-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, QXwbgnb5qbR8a/L/Ix8nra4V+xfjzApNGudSgawQd1kWRcySXzLOmP5uZXEh7agY f3u6YFF4eATrj0qSwCBoBQ== 0001014897-96-000014.txt : 19960830 0001014897-96-000014.hdr.sgml : 19960830 ACCESSION NUMBER: 0001014897-96-000014 CONFORMED SUBMISSION TYPE: S-1 PUBLIC DOCUMENT COUNT: 5 FILED AS OF DATE: 19960829 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: TRINITY WORKS INC CENTRAL INDEX KEY: 0001009591 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 742719029 STATE OF INCORPORATION: TX FISCAL YEAR END: 0131 FILING VALUES: FORM TYPE: S-1 SEC ACT: 1933 Act SEC FILE NUMBER: 333-11009 FILM NUMBER: 96622673 BUSINESS ADDRESS: STREET 1: 12201 TECHNOLOGY BLVD STREET 2: SUITE 145 CITY: AUSTIN STATE: TX ZIP: 78727 MAIL ADDRESS: STREET 1: 12201 TECHNOLOGY BLVD STREET 2: SUITE 145 CITY: AUSTIN STATE: TX ZIP: 78727 S-1 1 2 As filed with the Securities and Exchange Commission on August , 1996 Commission File Number SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM S-1 REGISTRATION STATEMENT Under The Securities Act of 1933 TRINITY WORKS, INC. TEXAS 94-6615349 (State or other (Primary Standard Industrial (I.R.S. Employer jurisdictions Classification Code Number) Indemnification Number) of incorporation or organization) 12201 Technology Boulevard Suite 145 Austin, Texas 78727 Telephone: (512) 249-1099 (Address and telephone number of registrant's principal executive offices and principal place of business.) Mark Castleman 12201 Technology Boulevard Suite 145 Austin, Texas 78727 Telephone: (512) 249-1099 (Name, address and telephone number of agent for service.) with copies to: Jody M. Walker Attorney At Law 7841 South Garfield Way Littleton, Colorado 80122 If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 133, check the following box: | x | CALCULATION OF REGISTRATION FEE ========================================================================
Title of each Proposed Proposed Amount of class of Amount to be offering aggregate registration securities registered price offering price fee, - ------------------------------------------------------------------------ Common Shares, $.001 par value 104,000 $2.50 $260,000 $89.66 A Warrants 100,000 $.001 $100 $3.45 Common Shares 100,000 $4.00 $400,000 $137.93 B Warrants 100,000 $.001 $100 $.03 Common Shares 100,000 $6.00 $600,000 $206.90 C Warrants 250,000 $.001 $250 $.09 Common Shares 250,000 $10.00 $1,000,000 $344.83 Common Shares 1,208,984 $2.50 $3,022,460 $1,042.23 - ------------------------------------------------------------------------ Total $5,282,910 $1,825.12 ======================================================================== Represents Common Shares necessary to effect the distribution described in the Registration Statement. Estimated solely for purposes of calculating the registration fee. Represents 1/29 of 1% of the value of the Common Shares being registered. Represents Common Shares underlying the A, B, and C Warrants being registered hereunder on behalf of the Selling Security Holders. Represents Common Shares being registered hereunder on behalf of the Selling Security Holders.
The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. 4
TRINITY WORKS, INC. Cross Reference Sheet between Items of Form S-1 and Prospectus Pursuant to 501(b) of Regulation S-K. Items in Form S-1 Location in Prospectus 1. Forepart of the Registration Statement and Outside Front Cover Page of Prospectus Outside Front Cover Page. 2. Inside Front and Outside Back Inside Front Cover Page; Cover Pages of Prospectus Outside Back Cover Page; 3. Summary Information & Risk Factors Prospectus Summary; Risk Factors. 4. Use of Proceeds Use of Proceeds 5. Determination of Offering Price Not Applicable 6. Dilution Not Applicable 7. Selling Security Holders Selling Security Holders 8. Plan of Distribution Inside Front Cover Page; Prospectus Summary; The Distribution 9. Description of Common Stock Outside Front Cover Page to be Registered Prospectus Summary; Description of Securities 10. Interest of Named Experts Interest of Named Experts and Counsel and Counsel. 11. Information with Respect to The Corporation; Legal the Registrant Proceedings; Market Information of Common Shares; Financial Statements; Selected Financial Data; Management's Discussion and Analysis of Financial Condition, Management; Certain Relationships and Related Transactions; Principal Shareholders. 12. Statement as to Indemnification Management - Indemnification.
5 PRELIMINARY PROSPECTUS DATED AUGUST 7, 1996 SUBJECT TO COMPLETION 104,000 Common Shares to be distributed 1,208,894 Common Shares on behalf of Selling Security Holders 100,000 A Warrants 100,000 Common Shares underlying the A Warrants 100,000 B Warrants 100,000 Common Shares underlying the B Warrants 250,000 C Warrants 250,000 Common Shares underlying the C Warrants TRINITY WORKS, INC. Common Stock ($.001 Par Value) As more fully set forth herein, Pratt, Wylce & Lords, Ltd., a Nevada corporation ("Pratt"), proposes to distribute (the "Distribution") on or about , 1996 as a dividend to its shareholders of record at the close of business on January 5, 1996 (the "Record Date"), one share of the common stock, par value $.001 per share (the "Common Shares") of Trinity Works, Inc., a Texas corporation (the "Corporation"), for each twenty shares of Pratt common stock, par value $.001 per share (the "Pratt Common Stock"), held by each Pratt shareholder on the Record Date. Pratt will distribute 104,000 Common Shares (29.89% of the 348,000 shares of Common Stock owned by it), which represents 4.21% of the Corporation's outstanding Common Stock on the Record Date. The Distribution will be made by Pratt without the payment of any consideration by its shareholders. No fractional shares will be distributed. See "The Distribution." The Common Shares of the Corporation owned by Pratt that are not being distributed are being registered for sale by Pratt as a selling shareholder. The expenses of the Distribution are estimated to be $34,825.12 and are to be paid by the Corporation. Additionally, the Corporation is registering 1,208,984 Common Shares on behalf of its selling security holders. The Corporation is registering 100,000 A and B Warrants and the stock underlying said A and B Warrants on behalf of its selling security holders. The A and B Warrants are exercisable into one Common Share each at the purchase price of $4.00 and $6.00, respectively. The A and B Warrants shall be effective for a period of two years from the date of issuance and shall be redeemable by the Corporation at $.001 per A and B Warrant upon thirty days notice. The Corporation is registering 250,000 C Warrants and the stock underlying said C Warrants on behalf of its selling security holders. The C Warrants are exercisable into one Common Share each at the purchase price of $10.00. The C Warrants shall be effective for a period of three years from the date of issuance and shall be redeemable by the Corporation at $.001 per C Warrant upon thirty days notice. Prior to the date hereof, there has been no trading market for the Common Stock of the Corporation. The Corporation has agreed to use its best efforts to apply for the quotation of its Common Stock on the National Association of Securities Dealers Automated Quotation System ("NASDAQ"). There can be no assurance, however, that the Common Stock will be quoted, that an active trading and/or a liquid market will develop or, if developed, that it will be maintained. 6 There are material risks in connection with the purchase of the securities. See Risk Factors, page 12 THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. Information contained herein is subject to completion or amendment. A registration statement relating to these securities has been filed with the Securities and Exchange Commission. These securities may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective. This prospectus shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sales of these securities in any State in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any state. Available Information The Corporation has filed with the Securities and Exchange Commission (the "Commission"), Washington, D.C. office, a Registration Statement on Form S-1 (Registration No. ) under the Securities Act of 1933, as amended (the "Securities Act"), for the registration of the securities offered hereby. This Prospectus omits certain of the information contained in the Registration Statement, and reference is hereby made to the Registration Statement and exhibits and schedules relating thereto for further information with respect to the Corporation and the securities to which this Prospectus relates. Statements contained herein concerning the provisions of any document are not necessarily complete and, in each instance, reference is made to the copy of such document filed as an exhibit to the Registration Statement. Each such statement is qualified in its entirety by such reference. Items of information omitted from this Prospectus but contained in the Registration Statement may be inspected without charge at the Public Reference Room of the Commission, 450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549 and copies of such material can be obtained from the Public Reference Section of the Commission, Washington, D.C. 20549 at prescribed rates. Upon consummation of this offering and the Distribution, the Corporation will become subject to the informational requirements of the Securities Exchange Act of 1934, as amended, and in accordance therewith file reports and other information with the Securities and Exchange Commission. The reports and other information filed by the Corporation can be inspected and copied at the public reference facilities maintained by the Commission in Washington, D.C. and at the Chicago Regional Office, Northwestern Atrium Center, 500 W. Madison Street, Suite 1400, Chicago, Illinois 60621-2511 and the New York Regional Office, 7 World Trade Center, New York, New York 10048. Copies of such material can be obtained from the Public Reference Section of the Commission, Washington, D.C. 20549 at prescribed rates. Reports to Security Holders The Corporation will furnish to shareholders: (i) an annual report containing financial information examined and reported upon by its certified public accountants; (ii) unaudited financial statements for each of the first three quarters of the fiscal year; and (iii) additional information concerning the business and operations of the Corporation deemed appropriate by the Board of Directors. The approximate date on which this Prospectus is first being sent to holders of Pratt Common Stock is , 1996. 8
- --------------------------------------------------------------------------- TABLE OF CONTENTS - --------------------------------------------------------------------------- PROSPECTUS SUMMARY 9 RISK FACTORS 12 THE DISTRIBUTION 16 SELLING SECURITY HOLDERS 17 USE OF PROCEEDS 19 THE CORPORATION 20 BUSINESS ACTIVITIES 21 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION 24 Trends and Uncertainties Capital and Source of Liquidity Results of Operations CERTAIN TRANSACTIONS 26 MANAGEMENT 27 Officers and Directors Remuneration Indemnification SHARES ELIGIBLE FOR FUTURE SALE 31 NASDAQ LISTING 32 PRINCIPAL SHAREHOLDERS 33 DESCRIPTION OF SECURITIES 34 LEGAL MATTERS 36 LEGAL PROCEEDINGS 36 EXPERTS 36 INTERESTS OF NAMED EXPERTS AND COUNSEL 36
9 - -------------------------------------------------------------------------- PROSPECTUS SUMMARY - -------------------------------------------------------------------------- The following summary is qualified in its entirety by the more detailed information, financial statements and notes to the financial statements including the notes thereto appearing elsewhere in this Prospectus. The Corporation. The Corporation was incorporated in Texas on August 1, 1994. The Corporation was authorized to issue Fifty Million (50,000,000) Common Shares, $.001 par value. The Board of Directors of the Corporation has authorized a dividend distribution of 100,000 A Warrants on a pro rata basis to the shareholders of record as of October 15, 1995. The A Warrants shall be exercisable for a period of two years from issuance. The A Warrants shall exercisable into Common Shares of the Corporation at the exercise price of $4.00 per Common Share. The Board of Directors of the Corporation has also authorized a dividend distribution of 100,000 B Warrants on a pro rata basis to the shareholders of record as of October 15, 1995. The B Warrants shall be exercisable for a period of two years from issuance. The B Warrants shall be exercisable into Common Shares of the Corporation at the exercisable price of $6.00 per Common Shares. The Board of Directors of the Corporation has also authorized a dividend distribution of 250,000 C Warrants on a pro rata basis to the shareholders of record as of October 15, 1995. The C Warrants shall be exercisable for a period of three years from issuance. The C Warrants shall be exercisable into Common Shares of the Corporation at the exercisable price of $10.00 per Common Share. The Corporation's executive offices are located at 12201 Technology Boulevard Suite 145, Austin, Texas 78727. Telephone No. (512) 249- 1099. These offices consist of 2997 square feet on a month to month lease for $2,216 per month. The operations and objectives of the Corporation are to manufacture and sell performance and productivity enhancement products for desktop computer systems and networks. The Distribution. Securities Being Distributed 104,000 of the Corporation's Common Shares. Purpose of Distribution To enhance the Corporation's ability to raise additional capital, if necessary, in the future. Shares of Common Stock Outstanding After Distribution 2,760,602 Common Shares. 10 Distributing Corporation Pratt, Wylce & Lords, Ltd., a Nevada corporation. Distribution Ratio One Common Share for approximately every twenty five shares of Pratt Common Stock owned of record on January 5, 1996 (the "Record Date"). Use of Proceeds The securities to which this Prospectus relates are being distributed to holders of Pratt Common Stock as a dividend and neither the Corporation nor Pratt will receive any cash or other proceeds in connection with the Distribution. Additionally this Prospectus relates to securities being registered on behalf of selling security holders and the Corporation will not receive any cash or other proceeds in connection with the subsequent sale. Any proceeds received from the subsequent exercise of the A, B and C Warrants shall be used as working capital and to expand operations. Certain Factors to be Considered See "Risk Factors." Absence of Dividends; Dividend Policy The Corporation does not currently intend to pay regular cash dividends on its Common Shares; such policy will be reviewed by the Corporation's Board of Directors from time to time in light of, among other things, the Corporation's earnings and financial position. See "Risk Factors." Transfer Agent The Corporation shall act as its own Transfer Agent until after completion of the Distribution. Selected Financial Information. The selected financial information presented below under the captions and "Balance Sheet" as of the years ended January 31, 1996 and 1995 and "Statement of Operations" for the years ended January 31, 1996 and 1995 are derived from the audited 11 financial statements of the Corporation. The selected financial information present below under the captions "Balance Sheet" as of April 30, 1996 and the Statement of Operations for the six months ended April 30, 1996 and 1995 is derived from the unaudited financial statements of the Corporation. The Balance Sheet and Statement of Operations have not been audited by independent certified public accountants however, in the opinion of management, all adjustments (which include only normal recurring adjustments) have been made in order to present fairly the operations for this period. See "Management's Discussion and Analysis of Financial Condition" and "Financial Statements."
