UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF
SECURITIES OF SMALL BUSINESS ISSUERS
UNDER SECTION 12(B) OR (G) OF THE SECURITIES EXCHANGE ACT OF 1934
TRINITY MEDICAL GROUP USA, INC.
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(Name of Small Business Issuer in its charter)
Florida 68-0438943
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
3753 Howard Hughes Pkwy, 2nd Floor, Las Vegas, Nevada 94901
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(Address of principal executive offices) (Zip Code)
Issuer's telephone number (415) 256-1995
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Securities to be registered under Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
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Securities to be registered under Section 12(g) of the Act:
Common Stock
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(Title of Class)
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(Title of Class)
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PART I
ITEM 1 DESCRIPTION OF BUSINESS
The Company
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Trinity Medical Group USA, Inc. ("Trinity" or the "Company") 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.
The Company is an affiliate of Trinity Medical Group, Ltd., a Thailand company
(http: //www.trinitygroups/trinity medical/dsmb.htm) ("TMG"). Trinity is a late
development stage company with potential rights to market a patented vaccine,
("Remune"), designed to induce specific T cell responses in people infected with
the Human Immunodeficiency Virus (HIV). Remune (an immune-based therapy
consisting of whole inactivated HIV-1 virus depleted of its gp120 coat protein)
is based on Dr. Jonas Salk's vaccine technology.
TMG was formed in 1995 after the principals of the TMG and The Immune
Response Corporation (NASDAQ: IMNR) entered into a License and Collaboration
Agreement (the "License and Collaboration Agreement") dated September 15, 1995
with The Immune Response Corporation 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 (the "Territory"). On the same day, TMG entered into a Stock Purchase
Agreement (the "Stock Purchase Agreement") with the Immune Response Corporation.
Per the Stock Purchase 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. TMG recognized the vaccine's
potential in 1995 and paid The Immune Response Corporation $5 million in cash to
secure the rights to develop and market Remune in Southeast Asia.
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 reimburse 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.
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 Company agrees to
prepare and complete all necessary documentation
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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.
In 1999, TMG completed a Phase II double blind placebo controlled
clinical trial in Thailand, the results of which were submitted to the Thailand
Food and Drug Administration for review in March, 2000. 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, TMG applied for expanded testing with the
Ministry of Public Health in Thailand. The extended project which has been
submitted for approval will be coordinated by Mahidol University in Bangkok,
Thailand and will study up to 10,000 individuals. This extended study of Remune
is not connected to the request for full commercial approval by the Thai Food
and Drug Administration.
The results of the Phase II controlled trial were also presented to the
World Health Organization (WHO) and the Joint United Nations Programme on
HIV/AIDS (UNAIDS) at a vaccine advisory committee meeting in Geneva, Switzerland
on February 23, 2000.
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,
antiretoviral 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 Thailand. The number of HIV infected people in
Thailand is currently estimated at 1.0-1.4 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.
Merger with August Project III Corp.
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Pursuant to an Agreement for the Exchange of Common Stock, dated
December 31, 1999, between the shareholders of the Company and August Project
III Corp., a Florida corporation ("August Project"), August Project issued to
the Company's shareholders 5,226,000
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shares of Common Stock in exchange for 100% of the outstanding shares of the
Company. In addition, certain 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.
Business Strategy
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Upon becoming a reporting company under United States securities laws,
the Company intends to acquire all of TMG's rights to Remune. Trinity intends to
market Remune in other countries in Southeast Asia where it has secured
marketing rights through partner or affiliated firms which carry out local
regulatory requirements, distribution and product support. The initial efforts
have focused on the research and development of Remune (through TMG) and on
securing sales and marketing rights in Thailand. Trinity agrees to grant
exclusive licensing rights to its Thai affiliate, TMG, for the distribution and
sale of Remune in Thailand and nine other Southeast Asian countries. Trinity
hopes to realize income from sales of Remune to TMG, starting in the second half
of 2000. TMGUSA desires to forge similar arrangements in each of its licensed
countries whereby distribution and sales are conducted by third parties. TMGUSA
does not expect to directly sell Remune to individuals. During 2000, the Company
projects 60,000 injections sold. The Company anticipates full regulatory
approval for Remune in Thailand before 2001 and shipment of at least 400,000
doses of the product during 2001. The Company also plans to gain revenue in 2000
by offering Remune to other parties in the other countries in the Territory.
While local approval for Remune must be granted before sale of product in any
country we anticipate partners will pay for the future sales and marketing
rights before such approval is granted.
The Company hopes to establish partners to test and distribute Remune
during 2000 in the Philippines, Malaysia, and Singapore. To date, we have not
contacted any such parties.
The Company believes there are more than one million individuals
infected with HIV in Thailand alone. The Company believes that Remune is
economical for HIV infected individuals, including the most indigent, and offers
a sensible therapy since the therapy is a relatively easy regimen of quarterly
injections. There is a significant incentive for the Thai government to directly
purchase and distribute Remune. Thailand could dramatically reduce its
expenditures on current HIV medications and improve its trade deficit as a
result of export potential to the nine other Southeast Asian countries where
Trinity has marketing rights. When Remune is finally manufactured in Thailand a
portion of the profits will remain in Thailand as revenues shared by Trinity and
its Thai manufacturing partner TMG.
If Thailand approves Remune as a mono-therapy for individuals with HIV,
there will be an alternative to the current burdensome regimen requiring dozens
of pills orally per day. Currently, very few individuals in Thailand have access
to the current Highly Active AntiRetro Virus Treatment (HAART) drugs. The HAART
multi-drug regime produces major side effects while Remune has little or no side
effects. Additionally, Remune's price is at the level of
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hundreds of dollars per year versus thousands of dollars per year for current
HAART programs. The Company believes that our Thai partners will be able to
subscribe at least 100,000 people during the year 2001 which would result in a
gross profit of $200 per person, or $20 million.
The Company has an option through the Agreement to secure the rights to
manufacture Remune for its customers in Thailand and its Territories and we
anticipate the need to exercise that option to meet demand. The Company believes
the U.S. supplier, The Immune Response Corporation, may not be able to supply
Remune to more than 250,000 patients per year for all of its licensees. The
supply agreement with IRC is fixed in price for only the first three years. The
Company also believes it can manufacture Remune outside the U.S. at lower cost.
The Company thus requires capitalization to construct an overseas manufacturing
facility in Thailand to increase its capacity to meet 100% of market needs and
expand its market to foreign customers. It is estimated that the facility will
take two to three years and up to $50 million to construct.
The Company intends to list its common stock in the public U.S.
markets. The Company will endeavor to maximize investor confidence and market
capitalization through its operations and stable growth. The Company intends to
deploy its assets to acquire other human disease treatment products that are in
advanced development or acquire license marketing and sales rights for currently
U.S. approved drugs for other regions of the world.
Marketing Strategy
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The Company intends to license its rights for Remune and become the
sole supplier of the product to partner entities and affiliates that are
familiar with local requirements and customs for drug sales in the contracted
territory. The Company's contracts may not necessarily be on an exclusive basis.
This strategy will minimize infrastructure requirements and costs.
Competition
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The therapeutic vaccine Remune will benefit the HIV+ population as a
monotherapy and as an addition to existing treatments available in Thailand. TMG
Ltd. has the exclusive right to distribute Remune in Thailand and nine other
Southeast Asian countries pursuant to an exclusive agreement with The Immune
Response Corporation. It is virtually impossible for competitors to clone or
copy the product and sell it on a counterfeit basis. Competitive treatments for
HIV and AIDS are available in Thailand, but are much more costly than Remune.
VaxGen (NASDAQ: VXGN) is developing an HIV "vaccine" product that, if successful
and effective, could reduce the degree of infection by HIV. VaxGen's product is
in Phase III trials in Thailand. We cannot accurately predict the prospects and
timing of VaxGen's marketability, but note that VaxGen is designed to prevent
initial infection with HIV and was not designed to treat the 1 to 1.4 million
already infected in Thailand. Remune, on the other hand, is a therapeutic
vaccine and thus far there has been no large clinical trial of VaxGen as a
therapeutic vaccine.
Risk Factors
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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.
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Risks Relating to Disease Treatment.
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The Company does not yet have approval from the Thai Ministry of Health or Food
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and Drug Administration to market, distribute and manufacture Remune.
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Approval of Remune by the Thai FDA or Ministry of Health is still
pending. If the Thai Food and Drug Administration does not approve Remune,
Remune cannot be marketed, sold or manufactured in Thailand. The Company will be
unable to generate any revenue in Thailand.
The Company cannot sell or distribute Remune in any other country in its
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Territory unless the Company has received required marketing approval from the
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governing health authority of Thailand.
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Article 5 of the License and Collaboration Agreement entered into
between The Immune Response Corporation and TMG states that the TMG and cannot
sell or distribute Remune to any country in the Territory, excluding Thailand,
unless TMG has previously received the required marketing approval for Remune
from the governing health authority of Thailand and the TMG has started
marketing and is diligently marketing Remune in Thailand.
Governmental regulation and legal uncertainties may effect the Company's
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business
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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
the Company 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. No such
restrictions have been imposed on any test vaccine in history.
The Company's business is dependent on the technology continuing to benefit
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patients that use it.
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The Company's success will depend, in whole, upon the product
continuing to benefit users as has been shown in clinical trials. HIV is perhaps
the greatest challenge 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.
The Company's business is dependent on the technology continuing to be safe and
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tolerable to the patients that use it.
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The Company's 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 certainty the existence
of harmful or even fatal side effects on rare user types or off-line usage that
may result in harmful side effects including illness and even death that could
expose the Company to liabilities. Remune is a killed vaccine. To date, in
studies with other killed vaccine, no
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incidences of the vaccine becoming activated and causing severe or harmful
effects has been reported.
The Company risks capacity constraints from its supplier of Remune.
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A key element of the Company's strategy is to utilize the manufacturing
capacity of the technology's supplier to meet the Company's market demands. The
Company has a contractual obligation with The Immune Response Corporation that
they largely meet our requirements provided we forecast a six month horizon.
Nonetheless, the Company will be adversely affected if the manufacturing
facility experiences down time. 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 The Immune Response Corporation can establish other manufacturing capacity
on a timely basis.
The Immune Response Corporation, Remune's developer, has not completed the
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development of Remune.
