SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10QSB
Securities and exchange commission
Washington, D. C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934
For the Quarter Ended September 30, 1999 Commission File No. 0-6518
TRILOGY GAMING CORPORATION
State of Incorporation I.R.S. Employer Identification No.
Delaware 87-0280129
1717 E. Bell Road, Suite 12
Phoenix, Arizona 85022
Telephone: (602) 788_5801
Securities Registered Pursuant to Section 12 (b) of this Act:
Title of Each Class Name of Each Exchange on Which Registered. None
Securities Registered Pursuant to Section 12 (g) of this Act: None
Title of Each Class Name of Each Exchange on Which Registered Common Voting
Stock, None
Par Value $0.01 Per Share
Indicate by check mark whether the Registrant (1) has filed all annual,
quarterly and other reports required to
be filed with the Commission, and (2) has been subject to the filing
requirements for at least the past ninety
days.
Yes x No
The Issuer's Revenue for the most recent fiscal year was $ 00.00
As of September 30, 1999 there were 3,130,272 shares of Common Stock, .001 Par
Value issued and
outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Exhibit A. Financial Statements Ending September 30, 1999.
Exhibit B. 1999 Annual Report to the Shareholders of Trilogy Gaming
Corporation.
Exhibit C. Notice of the Annual Meeting of the Shareholders of Trilogy
Gaming Corporation.
PART I
ITEM 1. THE COMPANY
The name of the Company is Trilogy Gaming Corporation, incorporated in the
State of Delaware on 3/7/1972.
The Company's address is 1717 E. Bell Road, Suite 12, Phoenix, Arizona 85022
(602) 788-5801.
The Company is a public Trading company. The Company's trading symbol listed
with the National Association of
Securities Dealers Automated Quotation ("NASDAQ") System, on the Bulletin
Board, is "TGGC". As a reporting
company, the Company intends to furnish its shareholders with annual reports
containing financial statements and
may distribute other information from time to time.
All outstanding Common Shares, excluding control persons holding 10% or more of
the common stock of the
Company and all restricted shares, are eligible to be sold in the open market.
Sales of substantial amounts of common
stock of the Company in a public market, may have a depressive effect on the
market price of the common stock.
THE COMPANY'S AUTHORIZED CAPITAL
75,000,000 Common non-cumulative voting shares, par value $0.001 per share,
5,000 Preferred non-cumulative voting shares, par value $0.01 per share
5,000 Preferred non-cumulative, non-voting shares, par value $0.01 per share
Holders of common stock are entitled to one vote per share on all matters to be
voted upon by the shareholders.
Holders of common stock are entitled to receive such dividends as may be
declared from time to time by the Board of
Directors out of funds legally available therefore after preferred dividend
payments have been paid to the Preferred
shares.
THE BUSINESS OF THE COMPANY
The Company has from the patent owner, who is the CEO, President and majority
shareholder of the Company, the
exclusive license for the United States to patent # 5,158,293 (referred to in
this document as the Trilogy progressive
jackpot tab/lotto type game) and patent #2,128,150 for the trade name "Trilogy"
and the " Game with Multiple
Incentives and multiple Levels of Game Play and combination Lottery Game" With
Time of Purchase Win Progressive
Jackpot".
The operations of the Company ending 09/30/1999 were financed by selling 101
Units for 505,000 common shares of
the Company's common stock for $2 per share, for $1,010,000. Each Unit is for
$10,000 for 5,000 common shares for $2
per share and (1) one non detachable series A warrant to purchase on or before
6/31/2000, 5,000 common shares for
$3 per share and (1) one non detachable series B warrant to purchase on or
before 12/31/2000, 5,000 common shares
for $7 per share. The Units were sold by private placement to accredited
investors only. From the placement of the
101 Units, the Company financed administration, and the on line game
communications operation systems
development and manufacturing of its Trilogy pull tab bingo game tables for
the St Regis Mohawk Tribe pursuant to
the St Regis Mohawk 100 Trilogy table game Agreement.
The Law firm of Snell & Wilmer of Phoenix, AZ has given its legal opinion to
the Company that the Trilogy multiple
jackpot game is a Class II game pursuant to the definitions set forth by the
United States Congress to NIGC and has
submitted the Company's Trilogy scratch tab game to the NIGC for Class II
classification or Class II use. The
Company cannot state the length of NIGC classification review process.
The Company entered into an agreement with St Regis Indian Mohawk Tribe for 100
Trilogy Table games that
allowed the Company to market its Trilogy game to the St. Regis license until
the NIGC Class II classification could be
obtained by the Company. The St. Regis Tribe was the only operating casino
that would take this risk, contemplating
that the game and the devise would eventually be classified as a class II
operation.
The Casino Dealer for each Table handles all the cash including the payment for
the ticket and the use of Casino
chips for the payment of certain winning tickets. The use of the table to
dispense the Trilogy progressive ticket also
created many new equipment communication requirements that had not been tested
as of that time.
An electronic BINGO scratcher game was designed on paper and Phoenix Gaming
International Inc. of Las Vegas was
assigned the task of creating the table from scratch. The use of the
electronic buttons to the design of the specialty
dispensers were all fabricated as the table was being developed. The actual
production of the table and the bases
was a difficult, time consuming and costly process. The table with the eye
catching blue felt and blinking BINGO
lamps was very well received especially at the April Indian Gaming show in
Tucson, Arizona. However, the real
obstacle to the game design was the creation and implementation of the
communication systems required to run the
game individually and collectively. Each table was really eight stations, each
station had to talk to each other and
each table needed to talk to each other and each casino needed to talk to each
other. This communication system
although easily drawn on paper was not a easy task in the field. A
communications company, Cybernet Ventures of
Las Vegas, recommended by Phoenix Gaming to create and install the required
computers, hubs, routers and T-1
communication lines was woefully unqualified to complete the communication
system. This not only cost a lot of
lost time but was also very costly financially. The Company was determined to
complete the implementation, if only
at the one Casino.
During this time, early 1999, the weather in upper New York was the worst it
has been in five years. The snowfall
crippled the area causing extensive delays in the implementation. The
implementation at the St. Regis Bingo Palace
was laden with extensive delays due to faulty electric supply and general labor
to complete the required tasks. The
implementation was originally scheduled to be completed by the end of February,
1999. The actual first date that the
game was ready to be kicked off was the end of April, 1999 but this only
included four tables, again this change was
the result of the extensive difficulties with the on site, off site
communication systems.
After much time and expense, it became obvious to the Company that the St.
Regis Mohawk Bingo Place was not
ready or familiar with the operating requirements of casino style table games
in a bingo hall environment. Trilogy
trained potential dealers and pit crew personnel including extensive internal
controls for both the game operation and
money control. Trilogy even paid for the first two weeks of this training and
potential implementation. In short, the
implementation took an extremely long time and caused great concern for the St.
Regis Tribe.
PGI produced 10 of the 30 tables ordered by the Company of which 9 were sent to
the St Regis Reservation in NY for
assembly by PGI. 8 were placed on the floor of the Mohawk bingo Palace of
which PGI, after a considerable amount
of time and expense to TGC, made only 4 of the 8 tables operational to dispense
and play the Trilogy tab/bingo game
without the wide area communications system functioning as specified and paid
for by TGC.
During the later stages of the implementation, the St. Regis Tribal Council
changed. The new Tribal Council begin to
concentrate on class III gambling and used all the delays and alleged confusion
as an excuse to cancel the Trilogy
table contract and to remove the tables from the Mohawk Bingo Palace. The
Company was informed of this decision
after the tables were removed and placed in a storage facility on the
reservation. Thus today the Company owns 10
tables, in storage, and 20 additional tables in various stages of assembly,
that are not class II approved and not likely
to be approved by NIGC in the near future. Via positive conversations with
NIGC committee members at the St. Regis
while the tables were being tested, it is very likely that when new licenses
are awarded that this game and table
devise will meet all the requirements of current class II criteria. The end
result is that after many months of in the field
designing a game from scratch and significant dollars expended to accomplish
this result, the game and the tables
work at least in one location. However, there is no Indian casino that has
committed to take a chance on placement of
the Trilogy bingo table game until the table game is first classified as a
class II game.
SUMMARY PATENT LICENSE AGREEMENTS
Wayne Mullins, the Company's CEO, President and Director, owns patent #
5,158,293 "Lottery game and method for
playing same" and Trilogy trademark patent Reg. # 1,533,082. In 1993 Mr.
Mullins granted the exclusive U. S. licensee
agreement to patent # 5,158,293 and Reg. # 1,533,082 to the Company, which
states in part that;
Pursuant to the License Agreement, the Company is required to pay Mr. Mullins
the following: 1% Royalties
payments due and payable to Mr. Mullins by the end of each month for all
royalties earned by the end of the
preceding month along with an accurate accounting of all sales/revenues covered
by the license agreement. Said
minimum royalty payments are due December 31 of each year of the license
agreement and payable to Mr. Mullins or
his assigns on or before 30 days following each said minimum royalty payment
due date, (ii) 1,310,00 common voting
shares of Trilogy Gaming Corporation and (iii) 3,690 convertible non-voting
preferred shares issued to Licensor. Said
preferred shares shall be increased or decreased in proportion to the exact
number of shares resulting from any and
all stock splits of TGC or its successors common stock until all said preferred
shares and splits there from have been
issued to Licensor. For each 1,000 new common shares issued by the Company,
from time to time, Beginning March
1, 1998, said Preferred shares are convertible at the rate of "one Preferred
share for 1,000 common shares" until all said
preferred shares have been converted. The licensee Agreement renews annually
providing the License is not in
default.
Mr. Mullins is the inventor of the "Game with Multiple Incentives and multiple
Levels of Game Play and combination
Lottery Game With Time of Purchase Win Progressive Jackpot" (patent pending)
and referred to in this document as
the Trilogy 9-Jackpot tab/card table game. Mr. Mullins licensed to the Company
the Trilogy 9-Jackpot tab/card table
game, which states in part that:
Pursuant to the License Agreement, the Company is required to pay Mr. Mullins
the following: [i] a royalty of one
percent (1%) of the gross dollar amount, of all revenues generated from all
game plays (excluding revenues generated
from patent # 5,158,293) and progressive jackpot "drops" generated directly or
indirectly by Licensee, its agents
and/or sub-licensees, who use any part of above stated invention to generate
game play and/or multiple progressive
jackpot game plays, or the annual minimum royalty payment of $50,000, whichever
is greater. Royalties are due and
payable to Mr. Mullins by the end of each month for all royalties earned by the
end of the preceding month along
with an accurate accounting of all sales/revenues covered by the license
agreement. Said minimum royalty payments
are due December 31 of each year of the license agreement and payable to
Licensor or his assigns on or before 30
days following each said minimum royalty payment due date, and [ii] 3,500
convertible non-voting preferred shares
issued to Mr. Mullins. Said preferred shares shall be increased or decreased
in proportion to the exact number of
shares resulting from any and all stock splits of TGC or its successors common
stock until all said preferred shares
and splits there from have been issued to Licensor. For each 1,000 new common
shares issued by the Company, from
time to time, beginning January 2, 2000, said Preferred shares are convertible
at the rate of "one Preferred share for
1,000 common shares" until all said preferred shares have been converted. The
licensee Agreement renews annually
providing the License is not in default.
The agreement is not a conveyance, assignment or Transfer of any right, title
or interest in or to the invention stated
hereto, or Licensors patent rights stated herein. This License is only a grant
of the exclusive limited right to develop,
exploit and market the invention stated herein only to state lotteries, Indian
and Charity gaming entities and no other
rights exists whatsoever that are not stated herein
Licensee (the Company) is an independent contractor and that it is not an agent
of, nor acting in behalf of Licensor
(Mullins) for any purpose or in any manner whatsoever in the operation of its
business during or after the expiration
of this agreement. furthermore, Licensee is not acting under any marketing
direction of Licensor and will formulate its
own marketing plan to best meet its business objectives, subject only to the
faithful observance of the provisions of
this agreement. Licensee agrees to indemnify and save harmless Licensor from
and against all claims, demands,
damages, actions, and causes of actions, liability, expenses or cost arising
out of any transaction participated in, or
any committed act or omission to act by this License.
The fact licensor is or may be in control of licensee business shall not be
construed as a conflict of interest to this
agreement If such a conflict exists or is implied, Licensee hereby waives any
claims of conflict, and hereby consents
to any such conflicts. Licensor shall use its best efforts representing
Licensee. However, Licensee understands and
unconditionally agrees that at all times in the enforcement of this agreement,
Licensor will first represent the best
interest of Licensor and Licensors patents including all other patent rights
and interest thereto at all times.