BALANCE SHEET
January 31, January 31, April 30, 1996 1995 1996 Total Assets $521,668 $132,748 $741,443 ------------ ----------- ----------- Total Liabilities $211,075 $173,056 $288,598 Total Stockholders' Equity (Deficit) $310,593 $(40,308) $452,845 ------------ ------------ ----------- Total Liabilities & Stockholders' Equity $521,668 $608,614 $741,443 ============ ============ ===========
STATEMENT OF OPERATIONS
For Six For Six For Year For Year Months Months Ended Ended Ended Ended Jan. 31 Jan 31, April 30, April 30, 1996 1995 1996 1995 Revenues from continuing operations $203,015 $7,519 $491,756 $26,589 Income (Loss) from continuing operations (920,208) (36,308) 145,619 176 12 Nonoperating Income (Expense) (10,795) (5,000) (3,367) (3,000) Provision (Credit) For Income Taxes - - - - Net income (loss) (931,003) (41,308) $142,252 (2,824) Net income (loss) per common share of outstanding stock $ (0.53) $ (0.03) $0.06 $(0.00)
- ------------------------------------------------------------------------- RISK FACTORS - ------------------------------------------------------------------------- In analyzing this offering, prospective investors should read this entire Prospectus and carefully consider, among other things, the following Risk Factors: No Diversification. The Corporation manufactures and sells performance and productivity enhancement products for desktop computer systems and networks. Therefore, the Corporation's financial viability will depend almost exclusively on its ability to generate revenues from its operation, and the Corporation will not have the benefit of reducing its financial risks by relying on revenues derived from other operations. Uncertainty of Future Financial Results. The Corporation has experienced accumulated losses from operations to date and future financial results are uncertain. As such, there can be no assurance that the Corporation can be operated in a profitable manner. Profitability depends upon many factors, including the success of the Corporation's marketing program, the maintenance or reduction of expense levels and the success of the Corporation's business activities. The Corporation has accumulated losses from operations as of April 30, 1996 of $830,059. Lacking future profitable operations, the Corporation will require additional capital. Even if the Corporation obtains future financing or revenues to expand operations, increased production or marketing expenses would adversely affect liquidity of the Corporation. See FINANCIAL STATEMENTS. Liquidity Dependent on Additional Capital and Debt Financing. On a long term basis, liquidity is dependent on increased revenues from operations and additional infusions of capital and debt financing. The Corporation believes that additional capital and debt financing in the short term will allow the Corporation to increase its marketing and sales efforts and thereafter result in increased revenue and greater liquidity in the long term. However, there can be no assurance that the Corporation will be able to obtain additional equity or debt financing in the future, if at all. No Ability to Control Affairs of the Corporation. The majority shareholders and the officers and directors of the Corporation as a group own over 65% of all of the outstanding common shares of the Corporation. As a result, these individuals have the ability to control the affairs of the Corporation. See MANAGEMENT and PRINCIPAL SHAREHOLDERS. 13 Dependence on Key Individuals. The future success of the Corporation is highly dependent upon the Corporation's ability to attract and retain qualified key employees. The Corporation has not yet entered into definitive employment agreements with any such individuals. The inability to attract and retain these individuals for the long term would have a material impact upon the business of the Corporation. See CORPORATION - Employees and MANAGEMENT. Lack of Experience of Management. The financial success of the Corporation is partly dependent upon the management expertise and judgment of its officers regarding the promotion of its products. The current officer has prior management experience with large and small businesses, however, does not have prior experience in the specific type of products being promoted by the Corporation. Two of the Directors, Michael Castleman, Jr. and Kent Bradshaw, each have limited prior experience in the specific type of products being promoted by the Corporation. The officers and directors will have the exclusive authority to manage and control and make all decisions regarding the business and affairs of the Corporation. There can be no assurance that management will be able to successfully conduct the operations of the Corporation due to this lack of experience. The current officer of the Corporation devotes all of his time to the affairs of the Corporation. The remaining directors spend as much time as deemed necessary on the corporate business affairs (estimated to be approximately 60% of their time) but are not required nor expected to devote their entire time or efforts to the Corporation's business and affairs. Conflicts of Interest. Some of the directors of the Corporation are currently principals of other businesses. As a result, conflicts of interest may arise. The directors shall immediately notify the other directors of any possible conflict which may arise due to their involvement with other businesses. The interested directors in any conflict shall refrain from voting on any matter in which a conflict of interest has arisen. The Corporation has adopted a policy that any transactions with directors, officers or entities of which they are also officers or directors or in which they have a financial interest, will only be on terms which are fair and reasonable to the Corporation and approved by a majority of the disinterested directors of the Corporation's Board of Directors. For further discussion see Management - - Conflicts of Interest Policy. There can be no assurance that such other activities will not interfere with the officers' and directors' ability to discharge their obligation herein. Competition. There is significant competition in the computer industry. The Corporation will be competing with established companies and other entities (many of which may possess substantially greater resources than the Corporation). Almost all of the companies with which the Corporation competes are substantially larger, have more substantial histories, backgrounds, experience and records of successful operations, greater financial, technical, marketing and other resources, more employees and more extensive facilities than the Corporation now has, or will have in the foreseeable future. It is also likely that other competitors will emerge in the near future. The Corporation shall compete on the basis of quality and on 14 public taste in addition to a price basis. Inability to compete successfully might result in increased costs, reduced yields and additional risks to the investors herein. See THE CORPORATION - Competition. Benefit to Management. Although currently the officers and directors have received minimal compensation and common shares for their services, the Corporation may, in the future, compensate the Corporation's management with substantial salaries and other benefits. Even though no compensation plan has been proposed or agreed upon, the payment of future salaries and the costs of these benefits may be a burden on the Corporation and may be a factor in limiting or preventing the Corporation from achieving profitable operations in the future. However, the Corporation would not continue to compensate management with such substantial salaries and other benefits under circumstances where to do so would have a material negative effect on the Corporation's financial condition. See MANAGEMENT - Remuneration. Arbitrarily Determined Warrant Exercise Price. The exercise price of the A , B and C Warrants being registered on behalf of the Selling Security holders was established arbitrarily by the Corporation with no direct relationship to the original offering price or the Corporation's assets, book value, shareholder's equity or any other recognized criterion of value. Accordingly, the A, B and C Warrants can be considered to have little or no value at the present time. No Assurance of Public Market for Securities. There is no market for the securities of the Corporation and there can be no assurance that an established trading market (or any public market) will develop at the conclusion of this offering, or that if developed, it would be sustained, or that the securities distributed hereunder may be resold at their original book value price or at any other price. Any market for the securities of the Corporation that may develop will, in all likelihood, be a substantially limited one. Effect of Future Sales of Common Shares and Uncertainty of Market Development. Upon completion of the distribution and a successful completion of the registration of warrants herein the Corporation will have 2,760,602 common shares outstanding, of which the A, B and C Warrants and underlying Shares registered in this offering will be freely tradable without restriction or further registration under the Securities Act of 1933 (the "Securities Act"). Upon the effective date of this Registration Statement, 1,312,984 of the currently 2,760,602 restricted Shares subject to certain limitations of Rule 144 of the Securities Act will become available for public sale. This does not include any Common Shares underlying the A, B or C Warrants. No assurance can be given that the availability of such Common Shares for sale will not have an adverse impact on the market price of the Corporation's Common Shares, should one develop. Prior to this offering, there has been no public market for any securities of this Corporation. Management of the Corporation cannot predict to what extent a secondary market in the Common Shares will develop and provide liquidity for holders of the Common Shares. See SALE OF SHARES PURSUANT TO RULE 144 and MARKET INFORMATION ON COMMON SHARES. 15 Possible Restrictions to Sales of Corporation Securities. Until the Corporation obtains a listing on NASDAQ, if ever, the Corporation's securities may be covered by a Rule 15c2-6 under the Securities Exchange Act of 1934 that imposes additional sales practice requirements on broker dealers who sell such securities to persons other than established customers and accredited investors (generally institutions with assets in excess of $5,000,000 or individuals with net worth in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly with their spouse). For transactions covered by the rule, the broker-dealer must make a special suitability determination of the purchaser and have received the purchaser's written agreement to the transaction prior to the sale. In order to approve a person's account for transactions in designated securities, the broker or dealer must (i) obtain information concerning the person's financial situation, investment experience and investment objectives; (ii) reasonably determined, based on the information required by paragraph (i) that transactions in designated securities are suitable for the person and that the person has sufficient knowledge and experience in financial matters that the person reasonably may be expected to be capable of evaluating the rights of transactions in designated securities; and (iii) deliver to the person a written statement setting forth the basis on which the broker or dealer made the determination required by paragraph (ii) in this section, stating in a highlighted format that it is unlawful for the broker or dealer to effect a transaction in a designated security subject to the provisions of paragraph (ii) of this section unless the broker or dealer has received, prior to the transaction, a written agreement to the transaction from the person; and stating in a highlighted format immediately preceding the customer signature line that the broker or dealer is required to provide the person with the written statement and the person should not sign and return the written statement to the broker or dealer if it does not accurately reflect the person's financial situation, investment experience and investment objectives and obtain from the person a manually signed and dated copy of the written statement. A designated security means any equity security other than a security (i) registered, or approved for registration upon notice of issuance on a national securities exchange that makes transaction reports available pursuant to 17 CFR 11Aa3-1 (ii) authorized or approved for authorization upon notice of issuance, for quotation in the NASDAQ system; or . . . (iv) whose issuer has net tangible assets in excess of $2,000,000 demonstrated by financial statements dated less than fifteen months previously that the broker or dealer has reviewed and has a reasonable basis to believe are true and complete in relation to the date of the transaction with the person. Consequently, the rule may affect the ability of broker-dealers to sell the Corporation's securities and also may affect the ability of purchasers in this offering to sell their shares in the secondary market. See NASDAQ Listing - Broker-Dealer Sales of Corporation's Securities. Lack of Dividends. There can be no assurance that the continued operations of the Corporation will result in any further revenues or will be profitable. At the present time, the Corporation intends to use any earnings which may be generated to finance the growth of the Corporation's business. Accordingly, while payment of dividends rests within the discretion of the Board of 16 Directors, the Corporation does not presently intend to pay dividends and there can be no assurance that dividends will ever be paid. See DIVIDEND POLICY. Vulnerability to Fluctuations in Economy. Demand for the Corporation's proposed products is dependent on, among other things, general economic conditions which are cyclical in nature. Prolonged recessionary periods may be damaging to the Corporation. - ---------------------------------------------------------------------------- THE DISTRIBUTION - ---------------------------------------------------------------------------- After careful study and review, the Board of Directors of Pratt determined that it would be in the best interests of Pratt and its shareholders to distribute a portion of the Corporation's Common Shares held by Pratt to its shareholders. In addition, the Corporation and Pratt determined that such a distribution would be in the best interests of the Corporation. Pratt shareholder's may realize economic benefits from the sale of any Common Stock distribution if a market for the Corporation's Common Stock develops, although there can be no assurances that any such market will result. Pratt and the Corporation believe that the distribution to Pratt's shareholders, which will result in an increased shareholder base of the Corporation, will be an advantage to the Corporation at such time as the Corporation may require additional capital and/or make application to NASDAQ. The increased shareholder base of approximately 1,321 shareholders represents an increase in potential future purchasers of additional stock in any subsequent offering or in the stock market if these individuals are satisfied with the performance of the Corporation's operations. Accordingly, after obtaining the approval of the independent directors on Pratt's Board of Directors, the Board of Directors of Pratt declared a dividend pursuant to which, on or about , 1996, 104,000 shares of the issued and outstanding Common Stock of the Corporation, constituting 29.89% of the shares of Common Stock owned by Pratt, will be distributed to the shareholders of record of Pratt as of January 5, 1996 on the basis of one share of Common Stock for each twenty five shares of Pratt Common Stock held. The Common Shares are being distributed by Pratt as a dividend to holders of Pratt Common Stock and neither the Corporation nor Pratt will receive any cash or other proceeds in connection with the Distribution. No fractional Common Shares will be issued. Pratt had approximately 1,321 shareholders of record on the Record Date. The Pratt Common Stock is quoted on over-the-counter under the symbol "PWLS". In order to comply with certain provisions of Texas corporate law, on August 1, 1996 (the "Payment Date') Pratt deposited the Common Shares to be distributed with Florida Atlantic Stock Transfer, Inc. (the "Depositary"). The Depositary will hold such Common Shares for the benefit of Pratt shareholders on the Record Date. The terms of the agreement with the 17 Depositary provides that the Common Shares will be released promptly after the Registration Statement to which this Prospectus relates is declared effective by the Commission. However, if the Registration Statement is not declared effective prior to July 31, 1997, then, unless such date is changed by notice to the Depositary from the Corporation, the Depositary shall return all such Common Shares to Pratt without effecting the distribution. - --------------------------------------------------------------------------- SELLING SECURITY HOLDERS - --------------------------------------------------------------------------- The Corporation shall register pursuant to this prospectus 1,208,984 Common Shares currently outstanding for the account of the following individuals or entities. The percentage owned prior to and after the offering reflects all of the then outstanding common shares. The amount and percentage owned after the offering assumes the sale of all of the Common Shares being registered on behalf of the selling shareholders.
Name Amount Total % Owned Amount % Owned Being Number Prior to Owned After Registered of Shares Offering After Offering Offering John Baer 3,000 3,000 .11% 0 0% Steve Bell 3,000 3,000 .11% 0 0% Tom Brennan 15,000 15,000 .61% 0 0% Ed Carlow 5,000 5,000 .20% 0 0% Sue Castleman 8,333 8,333 .30% 0 0% Pagogh Cho 3,000 3,000 .11% 0 0% Jonathan Ceck Al Damalak 7,000 7,000 .25% 0 0% Pauline Darosa 4,000 4,000 .145% 0 0% William DeMayo Murray Trachter 3,000 3,000 .11% 0 0% Gerald Dooher 5,000 5,000 .20% 0 0% Terrence Dooher 5,000 5,000 .20% 0 0% Del/Peggy Dugan 3,000 3,000 .11% 0 0% John Dunbar 3,000 3,000 .11% 0 0% Stuart Dupe 3,000 3,000 .11% 0 0% James Early 16,667 16,667 .60% 0 0% Ora Elliott 3,000 3,000 .11% 0 0% Charles & Judith Franklin 3,000 3,000 .11% 0 0% Randall Geist 9,000 9,000 .33% 0 0% Dr. Bob Gerner 10,000 10,000 .36% 0 0% Lynn Gjertsen 3,000 3,000 .11% 0 0% Charles Gluck 3,000 3,000 .11% 0 0% All American Way, Inc. Profit Sharing Plan 12,000 12,000 .435% 0 0% 18 Ken Gregory 3,000 3,000 .11% 0 0% James Haines 3,334 3,334 .12% 0 0% Kim & Gavin Hart 3,000 3,000 .11% 0 0% Richard Hinkle 3,000 3,000 .11% 0 0% Brian Hughes 1,000 1,000 .036% 0 0% Robert & Eleanor Hughes 6,000 6,000 .217% 0 0% Robert Hunt IRA 3,000 3,000 .11% 0 0% Cliff Jaebker 6,200 6,200 .225% 0 0% Grant Johnson 3,000 3,000 .11% 0 0% Virginia Junkin 4,000 4,000 .145% 0 0% Alan/Patti Katz 3,000 3,000 .11% 0 0% Larry Konfirst 6,000 6,000 .11% 0 0% John Lawson 15,000 15,000 .543% 0 0% Rosella Lawson 3,000 3,000 .11% 0 0% Kevin McGarry 3,000 3,000 .11% 0 0% John McKissach John Santry 3,000 3,000 .11% 0 0% Ronald Montano 7,334 7,334 .266% 0 0% Blake Mosher 20,000 20,000 .724% 0 0% Bowman Najmi 7,000 7,000 .25% 0 0% Johathan Pace 8,000 8,000 .29% 0 0% E. & W. Paton 9,000 9,000 .326% 0 0% Scott/M. Rader 3,000 3,000 .11% 0 0% Al Ridenger 35,000 35,000 1.27% 0 0% Al Ridenger, Jr. 3,000 3,000 .11% 0 0% Jerry & Sarah Robertson 3,000 3,000 .11% 0 0% Jay Rydman 4,000 4,000 .145% 0 0% Manuez Sanchez 7,000 7,000 .25% 0 0% Carol Sarwar 4,000 4,000 .145% 0 0% P. & S. Schaefer 7,000 7,000 .25% 0 0% Mary Jane & Vic Sohle 1,000 1,000 .036% 0 0% Derek Steele Rick Pease 3,000 3,000 .18% 0 0% Nancy Stiehl 3,000 3,000 .11% 0 0% Karyn Sussman 7,000 7,000 .25% 0 0% Mitsao Tatsugawa 3,000 3,000 .11% 0 0% William Taylor 6,000 6,000 .24% 0 0% L. & L. Turrel 60,000 60,000 2.17% 0 0% John Watson 6,000 6,000 .24% 0 0% Harry Welch 40,000 40,000 1.45% 0 0% 2422 Brazoria 3,000 3,000 .11% 0 0% John Wilson 27,000 27,000 .98% 0 0% Howard Witzel 40,000 40,000 1.45% 0 0% Johnny Wong 3,000 3,000 .11% 0 0% Shane Yost 3,734 3,734 .135% 0 0% Breaux Castleman32,000 32,000 1.16% 0 0% 19 James Early 20,000 20,000 .724% 0 0% Dick Galley 80,000 80,000 2.90% 0 0% Kent Bradshaw 32,300 323,000 11.70% 290,700 10.53% Mark Castleman 96,246 962,464 34.86% 866,218 31.38% Mike Castleman 32,300 323,000 11.70% 290,700 10.53% Clint Clark 87,000 87,000 3.15% 0 0% Darrell Daugherty 6,536 6,536 .24% 0 0% Darrell Hughes 40,000 40,000 1.45% 0 0% Jonathan Avedikian 20,000 20,000 0 0% Matt Casteman 20,000 20,000 0 0% David Avedikian 2,000 2,000 .036% 0 0% Pratt, Wylce & Lords, Ltd. 244,000 244,000 8.84% 0 0% Kent Bradshaw was previously a Director of the Corporation. Mark Castleman is currently the sole officer and a Director of the Corporation. Mike Castleman is currently a Director of the Corporation. Pratt, Wylce & Lords, Ltd. is distributing 104,000 of its common shares to its shareholders. These common shares are being registered in this offering. The Corporation shall register pursuant to this prospectus the common shares underlying 100,000 A Warrants, 100,000 B Warrants and 250,000 C Warrants currently outstanding for the account of the following individuals or entities. The percentage owned prior to and after the offering reflects all of the then outstanding warrants. The amount and percentage owned after the offering assumes the sale of all of the A, B and C Warrants and does not include any Common Shares underlying the A, B and C Warrants being registered on behalf of the selling security holders.