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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 conclusion of a Phase III trial of
Remune due to lack of efficacy had a material adverse effect on The Immune
Response Corporation. However, The Immune Response Corporation plans to initiate
two additional Phase III surrogate marker trials of Remune in light of a
previously reached agreement with the U.S. Food and Drug Administration so that
a marketing application for Remune could be submitted based upon favorable
virological endpoints. If The Immune Response Corporation is not able to
initiate or complete additional pivotal trials with Remune, The Immune Response
Corporation may have to abandon Remune or seek additional funding.
Technological Change and competition may render our potential products obsolete.
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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.
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Risks Relating to Company History and Financing Needs
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The Company faces risks when doing business outside of the United States
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The Company 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 the Company's
control may have a material adverse effect on the Company's business.
The Company has no operating history.
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The Company has minimal operations, nominal assets and no revenues from
operations. As a start-up business, the Company is subject to all the
substantial risks inherent in the commencement of a new business enterprise with
new management. There can be no assurance that the Company will be able to
successfully generate revenues, operate profitably, or make any distributions to
the holders of our securities. The Company has no 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 the Company's 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
the Company is a development stage company, our prospects must be considered in
light of the risks, expenses and difficulties encountered in establishing a new
business in any industry.
The Company currently has little working capital and limited sources of
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liquidity. The Company will need additional financing.
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The Company requires substantial capital to pursue its operating
strategy and currently has limited cash for operations. Until the Company can
obtain revenues sufficient to fund working capital needs, it will be dependent
upon external sources of financing. To date, the Company has no internal sources
of liquidity and does not expect to generate any internal cash flow until at
least the second half of 2000. The Company may not have the funds to comply with
the demand registration rights granted to investors in the Private Offering.
The Company may need additional capital.
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The Company does not have any other commitments to raise additional
capital and there is no assurance that any additional funds needed will be
available on favorable terms, if at all. The Company requires substantial
working capital to fund its business. The Company currently anticipates that the
net proceeds of the Private Offering, together with our available funds, will be
sufficient to meet its anticipated needs for working capital and capital
expenditures through at least the next 12 months. However, the Company may need
to raise additional funds prior to the expiration of this period.
Moreover, there is no assurance that the Company's estimate of its
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 the
Company raises additional funds through the issuance
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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 the Private Offering, we will not generate any
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internal cash flow until at least the second half of 2000.
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The Company will use a portion of the proceeds from the Private
Offering for working capital purposes which it expects to utilize for the first
half of 2000. After June of 2000, the Company will be required to utilize cash
flow from operations or from external sources to fund its on-going business. The
Company does not currently have any revenues and its estimates indicate that it
will not generate internal cash flows until at least the second half of 2000. As
such, the Company will be required to raise additional funds prior to June 2000.
As the Company does not have any external sources of funding, its inability to
successfully implement its business strategy and to raise additional financing
until June 2000 may compromise the Company's ability to achieve its projected
revenues. Furthermore, if the Company is required to raise additional funding,
there is no assurance that we would be successful, the failure of which would
have a material adverse effect.
The Company has not created a sinking fund for the repayment of the notes issued
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in connection with the Private Offering. The notes are not collateralized and
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are junior to all other debts. The Company will need to raise additional
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proceeds to make payment of the notes.
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The Company has not created any fund for repayment of the notes that
were issued as part of the Units sold in the Private Offering, and will not set
aside any portion of the proceeds from the offering for repayment of the notes.
Based on the Company's current estimate, the entire proceeds from the offering
will be spent prior to the maturity date of the notes. In addition, the Company
may not generate significant internal cash flows from operations prior to the
maturity date of the notes. Therefore, in order to make payment on the notes,
the Company may be required to raise additional funds through the sale of debt,
equity or other convertible securities. The Company has no commitments for such
funding, and can provide no assurance that it will be able to raise such funding
on favorable terms, if at all. If the Company is not able to raise additional
funding, it is likely that it will default on the notes. As such, although the
Company is legally obligated to make payment on the notes, there is no assurance
that it will be financially able to do so, and it should be assumed that if it
is not able to raise additional proceeds prior to the maturity date of the
notes, the Company will not be able to make payment on the notes. The notes are
not collateralized by any real, personal, or other property. The notes are
unsecured and subordinate and junior in right of payment to the prior payment in
full of all other indebtedness.
The Company may not have the funds to comply with the demand registration rights
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granted to investors in the Private Offering.
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As part of the Units, investors received a "demand" registration right,
which requires at any time after December 31, 1999, upon the demand of any
investor in the offering, that we file a registration statement with the SEC,
registering the resale of the shares of common stock to be
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issued as part of the Units. The Company estimates the cost of such registration
statement will be approximately $50,000. As the Company does not expect to
generate any revenues from operations until the second half of 2000, it may not
have the funds to file a registration statement. In addition, any funds that are
used to pay for a registration statement will reduce the Company's ability to
execute our business strategy. If the Company is not able to file a registration
statement for any reason, investors will only be able to sell their shares of
common stock pursuant to Rule 144, which requires among other items, that
investors hold the stock for a period of at least one year.
The Company's management has broad discretion over use of the proceeds of the
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private offering.
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All of the net proceeds from the sale of Units will be available to
fund development and for general corporate purposes. As of the date of this
Registration Statement, the Company cannot specify with certainty the particular
uses for the net proceeds to be received other than that they will be used as
working capital. Accordingly, the Company's 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 the
Company's business.
The Company's current monthly operating overhead is approximately
$35,000 which amount will increase if and as we expand our operations.
Currently, the Company relies upon our current stockholders to lend money and
fund our monthly operating overhead, as we have limited working capital.
However, sufficient operating resources through 2000 will be on hand if an
equity financing, which raises in the aggregate at least $250,000 in the form of
one equity transaction or in the form of a series of equity transactions, is
subscribed and funded. It should not be expected that the Company will receive
funds from any affiliate of the Company in the future.
As a start-up company, the Company's quarterly operating results may fluctuate.
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Based on the Company's business and industry and as a start-up, the
Company expects to experience significant fluctuations in the future quarterly
operating results due to a variety of factors, many of which are outside of the
Company's control. Factors that may adversely affect the quarterly operating
results include:
o government approvals and regulations that impede the Company's
ability to transport, sell and administer product;
o the Company's 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 the Company's overseas partner(s);
o supply of product by the manufacturer is not fulfilled as
expected;
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o the amount and timing of operating costs and capital
expenditures relating to expansion of the Company's business,
operations and infrastructures;
o costs and delays in introducing Remune by the Thai subsidiary
or partners;
o government regulations related to the shipment of drugs
overseas;
o the Company's ability to upgrade and develop its information
technology systems and infrastructure;
o costs related to acquisitions of technologies or businesses;
and
o general economic conditions, as well as those specific to
Thailand and related industries.
As a result of the Company's limited operating history, it is difficult
to accurately forecast the Company's revenue. As a result, the Company may be
unable to adjust its 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
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future.
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The Company has paid no dividends on its 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, the Company intends to retain earnings
to fund its operations. Therefore, the Company does not anticipate paying any
cash dividends on its common stock in the foreseeable future.
The Company is currently controlled by principal stockholders, officers and
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directors.
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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.
The Company lacks disinterested, independent directors.
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The Company's directors have a direct financial interest in the
Company. While the Company's 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.
All marketing will be done in-house.
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The Company's currently plans to market and promote our services
in-house. While the Company's officers have prior promotional and marketing
experience, there can be no assurances that the Company's marketing strategies
will be effectively instituted, or that these arrangements will result in
sufficient revenues to produce net income.
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The Company's current shareholders will continue to control the Company.
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The Company's current shareholders own or control all of the issued and
outstanding shares of common stock of the Company. Therefore, the Company's
current shareholders 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 will 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.
No Market for the Company's Securities
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There is currently no market for the Company's securities and there can
be no assurance that a market will ever develop. Accordingly, purchasers of the
Company's 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 a uniform resale rule ("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 no public
market for our securities and there is no assurance that our securities will be
traded on a 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.
Employees
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The Company has an employment agreement with Dr. James S. Namnath
(shareholder), 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 (the "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. The employment may be terminated at any time by the
Company.
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Private Offering
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Pursuant to a private offering (the "Private Offering"), the Company
raised $732,500 at the end of 1999 and an additional $30,000 during January
2000. In the Private Offering, the Company offered for purchase to accredited
investors 152.5 units at a price of $5,000 per unit. Each unit consists 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, par value $.001 per share
(collectively, the "Units"). The Company sold 152.5 Units in the Private
Offering.
ITEM 2 PLAN OF OPERATION
General
- -------
The Company was incorporated in September of 1998 in Delaware and was
reincorporated in November of 1999 in Nevada and has maintained no operations
until recently. The Company has an agreement to acquire the rights to Remune in
ten Southeast Asian countries from TMG. The Company does not expect to generate
significant revenues through June of 2000 and there is no assurance that it will
generate revenues thereafter.
The Company had no operating history on which to base an evaluation of
its business and prospects. Our prospects must be considered in light of the
risks, expenses and difficulties frequently encountered by companies in their
early stage of development. The Company will encounter various risks in
implementing and executing its business strategy. There can be no assurance that
the Company will be successful in addressing such risks, and the failure to do
so could have a material adverse effect on our business.
Plan of Operations
- ------------------
Based on the Company's current operations it is anticipated that our
monthly operating expenditures for the next four months will be approximately
$35,000 per month. Our business strategy contemplates expenditures of
approximately $50,000 for marketing and working capital. In addition, if we are
forced to prepare a registration statement as a result of an investor in the
Private Offering exercising his "demand" registration right, we will have to
expend approximately $50,000 in expenses. If the Company is required to raise
additional proceeds we may raise such proceeds through additional best efforts
equity offerings, joint ventures or other collaborative relationships,
borrowings, and other sources. To date, the Company has no commitment for any
such additional financing and it can provide no assurance that any such
financing will be available or, if it is available, that it will be available on
acceptable terms.
ITEM 3 DESCRIPTION OF PROPERTY
The Company's main office is at 3753 Howard Hughes Parkway, Las Vegas,
Nevada 89109 with an executive office at 55 Shaver Street, Suite 320, San
Rafael, CA 94901. The Company holds a lease on the Nevada offices until January
1, 2001. The Company plans to lease additional office spaces in Bangkok,
Thailand, San Rafael, CA and Carlsbad, CA.
ITEM 4 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
-12-
<PAGE>
The following table sets forth, as of the date of this Registration
Statement, the number and percentage of outstanding shares of Company Common
Stock owned by (i) each person known to the Company to beneficially own more
than 5% of its outstanding Common Stock, (ii) each director, (iii) each named
executive officer, and (iv) all officers and directors as a group.
