UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
TRINITY MEDICAL GROUP USA, INC.
(Name of small business issuer in its charter)
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Florida 8731 68-0438943
(State or jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
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55 SHAVER STREET, SUITE 320
SAN RAFAEL, CALIFORNIA 94901
(415) 256-1995
(Address and telephone number of principal executive offices)
JAMES NAMNATH, CHIEF EXECUTIVE OFFICER
TRINITY MEDICAL GROUP USA, INC.
55 SHAVER STREET, SUITE 320
SAN RAFAEL, CALIFORNIA 94901
(415) 256-1995
(name, address and telephone number for Agent of Service)
Copy to:
Christopher S. Auguste
Parker Chapin LLP
The Chrysler Building
405 Lexington Avenue
New York, New York 10174
Tel: (212) 704-6230
Fax: (212) 704-6288
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(Name, address and telephone number of agent for service)
APPROXIMATE DATE OF PROPOSED SALE TO THE PUBLIC: FROM TIME TO TIME
AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT.
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 1933, other than securities offered only in connection with
dividend or reinvestment plans, check the following box. [X]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
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If this form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [ ]
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If this form is a post-effective amendment filed pursuant to Rule
462(d) under the Securities Act, check
the following box and list the Securities Act registration statement number of
the earlier effective registration statement for the same offering. [ ]
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If delivery of the prospectus is expected to be made pursuant to Rule
434, check the following box. [ ]
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Tile of each Proposed Proposed
class of securities Amount to Be maximum offering maximum aggregate Amount of
to be registered Registered price per Share (1) offering price registration fee
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Common Shares, 2,000,000(1)(2) $4.25 $8,500,000 $2,244.00
Par Value $0.001
Common Shares, 906,560(1)(3) $4.25 $3,852,880 $1,017.48
Par Value $0.001
Common Shares, 332,850(1)(4) $4.25 $1,414,612 $373.45
Par Value $0.001
Common Shares, 450,000(1)(5) $4.25 $1,912,500 $504.90
Par Value $0.001
Common Shares, 50,000(6) $4.00 $200,000 $52.80
Par Value $0.001
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(1) Estimated solely for the purpose of calculating the registration fee. In
accordance with Rule 457(g), the registration fee for these shares is
calculated based upon a price which represents the highest of : (i) the
price at which the warrants may be exercised; (ii) the offering price of
securities of the same class included in the registration statement; and
(iii) the price of securities of the same class, as determined by Rule
457(c).
(2) Represents shares to be issued from Registrant from time to time.
(3) Represents shares of common stock issuable upon the conversion of
convertible notes payable.
(4) Represents shares of common stock issuable upon exercise of warrants
evidencing the right to purchase shares of common stock and issuable upon
conversion of convertible preferred stock.
(5) Represents estimate of shares of common stock issuable upon exercise of
warrants evidencing the right to purchase shares of common stock and shares
of common stock issuable upon the conversion of convertible promissory
note.
(6) Represents shares of common stock issuable upon exercise of non-statutory
stock options evidencing the right to purchase shares of common stock.
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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 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME EFFECTIVE
ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A) MAY DETERMINE.
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THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED.
WE MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION, DATED OCTOBER 20, 2000
PROSPECTUS
TRINITY MEDICAL GROUP USA, INC.
3,739,410 SHARES OF COMMON STOCK
o Of the 3,739,410 shares of common stock offered hereby, 2,000,000
shares are being offered by us and 1,739,410 shares are being
offered by the selling security holders. Prior to this offering,
there has been a limited public market for the common stock.
o We may from time to time sell up to 2,000,000 shares of common
stock, par value $.001. We will sell these shares of common stock
directly to our shareholders or to purchasers or through agents on
our behalf or through underwriters or dealers as designated from
time to time. If any agents or underwriters are involved in the
sale of any of these shares of common stock, the applicable
prospectus supplement will set forth the names of the agents or
underwriters and any applicable fees, commissions or discounts.
o We will provide specific terms for the sale of the common stock in
supplements to this prospectus. You should read this prospectus
and the applicable prospectus supplement carefully before you
invest.
o 1,739,410 shares of common stock offered by this prospectus are
being sold by the selling security holders listed in the section
of this prospectus called "Selling Security Holders." We will not
receive any proceeds from the sale of these shares, except as
described below.
o An estimated 399,350 shares of the total 1,739,410 shares of
common stock offered by the selling security holders are issuable
upon the exercise of options or warrants that have been granted by
the company. We will receive proceeds from the exercise of these
options and warrants.
o Our common stock is traded on the Pink Sheet Service of the
National Association of Securities Dealers under the symbol
"TMGU." On October 13, 2000, the last reported sale price of our
common stock on the Pink Sheet Service of the National Association
of Securities Dealers was $5.00 per share.
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THE SECURITIES OFFERED IN THIS PROSPECTUS INVOLVE A HIGH DEGREE OF
RISK. YOU SHOULD CAREFULLY CONSIDER THE FACTORS DESCRIBED UNDER THE HEADING
"RISK FACTORS" BEGINNING ON PAGE 8 OF THIS PROSPECTUS.
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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THE
ACCOMPANYING PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
The date of this prospectus is October 20, 2000.
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TABLE OF CONTENTS
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About This Prospectus 5
Information Regarding Forward Looking Statements 5
Prospectus Summary 5
Risk Factors 8
Use of Proceeds 12
Determination of Offering Price 13
Selling Security Holders 14
Plan of Distribution 15
Legal Proceedings 18
Directors, Executive Officers, Promoters and Control Persons 18
Security Ownership of Certain Beneficial Owners and Management 20
Description of Securities 20
Experts 21
Disclosure of Commission Position on Indemnification for Securities Act Liabilities 21
Organization within Last Five Years 22
Description of Business 22
Management's Discussion and Analysis or Plan of Operation 24
Description of Property 25
Certain Relationships and Related Transactions 26
Market for Common Equity and Related Stockholder Matters 27
Executive Compensation 28
Where You Can Find Additional Information 29
Financial Statements F-1
Part II II-1
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ABOUT THIS PROSPECTUS
Unless the context otherwise requires, the terms "we", "our", "us",
"the company" and "Trinity" refer to Trinity Medical Group USA, Inc., a Florida
corporation. This prospectus is part of a registration statement that we filed
with the Securities and Exchange Commission utilizing a "shelf" registration
process. Under the shelf process, we may sell shares of our common stock
described in this prospectus in one or more offerings up to a total of 2,000,000
shares of common stock, and the selling security holders may sell up to
1,739,410 shares of common stock. This prospectus provides you with a general
description of the common stock that may be offered by us or the selling
security holders. Each time we sell shares of our common stock, we will provide
a prospectus supplement that will contain specific information about the terms
of that offering. The prospectus supplement also may add, update or change
information contained in this prospectus. You should read both this prospectus
and any prospectus supplement together with additional information described
under the heading "Where You Can Find Additional Information."
We provide information to you about this offering of shares of our
common stock in this prospectus which describes the specific details regarding
this offering. You should read this prospectus carefully before you invest. This
document contains information you should consider when making your investment
decision. REMUNE is a registered trademark of The Immune Response Corporation.
Other copyrights, trademarks and tradenames referred to in this prospectus are
the property of their respective owners.
INFORMATION REGARDING FORWARD LOOKING STATEMENTS
This prospectus contains forward looking statements that involve risks
and uncertainties. These statements relate to our future plans, objectives,
expectations and intentions, and the assumptions underlying or relating to any
of these statements. These statements may be identified by the use of words such
as "expect," "anticipate," "intend" and "plan." Our actual results may differ
materially from those discussed in these statements. Factors that could
contribute to such differences include, but are not limited to, those discussed
in "Risk Factors" and elsewhere in this prospectus.
PROSPECTUS SUMMARY
THE COMPANY.
Trinity Medical Group USA, Inc. was incorporated in the State of
Delaware on September 28, 1998 and reincorporated in Nevada in November of 1999
with its principal place of business in California. In December 1999, as the
result of a reorganization, we became a Florida corporation. The company is an
affiliate of Trinity Medical Group, Ltd., a Thailand company
(http://www.trinitygroups/trinity medical/dsmb.htm). The Churdboonchart Trinity
Trust owns approximately 70% of the company's common stock. The beneficiaries of
The Churdboonchart Trinity Trust are also the majority owners of Trinity Medical
Group, Ltd. We are a late development stage company with rights to market an
HIV-Immunogen, also known as REMUNE, a patented therapeutic vaccine treatment,
designed to induce specific T cell responses in people infected with the Human
Immunodeficiency Virus (HIV). REMUNE is an immune-based therapy consisting of
whole inactivated HIV-1 virus depleted of its gp120 coat protein based on Dr.
Jonas Salk's vaccine technology.
Trinity Medical Group, Ltd. was formed in 1995 after the principals of
Trinity Medical Group, Ltd. entered into a license and collaboration agreement
dated September 15, 1995 with The Immune Response Corporation (NASDAQ: IMNR) to
develop and market REMUNE in ten Southeast Asian countries including Malaysia,
The Philippines, Singapore, Sri Lanka, Myanmar, Laos, Cambodia, Vietnam and
Indonesia, with Thailand as the lead nation. Trinity Medical Group, Ltd. also
entered into a stock purchase agreement on September 15, 1995 with The Immune
Response Corporation and purchased 333,334 shares of common stock of The Immune
Response Corporation at $15 per share on April 30, 1996. Under the stock
purchase agreement, Trinity Medical Group, Ltd. was also obligated to purchase
an additional 333,333 shares of common stock of The Immune Response Corporation
at $15 per share upon receiving the required marketing approval from the
governing health authority of Thailand for the drug therapy REMUNE. Trinity
Medical Group, Ltd. was further obligated to purchase an additional 333,333
shares of common stock of The Immune Response Corporation at $15 per share upon
receiving the required factory
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establishment license or approval from the governing health authority of
Thailand to manufacture the drug therapy REMUNE. These stock purchase
obligations of Trinity Medical Group, Ltd. became the obligations of the company
as a result of the collaboration and supply agreement and the assignment
agreement between the company and Trinity Medical Group, Ltd.
The company entered into a collaboration and supply agreement with
Trinity Medical Group, Ltd., dated December 1, 1999. Under the terms of the
collaboration and supply agreement, the company will pay Trinity Medical Group,
Ltd. for specified research personnel, travel, laboratory, facility and
publication costs associated with clinical trials of REMUNE until full
regulatory approval in Thailand is granted. During the nine month period ended
September 30, 2000, the company paid Trinity Medical Group, Ltd. approximately
$200,000 for costs incurred related to the research and development of the drug
REMUNE. During the year ended December 31, 1999, the company paid Trinity
Medical Group, Ltd. approximately $294,000 for costs incurred related to the
research and development of the drug REMUNE. The company anticipates that
Trinity Medical Group, Ltd. or Trinity Assets Company Limited, an affiliate of
the company and Trinity Medical Group, Ltd., will incur approximately $500,000
of additional research and development costs during the third and fourth quarter
of 2000 related to the drug REMUNE. The company will pay either of these
companies for such costs incurred as required by the applicable collaboration
and supply agreement or sublicense and supply agreement.
The collaboration and supply agreement also provides that the company
make its best efforts to capitalize itself with at least $4,000,000 through sale
or subscription of shares of common stock not to exceed 1 million shares. The
requirement for the company not to exceed 1 million shares in its attempt to
capitalize itself was subsequently waived. The company agreed to prepare and
complete all necessary documentation required for registration of the company
with the Securities and Exchange Commission as a reporting company, which it has
done by filing a Form 10-SB on May 12, 2000. In exchange for the company being
capitalized and a reporting company, Trinity Medical Group, Ltd. agreed to
transfer its license and collaboration agreement and stock purchase agreement
between it and The Immune Response Corporation, dated September 15, 1995, to the
company no later than the first sale of the product after full regulatory
approval in Thailand has been granted.
The company and Trinity Medical Group, Ltd. entered into an assignment
agreement on August 3, 2000, whereby all of Trinity Medical Group, Ltd.'s
rights, title, and interests in the license and collaboration agreement and
stock purchase agreement were assigned to the company. There was no accounting
recognition by the company as a result of the transfer of the license and
collaboration agreement and the related stock purchase agreement. The company
intends to capitalize future specified payments required under the stock
purchase agreement to an intangible asset (license technology) and to marketable
securities, as appropriate.
On August 4, 2000, we assigned through a sublicense and supply
agreement the sales, distribution, manufacturing and marketing rights to REMUNE
in Thailand to Trinity Assets Company Limited, an affiliate of the company and
Trinity Medical Group, Ltd. The manufacturing rights assigned to Trinity Assets
Company Limited are non-exclusive. Trinity Assets Company Limited is related
through common ownership. Two of the company's directors, Inthanom John
Churdboonchart and Orranart Victoria Churdboonchart, are beneficial owners of
the company's common stock and are shareholders of Trinity Assets Company
Limited. The sublicense and supply agreement provides that the company will
realize a minimum gross profit from the sale of REMUNE to Trinity Assets Company
Limited in Thailand and that profits, as defined, from the sale of REMUNE in
licensed territories other than Thailand will be shared equally. It is the
intent of the parties that if and when Trinity Assets Company Limited begins to
manufacture REMUNE, the company will continue to realize revenues either from
the purchase and resale of REMUNE to Trinity Assets Company Limited or as
royalties from Trinity Assets Company Limited on its sales of REMUNE to others.
Specific terms of the resale gross profit or royalties have not been negotiated
by the parties at this time. The company has also agreed to provide support to
Trinity Assets Company Limited (in the form and substance satisfactory to both
parties) for the warehousing, transportation, and production of any related
capital assets, plant and equipment, etc. which are necessary for the marketing,
promoting and selling of REMUNE in Thailand. This support may be in the form of
providing interest bearing loans to Trinity Assets Company Limited or capital,
in exchange for equity ownership of Trinity Assets Company Limited; no specific
terms of the support have been negotiated by the parties at this time. Under the
terms of the sublicense and supply agreement, the company will pay Trinity
Assets Company Limited for specified research personnel, travel, laboratory,
facility and publication costs associated with clinical trials of REMUNE until
full regulatory approval in Thailand is granted.
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In 1999, Dr. Vina Churdboonchart, principal investigator for Mahidol
University, with the collaboration of researchers from five leading Thai
universities, completed a Phase II double blind placebo controlled clinical
trial of REMUNE in Thailand, the results of which were submitted to the Thailand
National Committee on AIDS for review in March, 2000 and to Clinical Diagnostic
Laboratory and Immunology Journal who published the results in the September
2000 issue, Vol.7, No.5, pages 728 to 733. In the clinical trial above, REMUNE
was found to increase mean CD4+ cell counts, with increases in both cellular and
humoral immune responses and stable viral load. A follow up study through
eighty-eight (88) weeks showed a significant decrease of viral load in 30% of
the subjects.
On December 24, 1999, Mahidol University in Thailand applied for
expanded testing of REMUNE with the Ministry of Public Health in Thailand. The
extended project will be coordinated by Mahidol University with Dr. Vina
Churdboonchart, principal investigator, in Bangkok, Thailand and will confirm
the effectiveness of REMUNE and study the long term effects of REMUNE on up to
10,000 HIV infected individuals. This extended study of REMUNE is not connected
to the request for full commercial approval to be presented to the Thai Food and
Drug Administration.