Name and Amount Total Number Of % Amount % Being Registered Warrants Owned Owned Owned Registered Owned Prior to After After Offering Offering Offering Mark Castleman - 60,000 A Warrants 60,000 60% 0 0% - 60,000 B Warrants 60,000 60% 0 0% - 150,000 C Warrants 150,000 60% 0 0% 20 Kent Bradshaw - - 20,000 A Warrants 20,000 20% 0 0% -20,000 B Warrants 20,000 20% 0 0% -50,000 C Warrants 50,000 20% 0 0% Mike Castleman - - 20,000 A Warrants 20,000 20% 0 0% -20,000 B Warrants 20,000 20% 0 0% -50,000 C Warrants 50,000 20% 0 0%
- ------------------------------------------------------------------------ USE OF PROCEEDS - ------------------------------------------------------------------------ The securities to which this Prospectus relates are being distributed to holders of Pratt Common Stock as a dividend and neither the Corporation nor Pratt will receive any cash or other proceeds in connection with the Distribution. Additionally, securities are being registered on behalf of the selling security holders and the Corporation will not receive any cash or other proceeds in connection with the subsequent sale. Any proceeds received from the subsequent exercise of the A, B or C Warrants shall be used as working capital and to expand operations. If all of the A, B or C Warrants are exercised, the proceeds shall be utilized over a twelve month period. - -------------------------------------------------------------------------- THE CORPORATION - -------------------------------------------------------------------------- The Corporation. The Corporation was incorporated in Texas on August 1, 1994. The Corporation was authorized to issue Fifty Million (50,000,000) Common Shares, $.001 par value. The Board of Directors of the Corporation has authorized a dividend distribution of 100,000 A Warrants on a pro rata basis to the shareholders of record as of October 15, 1995. The A Warrants shall be exercisable for a period of two years from issuance. The A Warrants shall exercisable into Common Shares of the Corporation at the exercise price of $4.00 per Common Share. The Board of Directors of the Corporation has also authorized a dividend distribution of 100,000 B Warrants on a pro rata basis to the shareholders of record as of October 15, 1995. The B Warrants shall be exercisable for a period of two years from issuance. The B Warrants shall be exercisable into Common Shares of the Corporation at the exercisable price of $6.00 per Common Shares. The Board of Directors of the Corporation has also authorized a dividend distribution of 250,000 C Warrants on a pro rata basis to the shareholders of record as of October 15, 1995. The C 21 Warrants shall be exercisable for a period of two years from issuance. The C Warrants shall be exercisable into Common Shares of the Corporation at the exercisable price of $10.00 per Common Shares. The Corporation's executive offices are located at 1931 E. Ben White Boulevard, Suite 900, Austin, Texas 78741. Telephone No. (512) 249- 1099. These offices consist of 2,997 square feet on a month to month lease for $2,216 per month. There are presently outstanding 2,760,602 Common Shares, 100,000 A Warrants, 100,000 B Warrants and 250,000 C Warrants. Business Objective. The operations and objectives of the Corporation are to manufacture and sell performance and productivity enhancement products for desktop computer. Employees. As of the date of this prospectus, the Corporation has nine full time employees and no part time employees The Corporation will, as operations demand, sub-contract the balance of its personnel through independent contractors or hire additional employees. Competition. There is significant competition in the computer industry, The Corporation will be competing with established companies and other entities (many of which may possess substantially greater resources than the Corporation). Almost all of the companies with which the Corporation competes are substantially larger, have more substantial histories, backgrounds, experience and records of successful operations, greater financial, technical, marketing and other resources, more employees and more extensive facilities than the Corporation now has, or will have in the foreseeable future. It is also likely that other competitors will emerge in the near future. The Corporation shall compete on the basis of quality and on public taste in addition to a price basis. Consulting Agreement. On October 25, 1995, the Corporation entered into a consulting agreement on with Pratt, Wylce & Lords, Ltd. ("Pratt") to assist the Corporation in its capitalization and the obtainment of additional financing. To date, Pratt provided consulting services regarding capital structuring, initial equity financing, and preparation of a registration statement. The term of the agreement is for one year from October 25, 1995, unless extended. To date, Pratt has received 348,000 Common Shares valued at $1.50 per common share which represents 12.61% of the currently outstanding common stock of the Corporation. As a result, Pratt would be deemed to be an affiliate of the Corporation. Subsequent to the distribution pursuant to this registration statement, Pratt shall be a nonaffiliate owning 8.84% of the total outstanding common shares of the Corporation. In addition, Pratt will receive total cash compensation of $95,000, of which $75,000 has been received to date. 22 - -------------------------------------------------------------------------- BUSINESS ACTIVITIES - -------------------------------------------------------------------------- General. The operations and objectives of the Corporation are to manufacture and sell performance and productivity enhancement products for desktop computer. Products. The Trinity PowerPak r. The Trinity PowerPak is currently offered for several Power Macintosh (PowerPC) and 68040 (Motorola) based systems. The PowerPak is a customizable module capable of stacking over an existing clock signal to the CPU. This enables the CPU to operate at a higher rate or frequency. The level off acceleration varies depending upon the CPU type and relative marking for acceleration existing within the individual microprocessors. The Trinity PowerPak exists in two forms. One version offers a fixed signal upgrade to the system enabling the system to achieve a higher fixed frequency level. The other PowerPak known as the Universal PowerPak is a variable speed module where the user has the ability to change the relative clock setting depending upon the capabilities of the system and microprocessor which are being modified. The structural and active components of the PowerPaks comply with the applied patent technology. The Corporation designed all of these components parts and the dies and molds for these parts are all wholly owned by the Corporation. Availability of these parts is immediate from several suppliers and the cost (after tooling) is inexpensive. Only one part in the fixed speed PowerPak is not directly produced by the Corporation which represents one of the twelve parts in the PowerPak. On site production serves to protect product availability. The Corporation has been successful in maintaining sales relationships because the Corporation is capable of producing high quantities on demand without concern for the availability of component parts in the market. CPU Stacker. The CPU Stacker will be compliant with the applied patent technology. It has a customized connector socket designed by the Corporation which stacks on top of the existing microprocessor in the targeted system whether PowerPC or Intel based. Through this interface, the Stacker is able to override the existing CPU and operate a new more powerful CPU or multiple CPUs in its place. The CPU Stacker will vary in its secondary level components such as cache RAM (Random Access Memory). On top of the socket interface, the Stacker will have a PCB to redirect signal traces and accommodate the new microprocessor and other system level components. The socket and PCB will be manufactured by the Corporation while some of the board level components will be purchased in the market. 23 The PowerPC components are available through two sources: IBM Microelectronics and Motorola Semiconductor Group. X86 compatible components are available from Intel, AMD, Cyrix, IBM and NEXGen. All of these companies offer or are currently developing Pentium compatible microprocessors. Advertising. The Corporation's advertising campaign with specifically target the potential users of upgrade systems. Current advertisements for the Trinity PowerPak appear in MacWorld, MacUser and MacWeek magazines. Retail outlets include Comp USA, Computer City and Radio Shack Intl and mail order publications like MacMall and MacZone also market the Corporation's product. While the PC market is drastically different in comparison to the Macintosh market, the relative approach to the market through the trade publications is similar. The Corporation places advertisements in relevant industry publications like PCWeek, PC Computing, etc. In addition, the PC mail order catalogs are offered by the mail-order firms currently marketing the Corporation's product. PCMall, PCZone, and PC Connection represent several catalogs which carry the PCStacker products. Distribution. Distribution for the current products occurs through national distributors, TechData Corporation and Micro Central, Inc. Product is readily available to the smallest retail center in the most remote region of the market as well as the larger "superstore" chains. Higher volume resellers purchase product directly through the Corporation. Servicing. The Corporation will train and authorize major and minor resellers in the installation of the Corporation's product. Authorized installation centers will be identified for the end user. The end users will receive direct financial incentive in the form of an installation voucher for having the product installed by an authorized installation site. The Corporation expects this option will reduce the quantity of failed installations by inadequately trained end users. The direct servicing of the product on the component level will be performed by the Corporation at on-site facilities. Field Technicians and Application Engineers will be made available to volume resellers for specific training in value added features and on site technical repair for OEM (Original Equipment Manufacturers). Sales. The Corporation will employ an inside sales group and strategic sales team. The inside sales group responds to the needs of the VARs (Value Added Resellers) which operate on a local level, and the distributors that will channel the product to these resellers. This group will deliver necessary technical information to the distributors, independent resale outlets and the individual outlets of the national channels. The members of this team will possess significant consumer knowledge for the specified market and partner with the marketing team to understand the local market at the point of purchase. Inside sales will make sure that the channels of distribution are operating efficiently and effectively for the resale outlets. 24 The strategic sales group or will interface with the nationally established outlets as well as local VARs, respond to their sales needs, and develop sales strategies specific to the their national or local goals. This team will be responsible for generating sales forecasts and understanding national sales trends. The Corporation made sales in excess of 10% of its net sales to unrelated parties for the year ended January 31, 1996 to two companies aggregating $128,105 (63%). Additionally, the Corporation had open uncollateralized accounts receivable from these customers aggregating $12,445 January 31, 1996. The Corporation's major customers in 1996 consist of mail order companies who include a description of the Corporation's products in their advertisements in various computer related publications. The Corporation is charged for its share of the advertising costs and such billings are offset against accounts receivable from sales to these customers. - -------------------------------------------------------------------------- MANAGEMENT'S DISCUSSION OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - -------------------------------------------------------------------------- Trends and Uncertainties. Inasmuch as a major portion of the Corporation's activities is the manufacture and sale of performance and productivity enhancement products for desktop computer systems and networks, the Corporation's business operations may be adversely affected by competitors and prolonged recessionary periods. The sale of the Corporation's products is not considered seasonal. The continuation of obtaining additional types of new business and markets is uncertain and the continued success of any of the Corporation's new marketing strategies for generating revenue is uncertain. In addition, the future exercise of any of the A, B or C Warrants is uncertain based on the current financial condition of the Corporation. The lack of future exercise of the A, B or C Warrants registered hereunder would negatively impact the Corporation's ability to successfully expand operations. Capital and Source of Liquidity. The Corporation currently has no material commitments for capital expenditures. Plan of Operation. The Corporation has planned capital expenditures as discussed in "Business Activities". The Corporation intends to use future revenue and proceeds from future sales of its equity securities. There can be no guarantee that the Corporation will be able to obtain the additional funds from any of the sources listed and will not make the proposed acquisitions if said funds are not available. 25 Based on its established channels of distribution, its recent marketing and current and projected sales levels, the Corporation should begin to have positive cash flow from operations in the fourth quarter of 1996 and management is of the opinion that the Corporation will be able to generate sufficient cash flows to support these operations during fiscal year 1996. The Corporation is currently financing its sales with a combination of cash generated from internal operations and additional equity financing. The Corporation has recently raised $1,219,403 in the private placement of its Common Shares. The Corporation shall pursue additional equity or debt financing, if necessary, to continue or expand operations. For the three months ended April 30, 1996, the Corporation purchased $9,785 of equipment. As a result, the Corporation had net cash used in investing activities of $9,785 for the three months ended April 30, 1996. For the year ended January 31, 1996, the Corporation utilized $14,705 in the purchase of plant and equipment. This resulted in net cash used in investing activities of $14,705 for the year ended January 31, 1996. For the year ended January 31, 1995, the Corporation utilized $43,404 in the purchase of plant and equipment and had an increase in intangible assets of $13,664. This resulted in net cash used in investing activities of $57,068 for the year ended January 31, 1995. For the three months ended April 30, 1996, the Corporation had $0.00 cash provided by financing activities. For the year ended January 31, 1996, the Corporation received $629,404 from the sale of its Common Shares and repaid officer loans of $967. As a result, the Corporation had net cash provided by financing activities of $628,437 for the year months ended January 31, 1996. For the year ended January 31, 1995, the Corporation received $1,000 from the sale of its Common Shares and had an increase in officer loans of $1,600. Additionally, the Corporation received $150,000 in proceeds from investor notes. As a result, the Corporation had net cash provided by financing activities of $152,600 for the year ended January 31, 1995. On a long term basis, liquidity is dependent on increased revenues from operations and additional infusions of capital and debt financing. The Corporation believes that additional capital and debt financing in the short term will allow the Corporation to increase its marketing and sales efforts and thereafter result in increased revenue and greater liquidity in the long term. However, there can be no assurance that the Corporation will be able to obtain additional equity or debt financing in the future, if at all. Results of Operations. The Corporation had a net income from operations of $145,619 for the three months ended April 30, 1996. Sales increased from $26,589 for the three months ended April 30, 1995 to $491,756 for the same period in 1996. Cost of sales increased from $5,109 to $151,438 for those same period due to increased operations. General and 26 administrative costs increase from $21,304 for the three months ended April 30, 1995 to $194,699 for the three months ended April 30, 1996 due to management's attempt to obtain further capitalization and increased operations. As a result, the Corporation had net cash used in operations of $297,390 for the three months ended April 30, 1996 compared to net cash provided by operations of $1,756 for the three months ended April 30, 1995. The Corporation made sales in excess of 10% of its net sales to unrelated parties for the year ended January 31, 1996 to two companies aggregating $128,105 (63%). Additionally, the Corporation had open uncollateralized accounts receivable from these customers aggregating $12,445 January 31, 1996. The Corporation's major customers in 1996 consist of mail order and "superstore" companies who include a description of the Corporation's products in their advertisements in various computer related publications. The Corporation is charged for its share of the advertising costs and such billings are offset against accounts receivable from sales to these customers. The Corporation had a net loss from operations of $920,208 for the year ended January 31, 1996 compared to a net loss of $36,308 for the year ended January 31, 1995. Sales increased from $7,519 for the year ended January 31, 1995 to $203,015 for the year ended January 31, 1996. Cost of sales increased from $3,501 for the year ended January 31, 1995 to $81,052 for the year ended January 31, 1996 due to increased operations. General and administrative costs increased substantially from $35,092 for the year ended January 31, 1995 to $1,026,134 for the year ended January 31, 1996 mainly due legal and consulting fees of $779,916 and to increased operations. Research and development increased from $5,234 for the year ended January 31, 1995 to $16,037 for the year ended January 31, 1996. The Corporation had no major customers during the year ended January 31, 1995. The Corporation is seeking to lower its operating expenses while expanding operations and increasing its customer base and operating revenues. The Corporation is focusing on decreasing administrative costs. However, increased marketing expenses will probably occur in future periods as the Corporation attempts to further increase its marketing and sales efforts. - -------------------------------------------------------------------------- CERTAIN TRANSACTIONS - -------------------------------------------------------------------------- Related Party Transactions. During the year ended January 31, 1995, an officer and director of the Corporation made advances to the Corporation aggregating $1,600. During the year ended January 31, 1996, $967 of this debt was repaid in cash. Consulting Agreement. The Corporation has entered into a consulting agreement with Pratt, Wylce & Lords, Ltd. ("Pratt") to assist the 27 Corporation in its capitalization and the obtainment of additional financing. As partial payment for consulting services, the Corporation issued 348,000 of its Common Shares to Pratt, of which 104,000 Common Shares are to be registered and distributed to Pratt shareholders. Additionally, 87,000 Common Shares were issued to Clinton Clark. In addition, Pratt has received cash compensation of $75,000. Distribution of Securities. On October 15, 1995, the Board of Directors authorized the distribution of 100,000 each of A and B and 250,000 C Warrants exercisable as follows: $4.00 plus one A Warrant for each Common Share; $6.00 plus one B Warrant for each Common Share; and $10.00 plus one C Warrant for each Common Share. The A and B Warrants are exercisable for a period of two years from the date of issuance and the C Warrants are exercisable for a period of three years from the date of issuance. All of the Warrants are callable with 30 days notice at a price of $.001 per Warrant. These distributions were made to the owners of record of Common Shares on the books of the Corporation as of October 15, 1995. The A, B and C Warrants and the Common Shares underlying said A, B and C Warrants are being registered in this offering. Lockup Agreement. Pursuant to a written agreement on August, 1996, the principal shareholders and officer and directors (Mark Castleman, Kent Bradshaw and Michael Castleman) who received A, B and C Warrants issued them pursuant to the Special Meeting of the Board of Directors held on October 15, 1995 have agreed as follows: In the event the shareholder exercises any warrants, the stock issued to the shareholder pursuant to the exercise shall be locked in and restricted from trading for a period of two years. A notice is to be placed on the face of each stock certificate covered by the terms of the Agreement stating that the transfer of the stock evidenced by the certificate is restricted until twenty four (24) months from the date of issuance. The shareholder also agrees not to sell or otherwise transfer their interest in the warrants except to an underwriter or other market makers in the stock once a market is established. The shareholder further agrees that the total value in cash, or other consideration, paid by the buyer to the seller shall not exceed $.01 per warrant. - --------------------------------------------------------------------------- MANAGEMENT - ---------------------------------------------------------------------------- Officers and Directors. Pursuant to the Articles of Incorporation, each Director shall serve until the annual meeting of the stockholders, or until his successor is elected and qualified. It is the intent of the Corporation to support the election of a majority of "outside" directors at such meeting. 28 Directors may only be removed for "cause". The term of office of each officer of the Corporation is at the pleasure of the Corporation's Board. The principal executive officers and directors of the Corporation will be as follows:
Name Position Term(s) of Office Mark Castleman, age 27 President, Secretary Inception to Treasurer and Director present Michael Castleman, Jr., Director Inception to age 30 present