-13-
<PAGE>
<TABLE>
<CAPTION>
Percentage of Ownership(1)
Number of Shares of After Sale
Common Stock Before of
Name of Beneficial Owners Beneficially Owned Offering 152.5 Units
<S> <C> <C> <C>
Churdboonchart Trinity Trust 7,200,000 70.0% 66.0%
Account (2)
Trinity Partners Trust(3) 400,000 3.9 3.6
Eastern Frontier Trust 175,000 1.7 1.6
Black Hills Investment Corp. 175,000 1.7 1.6
Baldwin Family Trust 50,000 0.5 0.4
Dr. Buranaj Smutharaks 500,000 5.0 4.5
Virongrong Chaisiriroj 500,000 5.0 4.5
Uboltrattana Mahidol 500,000 5.0 4.5
Dr. Vina Churdboonchart 450,000 4.4 4.0
Elizabeth Namnath 50,000 0.5 0.4
</TABLE>
- --------------------
(1) Prior to the offering, there were approximately 10.2 million shares of
Company common stock outstanding. Upon conversion of 152.5 Units, there
will be a total of approximately 11 million shares outstanding.
(2) Churdboonchart Trinity Trust Account, c/o Trinity Group 55 Soi Silom Road
Bangkok Thailand
(3) Trinity Partners Trust, 55 Shaver Street Suite 320, San Rafael, CA 94901
Changes in Control
------------------
Pursuant to the notes issued in the Private Offering, the following
change in control provision applies:
"Change in Control" shall mean the occurrence of any of the following
events:
(i) any person becomes, after the issue date of this Note, the
"beneficial owner" (as defined in Rule 13d-3 promulgated under
the Securities Exchange Act of 1934, as amended ("Exchange
Act")), directly or indirectly, of securities of the Maker
representing 30% or more of the combined voting power of the
Maker's then outstanding securities, unless the Board of
Directors of the Maker (as constituted immediately, prior to
such Change in Control) determines in its sole absolute
discretion that no Change in Control has occurred;
(ii) individuals who constitute the Board of Directors of the Maker
on the issue date of this Note, cease, for any reason, to
constitute at least a majority of the Board of Directors of
the Maker; provided, however, that any person becoming a
director subsequent to the issue date of this Note who was
nominated for election by at least 66% of the Board of
Directors of the Maker as constituted on the issue date
-14-
<PAGE>
of this Note (other than the nomination of an individual whose
initial assumption of office is in connection with an actual
or threatened election contest relating to the election of the
Board of Directors of the Maker, as such terms are used in
Rule 14a-11 of Regulation 14A promulgated under the Exchange
Act) shall be for purposes of this Note, considered a member
of the Board of Directors of the Maker as constituted on the
issue date of this Note; or
(iii) the Board of Directors of the Maker determines in its sole and
absolute discretion that there has been a Change in Control of
the Maker.
ITEM 5 DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
Directors and Executive Officers
- --------------------------------
Following are Directors and Officers:
Name Age Position
- ---- --- --------
Dr. Vina Churdboonchart 54 President and Director
Arun Churdboonchart 58 Chairman of the Board of Directors
Dr. James S. Namnath 43 Chief Executive Officer
- --------------------
Dr. Vina Churdboonchart
Dr. Vina Churdboonchart, age 54, 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 1970, 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 hemorrographic
fever. Her research efforts have been supported and well recognized by the World
Health Organization. She has numerous published studies, including breakthrough
findings accepted in the Journal of AIDS and Vaccine Journal.
Dr. Churdboonchart received her doctorate in Microbiology (awarded by
the King of Thailand) in 1984. She received her bachelors degree from California
State University, Long Beach in 1970. Dr. Vina Churdboonchart is married to Mr.
Arun Churdboonchart.
Arun Churdboonchart
Mr. Churdboonchart, age 58, is one of Thailand's most distinguished and
recognized businessmen. He is a 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 of 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.
-15-
<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.
James S. Namnath, Ph.D.
Dr. James 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 CFO 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 $3 billion. Dr. Namnath is an experienced computer programmer with over 25
years of experience and certifications in business and accounting systems.
Dr. Namnath received his doctorate in Physical Chemistry in 1983 from
the University of Southern California. He earned two bachelor degrees from the
University of California, Santa Barbara in 1978.
ITEM 6 EXECUTIVE COMPENSATION
<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation
------------------- ----------------------
Awards Payouts
------ -------
Other Restricted Securities
Annual Stock Underlying LTIP All Other
Year Salary Bonus Compensation Award(s) Options/SARs Payouts Compensation
($) ($) ($) ($) (#) ($) ($)
<S> <C> <C> <C> <C> <C> <C> <C>
Dr. James S. Namnath, $180,000 $100,000 - - - - -
CEO
</TABLE>
ITEM 7 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Shares of common stock in exchange for services to date in preparing
the subscription, research, marketing and management [agreements] of the Company
to date: 175,000 to Eastern Frontier Trust whose beneficiary is Mr. Scot Cohen
of New York, New York; 175,000 to Black
-16-
<PAGE>
Hills Investment Corp. whose principals include Mr. Larry Gibson of Torrence,
California; and 50,000 shares to the Baldwin Family of La Costa, California.
ITEM 8 DESCRIPTION OF SECURITIES
Private Placement
- -----------------
The Company offered a minimum of 50 Units in the Private Offering. Each
Unit consisted of a $5,000, 10% per annum note of the Company due August 31,
2001 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 to 5,000
shares of Company common stock, par value $.001 per share. Management of the
Company could elect to increase the offering by another 60 Units by choosing to
oversubscribe. A total of 152.5 Units were sold in the Private Offering.
Common Stock
- ------------
The Company is authorized to issue up to 50,000,000 shares of common
stock, par value $.001 per share, of which 10,226,000 shares of common stock are
issued and outstanding on the date of this Registration Statement.
The holders of shares of common stock are entitled to one vote per
share on each matter submitted to a vote of stockholders. In the event of
liquidation, holders of common stock are entitled to share ratably in the
distribution of assets remaining after payment of liabilities. Holders of common
stock have no cumulative voting rights, and, accordingly, the holders of a
majority of the outstanding shares have the ability to elect all of the
directors. Holders of common stock have no preemptive or other rights to
subscribe for shares. Holders of common stock are entitled to such dividends as
may be declared by the Board of Directors out of funds legally available
therefore.
Notes
- -----
As part of the Units, the Company issued 152.5, $5,000 two-year,
non-redeemable, notes at an interest rate of 10% per year, that will mature on
September 30, 2001. The notes are pre-payable upon (i) a "Change of Control"
(see "Security ownership of certain Beneficial owners and Management" for
definition) or (ii) an equity financing raising gross proceeds of at least
$500,000, with equity financing meaning one equity transaction or a series of
equity transactions within a six month period. The notes are not collateralized
by any real, personal, or other property. The notes are unsecured and
subordinate and junior in right of payment to the prior payment in full of all
other indebtedness. The notes are convertible at the election of the holder
between October 15, 1999 and December 31, 1999 at which time no shareholders had
exercised this right or by election of the Company after December 31, 1999 to
5,000 shares of Company common stock, par value $.001 per share.
The interest on the notes may be paid at maturity in shares of common
stock. The value of the common stock shall be the "Fair Market Value" of the
share of common stock. The "Fair Market Value" of a share of common stock on any
date shall be (i) the closing sales price on the immediately preceding business
day of a share of common stock as reported on the principal securities exchange
on which shares of common stock are then listed or admitted to trading or
-17-
<PAGE>
(ii) if not so reported, the average of the closing bid and asked prices for a
share of common stock on the immediately preceding NASDAQ trading day or (iii)
if not quoted on NASDAQ, the average of the closing bid and asked prices for a
share of common stock as quoted by the National Association of Securities
Dealers' OTC Bulletin Board System. If the price of a share of common stock
shall not be so reported, the Fair Market Value of a share of common Stock shall
be determined by the Board of Directors in its absolute discretion. In no event
shall the Fair Market Value of any share of common stock be less than its par
value.
Transfer Agent
- --------------
The transfer agent for the shares of common stock is Interwest Stock
Transfer Company, Salt Lake City, Utah.
PART II
ITEM 1 MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDERS MATTERS
There is no established public trading market for the Company's common
stock. None of the Company's common stock is subject to outstanding options or
warrants. With respect to the 762,500 shares of common stock issuable upon
conversion of the outstanding notes payable (Units), the Company has given
certain investors one "demand" registration right, exercisable on or after
December 31, 1999. At the time of this Registration Statement 655,500 shares of
the Company's Common Stock could be sold pursuant to Rule 144.
There are approximately 55 holders of the Company's common stock.
Employee Agreements
- -------------------
There is an agreement to employ Dr. James Namnath until December 31,
2000 at a monthly rate of up to $15,000. His salary increases to $35,000 monthly
upon approval of Remune for sale in Thailand or TMGUSA is approved as a
reporting company and its shares of common stock are available for trading in
U.S. markets.
Stock Options and Warrants
- --------------------------
There are no stock options and warrants to date.
Dividends
- ---------
Since inception, the Company has not declared or paid cash dividends on
its common stock. The current policy of the Board of Directors is to retain
earnings, if any, to provide funds for operating and expansion of our business.
Such policy will be reviewed by the Board of Directors from time to time in
light of, among other things, our earnings and financial position.
ITEM 2 LEGAL PROCEEDINGS
None.
-18-
<PAGE>
ITEM 3 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
ITEM 4 RECENT SALES OF UNREGISTERED SECURITIES
None.
ITEM 5 INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company's Articles of Incorporation and Bylaws eliminate, subject
to certain exceptions, the personal liability of directors of the Company or its
stockholders for monetary damages for breaches of fiduciary duty by such
directors. The Articles of Incorporation and Bylaws do not permit eliminating or
limiting the personal liability of a director for (i) any breach of the
director's duty of loyalty to the Company or its stockholders, (ii) acts or
omissions not in good faith that constitute a breach of duty of the director or
which involve intentional misconduct or a knowing violation of law, (iii) any
transaction from which such director derives an improper personal benefit,
whether or not the benefit resulted from an action taken within the scope of the
director's office, or (iv) an act or omission for which the liability of a
director is expressly provided by an applicable statute. This provision of the
Articles of Incorporation and Bylaws will limit the remedies available to the
stockholder who is dissatisfied with a decision of the Board of Directors
protected by this provision; such stockholder's only remedy may be to bring a
suit to prevent the action of the Board. This remedy may not be effective in
many situations, because stockholders are often unaware of the transaction or
any event prior to the Board action in respect to such transaction or event. In
these cases, the stockholder and the Company could be injured by a Board's
decision and have no effective remedy.
