UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of the Securities Exchange Act of 1934
December 1, 1999
Date of Report (date of earliest event reported)
AmeriNet Group.com, Inc.(Exact name of registrant as specified in its chapter)
Delaware(State or other jurisdiction of incorporation
000-03718
(Commission File Number)
11-2050317 (IRS Employer Identification No.)
2500 North Military Trail, Suite 225-C; Boca Raton, Florida 33431
(Address of principal executive offices) (Zip Code)
902 Clint Moore Road, Suite 136-C; Boca Raton, Florida 33487 code(Former
name or former address, if changed since last report)
(561) 998-3435
Registrant's telephone number, including area
Dated December 15, 1999
INFORMATION INCLUDED IN THE REPORT
AVAILABLE INFORMATION.
The public may read and copy any materials filed by the Registrant with
the Commission at the Commission's Public Reference Room at 450 Fifth Street,
Northwest, Washington, D.C. 20549. The public may obtain information on the
operation of the Public Reference Room by calling the Commission at
1-800-SEC-0330. The Commission maintains an Internet site that contains reports,
proxy and information statements, and other information regarding the Registrant
and other issuers that file reports electronically with the Commission, at
http://www.sec.gov. the Registrant's wholly owned operating subsidiaries,
Wriwebs.com, Inc., and Trilogy International, Inc., maintain web sites at
Www.wriwebs.com and www.trilogyonline.coM, respectively.
CAVEAT PERTAINING TO FORWARD LOOKING STATEMENTS
The Private Securities Litigate Reform Act of 1995 provides a "safe
harbor" for forward-looking statements. Certain of the statements contained
herein, which are not historical facts, are forward-looking statements with
respect to events, the occurrence of which involve risks and uncertainties.
These forward-looking statements may be impacted, either positively or
negatively, by various factors. Information concerning potential factors that
could affect the Registrant is detailed from time to time in the Registrant's
reports filed with the Commission. This report contains "forward looking
statements" relating to the Registrant's current expectations and beliefs. These
include statements concerning operations, performance, financial condition and
anticipated growth. For this purpose, any statements contained in this
information statement that are not statements of historical fact are
forward-looking statements. Without limiting the generality of the foregoing,
words such as "may", "will", "expect", "believe", "anticipate", "intend",
"could", "estimate", or "continue", or the negative or other variation thereof
or comparable terminology are intended to identify forward-looking statements.
These statements by their nature involve substantial risks and uncertainties
which are beyond the Registrant's control. Should one or more of these risks or
uncertainties materialize or should the Registrant's underlying assumptions
prove incorrect, actual outcomes and results could differ materially from those
indicated in the forward looking statements.
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TABLE OF CONTENTS
ITEM PAGE
Available information 2
Item 2 Acquisition or Disposition of Assets 4
Item 101 Description of Business 5
Item 102 Description of Property _
Item 103 Legal Proceedings _
Item 303 Management's Plan of Operation; Discussion and Analysis of Financial
Condition and Results of Operations 10
Item 304 Changes in Accountants 15
Item 401 Directors and Executive Officers 16
Item 402 Executive Compensation 21
Item 403 Security Ownership of Certain Beneficial Owners and Management 24
Item 404 Certain Relationships and Related Transactions 27
Item 504 Risk Factors 28
Use of Proceeds 32
Item 701 Recent Sales of Unregistered Securities 33
Item 702 Indemnification _
Item 5 Other Events 34
Yankees Consulting Agreement 34
Amendment of Bylaws 34
Item 7 Financial Statements and Exhibits 35
Financial Statements of Businesses Acquired 35
Pro Forma Financial Information 37
Exhibits Required by Item 601 of Regulation SB 37
Signatures 38
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On December 1, 1999, the Registrant acquired Trilogy International, Inc., a
development stage Florida corporation (hereinafter referred to as Trilogy")
engaged in the business of selling pet care and human nutritional supplement
products through a network marketing (also referred to commonly as multi-level
marketing) program and over the Internet. The acquisition was effected by
merging Trilogy into a newly organized, wholly owned subsidiary of the
Registrant (Trilogy Acquisition Corporation, a Florida corporation), as a result
of which all of the capital stock of Trilogy was converted into 1,817,273 shares
of the Registrant's common stock, all outstanding Trilogy options and warrants
were converted into options and warrants to purchase 1/3 share of the
Registrant's common stock for every share of Trilogy capital stock covered
subject thereto, at an exercise price of $0.75 per share. At the time of the
acquisition, Trilogy had reserved 1,016,819 shares of its common stock for
issuance subject to outstanding, unexercised five year warrants (744,818 shares)
and ten year incentive stock options (272,001), there being no other obligations
directly or indirectly obligating Trilogy to issue any of its securities to any
person for any purpose; consequently, the Registrant has reserved 338,939 shares
of its common stock for issuance to former Trilogy option and warrant holders at
such time, if ever, that they elect to exercise their options or warrants. A
copy of the acquisition agreement, including exhibits and schedules thereto, is
filed as an exhibit to this report and the foregoing summary is qualified in its
entirety by reference thereto.
The following information pertaining to Trilogy has been provided to the
Registrant by Trilogy's management and is provided under headings based on
Commission Regulation S-B:
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ITEM 101 DESCRIPTION OF BUSINESS
BUSINESS DEVELOPMENT.
Trilogy is a Florida based network marketing / e-commerce company that
provides products which enhance the quality of life for people, the planet and
our pets. Trilogy offers consumers an opportunity to own and operate their own
"turn-key" Internet and network marketing business selling the Trilogy products.
Trilogy's independent field representatives can develop a customer base and earn
retail profit and bonuses from the sale of products as well as building a sales
force and earn commissions on the sales of others in their organization.
Trilogy began by offering consumers a proprietary line of wholesome,
effective and non-toxic products for the pet care industry, sold under the
"Trilogy's Best Friends" label. The next step in the Trilogy business plan was
to offer products in the consumer health care market with a line of nutritional
supplements. The first product in the consumer health care line was Trilogy's
"Essence of Life Colostrum Formula with Astragalus." Trilogy is currently
negotiating with a number of companies to add other products.
Trilogy was incorporated in Florida effective August 3, 1998 and became
operational in July 1999. During that eleven month period, Trilogy developed a
business plan, built an infrastructure, hired professional staff, designed and
implemented their e-commerce website and created the marketing materials
necessary to launch the business. Due to the fact that Trilogy's e-commerce was
not fully operational until December 1, 1999, there has been minimal active
recruiting or significant training of independent field representatives.
Currently, Trilogy has 152 independent field representatives and has implemented
a plan to recruit and train leaders in the network marketing field to generate
sales momentum.
PRINCIPAL PRODUCTS OR SERVICES AND THEIR MARKETS
All of the following products are marketed under the Trilogy's "Best
Friends" label:
PRODUCT DESCRIPTION RETAIL MARKET
PRICE
Count Down Supports a healthy $25.95 Overweight dogs and cats
weight loss program
Agility with Vitamin, mineral $38.95 Senior dogs and cats and
Glucosamine and herbal formula large and long-backed dogs
healthy bones and joints
Skin and Coat Formula Multivitamin and mineral $27.95 Kittens and cats with skin and coat problems
for cats and Kittens with formula for healthy skin
Fish Oil and Taurine and coat
Advanced Multivitamin Supports dog's overall $23.95 All Puppies and dogs
and Mineral Formula well being and natural
with Colostrum defenses
Advanced Multivitamin Supports cat's overall $21.95 All kittens and cats
and Mineral Formula with well being and natural
with Colostrum defenses
Herbal Skin and Coat For normal or problem $15.95 All dogs, cats, ferrets and horses
Shampoo with Tea skin and coat
Tree Oil and Aloe Vera
Odor Remover Removes odors $11.95 Consumers who are pet owners or have
a need to remove household odors
Soothing Mist with Tea Natural skin relief for $11.95 Dogs, cats and ferrets of all ages
Tree Oil and Aloe Vera skin and coat
Herbal Shed Less Reduces excessive $21.95 Puppies, dogs, kittens, cats and ferrets
shedding
Sampler Package One of each product $226.50 Those who sign up as Trilogy
in the Trilogy's Best independent field representatives
Friends pet care line
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In addition, Trilogy offers the following products under Trilogy's "Essence
of Life" label:
PRODUCT DESCRIPTION RETAIL PRICE MARKET
Trilogy's Essence of Supports a healthy $26.95 Health conscious consumers of all ages
Life Colostrum Formula immune system
with Astragalus
Trilogy's Essence of A case of Essence of $323.40 Those who sign up as Trilogy independent
Life Colostrum Formula Life Colostrum Formula field representatives
with Astragalus Sampler with Astragalus
Package
Independent field representatives are also encouraged to purchase a Trilogy
Replicator Internet E-commerce website cross linked to Trilogy's professionally
operated and maintained corporate website. The purchase price ($14.95) has been
waived for independent field representatives who elect to acquire the Trilogy
Replicator E-commerce Site prior to March 1, 2000. In addition to the purchase
price, independent field representatives who elect to acquire the Trilogy
Replicator E-commerce Site pay a monthly fee of $10.95.
DISTRIBUTION METHODS OF THE PRODUCTS OR SERVICES
Trilogy utilizes a network of independent field representatives throughout
the United States to distribute all of its products. The independent field
representatives pay a sign-up fee of $34.95 which grants them the conditional
right promote Trilogy products by either sending customers to their own
personalized Trilogy e-commerce site or by direct one-on-one sales. Trilogy
sells field representatives sales tools and promotional materials designed to
increase traffic to their web sites and to make professional one-on-one sales
presentations. Field Representatives can gain additional profit by growing their
sales force, thus continuously expanding Trilogy's distribution base (a
marketing program frequently described as network or multi-level marketing).
STATUS OF ANY PUBLICLY ANNOUNCED NEW PRODUCT OR SERVICE
All products and services previously announced are currently available and
are being marketed. Trilogy expects to be regularly developing new products and
to be regularly considering new products developed by outside suppliers, in
order to provide its independent field representatives an expanding source of
quality products to sell to their expanding consumer markets. Trilogy
disseminates all information regarding new products and services through its
network of independent field representatives. This is done through the mail, via
phone conference calls, e-mail and faxes. To date, two articles have been
published on Trilogy. The National Association of Professional Pet Sitters, a
registered field representative of Trilogy, released an article in their
December 1999 newsletter which discussed the pet products available for sale and
the opportunity to profit by selling the products. Trilogy founders, Dennis and
Carol Berardi, were also interviewed for an article that appeared in the
December/January 2000 issue of Network Marketing Lifestyles magazine.
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COMPETITIVE BUSINESS CONDITIONS AND THE SMALL BUSINESS ISSUER'S COMPETITIVE
POSITION IN THE INDUSTRY AND METHODS OF COMPETITION
Currently, Trilogy competes in two very aggressive markets in the United
States, premium pet nutraceutical products and human nutritional supplements.
The field is characterized by a broad range of participants ranging from
multinational corporations to "mom and pop" businesses. Many competitors or
potential competitors are very well capitalized and staffed, and would have
strong advantages in competition with Trilogy for products, personnel and
consumers. While most of these are not currently in direct competition with
Trilogy, they can be expected to enter Trilogy's market niche and provide
serious competition as Trilogy experiences material success. Trilogy plans to
overcome such risks by establishing an early brand name recognition, product
identity and reputation for quality and reliability.
Trilogy markets a proprietary line of wholesome, effective, non-toxic
products for the multi-billion dollar pet care industry, sold under the
Trilogy's Best Friends label. Trilogy's pet products are formulated by
nationally recognized veterinarian, Jane R. Bicks, D.V.M., who uses only the
highest quality ingredients. Only a handful of network marketing companies offer
premium nutritional supplements for pets. Amway, Oxyfresh USA, Inc. and Body
Wise International may be considered direct competitors because they offer
similar product lines through network marketing.
Trilogy's human supplement, Essence of Life Colostrum Formula with
Astragalus, is formulated by Yale educated physician, Kamau Kokayi, M.D. The
product is designed to help boost immune function. Many nutritional oriented
companies offer supplements to boost the immune system. However, because the
ingredients in Trilogy's formula are so unique, the primary competitors are only
those companies which offer nutritional products containing colostrum. The major
competitor in this area is New Life Foods based in Marietta, Georgia. New Life
Foods offers colostrum in capsule, powder and liquid formats, chewable tablets
for children, nutritional bars and a skin cream. To the best of our knowledge,
there is only one other company on the Internet selling an immune boosting
nutritional supplement with both colostrum and astragalus. Matol International,
a network marketing company based in Lachine, Quebec, Canada, offers Biomune OFS
Plus, a nutritional supplement that combines both of these ingredients.