Resumes: Mark Castleman. Mr. Castleman is currently President, Secretary and a Director of the Corporation. Mr. Castleman received a B.S. in Architecture from the University of Texas, Austin in 1993. From 1993 to December, 1994, Mr. Castleman served as facilities project manager for Advanced Micro Devices, Inc. where he worked as an architect. Michael Castleman, Jr. Mr. Castleman received his bachelor's degree from the University of Colorado in 1991. From 1991 to 1994, Mr. Castleman managed the Dallas/Fort Worth office of American Metro Study. American Metro Study maintains the largest database of residential real estate information in the United States. From June, 1994 to present, Mr. Castleman has been vice-president of Business Solutions, Inc. and is responsible for business development and marketing. Remuneration. Since inception, other than Mark Castleman who receives a monthly salary of $5,000 per month, no cash compensation has been paid by the Corporation to its officer and directors, during which there were one (1) officer and three (3) directors (Kent Bradshaw resigned as a Director in early 1996 to pursue other business opportunities): The Board of Directors and shareholders have approved a Non-Statutory Stock Option Plan to attract and retain persons of experience and ability and whose services are considered valuable and to encourage the sense of proprietorship in such persons and to stimulate the active interest of such persons in the development and success of the Corporation. 1. Persons Eligible to Participate in Non-Statutory Stock Option Plan. The persons eligible for participation in the Plan as recipients of Non statutory Stock Options ("NSOs") shall include full-time and part-time employees (as determined by the Committee) and officers of the Corporation or of an Affiliated Corporation. In addition, directors of the Corporation or any Affiliated Corporation who are not employees of the Corporation or an Affiliated Corporation and any attorney, consultant or other adviser to the Corporation or any Affiliated Corporation shall be 29 eligible to participate in the Plan. For all purposes of the Plan, any director who is not also a common law employee and is granted an option under the Plan shall be considered an "employee" until the effective date of the director's resignation or removal from the Board of Directors, including removal due to death or disability. The Committee shall have full power to designate, from among eligible individuals, the persons to whom NSOs may be granted. A person who has been granted an NSO hereunder may be granted an additional NSO or NSOs, if the Committee shall so determine. The granting of an NSO shall not be construed as a contract of employment or as entitling the recipient thereof to any rights of continued employment. 2. Common Shares Reserved for the Plan. Subject to adjustment, a total of 500,000 Common Shares, $.001 par value of the Corporation shall be subject to the Plan. The Common Shares subject to the Plan shall consist of unissued shares or previously issued shares reacquired and held by the Corporation or any Affiliated Corporation, and such amount of shares shall be and is hereby reserved for sale for such purpose. Any of such shares which may remain unsold and which are not subject to outstanding NSOs at the termination of the Plan shall cease to be reserved for the purpose of the Plan, but until termination of the Plan, the Corporation shall at all times reserve a sufficient number of shares to meet the requirements of the Plan. Should any NSO expire or be canceled prior to its exercise in full, the unexercised shares theretofore subject to such NSO may again be subjected to an NSO under the Plan. 3. Option Price. The purchase price of each Common Share placed under NSO shall not be less than Eighty Five percent (85%) of the fair market value of such share on the date the NSO is granted. The fair market value of a share on a particular date shall be deemed to be the average of either (i) the highest and lowest prices at which shares were sold on the date of grant, if traded on a national securities exchange, (ii) the high and low prices reported in the consolidated reporting system, if traded on a "last sale reported" system, such as NASDAQ, for over the counter securities, or (iii) the high bid and high asked price for other over-the-counter securities. If no transactions in the Common Shares occur on the date of grant, the fair market value shall be determined as of the next earliest day for which reports or quotations are available. If the common shares are not then quoted on any exchange or in any quotation medium at the time the option is granted, then the Board of Directors or Committee will use its discretion in selecting a good faith value believed to represent fair market value based on factors then known to them. The cash proceeds from the sale of Common Shares are to be added to the general funds of the Corporation. 4. Exercise Period. (a) The NSO exercise period shall be a term of not more than ten (10) years from the date of granting of each NSO and shall automatically terminate: (i) Upon termination of the optionee's employment with the Corporation for cause; (ii) At the expiration of twelve (12) months from the date of termination of the optionee's employment with the Corporation for any reason other than death, without cause; provided, that if the optionee dies 30 within such nine-month period, subclause (iii) below shall apply; or (iii) At the expiration of fifteen (15) months after the date of death of the optionee. (b) "Employment with the Corporation" as used in the Plan shall include employment with any Affiliated Corporation, and NSOs granted under the Plan shall not be affected by an employee's transfer of employment among the Corporation and any Parent or Subsidiary thereof. An optionee's employment with the Corporation shall not be deemed interrupted or terminated by a bona fide leave of absence (such as sabbatical leave or employment by the Government) duly approved, military leave or sick leave. Board of Directors Compensation. Members of the Board of Directors may receive an amount yet to be determined annually for their participation and will be required to attend a minimum of four meetings per fiscal year. All expenses for meeting attendance or out of pocket expenses connected directly with their Board representation will be reimbursed by the Corporation. Director liability insurance may be provided to all members of the Board of Directors. No differentiation is made in the compensation of "outside directors" and those officers of the Corporation serving in that capacity. Indemnification. The Corporation shall indemnify to the fullest extent permitted by, and in the manner permissible under the laws of the State of Texas, any person made, or threatened to be made, a party to an action or proceeding, whether criminal, civil, administrative or investigative, by reason of the fact that he is or was a director or officer of the Corporation, or served any other enterprise as director, officer or employee at the request of the Corporation. The Board of Directors, in its discretion, shall have the power on behalf of the Corporation to indemnify any person, other than a director or officer, made a party to any action, suit or proceeding by reason of the fact that he/she is or was an employee of the Corporation. Insofar as indemnification for liabilities arising under the Act may be permitted to directors, officers and controlling persons of the Corporation, the Corporation has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Corporation of expenses incurred or paid by a director, officer or controlling person of the Corporation in the successful defense of any action, suit or proceedings) is asserted by such director, officer, or controlling person in connection with any securities being registered, the Corporation will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issues. 31 INDEMNIFICATION OF OFFICERS OR PERSONS CONTROLLING THE CORPORATION FOR LIABILITIES ARISING UNDER THE SECURITIES ACT OF 1933, IS HELD TO BE AGAINST PUBLIC POLICY BY THE SECURITIES AND EXCHANGE COMMISSION AND IS THEREFORE UNENFORCEABLE. Conflicts of Interest Policy. The Corporation has adopted a policy that any transactions with directors, officers or entities of which they are also officers or directors or in which they have a financial interest, will only be on terms fair and reasonable to the Corporation (based on competitive bids, if appropriate, or on terms similar contracts with the Corporation by unaffiliated entities) and approved by a majority of the disinterested directors of the Corporation's Board of Directors. The Board of Directors resolved that the Bylaws of the Corporation shall be amended to provide that no such transactions by the Corporation shall be either void or voidable solely because of such relationship or interest of directors or officers or solely because such directors are present at the meeting of the Board of Directors of the Corporation or a committee thereof which approves such transactions, or solely because their votes are counted for such purpose if: (i) the fact of such common directorship or financial interest is disclosed or known by the Board of Directors or committee and noted in the minutes, and the Board or committee authorizes, approves or ratifies the contract or transaction in good faith by a vote for that purpose without counting the vote or votes of such interested directors; or (ii) the fact of such common directorship or financial interest is disclosed to or known by the shareholders entitled to vote and they approve or ratify the contract or transaction in good faith by a majority vote or written consent of shareholders holding a majority of the Common Shares entitled to vote (the votes of the common or interested directors or officers shall not be counted in any such vote of shareholders), or (iii) the contract or transaction is fair and reasonable to the Corporation based on competitive bids, if appropriate, and/or on terms consistent with similar contracts with the Corporation by unaffiliated entities at the time it is authorized or approved. In addition, interested directors may be counted in determining the presence of a quorum at a meeting of the Board of Directors of the Corporation or a committee thereof which approves such transactions. Currently, there are only two directors. The directors are brothers who are also majority shareholders. As a result, until such time as additional directors are appointed or elected to the Board of Directors, and even though the directors are aware of their fiduciary duty to the shareholders, there can be no assurance that the utilization of the policy will result in the resolution of any conflict of interest. - -------------------------------------------------------------------------- SHARES ELIGIBLE FOR FUTURE SALE - -------------------------------------------------------------------------- Upon completion of the Distribution, the Corporation will have 2,760,602 Common Shares outstanding, 1,208,984 of which are being registered on behalf of selling security holders in this offering. This does not include any Common Shares issued upon exercise of the A, B or C 32 Warrants currently being registered on behalf of selling security holders. Of these shares, 104,000 shares distributed in the Distribution will be freely tradable without restriction or further registration under the Securities Act, except for any shares purchased by an existing "affiliate" of the Corporation, which will be subject to the resale limitations of Rule 144 under the Securities Act. The remaining shares, as well as other securities which may be issued, in the future, in private transactions pursuant to an exemption from the Securities Act are "restricted securities" and may be sold in compliance with Rule 144 adopted under the Securities Act of 1933, as amended. Rule 144 provides, in essence, that a person who has held restricted securities for a period of two years may sell every three months in a brokerage transaction or with a market maker an amount equal to the greater of 1% of the Corporation's outstanding shares or the average weekly trading volume, if any, of the shares during the four calendar weeks preceding the sale. The amount of "restricted securities" which a person who is not an affiliate of the Corporation may sell is not so limited: nonaffiliates may each sell without limitation shares held for three years. Sales under Rule 144 may, in the future, depress the price of the Corporation's Common Shares in the over-the-counter market, should a market develop. Prior to this offering there has been no public market for the Common Shares of the Corporation. The effect, if any, of a public trading market or the availability of shares for sale at prevailing market prices cannot be predicted. Nevertheless, sales of substantial amounts of Common Shares in the public market could adversely effect prevailing market prices. - -------------------------------------------------------------------------- NASDAQ LISTING - -------------------------------------------------------------------------- Criteria for NASDAQ Listing. Prior to the date hereof, there has been no trading market for the Common Shares of the Corporation. The Corporation has agreed to use its best efforts to apply for the quotation of its Common Shares on the National Association of Securities Dealers Automated Quotation System ("NASDAQ"). The Corporation will not meet the proposed criteria as of the completion of the offering. In order to obtain the NASDAQ listing, the Corporation must meet the following criteria: (i) have total assets in excess of $4,000,000; (ii) have net equity in excess of $2,000,000; (iii) become a reporting Corporation under the Securities Exchange Act of 1934; (iv) have a minimum of 300 shareholders; (v) have a public float of at least 100,000 shares and (vi) have a bid price of $3.00. The Corporation hopes to meet (i) and (ii) upon the exercise of the Warrants being registered in this offering. There can be no assurance that any Warrants will, in fact, be exercised. Additionally, the Corporation shall file a Form 8-A under the Securities Exchange Act of 1934 immediately after the effective date of this registration statement to meet the requirements of (iii). After the effective date of this registration statement, the Corporation shall meet the criteria in (iv). Immediately after the effective 33 date of this registration statement, the Corporation shall apply for the quotation of its Common Shares on the over-the-counter market. There can be no assurance, however, that the Common Shares will be quoted, that an active trading and/or a liquid market will develop or, if developed, that it will be maintained. The Corporation does not intend to apply for quotation of its Common Shares on NASDAQ until it meets the above criteria. Broker-Dealer Sales of Corporation Securities. Until the Corporation successfully obtains a listing on the NASDAQ quotation system, if ever, the Corporation's securities may be covered by Rule 15c2-6 under the Securities Exchange Act of 1934 that imposes additional sales practice requirements on broker-dealers who sell such securities to persons other than established customers and accredited investors (generally institutions with assets in excess of $5,000,000 or individuals with net worth in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly with their spouse). For transactions covered by the rule, the broker-dealer must make a special suitability determination of the purchaser and have received the purchaser's written agreement to the transaction prior to the sale. In order to approve a person's account for transactions in designated securities, the broker or dealer must (i) obtain information concerning the person's financial situation, investment experience and investment objectives; (ii) reasonably determine, based on the information required by paragraph (i) that transactions in designated securities are suitable for the person and that the person has sufficient knowledge and experience in financial matters that the person reasonably may be expected to be capable of evaluating the rights of transactions in designated securities; and (iii) deliver to the person a written statement setting forth the basis on which the broker or dealer made the determination required by paragraph (ii) in this section, stating in a highlighted format that it is unlawful for the broker or dealer to effect a transaction in a designated security subject to the provisions of paragraph (ii) of this section unless the broker or dealer has received, prior to the transaction, a written agreement to the transaction from the person; and stating in a highlighted format immediately preceding the customer signature line that the broker or dealer is required to provide the person with the written statement and the person should not sign and return the written statement to the broker or dealer if it does not accurately reflect the person's financial situation, investment experience and investment objectives and obtain from the person a manually signed and dated copy of the written statement. A designated security means any equity security other than a security (i) registered, or approved for registration upon notice of issuance on a national securities exchange that makes transaction reports available pursuant to 17 CFR 11Aa3-1 (ii) authorized or approved for authorization upon notice of issuance, for quotation in the NASDAQ system; or . . . (iv) whose issuer has net tangible assets in excess of $2,000,000 demonstrated by financial statements dated less than fifteen months previously that the broker or dealer has reviewed and has a reasonable basis to believe are true and complete in relation to the date of the transaction with the person. Consequently, the rule may affect the ability of broker-dealers to sell the Corporation's securities and also may affect the ability of purchasers in this offering to sell their shares in the secondary market. 34 - ---------------------------------------------------------------------------- PRINCIPAL SHAREHOLDERS - ---------------------------------------------------------------------------- There are currently 2,760,602 Common Shares outstanding. The following tabulates holdings of shares of the Corporation by each person who, subject to the above, at the date of this Prospectus, holds of record or is known by management to own beneficially more than 5.0% of the Common Shares and, in addition, by all directors and officers of the Corporation individually and as a group.
Shareholdings at Date of This Prospectus Amount Amount of Common Name and Address of of Common Shares Owned Beneficial Owner Shares Owned % Offering % - ---------------------------------------------------------------------------- Mark Castleman 962,464 34.86% 866,218 31.38% 12201 Technology Boulevard Suite 145 Austin, Texas 78727 Michael Castleman 323,000 11.70% 290,700 10.53% 12201 Technology Boulevard Suite 145 Austin, Texas 78727 Kent Bradshaw 323,000 11.70% 290,700 10.53% 12201 Technology Boulevard Suite 145 Austin, Texas 78727 Pratt, Wylce & Lords 348,000 10.26% 244,000 8.84% 10 Office Park Road, #22 Hilton Head Island, SC 29938 All Directors & Officers as a group (2 persons) 1,285,464 46.56% 1,156,918 41.91%
There are currently 100,000 A Warrants outstanding. The following tabulates holdings of A Warrants of the Corporation by each person who, subject to the above, at the date of this Prospectus, holds of record or is known by management to own beneficially more than 5.0% of the Common Shares and, in addition, by all directors and officers of the Corporation individually and as a group. 35
Name Total Number Of % Amount % A Warrants Owned Owned Owned Owned Prior to After After Offering Offering Offering Mark Castleman 60,000 60% 0 0% Michael Castleman 20,000 20% 0 0% Kent Bradshaw 20,000 20% 0 0% All Officers and Directors As a Group (two) 80,000 80% 0 0%
There are currently 100,000 B Warrants outstanding. The following tabulates holdings of B Warrants of the Corporation by each person who, subject to the above, at the date of this Prospectus, holds of record or is known by management to own beneficially more than 5.0% of the Common Shares and, in addition, by all directors and officers of the Corporation individually and as a group.
Name Total Number Of % Amount % B Warrants Owned Owned Owned Owned Prior to After After Offering Offering Offering Mark Castleman 60,000 60% 0 0% Michael Castleman 20,000 20% 0 0% Kent Bradshaw 20,000 20% 0 0% All Officers and Directors As a Group (two) 80,000 80% 0 0%
There are currently 250,000 C Warrants outstanding. The following tabulates holdings of C Warrants of the Corporation by each person who, subject to the above, at the date of this Prospectus, holds of record or is known by management to own beneficially more than 5.0% of the Common Shares and, in addition, by all directors and officers of the Corporation individually and as a group. 36
Name Total Number Of % Amount % C Warrants Owned Owned Owned Owned Prior to After After Offering Offering Offering Mark Castleman 150,000 60% 0 0% Michael Castleman 50,000 20% 0 0% Kent Bradshaw 50,000 20% 0 0% All Officers and Directors As a Group (two) 200,000 70% 0 0%
