consolidated financial statements and
footnotes included in the company's Form 10-SB, as amended for the year ended
December 31, 1998 and Form 10KSB, as amended for the year ended December 31,
1999.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ORGANIZATION
-----------------------------------------------------------------------------
(A) Revenue Recognition
--------------------
Revenue for products ordered through our website NutritionCafe.com is recognized
and an accrual for returns is posted when the product is shipped. To date
returns of products sold has been immaterial. We believe the products we sell
are of a high quality and our customers are knowledgeable enough about the
products they purchase to ensure returns will continue to be immaterial.
Therefore, no accrual for estimated returns has been made for these financial
statements.
Sales of our products offered through TrimFast, Inc. (weight loss bars, WCW
bars, and Max Impact supplements) are sold utilizing food brokers, distributors
and directly to vendors. We use brokers and distributors to identify new
vendors, all sales are made directly to the vendor with the distributor or
broker informed of any sales through their efforts. Because we ship to, invoice
and receive payments directly from the end user, our policy is to record any
returns against current sales. Due to the nature of the products offered, and
customers ordering product conservatively, we have experienced no material
product returns, therefore no accrual for returns have been made in these
financial statements.
Revenue for the Cooler Group is earned through rental of water coolers and
delivery of water. A contract is signed for cooler rental and/or water delivery
service, and is invoiced monthly. Revenue is recognized for cooler rental each
month when invoiced and for water service based on usage when delivered.
(B) Accounts Receivable - Other
------------------------------
Components of A/R - Other is as follows: 12/31/99 9/30/99 9/30/00
-------- ------- -------
Due from Millennium $279,250 $259,558 $281,251
Due from Immmu/Immcel 0 $50,000 0
Stock held in escrow securing loan 0 $199,790 0
Other 0 2,930 0
-------- ------- --------
$279,250 $512,278 $281,251
======== ======= ========
9
<PAGE>
TrimFast Group, Inc. and Subsidiaries
Notes to Interim Consolidated Financial Statements
As of September 30, 2000
(Unaudited)
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ORGANIZATION - Cont'd
-------------------------------------------------------------------------------
(C) Inventory
---------
Components of inventory are as follows: 12/31/99 9/30/99 9/30/00
-------- ------- -------
Finished Goods $224,784 $320,296 $338,980
Product Components 56,529 56,974 32,078
-------- -------- --------
Total $281,313 $377,270 $371,058
======== ======== ========
The Company performs quarterly inspections of inventory to identify expired or
obsolete items. Any merchandise, which has past its expiration date, or has been
deemed obsolete by management, is removed from inventory and written off.
(See note 6 Litigation)
(D) Advertising Costs
------------------
Advertising costs are expensed as incurred unless a direct measurable response
exists. All advertising related costs have been recognized as expense in these
Interim Financial Statements.
(E) Software Development
---------------------
The Company accounts for software obtained for internal use in accordance with
the Accounting Standards Executive Committee Statement of Position No. 98-1
"Accounting For the Costs of Computer Software Developed or Obtained for
Internal Use" ("SOP 98-1"). SOP 98-1 generally requires the capitalization of
all internal or external direct costs incurred in developing or obtaining
internal use software and expensing all internal or external costs incurred
during the preliminary project stage and the post-implementation stage. The
Company generally amortizes software developed or obtained for internal use over
an estimated life of three years.
NOTE 3 - EQUITY TRANSACTIONS
--------------------------------
A. Common Stock
In March we issued 570,000 shares of our common stock for the acquisition of
Nutrition Clubstores, Inc. (See Note 5 (A)) and 10,000 shares of our common
stock in exchange for legal services associated with SEC filings. These shares
were issued pursuant to Section 4(2) of the Securities Act of 1933. We believed
section 4(2) was available because there was no general solicitation or
advertising used in connection with the offering and the transaction did involve
a public offering.
In May we canceled 20,000 shares of the Company's common stock that was returned
as a result of our cancellation of the consulting contract from 1999. In June we
canceled 20,000 shares of the Company's common stock that was returned as a
result of our cancellation of the consulting contract from 1999. In June we
issued 7,500 shares of the Company's common stock in accordance with the asset
purchase agreement with Max Muscle (See Note 5 (B)). These shares were issued
pursuant to Section 4(2) of the Securities Act of 1933. We believed section 4(2)
was available because there was no general solicitation or advertising used in
10
<PAGE>
TrimFast Group, Inc. and Subsidiaries
Notes to Interim Consolidated Financial Statements
As of September 30, 2000
(Unaudited)
NOTE 3 - EQUITY TRANSACTIONS - Cont'd
-----------------------------------------
connection with the offering and the transaction did not involve a public
offering.