The results of the Phase II controlled trial were presented at the XIII
International AIDS Conference in Durban, South Africa by Dr. Vina
Churdboonchart, as the principal investigator at Mahidol University with the
collaboration of researchers from five leading Thai universities. The results of
the Phase II clinical trials in Thailand and other clinical trials using REMUNE
as a treatment for slowing HIV-related disease progression are encouraging. The
global burden of disease and death related to HIV is increasing at a rate
unmatched by any other pathogen. At present, the most effective treatment for
slowing HIV-related disease progression, antiretroviral medication requiring a
daily multi-pill regime, is complicated to administer, requires close medical
monitoring, is extremely costly, and can cause significant adverse effects. The
study conditions of the clinical trials in Thailand allowed REMUNE to be
assessed as a "mono-therapy", that is, without any other anti-viral drugs.
REMUNE requires a minimum of a once a quarter (or more if needed) injection. As
a result, REMUNE is both more economical and practical for populations such as
in Thailand. As released by the Ministry of Public Health of Thailand, the
official number of HIV infected people in Thailand is 1 million people. The
estimate for Southeast Asia is approximately 9 million HIV-1 infected people.
REMUNE is potentially a very cost effective therapy for the treatment of HIV
among Thailand's poorest people.
Our goal is to develop our initial product, REMUNE, so that it may be
sold throughout our licensed territory. We intend to support the regulatory
approvals and then distribute the product first in Thailand. We later intend to
engage in sub-license and supply agreements with parties in our licensed
territory countries who will carry out local regulatory requirements,
distribution and product support for REMUNE. In Thailand, we have sub-licensed
our rights to REMUNE to Trinity Assets Company Limited, an affiliate of the
company and Trinity Medical Group, Ltd.
DEVELOPMENT OF IMMUNE-BASED THERAPY - REMUNE.
REMUNE is designed to stimulate an HIV-infected individual's immune
system to attack HIV, the virus that causes AIDS. We believe that results from
previous clinical trials demonstrate that REMUNE significantly boosts
HIV-specific immune responses and may induce a positive virologic effect in
HIV-infected individuals. Furthermore, we believe REMUNE stimulates the
production of specific antiviral substances that naturally protect components of
the immune system from HIV infection. Leading HIV clinical researchers have
begun to recognize that in order to effectively stop or slow the progression of
HIV to AIDS, therapies must stimulate HIV-specific cell mediated immune
responses in infected individuals in addition to reducing viral load through the
use of anti-viral drugs.
As mentioned above, the company and its affiliates completed Phase II
clinical trials in Thailand where REMUNE was used as a sole treatment for
individuals infected with HIV.
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RISK FACTORS
In evaluating an investment in Trinity and its business, potential
investors should carefully consider the following risk factors as well as other
information set forth elsewhere in this registration statement which pertain to
Trinity.
RISKS RELATING TO DISEASE TREATMENT
OUR SUCCESS IS DEPENDENT ON APPROVAL OF REMUNE BY THE THAI MINISTRY OF HEALTH OR
FOOD AND DRUG ADMINISTRATION.
The company or its affiliate, Trinity Assets Company Limited, has not
yet submitted an application for an approval from the Thai Ministry of Health or
Food and Drug Administration to market, distribute and manufacture REMUNE.
Approval of REMUNE by the Thai Food and Drug Administration or Ministry
of Public Health is necessary for the marketing, distribution and manufacture of
REMUNE. If the Thai Food and Drug Administration does not approve REMUNE, REMUNE
cannot be marketed, sold or manufactured in Thailand. We will be unable to
generate any revenue in Thailand.
WE CANNOT SELL OR DISTRIBUTE REMUNE IN ANY OTHER COUNTRY IN OUR LICENSED
TERRITORY UNLESS WE HAVE RECEIVED REQUIRED MARKETING APPROVAL FROM THE GOVERNING
HEALTH AUTHORITY OF THAILAND.
The license and collaboration agreement entered into between The Immune
Response Corporation and Trinity Medical Group, Ltd. states that it, and as a
result of the assignment of Trinity Medical Group, Ltd.'s rights to REMUNE to
the company, we cannot sell or distribute REMUNE to any country in the licensed
territory, excluding Thailand, unless we have previously received the required
marketing approval for REMUNE from the governing health authority of Thailand
and we have diligently commenced marketing REMUNE in Thailand. The license and
collaboration agreement between Trinity Medical Group, Ltd. and The Immune
Response Corporation, entered into in 1995, provided for possible termination of
the license and collaboration agreement if the marketing approval for REMUNE in
Thailand was not granted before December 31, 2000. The Immune Response
Corporation and the company have since amended the license and collaboration
agreement to extend the possible termination date to at least August 2001.
GOVERNMENTAL REGULATION AND LEGAL UNCERTAINTIES MAY AFFECT OUR BUSINESS.
The U.S. Food and Drug Administration may impose severe restrictions on
the production of REMUNE in the U.S., thus making the current supplier of
REMUNE, The Immune Response Corporation, incapable of supplying the product to
us for distribution in Thailand. However, it is believed that the U.S. Food and
Drug Administration will be constrained to do so only in the case of severe
adverse effects found to be directly related to the vaccine.
OUR BUSINESS IS DEPENDENT ON THE TECHNOLOGY CONTINUING TO BENEFIT PATIENTS THAT
USE IT.
Our success will depend, in whole, upon the product continuing to
benefit users as has been shown in clinical trials. HIV is among the greatest
challenges that the medical community has had to deal with to date. The ability
of this virus to mutate, and thereby defeat many forms of treatment, has already
made a variety of therapies obsolete. While REMUNE has been designed to overcome
the known defenses of the disease, it is not unreasonable that new or unknown
antagonists may be found or introduced due to widespread use of the product or
may begin to appear in the future rendering REMUNE obsolete.
OUR BUSINESS IS DEPENDENT ON THE TECHNOLOGY CONTINUING TO BE SAFE AND TOLERABLE
TO THE PATIENTS THAT USE IT.
Our success will depend, in large part, upon the product continuing to
show wide safety margins and a low incidence of adverse side effects. The
clinical trials to date suggest that no significant risks are associated with
use of the product. However, clinical trials with hundreds or even thousands of
subjects cannot predict with absolute
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certainty the existence of harmful or even fatal side effects on rare patients
types or off-line usage that may result in harmful side effects including
illness and even death that could expose us to liabilities. REMUNE is a killed
vaccine. To date, in studies with other killed vaccine, no incidences of the
vaccine becoming activated and causing severe or harmful effects has been
reported.
WE RISK CAPACITY CONSTRAINTS FROM OUR SUPPLIER OF REMUNE.
A key element of our strategy is to utilize the manufacturing capacity
of the technology's supplier to meet our market demands. We have a contractual
obligation with The Immune Response Corporation that they largely meet our
requirements provided we forecast a six month horizon. Nonetheless, we will be
adversely affected if for any reason the manufacturing facility experiences down
time or the supplier does not fulfill its obligations. Since the facility has no
history of volume production we cannot predict with absolute certainty that a
consistent supply volume can be expected. Further, The Immune Response
Corporation relies on a third party for the final inactivation step of the
manufacturing process. If the existing manufacturing operations prove
inadequate, there can be no assurance that any arrangement with a third party
can be established on a timely basis, or that we or The Immune Response
Corporation can establish other manufacturing capacity on a timely basis.
THE IMMUNE RESPONSE CORPORATION, REMUNE'S DEVELOPER, HAS NOT COMPLETED THE
DEVELOPMENT OF REMUNE.
The Immune Response Corporation, the developer of the REMUNE vaccine,
will need significant additional research and development efforts in order to
continue developing the therapy. The Immune Response Corporation has not
completed the development of any products and there can be no assurance that any
products will be successfully completed. The discontinuation of a Phase III
trial of REMUNE due to lack of statistical difference between test and control
groups, conducted in the United States, had a material adverse effect on The
Immune Response Corporation. Since the discontinuation of The Immune Response
Corporation's clinical endpoint study, Study 806, in May 2000, two significant
events took place. First, the U.S. Food and Drug Administration agreed to revise
its guidelines and allow measurements of viral load, or the amount of HIV in the
bloodstream, for licensure of drug products for HIV-1, including REMUNE. Second,
The Immune Response Corporation's REMUNE development partner, Agouron
Pharmaceuticals, Inc., a wholly owned subsidiary of Pfizer, Inc., launched a
multi-national pivotal registration trial under the revised guidelines that will
test REMUNE's ability to suppress viral load by harnessing the body's normal
protective response.
TECHNOLOGICAL CHANGE AND COMPETITION MAY RENDER OUR POTENTIAL PRODUCTS OBSOLETE.
The biotechnology industry continues to undergo rapid change, and
competition is intense and is expected to increase. Competitors may succeed in
developing technologies and products that are more effective or affordable than
any which are being developed by our supplier, The Immune Response Corporation.
Although The Immune Response Corporation believes that there is a significant
future market for therapeutics to treat HIV, The Immune Response Corporation
anticipates that REMUNE will face intense and increased competition in the
future. There can be no assurance that existing products or new products for the
treatment of HIV developed by competitors will not be more effective or more
effectively marketed and sold than REMUNE.
RISKS RELATING TO OUR HISTORY AND FINANCING NEEDS
WE FACE RISKS FROM DOING THE MAJORITY OF OUR BUSINESS OUTSIDE OF THE UNITED
STATES.
We may be subject to direct regulation by several governmental agencies
in Thailand in addition to regulations applicable to the development and
marketing of pharmaceutical products. The application of new laws and
regulations as well as political and economic events beyond our control may have
a material adverse effect on our business. Present Thai law requires domestic
pharmaceutical manufacturing and some aspects of sales and distribution be
conducted by a Thai company. Thus, we would not be controlling final disposition
of product nor would we be able to constantly monitor the local regulatory
environment as a result of day to day business experience. We would be
entrusting the local distributor in our licensed territory of Thailand to ensure
compliance with all regulations and anticipate any changes required for
continued success.
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WE HAVE LIMITED OPERATING HISTORY.
We have minimal operations, nominal assets and no revenues from
operations. As a start-up business, we are subject to all the substantial risks
inherent in the commencement of a new business enterprise with new management.
There can be no assurance that we will be able to successfully generate
revenues, operate profitably, or make any distributions to the holders of our
securities. We have less than one year business history for you to analyze or to
aid you in making an informed judgment as to the merits of an investment in our
securities. Any investment in our common stock should be considered a high risk
investment because you will be placing funds at risk in an unseasoned start-up
company with unforeseen costs, expenses, competition and other problems to which
start-up ventures are often subject. As we are a late stage development company,
our prospects must be considered in light of the risks, expenses and
difficulties encountered in establishing a new business in any industry.
WE CURRENTLY HAVE LITTLE WORKING CAPITAL AND LIMITED SOURCES OF LIQUIDITY. WE
WILL NEED ADDITIONAL FINANCING.
The company requires substantial capital to pursue its operating
strategy and currently has limited cash for operations. Until we can obtain
revenues sufficient to fund working capital needs, the company will be dependent
upon external sources of financing. To date, we have no internal sources of
liquidity and do not expect to generate any internal cash flow until the first
quarter of 2001.
We do not have any other commitments to secure additional capital and
there is no assurance that any additional funds needed will be available on
favorable terms, if at all. We require substantial working capital to fund our
business. We currently anticipate that the net proceeds from our sale of our
shares of common stock covered by this prospectus, together with our available
funds, will be sufficient to meet our anticipated needs for working capital and
capital expenditures through at least the next 12 months. However, we may need
to raise additional funds prior to the expiration of this period.
Moreover, there is no assurance that our estimate of our liquidity
needs is accurate or that new business development or other unforeseen events
will not occur, resulting in the need to raise additional funds. If we raise
additional funds through the issuance of equity, equity-related or convertible
debt securities, these securities may have rights, preferences or privileges
senior to those of the rights of the company's common stock. The failure to
raise any needed additional funds will likely have a material adverse effect on
the company's business.
AFTER UTILIZING THE PROCEEDS FROM OUR SALE OF OUR SHARES OF COMMON STOCK COVERED
BY THIS PROSPECTUS, WE WILL NOT GENERATE ANY INTERNAL CASH FLOW UNTIL THE FIRST
QUARTER OF 2001.
We do not currently have any revenues and our estimates indicate that
we will not generate internal cash flows until at least the first quarter of
2001. As such, we may be required to raise additional funds prior to the end of
the first quarter of 2001. As we do not have any external sources of funding,
our inability to successfully implement our business strategy and to raise
additional financing until the end of the first quarter of 2001 may compromise
our ability to achieve our projected revenues. Furthermore, if we are required
to raise additional funding, there is no assurance that we would be successful,
the failure of which would have a material adverse effect on our business and
operations.
OUR MANAGEMENT HAS BROAD DISCRETION OVER USE OF THE PROCEEDS OF OUR SALE OF OUR
SHARES OF COMMON STOCK COVERED BY THIS PROSPECTUS.
All of the net proceeds from our sale of shares of our common stock
will be available to fund development and for general corporate purposes. As of
the date of this registration statement, we cannot specify with certainty the
particular uses for the net proceeds to be received other than that they will be
used as working capital and for construction of handling and manufacturing
facilities and to meet specified potential obligations under the stock purchase
agreement with The Immune Response Corporation. Accordingly, our management will
have broad discretion in the application of the net proceeds. The failure of
management to apply such funds effectively could have a material adverse effect
on our business.
10
<PAGE>
Our current monthly operating overhead is approximately $65,000 which
amount will increase if and as we expand our operations. Currently, we rely upon
our current stockholders to lend money and fund our monthly operating overhead,
as we have limited working capital. It should not be expected that we will
receive funds from any of our affiliates until the first half of 2001.
AS A START-UP COMPANY, OUR QUARTERLY OPERATING RESULTS MAY FLUCTUATE.
Based on our business and industry and as a start-up, we expect to
experience significant fluctuations in the future quarterly operating results
due to a variety of factors, many of which are outside of our control. Factors
that may adversely affect the quarterly operating results include:
o government approvals and regulations that impede our ability
to transport, sell and administer product;
o our ability to operate at favorable gross margins;
o the acceptance of the product by administering physicians and
patients may not meet expectations;
o payment of invoices by our overseas partner(s) or affiliates;
o supply of product by the manufacturer is not fulfilled as
expected;
o the amount and timing of operating costs and capital
expenditures relating to expansion of our business, operations
and infrastructures;
o costs and delays in introducing REMUNE;
o government regulations related to the shipment of drugs
overseas;
o our ability to develop an appropriate information technology
system and infrastructure; and
o general economic conditions, as well as those specific to
Thailand and related industries.
As a result of our limited operating history, it is difficult to
accurately forecast our revenue. As a result, we may be unable to adjust our
spending in a timely manner to compensate for any unexpected revenue shortfall.
WE HAVE NOT PAID ANY DIVIDENDS AND DO NOT ANTICIPATE DOING SO IN THE NEAR
FUTURE.