By stressing direct inter-personal contact and providing competitive
compensation and a professionally developed training program, Trilogy expects
that its independent field representatives will be motivated to continuously
increase their customer base and expand their sales force. This, in turn,
provides Trilogy with a competitive advantage against traditional retailers and
e-commerce companies by materially reducing Trilogy's corporate advertising
expenses and increasing its profit margins.
Notwithstanding the foregoing, despite Trilogy's best efforts to develop
and market its products, no assurances can be provided that it will successfully
overcome current or future competition.
SOURCES AND AVAILABILITY OF RAW MATERIALS AND THE NAMES OF PRINCIPAL SUPPLIERS
The only raw material purchased directly by Trilogy is dendritic salt which
is the main ingredient in Trilogy's Best Friends Odor Remover. This product is
purchased from Eco-aromatic Systems Inc. in Decatur, Illinois. Dendritic salt is
a simple salt compound which would be readily available at competitive prices
from other sources.
Trilogy's current principal product and component suppliers are: Innovative
Chemical Corporation, Amherst, New York; Pharma Chemie, Syracuse, Nebraska;
Professional Pet Products, Miami, Florida; Promise Printing, Stuart, Florida;
Fawcett's Videomarketing, Laguna Niguel, California; Video Plus Inc., Lake
Dallas, Texas; Consolidated Label Co., Longwood, Florida; Tabco Inc., Kansas
City, Kansas.
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PATENTS, TRADEMARKS, LICENSES, FRANCHISES, CONCESSIONS, ROYALTY AGREEMENTS OR
LABOR CONTRACTS, INCLUDING DURATION
ROYALTY AGREEMENTS:
Trilogy is a party to the following royalty arrangements involving its
products or marketing tools, copies of which are files as exhibits to this
report:
An agreement dated June 24, 1999 with Richard Berardi, with no expiration
date, which requires Trilogy to pay him $0.05 per video tape for the Trilogy's
Best Friends theme song.
An agreement dated May 15, 1999 with Tana Henke, with no expiration date,
which requires Trilogy to pay her 5% of the price paid by Trilogy for its Best
Friends Advanced Multivitamin & Mineral Formula with Colostrum for Dogs and
Cats.
An agreement dated October 26, 1999 with Dr. Kamau Kokayi, with no
expiration date, which requires Trilogy to pay him 2% of the price paid by
Trilogy for its Essence of Life Colostrum Formula with Astragalus.
Copies of each of the foregoing agreements are filed as exhibits to this
report and the foregoing summaries are qualified in their entirety by reference
thereto.
TRADEMARKS:
Trilogy has applied for federal trademarks covering the name "Trilogy" for
a number of its products in the following classes, copies of which are filed as
exhibits to this report:
INTERNATIONAL SUPPLEMENTS IN INTERNATIONAL CLASS 005:
The application, dated June 11, 1999 was filed on June 7, 1999. If granted,
it could provide protection from unauthorized use for a period of ten years,
subject to renewal for an additional ten years. United States Trademark
Application Number 75/726,820. First use of the mark was June of 1998. Even if
granted, however, under certain circumstances courts may decline to enforce it
against a party infringing it that overcomes the presumptions under which it was
granted.
PET FOODS AND SUPPLIES IN INTERNATIONAL CLASS 031:
The application, dated June 11, 1999 was filed on June 7, 1999. If granted,
it could provide protection from unauthorized use for a period of ten years,
subject to renewal for an additional ten years. United States Trademark
Application Number 75/726,820. First use of the mark was June of 1998. Even if
granted, however, under certain circumstances courts may decline to enforce it
against a party infringing it that overcomes the presumptions under which it was
granted.
DIRECT SALES, NAMELY ADVERTISING DISTRIBUTED BY MAIL AND VIA GLOBAL
COMPUTER INFORMATION NETWORK IN INTERNATIONAL CLASS 035:
The application is currently in preparation.
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EFFECT OF EXISTING OR PROBABLE GOVERNMENTAL REGULATIONS ON THE BUSINESS
Trilogy's products are currently subject to regulation by the United States
Food and Drug Administration, and by comparable state agencies. Its current
products are subject to the Food and Drug Administration's regulation of
labeling under the Dietary Supplement and Health Education Act of 1994 for its
human nutritional supplement product, Trilogy's Essence of Life Colostrum
Formula with Astragalus. Trilogy complies with the standards set by the Center
for Veterinary Medicine of the United States Food and Drug Administration and
the American Association of Feed Control Officials for its nutritional pet
supplement products under the Trilogy's Best Friends label. Trilogy's e-commerce
corporate website is operated according to the regulations governing
communication activities regarding privacy rights, receipt of unsolicited
communications and Internet fraud. Trilogy has established policies that
independent field representatives must follow, which were designed to avoid such
problems. However, no assurances can be provided that in the future inadvertent
activities by Trilogy independent field representatives will not subject it to
regulatory actions or civil liabilities.
Although Trilogy will use best efforts to comply with applicable laws,
regulations and industry standards, in light of the dynamic nature of
legislation and regulation, especially on a state by state basis, no assurances
can be provided that it will always be in full compliance therewith. This is
especially the case because Trilogy relies on third parties for production and
delivery of its products. In order to alleviate the likelihood of possible
regulation, Trilogy carefully selects the companies with which it does business,
and monitors their performance for quality control purposes, timeliness and
customer relations.
NUMBER OF TOTAL EMPLOYEES AND NUMBER OF FULL TIME EMPLOYEES
As of November 30, 1999, Trilogy employed twelve people on a full time
basis. Currently, there are no part time staff employed. Most of Trilogy's sales
are conducted through independent representatives and its production and
delivery activities are conducted through third party contractors. Management of
Trilogy believes that all of its current and foreseeable personnel requirements
can be met from locally available personnel at competitive prices. None of
Trilogy's employees are, or have expressed an interest in, being represented by
unions or other organizations on the basis of collective bargaining agreements.
Trilogy's twelve current employees are comprised of six executives, two
marketing persons, three field representative coordinators and one ethics and
compliance manager.
ITEM 102 DESCRIPTION OF PROPERTY
DESCRIPTION OF TRILOGY'S ASSETS
As of September 30, 1999, the net assets of Trilogy were valued by
management at $306,160 and were comprised of product inventory and sales
material inventory ($143,339 at cost), and, furniture, fixtures and equipment
with a depreciated book value of $138,420, comprised of telephone equipment,
five Encore Binaural Headsets with modular adapters, one HP ScanJet 6200C
scanner, five printers, one Brother All-in-One fax, two Toshiba Tecra laptop
computers, seven computer stations including monitors, three servers and related
software, one backup power supply system, computer software, miscellaneous
computer hardware and office equipment, office furniture and leasehold
improvements.] being modified in e-mail message.
Trilogy leases the following office equipment and furniture at a monthly
cost of $2,702.34: one Panasonic Digital 816 Telephone System with eight lines
and eight stations, one Executone Telephone System, one Toshiba copier, one Dell
laptop computer , three field support computer stations, two desktop publishing
computer stations, one Internet server, one HP LaserJet printer, fifteen desks,
thirty-one chairs, four filing units and one conference table.
9
DESCRIPTION OF REAL ESTATE
Trilogy's corporate offices are located at 526 Southeast Dixie Highway,
Stuart, Florida 34994. The Trilogy phone number is 561-781-7278. Trilogy's
website address is www.trilogyonline.com. Trilogy's offices total approximately
4,400 square feet with 2,000 square feet used for order entry, field support and
sales and marketing and 2,200 for executive offices, conference room and
training facilities. The remaining 200 square feet are dedicated to computer and
telecommunication equipment. The office is leased with a five-year term at a
monthly cost of $4,975.50. The building was completely renovated to Trilogy's
specifications prior to occupancy.
ITEM 103 LEGAL PROCEEDINGS
The only material litigation to which Trilogy is known to be a party
involves a single claim by a former consultant, Deborah George. On November 29,
1999, an action for damages (breach of an oral consulting agreement) was filed
by Deborah George against Trilogy in the Circuit Court of the 19th Judicial
Circuit in Martin County, Florida Case No. 99-842-CA. Ms. George claims that she
and Trilogy orally agreed that she would provide a variety of consulting
services such as recruitment, training, securing financing, and general
consulting. Ms. George claims the compensation for such services was to be
payment of three thousand dollars per month plus additional fees for specific
projects and an option to purchase twenty thousand shares of Trilogy's common
stock. Ms. George claims Trilogy owes her for services rendered in the amount of
$36,000..00 plus the value of her stock options. Trilogy denies the allegations
in the Complaint and intends to vigorously defend this action and contest the
claim.
ITEM 303 MANAGEMENT'S PLAN OF OPERATION; DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
The information required by this item will be provided, together with the
financial statements and pro forma financial information pertaining to the
transaction which is the subject of this report, by amendment hereto to be filed
by the Registrant with Commission on or before the sixtieth day following the
date of this report. The financial data included in the following information is
based on unaudited data that may not comply with generally accepted accounting
principals, consistently applied and will be superseded in the subsequent
amendment. Accordingly, the information may not prove accurate and should not be
relied on other than as a good faith effort by Trilogy's management to provide
useful information on an interim basis.
PLAN OF OPERATION:
During the twelve months ending on November 30, 2000, Trilogy intends to
materially expand its business operations using the funding that the Registrant
provided upon the closing of the acquisition of Trilogy ($250,000) and the
funding that the Registrant has agreed to provide (up to an additional $650,000)
within the next 180 days.
Trilogy is a network marketing and e-commerce company selling its products
through a network of independent field representatives. Although Trilogy was
founded in May of 1998 and was formally organized as a Florida corporation in
August of 1998, product sales were not initiated until the end of July 1999.
Since July 1999, 152 individuals have signed agreements to become independent
field representatives.
Trilogy's business development was limited until recently because a major
component of its marketing plan involved use by its independent marketing
representatives of individual replicator sites based on Trilogy's Internet and
e-commerce site. Because the replicator sites were not fully functional and
therefore not available to independent field representatives until early
December of 1999, independent field representatives were not actively recruited
during the last four months. Consistent with management's belief in their
importance, Trilogy's web site (www.trilogyonline.com) and the corresponding
independent field representative's replicator sites will constantly be updated
and improved by the Trilogy information systems and marketing departments.
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During the next twelve months, assuming that the replicator sites remain
functional and available and that the Registrant provides funding for ongoing
operations during the next six months, Trilogy's chief executive officer and its
president will be devoting a major portion of their time to recruiting,
enlisting and training additional independent field representatives for Trilogy.
Trilogy's management believes that the number of active independent field
representatives necessary to produce revenues sufficient to generate net
operating income (approximately 5,000) can be recruited and trained within nine
months after the date of this report and that it will have trained and recruited
7,000 independent field representatives within twelve months after the date of
this report.
As Trilogy's marketing capabilities expand, management anticipates that it
will expand its product offerings to meet the perceived requirements of its
existing consumer base and to expand into other areas deemed potentially
profitable and synergistic. Its product development and marketing departments
will be responsible for assuring that required products are developed, tested
and test marketed in time to meet demand therefor.
Trilogy currently maintains its own product development and marketing
departments; however, all product development activities following the
formulation stage are conducted through third party anticipated suppliers. In
addition, a major source of new products in the future is expected to involve
marketing rights to products developed by other persons. Products under
consideration at this time include an expansion of Trilogy's current line of pet
care and human nutritional supplement products. In most instances, information
concerning products under development or products for which Trilogy is
negotiating marketing rights will be kept confidential and if disclosure
pursuant to Commission rules is required, the information will be provided under
requests for confidential treatment. Such policy is based on competitive and
negotiating factors.
MANAGEMENT DISCUSSION AND ANALYSIS
From the date of its organization in August of 1998 through late July of
1999, Trilogy had no revenues. From May of 1998 through December 31, 1998
Trilogy incurred start-up expenses of $93,608. Of this amount, $89,131 was
capitalized for tax purposes and then expensed in July of 1999. For the six
months ending June 30, 1999 Trilogy incurred expenses of $565,498. For the three
months ending September 30, 1999 Trilogy had revenues of $38,571 and expenses of
$477,502 for a net loss from operations of $438,931. Management estimates that
an additional loss from operations of approximately $150,000 was incurred for
the two months ending November 30, 1999.
Trilogy does not expect to be able to meet all anticipated operating
expenses during the next twelve months from internally generated operational
income. Management expects that loses from operations will continue to be
substantial for at least the next six months while a viable network of
independent field representatives is being established. Net operating loss from
operations for the next six months is projected to be approximately $475,000. If
projections are met, of which there can be no assurance at this time, operations
are expected to become marginally profitable in the third calendar quarter of
2000.