If the above stated consideration is not paid by the Company, the Company shall
be deemed in default of the License
Agreement and Mr. Mullins may terminate the License. There is no expiration
date on the 7,190 preferred convertible
shares.
CONFLICTS OF INTEREST
Wayne Mullins, the Company's CEO, President and Director, owns the Company's
Trilogy game and Trilogy
trademark patents. Mr. Mullins granted the Company the exclusive U. S. licensee
agreement to patent # 5,158,293
"lottery game and method for playing same" and U. S. patent/Trademark Reg. #
1,533,082 for the Trilogy mark and
the Trilogy 9_Jackpot tab/card table game, patent pending. Mr. Mullins as
President, CEO and Director of the
Company, will be in the position to represent both the patent Licensor (Mr.
Mullins) and the patent Licensee (the
Company) and his interest will most likely be first to himself as the Licensor.
n the event of a default of the patent
license agreement by the Company, Mr. Mullins will be in a position to make
demand upon the Company to cure the
default pursuant to the provisions of the license Agreement and to terminate
the license agreement if the default is
not cured pursuant to the license agreement. Because of this disclosure by the
Company regarding these
circumstances surrounding the Patent Licensor and the Patent Licensee, neither
the Company as Patent Licensee, or
any of its shareholders, Officers or Directors, shall have or make any claim or
demand that a conflict of interest
existed anytime prior to, during or after any default demand or upon
termination of the patent license agreement in the
event Mr. Mullins, as Patent Licensor, enforced any default of the license
agreement including, but not limited to,
termination of the license Agreement.
ITEM 2. PROPERTIES None
ITEM 3. LEGAL PROCEEDINGS None
However, On May 6, 1999, The Company was provided with a draft of a threatened
Complaint which has been
prepared with intent for filing in the Superior Court of the State of Arizona
in and for the County of Maricopa. The
threatened Complaint has been prepared by Thomas Granstrom, Rick Burris,
Charles F. Holland Jr., Jerry J. Lloyd,
Boyd Kent Park, Dawn Lynette Rogers, Will Rogers, Rande L. Schuck, and John
Does 1-1000 and Jane Does 1-1000
as the potential plaintiffs, and names Wayne Mullins and Jane Doe Mullins,
Michael J. Maledon and Jane Doe
Maledon and John Mullins as defendants. Among other things, the Complaint
alleges that the proposed plaintiffs
were investors in International Lottery Productions, Ltd. ("ILP"), a
predecessor company to Trilogy. The Complaint
further alleges that ILP (incorporated in 1989, went out of business in 1993,
resurrected and merged into Trilogy
Gaming Corporation on March 7, 1996) and certain of its officers and directors
made misrepresentations to the
plaintiffs in connection with their investments. The Complaint also alleges
that certain of the officers and directors of
ILP and Trilogy breached their fiduciary duties to the shareholders of the
respective corporations. The Complaint
seeks compensatory and punitive damages, and further seeks to establish a
constructive trust over the lottery game
operated by Trilogy and all revenues it generates, in favor of the plaintiffs.
It appears that the main thrust of the allegations are dependent upon the
claims that the 6 incorporators were induced
to and paid $10,000 each to Wayne Mullins personally for his personal benefit,
for a interest in his patent and for
40,000 common shares of ILP, when in fact, they each signed and initialed each
page of the "Pre-Organizational
Agreement" and the "Organizational Meeting". Both documents set forth all
their rights and risks involved in
investing into and forming a new corporation as the promoters. Each of their
$10,000 Capital contributions to form
the company (ILP) were made over a period of time and each payment was made
payable to ILP.
Following our receipt of the Draft Complaint, the company's legal counsel has
had several conversations with
counsel for the potential plaintiffs. It is uncertain whether the potential
plaintiffs will, in fact, file the threatened
Complaint. The Company has entered into a tolling agreement with the
plaintiffs in order to resolve the alleged
allegations. The Company has been advised that good arguments exist that some
or all of proposed plaintiffs'
threatened claims may contain false and misleading statements and fail to state
a cause of action and, therefore, may
be subject to dismissal. At this early stage, however, we are unable to
predict what the ultimate outcome of this
matter will be.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None
PART II
ITEM 5. RELATED SHAREHOLDER MATTERS and MARKET FOR THE REGISTRANTS COMMON
STOCK.
A. DECEASE IN AMOUNT OUTSTANDING OF SECURITIES OR INDEBTEDNES None.
B. INCREASE IN AMOUNT OUTSTANDING OF SECURITIES OR INDEBTEDNES 185,625
The following table shows the high and low bid prices for the company's common
stock as reported by the NASDAQ
electronic bulletin board (bulletin board symbol TGGC) for the year ended
December 31,1998. The Company started
trading in the fourth quarter of 1998.
HIGH LOW
FIRST QUARTER MARCH 31,1999 7.00 4.00
SECOND QUARTER JUNE 30,1999 4.75 2.00
THIRD QUARTER SEPTEMBER 30,1999 3.25 0.36
FOURTH QUARTER DECEMBER 31, 1999
Approximate number of equity securities holders as of September 30, 1999 568
DIVIDENDS: The Company paid no dividends in the years ended December 31,
1997 and 1998.
RECENT SALE OF UNREGISTERED SECURITIES:
The operations of the Company ending 09/30/1999 were financed by selling 101
Units for 505,000 common shares of
the Company's common stock for $2 per share, for $1,010,000. Each Unit is for
$10,000 for 5,000 common shares for $2
per share and (1) one non detachable series A warrant to purchase on or before
6/31/2000, 5,000 common shares for
$3 per share and (1) one non detachable series B warrant to purchase on or
before 12/31/2000, 5,000 common shares
for $7 per share. The Company placed 322,000 shares @ $2.00 each for a total
of $ 645,000 for the year ended
12/31/98, 185,625 shares for $635,000 in the first half of 1999 and 12,500
shares for $20,000 and 70,000 shares for
$35,000 during the third quarter ending September 30, 1999. The Units were
sold by private placement to accredited
investors only.
The Company has or may issue the following Warrants to acquire Common Stock of
the Company:
Series Number Price per Warrant
of Common expiration
Shares Share date
A 505,000 $3 June 31, 2000
B 505,000 $7 December 31, 2000
C 12,500 $3 January 31, 1999
D 12,500 $7 July 31, 2000
E 100,000 $1 June 30, 2000
F 70,000 $1 June 30, 2000
Royalty Units
The company has issued 61 five year Trilogy Lotto royalty interests. The
royalty units will receive a 6% minimum
royalty payment for two years plus a five year royalty of .01% of pre tax
income. Payments begin the first year the
Company receives gross profits and royalty earning payments from state
lottery's marketing the Trilogy Lotto game.
Options.
As of September 30, 1999, the Company has option outstanding to purchase a
total of 300,000 shares of common
stock at $1.25 per share.
ITEM 6. MANAGEMENTS PLAN OF OPERATION.
SUMMARY OF OPERATIONS
The Company is in the business of marketing its products to Indian Gaming
enterprises, Charitable Gaming
entities and State Lotteries in the United States. Gaming & Wagering magazine
reported in 1995 in the
United States: Indian Reservation Gaming Revenues of 49 billion dollars,
Charitable Gaming revenues of 9.8
billion dollars and State Lottery sales of 38.8 billion dollars. Most Indian
Gaming enterprises market bingo,
pull-tabs, and video slot games. There are Charitable Gaming enterprises that
market bingo, raffle and pull-tabs
games. State lotteries market on-line lottery drawings, or numbers type games,
scratch or instant type scratchier
tickets games.
The Company is in the development stage of design of its Class II designed
electronic video visual ticket display pull
tab game dispensing tables. The Company's initial plans are to market its
Patented/Licensed Trilogy pull tab
Progressive Mega Cash jackpot scratch tabs to Indian gaming casinos. Sales to
and Revenues from Indian gaming
casinos were targeted to begin in the 2nd quarter of 1999.
The Company has an agreement with St Regis Indian Mohawk Tribe located in the
State of New York, for 100 Trilogy
Table games that allowed the Company to market its Trilogy game to the St.
Regis until the NIGC Class II
classification could be obtained by the Company. The St. Regis Tribe was the
only operating casino that would take
this risk, contemplating that the game and the devise would eventually be
classified as a class II operation.
The Casino Dealer for each Table handles all the cash including the payment for
the ticket and the use of Casino
chips for the payment of certain winning tickets. The use of the table to
dispense the Trilogy progressive ticket also
created many new equipment communication requirements that had not been tested
as of that time.
An electronic BINGO scratcher game was designed on paper and Phoenix Gaming
International Inc. of Las Vegas was
assigned the task of creating the table from scratch. The use of the
electronic buttons to the design of the specialty
dispensers were all fabricated as the table was being developed. The actual
production of the table and the bases
was a difficult, time consuming and costly process. The table with the eye
catching blue felt and blinking BINGO
lamps was very well received especially at the April Indian Gaming show in
Tucson, Arizona. However, the real
obstacle to the game design was the creation and implementation of the
communication systems required to run the
game individually and collectively. Each table was really eight stations, each
station had to talk to each other and
each table needed to talk to each other and each casino needed to talk to each
other. This communication system
although easily drawn on paper was not a easy task in the field. A
communications company, Cybernet Ventures of
Las Vegas, recommended by Phoenix Gaming to create and install the required
computers, hubs, routers and T-1
communication lines was woefully unqualified to complete the communication
system. This not only cost a lot of
lost time but was also very costly financially. The Company was determined to
complete the implementation, if only
at the one Casino.
During this time, early 1999, the weather in upper New York was the worst it
has been in five years. The snowfall
crippled the area causing extensive delays in the implementation. The
implementation at the St. Regis Bingo Palace
was laden with extensive delays due to faulty electric supply and general labor
to complete the required tasks. The
implementation was originally scheduled to be completed by the end of February,
1999. The actual first date that the
game was ready to be kicked off was the end of April, 1999 but this only
included four tables, again this change was
the result of the extensive difficulties with the on site, off site
communication systems.
After much time and expense, it became obvious to the Company that the St.
Regis Mohawk Bingo Place was not
ready or familiar with the operating requirements of casino style table games
in a bingo hall environment. Trilogy
trained potential dealers and pit crew personnel including extensive internal
controls for both the game operation and
money control. Trilogy even paid for the first two weeks of this training and
potential implementation. In short, the
implementation took an extremely long time and caused great concern for the St.
Regis Tribe.
PGI produced 10 of the 30 tables ordered by the Company of which 9 were sent to
the St Regis Reservation in NY for
assembly by PGI. 8 were placed on the floor of the Mohawk bingo Palace of
which PGI, after a considerable amount
of time and expense to TGC, made only 4 of the 8 tables operational to dispense
and play the Trilogy tab/bingo game
without the wide area communications system functioning as specified and paid
for by TGC.
During the later stages of the implementation, the St. Regis Tribal Council
changed. The new Tribal Council
concentrated on class III gambling and most likely used all the Trilogy game
installation and startup delays and
alleged confusion as an excuse to cancel the table contract and remove the
tables from the Mohawk Bingo Palace.
The Company was informed of this decision after the tables were removed and
placed in a storage facility on the
reservation. The Company owns 10 tables, in storage, and 20 additional tables
in various stages of assembly, that are
not class II approved and not likely to be approved by NIGC in the near future.
Via positive conversations with NIGC
committee members at the St. Regis while the tables were being tested, it is
very likely that when new licenses are
awarded that this game and table devise will meet all the requirements of
current class II criteria.
The end result is that after many months of in the field designing a game from
scratch and significant dollars
expended to accomplish this result, the game and the tables work at least in
one location. However, no Indian casino
will commit to install and market the Trilogy table bingo game until it is
classified as class II game by the NIGC.
The Company does not plan to operate or manage any gaming enterprise marketing
Trilogy scratch tabs to Indian
Gaming markets. The primary business of the Company is to sell its Trilogy
scratch tabs on consignment, administer
the progressive jackpots and communication system. Therefore, the Company's
work force should be relatively
small. Most of the Company's work should be performed by experienced
contracted manufacturers, installers,
dispenser hardware and software, tab manufacturers, technicians, field
consultants and commissioned sales
professionals.
The Company is considering a plan to direct marketing if its Trilogy game via
the Internet as a Sweepstake Game.