In July we issued 15,000 shares of the Company's common stock in exchange for
legal Services associated with the various lawsuits against us and 10,000 shares
of the Company's common stock as settlement of a lawsuit against us. In August
we issued 112,776 shares of the Company's common stock to CALP II Limited
Partnership in exchange for $100,000 of the convertible debenture held by them
and 20,000 shares of the Company's common stock as settlement of a consulting
agreement.
B. Convertible Debenture.
1. Gibralt U.S., Inc. and FACS Enterprises, Inc.
On April 25, 2000 the Company entered into two convertible debenture agreements,
with Gibralt U.S., Inc., a Colorado Corporation and FAC Enterprises, Inc. a
Pennsylvania Corporation, each providing for the sale of $500,000 of its
convertible debentures due July 13, 2001 with interest at 12%. The proceeds will
be used to open additional Nutrition Clubstores and produce and broadcast the
commercial spots for our WCW Ultra Energy Bars. On April 28, 2000 we received
the first $1,000,000. The outstanding principal amount of debentures is
convertible at the option of the holder into the Companies' Common Stock at the
lower of (I) Two and 50/100 Dollars ($2.50) per share; or (ii) seventy-five
percent (75%) of the closing bid price of the Companies' publicly traded common
stock on the Closing Date. As to the Closing on April 28, 2000, the conversion
price is therefore about $2.00 per share for the first $1,000,000 of debentures.
No later than June 9, 2000, the Company was required to fi1e a registration
statement on Form S-2 under the Securities Act and under all applicab1e Blue Sky
laws covering the Common Stock. By August 26, 2000, the Company is required to
have caused such registration statement to be declared effective by the SEC, all
at the Company's sole cost and expense. Because the Company (a) has failed to
file a registration statement covering the Common Stock issuable upon conversion
of the Convertible Debentures, within 45 days of the first Closing Date and (b)
in the event the Company fails to have a registration statement declared
effective by the Securities and Exchange Commission within 120 days of the first
Closing Date, Company shall automatically be subjected to penalties. The Company
for each month or partial month while the default is continuing shall either:
(a) Make a payment of Fifty Thousand Dollars ($50,000) to the Purchaser; or
(b)deliver Twenty Thousand (20,000) shares of the Companies common stock to the
Purchaser, whichever the Purchaser elects. The purchasers in the aggregate
therefore, may receive up to One Hundred Thousand Dollars ($100,000) in cash per
month commencing June 9, 2000. We cannot predict when a registration statement
will be filed and be declared effective. As of August 9, 2000, the liquidated
damages amounted to $200,000, in cash, or 80,000 shares of Common Stock. We have
granted the purchasers a security interest in all of the 500,000 shares of
common stock of Insiderstreet.com (NSDR) that our Company owns to secure our
obligations to the debentureholders. The Company believes that the exemption
under Section 4(2) was available for this private placement. Additionally, the
Company pledged a parcel of real property at 2555 Blackburn Street, Clearwater,
Florida.
2. CALP II Limited Partnership
On August 29th CALP II converted $100,000 on its outstanding convertible
debenture for 112,776 shares of the Company's common stock.
11
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TrimFast Group, Inc.
Notes to Interim Consolidated Financial Statements
As of September 30, 2000
(Unaudited)
NOTE 3 - EQUITY TRANSACTIONS - Cont'd
-------------------------------------------
C. Notice of Default
We have received notice from Cranshire Capital, L.P., The DotCom Fund, LLC, S
Roberts Productions, LLC and Keyway Investments Limited, the subscribers to the
Company's Series A Convertible Preferred Stock that each seeks redemption of its
holdings, a total of 15,000 preferred shares issued to these investors. The
investors seek a total of $1,875,000 for the redemption of their Series A
Preferred Stock plus all accrued but unpaid dividends and all accrued but unpaid
liquidated damages. The redemption requirement applies unless the Company has
registered the Common Stock issuable upon conversion by the holders. The Company
is unable to register the underlying common stock at this time because it cannot
file a registration statement with the Securities and Exchange Commission that
complies with the accountants' report requirements. The Company was required to
cause a registration statement covering the shares to be declared effective
before November, 1999. There can be no assurances that we will ever be in a
position to file a registration statement that complies with the applicable
requirements. (See Note 5)Therefore an account for Redeemable Preferred Stock
has been established to include the original redemption of $1,875,000 and an
accrual for Dividends and liquidating damages.