Through November of 1999, the employees of Trilogy have funded a
substantial portion of the operating expenses of Trilogy through the deferral of
a portion of their salaries. Trilogy's liability for this deferred compensation
amounted to $390,224 through November 30, 1999 and an additional liability for
deferred compensation in December 1999 is expected in the amount of $22,460. The
total, expected to be $412,684 at December 31, 1999, is not payable until
Trilogy becomes profitable and is able to make payments to reduce this
obligation from positive cash flow from operations. However, Trilogy is
committed to start paying its employees at their full salaries as of January 1,
2000, which will increase the cash, requirements of Trilogy's operations by
approximately $14,543 per month.
11
If revenues are realized as projected, additional personnel will be
required in Trilogy's call center, administrative and finance departments.
Management anticipates that it will add a receptionist in March of 2000 and an
administrative assistant in July of 2000. An additional field support agent is
planned for the call center department in each of the months of April, June,
August, October and November, 2000. The finance department expects to add a
bookkeeper in April of 2000 and a staff accountant in November of 2000. An
assistant to the director of information systems is planned for November of 2000
but this position my have to be filled sooner depending on the demands created
by Trilogy's web site and the field representatives' replicator sites. The cost
of adding the personnel listed above is estimated to be $110,000 during the next
twelve months.
As additional personnel are employed, there will be a corresponding
requirement for capital expenditures for office furniture, computer hardware and
computer software. During the next twelve months, Trilogy's management
anticipates spending approximately $40,000 for such purpose.
Trilogy's current level of product inventory is sufficient to fill
anticipated orders for its current product line over the next several months and
current levels will be maintained by replacement as sold, funded by revenues.
However, a higher level of available inventory must be established and
maintained as new products are added to Trilogy's existing product line.
Management anticipates that as much as $100,000 could be required during the
next twelve months to establish and maintain inventories at the required levels.
To increase the network of independent field representatives, to expand
operations and make necessary capital expenditures as projected, Trilogy will be
dependent on up to $650,000 in funding from the Registrant over the next six
months in order to meet its ongoing financial obligations.
RESULTS OF OPERATIONS
For the eight-month period from the founding of Trilogy in May 1998 through
December 31, 1998, Trilogy had no revenues and incurred $93,608 of start-up
expenses. $89,131 of these expenses were capitalized for tax purposes as of
December 31, 1998 and subsequently expensed when Trilogy opened for business in
July 1999.
For the six-month period ending June 30, 1999, Trilogy had no revenues and
incurred expenses of $565,498. Of this amount payroll expense was $362,860 and
consulting expense was $96,408. Of this $459,268 total, $188,521 has been paid
and employees and consultants have deferred $270,747until Trilogy attains
profitable operations. Legal costs were $32,403 of which $24,739 was incurred in
conjunction with Trilogy's February 22, 1999 participating preferred offering.
Travel expense was $21,033, telephone expense $12,177 and other general and
administrative expenses including rent, utilities, insurance, facilities
maintenance and supplies totaled $40,617. Trilogy fiscal resources during this
period were employed principally to establish its infrastructure and to develop,
test and test market its existing product lines and marketing materials.
Trilogy began to book sales in August of 1999 and for the three month
period ending September 30, 1999 had net revenues from sales of its products and
sales materials of $38,571. Cost of sales was $20,888 yielding a gross profit of
$17,683. Departmental and other expenses for the period were $456,614 and net
operating loss was $438,931. Payroll expense was $247,793 and consulting expense
$45,316, of which $214, 273 was paid to employees and consultants and the
balance was accrued, increasing Trilogy's liability for deferred compensation by
$78,836. Travel expense was $44,452; telephone expense was $29,768; legal
expense was $18,311 and other departmental and general and administrative
expenses for the period were $61,652.
12
ACCOUNTING POLICIES AND PROCEDURES
Generally, Trilogy recognizes revenues from sales of products when its
products or sales materials are shipped. Generally, credit card, check, cash or
electronic transfer prepays all orders. Because its policy of prepayment is
generally applied, Trilogy's accounts receivable are minimal and are expected to
remain so.
INTERNAL AND EXTERNAL SOURCES OF LIQUIDITY
From its founding in May 1998 through late July 1999, Trilogy generated no
revenues. Trilogy financed its operations from its start-up through launch
phases using a combination of capital contributions, debt, lease financing,
extended credit terms from vendors and deferral of compensation by its officers,
employees and consultants.
CONTRIBUTIONS BY FOUNDERS
From the founding of Trilogy in May of 1998 and its organization as a
Florida corporation in August 1998 through March 1999, Dennis Berardi, the chief
executive officer and co-founder of Trilogy and his wife Carol Berardi, the
president and co-founder of Trilogy, contributed $96,818 of their own funds to
paid in capital. In addition, Mr. and Mrs. Berardi received no salary from
Trilogy from inception through November 1998 and deferred their full salaries
for the period from December 1, 1998 through March 1999 until such time as
Trilogy becomes sufficiently profitable to repay the deferred compensation from
positive cash flow generated by operations.
PRIVATE PLACEMENT TO ACCREDITED INVESTORS
In May of 1999, Trilogy completed a participating preferred offering in
reliance on Section 4(6) of the Securities Act in the amount of $660,000, the
net proceeds of which were $625,261 (after deduction for legal expenses in
connection with the offering). A total of 18 accredited investors participated
in the placement subscribing for $10,000 to $120,000 each. In accordance with
the terms of the participating preferred offering approximately $40,000 of the
proceeds were used to reimburse officers and employees of Trilogy for expenses
incurred on behalf of Trilogy during the period from January 1, 1999 through
April 30, 1999. No reimbursement for salaries deferred during the period
December 1, 1998 through March 31, 1999 were made, as required in accordance
with the terms of the Offering. As a condition of the participating preferred
offering and in order to conserve operating capital, the officers and management
employees of Trilogy agreed to defer 25% of their salaries for the four months
following the closing of the offering. The deferred portion of their salaries
was also to be paid only upon Trilogy's becoming profitable and having the
ability to repay the deferred compensation from positive cash flow generated by
operations.
RECENT SALARY DEFERRALS
The opening of Trilogy for business was delayed beyond the date that
management originally anticipated. As a result, in August 1999, in a further
effort to conserve Trilogy's operating capital, its officers, management
employees and consultants who had been deferring 25% of their salaries for the
prior four months agreed to continue to defer at least 25% of their salaries
through December 1999. Trilogy's Chief financial officer, upon being hired in
late July 1999, also agreed to defer 25% of his salary through December 1999. In
September two additional management employees agreed to defer 25% of their
salaries through the end of December 1999.
13
LOANS
In May of 1999, Trilogy borrowed $7,118 from a member of its board of
directors for the purchase of computer equipment. $1,000 of the subject loan was
subsequently repaid. The balance of the loan in the principal amount of $6,118
plus interest at 20.65% per annum (the lenders' interest cost based on
applicable credit card rates) from June 15, 1999, remains unpaid.
EXPENDITURE ARRANGEMENTS
In addition to the operating losses generated by Trilogy during the six
months ending June 30, 1999, Trilogy made capital expenditures in the amount of
$115,492 for computer hardware and software, office equipment and furniture;
purchased $33,415 of products and sales materials for inventory; and, made
security deposits for rent and utilities totaling $18,648.
During the three-month period ending September 30, 1999, Trilogy increased
its inventory on hand by $109,924 bringing the total value of inventory on hand
to $143,339 and purchased $27,118 of additional computer hardware, $22,366 of
which was leased, reducing the capital expenditure required to $4,752; and, made
additional capital expenditures for computer software; office furniture and
equipment; telephone equipment and lease hold improvements to its new office
space in the total amount of $26,822. After funding accrued expenses of
approximately $40,000 and funding the operating expenses and capital
expenditures through June 30, 1999, Trilogy retained approximately $229,339 of
the net proceeds of its participating preferred offering as working capital.
The operating loses and capital expenditures for the three month period
ending September 30, 1999, as detailed above, excluding start up expenses
recognized during the period but previously funded, were $486,164, resulting in
a requirement for additional working capital of $256,825. Trilogy was able to
deal with the shortfall for the period:
* Through deferring internal compensation in the amount of $78,836;
restructuring payment of accounts payable to vendors and reimbursement
of expenses to employees, resulting in a deferral of $138,815;
* By obtaining short term loans from officers, management employees and
families of officers in the total amount of $25,500 (based on Trilogy's
agreement to repay them from the proceeds of the investment anticipated
from the Registrant); and,
* Through an additional equity investment by two of the original
investors in Trilogy's participating preferred offering totaling
$33,000.
Subsequent to September 30, 1999, Trilogy continued to sustain substantial
loses from operations which required additional funding. In October of 1999 two
of the original investors in Trilogy's participating preferred offering made
additional equity investments which totaled $41,818 and in November of 1999 one
of the original investors made an additional $10,000 equity investment. In
October of 1999 a short-term loan in the amount of $7,000 was obtained from
members of officers families and in November of 1999 a short-term loan in the
amount of $12,000 was obtained from a member of Trilogy's board of directors.
During the period from October 1 through November 30, 1999, accounts payable
increased by approximately $27,931 to $166,746 and accrued compensation for
employees and consultants increased by approximately $33,942 to a total of
$383,525.
14
CURRENT CAPITAL REQUIREMENTS
On December 3, 1999 Trilogy received $220,000 of the $250,000 funded by the
Registrant upon closing of the acquisition of Trilogy which is the subject of
this report. $30,000 was retained by Trilogy's legal counsel for legal expenses.
Of the $30,000 retained by counsel, approximately $8,000 was to satisfy
outstanding accounts payable for services unrelated to the acquisition and
approximately $22,000 was retained for legal services rendered in connection
with the acquisition.
Upon receipt of the $220,000 in net proceeds from the initial funding
provided by the Registrant, Trilogy disbursed funds to reduce accounts payable
by approximately $119,153 leaving an accounts payable balance of approximately
$47,593 (the majority of which is past due). Short-term loans in the principal
amount of $44,500 were repaid together with accrued interest in the amount of
$908. In addition to deferring 25% of their salaries as agreed, Carol and Dennis
Berardi deferred payment of $16,442 of their salaries until the closing of the
acquisition and receipt of the initial funding from the Registrant. This amount
was paid from the proceeds of the Registrant's initial funding. The funds
remaining from the Registrant's initial funding of Trilogy combined with the
cash flow expected to be generated by Trilogy's operations will not be
sufficient to meet anticipated operating expenses through December 31, 1999 and
reduce the current accounts payable balance to an acceptable level.
Subject to a number of conditions involving Trilogy's compliance with its
obligations under the acquisition agreement (including providing required
audited financial statements for filing with the Commission in a timely manner
and the accuracy of representations and warranties), the Registrant indicated
that it intended to provide Trilogy with funding in addition to the initial
$250,000 provided, within 180 days after the acquisition of Trilogy, which took
place on December 1, 1999. The funding was anticipated in two equal
installments, the first of which was to be provided within 90 days after the
acquisition. However, subsequent to the closing Trilogy's management provided
the Registrant with projections of income, expense and cash flow indicating that
it would require accelerated funding of $50,000 during December of 1999, $75,000
during January of 2000 and $75,000 during February of 2000 from the first
$325,000 installment and Trilogy's management is endeavoring to persuade the
Registrant to provide such funding in a manner allowing Trilogy to meet its
revised, anticipated operating expense schedule. While no assurances can be
provided that the funding requested by Trilogy will be available, the Registrant
believes that funding can be arranged at level's deemed adequate for Trilogy by
the Registrant, provided that Trilogy's business operations and prospects
reflect the projections provided by Trilogy's management, as reflected by the
acquisition agreement and its schedules and exhibits, all of which are filed as
exhibits to this report. The failure of the Registrant to provide funding in a
manner sufficient to meet Trilogy's cash flow requirements could substantially
inhibit Trilogy's ability to expand its network of independent field
representatives, introduce new products or continue to operate its business as
planned.
ITEM 304 CHANGES IN ACCOUNTANTS
The firm of Nora F. Catano, CPA, of Stuart, Florida compiled a statement of
assets, liabilities and equity on an income tax basis for Trilogy as of December
31, 1998. As stated in Ms. Catano's compilation report dated March 5, 1999, the
financial statements for the partial year ending December 31, 1998 were prepared
on the accounting basis used by Trilogy for income tax purposes which is a
comprehensive basis of accounting other than generally accepted accounting
principles. Ms. Catano also stated in her compilation report that management had
elected to omit substantially all of the disclosures ordinarily included in
financial statements. If the omitted disclosures were included in the financial
statements, they might influence the user's conclusions about Trilogy's assets,
liabilities, capital, revenue and expenses. Accordingly, those financial
statements were not designed for those who are not informed about such matters.
15
During calendar year 1999, Trilogy did not use the services of Nora F.