The Company has two non salaried employees, the President and Chief Operating
Officer of the Company. They
have shareholder and director approval for a contract for an emplacement
contract for a salary. However as of
September 30, 1999 the Company has not issued any employment agreements to Mr.
Mullins or Mr. Maledon for a
salary. See the attached Notes to Financial Statements for further details
Registrant has announced its intention to provide supplemental information to
its stockholders and other interested
parties from time to time; and in all cases, the information contained herein
must be read in light of subsequent
information which may be issued, including but not limited to more recent
financial statements herein contained are
current as of their date, and are presumed to be "current" for a period of six
months after their date, barring
extraordinary circumstances. No inference can be drawn that the financial
condition of the Registrant has not
changed since the effective date of any financial statement contained herein.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS FILED
(A) Financial Statements containing:
* Report of Certified Public Accountants on Schedules as of 09/30/99.
* Compiled Balance Sheet ending 09/30/99
* Statement of Operations from 12/31/1989 to 09/30/99
* Compiled Statement of Changes in Shareholders Equity as of 09/30/99
* Compiled Statement of Common Stock issued from 1/1/1989 ending 09/30/99
* Compiled Statement of Cash Flows from 1/1/1989 ending 09/30/99
* Notes to Financial Statements ending 09/30/99 (consisting of 17 Notes)
(B) No reports on Form 8-K have been filed during any quarter from 10-1-1977
to 9-30-1999.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL
DISCLOSURE. None
PART III
ITEM 9. DIRECTORS OF THE REGISTRANT
Wayne Mullins age 63. CEO/President and Director. He is a former Insurance
Executive and inventor holding
several patents. The United States Patent Office granted Mr. Mullins the
registered trademark Trilogy ( and a patent
for his Trilogy "Lotto game and method for playing same". Mr. Mullins has
licensed his patent, registered trademark
and patent pending to the Company.
Mike Maledon, age 47. Chief Operating Officer, Secretary, Treasurer and
Director. He has held senior financial and
controllership management positions with American Express, American Hospital
Supply Corp. and Bally Mfg.
Corporation.
Jim Holmes, Director. age 56. He is President of Multimedia Games Inc. MG
provides the
communications network and its "MegaMania" bingo game played from 3,200 bingo
machines at Tribal
bingo/casinos located in multiple states. He is former Executive Vice
President of Gamma International
and directed the company's satellite network marketing program for its "Million
Dollar Mega Bingo" played
in multiple Indian Gaming locations. He is the former Missouri Lottery
Director.
John Wertheim, Director. age 55. President and Director of Single Stick,
Inc., Phoenix, Arizona, SSI packages and
markets individually packaged premium and miniature cigars. He is the former
President and CEO of J. W. &
Associates, a consulting firm specializing in providing financing capital to
small to medium size companies. He is a
Founder of First Business Bank of Arizona which begin operations in 1985. FBA
was merged with Century Bank, the
name was changed to Caliber Bank in 1990. During Mr. Wertheim's tenure as
President and CEO of Caliber Bank, CB
grew to $250 million in assets with nine branches. He is the former President
and CEO of Valley Bank
Corp., Inc. and Valley Bank of Arizona, a full-service commercial and consumer
bank service Phoenix, Arizona
Robert Rettig, age 70. Director. Former Executive Vice President of Illinois
Tool Works, Inc. from 1983 to 1990. He is
presently a TWI Director and consultant. From 1976 to 1983 he was President of
Packaging Systems and Instrument
Group.
Joseph M. Imhoff Director Mr. Imhoff is a Senior VP of Peacock, Hislop, Stanley
& Givens, Inc. A Securities
brokerage firm Phoenix, AZ. Mr. Imhoff has been in the investment banking and
bond underwriting business for the
past 40 years. Prior to his moving to Scottsdale AZ he was Executive VP and
Director of a Denver based NYSE firm.
Mr. Imhoff has been involved in numerous national and regional investment
banking organizations as both a Director
and a Officer.
At Registrants special meeting of the Shareholders of the Company held on
November 16, 1998, the above named
Directors were elected and shall hold office until his successor shall have
been elected and qualified.
ITEM 10. EXECUTIVE COMPENSATION AND REMUNERATION
The following table shows the compensation of each executive officer and
significant employee during the fiscal
years ended December 31,1996,1997, 1998, and September 30, 1999.
Name and year salary, Bonus, Restricted Securities all other Principal
Position Stock Underlying Compensation
YEAR Salary Award(s) Options other Compensation
Wayne Mullins, President\ CEO 1999 18,000 $23,000 Royalties
1998 36,235 $39,000 Royalties
1979 17,750
1996 22,276
1999 0
Michael Maledon, COO\Secretary 1998 0 62,500 50,000
Secretary\Treasurer 1997 0
Secretary\Treasurer 1996 0
The Board of Directors approved the following options for common stock granted
to the Chief Operating Officer
(COO) of the Company as of September 1, 1998 and exercisable for a period of
three years from 3/1/1999 for 150,000
common shares at the price of $1.25 per share and three years from 3/1/2000 for
150,000 common shares at the price of
$1.25 per share.
The Registrant has no annuity, pension or retirement benefits proposed to be
paid to any of its officers or directors.
There is no existing plan for the payment of such benefits.
ITEM 11. PRINCIPAL SECURITY HOLDERS AND SECURITY HOLDERS OF MANAGEMENT
Voting Securities owned of record or beneficially in excess of ten percent
(10%) of the issued and outstanding stock
of Registrant. Unless indicated otherwise below, the address for each listed
director and officer is PO BOX 30310,
Phoenix, Arizona 85046. Except as indicated by footnote, the persons named in
the table have sole voting and
investment power with respect to all shares of common stock shown as
beneficially owned by them. The number of
shares of common stock outstanding used in calculating the percentage for each
listed person includes the shares of
common stock underlying options held by that person that are exercisable within
60 days of September 30, 1999 but
excludes shares of common stock underlying options held by any other person.
Percentage of beneficial ownership
is based on 3,130,272 shares of common stock outstanding as of September 30,
1999.
Name of Shares of Percentage If all 500 units converted @ $4 Percentage
Beneficial common Stock beneficially per share for 1,250,000 shares
benef
icially
Owner beneficially owned owned then shares beneficially owned owned
Wayne Mullins (1) 1,275,000 40.7% (3) 3,481,625 52.8%
Tom Burns (2) 7,500 .024% (2) 7,500 .001%
All executive officers as
a group (3 persons) 1,282,500 40.7% 3,489,125 52.8%
(1) More than ten percent (2) Less than 1 percent. (3) Includes 7,190
shares of Preferred shares which are
convertible into 7,190,000 shares of Common Stock.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
(A). No Director, Officer or person holding an excess of ten percent (10%) of
the outstanding securities of the
Registrant, or any relative or spouse of any such persons or relative or spouse
of such person, had any interest in
any transactions or presently proposed transactions to which the Registrant was
a party, except Registrants patent
licensor Wayne Mullins, who is a Director and Officer of Registrant.
(B). No Director or Officer of the Registrant or associate of any such Director
or Officer has been indebted to the
Registrant from 12/ 31/ 1997 to 9/30/ 1999.
(C). There were no transactions since the beginning of the Registrant's last
fiscal year (December 31, 1998), and are
presently no proposed transactions wherein any retirement, saving or other
similar plan will be provided by the
Registrant to any person.
ITEM 13. YEAR 2000 COMPLIANCE
The Company's internal systems are believed to be Y-2000 compliance. The
Company's designed Trilogy game
Internet Hardware /Software will be specified Y-2000 compliance. However, the
failure of our internal systems or
material third-party systems to be Year 2000 compliant would significantly harm
our business. The Company may be
affected by Year 2000 issues related to non-compliant information technology
systems or non-information
technology systems operated by us or by third parties. As a result, the
Company could suffer a significant number
of business disruptions and inefficiencies for us, our service and providers
and our anticipated internet members and
users that may divert our time and attention and financial and human resources
from our ordinary business activities.
In addition, the Company cannot be certain that governmental agencies, utility
companies, Internet access
companies, third-party service providers and others outside of our control will
be Year 2000 compliant. The failure by
these entities to be Year 2000 compliant could result in a systemic failure
beyond our control, such as a prolonged
Internet, telecommunications or electrical failure, that could also prevent the
Company from delivering our anticipated
internet services to our customers, decrease the use of the Internet or prevent
users from accessing our Web site
which would lead to a decline in our anticipated revenues.
ITEM 14. EXHIBITS AND REPORTS ON FORM 8-Q None
Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange
Act of 1934, the Registrant has duly
caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
DATED this 28th day of December 1999.
TRILOGY GAMING CORPORATION
By:
__________________________________________
Wayne Mullins, Chief Executive Officer and President
TRILOGY GAMING CORPORATION
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
SEPTEMBER 30, 1999
TABLE OF CONTENTS
Page No.
FINANCIAL STATEMENTS 1
ACCOUNTANTS' REPORT 2
Balance Sheet 3
Statement of Operations 4
Statement of Changes in Shareholders' Equity 5-10
Statement of Cash Flows 11-12
Notes to Financial Statements 13-18
ACCOUNTANTS' REPORT
To the Board of Directors and Shareholders
Trilogy Gaming Corporation
Phoenix, Arizona
We have reviewed the accompanying balance sheet of Trilogy Gaming Corporation
(a development stage company)
as of September 30, 1999, and the related statements of operations, changes in
shareholders' equity and cash flows
for the nine months then ended, in accordance with Statements on Standards for
Accounting and Review Services
issued by the American Institute of Certified Public Accountants. All
information included in these financial
statements is the representation of the management of Trilogy Gaming
Corporation.
A review consists principally of inquiries of company personnel and analytical
procedures applied to financial data.
It is substantially less in scope than an audit in accordance with generally
accepted auditing standards, the objective
of which is the expression of an opinion regarding the financial statements
taken as a whole. Accordingly, we do not
express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the accompanying
financial statements in order for them to be in conformity with generally
accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
company will continue as a going
concern. As shown in the financial statements, the company incurred a net loss
of $2,277,949 from inception and, as
of September 30, 1999 had a working capital deficiency of $110,921 and a
shareholders' deficiency of $110,921. In
addition the company has no contracts for the sale of its products. As
discussed in Note 16 to the financial
statements, the company's significant operating losses and capital needs raise
substantial doubt about its ability to
continue as a going concern. The financial statements do not include any
adjustments that might result from the
outcome of this uncertainty.
Moffitt & Company, P.C.