- -------------------------------------------------------------------------- DESCRIPTION OF SECURITIES - -------------------------------------------------------------------------- Qualification. The following statements constitute brief summaries of the Corporation's Certificate of Incorporation and Bylaws, as amended. Such summaries do not purport to be complete and are qualified in their entirety by reference to the full text of the Certificate of Incorporation and Bylaws. The Corporation's Articles of Incorporation authorize it to issue up to 50,000,000 Common Shares, $.001 par value per Common Share . Common Shares purchased in this offering will be fully paid and non- assessable. Common Stock. Holders of Common Shares of the Corporation are entitled to cast one vote for each share held at all shareholders meetings for all purposes. Upon liquidation or dissolution, each outstanding Common Share will be entitled to share equally in the assets of the Corporation legally available for distribution to shareholders after the payment of all debts and other liabilities. Common Shares are not redeemable, have no conversion rights and carry no preemptive or other rights to subscribe to or purchase additional Common Shares in the event of a subsequent offering. All outstanding Common Shares are, and the Common Shares offered hereby will be when issued, fully paid and non-assessable. There are no limitations or restrictions upon the rights of the Board of Directors to declare dividends out of any funds legally available therefor. The Corporation has not paid dividends to date and it is not anticipated that any dividends will be paid in the foreseeable future. The Board of Directors initially may follow a policy of retaining earnings, if any, to finance the future growth of the Corporation. Accordingly, future 37 dividends, if any, will depend upon, among other considerations, the Corporation's need for working capital and its financial conditions at the time. A Warrants. The Board of Directors of the Corporation has authorized a dividend distribution of 100,000 A Warrants on a pro rata basis to the shareholders of record as of October 15, 1995. The A Warrants are exercisable for a period of two years from issuance. The A Warrants shall be exercisable into Common Shares of the Corporation at the exercise price of $4.00 per Common Share. The A Warrants will be callable with 30 days notice for a price of $.001 per A Warrant. B Warrants. The Board of Directors of the Corporation has authorized a dividend distribution of 100,000 B Warrants on a pro rata basis to the shareholders of record as of October 15, 1995. The B Warrants are exercisable for a period of two years from issuance. The B Warrants shall be exercisable into Common Shares of the Corporation at the exercise price of $6.00 per Common Share. The B Warrants will be callable with 30 days notice for a price of $.001 per B Warrant. C Warrants. The Board of Directors of the Corporation has authorized a dividend distribution of 250,000 C Warrants on a pro rata basis to the shareholders of record as of October 15, 1995. The C Warrants are exercisable for a period of three years from issuance. The C Warrants shall be exercisable into Common Shares of the Corporation at the exercise price of $10.00 per Common Share. The C Warrants will be callable with 30 days notice for a price of $.001 per C Warrant. Transfer Agent. The Corporation shall act as its own transfer agent until after the completion of the offering. - --------------------------------------------------------------------------- LEGAL MATTERS - --------------------------------------------------------------------------- The due issuance of the Common Shares offered hereby will be opined upon for the Corporation by Jody M. Walker, Attorney At Law in which opinion Counsel will rely on the validity of the Certificate and Articles of Incorporation issued by the State of Texas, as amended and the representations by the management of the Corporation that appropriate action under Texas law has been taken by the Corporation. - ------------------------------------------------------------------------- LEGAL PROCEEDINGS - ------------------------------------------------------------------------- The Corporation is not involved in any legal proceedings as of the date of this Prospectus. 38 - ------------------------------------------------------------------------- EXPERT - ------------------------------------------------------------------------- The audited financial statements included in this Prospectus have been so included in reliance on the report of Winter, Scheifley & Associates P.C., Certified Public Accountants, on the authority of such firm as experts in auditing and accounting. - ------------------------------------------------------------------------- INTERESTS OF NAMED EXPERTS AND COUNSEL - ------------------------------------------------------------------------- None of the experts or counsel named in the Prospectus are affiliated with the Corporation. 39 REPORT OF INDEPENDENT AUDITORS Shareholders and Board of Directors Trinity Works, Inc. We have audited the accompanying balance sheets of Trinity Works, Inc. as of January 31, 1996 and 1995 the related statements of operations, stockholders' equity, and cash flows for each of the two years then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Trinity Works, Inc. as of January 31, 1996 and 1995, and the results of its operations, and its cash flows for each of the two years then ended, in conformity with generally accepted accounting principles. Winter, Scheifley & Associates, P.C. Certified Public Accountants Englewood, Colorado March 15, 1996 40 Trinity Works, Inc. Balance Sheet January 31, 1996 and 1995 ASSETS Current assets: 1996 1995 Cash $ 317,029 $ - Accounts receivable, trade 24,870 7,055 Inventories 123,696 74,145 ---------- -------- -Total current assets 465,595 81,200 Property and equipment, at cost, net of accumulated depreciation of $18,935 and $5,374 42,471 38,030 Intangible assets, net of accumulated amortization of $1,512 and $146 12,152 13,518 Deposits 1,450 - ---------- -------- $ 521,668 $132,748 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Equipment leases payable $ 917 $ - Accounts payable 38,508 14,889 Accrued expenses 18,637 6,567 Advances from officer 633 1,600 ---------- ---------- Total current liabilities 58,695 23,056 Equipment leases - non-current 2,380 - Notes payable - directors 150,000 150,000 Commitments (Note 5) Stockholders' equity: Common stock, $.001 par value, 50,000,000 shares authorized, 2,469,602 issued and outstanding 2,470 1,615 Additional paid-in capital 474,901 (615) Accumulated deficit (166,778) (41,308) ---------- ---------- 310,593 (40,308) ---------- ---------- $ 521,668 $132,748 ========== ========== See accompanying notes to financial statements. 41 Trinity Works, Inc. Statements of Operations For The Years Ended January 31, 1996 and 1995 1996 1995 Sales $ 203,015 $ 7,519 Cost of sales 81,052 3,501 ---------- ---------- Gross profit 121,963 4,018 Other costs and expenses: General and administrative 1,026,134 35,092 Research and development 16,037 5,234 ---------- ---------- 1,042,171 40,326 ---------- ---------- Income (loss) from operations (920,208) (36,308) Other income and (expense): Interest expense (12,000) (5,000) Other 1,205 - ---------- ---------- (10,795) (5,000) ---------- ---------- Net income (loss) $ (931,003) $(41,308) ========== ========== Earnings (loss) per share: Net income (loss) $ (0.53) $ (0.03) ========== ========== Weighted average shares outstanding 1,758,717 1,615,000 ========== ========== See accompanying notes to financial statements. 42 Trinity Works, Inc. Statement of Changes in Stockholders' Equity For The Years Ended January 31, 1996 and 1995
Additional Common Paid -in Accumulated ACTIVITY Shares Amount Capital (Deficit) Total Initial capitalization at August 1, 1994 1,615,000 $ 1,615 $ (615) $ - $1,000 Net (loss) for the year (41,308) (41,308) ----------- ---------- ---------- ---------- -------- Balance, January 31, 1995 1,615,000 1,615 (615) (41,308) (40,308) Sale of shares for cash at $1.50 419,602 42 628,984 629,404 Stock issued for services 435,000 435 652,065 652,500 Reclass of S corporation deficit to paid-in capital (805,533) 805,533 Net (loss) for the year (931,003) (931,003) ----------- ---------- ----------- ----------- --------- Balance, January 31, 1996 2,469,602 2,470 $ 474,901 $(166,778) $ 310,593 =========== ========== =========== =========== ========== See accompanying notes to financial statements. 43 Trinity Works, Inc. Statements of Cash Flows For The Years Ended January 31, 1996 and 1995 1996 1995 Net income (loss) $ (931,003) $(41,308) Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization 14,927 5,520 Stock issued for services 652,500 Changes in assets and liabilities: (Increase) decrease in receivables (17,815) (7,055) (Increase) decrease in inventory (49,551) (74,145) (Increase) decrease in other assets (1,450) Increase (decrease) in accounts payable and accrued expenses 35,689 21,456 ---------- --------- Total adjustments 634,300 (54,224) Net cash (used in) operations (296,703) (95,532) Cash flows from investing activities: Increase in intangible assets (13,664) Acquisition of plant and equipment (14,705) (43,404) ---------- --------- Net cash (used in) for investments (14,705) (57,068) Cash flows from financing activities: Common stock sold for cash 629,404 1,000 Increase in officer loans 1,600 Repayment of officer loans (967) Proceeds from investor notes 150,000 ---------- --------- Net cash provided by financing 628,437 152,600 --------- ---------- Increase (decrease) in cash 317,029 - Cash, beginning of period ---------- --------- Cash, end of period $ 317,029 $ - ========== ========== See accompanying notes to financial statements. 44 Trinity Works, Inc. Statements of Cash Flows For The Years Ended January 31, 1996 and 1995 1996 1995 Supplemental cash flow information: Cash paid for interest $ - $ - Cash paid for income taxes $ - $ - Supplemental disclosure of non-cash transactions: Common stock issued for services $ 652,500 $ - Increase in leased equipment $ 3,297 $ - See accompanying notes to financial statements. 45 Trinity Works, Inc. Notes to Financial Statements Note 1 - Accounting policies Organization Trinity Works, Inc. is a manufacturer of computer related products incorporated under the laws of the State of Texas during August 1994. The Company's customers to date have been mail order companies that stock its products and end user purchasers. Inventories Inventories, consisting principally of raw materials and finished goods, are valued at the lower of cost or market on a first in - first out basis. Fixed assets Fixed assets are stated at cost, less accumulated depreciation. Depreciation is calculated under the straight line method over the expected useful lives of the assets of from three to seven years. Net loss per share: The net loss per share is computed by dividing the net loss for the period by the weighted average number of common shares outstanding for the period. Common stock equivalents are excluded from the computation as their effect would be anti-dilutive. Cash For purposes of the statement of cash flows the Company considers all highly liquid debt instruments purchased with a maturity of 3 months or less to be cash equivalents. At January 31, 1996 the Company maintained $317,029 on deposit at one bank which exceeded the $100,000 deposit insurance limit by $217,029. Revenue recognition The Company recognizes revenue upon shipment of goods to its customers. Patents and trademarks The Company has applied for patents for certain of its products. Patents and trademarks are amortized using the straight line method over a period of ten years and are stated net of accumulated amortization of $1,075 at January 31, 1996. 46 Estimates The preparation of the Company's financial statements requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from these estimates. Advertising costs Advertising costs are charged to operations when the advertising first takes place. Advertising costs charged to operations were $141,915 and $13,409 in 1996 and 1995. Note 2 - Inventories Inventories consisted of the following at January 31, 1996 and 1995: 1996 1995 Raw materials $ 89,920 $ 67,063 Finished goods 33,776 7,082 -------- -------- $123,696 $ 74,145 Note 3 - Fixed assets Fixed assets consist of the following at January 31 1996 and 1995: 1996 1995 Furniture and equipment $ 5,889 $ 1,085 Computer equipment 15,410 11,718 Computer equipment (leased) 3,297 - Molds and dies 35,816 30,601 Leasehold improvements 995 - -------- ------ -61,677 43,404 Less: accumulated depreciation 18,935 5,374 -------- ------ $42,472 $38,030 Depreciation expense was $13,561 and $5,374 for the years ended January 31, 1996 and 1995. Note 4 - Notes payable - directors During November 1994 the Company borrowed $75,000 from each of two of the Company's directors, one of whom is an immediate family member with the Company's president. The identical 47 uncollateralized notes bear interest at prime plus 2% and are to be repaid from operating profits of the Company beginning after January 31, 1997. Note 5 - Commitments Operating leases During March 1996, the Company entered into a lease in Austin, Texas for its corporate office and manufacturing facility. The lease provides for various escalations based on cost of living, real estate taxes, etc. Future minimum rentals under the lease are as follows: 1997: $19,442 1998: $23,330 1999: $23,330 2000: $3,888 Rent expense was $4,128 and $131 for the years ended January 31, 1996 and 1995, respectively. Capital leases The Company is the lessee of computer equipment under a capital lease that expires in January 1999. The assets and liability under the capital lease are recorded at the lower of the present value of the minimum lease payments or the fair value of the assets. The assets are depreciated over a three year period. Depreciation of the assets ($75) is included in depreciation expense for the year ended January 31, 1996. Minimum future lease payments under the lease as of January 31, 1996 for each of the next three years and in the aggregate are as follows. Year ended Amount January 31, 1997 $1,416 January 31, 1998 1,416 January 31, 1999 1,416 ------ 4,248 Less interest amount (951) ------ Present value of minimum payment $3,927 The interest rate on the lease amounts to 17.3% per annum. During February 1996, the Company leased additional equipment under similar lease terms having a fair value of $6,240. 48 Note 6 - Stockholders equity At inception, (August 1, 1994) the Company issued 1,615,002 shares of its $.001 par value common stock to three of its officers and directors in exchange for cash of $1,000. During October 1995 the Company entered into a one year consulting agreement with an entity whereby the entity would provide to the Company financial consulting services. Pursuant to the agreement the entity agreed to assist the Company in preparing a private placement memorandum to obtain equity or debt financing in the amount of $600,000 and to assist the Company in completing the offering. In exchange for these services the Company agreed to pay $92,630 in cash and to issue 323,000 shares of its $.001 par value common stock valued at $484,500. These amounts have been included in general and administrative expenses in 1996 in the accompanying Statement of Operations. During October 1995, the Company authorized the issuance of 100,000 each of A, B, and 250,000 of C stock purchase warrants exercisable as follows: $ 4.00 plus one A warrant for each share of common stock $ 6.00 plus one B warrant for each share of common stock $10.00 plus one C warrant for each share of common stock The warrants are exercisable for a period of 24 months from the date of issue for the A and B warrants and 48 months for the C warrants, and are callable with 30 days notice at a price of $.001 per warrant. During December, 1995 the Company began offering shares of its common stock at $1.50 per share pursuant to a private placement. The private placement was completed in January 1996 and the Company issued 419,602 shares of common stock for net cash proceeds aggregating $629,404. During the periods covered by these financial statements the Company issued shares of common stock without registration under the Securities Act of 1933. Although the Company believes that the sales did not involve a public offering of its securities and that the Company did comply with the safe harbor exemptions from registration under section 4(2), it could be liable for recision of the sales if such exemptions were found not to apply. Note 7 - Income taxes The Company had elected to be treated as an "S" corporation under the provisions of the Internal Revenue Code and state statutes. Under these provisions, no income tax is normally incurred at the corporate level. Instead the shareholder includes his pro rata share of the 49 corporations income or loss on his personal tax returns. During January 1996 the number of shareholders of the Company exceeded the maximum number of shareholders allowed for an S corporation and the election was terminated. In addition, the Company used December 31, as its year end for income tax purposes. Effective January 1, 1996 the Company adopted Financial Accounting Standards Board Statement No. 109, Accounting for Income Taxes. Of the loss for the year ended January 31, 1996 approximately $166,778 will be available as an operating loss carryforward for the Company expiring during 2011, and the balance will be allocated to the shareholders. The accumulated loss through the termination of the "S" election of $805,533 has been reclassified to paid in capital in the accompanying financial statements. The Company is unable to predict future taxable income that would enable it to utilize the deferred tax asset arising from the future value of the net operating loss and therefore the deferred tax asset of approximately $56,705 related thereto is fully reserved. Note 8 - Related party transactions During the year ended January 31, 1995 an officer and director of the made advances to the Company aggregating $1,600. During the year ended January 31, 1996 $967 of this debt was repaid in cash. Note 9 - Sales to major customers The Company made sales in excess of 10% of its net sales to unrelated parties for the year ended January 31, 1996 to two companies aggregating $128,105 (63%). Additionally, the Company had open uncollateralized accounts receivable from these customers aggregating $12,445 January 31, 1996. The Company had no major customers during the year ended January 31, 1995. The Company's major customers in 1996 consist of mail order companies who include a description of the Company's products in their advertisements in various computer related publications. The Company is charged for its share of the advertising costs and such billings are offset against accounts receivable from sales to these customers. Note 10 - Stock option plan During 1995, the Company adopted a non-statutory stock option plan which provides for granting to the Company's officers, directors, employees and certain other individuals who consult with or advise the Company, options to acquire up to 500,000 shares of the Company's common stock. The shares issuable under the plan are at a price not less than 85% of the fair market value of the stock on the date of grant. The exercise periods of the options are not to exceed ten years. No options have been granted pursuant to the plan as of January 31, 1996. 50 PART II INFORMATION NOT REQUIRED BY PROSPECTUS Item 13. Other Expenses of Issuance and Distribution. Other expenses in connection with this offering which will be paid by Trinity Works, Inc. (hereinafter in this Part II referred to as the "Corporation") are estimated to be substantially as follows:
Amount Payable Item By Corporation S.E.C. Registration Fees $ 1,825.12 State Securities Laws (Blue Sky) Fees and Expenses 1,500.00 Printing and Engraving Fees 5,000.00 Legal Fees 15,000.00 Accounting Fees and Expenses 10,000.00 Transfer Agent's Fees 1,500.00 Total $34,825.12
Item 14. Indemnification of Officers and Directors. Indemnification. The Corporation shall indemnify to the fullest extent permitted by, and in the manner permissible under the laws of the State of Texas, any person made, or threatened to be made, a party to an action or proceeding, whether criminal, civil, administrative or investigative, by reason of the fact that he is or was a director or officer of the Corporation, or served any other enterprise as director, officer or employee at the request of the Corporation. The Board of Directors, in its discretion, shall have the power on behalf of the Corporation to indemnify any person, other than a director or officer, made a party to any action, suit or proceeding by reason of the fact that he/she is or was an employee of the Corporation. The extent of the indemnification shall be determined on a case by case basis and will be dependent on the nature of the action, suit or proceeding and the specific facts and circumstances surrounding the situation. Insofar as indemnification for liabilities arising under the Act may be permitted to directors, officers and controlling persons of the Corporation, the Corporation understands that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Corporation of expenses incurred or paid by a director, officer or controlling person of the Corporation in the successful defense of any action, suit or proceedings) is asserted by such director, officer, or controlling person in connection with any securities being registered, the Corporation 51 will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issues. Item 15. Recent Sales of Unregistered Securities. In August, 1994, the Corporation issued 1,615,000 common shares to its officers and directors for the cash consideration of $1,615. On May 16, 1995, the Corporation issued 348,000 common shares to Pratt, Wylce & Lords, Ltd. and 87,000 common shares to Clinton Clark for consulting services pursuant to the terms of a consulting agreement filed as an exhibit to the registration statement. The Corporation pursued a private placement at $1.50 per common shares and issued a total of 419,602 to the following individuals. These issuances were made in compliance with Rule 505, Regulation D of the Securities Act of 1933 by Registrant's management, consultants and selected broker/dealers. No commissions or other remuneration was paid to anyone other than a NASD selected broker/dealer. No general solicitation was utilized. There was less than 35 nonaccredited investors. The determination of whether an investor was accredited or nonaccredited was based on the responses in the subscription agreement filled out by each investor.
Date Amount of Amount Issued Name Common Stock Paid - -------- -------- ------------- -------- 12-20-95 John Baer 3,000 $4,500 12-21-95 Steve Ball 3,000 $4,500 11-30-95 Tom Brennan 15,000 $22,500 1-3-96 Ed Carlow 5,000 $7,500 Sue Castleman 8,333 12-20-95 Pagogh Cho 3,000 $4,500 Jonathan Ceck 12-13-95 Al Damalak 7,000 $10,500 12-18-95 Pauline Darosa 4,000 $6,000 6-2-96 William DeMayo 3,000 $4,500 Murray Trachter 12-15-95 Gerald Dooher 5,000 $7,500 12-2-95 Terrence Dooher 5,000 $7,500 12-16-95 Del/Peggy Dugan 3,000 $4,500 12-21-95 John Dunbar 3,000 $4,500 1-2-96 Stuart Dupee 3,000 $4,500 12-21-95 James Early 16,667 12-19-95 Ora Elliott 3,000 $4,500 52 12-15-95 Charles & Judith Franklin 3,000 $4,500 12-20-95 Randall Geist 9,000 $13,500 12-18-95 Dr. Bob Gerner 10,000 $15,000 12-19-95 Lynn Gjertsen 3,000 $4,500 1-1-96 Charles Gluck 3,000 $4,500 12-18-95 All American Way, Inc. Profit Sharing Plan 12,000 $18,000 12-19-95 Ken Gregory 3,000 $4,500 12-11-95 James Haines 3,334 $5,000 12-20-95 Kim & Gavin Hart 3,000 $4,500 12-7-95 Richard Hinkle 3,000 $4,500 12-28-95 Brian Hughes 1,000 $1,500 12-14-95 Robert & Eleanor Hughes 6,000 $9,000 12-29-95 Robert Hunt IRA 3,000 $4,500 12-12-95 Cliff Jaebker 6,200 1-4-95 Grant Johnson 3,000 $4,500 12-7-95 Virginia Junkin 4,000 $6,000 12-29-95 Alan/Patti Katz 3,000 $4,500 12-6-95 Larry Konfirst 6,000 $9,000 12-21-95 John/Rosella Lawson 15,000 $22,500 12-21-95 Rosella Lawson 3,000 $4,500 12-22-95 Kevin McGarry 3,000 $4,500 12-13-95 John McKissach 12-1-95 John Santry 3,000 $4,500 1-2-96 Ronald Montano 7,334 $10,667 12-13-95 Blake Mosher 20,000 $30,000 12-12-95 Bowman Najmi 7,000 $10,500 12-6-95 Jonathan/Melissa Pace 8,000 $12,000 12-20-95 Elaine & William Paton 9,000 $13,500 12-4-95 Scott/Marcia Rader 3,000 $4,500 12-8-95 Al Ridenger 15,000 $22,500 Al Ridenger, Jr. 3,000 $4,500 12-21-95 Jerry & Sarah Robertson 3,000 $4,500 12-10-95 Jay Rydman 4,000 $6,000 12-17-95 Manuez Sanchez 7,000 $10,500 1-2-96 Carol Sarwar 4,000 $6,000 12-11-95 Paula/Steve Schaefer 7,000 $10,500 12-11-95 Mary Jane & Vic Sohle 1,000 $1,500 Derek Steele 12-21-95 Rick Pease 3,000 $4,500 12-22-95 Nancy Stiehl 3,000 $4,500 12-20-95 Karen Sussman 7,000 $10,500 12-22-95 Mitsao Tatsugawa 3,000 $4,500 12-6-95 William Taylor 6,000 $9,000 12-5-95 Larry/Lori Turrel 40,000 $60,000 1-10-96 John Watson 6,000 $9,000 12-13-95 Harry Welch 20,000 $30,000 12-26-95 2422 Brazoria 3,000 $4,500 12-8-95 John Wilson 3,000 $4,500 12-14-95 Howard Witzel 20,000 $30,000 12-23-95 Johnny Wong 3,000 $4,500 12-11-95 Shane Yost 3,734 $5,601 53 The Corporation issued Common Shares to the following employees as partial compensation valued at $1.50 per Common Share. 1-1-96 Darrell Hughes 40,000 $60,000 1-1-96 Jonathan Avedikian 20,000 $30,000 1-1-96 Matt Casteman 20,000 $30,000 4-1-96 David Avedikian 2,000 $3,000 The Corporation issued 6,536 Common Shares to Darrell Daugherty on May 22, 1996 valued at $1.50 per Common Share. During June, 1996, the Corporation received $590,000 by privately issuing the following Common Shares at $2.50 per Common Share. Breaux Castleman 32,000 $80,000 James Early 20,000 $50,000 Dick Galley 80,000 $200,000 Al Ridenger 20,000 $50,000 Larry Turel 20,000 $50,000 Howard Witzel 20,000 $50,000 John Wilson 24,000 $60,000 Harry Welch 20,000 $50,000
Due to the integration rules of Section 502(a), all of the above issuances of common stock would be deemed to be integrated and deemed to be part of the same Regulation D offering (Section 505). As a result, the Corporation obtained subscription agreements from all investors which indicated whether or not the investors were accredited. There were a total of 33 non-accredited investors. All of the above sales were made without general solicitation. No commissions were paid to anyone other than registered NASD broker-dealers. The total aggregate value of all of the issuances were substantially less than $5,000,000.