We have not paid any dividends on our common stock and we cannot assure
you that we will achieve sufficient earnings to pay cash dividends on our common
stock in the near future. Further, we intend to retain earnings to fund our
operations. Therefore, we do not anticipate paying any cash dividends on our
common stock in the near future.
WE ARE CURRENTLY CONTROLLED BY OUR PRINCIPAL STOCKHOLDERS, OFFICERS AND
DIRECTORS.
The directors and executive officers beneficially own approximately 79%
of the outstanding common stock of the company. As a result, the directors and
executive officers could exercise control over all matters requiring stockholder
approval, including the election of directors and approval of significant
corporate transactions. This concentration of ownership may have the effect of
delaying or preventing a change in control of the company.
WE LACK DISINTERESTED, INDEPENDENT DIRECTORS.
Our directors have a direct financial interest in the company. While
our management believes that the current directors will be able to exercise
their fiduciary duties as directors, there may exist inherent conflicts of
interest in the execution of their duties. The company intends to appoint
independent directors in 2001 and
11
<PAGE>
subsequently create audit and compensation committees. We have authorized
creation of a scientific advisory board and will be appointing members this
year.
ALL MARKETING WILL BE DONE IN-HOUSE.
We currently plan to market and promote our products in-house or
through related parties or affiliates. While our officers and directors have
prior promotional and marketing experience, there can be no assurances that our
marketing strategies will be effectively instituted, or that these arrangements
will result in sufficient revenues to produce net income.
OUR CURRENT STOCKHOLDERS WILL CONTINUE TO CONTROL THE COMPANY.
Our current stockholders have the voting power to elect all of the
members of the Board of Directors and control substantially all corporate
actions and decisions for an indefinite period of time. Accordingly, investors
may have no right or power to take part in the management or control of the
business of the company, or the election of its officers or directors.
Accordingly, no person should invest in the company unless he is willing to
entrust all aspects of control to the company's current management and to rely
upon their abilities.
LIMITED MARKET FOR OUR SECURITIES.
There is currently a limited market for our securities on the Pink
Sheet Service of the National Association of Securities Dealers system and there
can be no assurance that a broader market will ever develop. Accordingly,
purchasers of our securities will be required to bear the economic consequences
of holding such securities for an indefinite period of time. While there are not
blanket exemptions for re-sales of unregistered securities of privately held
companies, the SEC has promulgated Rule 144 that is generally applicable to the
holders of restricted securities of companies whose securities are traded on a
public market. However, there is currently a limited public market for our
securities and there is no assurance that our securities will be traded on a
broader public market.
In general, Rule 144 provides, if certain conditions are met, that a
person who has held restricted securities for at least one year may sell in
brokerage transactions, during each three-month period thereafter, an amount
equal to the greater of the average weekly trading volume of the common stock
during the four calendar weeks immediately proceeding the sale, or 1% of our
outstanding common stock, whichever is greater. Certain provisions of Rule 144
permit holders of restricted securities who have held their shares for more than
two years to sell all their shares without regard to the volume limitations
described above. Investors should not assume that they will be able to sell
their company securities in brokerage transactions, if at all.
USE OF PROCEEDS
We will not receive any proceeds from the sale of shares of our common
stock being offered by any of the selling security holders. We anticipate
receiving the net proceeds from the sale of the shares of common stock offered
by us. Assuming all of the shares are purchased, we would use the net proceeds
for general corporate purposes, including working capital, our stock purchase
commitment with The Immune Response Corporation upon product approval and upon
Trinity Assets Company Limited receiving the required factory establishment
license or approval from the governing health authority of Thailand to
manufacture the drug therapy REMUNE, and expenses related to clinical trials.
The stock purchase commitments with The Immune Response Corporation total $10
million. We intend to directly purchase, or lend capital to Trinity Assets
Company Limited so they may purchase, plant, equipment and secure land leases in
2001 for a handling and storage facility in Thailand. The estimated cost of the
facility is $12 million and will require six months to one year to construct. We
plan to use proceeds from the sale of our common stock to fund a portion of the
facility cost. We will also use the net proceeds from the sale of our common
stock to fund research and development of our product, REMUNE, which we expect
will be an additional $500,000. We will bear all expenses relating to this
registration.
12
<PAGE>
DETERMINATION OF OFFERING PRICE
The offering price of the 2,000,000 shares of common stock being
offered by us has been determined primarily by our capital requirements and has
no relationship to any established criteria of value, such as book value or
earnings per share. Additionally, because we have no significant operating
history and have not generated any revenues to date, the price of the shares of
common stock is not based on past earnings, nor is the price of the shares
indicative of current market value for the assets owned by us.
The offering price of the 1,739,410 shares being offered by the selling
security holders has no relationship to any established criteria of value, such
as book value or earnings per share. Additionally, because we have no
significant operating history and have not generated any revenues to date, the
price of our common stock is not based on past earnings, nor is the price of the
shares of our common stock indicative of current market value for the assets
owned by us. No valuation or appraisal has been prepared for our business and
potential business expansion.
13
<PAGE>
SELLING SECURITY HOLDERS
The following table sets forth the number of shares of common stock
which may be offered for sale from time to time by the selling security holders.
The shares offered for sale constitute all of the shares known to us to be
beneficially owned by the selling security holders. None of the selling security
holders has held any position or office with us, except as specified in the
following table. Other than the relationships described below, none of the
selling security holders had or have any material relationship with us.
<TABLE>
<CAPTION>
Selling Security Holders Number of Shares
------------------------ ----------------
<S> <C>
FIRST PRIVATE PLACEMENT--CONVERTIBLE NOTES, INCLUDES STOCK
ISSUABLE RELATED TO ACCRUED INTEREST AND COMMISSIONS
Alan Cornell 53,986
Patrick H. and Lee M. Miller 108,158
Ken Leiner 27,082
Meir Morag 26,740
Gary Coover 26,733
Marcaud Cook & CIE, SA 108,932
Robert Gibson 13,377
Grant Bettingen 13,332
Richard B. and Jacquelin Wasson 42,735
Fred Buelow 15,982
John Colwell 21,622
Wasson Family Trust 43,616
Andre Pringo 5,386
Steve Shannon 26,932
Phillip Mirabelli 5,351
Richard Abbe 108,849
John Ogle 43,349
Eric Weiss Charitable Remainder Unitrust 54,000
Anthony Spaulding 5,162
John Shulman 36,088
John D. Shulman 1,616
Martin Vulliez 5,327
Jim Palmersheim 26,637
HR Granger 13,318
Eastern Frontier 54,000
Black Hills Investment Corp. 6,750
John Colwell 11,500
------
Subtotal 906,560
-------
SECOND PRIVATE PLACEMENT--CONVERTIBLE PREFERRED STOCK,
INCLUDES STOCK ISSUABLE RELATED TO COMMISSIONS
Larry Berman 34,000
Karl Bratin 6,000
Milan Bratin 50,000
Bob Brooks 8,000
Bella Claravella 10,000
Gractia Chieffe 4,000
Edgar Orquiola 4,000
Michael Pallin 16,000
G Pjtrovic 6,000
R Pjtrovic 6,000
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Don Swartz 14,000
Charles H. Roeske 6,000
Torunn Curtis 4,000
James Garnett 20,000
John Gross 10,000
Anthony Spaulding 8,000
Hilary Spaulding 2,000
Glen Anthony 2,000
Cameron Harper 2,000
Steve Koppenjan 5,000
Kellie Mowdy 2,000
Jens Pechbrenner 4,000
Richard Vane 2,000
Chris Garife 2,000
David Carroll 6,000
Scot Cohen 50,000
Douglas Wasson 12,000
Thomas Wasson 8,000
Gaylord LLC 8,000
Jean Mitchell 4,000
Great Lakes Radio 2,000
Salomon Grey 8,200
Eastern Frontier 2,500
Black Hills Investment Corp. 3,150
John Colwell 2,000
-----
Subtotal 332,850
-------
THIRD PRIVATE PLACEMENT--CONVERTIBLE PROMISSORY NOTE
RoyCap Inc. 450,000
-------
NON-STATUTORY STOCK OPTIONS
Gary E. Wilson (1) 50,000
------
Total 1,739,410
=========
</TABLE>
(1) Chief Financial Officer, Executive Vice President - Finance, Treasurer
PLAN OF DISTRIBUTION
We are registering 2,000,000 shares of our common stock in
contemplation of offering unrestricted common stock to the public. We are
registering an additional 1,739,410 shares which were sold or granted to the
selling security holders. The company will not receive any proceeds from the
sale of the 1,739,410 shares attributed to the private placements or option
grants.
GENERAL.
We may sell up to 2,000,000 shares of our common stock through
underwriters or dealers, through agents or directly to one or more purchasers.
We may distribute the securities from time to time in one or more
15
<PAGE>
transactions at a fixed price or prices (which may be changed from time to
time), at market prices prevailing at the time of sale, at prices related to
these prevailing market prices or at negotiated prices.
The applicable prospectus supplement will describe the terms of the
offering of the securities, including:
o the name or names of any underwriters, if any;
o the purchase price of our common stock and the proceeds we will receive
from the sale;
o any underwriting discounts and other items constituting underwriters'
compensation;
o any discounts or concessions allowed or reallowed or paid to dealers;
and
o any securities exchange or market on which our common stock may be
listed.
Only underwriters named in the prospectus supplement, if any, are underwriters
of our common stock offered with the prospectus supplement.
USE OF UNDERWRITERS AND AGENTS.
If underwriters are used in the sale, they will acquire our common
stock for their own account and may resell them from time to time in one or more
transactions at a fixed public offering price or at varying prices determined at
the time of sale. We may offer our common stock to the public through
underwriting syndicates represented by managing underwriters or by underwriters
without a syndicate. Subject to certain conditions, the underwriters will be
obligated to purchase all of our common stock of the series offered by the
prospectus supplement. Any public offering price and any discounts or
concessions allowed or reallowed or paid to dealers may change from time to
time.
We may sell our common stock directly or through agents we designate
from time to time. We will name any agent involved in the offering and sale of
our common stock and we will describe any commissions we will pay the agent in
the prospectus supplement. Unless the prospectus supplement states otherwise our
agent will act on a best-efforts basis for the period of its appointment.
We may authorize agents or underwriters to solicit offers by certain
types of institutional investors to purchase our common stock from us at the
public offering price set forth in the prospectus supplement pursuant to delayed
delivery contracts providing for payment and delivery on a specified date in the
future. We will describe the conditions to these contracts and the commissions
we must pay for solicitation of these contracts in the prospectus supplement.
SALE DIRECTLY TO PURCHASERS.
We may enter into agreements directly with one or more purchasers. Such
agreements may provide for the sale of our common stock at a fixed price, based
on the market price of the common stock or otherwise. Alternatively, such
agreements may provide for the sale of common stock over a period of time by
means of draw downs at our election which the purchaser would be obligated to
accept under specified conditions. Under this form of agreement, we may sell
common stock at a per share price which is discounted from the market price.
Such agreements may also provide for sales of common stock based on combinations
of or variations from these methods.
DEMAND UNDERWRITERS.
In connection with the sale of the securities offered with this
prospectus, underwriters, dealers or agents may receive compensation from us or
from purchasers of our common stock for whom they may act as agents, in the form
of discounts, concessions or commissions. The underwriters, dealers or agents
which participate in the distribution of the securities may be deemed to be
underwriters under the Securities Act and any discounts or commissions received
by them and any profit on the resale of the securities received by them may be
deemed to be
16
<PAGE>
underwriting discounts and commissions under the Securities Act. Anyone deemed
to be an underwriter under the Securities Act may be subject to statutory
liabilities, including Sections 11, 12 and 17 of the Securities Act and Rule
10b-5 under the Exchange Act.
INDEMNIFICATION AND OTHER RELATIONSHIPS.
We may provide agents and underwriters with indemnification against
certain civil liabilities, including liabilities under the Securities Act, or
contribution with respect to payments that the agents or underwriters may make
with respect to such liabilities. Agents and underwriters may engage in
transactions with, or perform services for, us in the ordinary course of
business.
DISTRIBUTION BY SELLING SECURITIES HOLDERS.
The selling security holders may sell our common stock in the
over-the-counter market, or on any securities exchange on which our common stock
is or becomes listed or traded, in negotiated transactions or otherwise. The
selling security holders may sell our common stock at prices then prevailing or
related to the then current market price or at negotiated prices. The shares
will not be sold in an underwritten public offering.
USE OF BROKERS AND DEALERS.
The shares may be sold directly or through brokers or dealers. The
methods by which the shares may be sold include:
o purchases by a broker or dealer as principal and resale by such broker
or dealer for its account;
o ordinary brokerage transactions and transactions in which the broker;
o solicits purchasers; and
o privately negotiated transactions.
Brokers and dealers engaged by selling security holders may arrange for
other brokers or dealers to participate. Brokers or dealers may receive
commissions or discounts from selling security holders (or, if any such
broker-dealer acts as agent for the purchaser of such shares, from such
purchaser) in amounts to be negotiated. Broker-dealers may agree with the
selling security holders to sell a specified number of such shares at a
stipulated price per share, and, to the extent such broker-dealer is unable to
do so acting as agent for a selling security holder, to purchase as principal
any unsold shares at the price required to fulfill the broker-dealer commitment
to such selling security holder. Broker-dealers who acquire shares as principal
may resell those shares from time to time in the over-the-counter market or
otherwise at prices and on terms then prevailing or then related to the
then-current market price or in negotiated transactions and, in connection with
such resales, may receive or pay commissions.
DEEMED UNDERWRITERS.
The selling security holders and any broker-dealers participating in
the distributions of the shares may be deemed to be "underwriters" within the
meaning of Section 2(11) of the Securities Act of 1933. Any profit on the sale
of shares by the selling security holders and any commissions or discounts given
to any such broker-dealer may be deemed to be underwriting commissions or
discounts. The shares may also be sold pursuant to Rule 144 under the Securities
Act of 1933 beginning one year after the shares were issued.
TIMING OF SALE BY SELLING SECURITY HOLDERS.
We have filed this registration statement, of which this prospectus
forms a part, with respect to the sale of the shares by the selling security
holders. There can be no assurance that the selling security holders will sell
any or all of the offered shares.
17
<PAGE>
Under the Securities Exchange Act of 1934 and the regulations
thereunder, any person engaged in a distribution of the shares of our common
stock offered by this prospectus may not simultaneously engage in market making
activities with respect to our common stock during the applicable "cooling off"
periods prior to the commencement of such distribution. Also, the selling
security holders are subject to applicable provisions which limit the timing of
purchases and sales of our common stock by the selling security holders.
REGULATION M.
We have informed the selling security holders that, during such time as
they may be engaged in a distribution of any of the shares we are registering by
this registration statement, they are required to comply with Regulation M. In
general, Regulation M precludes any selling security holder, any affiliated
purchasers and any broker-dealer or other person who participates in a
distribution from bidding for or purchasing, or attempting to induce any person
to bid for or purchase, any security which is the subject of the distribution
until the entire distribution is complete. Regulation M defines a "distribution"
as an offering of securities that is distinguished from ordinary trading
activities by the magnitude of the offering and the presence of special selling
efforts and selling methods. Regulation M also defines a "distribution
participant" as an underwriter, prospective underwriter, broker, dealer, or
other person who has agreed to participate or who is participating in a
distribution.