<PAGE>
PART F/S
FINANCIAL STATEMENTS
================================================================================
FINANCIAL STATEMENTS AND
REPORT OF INDEPENDENT CERTIFIED
PUBLIC ACCOUNTANTS
TRINITY MEDICAL GROUP USA, INC.
DECEMBER 31, 1999
================================================================================
<PAGE>
CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS.......................................F-1
FINANCIAL STATEMENTS
BALANCE SHEET..........................................................F-2
STATEMENT OF OPERATIONS................................................F-3
STATEMENT OF STOCKHOLDERS' DEFICIT.....................................F-4
STATEMENT OF CASH FLOWS................................................F-5
NOTES TO FINANCIAL STATEMENTS..........................................F-6
</TABLE>
-i-
<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-1
<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-2
<PAGE>
(Continuation of Financial Statements)
TRINITY MEDICAL GROUP USA, INC.
(a company in the development stage)
STATEMENT OF OPERATIONS
Period From Inception (September 28, 1998) to December 31, 1999
<TABLE>
<CAPTION>
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-3
<PAGE>
(Continuation of Financial Statements)
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>
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-4
<PAGE>
(Continuation of Financial Statements)
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 thisstatement.
F-5
<PAGE>
TRINITY MEDICAL GROUP USA, INC.
(a company in the development stage)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
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.
F-6
<PAGE>
TRINITY MEDICAL GROUP USA, INC.
(a company in the development stage)
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.
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 cornmercialize 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
F-7
<PAGE>
TRINITY MEDICAL GROUP USA, INC.
(a company in the development stage)
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,
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
F-8
<PAGE>
TRINITY MEDICAL GROUP USA, INC.
(a company in the development stage)
$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),
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. 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.
F-9
<PAGE>
TRINITY MEDICAL GROUP USA, INC.
(a company in the development stage)
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 Churdboonchart Trinity Trust is the majority owner 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 reimburse 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
reimbursed 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 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,
1999, the Company has net operating loss carryforwards available to offset
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-10
<PAGE>
PART III
ITEM 1 INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit No. SEC Reference No. Title of Document
----------- ----------------- -----------------
<S> <C> <C>
1 3.1 Articles of Incorporation of the
Company
2 3.2 Bylaws of the Company
3 99 Exchange of Stock Agreement
</TABLE>
-19-
<PAGE>
ITEM 2 DESCRIPTION OF EXHIBITS
As listed in the above index, the appropriate exhibits are being filed.
The issuer is not a Canadian issuer and is not filing a written consent and
power of attorney.
-20-
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1935, the registrant has duly caused this registration statement to be
signed on its behalf by the undersigned, thereunto duly authorized.
TRINITY MEDICAL GROUP USA, INC.
Date: May 12, 2000 /s/ James Namnath
---------------------
Name: James Namnath
Title: President
*Print name and title of the signing officer under his signature.
<PAGE>
EXHIBIT INDEX
-------------
Exhibit No. Title of Document
----------- -----------------
1 Articles of Incorporation of the
Company
2 Bylaws of the Company
6 Exchange of Stock Agreement
EXHIBIT 1
CERTIFICATE OF AMENDMENT
OF THE
CERTIFICATE OF INCORPORATION
OF AUGUST PROJECT III, INC.
It is hereby certified that:
1. The name of the corporation (hereinafter called the
"Corporation") is:
AUGUST PROJECT III, INC.
2. The certificate of incorporation of the Corporation was
filed with the Secretary of State of the State of Florida.
3. The certificate of incorporation of the Corporation is
hereby amended by changing article "First" thereof so that the name of the
Corporation is changed to "TRINITY MEDICAL GROUP USA, INC." Accordingly, article
"First" of the certificate of incorporation of the Corporation is hereby amended
to read in its entirety as follows:
"FIRST: The name of the Corporation is:
TRINITY MEDICAL GROUP USA, INC."
4. This amendment was authorized by the directors of the
Corporation pursuant to Florida Business Corporation Law.
The undersigned has executed this Certificate and does hereby
affirm the statements contained herein as true under the penalties of perjury
this Fifth day of January, 2000.
/s/ James Namnath
- ---------------------------------------
Chief Executive Officer
/s/ Elizabeth S. Namnath
- ---------------------------------------
Secretary
EXHIBIT 2
BY-LAWS
-------
OF
--
TRINITY MEDICAL GROUP USA, INC.
-------------------------------
A Florida Corporation
ARTICLE I - OFFICES
The registered office of the Corporation in the State of Florida shall be
located in the City and State designated in the Certificate of Incorporation.
The Corporation may also maintain offices at such other places within or without
the United States as the Board of Directors may, from time to time, determine.
ARTICLE II - MEETING OF SHAREHOLDERS
Section 1 - Annual Meetings: (Section 607.0701*)
- -----------------------------
The annual meeting of the shareholders of the Corporation shall be held at the
time fixed, from time to time, by the Directors, at the place fixed, from time
to time, by the Directors.
Section 2 - Special Meetings: (Section 607.0702)
- -------------------------------
Special meetings of the shareholders shall be held within or without the State
of Florida. Such meetings may be called at any time by the Board of Directors or
by the President, and shall be called by the President or the Secretary at the
written request of the holders not less than ten per cent (10%), (this
percentage may be raised up to 50% if provided for in the Articles of
Incorporation of the Corporation), of the shares then outstanding and entitled
to vote thereat.
Section 3 - Court-ordered Meeting: (Section 607.0703)
- ------------------------------------
- --------
* Unless otherwise stated in these bylaws, all references to Sections
refer to those sections contained in the Florida Title 18 of the
Florida Business Corporations Act.
1
<PAGE>
The circuit court of the circuit in this State where the Corporation's principal
office is located, or where the Corporation's registered office is located if
its principal office is not located in this State, may, after notice to the
Corporation, order a meeting to be held:
(a) On application of any shareholder of the Corporation entitled to vote in an
annual meeting if an annual meeting has not been held within any thirteen month
period; or
(b) On application of a shareholder who signed a demand for a special meeting as
provided for under Section 2 of these Bylaws if the special meeting was not held
in accordance with the notice.
The court may fix the time and place of the meeting, determine the shares
entitled to participate in the meeting, specify a record date for determining
shareholders entitled to notice of and to vote at the meeting, prescribe the
form and content of the meeting notice, and enter other orders as may be
appropriate.
Section 4 - Place of Meetings: (Section 607.0701 & 607.0702)
- ------------------------------
Meetings of shareholders shall be held at the registered office of the
Corporation, or at such other places, within or without the State of Florida as
the Directors may from time to time fix. If no designation is made, the meeting
shall be held at the Corporation's principal office in the state of Florida.
Section 5 - Notice of Meetings: (Section 607.0705)
- -------------------------------
(a) Written or printed notice of each meeting of shareholders, whether annual or
special, stating the time when and place where it is to be held, shall be served
either personally or by first class mail (other than first-class mail may be
used to mail any notice so long as such notice is mailed at least thirty days
before the meeting), by or at the direction of the president, the secretary, or
the officer or the person calling the meeting, not less than ten or more than
sixty days before the date of the meeting, unless the lapse of the prescribed
time shall have been waived before or after the taking of such action, upon each
shareholder of record entitled to vote at such meeting, and to any other
shareholder to whom the giving of notice may be required by law. Notice of a
special meeting shall also state the business to be transacted or the purpose or
purposes for which the meeting is called, and shall indicate that it is being
issued by, or at the direction of, the person or persons calling the meeting.
If, at any meeting, action is proposed to be taken that would, if taken, entitle
shareholders to dissent and receive payment for their shares pursuant to the
Florida Business Corporation Act, the notice of such meeting shall include a
statement of that purpose and to that effect. If mailed, such notice shall be
deemed to be given when deposited in the United States mail addressed to the
shareholder as it appears on the share transfer records of the corporation,
unless s/he shall have previously filed with the Secretary of the Corporation a
written request that notices intended for her/him be mailed to some other
2
<PAGE>
address, in which case, it shall be mailed to the address designated in such
request, with the postage thereon prepaid.
(b) Notice of any meeting need not be given to any person who may become a
shareholder of record after the mailing of such notice and prior to the meeting,
or to any shareholder who attends such meeting, in person or by proxy, without
protesting the lack of notice thereof, or to any shareholder who, in person or
by proxy, submits a signed waiver of notice either before or after such meeting.
Notice of any adjourned meeting of shareholders need not be given, unless
otherwise required by law.
Section 6 - Waiver of Notice of Meeting: (Section 607.0706)
- ----------------------------------------
(a) Whenever any notice is required by law, the Articles of Incorporation of the
Corporation or these Bylaws, a shareholder may waive such notice before or after
the date and time stated in the notice, so long as such waiver is written,
signed by the shareholder entitled to such notice, and delivered to the
Corporation for inclusion in the minutes or filing with the Corporate records.
Neither the business to be transacted at nor the purpose of any regular or
special meeting of the shareholders need be specified in any written waiver of
notice unless so required by the Articles of Incorporation of the Corporation or
these Bylaws.
(b) A shareholder's attendance at a meeting:
(i) shall constitute a waiver of lack of notice or defective notice of the
meeting, unless the shareholder at the beginning of the meeting objects to
holding the meeting or transacting business at the meeting; or
(ii) shall constitute a waiver of objection to consideration of a particular
matter at a meeting that is not within the purpose or purposes described in the
meeting notice, unless the shareholder objects to considering the matter when it
is presented.
Section 7 - Shareholders' List: (Section 607.0720)
- -------------------------------
(a) After fixing a record date for a meeting, a Corporation shall prepare an
alphabetical list of the names of all its shareholders entitled to notice of the
meeting, arranged by voting group with the address of, and the number, class,
and series, if any, of shares held by, each shareholder. The shareholders' list
must be available for inspection by any shareholder for a period of ten days
before the meeting or such shorter time as exists between the record date and
the meeting and continue through the meeting at the Corporation's principal
office, at a place identified in the meeting notice in the city where the
meeting will be held, or at the office of the Corporation's transfer agent or
registrar. Any shareholder of the Corporation or the shareholder's agent or
attorney is entitled on written demand to inspect the shareholders' list during
regular business hours and at the shareholder's expense, during the period it is
available for inspection.