Catano, CPA, other than for the December 31, 1998 compilation report and the
preparation of payroll tax returns for the first two quarters of 1999. The
decision not to use such firm for any other matters did not involve any
disagreements over accounting issues, rather, they reflected Trilogy's
management's decision to perform such work in house.
From January 1, 1999 through the closing of the acquisition agreement
between the Registrant and Trilogy on November 30, 1999, all bookkeeping and
preparation of financial statements have been performed by Trilogy employees. No
employee of Trilogy is a certified public accountant. None of Trilogy's
financial statements prepared during the eleven months ending November 30, 1999
have been either reviewed by or audited by an independent accounting firm.
Management of Trilogy has used its best efforts to maintain current accounting
records for its business according to generally accepted accounting principals.
However, in as much as the financial data produced by Trilogy employees has not
been audited, it may not comply with generally accepted accounting principals
consistently applied.
As a result of its acquisition by the Registrant, Trilogy is now required
to provide certified financial statements, since inception, in compliance with
generally accepted accounting principals consistently applied, and complying
with the requirements of Commission regulation SB. Trilogy intends to retain the
services of the Registrant's auditor, the firm of Daszkal, Bolton, Manela,
Devlin & Co., Certified Public Accountants, Boca Raton, Florida ("Daszkal") to
conduct the audit of Trilogy's financial statements through June 30, 1999, an
unaudited quarterly update for the quarter ended September 30, 1999, and a final
unaudited update from the period starting on October 1, 1999 and ending on
November 30, 1999, the first two of which must be filed with and not rejected by
the Commission as an amendment to this report on or before the earlier of the
seventy-fifth day after the acquisition or the sixtieth day following this
report. In the event such financial statements were deemed by the Commission not
to meet the requirements of Regulation SB, the Registrant would have the several
options, including rescission of the acquisition, restructuring of the
acquisition and availing itself of remedies involving reduction of the
consideration for the acquisition of Trilogy by up to 20%. The firm of Daszkal,
Bolton, Manela, Devlin & Co., was selected because it also serves as the
Registrant's auditor.
ITEM 401 DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
DIRECTORS AND EXECUTIVE OFFICERS
The following persons served as Trilogy's officers and directors at the
time of its acquisition by the Registrant, and are expected to continue to serve
in such roles for the foreseeable future, albeit at the pleasure of Trilogy's
board of directors. Pursuant to the terms of the acquisition agreement between
the Registrant and Trilogy, the Registrant, as Trilogy's sole stockholder, has
agreed to elect designees of Trilogy's former stockholders to two-thirds of the
seats on Trilogy's board of directors, subject to SPECIFIED PERFORMANCE CRITERIA
(E.G., subject to attaining earnings projections, compliance with fiduciary
obligations and with applicable law). Trilogy's former stockholders have
designated Mrs. Berardi and Messrs. Berardi, Holmes and Calabro as their initial
designees. The Registrant has also elected its president, Michael Harris Jordan,
as a member of Trilogy's board of directors and is expected to elect Ryan D.
Chamberlin, the son of the Richard G. Chamberlin, Esquire (a member of the
Registrant's board of directors, its former secretary and its current general
counsel) as the final member of Trilogy's board of directors.
16
NAME AGE ELECTED POSITION
Dennis Berardi 54 (1) Director, chairman of the board of
directors and chief executive officer
Carol Berardi 45 (1) Director, president and chief
operating officer
John Holmes 55 (2)(3) Director and secretary
Michael Harris Jordan 46 (5) Director
Ryan D. Chamberlin 25 (5) Director
Arthur Yorke Calabro 54 (2) Director
David Cantley 62 (4) Chief financial officer
- -------
(1) Mr. and Mrs. Berardi have held these positions since Trilogy's inception
and will serve as members of Trilogy's board of directors until the next
annual meeting of Trilogy's stockholders, expected to be held during
December of the year 2000. The Registrant is required to continue to elect
designees of Mr. and Mrs. Berardi to two thirds of the seats on Trilogy's
board of directors, as long as Trilogy meets its financial projections
which may not be changed without unanimous board of directors approval, and
remains in material compliance with applicable laws and fiduciary
obligations.
(2) Elected to Trilogy's board of directors on September 25, 1999 and will
serve as members of Trilogy's board of directors until the next annual
meeting of Trilogy's stockholders, expected to be held during December of
the year 2000.
(3) Elected as Trilogy's secretary on December 1, 1999, replacing Mrs. Berardi
who served in such role since inception.
(4) Elected on September 25, 1999, to serve at the pleasure of the board of
directors, subject to compensation rights under his employment agreement
with Trilogy.
(5) Elected, effective as of December 16, 1999, as the Registrant's designees
to the board of directors, to serve thereon at the pleasure of the
Registrant (which holds all of Trilogy's capital stock).
BIOGRAPHICAL DATA FOR DIRECTORS AND EXECUTIVE OFFICERS
DENNIS A. BERARDI
Dennis Berardi, age 54, was recently elected as a member of the
Registrant's board of directors and serves as chief executive officer of the
Registrant's subsidiary, Trilogy. He began his career in the music industry as a
professional drummer. Mr. Berardi was drafted into the United States Army Band
in 1963 and was subsequently appointed to the Presidential Band in Washington,
D.C. In 1968, Mr. Berardi founded Town Music, a national chain of music stores
that he owned and operated. In 1976, he started Kramer Guitar, a major music
instrument company headquartered in Neptune, New Jersey. He sold Kramer Guitar
(now owned by Gibson Guitar) in 1989. In 1987, Mr. Berardi became involved in
the music promotion industry, brought the first Russian band, Gorky Park, to the
United States and obtained a major recording deal for the band with Polygram
Records. In the same year, Mr. Berardi founded Berardi-Thomas Management to help
oversee the careers of major recording artists. A year later, Mr. Berardi
organized the Moscow Peace Festival, which brought United States and Russian
rock and roll bands together for a concert at Moscow's Lenin Stadium. In 1990,
Mr. Berardi founded Uniquest, a direct sales company based in New Jersey that
specialized in the sale of non-run pantyhose. In 1995, Mr. Berardi and his wife,
Carol Berardi, started a distributorship with Nashua, New Hampshire based Envion
International, a direct sales company with a focus on nutritional products for
humans. In May of 1998, Mr. and Mrs. Berardi founded Trilogy, a direct
sales/e-commerce company specializing in the sale of products to enhance the
quality of life for people, the planet and pets.
17
CAROL A. BERARDI
Mrs. Berardi, age 45, was recently elected as a member of the Registrant's
board of directors and serves as president of the Registrant's subsidiary,
Trilogy. In 1980, Ms. Berardi founded Wayne, New Jersey based Jakits
Personnel/Transworld Temporaries, a permanent placement and temporary help
service firm, which she operated until 1990. In 1990, Mrs. Berardi joined Dennis
Berardi, now her husband, to co-found Uniquest, a direct sales company
specialized in the sale of non-run pantyhose, headquartered in Lakewood, New
Jersey. In 1992, Mrs. Berardi was retained as a consultant for Nashua, New
Hampshire based Envion International Inc., a start up company in the direct
sales industry with a product line of nutritional meal replacement bars. In
1995, upon completion of her assignment as a consultant to Envion, Mr. and Mrs.
Berardi started their own Envion distributorship. In May of 1998, Mr. and Mrs.
Berardi founded Trilogy, a direct sales/e-commerce company specializing in the
sale of products to enhance the quality of life for people, the planet and pets.
JOHN HOLMES
John Holmes, age 55, has served as a member of Trilogy's board of directors
since September 25, 1999 and as Trilogy's secretary since December 1, 1999. In
1967, Mr. Holmes graduated from Central Michigan University with a master degree
in business administration. He joined General Motors immediately following
graduation and has been with General Motors since that time. He has held
positions in human resources, manufacturing, engineering and operations. His
most recent position was chief operating officer of OnStar a division of General
Motors.
ARTHUR YORKE CALABRO
Arthur Calabro, age 54, recently retired as a teacher of the handicapped
after over thirty years of service, the last twenty-eight of which were spent in
the Lakewood (NJ) School District. He received his master of arts degree special
education in 1972 from the New Jersey City University and in 1969 received his
bachelor of science degree in English from St. Peter's College, Jersey City, New
Jersey. During his years as a teacher, he was also involved in many
entrepreneurial ventures and he served as president of Yorkjon Associates, Inc.,
a residential construction company from 1975 to 1978. Since 1978 he has been a
New Jersey licensed insurance agent. Since June of 1989 he has served as the
president and owner of Calabro Enterprises, Inc., a company that is most
recently involved in the brokering of contract packaging, distribution, filling
and general fulfillment. Mr. Calabro possesses a NASD Series 6 License and is a
representative with United Securities Alliance Inc. of Colorado. He remains
active in the insurance and financial services industries, providing his
expertise to municipalities, businesses and individuals. Mr. Calabro has been a
member of the Trilogy Board of Directors since September 25, 1999.
DAVID K. CANTLEY
David K. Cantley, age 62, has served as chief financial officer for the
Registrant's subsidiary Trilogy International since August 1999. Mr. Cantley was
graduated from Yale University in 1959. From 1959 through 1964, except for six
months active duty with the Pennsylvania National Guard, he worked in his
family's structural steel contracting business, Cantley & Co., Inc.,
Philadelphia, Pennsylvania. In 1965 he joined the Stouffer Corporation,
headquartered in Cleveland, Ohio where he held various management positions from
1965 through 1974. In 1974 he returned to Philadelphia and rejoined the family
business, Cantley & Co., Inc., where he served as vice-president until 1978.
From 1978 to 1981 Mr. Cantley was employed as general manger of the Greate Bay
Resort & Country Club, Somers Point, New Jersey. In 1981 he joined Bally's Park
Place Casino, Atlantic City, New Jersey where he was employed as dealer,
floorman and pit boss until 1984. From 1984 to 1992 he served as vice-president
of Hotel Properties, Inc., Somers Point, NJ, a private company in the
hospitality real estate development, construction and management business. He
served as president of Full House Resorts, Inc. (NASDAQ: FHRI) from its
inception in 1992 to 1995. From 1995 to 1999, Mr. Cantley was associated with
Nevada Gold & Casinos, Inc. (OTCBB: UWIN) as project director and financial
advisor. He remains an advisory director of Nevada Gold & Casinos. Mr. Cantley
joined Trilogy International in July 1999.
18
MICHAEL HARRIS JORDAN
Michael Harris Jordan, 46 years old, is a resident and native of Miami,
Florida. From 1972 until 1973 he attended the University of Miami where he
studied English literature. In 1979, Mr. Jordan obtained a Series 7 and a series
63 license from the NASD and in 1982 he obtained a Series 24 license from the
NASD (general securities principal). In conjunction with his activities as an
individual licensed to engage in securities transactions by the NASD, he was
also licensed by the securities regulatory authorities of a number of states.
Since 1985, Mr. Jordan has been engaged in business as a private investor. In
1992, Mr. Jordan incorporated Securities Counseling and Management, Inc., a
private consulting firm headquartered in Miami, Florida, for which he serves as
president and sole director. In January of 1996, Mr. Jordan became secretary,
treasurer and a member of the board of directors of Zagreus, Inc., a publicly
held Delaware corporation then headquartered in Miami, Florida ("Zagreus").
Zagreus is an inactive public company in the process of reorganization. In 1998,
Mr. Jordan became an independent consultant for the Southeast Companies, inc., a
Florida corporation engaged in providing business and political consulting
services and consumer financial services as a licensed mortgage brokerage
company and during 1998, became president of a division thereof operating in
compliance with Florida fictitious name laws as Southeast Counseling &
Management. In 1999, Mr. Jordan became a registered principal (NASD Series 24
license) of Sunshine Securities, Inc., an NASD member firm located in Orlando,
Florida. On August 6, 1999, Mr. Jordan became a member of the Registrant's board
of directors and was elected as its president.
RYAN D. CHAMBERLIN
Ryan D. Chamberlin, age 25, graduated from Central Florida Community
College in 1996, with an associate of arts degree in business. His network
marketing experience started in 1994, with Amway Corporation, where he served in
a position equivalent to that of an independent field representative and
eventually developed a network of 20 persons through which he received
compensation. Since 1995 he has been involved in a position equivalent to that
of an independent field representative with Excel Telecommunications Inc., where
he attained group leadership positions as a regional director and regional
training director over a 500+ person sales team assembled by him in the States
of Florida, Georgia, Maryland, New York, Texas and Utah. Since October, 1, 1999,
he has been involved in a position equivalent to that of an independent field
representative with Team Nationwide, an Atlanta based network marketing company
where he has already developed a network of 75 persons through which he receives
compensation. In addition to his network marketing activities, Mr. Chamberlin
has been active in the commercial finance field, where he started with Mercury
Finance Company at its Central Florida office in Ocala, Florida in 1995. In
1997, Mr. Chamberlin founded and served as president and chief executive officer
for Ryan Marketing Group, Inc., a consumer finance company headquartered in
Marion County, Florida, which specialized in sub-prime auto loans. In 1999, he
became senior vice president and chief operating officer for Southern Capital
Group, Inc., a consumer finance company and licensed mortgage brokerage business
headquartered in Marion County, Florida, where he also serves as president and
chief executive officer of its automobile finance division. Prior to entering
the finance and network marketing industries, Mr. Chamberlin was employed as a
manager by Kash - Karry, a large chain of grocery and consumer products stores
at various facilities in Marion County, Florida from 1991 until 1994, while he
attended Central Florida Community College.