Regulation M prohibits any bids or purchases made in order to stabilize
the price of a security in connection with the distribution of that security,
except as specifically permitted by Rule 104 of Regulation M. These stabilizing
transactions may cause the price of our common stock to be more than it would
otherwise be in the absence of these transactions. We have informed the selling
security holders that stabilizing transactions permitted by Regulation M allow
bids to purchase our common stock if the stabilizing bids do not exceed a
specified maximum. Regulation M specifically prohibits stabilizing that is the
result of fraudulent, manipulative, or deceptive practices. Selling security
holders and distribution participants are required to consult with their own
legal counsel to ensure compliance with Regulation M.
LEGAL PROCEEDINGS
There are no legal actions pending against us nor are any such legal
actions contemplated.
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
Following are Directors and Officers:
<TABLE>
<CAPTION>
Name Age Position
---- --- --------
<S> <C> <C>
Arun Churdboonchart 59 Chairman of the Board of Directors
Dr. Vina Churdboonchart 55 President and Director
Inthanom John Churdboonchart 33 Director
Orranart Victoria Churdboonchart 30 Director
Dr. James S. Namnath 43 Chief Executive Officer and Director
Gary E. Wilson 33 Chief Financial Officer, Executive
Vice President - Finance, Treasurer
Elizabeth Namnath 49 Corporate Secretary
</TABLE>
MR. ARUN CHURDBOONCHART, age 59, is one of Thailand's most
distinguished and recognized businessmen. He is a former member of the Thai
National Senate and a co-chairman of Trinity Group: a diversified Thai
corporation that owns extensive real estate, hotels, retail stores, and a
Bangkok radio station. Prior to founding the Trinity Group companies, Mr.
Churdboonchart was the chairman of AC Machinery which started as a small
supplier of engines and under his management became Bangkok's largest
distributor of marine engine spare parts.
18
<PAGE>
Mr. Churdboonchart received a B.S. degree in Business Administration
from California State University, Long Beach in 1970. Mr. Arun Churdboonchart is
married to Dr. Vina Churdboonchart.
DR. VINA CHURDBOONCHART, age 55, is among the most recognized female
scientists and business persons in Thailand today. She is also a former member
of the Thai Legislature and a former Thai Senate member. She is a founder of
Trinity Medical Group, Ltd., a Bangkok based privately held company which
focuses on treating HIV and AIDS. Since 1971, she has been a member of the
Faculty of Science, Mahidol University, which has two medical schools (Siriraj
and Ramathibodi) with two university-affiliated hospitals. At Mahidol
University, she has been the principal investigator of dengue hemorrhagic fever.
Her research efforts have been supported and well recognized by the World Health
Organization. She has many published studies, including breakthrough findings
accepted in the Journal of AIDS and Vaccine Journal.
Dr. Churdboonchart received her doctorate in Pathobiology in 1984. She
received her bachelors degree from California State University, Long Beach in
1970. Dr. Vina Churdboonchart is married to Mr. Arun Churdboonchart.
MR. INTHANOM JOHN CHURDBOONCHART, age 33, graduated from Gonzaga
University in 1992 with a B.S. in Computer Aid Design. Mr. Churdboonchart also
received a Mini Masters of Business Administration in Factory Management from
Chulalongkorn University in 1996. Mr. Churdboonchart began his professional
career assisting the Managing Director of Kaew Kanch Industry and Mining in
1994. He established AV Studio Company, Ltd. in 1995 and recently launched
Discazine Company, Ltd. Mr. Churdboonchart has been Managing Director of Trinity
Assets Company Limited since 1990.
MS. ORRANART VICTORIA CHURDBOONCHART, age 30, graduated from
Chulalongkorn University in 1991 with a B.A. Ms. Churdboonchart also received a
Masters of Business Administration from Pepperdine University in 1995. She began
her career assisting the Vice President of The Trinity Complex and is the Chief
Financial Officer of Trinity Medical Group, Ltd. Ms. Churdboonchart established
Learning Home International Kindergarten, which has recently expanded to a
second branch.
DR. JAMES S. NAMNATH, age 43, is an experienced senior executive of
high technology companies. He has managed the U.S. portfolio of assets and
operations for Trinity Medical Group, Ltd. since its inception. Dr. Namnath is
the founder, Chairman of the Board, and Chief Financial Officer of JennerNet
Software Company, an Internet focused provider of information systems to the
personnel industry. Prior to starting his own corporate ventures, Dr. Namnath
was a Senior Manager at Monsanto Company and Chevron Corporation. For over nine
years he was the Principal Scientist and Manager of Product Chemistry for the
Ortho and Roundup homeowner brands: products which have extensive government
regulatory guidelines. He started his professional career with Lever Brothers
and Cheeseborough-Ponds: leading consumer product companies where his patented
breakthroughs formed the basis for major corporate ventures. It is estimated
that his product inventions are a key part of products with annual retail sales
of $3 billion. Dr. Namnath is an experienced computer programmer with over 25
years of experience and certifications in business and accounting systems.
Dr. Namnath received his doctorate in Physical Chemistry in 1983 from
the University of Southern California. He earned two bachelor degrees from the
University of California, Santa Barbara in 1978.
MR. GARY E. WILSON, CPA, age 33, graduated from the University of
Michigan in 1991 with a B.A. in Economics, Business Administration and
Accounting. Prior to joining the company, Mr. Wilson was a Senior Assurance
Services Manager with Grant Thornton LLP where he served as an auditor and
professional business advisor to publicly-held and privately-owned
Manufacturing/Distribution, Life Sciences and High Technology companies. As a
Senior Assurance Services Manager, he regularly advised senior management and
various boards of directors on Best Business Practices, Inventory Management,
Strategic Planning, Stock Option Plans, Financing Options and Solutions, Capital
Market Transactions, Internal Controls and Accounting and Auditing matters.
MS. ELIZABETH NAMNATH, age 49, is an experienced senior manager of
international companies. She started and managed Maginet Corporation, a
pay-per-view movie provider, in Singapore and Thailand. Establishing major
operations in four cities throughout Southeast Asia, her management and
leadership skills have made Maginet Corporation become the largest "On Command"
movie provider. Prior to Maginet, she worked as General Manager
19
<PAGE>
for Trinity Hotel in Bangkok, Thailand. During her time as manager, Trinity
Hotel was recognized by Frommer Travel Guide as one of the best three-star
hotels in Bangkok.
Elizabeth received her B.A. degree in Communication with a Business
Administration minor from California State University, Long Beach in 1974.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the
beneficial ownership of our common stock as of October 12, 2000 by:
o each person or entity known by us to be the beneficial owner of more
than 5% of the outstanding shares of common stock;
o each of our directors and named executive officers; and
o each of our directors and executive officers as a group.
<TABLE>
<CAPTION>
Number of Shares of Common
Stock Percentage of
Name of Beneficial Owners Beneficially Owned Ownership
------------------------- ------------------ ---------
<S> <C> <C>
Churdboonchart Trinity Trust 7,200,000 70.4%
Account (1)
Trinity Partners Trust (2) 400,000 3.9
Dr. Vina Churdboonchart (3) 450,000 4.4
Elizabeth Namnath (4) 50,000 0.5
Gary E. Wilson (5) 50,000 0.5
Directors and Executive Officers as a
Group 8,150,000 79.3
</TABLE>
(1) Beneficiaries are Chairman Arun Churdboonchart, President Dr. Vina
Churdboonchart, Director Inthanom John Churdboonchart and Director Orranart
Victoria Churdboonchart
(2) Beneficiary is Dr. James Namnath, CEO
(3) President and Director
(4) Corporate Secretary
(5) Chief Financial Officer, Executive Vice President - Finance, Treasurer
DESCRIPTION OF SECURITIES
We are authorized to issue 50,000,000 shares of $.001 par value common
stock. Each share of common stock has equal rights and preferences, including
voting privileges. As of September 30, 2000, there were 10,226,000 shares of our
common stock issued and outstanding. We are also authorized to issue 1,000,000
shares of preferred stock. We sold 158.5 units of our preferred stock during the
nine months ended September 30, 2000. Each unit consisted of one hundred shares
of the company's series A preferred stock and a non-callable common stock
purchase warrant. Each preferred share was convertible, at the company's option,
into 10 shares of the company's common stock, par value $0.001. Each of the
warrants entitles the registered holder to purchase up to one thousand shares of
the common stock at a price of $4.00 per share for a period of 24 months. Each
shareholder of our common stock is entitled to a pro rata share of cash
distributions made to shareholders, including dividend payments. The holders of
our common stock are entitled to one vote for each share of record on all
matters to be voted on by shareholders. There is no cumulative voting with
respect to the election of our directors or any other matter. Therefore, the
holders of more than 50% of the shares voted for the election of those directors
can elect all of
20
<PAGE>
the directors. The holders of our common stock are entitled to receive dividends
when, and if, declared by our Board of Directors from funds legally available
therefor. Cash dividends are at the sole discretion of our Board of Directors.
In the event of our liquidation, dissolution or winding up, the owners of common
stock are entitled to share ratably in all assets remaining available for
distribution to them after payment of our liabilities and after a provision has
been made for each class of stock, if any, having any preference in relation to
our common stock. Holders of shares of our common stock have no conversion,
preemptive, or other subscription rights, and there are no redemption provisions
applicable to our common stock.
DIVIDEND POLICY.
We have never declared or paid a cash dividend on our common stock. We
do not expect to pay cash dividends on our common stock in the near future. We
currently intend to retain our earnings, if any, for use in our business. Any
dividends declared in the future will be at the discretion of our Board of
Directors and subject to any restrictions that may be imposed by our future
lenders, if any.
EXPERTS
The financial statements of the company as of December 31, 1999 and for
the period from inception (September 28, 1998) to December 31, 1999 included in
this prospectus have been so included in reliance on the report of Grant
Thornton LLP, independent certified public accountants, given on the authority
of said firm as experts in auditing and accounting.
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES
ACT LIABILITIES
Article X of our Certificate of Incorporation provides, among other
things, that our officers shall not be personally liable to us or our
shareholders for monetary damages for breach of fiduciary duty as a director,
except for liability:
o for any breach of such directors duty of loyalty to us or our
security holders;
o for acts or omissions not in good faith or which involve
intentional misconduct or knowing violation of law;
o liability for unlawful payments of dividends or unlawful
purchase or redemption by us; or
o for any transaction from which such director derived any
improper personal benefit.
Accordingly, our directors may have no liability to our shareholders
for any mistakes or errors of judgment or for any act or omission, unless the
act or omission involves intentional misconduct, fraud, or a knowing violation
of law or results in unlawful distributions to our shareholders.
Section VII of our Bylaws also provides that our officers and directors
shall be indemnified and held harmless by us to the fullest extent permitted by
the provisions of Section 607.0850 of the Florida Business Corporation Act.
INDEMNIFICATION AGREEMENTS.
We will enter into indemnification agreements with each of our
executive officers and directors. We will agree to indemnify each such person
for all expenses and liabilities, including criminal monetary judgments,
penalties and fines, incurred by such person in connection with any criminal or
civil action brought or threatened against such person by reason of such person
being or having been our officer or director or employee. In order to be
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<PAGE>
entitled to indemnification by us, such person must have acted in good faith and
in a manner such person believed to be in our best interest. With respect to
criminal actions, such person must have had no reasonable cause to believe his
or her conduct was unlawful.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to our directors, officers and controlling persons
pursuant to the foregoing provisions, or otherwise, we have been advised that in
the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in that Act and is, therefore, unenforceable.
ORGANIZATION WITHIN LAST FIVE YEARS
Trinity Medical Group USA, Inc. was incorporated in the State of
Delaware on September 1998 and reincorporated in Nevada in November of 1999 with
its principal place of business in California. Following an Agreement for the
Exchange of Common Stock between the company and August Project III Corp., a
Florida corporation, on December 31, 1999, August Project issued to the
company's shareholders 5,226,000 shares of its Common Stock in exchange for 100%
of the outstanding shares of the company. In addition, shareholders of August
Project sold 4,867,000 shares to the shareholders of the company in exchange for
$175,000. Following the merger, the shareholders of the predecessor company
owned a total of 10,093,000 out of a total of 10,226,000 outstanding shares of
August Project. August Project was the surviving corporation after the merger.
Prior to the merger, August Project had been approved for listing on the
National Quotation Service Pink Sheets with the following trading symbol: AUUK.
On January 5, 2000, August Project changed its name to Trinity Medical Group
USA, Inc.
DESCRIPTION OF BUSINESS
Trinity Medical Group USA, Inc. was incorporated in the State of
Delaware on September 28, 1998 and reincorporated in Nevada in November of 1999
with its principal place of business in California. In December 1999, as the
result of a reorganization, we became a Florida corporation. The company is an
affiliate of Trinity Medical Group, Ltd., a Thailand company
(http://www.trinitygroups/trinity medical/dsmb.htm). The Churdboonchart Trinity
Trust owns approximately 70% of the company's common stock. The beneficiaries of
The Churdboonchart Trinity Trust are also the majority owners of Trinity Medical
Group, Ltd. We are a late development stage company with rights to market an
HIV-Immunogen also known as REMUNE, a patented therapeutic vaccine treatment,
designed to induce specific T cell responses in people infected with the Human
Immunodeficiency Virus (HIV). REMUNE is an immune-based therapy consisting of
whole inactivated HIV-1 virus depleted of its gp120 coat protein based on Dr.
Jonas Salk's vaccine technology.
Trinity Medical Group, Ltd. was formed in 1995 after the principals of
Trinity Medical Group, Ltd. entered into a license and collaboration agreement
dated September 15, 1995 with The Immune Response Corporation (NASDAQ: IMNR) to
develop and market REMUNE in ten Southeast Asian countries including Malaysia,
The Philippines, Singapore, Sri Lanka, Myanmar, Laos, Cambodia, Vietnam and
Indonesia, with Thailand as the lead nation. Trinity Medical Group, Ltd. also
entered into a stock purchase agreement on September 15, 1995 with The Immune
Response Corporation and purchased 333,334 shares of common stock of The Immune
Response Corporation at $15 per share on April 30, 1996. Under the stock
purchase agreement, Trinity Medical Group, Ltd. was also obligated to purchase
an additional 333,333 shares of common stock of The Immune Response Corporation
at $15 per share upon receiving the required marketing approval from the
governing health authority of Thailand for the drug therapy REMUNE. Trinity
Medical Group, Ltd. was further obligated to purchase an additional 333,333
shares of common stock of The Immune Response Corporation at $15 per share upon
receiving the required factory establishment license or approval from the
governing health authority of Thailand to manufacture the drug therapy REMUNE.
These stock purchase obligations of Trinity Medical Group, Ltd. became the
obligations of the company as a result of the collaboration and supply agreement
and the assignment agreement between the company and Trinity Medical Group, Ltd.