3
<PAGE>
(b) The Corporation shall make the shareholder's list available at the meeting
of shareholders, and any shareholder or the shareholder's agent or attorney is
entitled to inspect the list at any time during the meeting or any adjournment.
(i) If the Corporation refuses to allow a shareholder or his agent or
attorney to inspect the shareholders' list before or at the meeting of
shareholders, and such shareholder is entitled to inspect such shareholders'
list, the meeting shall be adjourned until the demand of such shareholder either
in person or by proxy who failed to get such access, or if not adjourned upon
such demand, the circuit court of the county where the Corporation's principal
office (or if none in this state, its registered office) is located, on
application of the shareholder, may summarily order the inspection or copying at
the Corporation's expense and may postpone the meeting for which such list was
prepared until the inspection or copying is complete.
(ii) A shareholder of the Corporation may not sell or otherwise
distribute any information or records inspected under this section, except the
extent that such use is for a proper purpose as described by law, and any
shareholder who violates this section of these Bylaws shall be subject to a
civil penalty of $5,000.
Section 8 - Quorum: (Section 607.0725)
- -------------------
(a) Except as otherwise provided herein, or by law, or in the Articles of
Incorporation of the Corporation, or for meetings ordered by the Superior Court
called pursuant to Section 607.0703 of the Florida Business Corporation Act, a
quorum shall be present at all meetings of shareholders of the Corporation, if
the holders of a majority of the shares entitled to vote on that matter are
represented at the meeting in person or by proxy. When a specified item of
business is required to be voted on by a class or series of stock, a majority of
the shares of such class or series shall constitute a quorum for the transaction
of such item of business by that class or series of stock. The subsequent
withdrawal of any shareholder from the meeting, after the commencement of a
meeting, or the refusal of any shareholder represented in person or by proxy to
vote, shall have no effect on the existence of a quorum, after a quorum has been
established at such meeting.
(b) Despite the absence of a quorum at any meeting of shareholders, the
shareholders present may adjourn the meeting.
(c) Once a share is represented for any purpose at a meeting, it is deemed
present for quorum purposes for the remainder of the meeting and for any
adjournment of that meeting unless a new record date is or must be set for that
adjourned meeting.
Section 9 - Voting: (Section 607.0721)
- -------------------
(a) Except as otherwise provided by law, the Articles of Incorporation, or these
Bylaws, any corporate action, other than the election of directors or a matter
for which the affirmative vote of
4
<PAGE>
the holders of a specified portion of the shareholder entitled to vote is
required by statute, to be taken by vote of the shareholders, shall be
authorized by an affirmative vote of the majority of shares entitled to vote on
that matter and represented either in person or by proxy at a meeting of
shareholders at which a quorum is present. Unless otherwise provided for in the
Articles of Incorporation of this Corporation, directors will be elected by a
plurality of the votes cast by the shares entitled to vote in the election at a
meeting at which a quorum is present and each shareholder entitled to vote has
the right to vote the number of shares owned by him for as many persons as there
are directors to be elected.
(b) Except as otherwise provided by statute, the Articles of Incorporation, or
these bylaws, at each meeting of shareholders, each shareholder of the
Corporation entitled to vote thereat, shall be entitled to one vote for each
share registered in his name on the books of the Corporation.
Section 10 - Proxies: (Section 607.0722)
- ---------------------
Each shareholder entitled to vote or to express consent or dissent without a
meeting, may do so either in person or by proxy, so long as such proxy is
executed in writing by the shareholder himself, or by his attorney-in-fact
thereunto duly authorized in writing. Every proxy shall be revocable at will
unless the proxy conspicuously states that it is irrevocable and the proxy is
coupled with an interest. A proxy that is irrevocable under the terms stated in
these Bylaws, becomes revocable when the interest with which it is coupled is
extinguished and when the interest with which it is coupled is either a creditor
of a corporation who extended credit to the Corporation under terms requiring
the irrevocable proxy or an employee of the Corporation whose employment
contract requires the appointment, such proxy becomes revocable three years
after the date of the proxy or at the end of the period, if any, specified
therein, whichever is less, unless the period of irrevocability is renewed from
time to time by the execution of a new irrevocable proxy as provided for by
these Bylaws. A proxy shall not be revoked by the death or incapacity of the
shareholder, but the proxy shall continue to be in force until revoked by the
personal representative or the guardian of the shareholder. The presence at any
meeting of any shareholder who has given a proxy does not revoke the proxy
unless the shareholder files written notice of the revocation with the Secretary
of the meeting prior to the voting the proxy or votes the shares subject to the
proxy by written ballot. A person named in a proxy as the attorney or agent of a
shareholder may, if the proxy so provides, substitute another person to act in
his place, including any other person named as an attorney or agent in the same
proxy. The substitution shall not be effective until an instrument effecting it
is filed with the Secretary of the Corporation. A telegram, telex, cablegram, or
similar transmission by the shareholder, or as a photographic, photostatic,
facsimile, or similar reproduction of a writing executed by the shareholder
shall be treated as a valid proxy. No proxy shall be valid after the expiration
of eleven months from the date of its execution, unless otherwise provided in
the proxy. Such instrument shall be exhibited to the Secretary at the meeting
and shall be filed with the records of the Corporation.
5
<PAGE>
Section 11 - Action Without a Meeting: (Section 607.0704)
- --------------------------------------
(a) Unless otherwise provided for in the Articles of Incorporation, action
required or permitted to be taken at a meeting of the shareholders may be taken
without a meeting, without prior notice, and without a vote if the action is
taken by shareholders of each voting group entitled to vote thereon having not
less than the minimum number of votes with respect to each voting group that
would be necessary to authorize or take such action at a meeting at which all
voting groups and shares entitled to vote were present and voted. In order to be
effective, the action must be evidenced by one or more written consents
describing the action taken, dated and signed by the shareholders having the
requisite number of votes of each voting group entitled to vote thereon, and
delivered to the Corporation at its principal office in the State of Florida or
its principal place of business, or to the Secretary or another officer or agent
of the Corporation having custody of the book in which proceedings of meetings
of shareholders are recorded. No written consent shall be effective to take
corporate action unless, within sixty days of the date of the earliest dated
consent delivered in the manner required by this section, written consents
signed by the number of holders required to take action are delivered to the
Corporation.
Any written consent may be revoked before the date that the Corporation receives
the required number of consents to authorize the proposed action. No revocation
is effective unless in writing and until received by the Secretary or other
officer or agent of the Corporation having custody of the book in which
proceedings of meetings of shareholders are recorded. Within ten days after
obtaining authorization by written consent, notice must be given to those
shareholders who have not consented in writing or who are not entitled to vote
on the action. The notice shall fairly summarize the material features of the
authorized action and, if the action is one for which dissenters' rights are
provided for under the Certificate of Incorporation of the Corporation or by
law, the notice shall contain a clear statement of the right of shareholders
dissenting therefrom to be paid the fair value of their shares upon compliance
with applicable law regarding the rights of dissenting shareholders.
(b) A consent signed, as required by this section of these Bylaws, has the
effect of a meeting vote and may be described as such in any document.
(c) Whenever action is taken as provided in this section of these Bylaws, the
written consent of the shareholders consenting thereto or the written reports of
inspectors appointed to tabulate such consents shall be filed with the minutes
of proceedings of shareholders.
ARTICLE III- BOARD OF DIRECTORS
Section 1 - Number, Term, Election and Qualifications:
- ------------------------------------------------------
(Section 607.0802 & 607.0803)
6
<PAGE>
(a) The first Board of Directors and all subsequent Board of the Corporation
shall consist of one director, unless and until otherwise determined by vote of
a majority of the entire Board of Directors. The Board of Directors or
shareholders all have the power, in the interim between annual and special
meetings of the shareholders, to increase or decrease the number of Directors of
the Corporation. A Director must be a natural person 18 years of age or older,
but need not be a resident of the State of Florida or shareholders of the
Corporation unless the Certificate of Incorporation of the Corporation or these
Bylaws so require.
(b) Except as may otherwise be provided herein or in the Articles of
Incorporation, the members of the Board of Directors of the Corporation shall be
elected at the first annual shareholders' meeting and at each annual meeting
thereafter, unless their terms are staggered in the Certificate of Incorporation
of the Corporation or these Bylaws, by a majority of the votes cast at a meeting
of shareholders, by the holders of shares entitled to vote in the election.
(c) The first Board of Directors shall hold office until the first annual
meeting of shareholders and until their successors have been duly elected and
qualified or until there is a decrease in the number of Directors. Thereinafter,
Directors will be elected at the annual meeting of shareholders and shall hold
office until the annual meeting of the shareholders next succeeding his
election, or until his prior death, resignation or removal.
Section 2 - Duties and Powers: (Section 607.0801)
- ------------------------------
The Board of Directors shall be responsible for the control and management of
the business and affairs, property and interests of the Corporation, and may
exercise all powers of the Corporation, except as are in the Articles of
Incorporation or by statute expressly conferred upon or reserved to the
shareholders. (Note: If the Corporation has thirty-five or fewer shareholders,
the Articles of Incorporation of the Corporation may, if desired, dispense with
the Board of Directors or limit the authority of the Board of Directors and such
dispensing with or limitation of authority of the Board of Directors stated in
the Articles of Incorporation will be repeated under this section of these
Bylaws.)
Section 3 - Annual Meetings; Notice: (Section 607.0820 & 607.0822)
- ------------------------------------
(a) An annual meeting of the Board of Directors shall be held either within or
without of the State of Florida at such time and at such place as the Board
shall fix, so long as such meeting immediately follows the annual meeting of the
shareholders and is at the place of such annual meeting of shareholders. In the
absence of the Board fixing such time and place, such meeting shall be held at
noon on the first Tuesday of ___________ (month).
(b) No notice shall be required of any annual meeting of the Board of Directors
and, if given, need not specify the purpose of the meeting; provided, however,
that in case the Board of Directors shall fix or change the time or place of any
annual meeting when such time and place was fixed before such change, notice of
such action shall be given to each Director who shall not
7
<PAGE>
have been present at the meeting at which such action was taken within the time
limited, and in the manner set forth in these Bylaws with respect to special
meetings, unless such notice shall be waived in the manner set forth in these
Bylaws.
Section 4 - Special Meetings; Notice: (Section 607.0822)
- ----------------------------------------
(a) Special meetings of the Board of Directors shall be held at such time and
place as may be specified in the respective notices or waivers of notice
thereof.