SIGNIFICANT EMPLOYEES
NAME AGE APPOINTED POSITION
Jane R. Bicks, D.V.M. 51 April, 1999 Chief new product development
and education officer
Stephen Berardi 42 May, 1998 Chief administrative officer
Dr. Bicks and Mr. Berardi serve at the pleasure of Trilogy's board of
directors. However, Dr. Bicks' compensation rights contained in her employment
agreement with Trilogy would survive any premature termination.
19
BIOGRAPHICAL DATA FOR SIGNIFICANT EMPLOYEES
JANE R. BICKS, D.V.M.
Jane R. Bicks, D.V.M. has served as chief new product development and
education officer for the Registrant's subsidiary, TRILOGY SINCE APRIL OF 1999.
IN 1977, SHE GRADUATED SUMMA CUM LAUDE from the University of Parma, Italy,
where she received her doctor of veterinary medicine degree. In 1992, Dr. Bicks
served as the president and founder of Dr. Jane Enterprises, Ltd., where she
offered a line of holistic pet care products that were marketed throughout the
United States. She served as the president of the Veterinary Medical Association
of New York City in 1991. From 1978 to 1991, Dr. Bicks served as supervisor of
product formulation and development, technical services and education for Fauna
Food, a major pet food supplier and as a product formulation consultant for
various other major food suppliers. Dr. Bicks has been involved with many
advisory boards including Canine Companions for Independence, Cornell Feline
Health Center and Animal Care & Control in New York City. She is the author of
three national books, revolution in cat nutrition (Rawson Associates, New York,
1986), Dr. JAne's thirty days to a healthier, happier dog (Berkley Publishing,
New York, 1997) and Dr. Jane's Natural Guide to a Healthier, Happier Dog
(Berkley Publishing, New York, 1999). Dr. Bicks joined Trilogy in April of 1999.
STEPHEN BERARDI
Stephen Berardi, 42 years old, joined Trilogy in May of 1998 nad has served
as Trilogy's chief administrative officer for the Registrant's subsidiary,
Trilogy since December 1998. He attended Rider College in New Jersey from 1975
until 1978, majoring in accounting and management. In 1982, Mr. Berardi
graduated first in his class with high honors from the Culinary Institute of
America in Hyde Park, New York. That same year, he became a distributor for
Cambridge Plan International, a direct sales company based in Monterey,
California. In 1983, Mr. Berardi worked as Assistant Manager of Shenanigans, a
restaurant in Wall, New Jersey. In 1985, he designed and developed the theme for
a new restaurant named Josh's Place in Colts Neck, New Jersey. Prior to the
restaurant's completion, Mr. Berardi was offered the position of General
Manager, which he accepted. Mr. Berardi joined Kramer Guitar as the Director of
Purchasing in 1987. In 1990, he helped launch Uniquest, a direct sales company
that sold non-run panty hose based in New Jersey, where he served as the
Director of Materials Management. From 1993 to 1998, Mr. Berardi served as the
Director of Banquet Operations for The Molly Pitcher Inn, a 5 diamond hotel in
Red Bank, New Jersey.
FAMILY RELATIONSHIPS
BERARDI FAMILY
Dennis and Carol Berardi are the co-founders of Trilogy and are husband and
wife. In addition, Stephen Berardi, Richard Berardi and Michael Berardi, all
brothers of Dennis Berardi and are involved with Trilogy as follows: Stephen
Berardi serves as Trilogy's chief administrative officer; Richard Berardi
provided Trilogy with proprietary marketing and musical materials for which he
receives royalty payments; and, Trilogy is currently negotiating with a company
in which Michael Berardi is employed for rights to market products.
CHAMBERLIN FAMILY
Ryan D. Chamberlin, a member of Trilogy's board of directors designated by
the Registrant, is the son of G. Richard Chamberlin, Esquire, currently a member
of the Registrant's board of directors and its general counsel, and formerly its
secretary.
20
INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS
Based on information provided to the Registrant's legal counsel, during the
five year period ending on June 30, 1999, no current director, person nominated
to become a director, executive officer, promoter or control person of Trilogy
has been a party to or the subject of:
(1) Any bankruptcy petition filed by or against any business of which
such person was a general partner or executive officer either at the
time of the bankruptcy or within two years prior to that time;
(2) Any conviction in a criminal proceeding or pending criminal
proceeding (excluding traffic violations and other minor offenses);
(3) Any order, judgment, or decree, not subsequently reversed,
suspended or vacated, of any court of competent jurisdiction,
permanently or temporarily enjoining, barring, suspending or otherwise
limiting his involvement in any type of business, securities or banking
activities; or,
(4) Been found by a court of competent jurisdiction (in a civil
action), the Commission or the Commodity Futures Trading Commission to
have violated a federal or state securities or commodities law, and the
judgment has not been reversed, suspended, or vacated.
ITEM 402 EXECUTIVE COMPENSATION
The following tables disclose all plan and non-plan compensation awarded
to, earned or paid by any person for all services, in all capacities to Trilogy
during the last fiscal year, to all persons serving as Trilogy's chief executive
officer (or similar capacity), regardless of the compensation level; and, if
their aggregate compensation exceeded $100,000, Trilogy's four most highly
compensated executive officers and up to two additional persons who would have
been subject to the foregoing but for the fact that they were not executive
officers.
SUMMARY COMPENSATION TABLE
No person was paid more than $100,000 for services to Trilogy during the
last fiscal year. Because the responsibilities of chief executive officer and
president are held by different, albeit related persons, the Registrant has
elected to provide information concerning compensation of both persons. In
addition, Trilogy has not been in existence for three fiscal years and thus
information is provided from inception until June 30, 1999 (the Registrant's
year end). During the next fiscal year, Jane R. Bicks, D.V.M., is expected to
receive compensation in excess of $100,000 as called for by her employment
agreement with Trilogy (summarized below), and it is possible that Mr. and Mrs.
Berardi will also earn in excess of $100,000 in total compensation based on the
bonus provisions in their employment agreements with Trilogy (as also summarized
below).
21
SUMMARY COMPENSATION TABLE
YEAR ENDED JUNE 30, 1999
ANNUAL COMPENSATION LONG TERM COMPENSATION
AWARDS PAYOUTS
SECURITIES LONG
NAME UNDERLYING TERM
AND OTHER RESTRICTED OPTIONS/STOCK INCENTIVE ALL
PRINCIPLE ANNUAL STOCK APPRECIATION PLAN OTHER
POSITION YEAR SALARY BONUS COMPENSATION AWARD(S) RIGHTS PAYOUTS COMPENSATION
Dennis 1999 $17,814 0 (3) 0 0 0 0
Berardi (1)
Carol 1999 $17,814 0 (3) 0 0 0 0
Berardi (2)
- -------
(1) Chairman of the board of directors and chief executive officer.
(2) President and chief operating officer.
(3) $55,417 was to have been received as salary but only $17,814 was paid.
OPTIONS AND STOCK APPRECIATION RIGHTS
No options or stock appreciation rights were granted by Trilogy during the
fiscal year ended June 30, 1999, to any person for whom disclosure would be
required by Item 402 of Regulation SB. The only options or stock appreciation
rights granted by Trilogy during such period to any person are listed below. The
following information is provided as converted to securities of the Registrant,
generally based on a three shares of Trilogy common stock for one share of the
Registrant's common stock basis.
OPTION/STOCK APPRECIATION RIGHT GRANTS IN LAST FISCAL YEAR
YEAR ENDED JUNE 30, 1999
INDIVIDUAL GRANTS
Number of Percent of
Securities Underlying Total Options or
Options or Stock Stock Appreciation
Appreciation Rights Rights Granted to Exercise or
Name Granted Employees in fiscal year Base Price Expiration Date
- --------------------------------------------------------------------------------------------------
Stephen Berardi 4,667 100% $0.75 December 20, 2008
Jane R. Bicks, D.V.M. 16,667 100% $0.75 April 12, 2009
OTHER INFORMATION CONCERNING OPTIONS, STOCK APPRECIATION RIGHTS OR PLANS
No options or stock appreciation rights were exercised during the fiscal
year ending June 30, 1999, nor have any been exercised during the period from
June 30, 1999 until the date of this report. Trilogy does not have any long term
incentive plans, as that term is defined in Item 402(a)(iii) of Commission
Regulation SB.
22
COMPENSATION OF DIRECTORS
The non-employee members of the Trilogy's Board of Directors are not
compensated for any services provide as directors. The two members to be
designated by the Registrant will be compensated by the Registrant either under
other compensation arrangements, if otherwise employed by the Registrant, or at
one half the rate that the Registrant's directors receive compensation under its
director compensation programs if the director is independent of other roles
with the Registrant and Trilogy. Trilogy has recently requested that the
non-employee designees of Trilogy's former stockholders to its board of
directors receive the same compensation that the Registrant has agreed to
provide to Mr. Chamberlin; however, such subject will require further
discussions and probable concessions from Trilogy and may not be deemed
acceptable by the Registrant's board of directors (since such compensation is
provided by the Registrant). If it is agreed to, such compensation, including
the compensation to Mr. Chamberlin, would constitute a charge against Trilogy's
earnings and affect its ability to meet its projections.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE IN CONTROL
ARRANGEMENTS
Jane R. Bicks, D.V.M., Dennis Berardi and Carol Berardi each have
employment agreements with Trilogy. Each of the agreements provides that the
employee will not enter the employ of or serve as a consultant to, or in any way
perform any services with or without compensation to, any other persons,
business or organization without the prior consent of the President of Trilogy
JANE R. BICKS, D.V.M.:
Dr. Bicks agreement established a base salary of $100,000 per
year with bonus as determined by Trilogy. Her contract expires in
April 2004. Dr. Bicks will devote all of her time, attention and
energies during normal business hours to the affairs of Trilogy.
However, Dr. Bicks is permitted to devote a limited amount of her
time, without compensation, to professional, charitable or
similar organizations. Any product, formulation, formula,
invention, procedure, know-how, concept or other invention or
proprietary information developed by Dr. Bicks during the term of
her employment agreement or subsequently conceived or developed
based on research or marketing conducted during the term of her
employment agreement will be owned exclusively worldwide by
Trilogy and Dr. Bicks will have no property interest in any of
such tangible or intangible property. Dr. Bicks' employment
agreement is assignable and the rights and obligations of Trilogy
under her agreement will inure to the benefit of and be binding
upon the successors and assigns of Trilogy, provided that such
successor or assign acquire all or substantially all of the
securities or assets and business of Trilogy. Dr. Bicks's
obligations may not be assigned or alienated and any attempt to
do so by Dr. Bicks will be void.
DENNIS BERARDI:
Dennis Berardi's employment agreement expires on December 31,
2004. His contract is automatically renewed unless specifically
canceled by Trilogy or Mr. Berardi. Mr. Berardi has an annual
base salary of $80,000. His salary may be adjusted at six-month
intervals to reflect his performance as reflected in the
performance of Trilogy during such period. He is also eligible
for an annual bonus payable in a cash sum equal to 2.5% of the
net, pre tax profits of Trilogy and a bonus payable in the
Registrant's common stock, equal to the number of shares obtained
by dividing 20% of Mrs. Berardi's salary for the subject year by
the closing transaction price for the Registrant's common stock
on the last trading day of the subject year. Mr. Berardi will,
unless specifically otherwise authorized by Trilogy's board of
directors, on a case by case basis, devote all of his business
time exclusively to the affairs of Trilogy. Trilogy will defend,
indemnify and hold Mr. Berardi harmless from all liabilities,
suits, judgments, fines, penalties or disabilities, including
expenses associated directly, therewith (e.g., legal fees, court
costs, investigative costs, witness fees, etc.) resulting from
any reasonable actions taken by Mr. Berardi in good faith on
behalf of Trilogy, its affiliates or for other persons or
23
entities at the request of the board of directors of Trilogy, to
the fullest extent legally permitted, and in conjunction
therewith, will assure that all required expenditures are made in
a manner making it unnecessary for Mr. Berardi to incur any out
of pocket expenses; provided, however, that Mr. Berardi permits
the majority stockholders of Trilogy to select and supervise all
personnel involved in such defense and that Mr. Berardi waive any
conflicts of interest that such personnel may have as a result of
also representing Trilogy, its stockholders or other personnel
and agrees to hold them harmless from any matters involving such
representation, except such as involve fraud or bad faith.