The company entered into a collaboration and supply agreement with
Trinity Medical Group, Ltd., dated December 1, 1999. Under the terms of the
collaboration and supply agreement, the company will pay Trinity
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Medical Group, Ltd. for specified research personnel, travel, laboratory,
facility and publication costs associated with clinical trials of REMUNE until
full regulatory approval in Thailand is granted. During the nine month period
ended September 30, 2000, the company paid Trinity Medical Group, Ltd.
approximately $200,000 for costs incurred related to the research and
development of the drug REMUNE. During the year ended December 31, 1999, the
company paid Trinity Medical Group, Ltd. approximately $294,000 for costs
incurred related to the research and development of the drug REMUNE. The Company
anticipates that Trinity Medical Group, Ltd. or Trinity Assets Company Limited,
an affiliate of the company and Trinity Medical Group, Ltd., will incur
approximately $500,000 of additional research and development costs during the
third and fourth quarter of 2000 related to the drug REMUNE. The company will
pay either of these companies for such costs incurred as required by the
applicable collaboration and supply agreement or sublicense and supply
agreement.
The collaboration and supply agreement also provides that the company
make its best efforts to capitalize itself with at least $4,000,000 through sale
or subscription of shares of common stock not to exceed 1 million shares. The
requirement for the company not to exceed 1 million shares in its attempt to
capitalize itself was subsequently waived. The company agreed to prepare and
complete all necessary documentation required for registration of the company
with the Securities and Exchange Commission as a reporting company, which it has
done by filing a Form 10-SB on May 12, 2000. In exchange for the company being
capitalized and a reporting company, Trinity Medical Group, Ltd. agreed to
transfer its license and collaboration agreement and stock purchase agreement
between it and The Immune Response Corporation, dated September 15, 1995, to the
company no later than the first sale of the product after full regulatory
approval in Thailand has been granted.
The company and Trinity Medical Group, Ltd. entered into an assignment
agreement on August 3, 2000, whereby all of Trinity Medical Group Ltd.'s rights,
title, and interests in the license and collaboration agreement and stock
purchase agreement were assigned to the company. There was no accounting
recognition by the company as a result of the transfer of the license and
collaboration agreement and the related stock purchase agreement. The company
intends to capitalize future specified payments required under the stock
purchase agreement to an intangible asset (license technology) and to marketable
securities, as appropriate.
On August 4, 2000, we assigned through a sublicense and supply
agreement the sales, distribution, manufacturing and marketing rights to REMUNE
in Thailand to Trinity Assets Company Limited, an affiliate of the company and
Trinity Medical Group, Ltd. The manufacturing rights assigned to Trinity Assets
Company Limited are non-exclusive. Trinity Assets Company Limited is related
through common ownership. Two of the company's directors, Inthanom John
Churdboonchart and Orranart Victoria Churdboonchart, are beneficial owners of
the company's common stock and are shareholders of Trinity Assets Company
Limited. The sublicense and supply agreement provides that the company will
realize a minimum gross profit from the sale of REMUNE to Trinity Assets Company
Limited in Thailand and that profits, as defined, from the sale of REMUNE in
licensed territories other than Thailand will be shared equally. It is the
intent of the parties that if and when Trinity Assets Company Limited begins to
manufacture REMUNE, the company will continue to realize revenues either from
the purchase and resale of REMUNE to Trinity Assets Company Limited or as
royalties from Trinity Assets Company Limited on its sales of REMUNE to others.
Specific terms of the resale gross profit or royalties have not been negotiated
by the parties at this time. The company has also agreed to provide support to
Trinity Assets Company Limited (in the form and substance satisfactory to both
parties) for the warehousing, transportation, and production of any related
capital assets, plant and equipment, etc. which are necessary for the marketing,
promoting and selling of REMUNE in Thailand. This support may be in the form of
providing interest bearing loans to Trinity Assets Company Limited or capital,
in exchange for equity ownership of Trinity Assets Company Limited; no specific
terms of the support have been negotiated by the parties at this time. Under the
terms of the sublicense and supply agreement, the company will pay Trinity
Assets Company Limited for specified research personnel, travel, laboratory,
facility and publication costs associated with clinical trials of REMUNE until
full regulatory approval in Thailand is granted.
In 1999, Dr. Vina Churdboonchart, principal investigator at Mahidol
University, with the collaboration of researchers from five leading Thai
universities, completed a Phase II double blind placebo controlled clinical
trial of REMUNE in Thailand, the results of which were submitted to the Thailand
National Committee on AIDS for review in March, 2000 and which were published in
Clinical Diagnostic Laboratory and Immunology Journal on September 2000, Vol.7,
No.5, pages 728 to 733. In the clinical trial above, REMUNE was found to
increase mean CD4+ cell counts, with increases in both cellular and humoral
immune responses and stable viral load. A follow up study through eighty-eight
(88) weeks showed a significant decrease of viral load in 30% of the subjects.
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On December 24, 1999, Mahidol University in Thailand applied for
expanded testing of REMUNE with the Ministry of Public Health in Thailand. The
extended project will be coordinated by Mahidol University with Dr. Vina
Churdboonchart, principal investigator, in Bangkok, Thailand and will confirm
the effectiveness of REMUNE and study the long term effects of REMUNE on up to
10,000 HIV infected individuals. This extended study of REMUNE is not connected
to the request for full commercial approval to be presented to the Thai Food and
Drug Administration.
The results of the Phase II controlled trial were presented at the XIII
International AIDS Conference in Durban, South Africa by Dr. Vina
Churdboonchart, as the principal investigator at Mahidol University with the
collaboration of researchers from five leading Thai universities. The results of
the Phase II clinical trials in Thailand and other clinical trials using REMUNE
as a treatment for slowing HIV-related disease progression are encouraging. The
global burden of disease and death related to HIV is increasing at a rate
unmatched by any other pathogen. At present, the most effective treatment for
slowing HIV-related disease progression, antiretroviral medication requiring a
daily multi-pill regime, is complicated to administer, requires close medical
monitoring, is extremely costly, and can cause significant adverse effects. The
study conditions of the clinical trials in Thailand allowed REMUNE to be
assessed as a "mono-therapy", that is, without any other anti-viral drugs.
REMUNE requires a minimum of a once a quarter (or more if needed) injection. As
a result, REMUNE is both more economical and practical for populations such as
in Thailand. As released by the Ministry of Public Health of Thailand, the
official number of HIV infected people in Thailand is 1 million people. The
estimate for Southeast Asia is approximately 9 million HIV-1 infected people.
REMUNE is potentially a very cost effective therapy for the treatment of HIV
among Thailand's poorest people.
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The following discussion should be read in conjunction with our
financial statements and the notes appearing elsewhere in this prospectus. The
following discussion contains forward-looking statements which involve
substantial risks and uncertainties. These forward-looking statements can
generally be identified because the context of the statement includes words such
as "may," "will," "expect," "anticipate," "intend," "estimate," "continue,"
"believe," or other similar words. Similarly, statements that describe our
future plans, objectives and goals are also forward-looking statements. Our
actual results, performance or achievements could differ materially from those
expressed or implied in these forward-looking statements as a result of those
discussed in "Risk Factors" and elsewhere in this prospectus.
PLAN OF OPERATION
We have minimal operations, nominal assets and no revenues from
operations. We have less than one year business history. Our estimates indicate
that we will not generate internal cash flows until at least the first quarter
of 2001. As such, we may be required to raise additional funds prior to the end
of the first quarter of 2001. As we do not have any external sources of funding,
our inability to successfully implement our business strategy and to raise
additional financing by the end of the first quarter of 2001 may compromise our
ability to achieve our projected revenues.
Our goal is to develop our initial product, REMUNE, so that it may be
sold throughout our licensed territory. We intend to support the regulatory
approvals and then distribute the product first in Thailand. We later intend to
engage in sub-license and supply agreements with parties in our licensed
territory countries who will carry out local regulatory requirements,
distribution and product support for REMUNE. In Thailand, we have sub-licensed
our rights to REMUNE to Trinity Assets Company Limited, an affiliate of the
company and Trinity Medical Group, Ltd.
The company requires substantial capital to pursue its operating
strategy and currently has limited cash for operations. Until we can obtain
revenues sufficient to fund working capital needs, the company will be dependent
upon external sources of financing. To date, we have no internal sources of
liquidity and do not expect to generate any internal cash flow until the first
quarter of 2001. For the nine months ended September 30, 2000, we have used
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<PAGE>
approximately $750,000 of cash in our operations. This cash was provided by
financing activities which included the sale of convertible notes payable and
convertible preferred stock. The cash used in operations related primarily to
officer salaries and director expenses and to pay our affiliates for expenses
incurred related to the research and development of our product, REMUNE. We also
expect to incur approximately $500,000 in expense related to the research and
development of our product, REMUNE, during the third and fourth quarter of 2000.
Our current monthly operating overhead is approximately $65,000 which amount
will increase if and as we expand our operations. Currently, we rely upon our
current stockholders to lend money and fund our monthly operating overhead, as
we have limited working capital.
We do not have any other commitments to secure additional capital and
there is no assurance that any additional funds needed will be available on
favorable terms, if at all. We require substantial working capital to fund our
business. We currently anticipate that the net proceeds from our sale of our
shares of common stock covered by this prospectus, together with our available
funds, will be sufficient to meet our anticipated needs for working capital and
capital expenditures through at least the next 12 months. However, we may need
to raise additional funds prior to the expiration of this period. Moreover,
there is no assurance that our estimate of our liquidity needs is accurate or
that new business development or other unforeseen events will not occur,
resulting in the need to raise additional funds.
We, through our sub-licensee, Trinity Assets Company Limited, intend to
secure regulatory approval for the sale of REMUNE in Thailand during the
calendar year 2001. Our affiliated researchers have concluded a Phase II
clinical study in Thailand of about 300 individuals infected with HIV and
continue to analyze the study group. The results of this study were presented at
five major scientific conferences in 2000: at the UN/WHO AIDS conference in
Geneva, Switzerland, the UCLA AIDS Conference held in Palm Springs, California,
the 5 Asia-Pacific Congress of Medical Virology in Bali, Indonesia, the First
International Conference of Vaccine Development and Immunotherapy in HIV,
Florida, USA and the XIII International AIDS Conference in Durban, South Africa.
We believe we now have the necessary technical support for full regulatory
approval and through our Thai affiliate, Trinity Assets Company Limited, will be
submitting an application for commercialization of REMUNE to the Thai regulatory
officials. Upon sufficient capitalization, we intend to directly purchase, or
lend capital to Trinity Assets Company Limited so they may purchase, plant,
equipment and secure land leases in 2001 for a handling and storage facility in
Thailand. The facility will be located close to the Bangkok International
Airport and will receive REMUNE shipment in bulk. The facility will be built to
U.S. FDA Good Manufacturing Practice standards and provide for climate
controlled and secure warehousing. The estimated cost of the facility is $12
million and will require six months to one year to construct. The capital for
this project would be provided by product revenue and the sale of shares of
capital stock, issuance of debt or financing by a banking institution. We intend
to increase our employment base in the first quarter of 2001. We intend to add
clinical study supervisors, engineering consultants and additional directors
during the first quarter of 2001. From its present level of 3 employees, we
estimate having about 10 employees by the end of the first quarter of 2001.
As of the date of this registration statement, we cannot specify with
certainty the particular uses for the net proceeds to be received other than
that they will be used to fund product development and construction of handling
and manufacturing facilities, to provide working capital, and to meet specified
potential obligations under the stock purchase agreement with The Immune
Response Corporation.
DESCRIPTION OF PROPERTY
We own no real property. We currently lease executive and
administrative offices at 3753 Howard Hughes Parkway, Las Vegas, NV 89109 until
December 31, 2000. The company does not intend to renew this lease. We currently
lease those facilities from Vantas Corp. We will also lease executive and
administrative offices beginning December 1, 2000 at 30021 Tomas, Suite 300,
Rancho Santa Margarita, CA 92688. We will lease those facilities from American
Office Centers, L.L.C.
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Churdboonchart Trinity Trust owns approximately 70% of the
company's common stock. The beneficiaries of The Churdboonchart Trinity Trust
are also the majority owners of Trinity Medical Group, Ltd. During the nine
month period ended September 30, 2000, the company paid Trinity Medical Group,
Ltd. approximately $200,000 for costs incurred related to the research and
development of the drug REMUNE. During the year ended December 31, 1999, the
company paid Trinity Medical Group, Ltd. approximately $294,000 for costs
incurred related to the research and development of the drug REMUNE. The Company
anticipates that Trinity Medical Group, Ltd. or Trinity Assets Company Limited
will incur approximately $500,000 of additional research and development costs
during the third and fourth quarter of 2000 related to the drug REMUNE. The
company will pay either of these companies for such costs incurred as required
by the applicable collaboration and supply agreement or sublicense and supply
agreement.
Trinity Assets Company Limited is related through common ownership. Two
of the company's directors, Inthanom John Churdboonchart and Orranart Victoria
Churdboonchart, are beneficial owners of the company's common stock and are
shareholders of Trinity Assets Company Limited. On August 4, 2000 the company
entered into a sublicense and supply agreement with Trinity Assets Company
Limited, which assigned the sales, distribution, potential manufacturing and
marketing rights of REMUNE in Thailand to Trinity Assets Company Limited. The
agreement provides that the company will realize a minimum gross profit from the
sale of REMUNE to Trinity Assets Company Limited in Thailand and that profits,
as defined, from the sale of REMUNE in licensed territories other than Thailand
will be shared equally. It is the intent of the parties that if and when Trinity
Assets Company Limited begins to manufacture REMUNE, the company will continue
to realize revenues either from the purchase and resale of REMUNE to Trinity
Assets Company Limited or as royalties from Trinity Assets Company Limited on
its sales of REMUNE to others. Specific terms of the resale gross profit or
royalties have not been negotiated by the parties at this time. The company has
also agreed to provide support to Trinity Assets Company Limited (in the form
and substance satisfactory to both parties) for the warehousing, transportation,
production of any related capital assets, plant and equipment, etc. which are
necessary for the marketing, promoting and selling of REMUNE in Thailand. This
support may be in the form of providing interest bearing loans to Trinity Assets
Company Limited or capital, in exchange for equity ownership of Trinity Assets
Company Limited; no specific terms of the support have been negotiated by the
parties at this time. Under the terms of the sublicense and supply agreement,
the company will pay Trinity Assets Company Limited for specified research
personnel, travel, laboratory, facility and publication costs associated with
clinical trials of REMUNE until full regulatory approval in Thailand is granted.
The company entered into a collaboration and supply agreement with
Trinity Medical Group, Ltd., dated December 1, 1999. Under the terms of the
collaboration and supply agreement, the company will pay Trinity Medical Group,
Ltd. for specified research personnel, travel, laboratory, facility and
publication costs associated with clinical trials of REMUNE until full
regulatory approval in Thailand is granted.
The collaboration and supply agreement also provides that the company
make its best efforts to capitalize itself with at least $4,000,000 through sale
or subscription of shares of common stock not to exceed 1 million shares. The
requirement for the company not to exceed 1 million shares in its attempt to
capitalize itself was subsequently waived. The company agreed to prepare and
complete all necessary documentation required for registration of the company
with the Securities and Exchange Commission as a reporting company, which it has
done by filing a Form 10-SB on May 12, 2000. In exchange for the company being
capitalized and a reporting company, Trinity Medical Group, Ltd. agreed to
transfer its license and collaboration agreement and stock purchase agreement
between it and The Immune Response Corporation, dated September 15, 1995, to the
company no later than the first sale of the product after full regulatory
approval in Thailand has been granted.