(b) Except as otherwise required by statute, notice of special meetings shall be
mailed directly to each Director, addressed to her/him at her/his residence or
usual place of business, at least two (2) days before the day on which the
meeting is to be held, or shall be sent to her/him at such place by telegram,
radio or cable, or shall be delivered to her/him personally or given to her/him
orally, not later than the day before the day on which the meeting is to be
held. If mailed, the notice of any special meeting shall be deemed to be
delivered on the second day after it is deposited in the United States mails, so
addressed, with postage prepaid. If notice is given by telegram, it shall be
deemed to be delivered when the telegram is delivered to the telegraph company.
A notice, or waiver of notice, except as required by these Bylaws, need not
specify the business to be transacted at or the purpose or purposes of the
meeting.
(c) Notice of any special meeting shall not be required to be given to any
Director who shall attend such meeting without protesting prior thereto or at
its commencement, the lack of notice to her/him, or who submits a signed waiver
of notice, whether before or after the meeting. Notice of any adjourned meeting
shall not be required to be given.
(d) Unless otherwise stated in the Articles of Incorporation of the Corporation,
the Chairperson, President or any two Directors of the Corporation may call any
special meeting of the Board of Directors.
Section 5 - Chairperson:
- ------------------------
The Chairperson of the Board, if any and if present, shall preside at all
meetings of the Board of Directors. If there shall be no Chairperson, or he or
she shall be absent, then the President shall preside, and in her/his absence,
any other director chosen by the Board of Directors shall preside.
Section 6 - Quorum and Adjournments: (Section 607.0820 & 607.0824)
- -------------------------------------
(a) At all meetings of the Board of Directors, or any committee thereof, the
presence of a majority of the entire Board, or such committee thereof, shall
constitute a quorum for the transaction of business, except as otherwise
provided by law, by the Articles of Incorporation, or these Bylaws. (Note: If
the Articles of Incorporation authorize a quorum to consist of less than a
majority, but no fewer than one-third of the prescribed number of directors as
permitted by law, these Bylaws would state that this lesser amount, instead of a
majority, will constitute a quorum.)
8
<PAGE>
(b) A majority of the Directors present at the time and place of any regular or
special meeting, although less than a quorum, may adjourn the same from time to
time without notice, whether or not a quorum exists. Notice of such adjourned
meeting shall be given to Directors not present at the time of the adjournment
and, unless the time and place of the adjourned meeting are announced at the
time of the adjournment, to the other Directors who were present at the
adjourned meeting.
Section 7 - Manner of Acting: (Section 607.0820, 607.0821 & 607.0824)
- ------------------------------
(a) At all meetings of the Board of Directors, each Director present shall have
one vote, irrespective of the number of shares of stock, if any, which she/he
may hold.
(b) Except as otherwise provided by statute, by the Articles of Incorporation,
or these Bylaws, action approved by a majority of the votes of the Directors
present at any meeting of the Board or any committee thereof, at which a quorum
is present shall be the act of the Board of Directors or any committee thereof.
(c) Any action authorized in writing made prior or subsequent to such action, by
all of the Directors entitled to vote thereon and filed with the minutes of the
Corporation shall be the act of the Board of Directors, or any committee
thereof, and have the same force and effect as if the same had been passed by
unanimous vote at a duly called meeting of the Board or committee for all
purposes and may be stated as such in any certificate or document filed with the
Secretary of the State of Florida. Any action taken without a meeting is deemed
effective when the last director or committee member signs the consent, unless
the consent specified a different effective date for such action.
(d) Where appropriate communications facilities are reasonably available, any or
all directors shall have the right to participate in any Board of Directors
meeting, or a committee of the Board of Directors meeting, by means of
conference telephone or any means of communications by which all persons
participating in the meeting are able to hear each other.
Section 8 - Vacancies: (Section 607.0809)
- ----------------------
(a) Any vacancy in the Board of Directors occurring by reason of an increase in
the number of directors, or by reason of the death, resignation,
disqualification, removal (unless a vacancy created by the removal of a Director
by the shareholders shall be filled by the shareholders at the meeting at which
the removal was effected) or inability to act of any Director, or other case,
shall be filled by an affirmative vote of a majority of the remaining Directors,
though less than a quorum of the Board or by a sole remaining Director, at any
regular meeting or special meeting of the Board of Directors called for that
purpose.
9
<PAGE>
(b) Unless otherwise provided for by statute, the Articles of Incorporation or
these Bylaws, when one or more Directors shall resign from the board and such
resignation is effective at a future date, a majority of the Directors, then in
office, including those who have so resigned, shall have the power to fill such
vacancy or vacancies, the vote otherwise to take effect when such resignation or
resignations shall become effective.
(c) If a Director or Directors or class of Directors was elected by a voting
group of shareholders, only the shareholders of that voting group or a majority
of the Directors then in office elected by such voting group or by a sole
remaining Director elected by such voting group may fill the vacancy in the
Board of Directors created by such Director. Unless the Articles of
Incorporation of the Corporation state otherwise, if there is no Director
elected by such voting group remaining in office, the Directors not elected by
such voting group may fill vacancies by an affirmative vote of a majority of
those remaining Directors, though less than a quorum of the Board of Directors
exists or by the shareholders.
Section 9 - Resignation: (Section 607.0807)
- -----------------------
A Director may resign at any time by giving written notice to the Corporation.
Such resignation shall be effective upon receipt thereof by the Corporation
unless the notice specifies a later effective date, in which event the Board may
fill the pending vacancy before the effective date if they provide that the
successor does not take office until the effective date.
Section 10 - Removal: (Section 607.0808)
- --------------------
One or more or all the Directors of the Corporation may be removed with or
without cause at any time by the shareholders, at a special meeting of the
shareholders called for that purpose, unless the Articles of Incorporation
provide that Directors may only be removed for cause. If a Director was elected
by a voting group of shareholders, only the shareholders of that voting group
may participate in the vote to remove that Director. The notice of the meeting
at which a vote is taken to remove a Director must state that the purpose or one
of the purposes of the meeting is the removal of the Director or Directors.
Section 11 - Salary: (Section 607.08101)
- --------------------
The Board of Directors may authorize and establish reasonable compensation of
the Directors for services to the Corporation as Directors, including, but not
limited to attendance at any annual or special meeting of the Board.
Section 12 - Committees: (Section 607.0825)
- ------------------------
The Board of Directors, by resolution adopted by a majority of the entire Board,
may from time to time designate from among its members an executive committee
and such other committees, and alternate members thereof, as they deem
desirable, each consisting of two or more members,
10
<PAGE>
with such powers and authority (to the extent permitted by law and these Bylaws)
as may be provided in such resolution. Each such committee shall serve at the
pleasure of the Board and, unless otherwise stated by law, the Certificate of
Incorporation of the Corporation or these Bylaws, shall be governed by the rules
and regulations stated herein regarding the Board of Directors.
ARTICLE IV- OFFICERS
Section 1 - Number, Qualifications, Election and Term of Office:
- ---------------------------------------------------------------
(Section 607.0841)
(a) The officers of the Corporation shall consist of a President, a Secretary, a
Treasurer, and such other officers, including a Chairperson of the Board of
Directors, and one or more Vice Presidents, as the Board of Directors may from
time to time deem and advisable. Any officer other than the Chairperson of the
Board of Directors may be, but is not required to be, a director of the
Corporation. Any two or more offices may be held by the same person.
(b) The officers of the Corporation shall be elected by the Board of Directors
at the regular annual meeting of the Board following the annual meeting of
shareholders.
(c) Each officer shall hold office until the annual meeting of the Board of
Directors next succeeding his election, and until his successor shall have been
elected and qualified, subject to earlier termination by his or her death,
resignation or removal.
(d) Each officer shall have the authority to perform such duties as may be
provided for in these Bylaws or as may be determined, from time to time, by
resolution of the Board not inconsistent with these Bylaws.
(e) Any two or more offices may be held by the same person, but no officer shall
execute, acknowledge or verify any instrument in more than one capacity if such
instrument is required by law or these Bylaws to be executed, acknowledged, or
verified by two or more officers.
Section 2 - Resignation: (Section 607.0842)
- -----------------------
Any officer may resign at any time by giving written notice of such resignation
to the Corporation. Unless otherwise specified in such written notice, such
resignation shall take effect upon receipt thereof by the Corporation, and the
acceptance of such resignation shall not be necessary to make it effective. If a
resignation is made effective at a future date and the Corporation accepts the
future effective date, the Board of Directors may fill the pending vacancy
before the effective date if the Board provides that the successor does not take
office until the effective date.
Section 3 - Removal: (Section 607.0842)
- -------------------
11
<PAGE>
Any officer elected by the Board of Directors may be removed, either with or
without cause, and a successor elected by the Board at any time, and any officer
or assistant officer, if appointed by another officer, may likewise be removed
by such officer.
Section 4 - Duties of Officers: (Section 607.0841)
- ------------------------------
Officers of the Corporation shall, unless otherwise provided by the Board of
Directors, each have such authority and perform such duties as generally pertain
to their respective offices as well as such powers and duties as may be set
forth in these Bylaws, or may from time to time be specifically conferred or
imposed by the Board of Directors, not inconsistent with these Bylaws.
Section 5 - Shares of Other Corporations:
- -----------------------------------------
The President, any Vice President, or such other person as the Board of
Directors may authorize can execute any proxy, consent, or exercise the right to
vote possessed by the Corporation shares of stock owned by the Corporation at
any meeting of shareholders of, or with respect to any action of shareholders of
any other corporation, subject to the direction of the Board of Directors.
Section 6 - Compensation: (Section 607.0302)
- ------------------------
The compensation of the officers of the Corporation shall be fixed from time to
time by the Board of Directors.
ARTICLE V- SHARES OF STOCK
Section 1 - Certificate of Stock: (Section 607.0604,607.0621 & 607.0625)
- --------------------------------
(a) The shares of the Corporation shall be represented by certificates or shall
be uncertificated shares.
(b) The certificates representing shares of the Corporation shall state on its
face that the Corporation is organized under the laws of Florida:
(I) the name of the person to whom issued;
(II) the number and class of shares;
(III) the designation of the series, if any, which such certificate
represents; and
(IV) the relative rights, preferences and limitations applicable to
each class, if any, must be summarized on the front or back of each certificate
or a statement on the front or back of such certificate that the Corporation
will furnish the shareholder a full statement of this information on request to
such shareholder and without charge.