Exhibit Index. (1) Not Applicable (2) Not Applicable (3) Articles of Incorporation, Amendments and Bylaws (4) Specimen certificate for Common Stock - to be filed by amendment (5) Consent and Opinion of Jody M. Walker, Attorney At Law regarding legality of securities registered under this Registration Statement and to the references to such attorney in the Prospectus filed as part of this Registration Statement (6) Not Applicable (7) Not Applicable (8) Not Applicable (9) Not Applicable 54 (10) Not Applicable (11) Not Applicable (12) Not Applicable (13) Not Applicable (14) Not Applicable (15) Not Applicable (16) Not Applicable (17) Not Applicable (18) Not Applicable (19) Not Applicable (20) Not Applicable (21) Not Applicable (22) Not Applicable (23) Not Applicable (24) Consent of Winter, Scheifley & Associates, P.C., Certified Public Accountants for the Corporation (25) Not Applicable (26) Not Applicable (27) Not Applicable (28) Not Applicable (99.1) Consulting Agreement with Pratt, Wylce & Lords, Ltd. (99.2) Lock Up Agreement - to be filed by amendment Item 17. Undertaking. The undersigned registrant hereby undertakes: (a)(1) To file, during any period in which offers or sales are being made, a post-effective amendment to this Registration Statement: (i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933; (ii) To reflect in the prospectus any facts or events arising after the effective date of the Registration Statement (or the most recent post- effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the formation set forth in the Registration Statement. (iii) To include any material information with respect to the plan of distribution not previously disclosed in the Registration Statement or any material change to such information in the Registration Statement. (2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. 55 (b) Delivery of Certificates. The undersigned registrant hereby undertakes to provide to the Transfer Agent at the closing, certificates in such denominations and registered in such names as are required by the Transfer Agent to permit prompt delivery to each purchaser. (c) Indemnification. Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the provisions set forth in the Corporation's Articles of Incorporation or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. 56 Signatures Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this Registration Statement on Form S-1 as amended to be signed on its behalf by undersigned, thereunto duly authorized, in the city of Austin, State of Texas on the 7th day of August, 1996. Trinity Works, Inc. /s/ Mark Castleman -------------------- By: Mark Castleman, President Pursuant to the requirements of the Securities Act of 1933, this Registration on Form S-1 as amended has been signed by the following persons in the capacities and on the dates indicated.
Signature Capacity Date /s/ Mark Castleman 7/8/96 - --------------------------- Chief Executive Officer ---------------- Mark Castleman Chief Financial Officer Controller/Director /s/ Michael Castleman 7/8/96 - --------------------------- Director ---------------- Michael Castleman
57
Exhibit Index. (1) Not Applicable (2) Not Applicable (3) Articles of Incorporation, Amendments and Bylaws (4) Specimen certificate for Common Stock - to be filed by amendment (5) Consent and Opinion of Jody M. Walker, Attorney At Law regarding legality of securities registered under this Registration Statement and to the references to such attorney in the Prospectus filed as part of this Registration Statement (6) Not Applicable (7) Not Applicable (8) Not Applicable (9) Not Applicable (10) Not Applicable (11) Not Applicable (12) Not Applicable (13) Not Applicable (14) Not Applicable (15) Not Applicable (16) Not Applicable (17) Not Applicable (18) Not Applicable (19) Not Applicable (20) Not Applicable (21) Not Applicable (22) Not Applicable (23) Not Applicable (24) Consent of Winter, Scheifley & Associates, P.C., Certified Public Accountants for the Corporation (25) Not Applicable (26) Not Applicable (27) Not Applicable (28) Not Applicable (99.1) Consulting Agreement with Pratt, Wylce & Lords, Ltd. (99.2) Lock Up Agreement - to be filed by amendment
EX-3 2 ARTICLES OF INCORPORATION, AMENDMENTS AND BYLAWS 1 THE STATE OF TEXAS SECRETARY OF STATE CERTIFICATE OF INCORPORATION OF TRINITY WORKS, INC. CHARTER NUMBER: 1321298-00 The undersigned, as Secretary of State of Texas, hereby certifies that the attached Articles of Incorporation for the above named corporation have been received in this office and are found to confirm to law. ACCORDINGLY, the undersigned, as Secretary of State, and by virtue of the authority vested in the Secretary by law, hereby issues this Certificate of Incorporation. Issuance of this Certificate of Incorporation does not authorize the use of a corporate name in this state in violation of the rights of another under the federal Trademark Act of 1946, the Texas trademark law, the Assumed Business or Professional Name Act, or the common law. Dated: August 1, 1994 Effective: August 1, 1994 Secretary of State 2 ARTICLES OF INCORPORATION OF TRINITY WORKS, INC. ARTICLE ONE The name of the corporation is Trinity Works, Inc. ARTICLE TWO The period of duration of the corporation is perpetual. ARTICLE THREE The purpose for which the corporation is organized is the transaction of any and all lawful business for which corporations may be incorporated under the Texas Business Corporation Act (the "TBCA"). ARTICLE FOUR The aggregate number of shares which the corporation shall have authority to issue is one hundred thousand (100,000) shares of common stock, par value $.01 per share. ARTICLE FIVE The corporation will not commence business until it has received consideration of the value of one thousand dollars ($1,000.00) for the issuance of its shares, consisting of money, labor done or property actually received. ARTICLE SIX No shareholder or other person shall have any preemptive right whatsoever to acquire additional, unissued or treasury shares of the corporation, or securities of the corporation convertible into or carrying a right to subscribe to or acquire shares, or any other securities or property whatsoever. ARTICLE SEVEN Cumulative voting shall not be permitted. ARTICLE EIGHT The street address of the initial registered office of the corporation and the name of its initial registered agent are: Registered Agent Registered Office Mark Ballad Castleman 6000 Shepherd Mountain Cove Suite 221 Austin, Texas 78730 ARTICLE NINE The number of directors of the corporation shall be fixed as determined by the Bylaws, and the number of directors constituting the initial board of directors shall be three (3). 3 The name and address of the people who are to serve as directors until the first annual meeting of the shareholders or until their successors are duly elected and qualified are: Name Address Mark Ballad Castleman 6000 Shepherd Mountain Cove Suite 221 Austin, Texas 78730 Michael S. Castleman, Jr 12415 Cobblestone Houston, Texas 77024 Kent S. Bradshaw 12307 Queensbury Houston, Texas 77024 ARTICLE TEN The name and address of the sole incorporator is: Name Address Geoffrey A. Long Bracewell & Patterson, L.L.P. 711 Louisiana Street Suite 2900 Houston, Texas 77002-2781 ARTICLE ELEVEN No director of the Corporation shall be liable to the corporation or its shareholders for monetary damages for any act or omission in the director's capacity as a director, except to the extent that the foregoing exculpation from liability is not permitted under the applicable provisions of the Texas Miscellaneous Corporation Laws Act (or any successor or replacement statute) as the same now exists or may hereafter be amended. Any repeal or modification of the provisions of the foregoing sentence shall not adversely affect any right or protection of a director of the corporation existing at the time of such repeal or modification. ARTICLE TWELVE Section 12.1. Voting Requirement. With respect to any matter, other than the election of directors as provided in the bylaws, including, but not limited to, a matter for which the affirmative vote of the holders of a specified portion of the shares of the corporation entitled to vote is required by the TBCA, the affirmative vote of the holders of a majority of the shares of the corporation entitled to vote on the matter shall be the act of the shareholders. Section 12.2. Quorum Requirement. The holders of at least a majority of the shares of the corporation issued and outstanding and entitled to vote, represented in person or by proxy, shall constitute a quorum at any meeting of shareholders of the corporation. Section 12.3. Written Consent. Any action required by the TBCA to be taken at any annual or special meeting of shareholders, or any action that may be taken at any annual or special meeting of shareholders, may be taken without 4 a meeting, without prior notice, and without a vote, if a consent or consents in writing, setting forth the action so taken, shall be signed by the holder or holders of all of the outstanding shares entitled to vote on such action and shall be delivered to the corporation by delivery to its registered office in the state of incorporation, its principal place of business, or an officer or agent of the corporation having custody of the book in which proceedings of meetings of shareholders are recorded. IN WITNESS WHEREOF, I have set my hand this 1st day of August, 1994. Geoffrey A. Long 5 BYLAWS OF TRINITY WORKS, INC. A TEXAS CORPORATION DATE OF ADOPTION ,19 6 TABLE OF CONTENTS Page Article 1 Offices Section 1.1. Registered Office . . . . . . 1 Section 1.2. Other Offices . . . . . . . . 1 Article 2 Shareholders Section 2.1. Place of Meetings . . . . . . 1 Section 2.2. Quorum; Adjournment of Meetings 1 Section 2.3. Annual Meetings . . . . . . . 2 Section 2.4. Special Meetings . . . . . . 2 Section 2.5. Record Date . . . . . . . . . 2 Section 2.6. Notice of Meetings . . . . . 3 Section 2.7. Shareholders List . . . . . . 4 Section 2.8. Proxies . . . . . . . . . . . 4 Section 2.9. Voting; Election; Inspectors 5 Section 2.10. Conduct of Meetings. . . . . 6 Section 2.11. Treasury Stock . . . . . . . 6 Section 2.12. Action Without Meeting . . . 6 Article 3 Board of Directors Section 3.1. Power; Number; Term of Office 7 Section 3.2. Quorum; Voting . . . . . . . 7 Section 3.3. Place of Meetings; Order of Business . . . . . . . . . . 8 Section 3.4. First Meeting . . . . . . . . 8 Section 3.5. Regular Meetings . . . . . . 8 Section 3.6. Special Meetings . . . . . . 8 Section 3.7. Removal . . . . . . . . . . . 9 Section 3.8. Vacancies; Increased in the Number of Directors . . . . . 9 Section 3.9. Compensation . . . . . . . . 9 Section 3.10. Action Without a Meeting; Telephone Conference Meeting 9 Section 3.11. Approval or Ratification of Acts or Contracts by Shareholders. . . . . . . . . 10 7 ARTICLE 4 Committees Section 4.1. Designation; Powers . . . . .10 Section 4.2. Procedure; Meetings; Quorum 11 Section 4.3. Substitution and Removal of Members; Vacancies . . . . .11 ARTICLE 5 Officers Section 5.1. Number, Titles and Terms of Office . . . . . . . . . . . 11 Section 5.2. Powers and Duties of the Chairman of the Board . . . 12 Section 5.3. Powers and Duties of the President . . . . . . . . . 12 Section 5.4. Secretary . . . . . . . . . 12 Section 5.5. Action with Respect to Securities of Other Corporations . . . . . . . . 13 Section 5.6. Delegation . . . . . . . . . 13 ARTICLE 6 Capital Stock Section 6.1. Certificate of Stock . . . . 13 Section 6.2. Transfer of Shares . . . . . 14 Section 6.3. Ownership of Shares. . . . . 14 Section 6.4. Regulation Regarding Certificates . . . . . . . . 14 Section 6.5. Lost or Destroyed Certificates . . . . . . . . 14 ARTICLE 7 Miscellaneous Provisions Section 7.1. Fiscal Year . . . . . . . . 15 Section 7.2. Corporate Seal . . . . . . . 15 Section 7.3. Notice and Waiver of Notice 15 Section 7.4. Facsimile Signatures . . . . 16 Section 7.5. Reliance upon Books, Reports and Records . . . . . . . . 16 Section 7.6. Application of Bylaws . . . 16 8 ARTICLE 8 Indemnification of Officers and Directors Section 8.1. Indemnification . . . . . . 16 Section 8.2. Nonexclusivity . . . . . . . 17 Section 8.3. Insurance . . . . . . . . . 17 Section 8.4. Witnesses . . . . . . . . . 17 ARTICLE 9 Amendments Section 9.1. Amendments . . . . . . . . . 18 9 BYLAWS OF TRINITY WORKS, INC. Article 1 Offices Section 1.1. Registered Office. The registered office of the Corporation shall be the registered office named in the charter documents of the Corporation, or such other office as may be designated from time to time by the Board of Directors in the manner provided by law. Section 1.2. Other Offices. The Corporation may also have offices at such other places both within and without the State of Texas as the Board of Directors may from time to time determine or the business of the Corporation may require. Article 2 Shareholders Section 2.1. Place of Meetings. All meetings of the shareholders shall be held at the principal office of the Corporation, or at such other place within or without the State of Texas as shall be specified or fixed in the notices or waivers of notice thereof. Section 2.2. Quorum; Adjournment of Meetings. Unless otherwise required by law or provided in the Articles of Incorporation of the Corporation or these Bylaws, the holders of at least a majority of the stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at any meeting of shareholders for the transaction of business. The shareholders present at a duly organized meeting may continue to transact business until adjournment, notwithstanding the withdrawal of enough shareholders to leave less than a quorum. Directors shall be elected by a plurality of the votes of the shares present in person or represented by proxy at the meeting and entitled to vote on the election of directors. Notwithstanding the other provisions of the Articles of Incorporation of the Corporation or these Bylaws, the chairman of the meeting or the holders of a majority of the issued and outstanding stock, present in person or represented by proxy and entitled to vote thereat, at any meeting of shareholders whether or not a quorum is present, shall have the power to adjourn such meeting from time to time, without any notice other than announcement at the meeting of the time and place of the holding of the adjourned meeting. If the adjournment is for more than thirty (30) days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be 10 given to each shareholder of record entitled to vote at such meeting. At such adjourned meeting at which a quorum shall be present or represented any business may be transacted which might have been transacted at the meeting as originally called. Section 2.3. Annual Meeting. An annual meeting of the shareholders, for the election of directors to succeed those whose terms expire and for the transaction of such other business as may properly come before the meeting, shall be held at such place (within or without the State of Texas), on such date, and at such time as the Board of Directors shall fix and set forth in the notice of the meeting, which date shall be within thirteen (13) months subsequent to the last annual meeting of shareholders. Section 2.4. Special Meetings. Unless otherwise provided in the Articles of Incorporation of the Corporation, special meetings of the shareholders for any purposes may be called at any time by the Chairman of the Board, by the President, or by a majority of the Board of Directors, or by a majority of the executive committee (if any), at such time and at such place as may be stated in the notice of the meeting. Business transacted at a special meeting shall be confined to the purpose(s) stated in the notice of such meeting. Section 2.5. Record Date. For the purpose of determining shareholders entitled to notice of or to vote at any meeting of shareholders, or any adjournment thereof, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board of Directors of the Corporation may fix a date as the record date for any such determination of shareholders, which record date for any such determination of shareholders, which record date shall not precede the date on which the resolutions fixing the record date are adopted and which record date shall not be more than sixty (60) days nor less than ten (10) days before the date of such meeting of shareholders, nor more than sixty (60) days prior to any other action to which such record date relates. If the Board of Directors does not fix a record date for any meeting of the shareholders, the record date for determining shareholders entitled to notice of or to vote at such meeting shall be at the close of business on the day next preceding the day on which notice is given, or, if in accordance with Article 7, Section 7.3 of these Bylaws notice is waived, at the close of business on the day next preceding the day on which the meeting is held. The record date for determining shareholders for any other purpose (other than the consenting to corporate action in writing without a meeting) shall be at the close of business on the day on which the Board of Directors adopts the resolution relating thereto. A determination of shareholders of record entitled to notice of or to vote at a meeting of shareholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting. For the purpose of determining the shareholders entitled to consent to corporate action in writing without a meeting, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors, and 11 which date shall not be more than ten (10) days after the date upon which the resolution fixing the record date is adopted by the Board of Directors. If the Board of Directors does not fix the record date, the record date for determining shareholders entitled to consent to corporate action in writing without a meeting, when no prior action by the Board of Directors is necessary, shall be the first date on which a signed written consent setting forth the action taken or proposed to be taken is delivered to the Corporation at its registered office in the State of Texas or at its place of business. If the Board of Directors does not fix the record date, and prior action by the Board of Directors is necessary, the record date for determining shareholders entitled to consent to corporate action in writing without a meeting shall be at the close of business on the day on which the Board of Directors adopts the resolution taking such prior action. Section 2.6. Notice of Meetings. Written notice of the place, date and hour of all meetings, and, in case of a special meeting, the purpose or purposes for which the meeting is called, shall be given by or at the direction of the Chairman of the Board, the President, or the Secretary or the other person(s) calling the meeting to each shareholders entitled to vote thereat not less than ten (10) nor more than sixty (60) days before the date of the meeting. Such notice may be delivered either personally or by mail. If mailed, notice is given when deposited in the United States mail, postage prepaid, directed to the shareholder at such shareholder's address as it appears on the records of the Corporation. Section 2.7. Shareholder List. A complete list of shareholders entitled to vote at any meeting of shareholders, arranged in alphabetical order for each class of stock and showing the address of each such shareholder and the number of shares registered in the name of such shareholder, shall be open to the examination of any shareholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten (10) days prior to the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The shareholder list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any shareholder who is present. Section 2.8. Proxies. Each shareholder entitled to vote at a meeting of shareholders or to express consent or dissent to a corporate action in writing without a meeting may authorize another person or persons to act for him by proxy. Proxies for use at any meeting of shareholders shall be filed with the Secretary, or such other officer as the Board of Directors may from time to time determine by resolution, before or at the time tof the meeting. All proxies shall be received and taken charge of and all ballots shall be received and canvassed by the secretary of the meeting, who shall decide all questions touching upon the qualification of voters, the validity of the proxies, and the acceptance or rejection of votes, unless an inspector or inspectors shall have been appointed by the chairman of the meeting, in which event such inspector or inspectors shall decide all such questions. 12 No proxy shall be valid after eleven (11) months from its date, unless the proxy provides for a longer period. Each proxy shall be revocable and coupled with an interest sufficient in law to support an irrevocable power. Should a proxy designate two or more persons to act as proxies, unless such instrument shall provide the contrary, a majority of such persons present at any meeting at which their powers thereunder are to be exercised shall have and may exercise all the powers of voting or giving consents thereby conferred, or if only one be present, then such powers may be exercised by that one; or, if an even number attend and a majority do not agree on any particular issue, each proxy so attending shall be entitled to exercise such powers in respect of such portion of the shares as is equal to the representing such shares divided by the total number of shares represented by such proxies. Section 2.9. Voting; Election; Inspectors. Unless otherwise required by law or provided in the Articles of Incorporation of the Corporation, each shareholder shall on each matter submitted to a vote at a meeting of shareholders have one vote for each share of the stock entitled to vote which is registered in his name on the record date for the meeting. For the purposes hereof, each election to fill a directorship shall constitute a separate matter. Shares registered in the name of another corporation, domestic or foreign, may be voted by such officer, agent or proxy as the bylaws (or comparable body) of such corporation may determine. Shares registered in the name of a deceased person may be voted by the executor or administrator of such person's estate, either in person or by proxy. All voting, except as required by the Articles of Incorporation of the Corporation or where otherwise required by law, may be by a voice vote; provided, however, upon request of the chairman of the meeting or upon demand therefor by shareholders holding a majority of the issued and outstanding stock present in person or by proxy at any meeting a stock vote shall be taken. Every stock vote shall be taken by written ballots, each of which shall state the name of the shareholder or proxy voting and such other information as may be required under the procedure established for the meeting. All elections of directors shall be by written ballots, unless otherwise provided in the Articles of Incorporation of the Corporation. At any meeting at which a vote is taken by written ballots, the chairman of the meeting may appoint one or more inspectors, each of whom shall subscribe an oath or affirmation to execute faithfully the duties of inspector at such meeting with strict impartiality and according to the best of such inspector's ability. Such inspector shall receive the written ballots, count the votes, and make and sign a certificate of the result thereof. The chairman of the meeting may appoint any person to serve as inspector, except no candidate for the office of director shall be appointed as an inspector. 