CAROL BERARDI:
Carol Berardi's employment agreement expires on December 31,
2004. Her contract is automatically renewed unless specifically
canceled by Trilogy or Mrs. Berardi. Mrs. Berardi has an annual
base salary of $80,000. Her salary may be adjusted at six-month
intervals to reflect her performance as reflected in the
performance of Trilogy during such period. She is also eligible
for an annual bonus payable in a cash sum equal to 2.5% of the
net, pre tax profits of Trilogy and a bonus payable in the
Registrant's common stock, equal to the number of shares obtained
by dividing 20% of Mrs. Berardi's salary for the subject year by
the closing transaction price for the Registrant's common stock
on the last trading day of the subject year. Mrs. Berardi will,
unless specifically otherwise authorized by Trilogy's board of
directors, on a case by case basis, devote all of her business
time exclusively to the affairs of Trilogy. Trilogy will defend,
indemnify and hold Mrs. Berardi harmless from all liabilities,
suits, judgments, fines, penalties or disabilities, including
expenses associated directly, therewith (e.g., legal fees, court
costs, investigative costs, witness fees, etc.) resulting from
any reasonable actions taken by Mrs. Berardi in good faith on
behalf of Trilogy, its affiliates or for other persons or
entities at the request of the board of directors of Trilogy, to
the fullest extent legally permitted, and in conjunction
therewith, will assure that all required expenditures are made in
a manner making it unnecessary for Mrs. BERARDI TO INCUR ANY OUT
OF POCKET EXPENSES; PROVIDED, HOWEVER, that Mrs. Berardi permits
the majority stockholders of Trilogy to select and supervise all
personnel involved in such defense and that Mrs. Berardi waive
any conflicts of interest that such personnel may have as a
result of also representing Trilogy, its stockholders or other
personnel and agrees to hold them harmless from any matters
involving such representation, except such as involve fraud or
bad faith.
REPORT ON REPRICING OF OPTIONS OR STOCK APPRECIATION RIGHTS
Except as a result of its acquisition by the Registrant, Trilogy has never
repriced any of its options and has never had any stock appreciation rights. As
a result of the acquisition of Trilogy by the Registrant's, all of Trilogy's
outstanding options and warrants were converted into the right to receive 1/3 of
the number of shares in the Registrant's common stock at three times the
exercise price.
ITEM 403 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following tables disclose information concerning ownership of the
Registrant's common stock by Trilogy's officers, directors and former principal
stockholders (now holders of 5% or more of the Registrant's common stock). All
footnotes follow the second table. The Registrant's currently outstanding shares
of common stock, for purposes of these calculations, are calculated based on
information available as of December 15, 1999, and include both currently
outstanding securities (10,363,126) and securities which a named person has a
right to acquire within 60 days following the date of this report. Consequently,
the number of shares deemed outstanding for purposes of Table A will vary
materially from those deemed outstanding for purposes of Table B.
24
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
As of December 15, 1999, the following persons associated with Trilogy
(including any "group") are, based on information available to the Registrant,
beneficial owners of more than five percent of the Registrant's common stock
(its only class of voting securities). Of the number of shares shown in column
3, the associated footnotes indicate the amount of shares with respect to which
such persons have the right to acquire beneficial ownership as specified in
Commission Rule 13(d)(1), within 60 days following the date of this report. For
purposes of this Table, 10,363,126 shares of the Registrant's common stock are
assumed to be outstanding.
Footnotes follow Table B.
Table A
PRINCIPAL STOCKHOLDERS:
Title Amount and Nature Percent
Of Class Name and Address of Beneficial Owner Ownership of Class
Common Dennis Berardi 525,864 shares 5.1%
1050 Chapman Way; Palm City, Florida 34990
Common Carol Berardi 525,864 shares 5.1%
1050 Chapman Way; Palm City, Florida 34990
- --------
Footnotes follow Table B.
SECURITY OWNERSHIP OF MANAGEMENT
As of December 15, 1999, the following Table discloses the Registrant's
common stock (the only outstanding class of equity securities for the
Registrant, its parents or subsidiaries held by persons other than the
Registrant) other than directors' qualifying shares, beneficially owned by:
* all of Trilogy's directors and nominees, naming them each;
* each of the named Trilogy executive officers as defined in Item 402(a)
of Commission Regulation S-B;
* and all directors and executive officers of Trilogy as a group,without
naming them.
The Table shows in column 3 the total number of shares beneficially owned
and in column 4 the percent so owned. Of the number of shares shown in column 2,
the associated footnotes indicate the amount of shares, if any, with respect to
which such persons have the right to acquire beneficial ownership as specified
in Commission Rule 13(d)(1), within 60 days following the date of this report
(none being applicable). For purposes of this Table, 10,433,127 shares of the
Registrant's common stock are assumed to be outstanding. Footnotes for Table A
and Table B follow this Table.
25
Table B
SECURITY OWNERSHIP OF MANAGEMENT:
BENEFICIAL AMOUNT OF NATURE OF PERCENT
NAME AND ADDRESS OF BENEFICIAL OWNER (1) EQUITY OWNED BENEFICIAL OWNERSHIP OF CLASS
Dennis Berardi 525,864 shares (1) 5.0%
1050 Chapman Way; Palm City, Florida 34990
Carol Berardi 525,864 shares (1) 5.0%
1050 Chapman Way; Palm City, Florida 34990
John Holmes 106,667 shares (2) (1) 1.0%
49504 Nautical Drive; Chesterfield, Michigan 48047
Arthur Calabro 26,667 shares (3) (1) 0.3%
661 Rolling Hills Court; Brick, New Jersey 08724
Michael Harris Jordan None (4) None None
21131 Northeast 24th Court; Miami, Florida 33180
Ryan D. Chamberlin None (5) None None
5410 Southeast 110th Street; Belleview, Florida 34420
Jane R. Bicks, D.V.M. 16,667 shares (6) (1) 0.2%
13619 Deer Creek Drive; Palm Beach Gardens, Florida 33418
David Cantley 8,667 shares (1) 0.1%
4197 Southeast Bayview Street; Stuart, Florida 34997
Stephen Berardi 17,667 shares (7) (1) 0.2%
1484-A Southwest Silverpine Way; Palm City, Florida 34990
All of Trilogy's Executive 1,178.395 shares (1) 11.4%
Officers and Directors
- --------
FOOTNOTES TO TABLES A AND B.
(1) Record and beneficial ownership.
(2) Includes options to purchase 20,000 shares of the Registrant's common stock
at $0.75 per share until November 30, 2004 and 26,667 shares of the
Registrant's common stock at $0.75 per share until November 30, 2008.
(3) Includes options to purchase 6,667 shares of the Registrant's common stock
at $0.75 per share until November 30, 2004.
(4) Mr. Jordan serves as a director of Trilogy and of the Registrant and as the
Registrant's president. Does not include 100,000 shares of the Registrant's
common stock that Mr. Jordan is entitled to purchase pursuant to the terms
of his employment agreement with the Registrant because they are not
exercisable within the next 60 days.
(5) Does not include 7,500 shares of the Registrant's common stock that Mr.
Chamberlin is entitled to purchase pursuant to the terms of his agreement
with the Registrant to serve as one of its designees on Trilogy's board of
directors because they are not exercisable within the next 60 days.
26
(6) Includes options to purchase 16,667 shares of the Registrant's common stock
at $0.75 per share until November 30, 2009.
(7) Includes options to purchase 16,667 shares of the Registrant's common stock
at $0.75 per share until November 30, 2004.
CHANGES IN CONTROL
The Registrant is not aware of any arrangements that may result in a change
in control of Trilogy, other than the change of control pursuant to which the
Registrant acquired Trilogy.
ITEM 404 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
TRANSACTIONS WITH DIRECTORS, NOMINEES FOR ELECTION AS A DIRECTOR, EXECUTIVE
OFFICERS, TEN PERCENT+ STOCKHOLDERS OR THEIR IMMEDIATE
FAMILIES
Since Trilogy's inception, it was a party to the following transactions in
which:
* a director or executive officer of Trilogy,
* a nominee for election as a director,
* a beneficial owner of ten percent or more of Trilogy's common
stock, or
* any member of the immediate family of any of the foregoing;
had or will have a direct or indirect interest, and did not involve: rates or
charges determined by competitive bids; services at rates or charges fixed by
law or governmental authority; services as a bank depository of funds, transfer
agent, registrar, trustee under a trust indenture; or, similar services:
Relationship Nature of Interest Amount of
Name to Trilogy in the Transaction Such Interest
- --------------------------------------------------------------------------------------------
Richard Berardi Brother of Dennis Berardi (1) (1)
Trilogy's chief executive officer
John Holmes Director and secretary (2) (2)
- -------
(1) Provided Trilogy with certain marketing materials and songs, including the
Trilogy's Best Friends video, in consideration for $1,800 (of which only
$700 has been paid) and a royalty payments of $0.05 per copy.
(2) A consulting company owned by relatives has provided services to Trilogy
for which it is owed $95,000.
In addition to the foregoing, Trilogy is currently negotiating with a
company that employs Michael Berardi, a brother of Dennis Berardi, Trilogy's
chief executive officer, for product marketing rights.
27
(B) PARENTS OF TRILOGY
As defined in Rule 405 of Commission Regulation C, a "parent" of a
specified person is an affiliate controlling such person directly, or indirectly
through one or more intermediaries. The same rule defines an affiliate as a
person that directly, or indirectly through one or more intermediaries, controls
or is controlled by, or is under common control with, the person specified.
Based on such definitions, Mr. and Mrs. Berardi were the parents of Trilogy
until its acquisition by the Registrant, at which time the Registrant became the
"parent" of Trilogy.
ITEM 504 RISK FACTORS
TRILOGY MAY NOT BE ABLE TO ESTABLISH THE NUMBER OF INDEPENDENT FIELD
REPRESENTATIVES NECESSARY TO ACHIEVE ITS REVENUE PROJECTIONS OR ACHIEVE
PROFITABILITY.
As a network marketing company, Trilogy will be dependent upon a large
network of independent field representatives' to generate sufficient revenues
for it to be profitable. Trilogy's projections indicate that it will need to
establish a network of approximately 4,000 independent field representatives
each generating average revenues in excess of $100 per month in order to cover
operating expenses and not experience negative cash flow from operations. It has
been projected by Trilogy's management that this combination of active
independent field representatives and average monthly sales can be reached by
July of 2000. Trilogy's management has projected continued growth during the
balance of the next twelve months based on the assumption that approximately
7,200 active independent field representatives would be generating average
monthly revenues of approximately $163 per month (each) by the end of November
of 2000. Trilogy may not be able to recruit and properly train such number of
independent field representatives or they may not attain the average monthly
sales per representative necessary to achieve Trilogy's revenue projections or
attain profitability.
TRILOGY HAS NO E-COMMERCE OPERATING HISTORY AND MAY NOT BE ABLE TO SUCCESSFULLY
MANAGE ITS BUSINESS OR ACHIEVE PROFITABILITY.
Trilogy began selling its products through its independent field
representatives in late July 1999 but did not begin sales through the Internet
until early December of 1999. Trilogy's projections for the next twelve months
assume that a large portion of its sales will come through the Internet by way
of replicator sites of the www.trilogyonline.com corporate Web site. Trilogy
believes that the replicator sites will be a valuable sales tool for its
independent field representatives and will enable them to reach the sales goals
projected. However, Trilogy has a limited operating history on which to base an
evaluation of its business and prospects. Trilogy's prospects should be
considered in light of the risks, expenses and difficulties frequently
encountered by companies in their early stage of development, particularly
companies in new and rapidly evolving markets such as online commerce. Such
risks for Trilogy include, but are not limited to an evolving and unpredictable
business model and the proper management of growth. To address such risks,
Trilogy must, among other things, develop, train and retain its network of
independent field representatives, develop and maintain its customer base,
implement and successfully execute its business and marketing strategy, continue
to develop and upgrade its technology and transaction-processing systems,
improve its host Web site and corresponding replicator sites, provide superior
support to the network of independent field representatives, provide superior
customer service and order fulfillment, respond to competitive developments, and
attract, retain and motivate qualified personnel. Trilogy may not be able to
successfully address such risks, or manage its business to achieve or maintain
profitability. The failure to do so could have a material adverse effect on
Trilogy's business, prospects, financial condition and results of operations.