D. Additional Paid-In Capital
In February Michael Muzio contributed 500,000 shares of restricted stock of
Insiderstreet.com, Inc. to the Company. The shares were valued at the $7.50
based on the quoted trading price on the date of contribution. The shares
contributed are less than 20% of issued and outstanding shares of
Insiderstreet.com, Inc. and is accounted for as a long-term investment.
NOTE 4 - MARVEL LICENSE AGREEMENT
On February 25, 2000 the Company executed a licensing agreement with Marvel
Characters, Inc. to produce and market a childrens chewable Multi-Vitamin and
mineral supplement of the character Spider-Man.
The license commences on March 1, 2000 and expires on December 1, 2001. The
agreement includes a 9% royalty rate to be paid to Marvel on net sales with the
following minimum royalty guarantees. $100,000 was paid at signing of the
agreement and is posted to prepaid expenses and will be amortized over the life
of the agreement. $50,000 to be paid on or before March 1, 2001.
NOTE 5 - ACQUISITIONS
------------------------
(A) - Nutrition Clubstores
On March 20, 2000 we acquired from Nutrition Superstores.com, Inc. all of the
issued and outstanding shares of common stock in its wholly owned subsidiary,
Nutrition Clubstores, Inc. The purchase price was $150,000 cash plus 570,000
shares of our common stock valued at $4.80 per share based average quoted
trading price a few days before and after the announcement of the transaction
based on EITF 95-19 for a total of $2,886,000, which includes approximately
$5,000 in transaction costs. In addition, for a period beginning three months
following the Closing and continuing for a period of twelve months thereafter,
the Seller shall receive a royalty equal to three percent (3%) of the gross
sales generated
12
<PAGE>
TrimFast Group, Inc.
Notes to Interim Consolidated Financial Statements
As of September 30, 2000
(Unaudited)
NOTE 5 - ACQUISITIONS - Cont'd
----------------------------------
by the kiosks operated by Nutrition Clubstores, Inc. The number of shares
issuable to the Seller of the Nutrition Clubstores, Inc. is subject to
adjustment based upon the audited financial statements, which are to be provided
by the sellers of Nutrition Clubstores, Inc. To the extent that the Nutrition
Clubstores audited financial statements for February 29, 2000 show a net worth
which is less than 85% of the unaudited financial statements, for every $5.00
reduction or portion thereof in net worth, Seller shall be entitled to receive
one less share of common stock.
The acquisition will be accounted for under the purchase method. Subject to the
completion of the Nutrition Clubstores audit, we anticipate allocating the
purchase price of this acquisition as follows: inventory $410,885, fixed assets
$367,848, goodwill $2,335,004 accounts payable $162,422 and notes payable
$65,315. The allocation to goodwill would be reduced dollar for dollar to the
extent of any downward adjustment of the purchase price based on the audit.
The goodwill balance will be amortized over 60 months. The Company will review
the audited financial statements when received and adjust our books accordingly.
The $150,000 cash used in the acquisition was advanced to the Company by the
principal stockholder.
In June, we received audited financial statements for Nutrition Clubstores as of
February 29, 2000 as required in our acquisition agreement. We are reviewing the
statements and have been discussing them with the previous owners to determine
the most appropriate way to complete the transaction.
(B) - Max Muscle
On June 9, 2000 we acquired all of the assets of the business named Max Muscle,
a retail location in Tampa, Florida. The purchase price was $35,000 cash plus
7,500 shares of our common stock valued at $2.56 per share based average quoted
trading price a few days before and after the transaction based on EITF 95-19
for a total of $54,200, which includes approximately $100 in transaction costs.
The acquisition will be accounted for under the purchase method. The allocation
of the purchase price of this acquisition is as follows: inventory $26,000,
fixed assets $20,000, goodwill $8,200. The goodwill balance will be amortized
over 60 months.