5040 E. Shea Blvd.
Suite 270
Scottsdale, Arizona 85254
(480) 951-1416
November 20, 1999
TRILOGY GAMING CORPORATION
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
SEPTEMBER 30, 1999
ASSETS
CURRENT ASSETS
Cash and cash equivalents 31
TOTAL ASSETS 31
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $110,952
TOTAL CURRENT LIABILITIES 110,952
REDEEMABLE PREFERRED STOCK
Non-cumulative, non-voting shares
Par value $0.01 per share
Authorized 5,000,000 shares
Issued and outstanding - 6 shares 0
SHAREHOLDERS' EQUITY
Capital stock
Preferred stock, convertible, non-cumulative
Voting shares
Par value $0.01 per share
Authorized 5,000,000 shares
Issued and outstanding - 7,190 shares 72
Common stock
Par value $0.001 per share
Authorized 75,000,000 non-cumulative voting shares
Issued and outstanding - 3,130,272 shares 3,130
Paid in capital in excess of par value of stock 2,643,702
Stock subscription receivable ( 2,500)
Retained earnings (deficit) ( 477,376)
Deficit accumulated during the development stage ( 2,277,949)
TOTAL SHAREHOLDERS' EQUITY (110,921)
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $31
See Accompanying Notes and Accountant's Report
TRILOGY GAMING CORPORATION
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 AND
FOR THE PERIOD JANUARY 1, 1989 (DATE OF INCEPTION OF DEVELOPMENT)
TO SEPTEMBER 30, 1999
January 1, 1989
Nine (Date of
Months Inception of
Ended Development) to
September 30, September 30,
1999 1999
REVENUE $0 $0
DEVELOPMENT COSTS 646,198 2,277,949
NET (LOSS) $ ( 646,198) $( 2,277,949)
NET (LOSS) PER COMMON SHARE
Basic $ ( .21)
AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING
Basic 3,130,272
Diluted 3,707,626
See Accompanying Notes and Accountant's Report
TRILOGY GAMING CORPORATION
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE PERIOD JANUARY 1, 1989 (DATE OF INCEPTION
OF DEVELOPMENT) TO SEPTEMBER 30, 1999
Preferred Stock
(Convertible) Common Stock
Shares Amount Shares Amount
BALANCE, JANUARY 1, 1989
(DATE OF INCEPTION OF
DEVELOPMENT) 0 $ 0 49,985,211 $1,979
NET LOSS FOR THE YEAR
ENDED DECEMBER 31, 1989 0 0 0 0
BALANCE, DECEMBER 31, 1989 0 0 49,985,211 1,979
NET LOSS FOR THE YEAR
ENDED DECEMBER 31, 1990 0 0 0 0
BALANCE, DECEMBER 31, 1990 0 0 49,985,211 1,979
NET LOSS FOR THE YEAR
ENDED DECEMBER 31, 1991 0 0 0 0
BALANCE, DECEMBER 31, 1991 0 0 49,985,211 1,979
NET LOSS FOR THE YEAR
ENDED DECEMBER 31, 1992 0 0 0 0
BALANCE, DECEMBER 31, 1992 0 0 49,985,211 1,979
NET LOSS FOR THE YEAR
ENDED DECEMBER 31, 1993 0 0 0 0
BALANCE, DECEMBER 31, 1993 0 0 49,985,211 1,979
NET LOSS FOR THE YEAR
ENDED DECEMBER 31, 199 0 0 0 0
BALANCE, DECEMBER 31, 1994 0 0 49,985,211 1,979
NET LOSS FOR THE YEAR
ENDED DECEMBER 31, 1995 0 0 0 0
BALANCE, DECEMBER 31, 1995 0 $ 0 49,985,211 $1,979
See Accompanying Notes and Accountant's Report
Paid in Deficit
Capital Accumulated
in Excess Advance Stock Retained During the
of Par on Stock Subscription Earnings Development
Value of Stock Subscription Receivable (Deficit) Stage
BALANCE, JANUARY 1, 1989
(DATE OF INCEPTION OF
DEVELOPMENT $1,003,753 $-0 $-0 $ (447,376) $- 0
NET LOSS FOR THE YEAR
ENDED DECEMBER 31, 1989 1,003,753 0 0 ( 447,376) ( 47,037)
BALANCE, DECEMBER 31, 1989 0 0 0 0 ( 160,296)
NET LOSS FOR THE YEAR
ENDED DECEMBER 31, 1990 1,003,753 0 0 ( 447,376) ( 207,333)
BALANCE, DECEMBER 31, 1990 0 0 0 0 ( 111,886)
NET LOSS FOR THE YEAR
ENDED DECEMBER 31, 1991 1,003,753 0 0 ( 447,376) ( 319,219)
BALANCE, DECEMBER 31, 1991 0 0 0 0 ( 37,250)
NET LOSS FOR THE YEAR
ENDED DECEMBER 31, 1992 1,003,753 0 0 ( 447,376) ( 356,469)
BALANCE, DECEMBER 31, 1992 0 0 0 0 ( 52,882)
NET LOSS FOR THE YEAR
ENDED DECEMBER 31, 1993 1,003,753 0 0 ( 447,376) ( 409,351)
BALANCE, DECEMBER 31, 1993 0 0 0 0 ( 39,250)
NET LOSS FOR THE YEAR
ENDED DECEMBER 31, 1994 1,003,753 0 0 ( 447,376) ( 448,601)
BALANCE, DECEMBER 31, 1994 0 0 0 0 ( 27,075)
NET LOSS FOR THE YEAR
ENDED DECEMBER 31, 1995
BALANCE, DECEMBER 31, 1995 $1,003,753 $ 0 $ 0 $( 447,376) $( 475,676)
See Accompanying Notes and Accountant's Report
TRILOGY GAMING CORPORATION
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
(CONTINUED)
FOR THE PERIOD JANUARY 1, 1989 (DATE OF INCEPTION
OF DEVELOPMENT) TO SEPTEMBER 30, 1999
Preferred Stock
(Convertible) Common Stock
Shares Amount Shares Amount
BALANCE AFTER REVERSE
STOCK SPLIT -
MARCH 1, 1996 0 $-0 494,684 $-0
MERGER OF INTERNATIONAL
LOTTERY PRODUCTIONS LTD. 0 0 1,596,893 0
ISSUANCE OF COMMON
STOCK FOR
Cash 0 0 118,000 118
Royalties 0 0 78,750 0
NET LOSS FOR THE YEAR
ENDED DECEMBER 31, 1996 0 0 0 0
BALANCE, DECEMBER 31, 1996 0 0 2,288,327 2,097
ISSUANCE OF PREFERRED
STOCK FOR CASH 3,690 37 0 0
ISSUANCE OF COMMON
STOCK FOR
Services rendered 0 0 6,200 62
Cash 0 0 15,000 150
NET LOSS FOR THE YEAR
ENDED DECEMBER 31, 1997 0 0 0 0
BALANCE, DECEMBER 31, 1997 3,690 $ 37 2,309,527 $ 2,309
See Accompanying Notes and Accountant's Report
Paid in Deficit
Capital Accumulated
in Excess Advance Stock Retained During the
of Par on Stock Subscription Earnings Development
Value of Stock Subscription Receivable (Deficit) Stage
BALANCE AFTER REVERSE
STOCK SPLIT -
MARCH 1, 1996 $ 0 $ 0 0 $ 0 $ 0
MERGER OF INTERNATIONAL
LOTTERY PRODUCTIONS LTD. 0 0 0 0 0
ISSUANCE OF COMMON
STOCK FOR
Cash 147,382 0 0 0 0
Royalties 0 0 0 0 0
NET LOSS FOR THE YEAR
ENDED DECEMBER 31, 1996 0 0 0 0 0
BALANCE, DECEMBER 31, 1996 1,151,135 0 0 (477,376) (643,110)
ISSUANCE OF PREFERRED
STOCK FOR CASH 0 0 0 0 0
ISSUANCE OF COMMON
STOCK FOR
Services rendered 7,688 0 0 0 0
Cash 34,850 0 0 0 0
NET LOSS FOR THE YEAR
ENDED DECEMBER 31, 1997 0 0 0 0 0
BALANCE, DECEMBER 31, 1997 $1,193,673 $ 0 $ 0 ($477,376) ($717,858)
See Accompanying Notes and Accountant's Report
TRILOGY GAMING CORPORATION
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY (CONTINUED)
FOR THE PERIOD FROM JANUARY 1, 1989 (DATE OF INCEPTION
OF DEVELOPMENT) TO SEPTEMBER 30, 1999
Preferred Stock
(Convertible) Common Stock
Shares Amount Shares Amount
ISSUANCE OF COMMON
STOCK FOR
Cash, net of commission paid 0 $ 0 386,500 $387
Services rendered 0 0 50,000 50
Directors' fee 0 0 105,000 105
CORRECTION OF ISSUED
SHARES 0 0 (900) 0
OUTSTANDING STOCK
OPTIONS 0 0 0 0
ADVANCE ON STOCK
SUBSCRIPTION 0 0 0 0
NET LOSS FOR THE YEAR
ENDED DECEMBER 31, 1998 0 0 0 0
BALANCE, DECEMBER 31, 1998 3,690 37 2,850,127 2,850
CORRECTION OF ISSUED
SHARES 0 0 (355) 0
ISSUANCE OF PREFERRED
STOCK FOR PENDING
PATENT 3,500 35 0 0
ISSUANCE OF COMMON
STOCK FOR CASH, NET OF
COMMISSIONS PAID 0 0 252,500 252
ISSUANCE OF COMMON STOCK
FOR ADVANCE ON STOCK
SUBSCRIPTION 0 0 8,000 8
ISSUANCE OF COMMON
STOCK FOR DIRECTORS' FEE 0 0 20,000 20
NET LOSS FOR THE NINE
MONTHS ENDED
SEPTEMBER 30, 1999 0 0 0 0
BALANCE, SEPTEMBER 30, 1999 7,190 $72 3,130,272 $3,130
See Accompanying Notes and Accountant's Report
Paid in Deficit
Capital Accumulated
in Excess Advance Stock Retained During the
of Par on Stock Subscription Earnings Development
Value of Stock Subscription Receivable (Deficit) Stage
ISSUANCE OF COMMON
STOCK FOR
Cash, net of commission paid $627,464 $ 0 $ 0 $ 0 $ 0
Services rendered 62,450 0 0 0 0
Directors' fee 209,895 0 0 0 0
CORRECTION OF ISSUED
SHARES 0 0 0 0 0
OUTSTANDING STOCK
OPTIONS 225,000 0 0 0 0
ADVANCE ON STOCK
SUBSCRIPTION 0 7,500 0 0 0
NET LOSS FOR THE YEAR
ENDED DECEMBER 31, 1998 0 0 0 0 0
BALANCE, DECEMBER 31, 1998 2,318,482 7,500 0 (477,376) (1,613,751)
CORRECTION OF ISSUED
SHARES 0 0 0 0 0
ISSUANCE OF PREFERRED
STOCK FOR PENDING
PATENT 0 0 0 0 0
ISSUANCE OF COMMON
STOCK FOR CASH, NET OF
COMMISSIONS PAID 317,548 0 0 0 0
ISSUANCE OF COMMON STOCK
FOR ADVANCE ON STOCK
SUBSCRIPTION 7,492 (7,500) (2,500) 0 0
ISSUANCE OF COMMON
STOCK FOR DIRECTORS' FEE 180 0 0 0 0
NET LOSS FOR THE NINE
MONTHS ENDED
SEPTEMBER 30, 1999 0 0 0 0 (646,198)
BALANCE, SEPTEMBER 30, 1999 $2,643,702 $ 0 (42,500) ($477,376) ($2,27
7,949)
See Accompanying Notes and Accountant's Report
TRILOGY GAMING CORPORATION
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 AND
FOR THE PERIOD JANUARY 1, 1989 (DATE OF INCEPTION OF DEVELOPMENT)
TO SEPTEMBER 30, 1999
January 1, 1989
Nine (Date of
Months Inception of
Ended Development) to
September 30, September 30,
1999 1999
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) $ ( 646,198) $ ( 2,277,949)
Adjustments to reconcile net (loss) to net cash
(used) by operating activities:
Capital and stock issued for expenses and services 235 505,485
Merger of International Lottery Productions Ltd. 0 527,608
Abandonment of property and equipment and
equipment lease security deposit 584,249 584,249
Accrued officers' salaries and expenses ( 143,098) 0
Increases (decreases) in:
Prepaid expenses 7,350 0
Accounts payable 77,102 110,952
NET CASH (USED) BY OPERATING
ACTIVITIES ( 120,360) ( 549,655)
CASH FLOWS FROM INVESTING ACTIVITIES:
Construction in process for gaming tables
and computers ( 271,846) ( 571,743)
NET CASH (USED) BY INVESTING
ACTIVITIES ( 271,846) ( 571,743)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of company stock,
net of commissions paid 315,300 1,125,650
Equipment lease security deposits 0 ( 12,506)
Advance on stock subscription 0 7,500
NET CASH PROVIDED BY FINANCING
ACTIVITIES 315,300 1,120,644
NET (DECREASE) IN CASH AND
CASH EQUIVALENTS $ ( 76,906) $ ( 754)
See Accompanying Notes and Accountant's Report
TRILOGY GAMING CORPORATION
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS (CONTINUED)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999
AND FOR THE PERIOD JANUARY 1, 1989
(DATE OF INCEPTION OF DEVELOPMENT)
TO SEPTEMBER 30, 1999
January 1, 1989
Nine (Date of
Months Inception of
Ended Development) to
September 30, September 30,
1999 1999
CASH AND CASH EQUIVALENTS BALANCE AT
BEGINNING OF PERIOD $ 76,937 $ 785
CASH AND CASH EQUIVALENTS BALANCE AT
END OF PERIOD $ 31 $ 31
SUPPLEMENTARY DISCLOSURE OF
CASH FLOW INFORMATION
Interest paid $ 0 $ 0
Taxes paid $ 0 $ 0
NON CASH INVESTING AND FINANCING
ACTIVITIES
Issuance of company stock for expenses and
services $ 505,485
Issuance of company stock for merger of
International Lottery Productions Ltd. $ 527,608
See Accompanying Notes and Accountant's Report
TRILOGY GAMING CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1999
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES
Nature of Business
Trilogy Gaming Corporation was incorporated in the State of Delaware for the
primary business
purpose of selling its Trilogy scratch tab/lotto type tickets on consignment
and administering the
progressive jackpots and communication systems.