28
TRILOGY HAS INCURRED NET LOSSES SINCE INCEPTION AND ANTICIPATES CONTINUED LOSSES
AND NEGATIVE CASH FLOWS
From inception of its business in May of 1998 through September 30, 1999,
Trilogy incurred net operating losses of $1,007,942 (unaudited). As of September
30, 1999 Trilogy had a negative net equity of $219,290 (unaudited). Trilogy
anticipates that its losses from operations will continue for at least the next
seven months and that losses during the period from December 1, 1999 through
June of 2000 will be approximately $500,000. Trilogy's ability to become
profitable given its current and planned expenses depends on its ability to
generate and sustain substantial sales from a large but yet to be established
network of independent field representatives and from e-commerce operations. If
Trilogy does achieve profitability, it cannot be certain that it can sustain or
increase profitability on a quarterly or annual basis in the future. If Trilogy
cannot achieve and sustain operating profitability or positive cash flows from
operations, it may be unable to meet its working capital requirements without
seeking additional financing.
TRILOGY REQUIRES SUBSTANTIAL WORKING CAPITAL TO FUND ITS BUSINESS AND IS
DEPENDENT UPON THE REGISTRANT TO FUND ONGOING OPERATIONS
The Registrant has indicated that it intends to provide Trilogy with
funding in the amount of $650,000 over the next six months in addition to the
initial $250,000 already provided. Trilogy's projections indicate that
approximately 90% of such funding will be expended to cover negative cash flow
from operations during the next six to nine months. If Trilogy fails to meet its
projections or the Registrant is unable or unwilling to provide such funding,
its ability to continue operating its business could be jeopardized.
GENERAL ECONOMIC CONDITIONS
Trilogy's financial success may be detrimentally affected by a number of
factors wholly outside of its control, such as GENERAL OR SPECIAL ECONOMIC
CONDITIONS, WHETHER OR NOT SUCH CHANGES ARE GENERALLY PERCEIVED AS NEGATIVE
(E.G., recession, inflation, unemployment and interest rate fluctuations).
Changes can affect the costs of supplies, insurance, transportation, labor and
other expenses and could affect Trilogy's business. Changes can provide new or
improved opportunities but they can also negatively change the financial
environment in which Trilogy operates. To the extent that changes increase
net-operating expenses for Trilogy without permitting corresponding increases in
prices charged, such changes could reduce demands in the marketplace for its
services creating losses of business. While Trilogy will keep informed
concerning economic trends and developments and intends to develop plans for
dealing with them, no assurances can be provided that such efforts will succeed
in predicting or dealing with uncontrollable economic forces.
THE INDUSTRY
The Internet services industry is characterized by the constant emergence
of new technologies and markets which displace existing technologies and
markets. Such innovation can prove either positive or negative based on the
ability of Internet businesses to predict and participate in such changes rather
than to be replaced by them. Consumer's tastes and desires fluctuate and are
difficult to predict. There are no assurances that Trilogy will be able to
accurately predict industry trends or to keep pace with industry changes.
TRILOGY MAY BECOME SUBJECT TO ADDITIONAL GOVERNMENT REGULATION
Laws and regulations directly applicable to communications or commerce over
the Internet are becoming more prevalent. The laws governing the Internet,
however, remains largely unsettled, even in areas where there has been some
legislative action. It may take years to determine whether and how existing laws
such as those governing intellectual property, privacy, libel, contracts and
taxation apply to the Internet. In addition, the growth and development of the
market for online commerce may prompt calls for more stringent consumer
protection laws that may impose additional burdens on companies conducting
business online. The adoption or modification of laws or regulations relating to
the Internet could adversely affect Trilogy's business.
29
YEAR 2000 RISK MAY ADVERSELY AFFECT TRILOGY
Many existing computer programs use only two digits to identify a year.
These programs were designed and developed without addressing the impact of the
upcoming change in the century. If not corrected, many computer software
applications could fail or create erroneous results by, at or beyond the Year
2000. Trilogy has assessed its systems which permit the sale, order, processing
and delivery of products to its independent field representatives and customers
to determine Year 2000 compliance. Based on Trilogy's review and the results of
limited testing, Trilogy believes all of such systems are Year 2000 compliant.
Trilogy also uses software, computer technology and other services internally
developed and provided by third-party vendors that may fail due to the Year 2000
phenomenon. For example, Trilogy is dependent on the institutions involved in
processing its independent field representatives' and customers' credit card
payments. Trilogy is also dependent on telecommunications vendors and leased
point-of-purchase vendors to maintain network reliability. Consequently, errors
or defects that affect the operation of its systems could result in delay or
loss of revenue, interruption of shopping services, cancellation of customer
contracts, diversion of development resources, damage to its reputation, costs
and litigation costs, any of which could adversely affect its business,
financial condition and results of operations. The expenses associated with
Trilogy's assessment and potential remediation plan cannot be determined.
Further, at this time, Trilogy does not have enough information to determine the
most reasonably likely worse case scenario. Therefore, Trilogy does not have a
contingency plan in place to handle the most reasonably likely worse case
scenario, and it does not intend to create one. TECHNOLOGICAL OBSOLESCENCE
The Internet industry involves two of the most obsolescence sensitive areas
of modern business: computers and communications. Changes, especially in
computer systems involving both hardware and software seem to appear weekly and
require a balance between not permitting equipment and software to become stale
and non-competitive, resulting in lost business, and, making premature
expenditures on unproven systems. Failure to make the correct decision, at the
right time, could materially impair Trilogy's business prospects and
profitability.
TRILOGY'S MANAGEMENT TEAM IS NEW AND IT WILL NEED ADDITIONAL PERSONNEL
Trilogy is substantially dependent on the efforts of Dennis Berardi, its
chief executive officer and Carol Berardi, its president, to attract, train,
retain and motivate a large and extensive network of independent field
representatives that it will be dependent on for the bulk of its revenues. Mr.
and Mrs. Berardi have been successful in the past in building such a network of
field representatives for other companies and Trilogy expects that they will be
successful in building the organization for Trilogy as projected, but such
success cannot be assured. During the next twelve months Trilogy expects to add
additional personnel to manage the anticipated growth of its operations.
However, the e-commerce market is highly competitive, and retaining both
existing employees and new personnel could be costly in terms of cash
compensation or equity necessary, or such personnel may not be available to
Trilogy on any terms. Competition for qualified individuals to either replace or
supplement existing personnel is intense and Trilogy may be unable to
successfully attract, assimilate or retain sufficiently qualified personnel in
the future.
TRILOGY RELIES ON MANUFACTURERS FOR ITS PRODUCTS
Trilogy is dependent upon the manufacturers that supply it with
products for resale, and the availability of these products, which Trilogy
believes will be adequate to meet its demand, cannot be assured. As is common in
the industry, Trilogy has no long-term or exclusive arrangements with any
manufacturer that guarantees the availability of any of its products for resale.
30
TRILOGY IS SUBJECT TO RISK OF SYSTEM FAILURE
Trilogy's success, in particular its ability to successfully receive and
fulfill orders and provide high quality customer service, largely depends on the
efficient and uninterrupted operation of its computer and communications
systems. Trilogy contracts with third parties to host its computer and
communications hardware systems and to maintain its critical connection to the
Internet.
Trilogy's systems and operations are vulnerable to damage or interruption
from fire, flood, power loss, telecommunications failure, break-ins and similar
events. Trilogy has no formal disaster recovery plan and carry no business
interruption insurance to compensate it for losses that may occur. Furthermore,
Trilogy's security mechanisms or those of its suppliers may not prevent security
breaches or service breakdowns. Despite Trilogy's implementation of security
measures, its servers may be vulnerable to computer viruses, physical or
electronic break-ins and similar disruptions. These events could cause
interruptions or delays in its business, loss of data or render it unable to
accept and fulfill orders.
TRILOGY IS SUBJECT TO RISKS ASSOCIATED WITH ONLINE COMMERCE SECURITY AND CREDIT
CARD FRAUD
A significant barrier to online commerce and communications is the secure
transmission of confidential information over public networks. Trilogy's
business may be adversely affected if its security measures do not prevent
security breaches. Trilogy cannot assure that it can prevent all security
breaches. To the extent that Trilogy's activities, or those of third-party
contractors, involve the storage and transmission of proprietary information
(such as credit card numbers), security breaches could damage its reputation,
and expose Trilogy to a risk of loss or litigation and possible liability. Under
current credit card practices, a merchant is liable for fraudulent credit card
transactions where, as is the case with the transactions that it processes, that
a merchant does not obtain a cardholder's signature. Fraudulent use of credit
card data in the future could adversely affect Trilogy's business.
TRILOGY IS SUBJECT TO CAPACITY CONSTRAINT RISKS; RELIANCE ON INTERNALLY
DEVELOPED SYSTEMS AND SYSTEM DEVELOPMENT RISKS
A key element in Trilogy's strategy is to generate a high volume of traffic
on, and use of, its corporate Web site and the replicator Web sites that it
anticipates will be purchased by its independent field representatives.
Accordingly, Trilogy's Web site transaction processing systems and network
infrastructure performance, reliability and availability are critical to its
operating results. These factors are also critical to Trilogy's reputation and
its ability to attract and retain independent field representatives and
customers and maintain adequate support to its independent field representatives
and adequate customer service levels. The volume of goods Trilogy sells and the
attractiveness of its product and service offerings will decrease if there are
any system interruptions that affect the availability of its Web sites or its
ability to fulfill orders. Trilogy intends to continually enhance and expand its
technology and transaction processing systems, and network infrastructure and
other technologies, to accommodate increases in the volume of traffic on Trilogy
Web sites. Trilogy may be unsuccessful in these efforts or it may be unable to
accurately project the rate or timing of increases in the use of its Web sites.
Trilogy may also fail to timely expand and upgrade its systems and
infrastructure to accommodate these increases.
31
PROJECTIONS
Trilogy's proposed expansion and growth is largely based on confidential
internal projections predicated primarily on management's expectations of the
future performance of Trilogy and its network of independent field
representatives. The projections are based upon certain assumptions concerning
the economy and potential growth of the Internet and related industries, which
management cannot control, and on anticipated rapid and sustained growth in
Trilogy's network of independent field representatives. One of the material
assumptions is that there will be a demand for and acceptance of Trilogy's line
of products sufficient to generate projected revenues. Another material
assumption is that the replicator web sites will be received favorably by
Trilogy's independent sales representatives and will enable then to generate the
revenues projected. While management discussions with current and prospective
independent field representatives have led to optimistic expectations, there are
usually differences between expectations and actual results caused by events and
circumstances that do not occur as expected. There can be no assurance that past
or current indications of interest from the relatively small number of
independent field representatives attracted to date will result in the
generation of revenues projected or Trilogy's attainment of profitability.
TRILOGY'S MARKETS ARE HIGHLY COMPETITIVE
The online commerce market is new, rapidly evolving and intensely
competitive. Trilogy expects competition to intensify in the future because
barriers to entry are minimal. In addition, the pet nutraceutical and the human
nutritional supplements industry are highly competitive. Trilogy competes with a
growing number of manufacturers that sell their products directly online.
Trilogy also competes with traditional store-based retailers and mail order
and/or direct marketers. Competitive pressures created by any one of these
current or future competitors, could have a material adverse affect on Trilogy's
operations.
ITEM 504 USE OF PROCEEDS
The Registrant intends to invest a total of $900,000 in Trilogy, subject to
the accuracy of representations made by Trilogy it the acquisition agreement and
Trilogy's compliance with a number of its obligations under the acquisition
involving providing information that the Registrant is required to file with the
Commission in an accurate, complete and timely fashion. The Registrant provided
Trilogy with $250,000 of such funds on the effective date of the acquisition and
intended to provide another $325,000 on March 1, 2000 and the final $325,000 on
June 1, 2000. However, Trilogy's anticipated operations require an adjustment to
the contractual funding schedule (see Item 303).
Trilogy intends to use such funds as follows:
Purposes for Which Proceeds are to be Used Amounts
Payment of Merger Related Legal Expenses $ 22,000
Reduction in Accounts Payable on Effective Date $119,153
Balance of Accounts Payable on Effective Date $ 49,824
Repayment of Obligations to Officers, Employees and Affiliates $ 61,850
Payroll Tax Liability as of Effective Date $ 11,766
Sales Tax Liability as of Effective Date $ 2,614
Negative Cash Flow from Operations during December, 1999 $ 61,385
Negative Cash Flow from Operations January, 2000 $ 75,653
Negative Cash Flow from Operations February, 2000 $ 78,129
Negative Cash Flow from Operations March, 2000 $ 75,392
Negative Cash Flow from Operations April, 2000 $ 70,145
Negative Cash Flow from Operations May, 2000 $ 52,746
Negative Cash Flow from Operations June, 2000 $ 18,865
Additions to Average Inventory On Hand $100,000
Additional Furniture and Equipment $ 40,000
Working Capital $ 60,478
Total $900,000
32
ITEM 701 RECENT SALES OF UNREGISTERED SECURITIES
In 1998 Trilogy issued to its co-founders, Dennis and Carol Berardi, a
total of 3,240,000 unregistered shares of its common stock, $0.001 par value per
share, in consideration for $92,946 in cash. The shares were issued in reliance
on the exemption from registration under the Securities Act provided by Section
4(2) thereof.