12
<PAGE>
(c) Certificated shares of the Corporation shall be signed, (either manually or
by facsimile), by the President or Vice President and the Secretary or any
Assistant Secretary, or any other Officer designated by the Board of Directors.
In case any officer who has signed or whose facsimile signature has been placed
upon such certificate, shall have ceased to be such officer before such
certificate is issued, the certificate may be issued by the Corporation with the
same effect as if he were such officer at the date of its issue.
(d) Within a reasonable time after the issuance of by the Board or the transfer
of uncertificated shares, the Corporation shall send to the registered owners
thereof a written notice containing the information required to be set forth or
states on certificates by this subsection of these Bylaws.
(e) Except as otherwise provided by law, the rights and obligations of the
holders of uncertificated shares and the rights and obligations of the holders
of certificates representing shares of the same class and series shall be
identical.
Section 2 - Fractions of Shares/Scrip: (Section 607.0604)
- -------------------------------------
The Board of Directors may authorize the issuance of certificates or payment of
money for fractions of a share, either represented by a certificate or
uncertificated, which shall entitle the holder to exercise voting rights,
receive dividends and participate in any assets of the Corporation in the event
of liquidation, in proportion to the fractional holdings; or it may authorize
the payment in money of the fair value of fractions of a share as of the time
when those entitled to receive such fractions are determined; or it may
authorize the issuance, subject to such conditions as may be permitted by law,
of scrip in registered or bearer form over the signature of any officer or agent
of the Corporation, exchangeable as therein provided for full shares, but such
scrip shall not entitle the holder to any rights of a shareholder, except as
therein provided.
Section 3 - Lost or Destroyed Certificates:
- -------------------------------------------
The Board of Directors may direct a new certificate or certificates to be issued
in place of any certificate or certificates theretofore issued by the
Corporation alleged to have been lost, stolen or destroyed if the owner:
(a) so requests before the Corporation has notice that the shares have been
acquired by a bona fide purchaser,
(b) files with the Corporation a sufficient indemnity bond, and
(c) satisfies such other requirements, including evidence of loss, theft, or
destruction, as may be imposed by the Corporation.
Section 4 - Transfers of Shares:
- --------------------------------
13
<PAGE>
(a) Transfers or registration of transfers of shares of the Corporation shall be
made on the stock transfer books of the Corporation by the registered holder
thereof, or by his attorney thereunto authorized by a power of attorney duly
executed and filed with the Secretary of the Corporation or with a transfer
agent or a registrar, if any; and in the case of shares represented by
certificates, only after the surrender to the Corporation of the certificates
representing such shares with such shares properly endorsed and the payment of
all taxes due thereon.
(b) The Corporation shall be entitled to treat other holders of record of any
share or shares as the absolute owner thereof for all purposes and, accordingly,
shall not be bound to recognize any legal, quotable or other claim to, or
interest in, such share or shares on the part of any other person, whether or
not it shall have express or other notice thereof, except as otherwise expressly
provided by law.
Section 5 - Record Date: (Section 607.0707)
- -----------------------
(a) The Board of Directors may fix, in advance, a date not exceeding seventy
days before the meeting or action requiring a determination of shareholders, as
the record date for the determination of shareholders entitled to receive notice
of, or to vote at, any meeting of shareholders, or to consent to any proposal
without a meeting, or for the purpose of determining shareholders entitled to
receive payment of any dividends, or allotment of any rights, or for the purpose
of any other action. If no record date is fixed, the record date for
shareholders entitled to notice of a meeting shall be at the close of business
on the day preceding the day on which notice is given, or, if no notice is
given, the day on which the meeting is held. If no record date is given for
shareholders entitled to a share dividend, it is the date the Board of Directors
authorizes the share dividend.
(b) If no record date is fixed, the record date for determining shareholders
entitled to demand a special meeting is the date the first shareholder delivers
his/her demand to the Corporation.
(c) If no record date is fixed and no prior action is required by the Board, the
record date for determining shareholders entitled to consent to corporate action
in writing without a meeting, shall be the first date on which a signed written
consent setting forth the action taken or proposed to be taken is delivered to
the Corporation by delivery to its registered office in this State, its
principal place of business, or an officer or agent of the Corporation having
custody of the book in which proceedings of meetings of shareholders are
recorded.
(d) A determination of shareholders entitled to notice of or to vote at a
shareholders' meeting is effective for any adjournment of the meeting unless the
Board of Directors fixes a new record date, which it must do if the meeting is
adjourned to a date more than 120 days after the date fixed for the original
meeting.
14
<PAGE>
ARTICLE VI- DIVIDENDS (Section 607.0623)
Subject to applicable law, dividends may be declared and paid out of any funds
available therefor, as often, in such amounts, and at such time or times as the
Board of Directors may determine
ARTICLE VII- FISCAL YEAR
The fiscal year of the corporation shall be fixed, and shall be subject to
changed by the Board of Directors from time to time, subject to applicable law.
ARTICLE VIII- CORPORATE SEAL (Section 607.0302(2))
The corporate seal, if any, shall be in such form as shall be prescribed and
altered, from time to time, by the Board of Directors.
ARTICLE IX-AMENDMENTS (Section 602.1020)
Section 1 - Initial Bylaws:
- --------------------------
The initial Bylaws of the Corporation shall be adopted by the Board of Directors
at its organizational meeting, when such meeting is held by the Directors.
Section 2 - By Shareholders:
- ---------------------------
All Bylaws of the Corporation shall be subject to alteration or repeal, and new
Bylaws may be made, by a majority vote of the shareholders at the time entitled
to vote in the election of Directors even though these Bylaws may also be
altered, amended or repealed by the Board of Directors.
Section 3 - By Directors:
- -------------------------
The Board of Directors shall have power to make, adopt, alter, amend and repeal,
from time to time, Bylaws of the Corporation; however, Bylaws made by the Board
may be altered or repealed, and new Bylaws made by the shareholders.
15
EXHIBIT 6
THE SECURITIES WHICH ARE THE SUBJECT OF THIS AGREEMENT HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "1933 ACT"), NOR REGISTERED
UNDER ANY STATE SECURITIES LAW, AND ARE "RESTRICTED SECURITIES" AS THAT TERM IS
DEFINED IN RULE 144 UNDER THE 1933 ACT. THE SECURITIES MAY NOT BE OFFERED FOR
SALE, SOLD OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE 1933 ACT, OR PURSUANT TO AN EXEMPTION FROM REGISTRATION
UNDER THE 1933 ACT, THE AVAILABILITY OF WHICH IS TO BE ESTABLISHED TO THE
SATISFACTION OF THE COMPANY.
AGREEMENT FOR THE EXCHANGE OF COMMON STOCK
AGREEMENT made this 31st day of December 1999, by and among August
Project III Corp., a Florida corporation (the "ISSUER"), the selling
shareholders listed on Schedule A attached hereto (the "Selling Shareholders")
and the shareholders listed in Schedule B attached hereto (the "SHAREHOLDERS"),
which SHAREHOLDERS own all of the issued and outstanding shares of Trinity
Medical Group USA, Inc., a Nevada corporation ("Trinity").
In consideration of the mutual promises, covenants, and representations
contained herein, and other good and valuable consideration,
THE PARTIES HERETO AGREE AS FOLLOWS:
EXCHANGE OF SECURITIES. Subject to the terms and conditions of this
Agreement, the ISSUER agrees to issue to SHAREHOLDERS, 5,226,000 shares of the
common stock of ISSUER, $0.001 par value (the "Shares"), in exchange for 100% of
the issued and outstanding shares of Trinity such that Trinity shall become a
wholly owned subsidiary of the ISSUER. In addition, the Selling Shareholders
shall transfer 4,867,000 shares the SHAREHOLDERS in exchange for $175,000. The
total number of shares, 10,093,000 shall be issued in accordance with the
Schedule B attached hereto.
REPRESENTATIONS AND WARRANTIES. ISSUER represents and warrants to
SHAREHOLDERS and Trinity the following:
Organization. ISSUER is a corporation duly organized, validly
existing, and in good standing under the laws of Florida, has all necessary
corporate powers to own properties and carry on a business, and is duly
qualified to do business and is in good standing in Florida. All actions taken
by the incorporators, directors and shareholders of ISSUER have been validly
taken in accordance with the laws of the State of Florida.
<PAGE>
Capital. The authorized capital stock of ISSUER consists of
50,000,000 shares of common stock, $0.001 par value, of which 5,000,000 are
issued and outstanding. All of the outstanding shares were fully paid and non
assessable, free of liens, encumbrances, options, restrictions and legal or
equitable rights of others not a party to this Agreement. At closing, there will
be no outstanding subscriptions, options, rights, warrants, convertible
securities, or other agreements or commitments obligating ISSUER to issue or to
transfer from treasury any additional shares of its capital stock. All of the
shareholders of ISSUER have valid title to such shares and acquired their shares
in a lawful transaction and in accordance with the laws of Florida.
Financial Statements. Annexed hereto as Exhibit A to this
Agreement are the audited financial statements of ISSUER as of July 9, 1999. The
financial statements have been prepared in accordance with generally accepted
accounting principles consistently followed by ISSUER throughout the periods
indicated, and fairly present the financial position of ISSUER as of the date of
the balance sheet in the financial statements, and the results of its operations
for the periods indicated.
Absence of Changes. Since the date of the financial
statements, there has not been any change in the financial condition or
operations of ISSUER, except changes in the ordinary course of business, which
changes have not in the aggregate been materially adverse.
Assets and Liabilities. ISSUER does not have any debt,
liability, or obligation of any nature, whether accrued, absolute, contingent,
or otherwise, and whether due or to become due, that is not reflected on the
ISSUERS' financial statement. ISSUER is not aware of any pending, threatened or
asserted claims, lawsuits or contingencies involving ISSUER or its common stock.
There is no dispute of any kind between ISSUER and any third party, and no such
dispute will exist at the closing of this Agreement. ISSUER has no assets. At
closing, ISSUER will be free from any and all liabilities, liens, claims and/or
commitments and will continue to have no assets.
Ability to Carry Out Obligations. ISSUER has the right, power,
and authority to enter into and perform its obligations under this Agreement.