The company and Trinity Medical Group, Ltd. entered into an assignment
agreement on August 3, 2000, whereby all of Trinity Medical Group, Ltd.'s
rights, title, and interests in the license and collaboration agreement and
obligations under the stock purchase agreement with The Immune Response
Corporation were assigned to the company.
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MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
MARKET INFORMATION
The principal United States market in which our common stock is and has
been traded is the Pink Sheet Service of the National Association of Securities
Dealers. Our common stock began trading in July 2000 under the symbol TMGU.
Firms making a market in Trinity common stock include Knight Trading and Salomon
Grey. We intend to apply for listing of our shares of common stock on the Over
the Counter Bulletin Board when this registration statement becomes effective.
Further, we intend to apply for listing on the NASDAQ Small Cap or National
Market when we meet the necessary listing requirements.
On September 30, 2000, there were approximately 50 holders of record of
our common stock. This number does not include any adjustment for stockholders
owning Trinity common stock in street name. The stock transfer records of the
corporation indicate that, as of September 30, 2000, there were 10,226,000
common shares outstanding. We have never paid dividends, and we do not
anticipate paying any dividends in the near future; instead, we intend to retain
earnings, if any, to provide funds for general corporate purposes and the
expansion of business. As well as being regulated at the federal level by the
Securities Exchange Act of 1934, the sale and resale of our common stock is
regulated at the state level through the Blue Sky laws. Our common stock is
listed on Pink Sheet Service of the National Association of Securities Dealers
under the trading symbol TMGU and this offering has been the subject of a
federally qualified registration statement, but the common stock still might not
be salable by the resident of a state in which we have not met the applicable
Blue Sky requirements. Various methods are available to brokers who want to fill
buy or sell orders for a resident of such a state, but the willingness to do
this depends heavily on the particular state or states involved and on the
aggregate value of the transaction. It also depends on the brokers involved. The
compliance departments of some brokerage firms routinely disallow trading in
certain stocks - especially "penny stocks" and others with inadequate levels of
public disclosure, low or suspiciously volatile prices, or market makers of less
than sterling reputation. There are federal regulations that can also influence
a broker's willingness or ability to be involved in sales of certain low-priced
stocks like Trinity's. The Securities and Exchange Commission has adopted rules
that regulate broker-dealer practices in connection with transactions in these
"penny stocks". Generally speaking, "penny stocks" are equity securities with a
price of less than $5 per share, other than securities listed on certain
national exchanges, or quoted on the National Association of Securities Dealers
Automated Quotation system, provided that current price and volume information
with respect to transactions in such securities is provided by such exchange or
system. If our common stock meets the definition of a "penny stock", before
executing a transaction not otherwise exempt, a broker-dealer must do the
following:
o Deliver a standardized risk disclosure document prepared by the
Securities and Exchange Commission that provides information about
penny stocks and the nature and level of risks in the penny stock
market.
o Provide the customer with bid and offer quotations for our common
stock, the compensation of the broker-dealer and the salesperson in the
transaction, and monthly account statements showing the market value of
each penny stock held in the customer's account.
o Make a special, written determination that our common stock is a
suitable investment for the purchaser and receive the purchaser's
written agreement to the transaction. These disclosure requirements may
have the effect of reducing the level of trading activity in the
secondary market for our common stock if it is or becomes subject to
the penny stock rules. If our common stock is or becomes subject to the
penny stock rules, shareholders may find it more difficult to sell
their the stock in their units because of the regulatory and paperwork
burden a broker has to deal with. Considering that it is unlikely that
a broker will make much money off such transactions, a shareholder
might find it hard to get a broker to execute trades of our common
stock.
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<TABLE>
<CAPTION>
EXECUTIVE COMPENSATION
ANNUAL COMPENSATION LONG-TERM COMPENSATION
------------------- ----------------------
Other Restricted Securities LTIP
Annual Stock Underlying Options/SARs All Other Compensation
Year Salary($) Bonus ($) Compensation($) Award(s) ($) (#) Payouts ($) ($)
<S> <C> <C> <C>
Dr. James S. Namnath 2000 $300,000 $0 - - - - -
CEO
</TABLE>
The company has an employment agreement with Dr. James S. Namnath
(shareholder, CEO and Director), whereby he will serve as the company's Chief
Executive Officer. The agreement expires on December 31, 2000. The agreement
specifies that Dr. Namnath's employment would be conducted under contract
services with his present employer, NotesETC, Inc. until the company begins sale
of REMUNE, its shares of common stock have been approved for trading in the
equity markets or the company becomes a reporting company under U.S. securities
laws. At such time, he would be directly employed by the company on a full time
basis.
Because the company has become a reporting company, Dr. Namnath has now
become employed, as CEO, on a full time basis. In August of 2000, the terms of
this employment agreement were modified to provide for a monthly salary amount
of $25,000 as opposed to $35,000 per month.
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WHERE YOU CAN FIND ADDITIONAL INFORMATION
We file reports relating to the company with the Securities and
Exchange Commission. You can read and copy any document we file at the
Securities and Exchange Commission's public reference rooms in Washington, DC,
New York, NY, and Chicago, IL. Please call the Securities and Exchange
Commission at 1-800-SEC-0330 for further information on the public reference
rooms. Our Securities and Exchange Commission filings are also available to the
public from the Securities and Exchange Commission's website at
"http://www.sec.gov."
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<PAGE>
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS AND REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS AS
OF DECEMBER 31, 1999 AND FOR THE PERIOD FROM INCEPTION (SEPTEMBER 28, 1998) TO
DECEMBER 31, 1999.
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS..............................................................F-2
FINANCIAL STATEMENTS
BALANCE SHEET.................................................................................F-3
STATEMENT OF OPERATIONS.......................................................................F-4
STATEMENT OF STOCKHOLDERS' DEFICIT............................................................F-5
STATEMENT OF CASH FLOWS.......................................................................F-6
NOTES TO FINANCIAL STATEMENTS.................................................................F-7
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors
Trinity Medical Group USA, Inc.
We have audited the accompanying balance sheet of Trinity Medical Group USA,
Inc. (a company in the development stage) as of December 31, 1999, and the
related statement of operations, stockholders' deficit and cash flows for the
period from inception (September 28, 1998) to December 31, 1999. 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 audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States. 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
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides 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 Medical Group USA, Inc.
as of December 31, 1999 and the results of its operations and its cash flows for
the period from inception (September 28, 1998) to December 31, 1999, in
conformity with accounting principles generally accepted in the United States.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. The Company is not yet generating
revenues and, as shown in the financial statements, has incurred losses in its
development stage. Also, as discussed in Note D, the Company has incurred
substantial obligations and will need to raise additional capital to complete
its development activities. These factors, among others as discussed in Note D,
raise substantial doubt about the Company's ability to continue as a going
concern. Management's plans are also discussed in Note D. The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
/S/ GRANT THORNTON LLP
Irvine, California
February 11, 2000
F-2
<PAGE>
TRINITY MEDICAL GROUP USA, INC.
(a company in the development stage)
BALANCE SHEET
December 31, 1999
ASSETS
<TABLE>
<CAPTION>
Current Assets
<S> <C>
Cash and cash equivalents $ 171,485
Subscription receivable from founding shareholders 9,600
Income tax refund receivable 18,951
------------------------------
Total assets $ 200,036
==============================
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities:
Accounts payable $ 10,343
Accrued liabilities 84,595
------------------------------
Total current liabilities 94,938
Convertible notes payable 732,500
Commitments and Contingencies _
Stockholders' deficit:
Common Stock, $0.001 par value, 50,000,000 shares authorized,
10,226,000 shares issued and outstanding 10,226
Additional paid-in capital 228,574
Deficit accumulated during the development stage (866,202)
------------------------------
Total stockholders' deficit (627,402)
------------------------------
Total liabilities and stockholders' deficit $ 200,036
==============================
</TABLE>
The accompanying notes are an integral part of this statement.
F-3
<PAGE>
<TABLE>
<CAPTION>
TRINITY MEDICAL GROUP USA, INC.
(a company in the development stage)
STATEMENT OF OPERATIONS
Period From Inception (September 28, 1998) to December 31, 1999
Operating expenses:
<S> <C>
Research and development $ (294,000)
General and administrative
Acquisition costs (404,200)
Administrative costs (71,990)
Marketing costs (78,250)
------------------------------
Total operating expenses (848,440)
------------------------------
Other income (expense):
Interest income 2,028
Interest expense (11,345)
Loss on sale of investments (8,445)
------------------------------
(17,762)
------------------------------
Net Loss $ (866,202)
==============================
Basic and diluted loss per common share $ (0.08)
==============================
Basic and diluted weighted average common shares outstanding 10,226,000
==============================
</TABLE>
The accompanying notes are an integral part of this statement.
F-4
<PAGE>
TRINITY MEDICAL GROUP USA, INC.
(a company in the development stage)
STATEMENT OF STOCKHOLDERS' DEFICIT
Period From Inception (September 28, 1998) to December 31, 1999
<TABLE>
<CAPTION>
Deficit
Accumulated
Additional During the
Common Stock Paid-in Development
Shares Amount Capital Stage Total
--------------- ---------------- --------------- ---------------- ---------------
<S> <C> <C> <C> <C> <C>
Balance at inception $ -- $ -- $ -- $ -- $ --
Common stock issued to founding
shareholders 9,600,000 9,600 -- -- 9,600
Common stock issued for services 493,000 493 228,707 -- 229,200
Common stock issued to various
shareholders in connection with
August Project III merger 133,000 133 (133) -- --
Net Loss -- -- -- (866,202) (866,202)
--------------- ---------------- --------------- ---------------- ---------------
Balance, December 31, 1999 10,226,000 $ 10,226 $ 228,574 $ (866,202) $ (627,402)
=============== ================ =============== ================ ===============
</TABLE>
The accompanying notes are an integral part of this statement.
F-5
<PAGE>
TRINITY MEDICAL GROUP USA, INC.
(a company in the development stage)
STATEMENT OF CASH FLOWS
Period From Inception (September 28, 1998) to December 31, 1999
<TABLE>
<CAPTION>
Cash flows from operating activities:
<S> <C>
Net loss $ (866,202)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock issued for services 229,200
Loss on sale of investments 8,445
Changes in assets and liabilities:
Income tax refund receivable (18,951)
Accounts payable 10,343
Accrued liabilities 84,595
-----------------------
Net cash used in operating activities (552,570)
-----------------------
Cash flows from investing activities:
Purchases of investments (69,330)
Proceeds from sale of investments 60,885
-----------------------
Net cash used in investing activities (8,445)
-----------------------
Cash flows provided by financing activities:
Issuance of convertible notes payable 732,500
-----------------------
Net increase in cash and cash equivalents 171,485
Cash and cash equivalents - at inception --
-----------------------
Cash and cash equivalents - December 31, 1999 $ 171,485
======================
Non-cash investing and financing activities:
Issuance of common stock to founding shareholders in exchange for
subscription receivable $ 9,600
======================
</TABLE>
The accompanying notes are an integral part of this statement.
F-6
<PAGE>
TRINITY MEDICAL GROUP USA, INC.
(a company in the development stage)
NOTES TO FINANCIAL STATEMENTS
December 31, 1999
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Cash and cash equivalents
The Company considers all money market funds and demand deposits with original
maturities of ninety days or less to be cash equivalents.
Cash equivalents consist of money market folds whose fair value approximates
cost and are readily redeemable.
Income Taxes
Deferred tax assets and liabilities arc recorded for differences between the
financial statement and tax basis of the assets and liabilities that will result
in taxable or deductible amounts in the future based on enacted tax laws and
rates applicable to the periods in which the differences are expected to affect
taxable income. Valuation allowances are established when necessary to reduce
deferred tax assets to the amount expected to be realized. Income tax expense is
recorded for the amount of income tax payable or refundable for the period
increased or decreased by the change in deferred tax assets and liabilities
during the period.
Research and Development Costs
The Company incurred costs in the research and development of a drug therapy,
REMUNE. These costs were incurred for Phase I and II clinical trials of REMUNE
in Thailand. Such costs are charged to expense as incurred. See Note I.
Stock-Based Compensation
Stock-based compensation issued to non-employees is recorded based on the fair
value of the consideration received or the fair value of the equity instruments
issued, whichever is more reliably measurable.
Fair Value of Financial Instruments
The Company is required to estimate the fair value of all financial instruments
included on its balance sheet at December 31,1999. The Company's financial
instruments at December 31,1999 consist of cash and cash equivalents, accounts
payable, accrued liabilities and convertible notes payable. These financial
instruments approximate their fair value due to the relatively short period of
time between origination of the instruments and their expected realization, or,
with respect to the convertible notes payable, based on current rates available
to the Company.
Earnings per share
Basic net loss per share is computed by dividing the net loss available to
common stockholders for the period by the weighted average number of common
shares outstanding during the period. Incremental common shares issuable upon
the conversion of notes payable and exercise of stock options and warrants, are
included in the computation of diluted net loss per share to the extent such
shares are dilutive.
The Company has excluded 732,500 potentially dilutive shares from the
calculation of diluted loss per common share, as the effect would be
antidilutive.
F-7
<PAGE>
TRINITY MEDICAL GROUP USA, INC.
(a company in the development stage)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 31, 1999
Use of Estimates
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosures of
contingent assets and liabilities at the date of the financial statements, and
the reported amounts of revenues and expenses during the reporting period.
Accordingly, actual results could differ from those estimates and assumptions.
NOTE B - COMPANY BACKGROUND
Trinity Medical Group USA, Inc. (the "Company" or "TMGUSA") was incorporated in
the State of Delaware in September 1998. TMGUSA reincorporated in Nevada in
November of 1999. In December 1999, as the result of a reorganization (see Note
C), the Company became a Florida corporation. Although the Company was formed
and incorporated as a Delaware Corporation on September 28, 1998, the Company
had no capital transactions or operating activities of any significance between
September 28,1998 and December 31,1998. Accordingly, separate financial
statements as of December 31,1998 were not considered necessary.
TMGUSA is a development stage company with potential rights to market a drug
treatment, "REMUNE", designed for people infected with the Human
Immunodeficiency Virus (HIV) and afflicted with Acquired Immunodeficiency
Syndrome (AIDS). The Company is an affiliate of Trinity Medical Group, Ltd.
("TMG"), which is based in Bangkok, Thailand and is owned by the majority
shareholders of the Company. As further explained below, TMG currently owns the
rights to produce and sell REMUNE in Thailand, Philippines, Malaysia, Indonesia,
Singapore, Cambodia, Sri Lanka, Vietnam, Burma and Laos upon approval by the
governments of these countries. The Company has an option to acquire all of TMG
rights to develop and commercialize REMUNE in the aforementioned Asian
countries. See Note D.