On May 6, 1999, Trilogy completed a participating preferred offering to
private accredited investors in the amount of $660,000, involving the issuance
of 1,320,000 unregistered shares of its common stock, $0.001 par value per share
and 660,000 unregistered shares of its Series A preferred stock, $0.50 stated
value per share. The shares were issued in reliance on the exemption from
registration under the Securities Act provided by Section 4(6) thereof.
During the period from August 19, 1999 until November 12, 1999, Trilogy
completed a second round of investment by six of the original accredited
investor subscribers to its participating preferred offering in the total amount
of $84,818. In exchange for this investment Trilogy issued 84,818 new
unregistered shares of common stock, $0.001 par value per share, re-issued
84,818 unregistered shares of common stock, $0.001 par value per share that were
returned to Trilogy by Dennis and Carol Berardi and issued 84,818 unregistered
shares of its Series A preferred stock, $0.50 stated value per share. The shares
were issued in reliance on the exemption from registration under the Securities
Act provided by Section 4(6) thereof.
Prior to the closing of the acquisition of Trilogy by the Registrant,
Trilogy issued a total of 62,184 shares of unregistered common stock, $0.001 par
value per share to ten of its employees and affiliates in consideration for
services rendered.
Prior to the acquisition of Trilogy by the Registrant, there were a total
of 4,707,001 unregistered shares of Trilogy's common stock, $0.001 par value per
share issued and outstanding and 744,818 unregistered shares of its Series A
preferred stock, $0.50 stated value per share issued and outstanding with all
shares of Trilogy's Series A preferred stock, $0.50 stated value per share,
converted, on a share per share basis, into shares of Trilogy's common stock,
$0.001 par value. The conversion was effected without registration under the
Securities Act in reliance on the exemption provided by Section 3(a)(10)
thereof. Because legal counsel to Trilogy failed to effect the actual manual
exchange of common for preferred shares called for by the acquisition agreement
prior to the closing, the actual transaction between the Registrant and Trilogy
may be deemed to have involved an exchange of shares of the Registrant's common
stock for shares of Trilogy's common stock and shares of Trilogy's preferred
stock, on a one share of the Registrant's common stock for three shares of
Trilogy's common stock or three shares of Trilogy's preferred stock basis. In
either case, the Registrant issued 1,817,273 shares of its unregistered common
stock to the former stockholders of Trilogy in exchange for all of Trilogy's
capital stock, the exchange having been effected in reliance on the exemptive
provisions of Section 4(2) of the Securities Act.
ITEM 702 INDEMNIFICATION:
Article X of Trilogy's articles of incorporation provides as follows:
"Subject to the qualifications contained in Section 607.0850, Florida Statutes,
[Trilogy] ... shall indemnify its officers and directors and former officers and
directors ... to the fullest extent against expenses (including attorneys fees),
judgments, fines and amounts paid in settlement arising out of his or her
services as an officer or director of ... [Trilogy]."
33
ITEM 5. OTHER EVENTS.
YANKEES CONSULTING AGREEMENT
As of November 23, 1999, the Registrant became obligated to pay the Yankee
Companies, Inc., a Florida corporation which serves as the Registrant's
strategic consultant and which has become one of the Registrant's principal
stockholder ("Yankees"), a monthly fee of $5,000, together with hourly fees and
document licensing fees, pursuant to the terms of a consulting agreement entered
into on November 24, 1998. Because the Registrant requires all available cash to
fund operations of existing subsidiaries and for continuation of its acquisition
program, its management requested that Yankees agree to an amendment of the
consulting agreement pursuant to which Yankees will waive cash payments for an
additional period ending on December 31, 2000. Yankees has agreed to such
amendment, except that it will not cover payments to Yankees for the services of
its general counsel to AmeriNet, payments due to clerical employees of Yankees
for services provided to AmeriNet, or the services of Yankees personnel as
officers or directors of AmeriNet. In does cover all hourly consulting fees for
services provided by Yankees principals, all document licensing fees, and the
$5,000 monthly fee, all of which will be waived (not accrued) until December 31,
2000. In conjunction with arrangements where cash PAYMENTS ARE REQUIRED (E.G.,
for use of Yankees general counsel, secretarial and clerical personnel, or
reimbursement of out of POCKET COSTS, ETC.), the Registrant has requested that
Yankees consider accepting shares of the Registrant's unregistered common stock
issued in reliance on the exemptive provisions of Section 4(6) of the Securities
Act as compensation and Yankees has agreed to consider such arrangement, on a
case by case basis, subject to a 50% discount from the price paid by any other
subscriber for shares of the Registrant's unregistered common stock within a
reasonable period before or after the transaction in question.
In consideration for Yankees agreement to such amendment, the term of its
existing option to purchase shares of the Registrant's common stock was extended
until the later of December 31, 2003 or the sixth month following registration
of the options and the underlying common stock with the Securities and Exchange
Commission; and, the quantity of the Registrant's common stock subject to the
option was increased from 10% to 12.5% of its outstanding or reserved common
stock. However, option exercise was precluded until after June 30, 2000, and the
aggregate cost for exercise was increased from $60,000 to $90,000. In addition,
Yankees preferential right to subscribe for any securities offered by the
Registrant (a right of first refusal at a price equal to 50% of the price paid
by any other subscriber to the subject offering, limited offering, rights
offering or private placement) was confirmed and extended.
A copy of the amended agreement, dated effective as of November 23, 1999,
is filed as an exhibit to this report and the foregoing summary is qualified in
its entirety by reference to the actual language of the amended agreement.
AMENDMENT OF BYLAWS
The Registrant's board of directors also amended the Registrant's bylaws in
order to more closely conform provisions thereof pertaining to meetings of the
Registrant's stockholders to legal requirements under the Exchange Act. A copy
of the amended bylaws, dated December 14, 1999, is filed as an exhibit to this
report and the foregoing summary is qualified in its entirety by reference to
the actual language of the amended agreement.
34
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
FINANCIAL STATEMENTS OF BUSINESSES ACQUIRED.
As permitted by Item 7(d) of Form 8-K, the Registrant has elected to
provide certified financial statements called for by Item 301(c) of Commission
regulation SB for Trilogy not later than 60 days after the date that of this
report on Form 8-K but has elected to include the following unaudited financial
statements for Trilogy, prepared by management thereof in this report on Form
8-K.
Trilogy International, Inc.
Statements of Income
For the period May 1, 1998(date of inception) to December 31, 1998
and for the Six Months Ended June 30, 1999
and for the Nine Months ended September 30, 1999 (unaudited)
SIX MONTHS NINE MONTHS
PERIOD ENDED ENDED ENDED
DEC. 31, 1998 JUNE 30, 1999 SEPT. 30, 1999
Net revenues - - 38,571
Cost of revenues - - 20,888
--------------------------------------------------
Gross Profit - - 17,683
Selling, general and administrative expenses - 540,367 987,659
--------------------------------------------------
Operating Loss - (540,367) (969,976)
Other income:
Lease hold improvements abandoned (3,513)
Offering costs (24,739) (24,739)
Interest expense (213) (888)
Taxes (179) (179)
Depreciation - - (8,647)
--------------------------------------------------
Net Loss (3,513) (565,498) (1,004,429)
35
Trilogy International, Inc.
Balance Sheets
December 31, 1998, June 30, 1999 and September 30, 1999
ASSETS
DEC. 31, JUNE 30, SEPT.30,
-----------------------------------------------
1998 1999 1999
------------------------------------------------
Current assets:
Cash - 229,339 2,247
Deposits in transit - - 3,531
Accounts Receivable - - 2,132
Due from related party 3,240 3,240 -
Inventory 33,415 143,339 -
------------------------------------------------
Total current assets 3,240 265,994 151,249
Computer hardware, net - 64,159 -
Computer Software, net - 35,012 50,455
Office furniture and equipment, net - 16,322 18,072
Leashold improvements, net - - 5,662
Deposits - 18,648 15,675
Organizational costs 575 575 575
Start-up expenses 85,618 85,618
================================================
89,433 486,328 305,919
================================================
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts Payable - - 138,815
Accrued expenses - 290,329 352,067
Related party obligations - 9,712 31,618
Sales Tax Payable - - 2,709
------------------------------------------------
Total current liabilities - 300,041 525,209
Stockholders' equity (deficit)
Series A Preferred, $.50 Stated Value per share: - 330,000 346,500
(See Notes)
Common Stock, $.001 par value per share: 3,240 4,560 4,626
30,000,000 shares authorized (See Notes)
Additional paid-in capital 89,706 420,737 437,526
Deficit (3,513) (569,010) (1,007,942)
Total Stockholders' equity (deficit) 89,433 186,287 (219,290)
------------------------------------------------
89,433 486,328 305,919
================================================
Notes:
SERIES A PREFERRED STOCK: June 30, 1999 660,000 shares authorized and 660,000 shares oustanding.
September 30, 1999, 900,000 shares authorized, 693,000 shares outstanding.
COMMON STOCK: December 31, 1998, 3,240,000 shares outstanding; June 30, 1999 4,560,000 shares
outstanding; September 30, 1999, 4,626,000 shares outstanding.
36
PRO FORMA FINANCIAL INFORMATION.
As permitted by Item 7(d) of Form 8-K, the Registrant has elected to
provide pro forma information called for by Item 301(d) of Commission Regulation
SB pertaining to its acquisition of Trilogy not later than 60 days after the
date that of this report on Form 8-K but has elected to include the following
unaudited pro forma information pertaining to its acquisition of Trilogy in this
report on Form 8-K.
EXHIBITS REQUIRED BY ITEM 601OF REGULATION S-B
The exhibits listed below and designated as filed herewith (rather than
incorporated by reference) follow the signature page in sequential order.
Designation Page
of Exhibit Number
as Set Forth or Source of
in Item 601 of Incorporation
Regulation S-B By Reference Description
(2) Plan of acquisition, reorganization,
arrangement, liquidation or succession:
.14 39 Agreement and Plan of Merger dated December
1, 1999 between the Registrant, Trilogy
and Trilogy Acquisition Corporation.
(3) (ii) Bylaws:
.3 214 Registrant's bylaws, as amended
(10) Material Contracts
.40 242 First amendment to Yankees Consulting
Agreement, dated November 23, 1999.
.41 244 First Amendment to Yankee Warrant Agreement,
dated November 23, 1999.
.42 Material agreements to which Trilogy is a
party or by which its is bound:
.1 258 AVN Communications
.2 259 Bellsouth Relay Agreement
.3 261 Bellsouth PRI Agreement
.4 263 Ciberlynx Contract
.5 267 Comco Equipment Lease
.6 272 Copyco Equipment Lease
.7 275 Consulting Agreement with MiPro, Inc.
.8 276 Deferred Compensation Agreement Carol Berardi
.9 277 Deferred Compensation Agreement Robert Rowe
.10 278 Deferred Compensation Agreement Debbie George
.11 279 Deferred Compensation Agreement David Cantley
.12 280 Deferred Compensation Agreement Dennis Berardi
.13 281 Deferred Compensation Agreement Dr. Jane Bicks
.14 282 Deferred Compensation Agreement Stephen Berardi
.15 283 Dr. Jane Enterprises Transition Agreement
.16 * Employment Agreement with Carol Berardi
.17 * Employment Agreement with Dennis Berardi
.18 * Employment Agreement with Dr. Jane Bicks
.19 284 Fawcett Video Marketing
.20 * Field Representative Terms of Agreement
.21 287 Genesis CCM Contract
.22 299 Genesis Webpage Genie contract
.23 311 Haskett - Trilogy Lease
.24 326 Replicator Site Terms of Agreement
.25 328 Royalty Agreement with Dr. Kamair Kokayi
.26 329 Royalty Agreement with Richard Berardi
.27 330 Royalty Agreement with Tana Henke
.28 * Trilogy Affiliate Agreement
.29 331 Trademark Registration
- --------
* Included as exhibits to or in the schedules to the Agreement and Plan
of Merger dated December 1, 1999 between the Registrant, Trilogy and
Trilogy Acquisition Corporation, filed herewith as exhibit 2.14
37
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
AMERINET GROUP.COM, INC
Dated: December 15, 1999
/s/ Michael H. Jordan
---------------------------------
Michael Harris Jordan
President
38