The $35,000 cash used in the acquisition was advanced to the Company by the
principal stockholder.
NOTE 6 - LITIGATION
----------------------
The Company is subject to a course of action premised on a Letter of Agreement
between the two parties whereby the Plaintiff alleges the Company committed to
purchase 155,000 shares of the Company's common stock at a stipulated price. The
second count of the action is a mortgage foreclosure action, which is based upon
an alleged lien upon real property that is to have collateralized the Agreement.
The Company has filed a motion to dismiss the complaint because the Agreement
sued upon call for arbitration in the event of dispute. The Company also filed a
motion to dismiss the mortgage foreclosure action since the cause of action is
premised upon documents that cannot be recorded. On July 18, 2000 the Company
entered into a settlement agreement whereby we agreed to execute a secured
promissory note in the total amount of $620,000 at a 7% per annum simple
interest which is due on or before July 31, 2001. In exchange, the Plaintiff
will return 53,000 shares of the Company's common stock and dismiss all claims
alleged in this case.
13
<PAGE>
TrimFast Group, Inc.
Notes to Interim Consolidated Financial Statements
As of September 30, 2000
(Unaudited)
NOTE 6 - LITIGATION - Cont'd
--------------------------------
The Company is subject to various other lawsuits, investigations and claims
primarily relating to amounts due to vendors which, in the opinion of
management, arise in the normal course of conducting Company business.
Appropriate amounts have been accrued at September 30, 2000. In the opinion of
the Company's management, after consultation with outside legal counsel, the
ultimate disposition of such remaining proceedings will not have a materially
adverse effect on the Company's consolidated financial position or future
results of operations.
Sheri Peck v. Trimfast Group, Inc., et al. (Case No.1:99CV374) During June,we
negotiated a settlement whereby we agree to pay $3,000 cash and 10,000 shares
of the Company's restricted common stock. In July we paid the cash and issued
the shares described above in settlement of this case.
Cranshire Capital, LP, S. Robert Productions, LLC, and The DOTCOM Fund, LLC vs
TrimFast Group, Inc. (case number 00C3510) On June 9, 2000 the a lawsuit was
filed in the U.S. District Court for the Northern District of Illinois, Eastern
Division against the Company for (i) breach of contract for failing to file the
required registration statement with the SEC and (ii) pay liquidated damages
arising from its failure to file the required registration statement; (iii)
confirm receipt of the investors' redemption notices and (iv) redeem the
investors preferred stock. The suit seeks damages of an unspecified amount
exceeding $75,000.
On July 21, 2000 the Company entered into a settlement with Slim-fast Foods Co.
on their claim of patent infringement. (civil action number 00 Civ. 4380 (LLS)
in the U.S. District court southern district of New York) The settlement allows
TrimFast to continue selling our weight loss pills under the TrimFast name, but
restricts us from selling weight loss bars labeled with the TrimFast name after
current inventory is sold or September 20, 2000, at which time the Company
agreed to provide Slim-fast an affidavit attesting to the destruction of any
remaining bars. On September 20th, the Company had in its possession
approximately 10,000 bars of assorted flavors. In accordance with the agreement
the Company donated all the bars to a local food bank. The financial impact of
the transaction resulted in a charge of $4,396.
Mark Sansom vs. InsiderStreet.com, Inc., TrimFast Group, Inc. Florida Atlantic
Stock Transfer, Inc. Michael J. Muzio (Case No. 000904440). In an action filed
in the Third Judicial District Court for Salt Lake City, Utah. The complaint is
a multi-count complaint and alleges that the signature of Mark Sansom contained
on a rescission agreement in connection with a consulting agreement for 300,000
shares of the Companys' common stock is not genuine. Plaintiff also alleges
conversion on the part of TrimFast and wrongful refusal to register/transfer the
shares. Mr. Sansom has also filed a breach of contract count against Mr. Muzio
for failing to purchase 36,000 shares of TrimFast common stock at a price of
$7.00 per share.