Accounting Estimates
Management uses estimates and assumptions in preparing financial
statements in
accordance with generally accepted accounting principles. Those estimates and
assumptions
affect the reported amounts of assets and liabilities, the disclosure of
contingent assets and
liabilities, and the reported revenues and expenses. Actual results could vary
from the estimates
that were used.
Cash and Cash Equivalents
For purposes of the statement of cash flows, the company considers all highly
liquid debt
instruments purchased with a maturity of three months or less to be cash
equivalents.
Income Taxes
Provisions for income taxes are based on taxes payable or refundable for the
current year and
deferred taxes on temporary differences between the amount of taxable income
and pretax financial
income and between the tax bases of assets and liabilities and their reported
amounts in the
financial statements. Deferred tax assets and liabilities are included in the
financial statements at
currently enacted income tax rates applicable to the period in which the
deferred tax assets and
liabilities are expected to be realized or settled as prescribed in FASB
Statement No. 109,
Accounting for Income Taxes. As changes in tax laws or rate are enacted,
deferred tax assets and
liabilities are adjusted through the provision for income taxes.
Net Loss Per Share
Net loss per common share is computed by dividing net loss by the weighted
average number of
shares outstanding during the period. In accordance with FASB 128, potentially
dilative warrants
and options that would have an anti-dilutive effect on net loss per share are
excluded.
Long Lived Assets
Statement of Financial Accounting Standards No. 121, "Accounting for the
Impairment of Long-
Lived Assets and for Long-Lived Assets to Be Disposed Of," requires that
long-lived assets be
reviewed for impairment whenever events or changes in circumstances indicate
that the carry
amount of the asset in question may not be recoverable.
Accordingly, the following assets were expensed for the period ended September
30, 1999.
See Accompanying Notes and Accountant's Report
TRILOGY GAMING CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1999
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES (CONTINUED)
Long Lived Assets (Continued)
Gaming tables $ 571,239
Cybernet lease 12,506
Office equipment 504
$ 584,249
NOTE 2 DEVELOPMENT STAGE OPERATIONS
As of September 30, 1999, the company was in the development stage of
operations.
According to the Financial Accounting Standards Board of the Financial
Accounting
Foundation, a development stage company is defined as a company that devotes
most of its
activities to establishing a new business activity. In addition, planned
principle activities
have not commenced, or have commenced and have not yet produced significant
revenue.
FAS-7 requires that all development costs be expensed during the development
period. The
company expensed $646,163 of development costs for the nine months ended
September 30,
1999 and $2,277,914 from January 1, 1989 (date of inception of development) to
September 30,
1999.
NOTE 3 TRIBAL GAMING CONTRACT
The company's contract with the St. Regis Mohawk Indian Tribe of New
York was canceled
by the Indian Counsel. The company expensed the gaming table, cybernet lease
and tickets
as worthless as of September 30, 1999.
NOTE 4 DEFERRED TAX ASSET
The deferred tax asset arises from the difference between the accounting for
development
stage costs. For financial statement purposes, development stage costs are
expensed as
incurred. For tax purposes, these expenses are capitalized and will be
amortized over 60
months once operations begin.
The components of the deferred tax asset are as follows:
Deferred tax asset from development costs $ 569,479
Less valuation allowance 569,479
Net deferred tax asset $ 0
See Accompanying Notes and Accountant's Report
TRILOGY GAMING CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1999
NOTE 5 LICENSING AGREEMENT WITH RELATED PARTY
The company has two licensing agreements with the company's Chief Executive
Officer for the
exclusive right to use the officer's patents and trade marks for the Trilogy
Lotto game.
The first agreement provides:
A. 1,310,000 common voting shares of stock
B. 3,690 shares of convertible preferred shares, convertible at the rate of 1
convertible
preferred share for 1,000 common shares beginning March 1, 1998 for each 1,000
new
shares issued by the company. The shares eligible for conversion at September
30, 1999
is computed as follows:
Shares outstanding at March 1, 1998 2,478,647
Shares outstanding at September 30, 1999 3,130,272
Shares eligible for conversion 651,625
C. 1 % royalty with minimum payments of $50,000.
The second agreement provides:
A. 3,500 shares of convertible preferred shares, convertible at the rate
of 1 convertible
preferred share for 1,000 common shares beginning January 2, 2000 for each
1,000 new
shares issued by the company.
B. 1 % royalty with minimum payments of $50,000.
NOTE 6 BEARER ROYALTY CERTIFICATES
The company has issued 61 five year Trilogy Lotto royalty interests.
The royalty units will
receive a 6% minimum royalty payment for two years plus a five year royalty of
.01% of pre
tax income. Payments begin the first year the company receives gross profits
and royalty
earnings payments from each state lottery marketing the Trilogy Lotto game.
NOTE 7 CONVERTIBLE PREFERRED STOCK
As part of the licensing agreements described in footnote number 5,
the Chief Executive
Officer received 7,190 shares of convertible, non-cumulative voting preferred
shares of stock.
These shares are convertible at the rate of one preferred share for 1,000
common shares for a
total of 7,190,000 common shares. There is no expiration date on this option.
NOTE 8 REDEEMABLE PREFERRED STOCK
Regulation S-X of the Securities and Exchange Commission states that preferred
stock
subject to mandatory redemption requirements must be presented separately in
the balance
sheet and not be included in the shareholders' equity section. The
non-cumulative, non-
voting shares have a redemption value of $10,000 payable from 25% of the
company's
quarterly pre-tax earnings as a preferred stock dividend. When the preferred
stock dividends
paid under this formula equals $10,000 per unit, the preferred unit shares will
be terminated on
the books of the company.
At September 30, 1999, the company was contingently liable to redeem
$60,000 of preferred
stock from 25% of pre-tax earnings.
See Accompanying Notes and Accountant's Report
TRILOGY GAMING CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1999
NOTE 9 INCENTIVE QUALIFIED EMPLOYEE STOCK OPTION PLAN
The company has adopted an incentive qualified employee stock option
plan. The plan is
designed for key employees and will be administered by the Compensation
Committee of the Board
of Directors and/or the company's Chief Executive officer. The plan will
provide that employee
options granted by the company are vested in the employee after services have
been performed or
after one year of full time employment and may be exercised after the
options are vested and prior to the termination date of the vested
option. The options are
exercisable for $1.25 per share and each option shall be vested for services
performed for the
company or after one year as a full time employee of the company.
The company granted the chief operating officer the following options:
Three year option for 150,000 shares of common stock from March 1,
1999.
Three year option for 150,000 shares of common stock from March 1,
2000.
A summary of the stock options is as follows:
Option Price
Shares Per Share
Outstanding at January 1, 1999 300,000 1.25
Granted during the year 0 0
Outstanding at September 30, 1999 300,000 $1.25
The company has reserved 1,500,000 shares from its authorized common
stock under its Incentive
Qualified Employee stock option plan.
Information regarding stock options outstanding as of September 30,
1999 is as follows:
Options Outstanding
Weighted
Weighted Average
Average Remaining
Price Exercise Contractual
Range Shares Price Life
$ 1.25 300,000 $ 1.25 3 years, 2months
See Accompanying Notes and Accountant's Report
TRILOGY GAMING CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1999
NOTE 9 INCENTIVE QUALIFIED EMPLOYEE STOCK OPTION PLAN (CONTINUED)
Options Exercisable
Weighted
Average
Price Exercise
Range Shares Price
$ 1.25 0 N/A
NOTE 10 EXECUTIVE EMPLOYMENT AGREEMENTS
The company has entered into employment contracts with the Chief
Executive Officer and Chief
Operating Officer. The terms for each agreement are as follows:
A. Annual base salary of $104,000
B. $600 monthly automobile allowance
C. Medical insurance coverage
D. Annual bonus of $10,000 for each $1,000,000 pre tax earnings
E. Seven year term for the Chief Executive Officer and five year
term for the Chief Operating Officer
The two officers retroactive suspended the contracts and financial
obligation effective on the
original contract approval dates. Accordingly, all previous liabilities on
these contracts were
voided.
NOTE 11 DIRECTORS' COMPENSATION
The stockholders approved the following compensation for the Directors of the
company:
A. Issuance of common stock
5,000 shares to each director for each full year of service from November
1, 1995 to November 1,
1998 and 10,000 shares for each full year from November 16, 1998.
and
B. Bonus
An annual director bonus of up to 1,000 common shares for each
$1,000,000 of pre tax earnings
generated to the company during each of the company's fiscal year the director
served on the
Board of Directors of the Company.
See Accompanying Notes and Accountant's Report
TRILOGY GAMING CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1999
NOTE 12 PUBLIC OFFERING
The Board of Directors have the authority, prior to November 1, 1999, to
register with the
Securities and Exchange Commission a public offering for up to 10,000,000
common shares of
the company's common stock.
NOTE 13 EXECUTIVE BONUSES
Eight corporation officers have been granted an Executive Bonus program
whereby they will
receive, for each full year as a full time employee and officer of the company,
10,000 common
shares of the company for each $1,000,000 of pre tax earnings generated to the
company
during the company's fiscal year.
NOTE 14 STOCK SPLIT
The Board of Directors are authorized to split the company's
outstanding common shares up
to a total of five for one. This authorization expires on December 31, 1999.
NOTE 15 WARRANTS TO ACQUIRE COMMON STOCK
The company has issued the following warrants:
Number Price Per Expiration
of Shares Shares Date
Series A warrants 505,000 $3.00 June 30, 2000
Series B warrants 505,000 7.00 December 31, 2000
Series C warrants 12,500 3.00 January 31, 2000
Series D warrants 12,500 7.00 July 31, 2000
Series F warrants 70,000 1.00 June 30, 2000
NOTE 16 GOING CONCERN
These financial statements are presented on the basis that the company
is a going concern.
Going concern contemplates the realization of assets and the satisfaction of
liabilities in the
normal course of business over a reasonable length of time. The accompanying
financial
statement show that current liabilities exceed current assets by $110,921, a
shareholders'
deficiency of $110,921, and the company has no contracts for the sale of its
products.
NOTE 17 SUBSEQUENT EVENTS
On November 9, 1999, the company issued 100,000 shares of common stock
for $0.25 per
shares. The shares had warrants for 200,000 shares of common stock at $1.00
per share,
expiring June 30, 2000
See Accompanying Notes and Accountant's Report
END OF FINANCIAL STATEMENTS
EXHIBIT A
REPORT TO THE SHAREHOLDERS
Of
Trilogy Gaming Corporation
Attached to this Report is DRAFT of a cover page outlining the Company's
proposed 500 Unit Private
Placement and the marketing plan for the Company's new World Wide Web
(Internet)
TelNETgo2000.com progressive jackpot FREE Sweepstakes game. This plan is
predicated upon
sufficient capital infusion to implement the product for its intended market.
For a better understanding
about the direction and goals of the Company, please review these marketing
materials.
The Company has also designed the Trilogy game for marketing to State Lotteries
using the lotteries current
ITVM's (Instant Ticket Vending Machines) as the distribution system for the
Trilogy scratchier ticket
progressive jackpot game. Recent contact with certain state Lottery officials
has been very encouraging.
The company has sent information, per their request, and currently await the
opportunity to demonstrate the
game and the process for distribution to each of the states. The further
advancement of this market will
require a major infusion of capital and could take a considerable amount of
time and expense before the
Company could land a contract with a State lottery.
The following report includes the activities and events covering 1998 through
September 30,1999.
This overlap is to assure that all the new shareholders are informed of all
previous activity as well as
the current events of the company.
The Company, incorporated in the State of Delaware, is a public reporting
company with 500 +/- shareholders. The
Company trade symbol is "TGGC".
American Securities Transfer & Trust, 938 Quail Street, Suite 101, Lakewood, CO
80215 is the Company
stock transfer agent.
For the past several years the Company has been in the stage of product
development, software/hardware
and network communication design of its Trilogy progressive jackpot game.
The Company has from the patent owner, who is the CEO, President and majority
shareholder of the Company, the
exclusive license for the United States to patent # 5,158,293 (referred to in
this document as the Trilogy progressive
jackpot tab/lotto type game) and patent #2,128,150 for the trade name "Trilogy"
and the " Game with Multiple
Incentives and multiple Levels of Game Play and combination Lottery Game" With
Time of Purchase Win Progressive
Jackpot".
On April 30, 1998 the Company entered into an Agreement of Merger with Shared
Use Network Services, Inc (SUNS).