13 Unless otherwise provided in the Articles of Incorporation of the Corporation, cumulative voting for the election of directors shall be prohibited. Section 2.10. Conduct of Meetings. The meetings of the shareholders shall be presided over by the Chairman of the Board, or, if the Chairman of the Board is not present, by the President, or, if neither the Chairman of the Board nor the President is present, by a chairman elected at the meeting. The Secretary of the Corporation, if present, shall act as secretary of such meetings, or, if the Secretary is not present, then a secretary shall be appointed by the chairman of the meeting. The chairman of any meeting of shareholders shall determine the order of business and the procedure at the meeting, including such regulation of the manner of voting and the conduct of discussion as seem to the chairman in order. Section 2.11. Treasury Stock. The Corporation shall not vote, directly or indirectly, shares of its own stock owned by it and such shares shall not be counted for quorum purposes. Nothing in this Section 2.11 shall be construed as limiting the right of the Corporation to vote stock, including but not limited to its own stock, held by it in a fiduciary capacity. Section 2.12. Action Without Meeting. Unless otherwise provided in the Articles of Incorporation of the Corporation, any action permitted or required by law, the Articles of Incorporation of the Corporation of these Bylaws to be taken at a meeting of shareholders, may be taken without a meeting, without prior notice and without a vote, if a consent or consents in writing, setting forth the action so taken, shall be signed by the holders of all the outstanding shares entitled to vote on such action and shall be delivered to the Corporation by delivery to its registered office in the state of incorporation, its principal place of business, or an officer or agent of the Corporation having custody of the book in which proceedings of meetings of shareholders are recorded. Delivery made to the Corporation's registered office shall be by hand or by certified or registered mail, return receipt requested. Every written consent shall bear the date of signature of each shareholder who signs the consent, and no written consent shall be effective to take the corporate action referred to therein unless, within sixty (60) days of the earliest dated consent delivered in the manner required by this Section to the Corporation by delivery to its registered office in the state of incorporation, its principal place of business, or an officer or agent of the Corporation having custody of the book in which proceedings of meetings of shareholders are recorded. Delivery made to the Corporation's registered office shall be by hand or by certified or registered mail, return receipt requested. 14 Article 3 Board of Directors Section 3.1. Power; Number; Term of Office. The business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors, and, subject to the restrictions imposed by law or the Articles of Incorporation of the Corporation, the Board of Directors may exercise all the powers of the Corporation. The number of directors which shall constitute the whole Board of Directors shall be determined from time to time by the Board of Directors (provided that no decrease in the number of directors which would have the effect of shortening the term of an incumbent director may be made by the Board of Directors). If the Board of Directors makes no such determination, the number of directors shall be three. Each director shall hold office for the term for which such have been elected and qualified or until such director's earlier death, resignation or removal. Unless otherwise provided in the Articles of Incorporation of the Corporation, directors need not be shareholders nor residents of the State of Texas. Section 3.2. Quorum; Voting. Unless otherwise provided in the Articles of Incorporation of the Corporation, a majority of the number of directors fixed in accordance, with Section 3.1 shall constitute a quorum for the transaction of business of the Board of Directors and the vote of a majority of the directors present at a meeting at which a quorum is present shall be the act of the Board of Directors. Section 3.3. Place of Meetings; Order of Business. The directors may hold their meetings and may have an office and keep the books of the Corporation, except as otherwise provided by law, in such place or places, within or without the State of Texas of the Corporation, as the Board of Directors may from time to time determine. At all meetings of the Board of Directors business shall be transacted in such order as shall from time to time be determined by the Chairman of the Board, or in the Chairman of the Board's absence by the President or by the Board of Directors. Section 3.4. First Meeting. Each newly elected Board of Directors may hold its first meeting for the purpose of organization and the transaction of business, if a quorum is present, immediately after and at the same place as the annual meeting of the shareholders. Notice of such meeting shall not be required. At the first meeting of the Board of Directors in each year at which a quorum shall be present, held after the annual meeting of shareholders, the Board of Directors shall elect the officers of the Corporation. Section 3.5. Regular Meetings. Regular meetings of the Board of Directors shall be held at such times and places as shall be designated from time to time by the Chairman of the Board, or in the Chairman of the Board's absence, by the President, or in the President's absence, by another officer of the Corporation. Notice of such regular meetings shall not be required. 15 Section 3.6. Special Meetings. Special meetings of the Board of Directors may be called by the Chairman of the Board, or in the Chairman of the Board's absence, by the President, or, on the written request of any director, by the Secretary, in each case on at least twenty-four (24) hours' personal, written, telegraphic, cable or wireless notice to each director. Such notice, or any waiver thereof pursuant to Article 7, Section 7.3 hereof, need not state the purpose or purposes of such meeting, except as may otherwise be required by law or provided for in the Articles of Incorporation of the Corporation or these Bylaws. Meetings may be held at any time without notice if all the directors are present or if those not present waive notice of the meeting in writing. Section 3.7. Removal. Any director or the entire Board of Directors may be removed, with or without cause, by the holders of a majority of the shares then entitled to vote an election of directors. Section 3.8. Vacancies; Increases in the Number of Directors. Unless otherwise provided in the Articles of Incorporation of the Corporation, vacancies existing on the Board of Directors for any reason may be filed by the affirmative vote of a majority of the directors then in office, although less than a quorum, or by a sole remaining director; and any director so chosen shall hold office until the next annual election and until such director's successor shall have been elected and qualified, or until such director's earlier death, resignation or removal. Section 3.9. Compensation. Directors and members of standing committees may receive such compensation as the Board of Directors from time to time shall determine to be appropriate, and shall be reimbursed for all reasonable expenses incurred in attending and returning from meetings of the Board of Directors. Section 3.10. Action Without a Meeting; Telephone Conference Meeting. Unless otherwise restricted by the Articles of Incorporation of the Corporation, any action required or permitted to be taken at any meeting of the Board of Directors or any committee designated by the Board of Directors may be taken without a meeting if all members of the Board of Directors or committee, as the case may be, consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the Board of Directors or committee. Such consent shall have the same force and effect as a unanimous vote at a meeting, and may be stated as such in any document or instrument filed with the Secretary of State of the state of incorporation of the Corporation. Unless otherwise restricted by the Articles of Incorporation of the Corporation, subject to the requirement for notice of meetings, members of the Board of Directors, or members of any committee designated by the Board of Directors, may participate in a meeting of such Board of Directors or committee, as the case may be by means of a conference telephone connection or similar communications equipment by means of which all persons participating in the meeting shall hear each other, and participation in such a meeting shall constitute presence in person at such meeting, except where a person participates in the meeting for the express purpose of objecting to the transaction if any business on the ground that the meeting is not lawfully called or convened. 16 Section 3.11. Approval or Ratification of Acts or Contracts by Shareholders. The Board of Directors in its discretion may submit any act or contract for approval or ratification at any annual meeting of the shareholders, or at any special meeting of the shareholders called for the purpose of considering any such act or contract, and any act of contract that shall be approved or be ratified by the vote of the shareholders holding a majority of the issued and outstanding shares of stock of the Corporation entitled to vote and present in person or by proxy at such meeting (provided that a quorum is present) shall be as valid and as binding upon the Corporation and upon all the shareholders as if it has been approved or ratified by every shareholder of the Corporation. In addition, any such act or contract may be approved or ratified by the written consent of shareholders holding all of the issued and outstanding shares of capital stock of the Corporation entitled to vote, and such consent shall be as valid and binding upon the Corporation and upon all the shareholders as if it had been approved or ratified by every shareholder of the Corporation. Article 4 Committees Section 4.1. Designation; Powers. The Board of Directors may, by resolution passed by a majority of the whole board, designate one or more committees, including, if they shall so determine, an executive committee, with each such committee to consist of one or more of the directors of the Corporation. Any such designated committee shall have and may exercise such of the powers and authority of the Board of Directors in the management of the business and affairs of the Corporation as may be provided in such resolution, except that no such committee shall have the power or authority of the Board of Directors in reference to amending the Articles of Incorporation of the Corporation, adopting an agreement of merger of consolidation, recommending to the shareholders the sale, lease, or exchange of all or substantially all of the Corporation's property and assets, recommending to the shareholders a dissolution of the Corporation or a revocation of a dissolution of the Corporation, or amending, altering or repealing these Bylaws or adopting mew bylaws for the Corporation. Any such designated committee may authorize the seal of the Corporation to be affixed to all papers which may require it. In addition to the above, such committee or committees shall have such other powers and limitations of authority as may be determined from time to time by the Board of Directors. Section 4.2. Procedure; Meetings; Quorum. Any committee designated pursuant to this Article 4 shall keep regular minutes of its actions and proceedings in a book provided for that purpose and report the same to the Board of Directors at its meeting next succeeding such action, shall fix its own rules or procedures, and shall meet at such times and at such place or places as may be provided by such rules, or by such committee or the Board of Directors. Should a committee fail to fix its own rules, the provisions of these Bylaws pertaining to the calling of meetings and conduct of business by the Board of Directors shall apply as nearly as may be possible. At every meeting of any such committee, the presence of a majority of all the members thereof shall constitute a quorum, except as provided in Section 4.3 of this Article 4, and the affirmative vote of a majority of the members present shall be necessary for the adoption by it of any resolution. 17 Section 4.3. Substitution and Removal of Members; Vacancies. The Board of Directors may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of such committee. In the absence or disqualification of a member of a committee, the member or members present at any meeting and not disqualified from voting, whether or not constituting a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of the absent or disqualified member. The Board of Directors shall have the power at any time to remove any member(s) of a committee and to appoint other directors in lieu of the person(s) so removed and shall also have the power to fill vacancies in a committee. Article 5 Officers Section 5.1. Number, Titles and term of Office. The officers of the Corporation shall be a Chairman of the Board, President, a Secretary, and such other officers as the Board of Directors may from time to time elect or appoint (including, but not limited to, a Treasurer, one or more Vice Presidents, Assistant Secretaries and one or more Assistant Treasurers). Each officer shall hold office until such officer's successor shall be duly elected and shall qualify or until such officer's death or until such officer shall resign or shall have been removed. Any number of offices may be held by the same person, unless the Articles of Incorporation of the Corporation provide otherwise. Except for the Chairman of the Board, no officer need be a director. Section 5.2. Powers and Duties of the Chairman of the Board. The Chairman of the Board shall be the chief executive officer of the Corporation. Subject to the control of the Board of Directors and the Executive Committee (if any), the Chairman of the Board shall have general executive charge, management and control of the properties, business and operations of the Corporation with all such powers as may be reasonably incident to such responsibilities; may agree upon and execute all leases, contracts, evidences of indebtedness and other obligations in the name of the Corporation and may sign all certificates for shares of capital stock of the Corporation; and shall have such other powers and duties as designated in accordance with these Bylaws and as from time to time may be assigned to the Chairman of the Board by the Board of Directors. The Chairman of the Board shall preside at all meetings of the shareholders and of the Board of Directors. Section 5.3. Powers and Duties of the President. Unless the Board of Directors otherwise determines, the President shall have the authority to agree upon and execute all leases, contracts, evidences of indebtedness and other obligations in the name of the Corporation; and, unless the Board of Directors otherwise determines, the President shall, in the absence of the Chairman of the Board or if there be no Chairman of the Board (should the President be a director) preside at all meetings of the shareholders and of the Board of Directors; and the President shall have such other powers and duties as designated in accordance with these Bylaws and as from time to time may be assigned to the President by the Board of Directors or the Chairman of the Board. 18 Section 5.4. Secretary. The Secretary shall keep the minutes of all meetings of the Board of Directors and the shareholders, in books provided for that purpose; shall attend to the giving and serving of all notices; may in the name of the Corporation affix the seal of the Corporation to all contracts and attest the affixation of the seal of the Corporation thereto; may sign with the other appointed officers all certificates for shares of capital stock of the Corporation; shall have charge of the certificate books, transfer books and stock ledgers, and such other books and papers as the Board of Directors may direct, all of which shall at all reasonable times be open to inspection of any director upon application at the office of the Corporation during business hours; shall have such other powers and duties as designated in these Bylaws and as from time to time may be assigned to the Secretary by the Board of Directors, the Chairman of the Board, the President or the Vice Chairman of the Board; and shall in general perform all acts incident to the office of Secretary, subject to the control of the Board of Directors, the Chairman of the Board or the President. Section 5.5. Action Without Respect to Securities of Other Corporations. Unless otherwise directed by the Board of Directors, the Chairman of the Board or the President, together with the Secretary shall have power to vote and otherwise act on behalf of the Corporation, in person or by proxy, at any meeting of security holders of any other corporation in which this Corporation may hold securities and otherwise exercise any and all rights and powers which this Corporation may possess by reason of its ownership of securities in such other corporation. Section 5.6. Delegation. For any reason that the Board of Directors may deem sufficient, the Board of Directors may, except where otherwise provided by statue, delegate the powers or duties of any officer to any other person, any may authorize any officer to delegate specified duties of such office to any other person. Any such delegation or authorization by the Board shall be effected from time to time by resolution of the Board of Directors. Article 6 Capital Stock Section 6.1. Certificates of Stock. The certificates for shares of the capital stock of the Corporation shall be in such form, not inconsistent with that required by law and the Articles of Incorporation of the Corporation, as shall be approved by the Board of Directors. Every holder of stock represented by certificates shall be entitled to have a certificate signed by or in the name of the Corporation by the Chairman of the Board or President and the Secretary of the Corporation representing the number of shares (and, if the stock of the Corporation shall be divided into classes or series, certifying the class and series of such shares) owned by such shareholder which are registered in certified form; provided, however, that any of or all the signatures on the certificate may be facsimile. The stock record books and the blank stock certificate books shall be kept by the Secretary or at the office of such transfer agent or transfer agents as the Board of Directors may from time to time determine. In case any officer, transfer agent or registrar who shall have signed or whose facsimile signature or signatures shall have 19 been placed upon any such certificate or certificates shall have ceased to be such officer, transfer agent or registrar before such certificate is issued by the Corporation, such certificate may nevertheless be issued by the Corporation with the same effect as if such person were such officer, transfer agent or registrar at the date of issue. The stock certificates shall be consecutively numbered and shall be entered in the books of the Corporation as they are issued and shall exhibit the holder's name and number of shares. Section 6.2. Transfer of Shares. The shares of stock of the Corporation shall be transferable only on the books of the Corporation by the holders thereof in person or by their duly authorized attorneys or legal representatives upon surrender and cancellation of certificates for a like number of shares. Upon surrender to the Corporation or a transfer agent of the Corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession assignment or authority to transfer, it shall be the duty of the Corporation to issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its books. Section 6.3. Ownership of Shares. The Corporation shall be entitled to treat the holder of record of any share of shares of capital stock of the Corporation as the holder in fact thereof and, accordingly, shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of the State of Texas. Section 6.4. Regulations Regarding Certificates. The Board of Directors shall have the power and authority to make all such rules and regulation as they may deem expedient concerning the issue, transfer and registration or the replacement of certificates for shares of capital stock of the Corporation. Section 6.5. Lost or Destroyed Certificates. The Board of Directors may determine the conditions upon which the Corporation may issue a new certificate of stock in place of a certificate theretofore issued by it which is alleged to have been lost, stolen or destroyed and may require the owner of such certificate or such owner's legal representative to give bond, with surety sufficient to indemnify the Corporation and each transfer agent and registrar against any and all losses or claims which may arise by reason of the alleged loss, theft or destruction of any such certificate or the issuance of such new certificate in the place of the one so lost, stolen or destroyed. Article 7 Miscellaneous Provisions Section 7.1. Fiscal Year. The fiscal year of the Corporation shall begin on the first day of January of each year. Section 7.2. Corporate Seal. The corporate seal shall be circular in form and shall have inscribed thereon the name of the Corporation and the state of its incorporation, which seal shall be in the charge of the Secretary and shall be affixed to certificates of stock, debentures, bonds, and other documents, in accordance with the direction of the Board of Directors or a committee thereof, and as may be required by law; however, the Secretary may, if the Secretary deems it expedient, have a facsimile of the corporate seal inscribed on any such certificates of stock, debentures, bonds, contract or other documents. 