Note 7 - Subsequent Events
---------------------------
On November 2, 2000, TrimFast Group, Inc. filed for protection under Chapter 11
of the United States Bankruptcy Code. (U.S. Bankruptcy Court, Middle District of
Florida, Tampa Division, Case No. 00-17003-8C1) Two days after the petition was
filed, the Company agreed in principle with a Series A Preferred Debenture
Holder (Crenshire Capital, LP - Case No. 00C3510) to settle a lawsuit which had
been previously disclosed. The settlement obviated the need for a Chapter 11
proceeding. The Company intends to file a Motion for Withdrawal of its Petition
in Bankruptcy by November 15, 2000 and should such Motion not be granted by
November 15, 2000, the Company, if necessary, will file Form 8-K within the 15
days proscribed by the Rules.
14
<PAGE>
TRIMFAST GROUP, INC.
MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS.
FINANCIAL STATEMENT PRESENTATION
RESULTS OF OPERATIONS.
September 30, 2000 as compared to September 30, 1999
Sales for the nine months ended September 30, 2000 were $1,108,061 as compared
to $581,337 for nine months ended September 30, 1999. Cost of sales increased
from $408,495 as of September 30, 1999 to $1,055,514 as of September 30, 2000.
This increase in cost of sales is a result of our acquisition of Nutrition
Clubstores and the lower margins on the products in inventory we acquired.
Additionally, we felt the inventory levels carried in each store were too high,
and decided to discount prices on items we decided not to carry any longer.
Our salaries and compensation increased from $505,372 for the nine months ended
September 30, 1999 to $795,479 for the nine months ended September 30,2000 for
several reasons. The 1999 balance does not include a full 9 months compensation
for Nutrition Cafe, which we opened in June 1999, or the Cooler Group, which we
acquired in May 1999. The largest portion of the September 2000 balance is from
salaries and wages for Nutrition Clubstores employees. During the quarter we
dramatically changed the pay structure for all employees and terminated the
higher paid salaried employees. The balance of the change relates to upgrading
positions at the corporate level to handle the increased responsibilities
associated with being a publicly traded company and additional support staff.
Moreover, the employment market in Tampa has been highly competitive in 2000
resulting in our company paying higher wages to all employees to retain and
recruit qualified employees.
For the nine months ended September 30, 2000, we recorded $341,574 in
Professional fees as compared to $1,467,900 for the nine months ended September
30, 1999. During 2000, approximately $50,000 represents non-cash issuance of
common stock in exchange for legal services related to SEC filings and
approximately $45,000 represents non-cash issuance of common stock as settlement
of a consulting contract Approximately $150,000 were for legal fees associated
with various lawsuits. Approximately $84,000 were accounting costs associated
with the year end audit and SEC filings. Of the remaining balance, approximately
$5,000 was paid for filing fees associated with SEC filings and approximately
$8,000 was paid to various business consultants. During 1999, non-cash issuances
of stock resulted in approximately $515,000 paid on various consulting contracts
for public relations, approximately $205,000 paid for legal fees and
approximately $590,000 paid for various consulting contracts in the set up of
Nutritioncafe.com. Additionally, approximately $88,000 was paid for various
consultants for public relations, $15,000 was paid to certified public
accountants, approximately $20,000 was paid for legal fees and approximately
$35,000 was paid for various professional services.
Selling general and administrative expenses were $1,044,286 and $623,451 for the
nine months ended September 30, 2000 and 1999 respectively. The increase is
related to the additional locations associated with Nutrition Clubstores.
Net loss before comprehensive income for the nine months ended September 30,
2000 was $3,256,437. Net loss for the nine months ended September, 31 1999 was
$3,478,802.
15
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES.
September 30, 2000 as compared to September 30, 1999
Total cash and cash equivalents as of September 30, 2000 were $6,927 as compared
to $59,092 as of September 30, 1999.
Trade receivables were $57,046 as of September 30, 2000 and $318,407 as of
September 30, 1999 including $267,240 related to Cutting Edge that was written
off in December 1999.
Inventory as of September 30, 2000 was $371,058 as compared to $377,270 as of
September 30, 1999.
Total current assets were $716,282 as of September 30, 2000 and $1,308,267 as of
September 30, 1999 the change is related to the decline in trade receivables and
cash as discussed above along with the redemption of shares held in escrow
securing the note for the purchase of The Cooler Group.
Property and equipment increased from $1,459,270 on September 30, 1999 to
$1,623,174 on September 30, 2000. The increase is related to the assets acquired
with Nutrition Clubstores.