On September 15, 1995, TMG obtained the rights to produce and sell REMUNE in ten
Asian countries via a License and Collaboration Agreement with The Immune
Response Corporation (NASDAQ:IMNR). On the same day, TMG entered into a Stock
Purchase Agreement with The Immune Response Corporation. Per the agreement, TMG
purchased 333,334 shares of The Immune Response Corporations stock at $15 per
share on April 30, 1996. TMG is further obligated to purchase an additional
333,333 shares of The Immune Response Corporation's stock at $15 per share upon
receiving the required marketing approval from the governing health authority of
Thailand for the drug therapy REMUNE. TMG is further obligated to purchase
another 333,333 shares of The Immune Response Corporation's stock at $15 per
share upon receiving the required factory establishment license or approval from
the governing health authority of Thailand to manufacture the drug therapy
REMUNE.
If TMG does not receive the required marketing approval from the governing
health authority of Thailand by December 31, 2000, The Immune Response
Corporation may terminate the aforementioned agreements.
NOTE C - REORGANIZATION
In December 1999, TMGUSA entered into a merger agreement to acquire all of the
outstanding common stock of August Project III Corporation, a Florida
corporation, in a transaction described as a "reverse merger". The merger became
effective on December 31, 1999. August Project III Corporation was the surviving
legal entity after the merger but TMGUSA remains the accounting acquirer. The
merger was accounted for as a recapitalization of TMGUSA. In January 2000,
F-8
<PAGE>
TRINITY MEDICAL GROUP USA, INC.
(a company in the development stage)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 31, 1999
August Project III Corporation changed its name to Trinity Medical Group USA,
Inc.
As part of the reorganization and merger agreement, August Project III
Corporation issued 5,226,000 common shares to the shareholders of TMGUSA in
exchange for all of the outstanding common shares of TMGUSA. TMGUSA common
shares were subsequently cancelled. Following the merger, certain original
shareholders of August Project III Corporation sold 4,867,000 common shares to
the Company in exchange for $175,000. The Company has recorded the acquisition
cost of $175,000 as an expense in 1999. Following the merger, the original
shareholders of TMGUSA own a total of 10,093,000 shares of August Project III
Corporation or 98.69% of the total 10,226,000 outstanding shares.
NOTE D - GOING CONCERN
The accompanying financial statements have been prepared on a going-concern
basis, which contemplates the realization of assets and the satisfaction of
liabilities in the normal course of business. The Company is in the development
stage, has not generated any revenues and, at December 31,1999, has accumulated
losses during the development stage amounting to $866,202 and, in 1999, used
$552,570 of cash in its operations. As mentioned in Note B, the drug therapy
REMUNE, which the Company has potential rights to market, must under go several
phases of trial testing before approval of the drug by the Thailand government
can be obtained and significant commercialization of the drug can occur. This
additional testing will require significant additional financing.
Upon becoming a reporting company under United States securities laws, the
Company intends to acquire, in the near term, the rights to REMUNE and assume
the related obligations specified under the Stock Purchase Agreement from TMG
(see also Note I). The Company intends to market REMUNE in the countries where
it has the rights through partner or affiliated firms which will carry out the
local regulatory requirements, distribution, and product support. The Company
intends to finance the aforementioned activities through a secondary offering
for between $15,000,000 and $20,000,000. The Company's initial efforts have
focused on the research and development of REMUNE (through TMG) and securing
sales and marketing rights in Thailand.
There can be no assurance that management will be successful in raising the
necessary funds to complete the clinical trials and obtain the necessary
government approvals for the manufacturing and sale of REMUNE. The Company's
ability to continue as a going concern will depend upon these factors and the
success of future operations.
NOTE E - CONCENTRATION OF CREDIT RISK
The Company has cash deposits at U. S. banks and financial institutions which
exceed federally insured limits at December 31,1999. The Company is exposed to
credit loss for amounts in excess of insured limits in the event of
non-performance by the institution; however, the Company does not anticipate
such non-performance.
NOTE F - COMMITMENTS AND CONTINGENCIES
In January 2000, the Company entered into a non-cancelable operating lease
expiring in January 2001 for office facilities and general administrative
services. There was no rent expense for the period from inception (September 28,
1998) to December 31, 1999. Future minimum lease payments are $14,820 for the
year ending December 31, 2000.
The Company has an employment agreement with Dr. James S. Namnath (shareholder),
F-9
<PAGE>
TRINITY MEDICAL GROUP USA, INC.
(a company in the development stage)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 31, 1999
whereby he will serve as the Company's Chief Executive Officer. The agreement
expires on December 31, 2000. Dr. Namnath's employment will be conducted under
contract services with his present employer, NotesETC, Inc. until such time
("Milestone") that the Company either begins sale of REMUNE product or is
approved for public trading of its common shares in the United States equity
market as a reporting company; after this time, he will be directly employed by
the Company on a full time basis.
Until Milestone, his compensation will be at a rate of $250 per hour but not to
exceed 60 hours per month ($15,000). After Milestone, his salary will be $35,000
per month. In August of 2000, the terms of this employment agreement were
modified to provide for a monthly salary amount of $25,000 as opposed to $35,000
per month.
The employment may be terminated at any time by the Company. Total
amounts paid to Dr. Namnath during 1999 were $45,000.
NOTE G - CONVERTIBLE NOTES PAYABLE
During fiscal 1999, the Company sold 146.5 units at a price of $5,000 per unit
to accredited investors in a private offering. Each unit consists of a $5,000
10% note of the Company due of the Company's August common stock. Each unit was
convertible at the election of the holder between October 15,1999 and December
31,1999 or by election of the Company after December 31,1999. Interest accrued
on each unit is convertible to common stock at the rate of $1 per share at the
date of conversion. As of December 31, 1999, no units had been converted to
common stock. Subsequent to December 31,1999 an additional six units were sold.
NOTE H - STOCK ISSUED FOR SERVICES
During 1999, the Company issued 460,000 shares of common stock in exchange for
legal and consulting services provided. The expense related to such services,
$229,200, was determined based upon the fair value of the services received.
NOTE I - RELATED PARTY TRANSACTIONS
The Churdboonchart Trinity Trust owns approximately 70% of the Company's common
stock. The beneficiaries of the Churdboonchart Trinity Trust are also the
majority owners of TMG.
The Company entered into a Collaboration and Supply Agreement (the "Agreement")
with TMG, dated December 1,1999. Under the terms of the Agreement, the Company
will pay TMG for specified research personnel, travel, laboratory, facility and
publication costs associated with clinical trials of REMUNE until full
regulatory approval in Thailand is granted. During 1999, the Company paid TMG
$294,000 for costs incurred under the Agreement related to the research and
development of REMUNE.
The Agreement also provides that the Company make its best efforts to capitalize
itself with at least $4,000,000 through sale or subscription of common class
shares not to exceed 1 million shares. The requirement for the Company not to
exceed one million shares in its attempt to capitalize itself was subsequently
waived. The Company agrees to prepare and complete all necessary documentation
required for registration of the Company with the U.S. Securities and Exchange
Commission as a reporting company.
In exchange for the aforementioned conditions, TMG agrees to transfer its
License and Collaboration Agreement and Stock Purchase Agreement between it and
The Immune Response Corporation, dated September 15,1995, to the Company no
later than the first sale of product after full regulatory approval in Thailand
has been granted.
NOTE J - INCOME TAXES
No provision for federal and state income taxes has been recorded as the Company
has incurred net operating losses through December 31, 1999. At December 31,
F-10
<PAGE>
TRINITY MEDICAL GROUP USA, INC.
(a company in the development stage)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 31, 1999
1999, the Company has net operating loss carryforwards available to future
taxable income for federal tax purposes of approximately $900,000; such
carryforwards expire in various years through 2019. Deferred tax assets include
these net operating loss carryforwards as well as certain expenses that are
reported for book and tax purposes in different periods. The Company has
provided a valuation allowance to offset all deferred assets due to the
uncertainty of realization.
F-11
<PAGE>
INTERIM FINANCIAL STATEMENTS FOR THE PERIOD ENDED JUNE 30, 2000
INDEX TO INTERIM FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
BALANCE SHEETS.................................................................F-13
STATEMENTS OF OPERATIONS.......................................................F-14
STATEMENTS OF CASH FLOWS.......................................................F-15
NOTES TO FINANCIAL STATEMENTS..................................................F-16
</TABLE>
F-12
<PAGE>
TRINITY MEDICAL GROUP USA, INC.
(a company in the development stage)
<TABLE>
<CAPTION>
BALANCE SHEETS
ASSETS
June 30, December 31,
2000 1999
---------------------- ----------------------
(unaudited)
Current Assets:
<S> <C> <C>
Cash $ 33,303 $ 171,485
Subscription receivable from founding shareholders - 9,600
Income tax refund receivable 18,951 18,951
---------------------- ----------------------
Total current assets 52,254 200,036
Computer Equipment 2,100 -
---------------------- ----------------------
Total assets $ 54,354 $ 200,036
====================== ======================
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities:
Accounts payable $ 2,000 $ 10,343
Accrued commissions 76,700 73,250
Accrued interest payable 48,648 11,345
---------------------- ----------------------
Total current liabilities 127,348 94,938
Convertible Notes Payable 772,500 732,500
Stockholders' deficit:
Convertible Preferred Stock, no par value, 1,000,000 shares
authorized, 900 shares issued and outstanding 34,500 -
Common Stock, $0.001 par value, 50,000,000 shares authorized,
10,226,000 shares issued and outstanding 10,226 10,226
Additional paid-in capital 228,574 228,574
Deficit accumulated during the development stage (1,118,794) (866,202)
---------------------- ----------------------
Total stockholders' deficit (845,494) (627,402)
---------------------- ----------------------
Total liabilities and stockholders' deficit $ 54,354 $ 200,036
====================== ======================
</TABLE>
The accompanying notes are an integral part of these statements.
F-13
<PAGE>
TRINITY MEDICAL GROUP USA, INC.
(a company in the development stage)
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Cumulative Three Months Six Months
from inception Ended Ended
to June 30, June 30,
June 30, 2000 2000 2000
----------- ----------- -----------
(unaudited) (unaudited) (unaudited)
Operating expenses
<S> <C> <C> <C>
Research and development $ (294,000) $ - $ -
General and administrative
Acquisition costs (404,200) - -
Administrative costs (288,400) (88,485) (216,409)
Marketing costs (78,250) - -
---------------- ----------------- -------------------
Total operating expenses (1,064,850) (88,485) (216,409)
Other income (expense):
Interest income 3,148 78 1,120
Interest expense (48,647) (18,645) (37,303)
Other income (8,445) - -
---------------- ----------------- -------------------
(53,944) (18,567) (36,183)
---------------- ----------------- -------------------
Net Loss $ (1,118,794) $ (107,052) $ (252,592)
================ ================= ===================
Basic and diluted loss per common
share $ (0.01) $ (0.02)
================= ===================
Basic and diluted weighted average common shares
outstanding 10,226,000 10,226,000
================= ===================
</TABLE>
F-14
<PAGE>
TRINITY MEDICAL GROUP USA, INC.
(a company in the development stage)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Cumulative
from inception
to Six Months Ended
June 30, 2000 June 30, 2000
------------- -------------
(unaudited) (unaudited)
Cash flows from operating activities:
<S> <C> <C>
Net loss $ (1,118,794) $ (252,592)
Adjustments to reconcile net loss to net cash used in
operating activities
Stock issued for services 229,200 -
Loss on sale of investment 8,445 -
Changes in assets and liabilities:
Income tax refund receivable (18,952) -
Accounts payable 2,000 (8,343)
Accrued liabilities 125,349 40,753
--------------- -------------
Net cash used in operating activities (772,752) (220,182)
--------------- -------------
Cash flows from investing activities:
Purchase of fixed assets (2,100) (2,100)
Purchase of investments (69,330) -
Proceeds from sale of investments 60,885 -
--------------- -------------
Net cash used in investing activities (10,545) (2,100)
--------------- -------------
Cash flows from financing activities:
Proceeds from issuance of convertible notes payable 772,500 40,000
Proceeds from sale of convertible preferred stock 34,500 34,500
Collection of subscription receivable 9,600 9,600
--------------- -------------
Net cash provided by financing activities 816,600 84,100
--------------- -------------
Net increase (decrease) in cash 33,303 (138,182)
Cash - beginning of period - 171,485
--------------- -------------
Cash - end of period $ 33,303 $ 33,303
=============== =============
Non-cash investing and financing activities:
Issuance of common stock to founding shareholders in exchange
for subscription receivable $ 9,600 $ -
=============== =============
</TABLE>
F-15
<PAGE>
TRINITY MEDICAL GROUP USA, INC.
(a company in the development stage)
NOTES TO FINANCIAL STATEMENTS
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited financial statements contain all adjustments
(consisting only of normal recurring adjustments) which in the opinion of
management are necessary to present fairly the financial position of the Company
at June 30, 2000, and the results of its operations and its cash flows for the
three and six month periods ended June 30, 2000. The financial statements do not
include comparative second quarter information because the Company had no
activity during the six month period ended June 30, 1999. Certain information
and footnote disclosures normally included in financial statements have been
condensed or omitted pursuant to rules and regulations of the Securities and
Exchange Commission, although the Company believes that the disclosures in the
financial statements are adequate to make the information presented not
misleading. These financial statements should be read in conjunction with the
Company's financial statements as of December 31, 1999 and for the period from
inception (September 28, 1998) to December 31, 1999, included herein.
NOTE B - PROPERTY AND EQUIPMENT
Property and equipment are recorded at cost. Depreciation is provided using the
straight-line method over the useful lives of the related assets, which ranges
from three to five years. The cost and related accumulated depreciation of
equipment sold or otherwise disposed of are removed from the accounts and the
resulting gain or losses are included in the statement of operations.
NOTE C - GOING CONCERN
The accompanying financial statements have been prepared on a going concern
basis, which contemplates the realization of assets and the satisfaction of
liabilities in the normal course of business. As shown in the financial
statements, the Company is in the development stage and, at June 30, 2000 has
accumulated losses from operations amounting to $1,118,794. For the six month
period ended June 30, 2000, and for the period from inception to June 30, 2000
the Company used $220,182 and $772,752, respectively, of cash in its operations.
The drug therapy, REMUNE, must undergo several phases of trial testing before
approval by the Thailand government can be obtained and significant
commercialization of the drug can occur. This additional testing will require
significant additional financing. These factors, among others, raise substantial
doubt about the Company's ability to continue as a going concern. The financial
statements do not include any adjustments relating to the recoverability and
classification of recorded asset amounts or the amounts and classification of
liabilities that might be necessary should the Company be unable to continue as
a going concern for a reasonable period of time.
F-16
<PAGE>
TRINITY MEDICAL GROUP USA, INC.
(a company in the development stage)
NOTES TO FINANCIAL STATEMENTS
The Company intends to acquire, in the near term, the rights to REMUNE and
assume the related obligations specified under the Stock Purchase Agreement from
TMG. The Company intends to market REMUNE in the countries where it has the
rights through partner or affiliated firms, which will carry out the local
regulatory requirements, distribution, and product support. The Company intends
to finance the aforementioned activities through a secondary offering. The
Company's initial efforts have focused on the research and development of REMUNE
(through TMG) and securing sales and marketing rights in Thailand.