20 Section 7.3. Notice and Waiver of Notice. Whenever any notice is required to be given by law, the Articles of Incorporation of the Corporation or under the provisions of these Bylaws, said notice shall be deemed to be sufficient if given (i) by telegraphic, cable or wireless transmission (including by telecopy or facsimile transmission) or (ii) by deposit of the same in a post office box or by delivery to an overnight courier service company in a sealed prepaid wrapper addressed to the person entitled thereto at such person's post office address, as it appears on the records of the Corporation, and such notice shall be deemed to have been given on the day of such transmission or mailing or delivery to courier, as the case may be. Whenever notice is required to be given by law, the Articles of Incorporation of the Corporation or under any of the provisions of these Bylaws, a written waiver thereof, signed by the person entitled to notice, whether before or after the time stated therein, shall be deemed equivalent to notice. Attendance of a person, including without limitation a director, at a meeting shall constitute a waiver of notice of such meeting, except when the person attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the shareholders, directors, or members of a committee of directors need to be specified in any written waiver of notice unless so required by the Articles of Incorporation of the Corporation or these Bylaws. Section 7.4. Facsimile Signatures. In addition to the provisions for the use of facsimile signatures elsewhere specifically authorized in these Bylaws, facsimile signatures of any officer or officers of the Corporation may be used whenever and as authorized by the Board of Directors. Section 7.5. Reliance upon Books, Reports and Records. A member of the Board of Directors, or a member of any committee designated by the Board of Directors, shall, in the performance of such person's duties, be protected to the fullest extent permitted by law in relying upon the records of the Corporation and upon information, opinion, reports or statements presented to the Corporation. Section 7.6. Application of Bylaws. In the event that any provisions of these Bylaws is or may be in conflict with any law of the United States, of the State of Texas or of any other governmental body or power having jurisdiction over this Corporation, or over the subject matter to which such provision of these Bylaws applies, or may apply, such provision of these Bylaws shall be inoperative to the extent only that the operation thereof unavoidably conflicts with such law, and shall in all other respects be in full force and effect. Article 8 Indemnification of Officers and Directors Section 8.1. Indemnification. As permitted by Section G of Article 2.02-1 of the Texas Business Corporation Act or any successor statute (the "Indemnification Article"), the Corporation hereby: 21 (a) makes mandatory the indemnification permitted under Section B of the Indemnification Article as contemplated by Section G thereof; (b) makes mandatory its payment or reimbursement of the reasonable expenses incurred by a former or present director who was, is, or is threatened to be made a named defendant or respondent in a proceeding upon such director's compliance with the requirements of Section K of the Indemnification Article; and (c) extends the mandatory indemnification referred to in Section 8.1(a) above and the mandatory payment or reimbursement of expenses referred to in Section 8.1(b) above (i) to all former or present officers of the Corporation and (ii) to all persons who are or were serving at the request of the Corporation as a director, officer, partner or trustee of another foreign or domestic corporation, partnership, joint venture, trust or employee benefit plan, to the same extent that the Corporation is obligated to indemnify and pay or reimburse expenses to directors. Section 8.2. Nonexclusivity. The indemnification provided by this Article shall not be deemed exclusive of any other rights to which the person indemnified may be entitled under any bylaw, agreement, authorization of shareholders or disinterested directors or otherwise, both as to action in such person's official capacity and as to action in another capacity while holding such office, and shall continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of such person. EX-5 3 CONSENT AND OPINION OF JODY M. WALKER, ATTORNEY AT LAW 1 Jody M. Walker Attorney At Law 7841 South Garfield Way Littleton, Colorado 80122 Telephone: (303) 850-7637 Facsimile: (303) 220-9902 August 20, 1996 Re: OPINION RE: LEGALITY AND CONSENT OF COUNSEL TO USE OF NAME IN THE REGISTRATION STATEMENT ON FORM S-1 OF TRINITY WORKS, INC. I am securities counsel for the above mentioned corporation and I have prepared the registration statement on Form S-1. I hereby consent to the inclusion and reference to my name in the Registration Statement on Form S-1 for Trinity Works, Inc. It is my opinion that the securities of the Trinity Works, Inc. and which are registered with the Securities and Exchange Commission pursuant to Form S-1 Registration Statement of Trinity Works, Inc. have been legally issued and will be, when distributed and/or sold, legally issued, fully paid and non-assessable. Very truly yours, /s/ Jody M. Walker - -------------------------------------------- Jody M. Walker EX-24 4 CONSENT OF WINTER, SCHEIFLEY & ASSOCIATES, P.C. CERTIFIED PUBLIC ACCOUNTANTS FOR THE CORPORATION 1 REPORT OF INDEPENDENT CERTIFIED ACCOUNTANT We consent to the use, in this Registration Statement of Trinity Works, Inc., our report dated March 15, 1996 appearing in the prospectus, which is a part of such Registration Statement. /s/ Winter, Scheifley & Associates, P.C. ------------------------------------------------- Winter, Scheifley & Associates, P.C. EX-99.1 5 CONSULTING AGREEMENT WITH PRATT, WYLCE & LORDS, LTD. 1 CONSULTING AGREEMENT This Consulting Agreement is entered into between Pratt, Wylce & Lords, Ltd. a Nevada Corporation (PWL) and Trinity Works, Inc. (Client), (the "Agreement") with reference to the following facts. Client has expressed a desire to enter into this Agreement with PWL for PWL to provide consulting services through which Client will become a publicly traded company (the "Services") PWL is in the business of providing such services and desires to enter into an Agreement with Client to provide such "Services". This Agreement is for the purpose of defining the services provided and the rights and responsibilities of both parties. 1. SERVICES PROVIDED BY PWL 1. PWL agrees to prepare or cause to be prepared a suitable business plan for Client. This business plan will be prepared in a format acceptable to the securities industry and will be prepared from information provided by Client (optional) 2. PWL will recommend a structure for Client's entry into the public market. This structure will be approved by Client. The structure will include distribution to shareholders, creditors, and other parties and will include agreed upon capital formation requirements of Client. 3. PWL will prepare, through its securities counsel, a Private Placement Memorandum or other private bridge financing in the amount of a minimum of $300,000 and a maximum of $600,000. PWL will also use its contacts and sources on a best efforts basis to locate suitable licensed sources to assist in the completion of the PPM. 4. PWL will, if requested, provide or arrange to be provided, such accounting services as necessary to complete audits of Client's books in order to proceed with the preparation and filing of the registration. (Clients expense) 5. PWL will prepare and file, through its securities counsel, a Registration Statement on Form S1 with the Securities and Exchange Commission (SEC). Securities to be registered in said registration include the stock issued to PWL, and other such stock as agreed upon by both parties. 6. Upon the effectiveness of the Registration Statement, PWL agrees to distribute to its shareholders up to 40% of the voting common shares it receives from Client as set forth herein. 2 7. PWL will prepare such packaging and promotional materials as PWL and Client deem necessary as outlined in Exhibit C. Client will approve all materials prior to completion. 8. PWL will prepare a form 15c2-11 and coordinate its distribution to the brokerage community at its own expense for the purpose of establishing a market for the stock and arrange a listing on the Over the Counter Market. 9. PWL agrees to use its expertise and business contacts to arrange for the establishment of a market for Client's stock once the Statement of Registration is effective and the stock distribution complete. "Market" is defined as a listing on the Over the Counter Market (either NASDAQ or Bulletin Board) with a minimum of 3 market makers quoting the stock. 10. PWL agrees to use its expertise and business contacts to arrange for the continued promotion of Client's stock. This promotion will be evidenced by the implementation of a financial relations program created by PWL and described in Exhibit C and paid for by Client according to the fees disclosed in this agreement. 11. PWL agrees to arrange for the inclusion of the Company in either Moody's company listing services for the purpose of expanding the marketability of the stock. PWL will obtain the application for the Client and assist the Client in preparing the applications. PWL will pay the initial fees on behalf of the client. 12. PWL agrees to provide consulting services on as needed basis to Client for a period of 1 year from this Agreement at no additional cost to client and will make itself available to render advice to Client concerning but not limited to shareholder relations, market strategy, broker relations and additional capitalization and any other subjects as may fall under the services provided within this contract. 2. RESPONSIBILITIES OF CLIENT 1. Client agrees to provide PWL such financial, business and other material and information about Client, its products, services, contracts, litigation, patents, trademarks and other such business matters which PWL may request and which PWL considers to be important and material information for the completion of this contract. 2. Client agrees to provide PWL or its attorneys and accountants all material requested in order to prepare a registration document. These materials include but are not limited to articles of incorporation and all amendments thereto, by laws of the corporation, its minutes and resolutions of all shareholders and board of directors meetings, a copy of the share register showing the names, addresses and social security number of shareholders and the dates of issuance and the numbers of shares owned by each resume for each officer and director of the corporation and audited financial statements providing balance sheets for the two previous years and Statement of Operations for the three previous years. 3 3. Client agrees to provide PWL with monthly financial statements Balance Sheets and Profit and Loss statements utilizing "GAP" accounting until the effective date of the registration and the Client also agrees to notify PWL of any changes in the status or nature of its business, any litigation, or any other developments that may require further disclosure in the registration or other documents. 3. CASH COMPENSATION PWL will receive a total fee equal to $95,000 for the above services rendered which includes any and all expenses by PWL in accordance with this Agreement,: Development of corporate and capitalization structure, preparation of registrations including all attorneys fees, preparation of 15c211, establishment of initial markets. (items 2,5,8,9) $95,000 Packaging of Corporation & Stock Promotion (item 7 & 10) basic $negotiable Registration with Moody's (item 11) $included Provide Consulting Services for 12 months $included Cash fees to PWL are to be paid $75,000 upon the funding of the minimum amount of the Private Placement as indicated in item 1.3 and the balance upon closing the Private Placement. 4. ADDITIONAL CONSIDERATION In addition to the above cash consideration, PWL will receive from Client 348,000 shares of common stock in Client (the Stock). Said amount of stock is based upon the structure as indicated in Exhibit B. Stock will be paid to PWL the execution of this agreement. 5. REPRESENTATIONS BY PWL 1. PWL represents warrants and convenants the following: 2. PWL is a corporation duly organized and existing under the laws of Nevada and is in good standing with the jurisdiction of its incorporation. 3. PWL will disclose to Client all material facts and circumstances which may affect its ability to perform its undertaking herein. 4. PWL will cooperate in a prompt and professional manner with Client, its attorneys, accounts and agents in the performance of this Agreement. 4 6. REPRESENTATIONS OF CLIENT 1. Client represents warrants and covenants the following: 2. Corporation will cooperate fully with PWL in executing the responsibilities required under this contract so that PWL may fulfill its responsibilities in a timely manner. 3. Client will not circumvent this Agreement either directly or indirectly nor will it interfere with, impair, delay or cause PWL to perform work not described in this Agreement. 4. Client and each of its subsidiaries is a corporation duly organized and existing under the laws of its state of incorporation and is in good standing with the jurisdiction of its incorporation in each state where it is required to be qualified to do business. 5. Client's articles of incorporation and bylaws delivered pursuant to this Agreement are true and complete copies of same and have been duly adopted. 6. Client will cooperate in a prompt and professional manner with PWL, its attorneys, accountants and agents during the performance of the obligations due under this Agreement. 7. Client represents that no person has acted as a finder or investment advisor in connection with the transactions contemplated in this letter other than those listed on Exhibit A, and Client will indemnify PWL with respect to any claim for a finders fee in connection with this Agreement. Client represents that no officer, director or stockholder of the company is a member of the NASD, and employee or associated member of the NASD, or an employee or associated person or member of the NASD. Client represents that is separately has disclosed to PWL all potential conflicts of interest involving officers, directors, principal stockholders and/or employees. 7. CONFIDENTIALITY PWL agrees that all information received from Client shall be treated as confidential information and PWL shall not share such information with any other person or entity, except the SEC, attorneys and accountants, without the express written consent of Client, unless such disclosure will not cause damages to Client. Client agrees not to divulge each and any named source (lending, institutions, investors, individuals, Brokers, etc.) which have been introduced by PWL for a period of one year from the execution of this Agreement. Furthermore, Client agrees not to circumvent, either directly or indirectly, the relationship that each PWL has with said sources. 5 8. NOTICES Any notices from either party to the other shall be deemed received on the date such notice is personally delivered. Any notice sent by fax transmission shall be deemed received by the other party on the day it has been transmitted. Any notice sent by mail by either party to the other shall be deemed received on the third business day after is has been deposited at a United States Post Office. For purposes of delivering or sending notice to the parties to this Agreement such notices shall be delivered or sent as follows: If notice is delivered to PWL: If notice is to be delivered to Client: Pratt, Wylce & Lords, Ltd. Trinity Works, Inc. 804 Colorado Blvd. 1931 East Ben White Blvd PO Box 1427 Suite 900 Idaho Springs, CO 80452 Austin, TX 78741 Telephone # 303-567-0839 Phone # 512-440-7852 Fax # 303-567-0841 Fax # 512-440-7143 9. ENTIRE AGREEMENT Neither party has made any representations to the other which are not specifically set forth in this Agreement. There are no oral other agreements between the parties which have been entered into prior or contemporaneously with the formation of this Agreement. All oral promises, agreements, representations, statements and warranties hereinafter asserted by one party against the other shall be deemed to have been waived by such party asserting that they were made and this Agreement shall supersede all prior negotiations, statements representations, warranties and agreements made or entered into between the parties to this Agreement. 10. NO ASSIGNMENT Neither party may assign any benefit due or delegate performance under this Agreement without the express written consent of the other party except as noted herein: Jody M Walker atty.-at-Law shall contract with the Client and shall be paid by PWL for the preparation and filing of the S1 registration. 11. GOVERNING LAW This Agreement shall be governed by and construed in accordance with the laws of the State of Colorado. It shall also be construed as if the parties participated equally in its negotiation and drafting. The Agreement shall not be construed against one party over another party. 6 12. ATTORNEYS FEES In any action concerning the enforcement, breach, or interpretation of this Agreement, the prevailing party shall be entitled to recover its costs of suit and reasonable attorneys fees from the other party, in addition to any other relief granted by the court. 13. WAIVER The waiver of any provision of this Agreement by either party shall not be deemed to be a continuing waiver of any other provision of this Agreement by either party. 14. SEVERABILITY If any provision of this Agreement or any subsequent modifications hereof are found to be unenforceable by a court of competent jurisdiction, the remaining provisions shall continue to remain in full force and effect. 15. AUTHORITY TO ENTER INTO AGREEMENT The individuals signing this Agreement below represent to each other that they have the authority to bind their respective corporations to the terms and conditions of this Agreement. The individuals shall not, however have personal liability by executing this officers of the Client and PWL respectively. Dated this 25th of October, 1995 Dated this 25th of October, 1995 Pratt, Wylce, & Lords, Ltd. Trinity Works, Inc. by by President President 7 EXHIBIT A The following individuals will be compensated by Pratt, Wylce, & Lords, Ltd. in the amounts shown: Clinton Clark $17,500 Alan Filson $20,000 Alan Filson 25,000 Shares The following individuals will be compensated by Trinity Works, Inc. in the amounts shown. Clinton Clark 87,000 Shares The above compensation is the total compensation to the above named parties unless disclosed in writing. 8 EXHIBIT B Trinity Works, Inc. and PWL will mutually agree upon the following reorganization plan Alternate reorganization structures may also be chosen with the approval of both parties. Trinity Works, Inc. will reorganize its corporate structure as follows: Trinity Works, Inc. will authorize the issuance of 50,000,000 of common stock and adjust the total issued and outstanding to provide current shareholders with 1,615,000 shares. The Board of Directors will then approve the following: The issuance of 348,000 shares of common stock to Pratt, Wylce & Lords, Ltd. and 87,000 common shares to Clinton Clark as compensation pursuant to this agreement. The distribution of 100,000 A Common stock purchase Warrants exercisable at $4.00, 100,000 B Common stock purchase Warrants exercisable at $6.00 and 25,000 Class C common stock purchase warrants exercisable at $10.00. The warrants will be distributed pro rata to shareholders of record following the issuance of the 1,615,000 shares as previously mentioned. The authorization and issuance of 400,000 shares of common stock subject to a Private Placement Memorandum. Said shares shall be sold at a rate of $1.50 per share. 9 EXHIBIT C CORPORATE PACKAGE - - 1-2 sided, 2 color Corporate Profile (5000 reprints) - - 1-11 x 14 bi-fold full color Corporate Profile with 2- 1/4 page pictures. (3000 reprints) - - Full Color Glossy pocket folder (1000 reprints) - - 5 Minute Corporate Video - - Card Deck mailing to 100,000 US investors plus 50,000 US brokers - - Utilization of a publicist provided by PWL from the effective date of the registration to the end of the contract. Financial relations and promotions will be implemented by Pratt, Wylce & Lords, Ltd.'s. Financial Relations Manager. NOTE: Additional financial relations may be required in order to complete capitalization. If so, additional financial relations work may be required. This work will include but may not be limited to the following: Press Releases strategically placed in Investors Business Daily Full page Corporate profiles in Financial World or other similar publications. Additional mass distribution, direct response mailings by a "stock deck" or other similar instrument. Other lead generation, financial relations packages as agreed upon by Client and PWL. Approximate cost Approximately 5% of the exercise price of the Warrants to be exercised. All financial relations and broker relations work will be done with the approval of PWL and Client. -----END PRIVACY-ENHANCED MESSAGE-----