The execution and delivery of this Agreement by ISSUER and the performance by
ISSUER of its obligations hereunder will not cause, constitute, or conflict with
or result in (a) any breach or violation or any of the provisions of or
constitute a default under any license, indenture, mortgage, charter,
instrument, articles of incorporation, bylaw, or other agreement or instrument
to which ISSUER or its shareholders are a party, or by which they may be bound,
nor will any consents or authorizations of any party other than those hereto be
required, (b) an event that would cause ISSUER to be liable to any party, or (c)
an event that would result in the creation or imposition or any lien, charge or
encumbrance on any asset of ISSUER or upon the securities of ISSUER to be
acquired by SHAREHOLDERS.
2
<PAGE>
Full Disclosure. None of representations and warranties made
by the ISSUER, or in any certificate or memorandum furnished or to be furnished
by the ISSUER, contains or will contain any untrue statement of a material fact,
or omit any material fact the omission of which would be misleading.
Contract and Leases. ISSUER is not currently carrying on any
business and is not a party to any contract, agreement or lease. No person holds
a power of attorney from ISSUER.
Compliance with Laws. ISSUER has complied with, and is not in
violation of any federal, state, or local statute, law, and/or regulation
pertaining to ISSUER . ISSUER has complied with all federal and state securities
laws in connection with the issuance, sale and distribution of its securities.
Pink Sheet Listing. ISSUER has been approved for listing on
the National Quotation Service Pink Sheets with the following trading symbol:
AUUK.
Litigation. ISSUER is not (and has not been) a party to any
suit, action, arbitration, or legal, administrative, or other proceeding, or
pending governmental investigation. To the best knowledge of the ISSUER, there
is no basis for any such action or proceeding and no such action or proceeding
is threatened against ISSUER and ISSUER is not subject to or in default with
respect to any order, writ, injunction, or decree of any federal, state, local,
or foreign court, department, agency, or instrumentality.
Conduct of Business. Prior to the closing, ISSUER shall
conduct its business in the normal course, and shall not (1) sell, pledge, or
assign any assets, (2) amend its Articles of Incorporation or Bylaws, (3)
declare dividends, redeem or sell stock or other securities, (4) incur any
liabilities, (5) acquire or dispose of any assets, enter into any contract,
guarantee obligations of any third party, or (6) enter into any other
transaction.
Documents. All minutes, consents or other documents pertaining
to ISSUER to be delivered at closing shall be valid and in accordance with the
laws of Florida.
Title. The Shares to be issued to SHAREHOLDERS will be, at
closing, free and clear of all liens, security interests, pledges, charges,
claims, encumbrances and restrictions of any kind. None of such Shares are or
will be subject to any voting trust or agreement. No person holds or has the
right to receive any proxy or similar instrument with respect to such shares,
except as provided in this Agreement, the ISSUER is not a party to any agreement
which offers or grants to any person the right to purchase or acquire any of the
securities to be issued to SHAREHOLDERS. There is no applicable local, state or
federal law, rule, regulation, or decree which would, as a result of the
issuance of the Shares to SHAREHOLDERS, impair, restrict or delay SHAREHOLDERS'
voting rights with respect to the Shares.
SHAREHOLDERS and Trinity represent and warrant to ISSUER the following:
3
<PAGE>
Organization. Trinity is a corporation duly organized, validly
existing, and in good standing under the laws of Nevada and has all necessary
corporate powers to own properties and carry on a business, and is duly
qualified to do business and is in good standing in Nevada. All actions taken by
the incorporator, directors and shareholders of Trinity have been validly taken
in accordance with the laws of Nevada.
Shareholders and Issued Stock. Schedule B annexed hereto sets
forth the names and share holdings of 100% of Trinity's shareholders.
Counsel. SHAREHOLDERS and Trinity represent and warrant that
prior to Closing, that they are represented by independent counsel or have had
the opportunity to retain independent counsel to represent them in this
transaction and that prior to Closing, the law offices of Eric P. Littman, P.A.
has acted as exclusive counsel to the ISSUER and has not represented either the
SHAREHOLDERS or Trinity in any manner whatsoever.
INVESTMENT INTENT. SHAREHOLDERS agree that the Shares being issued
pursuant to this Agreement may be sold, pledged, assigned, hypothecate or
otherwise transferred, with or without consideration ( a "Transfer"), only
pursuant to an effective registration statement under the Act, or pursuant to an
exemption from registration under the Act, the availability of which is to be
established to the satisfaction of ISSUER. SHAREHOLDERS agrees, prior to any
Transfer, to give written notice to ISSUER expressing his desire to effect the
transfer and describing the proposed transfer.
CLOSING. The closing of this transaction shall take place at the law
offices of Eric P. Littman, 7695 S.W. 104th Street, Suite 210, Miami, Florida
33156. Unless the closing of this transaction takes place on or before December
24, 1999, then either party may terminate this Agreement.
DOCUMENTS TO BE DELIVERED AT CLOSING.
By the ISSUER
Board of Directors Minutes authorizing the issuance of a
certificate or certificates for 5,226,000 Shares, and instructions from the
Selling Shareholders to reissue 4,867,000 shares all to be registered in the
names of the SHAREHOLDERS equal to their pro-rata holdings in Trinity, pursuant
to schedule B attached hereto.
The resignation of all officers of ISSUER.
A Board of Directors resolution appointing such
person as SHAREHOLDERS designate as a director(s) of ISSUER.
4
<PAGE>
The resignation of all the directors of ISSUER,
except that of SHAREHOLDERS designee, dated subsequent to the resolution
described in clause (iii), above.
Audited financial statements of ISSUER, which shall
include a balance sheet dated as of July 9, 1999 and statements of operations,
stockholders equity and cash flows for the twelve month period then ended.
All of the business and corporate records of ISSUER,
including but not limited to correspondence files, bank statements, checkbooks,
savings account books, minutes of shareholder and directors meetings, financial
statements, shareholder listings, stock transfer records, agreements and
contracts.
Such other minutes of ISSUER's shareholders or
directors as may reasonably be required by SHAREHOLDERS.
BY SHAREHOLDERS and Trinity:
Delivery to the ISSUER, or to its Transfer Agent, the
certificates representing 100% of the issued and outstanding stock of Trinity.
Consents signed by all the shareholders of Trinity
consenting to the terms of this Agreement.
Payment in the amount of $175,000 which shall be
wired as follows:
CITY NATIONAL BANK
801 Brickell Avenue
Miami, FL 33131
ABA: 066004367
CREDIT THE ACCOUNT OF ERIC P. LITTMAN, P.A., TRUST
ACCOUNT
ACCOUNT NUMBER: 10002924139
REMEDIES.
Any controversy or claim arising out of, or relating to, this
Agreement, or the making, performance, or interpretation thereof, shall be
settled by arbitration in Miami, Dade County, Florida in accordance with the
Rules of the American Arbitration Association then existing, and judgment on the
arbitration award may be entered in any court having jurisdiction over the
subject matter of the controversy.
MISCELLANEOUS.
5
<PAGE>
Captions and Headings. The Article and paragraph headings
throughout this Agreement are for convenience and reference only, and shall in
no way be deemed to define, limit, or add to the meaning of any provision of
this Agreement.
No oral Change. This Agreement and any provision hereof, may
not be waived, changed, modified, or discharged orally, but only by an agreement
in writing signed by the party against whom enforcement of any waiver, change,
modification, or discharge is sought.
Non Waiver. Except as otherwise expressly provided herein, no
waiver of any covenant, condition, or provision of this Agreement shall be
deemed to have been made unless expressly in writing and signed by the party
against whom such waiver is charged; and (i) the failure of any party to insist
in any one or more cases upon the performance of any of the provisions,
covenants, or conditions of this Agreement or to exercise any option herein
contained shall not be construed as a waiver or relinquishment for the future of
any such provisions, covenants, or conditions, (ii) the acceptance of
performance of anything required by this Agreement to be performed with
knowledge of the breach or failure of a covenant, condition, or provision hereof
shall not be deemed a waiver of such breach or failure, and (iii) no waiver by
any party of one breach by another party shall be construed as a waiver with
respect to any other or subsequent breach.
Time of Essence. Time is of the essence of this Agreement and
of each and every provision hereof.
Entire Agreement. This Agreement contains the entire Agreement
and understanding between the parties hereto, and supersedes all prior
agreements and understandings.
Counterparts. This Agreement may be executed simultaneously in
one or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
Notices. All notices, requests, demands, and other
communications under this Agreement shall be in writing and shall be deemed to
have been duly given on the date of service if served personally on the party to
whom notice is to be given, or on the third day after mailing if mailed to the
party to whom notice is to be given, by first class mail, registered or
certified, postage prepaid, and properly addressed, and by fax, as follows:
ISSUER: c/o Eric P. Littman, Esquire
7695 S.W. 104th Street, Suite 210
Miami, Florida 33156
TRINITY: Dr. James Namnath
6
<PAGE>
Trinity Medical Group USA, Inc.
55 Shaver Street, Suite 320
San Rafael, CA 94901
IN WITNESS WHEREOF, the undersigned has executed this Agreement this
31st day of December, 1999.
AUGUST PROJECT III CORP.
By:/s/ Eric Littman
------------------------------
Eric Littman, President and as
Representative of the Selling
Shareholder
TRINITY MEDICAL GROUP USA, INC.
By:/s/ James Namnath
------------------------------
James Namnath, President
7
<PAGE>
SCHEDULE A
----------
Selling Shareholders of August Project III Corp.
NAME NO. OF SHARES BEING SOLD
- ---- ------------------------
Eric Littman 3,867,000
Dennis Strum 1,000,000
TOTAL 4,867,000
8
<PAGE>
SCHEDULE B
----------
Shareholders of Trinity Medical Group USA, Inc.
NAME OF STOCKHOLDER CERTIFICATES ISSUED ISSUED-NOS
NO. OF SHARES OF SHARES
Churoboonchart Trinity Trust 7,200,000 1501
Trinity Partners Trust 400,000 1502
Eastern Frontier 175,000 1503
Black Hills Investment 175,000 1504
Baldwin Family Trust 50,000 1505
Coleman Abbe 22,500 1506
Bob Rubin 5,000 1507
Atlas Equity 5,500 1508
Ron McDonald 20,000 1509
Ron McDonald 20,000 1510
Stephen Devanney 20,000 1511
Dr. Buranaj Smutharako 500,000 1512
Virongrong Chaisiriroj 500,000 1513
Ubolrattana Mahidol 500,000 1514
Dr. Vina Churdboonchart 450,000 1515
Elizabeth Namnath 50,000 1516
TOTAL 10,093,000
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EXHIBIT A
Financial Statements of August Project III Corp. as of July 9, 1999.
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