A dispute arose regarding the consideration under the agreement including the
seven million dollar valuation of
SUNS assets that were to be acquired by TGC upon the merger. Upon advice of
the Company's corporate counsel,
SUNS was notified on October 7, 1998 that the Board of Directors of TGC had
voted to terminate, rescind and
abandon the proposed merger. At the November 16, 1998 annual shareholders
meeting, by resolution, the
shareholders unanimously approved to ratify and approve the action of the board
of directors resending the
proposed SUNS merger. Certain investors purchased shares of TGC's common stock
through a private placement
memorandum that made references, including financial information regarding the
SUNS proposed merger. After the
proposed merger was rescinded, TGC made a recession offer to all shareholders
that had purchased shares through
the private placement that referenced SUNS. The recession offer was to Return
the shares for a full refund plus 6%
or Retain the shares and sign a new private placement agreement and letter of
investment intent. 100% elected to
Retain their shares.
At the November 16, 1998 annual Shareholders Meeting, Mr. Maledon gave a
progress report to the Shareholders
regarding the game tables manufacture, software, hardware and communications
company that he had been working
with to produced the Trilogy table game under his direction. The Shareholders
acknowledged and affirmed that Mr.
Maledon was the officer of the Company designated by the CEO with full
authority over the Trilogy table game
development, manufacturing, communications, etc. The shareholders by
resolution approved and instructed the
Board of Directors to elect Mr. Maledon as the Chief Operating Officer (COO) of
the Company and that he shall
continue his duties with full authority over the Trilogy table game
development, manufacturing, communications, etc.
Mr. Tommy McLeese President of Phoenix Gaming International Inc. (PGI) of Las
Vegas, Nevada was recognized by
the shareholders at the Annual Shareholders Meeting held on November 16, 1998
as the Primary contractor for the
Company to design and develop the game software/hardware, electronics for the
tables, the table tops, installation
and on site training of Tribal personal. Mr. McLeese was elected to the Board
of Directors at the Annual
Shareholders Meeting.
Mr. Mike Maledon, the Company's COO, Secretary and Director disclosed at the
Annual shareholders and Directors
meeting that he was a partner of Industrial Power Coating Inc. It was
recognized by the shareholders and directors
that Phoenix Power Coating Inc. of Phoenix, Arizona was the contractor to
produce the metal base for the tables in
coordination with Phoenix Gaming International, Inc and the COO.
At the November 16, 1998 Board of Directors Meeting, Mr. Maledon and Mr.
McLeese gave a progress report to the
Board of Directors regarding producing the game tables, software, hardware and
communications. The Board of
directors acknowledged and affirmed that Mr. Maledon was the Officer of the
Company designated by the
shareholders with full authority over the Trilogy table game development,
manufacturing, communications,
installation, ticket printing, etc and that Mr. Maledon continue his duties and
the newly elected Director Tommy
Mcleese continue development and manufacturing of the Trilogy table game and
acknowledged that they were doing
a good job for the Company.
The Law firm of Snell & Wilmer of Phoenix, AZ has given its legal opinion to
the Company that the Trilogy tab/card
multiple jackpot game is a Class II game pursuant to the definitions set forth
by the United States Congress to NIGC.
On September 15, 1998 the Company submitted the Trilogy scratch tab/card game
to the NIGC for Class II
classification or opinion.
In 1996 Trilogy Gaming Corporation signed an agreement with the St. Regis
Mohawk Indian Tribe for up to 1000
stand alone machines that would dispense and play the Trilogy Progressive pull
tab game. This contract was subject
to the receipt of class II license for the Trilogy game. The Arizona
Department of Gaming reviewed the game during
this time and advised that the game itself is very certain to be classified as
a class II game, but the device is just too
similar to a slot machine and certain other arrangements must be made. Trilogy
went back to the St. Regis Mohawk
Tribe with a new design in the form of a Table Game that also dispensed and
played the Trilogy Progressive game.
During this time the National Indian Gaming Commission (NIGC), the commission
that issues class II licenses, put a
hold on all new issuances until certain legal issues with other companies that
were and are still pending are resolved.
In 1998, the St. Regis Tribal Council in an effort to obtain the Trilogy
progressive Class II game, issued an agreement
for 100 Trilogy Table games that allowed Trilogy to use the St. Regis license
until the official classification could be
obtained. The St. Regis Tribe was the only operating casino that would take
this risk, contemplating that the game
and the devise would eventually be classified as a class II operation.
The use of the Table to dispense the ticket, satisfied several of the NIGC
requirements that were missing in the slot
machine look alike. The Casino Dealer for each Table handles all the cash
including the payment for the ticket and
the use of Casino chips for the payment of certain winning tickets. The use of
the table to dispense the Trilogy
progressive ticket also created many new equipment communication requirements
that had not been tested as of that
time.
The table game that was presented at the previous shareholders meeting in
November of 1998, a nine jackpot game
with the use of playing cards imprinted on the back of the scratch ticket, was
scrapped because it was deemed, by
Trilogy Management, to be to complicated as the first game to be introduced by
the Company and the possibility that
it would not be classified as a Class II device. An electronic BINGO scratcher
game was designed on paper and
Phoenix Gaming International Inc. of Las Vegas was assigned the task of
creating the table from scratch. The use of
the electronic buttons to the design of the specialty dispensers were all
fabricated as the table was being developed.
The actual production of the table and the bases was a difficult, time
consuming and costly process. The table with
the eye catching blue felt and blinking BINGO lamps was very well received
especially at the April Indian Gaming
show in Tucson, Arizona. However, the real obstacle to the game design was the
creation and implementation of the
communication systems required to run the game individually and collectively.
Each table was really eight stations,
each station had to talk to each other and each table needed to talk to each
other and each casino needed to talk to
each other. This communication system although easily drawn on paper was not a
easy task in the field. A
communications company, Cybernet Ventures of Las Vegas, recommended by Phoenix
Gaming to create and install
the required computers, hubs, routers and T-1 communication lines was woefully
unqualified to complete the
communication system. This not only cost a lot of lost time but was also very
costly financially. The Company was
determined to complete the implementation, if only at the one Casino.
During this time, early 1999, the weather in upper New York was the worst it
has been in five years. The snowfall
crippled the area causing extensive delays in the implementation. The
implementation at the St. Regis Bingo Palace
was laden with extensive delays due to faulty electric supply and general labor
to complete the required tasks. The
implementation was originally scheduled to be completed by the end of February,
1999. The actual first date that the
game was ready to be kicked off was the end of April, 1999 but this only
included four tables, again this change was
the result of the extensive difficulties with the communication systems.
The St. Regis also was not ready or familiar with the operating requirements of
real table games in a Casino. Trilogy
trained potential dealers and pit crew personnel including extensive internal
controls for both the game operation and
money control. Trilogy even paid for the first two weeks of this training and
potential implementation. In short, the
implementation took an extremely long time and caused great concern for the St.
Regis Tribe.
During the later stages of the implementation, the St. Regis Tribal Council
changed and the new control group
decided that they wanted to concentrate on class III gambling and used all the
delays and alleged confusion as an
excuse to cancel the table contract and to remove the tables from the bingo
palace. Trilogy was informed of this
decision after the tables were removed and placed in a storage facility on the
reservation. Thus today Trilogy owns
10 tables, in storage, and 20 additional tables in various stages of
completion, that are not class II approved and not
likely to be approved by NIGC in the near future. Via positive conversations
with NIGC committee members at the St.
Regis while the tables were being tested, it is very likely that when new
licenses are awarded that this game and table
devise will meet all the requirements of current class II criteria. The end
result is that after many months of in the field
designing a game from scratch and significant dollars expended to accomplish
this result, the game and the tables
work at least in one location, but now there is no willing casino to take a
chance on this equipment until they are
classified as class II.
PGI produced 10 of the 30 tables ordered by the Company of which 9 were sent to
the St Regis Reservation in NY for
assembly by PGI. 8 were placed on the floor of the Mohawk bingo Palace of
which PGI, after a considerable amount
of time and expense to TGC, made only 4 of the 8 tables operational to dispense
and play the Trilogy tab/bingo game
without the wide area communications system functioning as specified and paid
for by TGC.
Tommy McLeese Resigned as a Director of TGC on May 27, 1999.
The Company believes Phoenix Gaming International (PGI) was negligent and
unprofessional in its:
(A) Design of the Trilogy table game software, hardware, software programmers,
hardware suppliers, and T-1 line
communications, needs, requirements and supplier. Not adequately testing all
such items prior to shipping
Trilogy game tables to the St Regis Reservation for delivery to the Tribes
Mohawk Bingo Palace.
(B) Design and manufacturing of the Trilogy game tables, the game software to
operate the game at the tables,
the software to communicate the game information at and between the game tables
to the location host
computer and the communications system governing the whole system for the
Trilogy progressive jackpot
wide area net work game.
(C) Prior to shipping Trilogy Tables and game hardware, on-site inspection and
preparation of the St Regis
Tribes Mohawk Bingo Palace for Trilogy table dedicated floor space, required
structural floor space,
electrical wiring, table pay video security, Trilogy Tab room vault receiving
game ticket.
(D) Installation of the table, on sight training of certain personal required
to operate the Trilogy game.
The Company believes PGI exceeded its manufacturing quotes to TGC to produce 30
Trilogy game tables with
software and hardware which PGI claims were additional cost incurred by PGI for
on-site cost and expense for PGI,
certain of its employees and software programmers incurred getting St Regis
Mohawk Bingo Palace ready to accept
the Trilogy tables, hardware and game tickets and to get the Trilogy game
software to operate to run the Trilogy table
game and setting up the St Regis Mohawk Bingo Palace for marketing the Trilogy
game.
Tommy McLeese President of PGI (and as a Director of TGC) assured the Company
that he would deliver all the
software to the Company's COO Mr. Maledon when the software produced by PGI was
completed and tested. Mr.
Maledon has requested on several occasions that PGI make available and deliver
to him the Trilogy game software
that TGC has paid PGI for. PGI has refused to provide to the Company or allow
the Company's COO to obtain the
Trilogy game software. The Company plans to seek legal action to resolve this
issue as well as any other damages
that the Company may have sub stained as a result of PGI's negligence.
A detailed analysis of the amounts spent on this project are included in the
financial summary included with
this report.
During the period of May 1999 to current, Trilogy investigated the Charity
market with the hope of placing qualified
equipment in various charity locations and implementing a modified version of
the class II game in the form of an
electronic raffle. The VFW, a qualified charity located in Phoenix, Arizona
were very eager to proceed with this type
of fund raising activity, pending the formal indication, via independent legal
opinion that the process in total is
lawful. The legal opinion is still pending, but inadequate company funds have
put the opinion on hold.
During this charity research, the Trilogy contacted The Infinity Group, Inc
which is the only company that owns
NIGC class II approved machines and tickets and discovered it was looking for a
wide area progressive game that
would fit their current equipment and allow for a greater return on the
equipment.
On Tuesday September 21, 1999, Mr. Mullins and Mr. Maledon met with the
principals of the Infinity Group in
Albuquerque, New Mexico to discus such a proposal. Infinity had several
hundred class II NIGC approved machines
on hand that TGC, by very favorable lease arrangements, could through Infinity,
have the Trilogy game marketed on
Infinity machines under Infinity's Class II approval. It appeared there could
be a beneficial business arrangement
that could be worked out satisfactory to both parties. A marketing plan was
prepared for a method to have access to
600 +/- Infinity machines, provide $450,000 +/- operating capital to TGC with
the potential to earn $6,000,000 to TGC
the first 12 months of operations. Mr. Mullins and Mr. Maledon presented the
proposal to Mr. Daniels (Mr. Daniels
sold the majority of the company's 98 Unit Private placement) on the morning of
Wednesday, September 22, 1999.
Mr. Daniels represented that he had the investors that would fund the 600 +/-
machine lease package for a
participation interest. The Infinity plan was presented that afternoon to the
special meeting of the Board of Directors
of the Company for consideration and action thereon. The board approved
management to proceed with the Infinity
Group to consummate the deal as presented.
At the special Board of Directors meeting, certain Directors demanded Mr.
Mullins, as the majority shareholder, turn
over control of the Company to them, Mr. Mullins rejected their demands. The
following Director resignations were
rendered citing personal reasons and differences of opinion with the majority
shareholder Mr. Mullins.
Joseph Imhoff September 25, 1999 Jim Holmes October 07, 1999
Robert Rettig September 29, 1999 John Wertheim October 19, 1999
It appears that after certain Directors resigned from the Board that Mr.