We also experienced an increase in liabilities. Accounts payable increased from
$926,612 on September 30, 1999 to $1,116,571 on September 30, 2000. The large
increase is the result of our acquisition of Nutrition Clubstores which had
approximately $300,000 in outstanding payables as of September 30, 2000.
Part II. Other Information
Item 1. Legal Proceedings.
On June 9, 2000, The Company was sued based upon a breach of a securities
purchase agreement. Plaintiff believes their cause of action exceeds $2.2
million; The Company believes damages, if any, would be within $100,000.
Discovery is underway, and no final hearing has been set in this matter.
Cranshire Capital, L.P., et al. v. Trimfast Group, Inc., U.S. District Court,
Northern District of Illinois, Case # 00 C 3510. On June 14, 2000 The Company
was sued for a breach of service agreement. Damages of $15,000 are being
claimed. The Company has filed a denial. Discovery is underway, and no final
hearing has been set. Creative Solutions Interactive, Inc., v. Trimfast Group,
Inc., Circuit Court, Hillsborough County, Florida, Case # 00 3512. On February
15, 1999, the Company was sued for a breach of account stated. Final judgment
was entered against the Company on June 4, 1999 in the amount of $10,737.72 plus
interest and court costs. At present time, discussions are ongoing regarding a
settlement. DLB Printing, Inc. v. Trimfast, Inc., County Court, Hillsborough
County, Florida, Case # 99 2303 CCI. On March 23, 2000, the Company, along with
Trimfast, Inc. was sued on an account stated in the amount of $14,356.49. An
answer has been filed, denying the allegations. It is admitted that the monies
are owed by Trimfast, Inc. but not the Company. The trial has not yet been set.
Americraft Carton, Inc. v. Trimfast Inc., a/k/a Trimfast Group, Inc. County
Court, Hillsborough County, Florida, Case # 2000-4978 CC. In April 2000, the
Company was sued on a cause of action premised upon a letter agreement between
the two parties. A settlement has been reached in this case, whereby the Company
agrees to pay the Plaintiff the sum of $620,000 on or before July 2001. Upon
payment, this action will be dismissed. Aryeh Trading v. Trimfast Group, Inc.,
Circuit Court, Pinellas County, Florida, Case # 2000-802-C1-21. On June 14,
1999, the Company was used for monies owned on an account stated. The amount of
the claim is $10,456.60. This matter has not yet been set for a Final Hearing.
An Offer to Settle has been extended by the Company in the amount of $6,000. L&N
Label Company v. Trimfast, Inc., County Court, Hillsborough County, Florida,
Case # 99-8611-CC. On January 24, 2000, the Company was sued for damages
resulting from an account stated. Plaintiff seeks $7,777.45 plus court costs and
interest. No final hearing has been set in this matter. NCA Medical Labs, Inc.
v. Trimfast, Inc., County Court,
16
<PAGE>
Hillsborough County, Florida, Case # 00-1232 CC. On June 8, 2000, the Company
was sued based on an account stated in the amount of $46,740.36. The Company has
filed a denial. No final hearing has been set. Nutripro Distribution Systems. v.
Nutrition Clubstores, Inc., Circuit Court in Dade County, Florida, Case #
00-14364 CA 01. On December 6, 1999, the Company was sued based on an account
stated. Plaintiff corporation has filed for bankruptcy protection in federal
court, and this matter has been stayed. Phillips Pharmatech Labs, Inc. v.
Trimfast, Inc., Circuit Court of Pinellas County, Florida, Case # 99-4667. On
February 4, 2000, the Company was sued for services rendered. A final judgment
was entered against the Company in the amount of $5,678.59. Settlement
discussions on the retirement and satisfaction of this judgment are ongoing.
Popov and McCullough, LLP v. Trimfast Group, Inc., Superior Court of California,
Los Angeles County, Case # GIC 742910. On June 5, 2000, the Company was sued for
breach of contract for services rendered. The Company has denied all allegations
and discovery is ongoing. No final hearing has been set in this matter. Sansom
v. Trimfast Group, Inc. and Michael Muzio, individually, et al. United States
District Court, District of Utah, Central Division, Case # 2-00CV0527S. On June
7, 1999, the Company was sued based upon the distribution of a product that may
have been unsafe when consumed. Discovery is ongoing, but no final hearing has
been set. Jensen vs. Body Life Sciences, Trimfast Group, et al., District Court,
State of Idaho, Case # CV PI 9900250D. On March 27, 2000, the Company was sued
by plaintiff who alleges that the Company improperly canceled 600,000 shares of
Company Stock. On August 2, 2000 the United States Magistrate Judge dismissed
the case with prejudice. Gainsfor Ventures, SA, et al. v. Trimfast Group, Inc.,
et al., United States District Court, Southern District of New York, Case # 00
CV 2299.