There can be no assurance that management will be successful in raising the
necessary funds to complete the clinical trials and obtain the necessary
government approvals for the manufacturing and sale of REMUNE. The Company's
ability to continue as a going concern will depend upon these factors and the
success of future operations.
NOTE D- CONVERTIBLE NOTES PAYABLE
During the six month period ended June 30, 2000, the Company sold 8 units of its
convertible notes payable at a price of $5,000 per unit to accredited investors
in a private placement offering. Each unit consists of a $5,000, 10% note due
August 30, 2001. Each unit is convertible into 5,000 shares of the Company's
common stock at the election of the Company. Interest accrued on each unit is
convertible to common stock at a rate of $1 per share at the date of conversion.
As of June 30, 2000, no units had been converted to common stock.
NOTE E- CONVERTIBLE PREFERRED STOCK
On June 21, 2000, the Company began to raise additional capital under a private
placement offering. A maximum of 175 units at $4,000 per unit was offered in the
private placement. Each unit consisted of one hundred shares of the Company's
Series A Preferred Stock (the "Preferred Shares") and a non-callable common
stock purchase warrant (the "Warrant"), designated "A Warrants". Each Preferred
Share is convertible, at the Company's option, into 10 shares of the Company's
common stock, par value $0.001 (the "Common Stock"). Each of the A Warrants
entitles the registered holder to purchase up to one thousand shares of the
Common Stock at a price of $4.00 per share for a period of 24 months from the
date of the Private Placement Prospectus. The Preferred Shares and the Warrant
included in the units will not be separately transferable until 90 days after
the date of the Prospectus or such earlier date as the Company may determine.
The Preferred Shares may be converted at the Company's discretion into Common
Stock no later than October 1, 2000 upon the effectiveness of the Registration
Statement for the shares of Common Stock issuable upon conversion of the
Preferred Shares and upon exercise of the A Warrants. The Company raised $34,500
under this private placement offering during the three months ended June 30,
2000. Subsequent to June 30, 2000, the Company raised approximately $600,000
through this private placement offering, for an aggregate of 158.5 units sold.
NOTE F- SUBSEQUENT EVENTS
The Company and Trinity Medical Group, Ltd. entered into an Assignment Agreement
on August 3, 2000, whereby all of Trinity Medical Group, Ltd.'s rights, title,
and interests in the License and Collaboration agreement and Stock Purchase
Agreement were assigned to the Company. There was no accounting recognition by
the Company as a result of the transfer of the License and Collaboration
Agreement and the related Stock Purchase Agreement. The Company intends to
capitalize future specified payments required under the Stock Purchase Agreement
to an intangible asset (license technology) and to marketable securities, as
appropriate.
On August 4, 2000, The Company assigned through a Sublicense and Supply
Agreement the sales, distribution, manufacturing and marketing rights to REMUNE
in Thailand to Trinity Assets Company Limited, an affiliate of the Company and
Trinity Medical Group, Ltd. The manufacturing rights assigned to Trinity Assets
Company Limited
F-17
<PAGE>
TRINITY MEDICAL GROUP USA, INC.
(a company in the development stage)
NOTES TO FINANCIAL STATEMENTS
are non-exclusive. Trinity Assets Company Limited is related through common
ownership. Two of the Company's directors, Inthanom John Churdboonchart and
Orranart Victoria Churdboonchart, are beneficial owners of the Company's common
stock and are shareholders of Trinity Assets Company Limited. The Sublicense and
Supply Agreement provides that the Company will realize a minimum gross profit
from the sale of REMUNE to Trinity Assets Company Limited in Thailand and that
profits, as defined, from the sale of REMUNE in licensed territories other than
Thailand will be shared equally. It is the intent of the parties that if and
when Trinity Assets Company Limited begins to manufacture REMUNE, the company
will continue to realize revenues either from the purchase and resale of REMUNE
to Trinity Assets Company Limited or as royalties from Trinity Assets Company
Limited on its sales of REMUNE to others. Specific terms of the resale gross
profit or royalties have not been negotiated by the parties at this time. The
Company has also agreed to provide support to Trinity Assets Company Limited (in
the form and substance satisfactory to both parties) for the warehousing,
transportation, and production of any related capital assets, plant and
equipment, etc. which are necessary for the marketing, promoting and selling of
REMUNE in Thailand. This support may be in the form of providing interest
bearing loans to Trinity Assets Company Limited or capital, in exchange for
equity ownership of Trinity Assets Company Limited; no specific terms of the
support have been negotiated by the parties at this time. Under the terms of the
Sublicense and Supply Agreement, the Company will pay Trinity Assets Company
Limited for specified research personnel, travel, laboratory, facility and
publication costs associated with clinical trials of REMUNE until full
regulatory approval in Thailand is granted.
On September 5, 2000, the Company entered into a two year employment agreement
with its Chief Financial Officer, whereby the Officer will be paid a minimum
annual salary of $160,000 and receive a minimum annual bonus equal to 10% of the
annual salary amount. The Officer was also granted 50,000 non-statutory stock
options with a term of 10 years and an exercise price of $4.00. The Officer will
receive a minimum of 50,000 additional stock options on each anniversary date of
the employment agreement. If the Officer is terminated without cause as defined,
the minimum salary, bonus and certain other benefits must continue to be paid
through the remaining term of the employment agreement.
The License and Collaboration Agreement between Trinity Medical Group, Ltd. and
The Immune Response Corporation, entered into in 1995, provided for possible
termination of the License and Collaboration Agreement if the marketing approval
for REMUNE in Thailand was not granted before December 31, 2000. On September
29, 2000, The Immune Response Corporation and the Company amended the License
and Collaboration Agreement to extend the possible termination date to at least
August 2001.
During the third quarter ended September 30, 2000, the Company paid Trinity
Medical Group, Ltd. approximately $200,000 for costs incurred related to the
research and development of the drug REMUNE. The Company anticipates that
Trinity Medical Group, Ltd. or Trinity Assets Company Limited, an affiliate of
the Company and Trinity Medical Group, Ltd., will incur approximately $500,000
of additional research and development cost during the third and fourth quarter
of 2000 related to the drug REMUNE. The Company will pay either of these
companies for such costs incurred as required by the applicable Collaboration
and Supply Agreement or Sublicense and Supply Agreement.
On October 19, 2000, in connection with a Section 4(2) exempt offering, the
Company issued a $500,000 convertible promissory note to an "accredited
investor" as defined in Regulation D promulgated under the Securities Act of
1933, as amended. The note matures on October 19, 2001 and bears interest at 8%
per annum, with interest payments due and payable semi-annually. The note is
convertible at the conversion price equal to the lesser of (i) $4.00 or (ii) 80%
of the average closing bid price of the common stock, par value $0.001, for the
ten (10) consecutive trading days preceding the conversion date. On the date of
conversion, the Company shall also issue to the holder a warrant to purchase
such number of shares of the company's common stock equal to aggregate the
number of shares of common stock issued upon conversion of this note. The
warrant shall have an exercise price equal to $4.00 per share and shall have a
term of five years from its date of issuance. Interest accruing on the note is
payable, at the option of the Company or the holder, in cash or in accordance
with the aforementioned conversion
F-18
<PAGE>
TRINITY MEDICAL GROUP USA, INC.
(a company in the development stage)
NOTES TO FINANCIAL STATEMENTS
terms of the note. The terms of the note also prevent the Company from pledging
any of its assets, including licenses, to any third party or incurring
indebtedness with rank pari passu or senior to the note.
F-19
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 607.0850 of the Florida Business Corporation Act permits
indemnification of officers and directors of the Registrant under certain
conditions and subject to certain limitations. Section 607.0850 of the Florida
Business Corporation Act also provides that a corporation has the power to
purchase and maintain insurance on behalf of its officers, directors, employees,
and agents against any liability asserted against such person and incurred by
him or her in such capacity, or arising out of his or her status as such,
whether or not the corporation would have the power to indemnify him or her
against such liability under the provisions of Section 607.0850 of the Florida
Business Corporation Act.
Article VII of the Bylaws of the Registrant provides that the
Registrant shall indemnify its officers, directors and employees. The rights to
indemnity thereunder continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of the heirs,
executors, and administrators of the person. In addition, expenses incurred by a
officer, director, employee or agent in defending any action, suit or proceeding
by reason of the fact that he or she is or was a officer, director, employee or
agent of the Registrant shall be paid by the Registrant if he or she is
successful in defending the suit, whether on the merits or otherwise, and such
expenses may be paid by the Registrant in other situations unless such officer,
director, employee or agent is adjudged liable for negligence or misconduct in
the performance of his or her duties.
Article X of the Registrant's Certificate of Incorporation provides
that the Registrant shall indemnify all persons whom it may indemnify pursuant
to Section 607.0850 of the Florida Business Corporation Act to the full extent
permitted by such Section 607.0850 of the Florida Business Corporation Act.
OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table shows the estimated expenses in connection with the
issuance and distribution of the common stock being registered:
SEC registration fees.......................................$ 4,193
Legal fees and expenses.....................................$50,000
Accounting fees and expenses................................$10,000
Miscellaneous...............................................$ 5,000
-------
TOTAL: $69,193
=======
RECENT SALES OF UNREGISTERED SECURITIES.
In connection with a December 1999 private placement the company issued
154.5 notes. The notes were sold to "accredited investors", as that term is
defined in Regulation D promulgated under the Securities Act of 1933, as
amended, (the "Securities Act"). The notes were sold in units. Each unit cost
$5,000 and consisted of a $5,000, 10% per annum note of the company due August
31, 2001 convertible into 5,000 shares of the company's common stock, $0.001 par
value, per share. The aggregate offering price was $772,500 and the company
received net proceeds of approximately $756,000. The company believes that the
exemption afforded by Section 4(2) of the Securities Act and Regulation D
promulgated thereunder, is applicable to the above issuances as a transaction by
an issuer not involving a public offering. The proceeds from this private
placement were used to satisfy the company's initial developmental business
expenses.
In connection with a June 2000 private placement the company issued
158.5 units at $4,000 per unit. The units were sold to "accredited investors",
as that term is defined in Regulation D promulgated under the Securities Act of
1933, as amended, (the "Securities Act"). Each unit consisted of one hundred
shares of the company's series A preferred stock and a non-callable common stock
purchase warrant, designated "A warrants". Each preferred share is convertible,
at the company's option, into 10 shares of the company's common stock, par value
$0.001.
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<PAGE>
Each of the A warrants entitles the registered holder to purchase up to one
thousand shares of the common stock at a price of $4.00 per share for a period
of 24 months from the date of the private placement prospectus. The preferred
shares and the warrant included in the units will not be separately transferable
until 90 days after the date of the prospectus or such earlier date as the
company may determine. The preferred shares may be converted at the company's
discretion into common stock no later than October 1, 2000 upon the
effectiveness of the Registration Statement for the shares of common Stock
issuable upon conversion of the preferred shares and upon exercise of the A
warrants. The company received net proceeds of approximately $592,000 under this
private placement offering. The proceeds from this private placement will be
used to meet the company's continuing operating expense requirements, including
the cost of filing the aforementioned Registration Statement.
On October 19, 2000, in connection with a Section 4(2) exempt offering,
the company issued a $500,000 convertible promissory note to an "accredited
investor" as defined in Regulation D promulgated under the Securities Act of
1933, as amended. The note matures on October 19, 2001 and bears interest at 8%
per annum, with interest payments due and payable semi-annually. The note is
convertible at the conversion price equal to the lesser of (i) $4.00 or (ii) 80%
of the average closing bid price of the common stock, par value $0.001, for the
ten (10) consecutive trading days preceding the conversion date. On the date of
conversion, the company shall also issue to the holder a warrant to purchase
such number of shares of the company's common stock equal to aggregate the
number of shares of common stock issued upon conversion of this note. The
warrant shall have an exercise price equal to $4.00 per share and shall have a
term of five years from its date of issuance. Interest accruing on the note is
payable, at the option of the company or the holder, in cash or in accordance
with the aforementioned conversion terms of the note. The terms of the note also
prevent the company from pledging any of its assets, including licenses, to any
third party or incurring indebtedness with rank pari passu or senior to the
note.
EXHIBITS.
(A) EXHIBITS
EXHIBIT DESCRIPTION
2.1 Agreement for the Exchange of Common Stock by and among
August Project III Corp.
3.1 State of Florida Articles of Incorporation of August
Project III dated July 1997
3.2 State of Florida Certificate of Amendment of the
Certificate of Incorporation of the company dated
January 2000
3.3 By-Laws of the company
4.1 Registration Rights Agreement
4.2 Promissory Note
4.3 Registration Rights Agreement
4.4 Form of Common Stock Purchase Warrant
4.5 Subscription Agreement
4.6 Convertible Promissory Note
5.1 Legal Opinion of Parker Chapin LLP
II-2
<PAGE>
10.1 Sublicense and Supply Agreement between the company and
Trinity Assets Company Limited dated August 4, 2000
10.2 Supplement to Sublicense and Supply Agreement between
the company and Trinity Assets Company Limited dated
August 5, 2000
10.3 Amendment No. 1 to the License and Collaboration
Agreement dated September 29, 2000
10.4 Assignment Agreement between Trinity Medical Group, Ltd.
and the company dated August 3, 2000
10.5 Gary E. Wilson's Employment Agreement
10.6 Dr. James S. Namnath's Employment Contract
23.1 Consent of Parker Chapin LLP (included in Exhibit 5.1)
23.2 Consent of Independent Certified Public Accountants
UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement to include any
material information with respect to the plan of distribution not previously
disclosed in this Registration Statement or any material change to such
information in this Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, 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.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
Registration Statement 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.
The undersigned Registrant hereby undertakes to deliver or cause to be
delivered with the Prospectus, to each person to whom the Prospectus is sent or
given, the latest annual report to security holders that is incorporated by
reference in the Prospectus and furnished pursuant to and meeting the
requirements of Rule 14a-3 or Rule 14c-3 under the Securities Exchange Act of
1934; and, where interim financial information required to be presented by
Article 3 of Regulation S-X are not set forth in the Prospectus, to deliver, or
cause to be delivered to each person to whom the Prospectus is sent or given,
the latest quarterly report that is specifically incorporated by reference in
the Prospectus to provide such interim financial information.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, Section 607.0850 of the Florida
Business Corporation Act 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 Securities 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 hereunder, 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 of whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
II-3
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements of filing on Form SB-2 and authorized this registration
statement to be signed on its behalf by the undersigned, in the City of San
Rafael, State of California on October 20 , 2000.
TRINITY MEDICAL GROUP USA, INC.
By: /s/ James S. Namnath
--------------------------------
Name: James S. Namnath
Title: Chief Executive Officer and Director
<TABLE>
<CAPTION>
SIGNATURE TITLE
<S> <C>
/s/ Dr. Vina Churdboonchart President and Director October 20, 2000
-------------------------------
Dr. Vina Churdboonchart
/s/ Inthanom John Churdboonchart Director October 20, 2000
-------------------------------
Inthanom John Churdboonchart
/s/ Gary E. Wilson
---------------------------- Executive V.P. - Finance, October 20, 2000
Gary E. Wilson Chief Financial Officer,
Treasurer
</TABLE>
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