Daniels and others closely related to the
Company may have circumvented the Company and went directly to the Infinity
Group and cut their own deal to
purchase pull tab machines and game tickets under similar favorable arrangement
that they received from TGC as
proprietary information and trade secrets. Because of these actions, the
Company was not successful in making any
business arrangements with the Infinity Group. The Company believes there
exists possible conflicts and corporate
gain to unjustly enrich certain individuals. The Company believes it has been
damaged by such actions and plans to
seek legal action against those involved.
The Present Board of Directors of the Company are: Wayne Mullins Michael
Maledon Tom Burns.
During May of 1999 the Company's law firm of Snell & Wilmer received and
delivered to the Company a draft of a law
suite with the threat that it may be filed on behalf of the former ILP Delaware
secretary and six (6) of the ten (10)
original organizers who were minority shareholders of International Lottery
Productions, Ltd., (ILP) a Delaware
company incorporated on March 16, 1989. ILP had 10 Founder A Incorporators and
12 founder B shareholders for a
total of 22 shareholders. The main thrust of the allegations are dependent
upon the claims that the 6 incorporators
were induced to and paid $10,000 each to Wayne Mullins personally for his
personal benefit, for a interest in his
patent and for 40,000 common shares of ILP, when in fact, they each signed and
initialed each page of the "Pre-
Organizational Agreement" and the "Organizational Meeting". Both documents set
forth all their rights and risks
involved in investing into and forming a new corporation as the promoters.
Each of their $10,000 Capital
contributions to form the company (ILP) were made over a period of time and
each payment was made payable to
ILP.
During early 1999, the former Secretary of ILP, Rick Burris called Mr. Mullins
to meet at the Sliver Spur Restaurant at
16th street and Bell, PHX, AZ with Burris, Will Rogers and Steve Rogers to
discus the ILP March 7, 1996 merger into
TGC. At this meeting, Will Rogers, Steve Rogers and Rick Burris demanded that
their group of 6 closely related
friends and relatives receive 340,000 TGC shares instead of the 15,000 shares
that was approved by the merger of ILP
into TGC. They threatened Mr. Mullins that, if their group did not each get
the same number of 40,000 ILP shares in
TGC, they would file a law suite and drive the company into ruin and
bankruptcy. They even bragged that that they
had an attorney who would represent them on consignment and the best thing TGC
and/or Mr. Mullins could do was
to issue them 340,000 TGC shares instead of the 15,000 TGC shares approved by
the merger. (TGC shares at the time
of this meeting were trading around $6 or $7 thereby making their extortion
attempt valued at 340,000 shares times $6
for $2,000,000+/-) As the patent owner and majority shareholder of ILP, Mr.
Mullins believes that the 6 disgruntled
ILP shareholders will not prevail with their claim that they have an ownership
right in Mr. Mullins Trilogy game
patent, without which, all of their other allegations most likely become
feverous and without merit. In the event this
group of 6 file their threatened action, the Company and Mr. Mullins (severely)
will defend and counter sue all parties
thereto.
10 years after ILP was incorporated and 7 years after ILP went out of business,
TGC begin contacting the TGC/ILP
shareholders. 3 of the ILP founder B shareholders cannot be located, 1 has not
been contacted including the 6
Founder A shareholders of which 1 of the 6 has already agreed to the license by
"written voting ballot" pursuant to
the shareholder meeting approving the merger of ILP into TGC and another 1 of
the 6 has already approved Mr.
Mullins license by "written voting ballot" at the November 16, 1998
shareholders meeting of TGC.
The remaining 4 Founder A and 8 Founder B Shareholders have acknowledged in
writing that; if a discrepancy may
of existed anytime as to whether ILP may have owned the patent or the patent
was a license to ILP is agreed to and
affirmed to by the fact that, all 10 incorporators (including the six
disgruntled shareholders) did in fact sign the Pre-
incorporation agreement, the Organizational Meeting of the Incorporators
whereby ILP entered into a license
agreement with Mr. Mullins, the Secretary of ILP signed the licensee for ILP,
that the license was not a conveyance,
that Mr. Mullins had the right to terminate the license, that Mr. Mullins gave
proper notice along with an accounting
to terminate the license agreement, that proper notice of the merger of ILP
into TGC was given and that the merger
was legally concluded.
A copy of letter from the Company's law firm directed to Mr. Galbraith dated
May 12, 1998 is attached to this
report.
The parties have entered into a Tolling Agreement for the purpose of attempting
to resolve the alleged allegations.
WARRANTS AND REGISTRATION
In the process of issuing common stock via the private placement to qualified
investor, warrants for the
additional sale of common stock were also issued. The original exercise date
for the series A warrants was
set at June 30, 1999 at an exercise price of $3.00 per share and Series B
warrants with an exercise price of
$7.00. Both warrants were amended and extended as follows:
Each Unit is for 5,000 common voting shares and
1 Series A Warrant (non detachable) to purchase for the price of $3.00 per
share: 5,000 restricted common shares on
or before 12/31/1999 or 5,000 non-restricted common shares on or before sixty
(60) days after the Company has given
written notice to the Unit holder of record on the books of the Company
(whichever occurs first) that, the Company
has registered with the SEC; (a) the common shares pursuant to this Agreement
(providing said shares have been
outstanding less than the required SEC 12 month holding period for restricted
stock) that are coupled to the Series A
and B warrants and (b) to sell to the Company's Series A and B Warrant
holders of record, the number of new
common shares of the Company stock at the price stated on the Series A and
Series B Warrant(s), and
1 Series B Warrant (non detachable) to purchase for the price of $7.00 per
share: 5,000 restricted common shares on
or before 6/30/2000 or 5,000 non-restricted common shares one hundred eighty
(180) days after the above said written
notice is given by the Company to the Unit holder, whichever occurs first.
The company also planned to register all outstanding issues and prepare for a
second public offering at the
same registration. At the advise of council the company has not opted to
register the common share until
such time that it is financially feasible.
The Company's new mailing address is Trilogy Gaming Corporation PO Box
30310 Phoenix, Arizona 85046
FINANCIAL SUMMARY
During the 9 months ended September 30, 1999 the Company completed the sale for
the Private Placement to
Qualified investors with receipts totaling $395,000. Total cash disbursements
for the same period were $467,246. For
a reduction in cash of $72,246.
The major disbursements for this period were:
Costs to complete the tables in New York $268,280
Commissions paid on sale of stock $79,200
Royalty payments to Wayne Mullins, CEO $23,000
Legal fees Snell & Wilmer $16,079
Office supplies $15,565
Web site production $8,300
Auto lease and insurance $7,277
Indian Trade Show Tucson, AZ $6,588
Accounting Audit fees $6,075
Stock Transfer Agent fees $6,436
Office Rent $6,717
Insurance D&O $4,855
Utilities and Telephone $4,484
Travel expenses for M. Maledon to New York $3,000
All other $11,400
Over 75%, $347,480 of the funds disbursed were for the completion of the table
games in New York and for
commissions paid for the placing of the private placement.
The following summary is for the 21 months from January 1, 1998 thru September
30, 1999.
Total receipts from Private Placements $1,102,000
Total disbursements by major category and % of total disbursements
Capital expenditures $607,803 54.5%
Commissions & bonuses paid $213,958 19.2%
Royalty payments paid to Mr. Mullins $62,064 5.6%
Office supplies/printing $54,002 4.8%
Legal Fees $31,831 2.9%
Auto leases and insurance $21,760 2.0%
Insurance D&O/Prop $26,111 2.3%
Accounting audit fees $21,370 1.9%
Office rent $16,500 1.5%
Transfer agencies $10,213 0.9%
Suns acquisition costs $10,161 0.9%
Advertising/Web Production $10,091 0.9%
Telephone $9,604 0.9%
All other expenses $24,596 2.2%
Total disbursements $1,120,065 100.0%
ACCOUNTS PAYABLE
The company, as of September 30, 1999, has normal trade accounts payable of
approximately $111,000. The major
categories are as follows:
Current 30days +
Legal fees $2,000 $10,575
Accounting/audit $2,175 $6,515
Insurance D&O $2,437 $9,215
Insurance Prop/Casualty $1,700 $8,000
Office rent $840 $840
Stock transfer agent $442 $480
Utilities $471 $475
Office max supplies $4,238
Microage of Montreal, Canada $3,000
Michael Maledon Travel $9,500
Industrial Powdercoating cash advance $24,000
Industrial Powdercoating table bases $22,500
Other suppliers $1,550
Total $15,853 $95,100
Insurance coverage for both D&O and the Property & Casualty was cancelled in
October, 1999, for lack of payment.
The law firm of Snell & Wilmer resigned as Corporate Council effective October
2, 1999, citing a lack of payment and a
conflict of interest.
The Company is in the process of selecting another law firm to represent the
Company.
The following are summaries of the Audited Financial Statements for the Year
Ended 12/31/98 and the management
generated Financial Statements for the 9 Months Ended 09/31/99.
TRILOGY GAMING CORPORATION BALANCE SHEET
ASSETS 12/31/98 6/30/99
Cash $785 $25
Property and Equipment $395,905 0
TOTAL ASSETS $396,690 $25
LIABILITIES AND SHAREHOLDERS EQUITY
Liabilities $176,948 356,000
PREFERRED STOCK (par value $0.01 3690 shares outstanding) $37 $37
COMMON STOCK (par value $0.001 5,060,00 shares outstanding) $2,850
$3,060
Paid in Capital $$2,318,482 $2,279,378
Advance on stock $7,500 0
RETAINED EARNINGS (defect) ($477,376) ($477,376)
DEFICIT ACCUMULATED DURING DEVELOPMENT STAGE ($1,631,751) ($2,279,378)
TOTAL LIABILITIES AND SHAREHOLDERS EQUITY $396,680 $25
TRILOGY GAMING CORPORATION
(A DEVELOPMENT COMPANY)
STATEMENTS OF OPERATIONS
(see page 6 for cash disbursements by category)
Full reviewed statements for the 3rd quarter (period ended 9-30-99) were
unavailable at the time of this report.
1998 audited financial statements and the 1st, 2nd & 3rd quarter 1999
un-audited financial statements will be available for review at
the annual shareholders meeting.
_______________________________________ END OF SHAREHOLDERS REPORT
Wayne Mullins, CEO &President of the Company
this 27th day of November, 1999
DRAFT Private Placement
Memorandum DRAFT
500 Series A Preferred voting, Revenue Sharing, Convertible UNITS
Unit Price to
Purchasers
(1)
Selling
Expenses
(2)
Proceeds to
Company
(3)
Minimum Purchase
$10,000
$1,500
$8,500
Maximum Offering(1)
$5,000,000
$750,000
$4,250,000
(1) Units are being offered by the Company on a "best efforts basis with
respect to the Offering. See "TERMS OF THE
OFFERING."
(2) Expense Of The Offering excluding non-accountable expense allowance, see
"Plan Of Distribution."
(3) After deducting expenses estimated at $750,000 if all of the Offering is
sold.
THE UNITS MAY BE PURCHASED BY ACCREDITED INVESTORS ONLY.
Each Unit is For One (1) Series A Preferred voting share with revenue sharing
rights and convertible rights.
REVENUE SHARING. Each UNIT shall receive 25% of the Quarterly pre-tax earnings
of the Company
divided by 500 and 1/500th shall then be paid to each issued and outstanding
series A Preferred UNIT share
holder of record until such time the Preferred dividends/payments, equals 300%
of the Unit Price of this
offering, or until December 31, 2001 at which time the series A Preferred UNIT
not converted, converts for
common shares at the below price.
CONVERTIBLE RIGHTS. During the revenue sharing period, each series A
Preferred UNIT may be
converted for common shares of the Company's restricted common voting stock
pursuant to the following:
On or Before Providing UNIT Convertible Price per share Price per
share If all 500 units
has not received for below including excluding converted at this
projected revenue number of projected any projected price,
stake in the
payments exceeding voting shares revenue payments revenue payments
Comp
any would be
06-30-2000 $0.00 2,500 - $4.00 $4.00 19.2%
09-31-2000 $2,500 1,250 - $6.00 $8.00 9.6%
12-31-2000 $6,000 1,000 - $4.00 $10.00 7.7%
03-31-2001 $12,000 500 - $0.25 $20.00 3.8%
06-31-2001 $15,000 250 + $20.00 $40.00 1.5%
09-31-2001 $25,000 125 + $120.00 $80.00 .02%
12-31-2001 $30,000 100 + $200.00 $100.00 .008%
The Securities offered hereby are speculative securities and involve a high
degree of risk. See "RISK FACTORS."