Item 2. Changes in Securities and Use of Proceeds.
Since each of the Series A shareholders seeks redemption, the Company is
obligated to redeem them pro rata in accordance with their holdings. The
Company, a Nevada corporation, is subject to the provisions of Nevada law
concerning a corporation's right to pay dividends, which is limited by the legal
availability of funds for the payment thereof. A Nevada corporation can pay
dividends that do not impair the corporation's capital, but no more than that.
The Company is legally prohibited from making dividends unless or until making
such payment will not impair the company's capital after the payment. The Series
A Preferred stock is also junior to all Company debts, obligations, accounts
payable or absolute liabilities, whether or not there are any liens recorded.
However, Series A Preferred is entitled to payment before any dividend,
distribution or redemption of the holders of the Company's Common Stock. A total
of $1,875,000 as of May 25, 2000 was the amount that the Company is obligated to
pay to redeem all of the presently outstanding Series A Preferred. In addition
to the redemption price above, the Preferred stockholders assert that the
Company remains obligated to pay all accrued but unpaid regular dividends,
totaling $120,000 at September 30, 2000, and liquidated damages of in an amount
of $318,000. When the company does not promptly pay this redemption price, which
we so shall be restricted from doing by the provisions of the Nevada law we
referred to above in this paragraph, any of these above-mentioned or other
creditors may seek available remedies to recover or establish their respective
priorities as well. Regardless of the outcome, these creditors' remedies may
distract management's time and attention and cause the Company to incur
expenses, which may include costs of any such suit or action, such as opposing
any actions which might include involuntary bankruptcy, involuntary liquidation
or dissolution or others, or costs incurred by us or others to whom we may owe a
duty of indemnification or defense, which may include affiliates of the Company
or its principal shareholder or any of its Board of Directors or management.
Item 3. Defaults under Senior Securities
We have received notice from Cranshire Capital, L.P., The DotCom Fund, LLC, S.
Roberts Productions, LLC and Keyway Investments Limited, the subscribers to the
Company's Series A Convertible Preferred Stock, that each seeks redemption of
its holdings, a total of 15,000 preferred shares issued to these investors. The
investors seek a total of $1,875,000 for the redemption of their Series A
Preferred Stock plus all accrued but unpaid dividends and all accrued but unpaid
liquidated damages. The redemption requirement applies unless the Company has
registered the Common Stock issuable upon conversion by the holders. The Company
is unable to register the underlying common stock at this time because it cannot
file a registration statement with the Securities and Exchange Commission that
complies with the accountants' report requirements. The Company was required to
cause a registration statement covering the shares to be declared effective
before November, 1999. There can be no assurances that we will ever be in a
position to file a registration statement that complies with the applicable
requirements. As of October 31, the Company has missed two dividend payments
that total $120,000. Additionally, the liquidated damages, as of September 30,
2000 total $318,000.
17
<PAGE>
Item 5. Other Information.
On November 2, 2000, TrimFast Group, Inc. filed for protection under Chapter 11
of the United States Bankruptcy Code. (U.S. Bankruptcy Court, Middle District of
Florida, Tampa Division, Case No. 00-17003-8C1) Two days after the petition was
filed, the Company agreed in principle with a Series A Preferred Debenture
Holder (Crenshire Capital, LP - Case No. 00C3510) to settle a lawsuit which had
been previously disclosed. The settlement obviated the need for a Chapter 11
proceeding. The Company intends to file a Motion for Withdrawal of its Petition
in Bankruptcy by November 15, 2000 and should such Motion not be granted by
November 15, 2000, the Company, if necessary, will file Form 8-K within the 15
days proscribed by the Rules.
18
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
TrimFast Group, inc.
/s/ Michael J. Muzio
----------------------------------------------
By: Michael J. Muzio
Dated: This 13th day of November, 2000
19