These securities have not been registered under the securities act or any state
securities laws and have not been
approved or disapproved by any federal or state securities commission or
regulatory authority. Furthermore, the
foregoing authorities have not passed upon the accuracy, completeness or
adequacy of this memorandum. Any
representation to the contrary is a criminal offense.
This memorandum does not constitute an offer to sell or a solicitation of an
offer to buy any securities other than the
preferred stock offered hereby, nor does it constitute an offer to sell or a
solicitation of an offer to buy from any
person in any state or other jurisdiction in which such offer or solicitation
would be unlawful, or to a person to whom
it is unlawful to make such offer or solicitation.
Each investor purchasing the securities offered hereby will be required to
execute a subscription agreement. Any
purchase of securities should be made only after a complete and thorough review
of this memorandum and the
provisions of such subscription agreement. The suitability standards set forth
in this memorandum and in the
subscription agreement represent suitability standards for prospective
investors. Each prospective investor should
carefully assess and determine whether an investment in the securities by such
investor is appropriate.
NOTICE OF ANNUAL MEETING
OF THE SHAREHOLDERS
of
Trilogy Gaming Corporation
a Delaware corporation.
Pursuant to the Company's Article of Incorporation, Article IX
NOTICE IS HEREBY GIVEN, that, the Annual Meeting of the Shareholders of Trilogy
Gaming Corporation will be
held at 9:00 A. M. on the 17th day of December, 1998 at the Double Tree La
Posada Resort, (in the Hayden Room),
4949 E. Lincoln Drive, Scottsdale, AZ and at this meeting the following
resolutions will be discussed and submitted,
along with any other business that may be presented for a resolution, to the
shareholders of record on the books of
the Company for vote thereon:
Discuession will be held regarding the Company's marketing of its Trilogy game
product which include the following:
Marketing our product with walls and boundaries. Indian Gaming, Charity Gaming
and State Lotteries are
lucrative markets that SELL tickets or game plays which is regulated gaming
requiring gaming licensee and machine
classification approvals which take a considerable amount of time, cost and
expense. Gaming machines are a large
startup cost to launch any regulated game. These markets are restricted to
size and locations, subject to traffic, which
relates to game play that determines profits. The Company plans at a later
time to market its Trilogy game to these
markets.
Marketing our product without walls, boundaries, gaming license or machines.
The Company has
elected not to SELL its game tickets. Instead it has elected to launch its
Patented Trilogy Game as a Charity driven
World FREE Sweepstakes Lottery Multi-Jackpot game via the World Wide Web
(Internet) distributed from the www
TelNETgo2000.com web site. The Company plans this launch between the 1stth or
2nd quarter of 2000.
The Company's plans to change its name from Trilogy Gaming Corporation to
TelNETgo2000 Inc. Management feels
that the name TelNETgo2000 better reflects the Company's business strategy the
enter the new millennium e-
commerce business, partnering with various Charities and offer its patented
Trilogy game product to a world wide
market as a FREE Sweepstakes Game play to promote and encourage initial and
ongoing Charity contributions.
TelNETgo2000 primary business is to partner with various qualified Charity
organizations as their charity fundraiser
and solicit charity contributions worldwide for the benefit of the
participating charities. To encourage the anticipated
large volume of $10 charity contributions and further encourage those
contributors to continue their pledge of $10 a
week to the charity of their choice, TelNETgo2000 will give him/her 1
Sweepstake electronic ticket game Play FREE
with every $1 charity contribution made. The objective of TelNETgo2000 is to
establish a minimum annual
contribution of $520 per member at the rate of $10 per week coupled with the
opportunity to win a multi million
dollar Sweepstake jackpot. The Company will earn its revenues from its portion
of gross charity proceeds generated
by the Company as the Charity organizations Fundraiser.
The Company will solicit charity contributions over the Internet and administer
the World Trilogy Lottery
Sweepstakes progressive jackpots. Therefore, the Company's work force should
be relatively small. Most of the
Company's work should be performed by experienced contracted computer
programmers, computer hardware and
software manufacturers and suppliers, technicians, field consultants and
commissioned sales professionals.
The Company's objective is to partner with one or more Internet Publishers that
market banner adds over the internet
with collectively 8,000 web partners, each generating an average of 50 hits per
day to TelNETgo2000 totaling
400,000 hits per day (5 day Wk) of which an average of 15% (7.5 people) per day
become Members and donate $10
to the Charity of their choice and receive 10 FREE sweepstakes ticket plays on
their home computer for a chance to
win a multi million dollar sweepstakes jackpot.
1 RESOLVED, The action of the Board of Directors dated November 22, 1999 to
change the name of the
Company From Trilogy Gaming corporation to TelNETgo2000, Inc is hereby ratified
and approved. The CEO
and Secretary shall file the necessary documents on behalf of the Company with
the appropriate state
regulatory agency's to effect the name-approved change.
2 RESOLVED, the Company is authorized, retroactive from November 1, 1999, to
offer by private placement,
exemption or registration on or before November 1, 2000:
[a] up to 10,000,000 restricted common shares of the Company's common stock
and/or
[b] up to 15,000 restricted Series A through Series F Preferred voting shares
and/or
[c] up to 5,000 restricted preferred non voting shares of the Company's
preferred stock,
at the price per share that is determined by the CEO or the COO and Secretary
of the Company. and
Further Resolved, in conjunction with above said common share offer, the
Company is authorized to offer various
amounts of Series E through Series P Warrants. Each Series E through Series P
Warrant shall be for the right to
purchase stated number of common shares of the Company common stock at a stated
price by a designated time
which shall be determined by the CEO or the Secretary of the Company. The
common shares stated on each Series E
through Series P Warrant shall be increased or decreased in proportion to the
exact number of shares resulting from
any and all stock splits of the Company or its successors common stock
therefrom, until the Warrant is exercised.
3 RESOLVED. Wayne Mullins, Mike Maledon, Tom Burns, are hereby elected to
the Board of Directors of
the Company. Each Director elected shall hold office until his successor shall
have been elected and
qualified. (one additional individual will be submitted for nomination to the
Board of Directors at this
shareholders meeting).
4 RESOLVED. The Board of Directors are authorized and instructed to re-elect
Wayne Mullins as the CEO
and President of the Company. The 7 year employee contract for Wayne Mullins
and the 5 year employee
contract for Mike Maledon that were approved at the 1998 annual shareholders
meeting is hereby rescinded,
and
Further Resolved that, the Company shall enter into a annual employment
agreement with Wayne Mullins and the
employment agreement shall provide in part that in the performance with his
duties as an officer, director or
consultant of the Company; [i] all expenses incurred by Mullins shall be paid
by or reimbursed by the Company, [ii]
a vehicle with full insurance coverage or up to $800 monthly auto and insurance
allowance, [iii] reasonable medical
and dental plan/benefits or full reimbursement thereof until such a plan is in
place, and
Further Resolved that, beginning upon the Company having $1,000,000 capital on
hand or the Company begins to
generate monthly sales of $25,000, whichever occur first, Mr. Mullins one year
employee agreement shall then be for
a seven year term with an annual base salary of $104,000 together with an
annual bonus of $10,000 for each $1,000,000
pre tax earnings generated to the Company during a calendar year during the
term of the employment agreement.
Any increase in the base salary or bonus, if any, after the first year will be
determined by the Company's Board of
Directors or the Company's management committee or by a majority vote of the
shareholder . (MR Mullins abstained
voting on this resolution).
5 RESOLVED. The shareholders approve and instruct the Directors to approve
and authorizes the CEO to
hire, terminate and set all salary compensations (excluding the CEO
compensations) not exceeding 12 month.
The CEO may at his discretion from time to time, increase or decrease any such
salary's bonus's and/or
option not earned. (MR Mullins abstained voting on this resolution).
6 RESOLVED. The shareholders approve and instruct the Directors to approve
that, beginning upon the
Company having $1,000,000 capital on hand or the Company begins to generate
monthly sales of $25,000,
whichever occur first, the Company's CEO may enter into employment contracts of
more than one year but
not exceeding five years. Each employment agreement shall provide in part
that, [I] the annual base salary
not exceed $104,000 without Board of Director approval. Any increase in the
base salary, if any, after the
first year will be determined by the Company's Board of Directors or the
Company's CEO or the Company's
management committee. [ii] all expenses incurred in the performance with the
duties as an officer, employees,
consultant and director of the Company may be paid or reimbursed by the
Company, [iii] the employee may
be provided with a vehicle with full insurance coverage or up to $600 monthly
auto and insurance allowance,
[iv] may be provided reasonable medical and dental plan/benefits or may be
reimbursed thereof until such a
plan is in place, [v] may receive executive employee annual bonus of up to
$5,000 for each $1,000,000 pre tax
earnings generated to the Company during each calendar year of employment, [vi]
may receive employee
and consultant options for common stock, not exceeding 100,000 restricted
common shares to any one
person, exercisable over a period of three years from the grant date of the
option, at the price per share of
[a] prior to the end of the 1st year, 30% of the market value of the shares or
$5.00 per share, whichever is
greater, or [b] prior to the end of the 2nd year, 40% of the market value of
the shares or $10.00 per share,
whichever is greater, or [c] prior to the end of the 3rdt year, 50% of the
market value of the shares or $20.00
per share, whichever is greater.
7 RESOLVED. The Company hereby authorizes the Board of Director through the
management of the
Company that anytime prior to November 31, 2000 and at the discretion of the
CEO and Secretary of the
Company, to register with the SEC all outstanding common and preferred shares,
warrants and options for
common shares of the Company.
8 RESOLVED, The Company hereby authorizes the Board of Director through the
management of the
Company that anytime prior to November 31, 2000 and at the discretion of the
CEO and Secretary of the
Company, to register with the SEC a public offering of up to 10,000,000 common
shares of the Company's
common stock along with warrants, if any, at the price per common share and
warrant exercise time and price
per share to be determined by and at the discretion of the CEO and Secretary of
the Company. All
outstanding common and preferred shares, warrants and options of the Company
shall be included in said
registration.
9 RESOLVED. The shareholders hereby approve that, the Board of Directors and
the CEO and Secretary of
the Company are authorized and instructed that; the Chief Executive Officer
(CEO), Chief Operating Officer
(COO), Chief Financial Officer (CFO), Vice Presidents of Marketing (VPM), Vice
President of
Communications (VPC), Vice President of Administration (CAO) and Vice President
of Communication
Systems (VPCS) for each full year as a full time salaried employee and officer
of the Company, shall each
receive an annual bonus (of 10,000 common shares approved by shareholders on
the November 16, 1998
shareholders meeting, shall now state) of up to 10,000 common shares of the
Company for each $1,000,000
of pre tax earnings generated to the Company during the Company's fiscal year.
10 RESOLVED. The Series A Warrants are hereby extended from 12/31/1999 to
6/30/2000 and the Series B
Warrants are extended from 6/30/2000 to 12/31/2000.
11 RESOLVED, all acts and actions of the Officers and Directors of the
Corporation and their general conduct
relating to this corporation, effected to the date hereof, be, and they are,
authorized, adopted, ratified and
approved.
The close of business on November 22, 1999, shall be the "record date" for the
determination of shareholders of
record with the Company's transfer agent entitled to notice of and to vote at
the meeting or any adjournment(s)
thereof (the "record date"). Shares of common stock and preferred stock can be
voted at the meeting only if the
holder is present at the meeting in person or by voting ballot or by a valid
proxy. Neither the Board of Directors or
Management of the Company are soliciting proxies in connection with this Annual
Shareholders Meeting. You are
encouraged to attend the meeting.
This Annual notice of the Annual Shareholders Meeting of TGC is given this 27th
day of November, 1999 and is
called pursuant to the Articles of the Company and Delaware corporate law.
___________________________________________ Wayne Mullins as President of the
Company.
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 9-MOS
<FICAL-YEAR-END> DEC-31-1999
<PERIOD-END> SEP-30-1999
<CASH> 31
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 31
<CURRENT-LIABILITIES> 110,952
<BONDS> 0
0
72
<COMMON> 3,130
<OTHER-SE> <114,123>
<TOTAL-LIABILITY-AND-EQUITY> 31
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COST> 0
<OTHER-EXPENSES> 646,198
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> <646,198>
<INCOME-TAX> 0
<INCOME-CONTINUING> <646,198>
<DISCOUNTED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> <646,198>
<EPS-BASIC> <.21>
<EPS-DILUATED> <.21>
</TABLE>
