-----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, A/Na4A5iHOYrjPoVvRRtrYTF7H04VSPyJKwL52KHdbpDulGbBkLNO5YATuEYl710 oyhbwvqG3XIj3ixJs2C/zw== 0000909012-08-000443.txt : 20080317 0000909012-08-000443.hdr.sgml : 20080317 20080317171907 ACCESSION NUMBER: 0000909012-08-000443 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20080131 FILED AS OF DATE: 20080317 DATE AS OF CHANGE: 20080317 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TRIMEDIA ENTERTAINMENT GROUP INC CENTRAL INDEX KEY: 0001163680 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MOTION PICTURE & VIDEO TAPE PRODUCTION [7812] IRS NUMBER: 571107699 STATE OF INCORPORATION: DE FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-49865 FILM NUMBER: 08694022 BUSINESS ADDRESS: STREET 1: 101 CHARLES DRIVE CITY: BRYN MAWR STATE: PA ZIP: 19010 BUSINESS PHONE: (610) 520-3050 MAIL ADDRESS: STREET 1: 101 CHARLES DRIVE CITY: BRYN MAWR STATE: PA ZIP: 19010 FORMER COMPANY: FORMER CONFORMED NAME: US PATRIOT INC DATE OF NAME CHANGE: 20011214 10QSB 1 t304191.txt TriMedia Entertainment Group, Inc. UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-QSB {X} QUARTERLY REPORT UNDER TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarter ended January 31, 2008 OR { } TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to --------------------- -------------------- Commission File No. 000-49865 TriMedia Entertainment Group, Inc. (Name of Small Business Issuer) Delaware 14-1854107 - ----------------------------------- -------------------------------- (State or other jurisdiction of (IRS Employer Identification No.) Incorporation or Organization) 115 East 57th Street, 11th Floor New York, NY 10022 - -------------------------------- -------------------------------- (Address of principal executive offices) (Zip Code) Tel 917.546.6640 ---------------- (Registrant's Telephone Number, including Area Code) Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filings requirements for the past 90 days. YES {X} NO { } Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES { } NO {X} There were 94,710,012 issued and outstanding shares of the registrant's common stock, par value $.0001 per share, at March 14, 2008. - -------------------------------------------------------------------------------- TRIMEDIA ENTERTAINMENT GROUP, INC. AND SUBSIDIARY INDEX TO FORM 10-QSB January 31, 2008 PAGE NUMBER ------ PART I - FINANCIAL INFORMATION Item 1. Financial Statements: Consolidated Balance Sheets as of January 31, 2008 and October 31, 2007 1 Consolidated Statements of Operations for the three month periods ended January 31, 2008 and January 31, 2007 2 Consolidated Statements of Cash Flows for the three month periods ended January 31, 2008 and January 31, 2008 3 Notes to the Consolidated Financial Statements 4 Item 2. Management's Discussion and Analysis or Plan of Operations 11 Item 3a. Controls and Procedures 14 PART II - OTHER INFORMATION Item 1 Legal Proceedings 15 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 15 Item 6. Exhibits 15 SIGNATURES
TRIMEDIA ENTERTAINMENT GROUP, INC. AND SUBSIDIARY CONSOLIDATED BALANCE SHEETS JANUARY 31, 2008 AND OCTOBER 31, 2007 January 31, October 31, 2008 2007 ------------ ------------ (Unaudited) (Audited) ASSETS CURRENT ASSETS Cash $ 87,930 $ 233 Other current assets - discontinued operations -- 22,087 ------------ ------------ TOTAL ASSETS $ 87,930 $ 22,320 ============ ============ LIABILITIES AND STOCKHOLDERS' DEFICIT CURRENT LIABILITIES Term loans $ -- $ 3,740,888 Convertible notes payable, net of discount 150,500 -- Accounts payable and accrued expenses 954,891 1,614,757 Taxes payable -- 16,000 Due to stockholder -- 147,119 Other current liabilities of discontinued operations -- 2,800,819 ------------ ------------ TOTAL LIABILITIES 1,105,391 8,319,583 ------------ ------------ STOCKHOLDERS' DEFICIT Preferred stock, $0.0001 par value; 20,000,000 shares authorized; 10,000 and -0- shares issued and outstanding in 2008 and 2007 10 -- Common stock, $0.0001 par value; 100,000,000 shares authorized; 93,710,012 and 47,710,012 shares issued and outstanding in 2008 and 2007 9,370 4,769 Additional paid-in capital 14,610,328 13,285,312 Accumulated deficit (15,637,169) (21,587,344) ------------ ------------ TOTAL STOCKHOLDERS' DEFICIT (1,017,461) (8,297,263) ------------ ------------ TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 87,930 $ 22,320 ============ ============
See accompanying notes to consolidated financial statements.\ -1-
TRIMEDIA ENTERTAINMENT GROUP, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF OPERATIONS THREE MONTHS ENDED JANUARY 31, 2008 AND 2007 (UNAUDITED) 2008 2007 ------------ ------------ NET REVENUE $ -- $ -- DIRECT COSTS -- -- ------------ ------------ GROSS PROFIT (LOSS) -- -- OPERATING EXPENSES 99,773 395,108 ------------ ------------ LOSS FROM OPERATIONS (99,773) (395,108) ------------ ------------ OTHER INCOME (EXPENSE) Other income 5,000 4,150 Impairment loss (641,800) -- ------------ ------------ (636,800) 4,150 ------------ ------------ NET INCOME (LOSS) FROM CONTINUING OPERATIONS (736,573) (390,958) NET INCOME (LOSS) FROM DISCONTINUED OPERATIONS -- 3,040,753 ------------ ------------ NET INCOME (LOSS) $ (736,573) $ 2,649,795 ============ ============ WEIGHTED AVERAGE NUMBER OF SHARES 86,043,345 47,710,012 ============ ============ PER SHARE BASIS: Basic and diluted Continuing operations $ (0.01) $ -- Discontinued operations -- 0.06 ------------ ------------ INCOME (LOSS) PER SHARE $ (0.01) $ 0.06 ============ ============
See accompanying notes to consolidated financial statements.\ -2-
TRIMEDIA ENTERTAINMENT GROUP, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CASH FLOWS THREE MONTHS ENDED JANUARY 31, 2008 AND 2007 (UNAUDITED) 2008 2007 ----------- ----------- CASH FLOWS FROM OPERATING ACTIVITIES Net income (loss) $ (736,573) $ 2,649,795 Adjustment to reconcile net income (loss) to net cash used in operating activities Impairment loss 641,800 -- Depreciation in discontinued operations -- 1,185 Accretion of interest on notes payable 4,500 -- (Increase) decrease in assets Increase (decrease) in liabilities Accounts payable and accrued expenses (6,030) 296,607 Deferred revenue -- 67,720 Taxes payable (16,000) -- Decrease in assets and liabilities relating to discontinued operations -- (3,145,821) ----------- ----------- Net cash used in operating activities (112,303) (130,514) CASH FLOWS FROM INVESTING ACTIVITIES Due to (from) stockholder -- 66,110 CASH FLOWS FROM FINANCING ACTIVITIES Net borrowings on convertible term loans 200,000 62,150 ----------- ----------- NET INCREASE (DECREASE) IN CASH 87,697 (2,254) CASH - BEGINNING OF PERIOD 233 3,586 ----------- ----------- CASH - END OF PERIOD $ 87,930 $ 1,332 =========== =========== CASH PAID DURING THE PERIOD FOR: Interest - continued operations $ -- $ -- =========== =========== Interest - discontinued operations $ -- $ 18,574 =========== =========== SUPPLEMENTAL DISCLOSURE OF NON CASH INVESTING AND FINANCING ACTIVITIES: Issuance of warrants for deferred financing fee $ 54,000 $ -- =========== =========== Issuance of preferred stock for acquisition $ 641,800 $ -- =========== =========== Issuance of common stock for settlement of debt $ 460,000 $ -- =========== =========== Transfer investment for settlement of debt $ 250,000 $ -- =========== =========== Spin-off of subsidiaries: Accumulated deficit $ 6,686,748 $ -- Additional paid-in capital (76,173) -- ----------- ----------- $ 6,610,575 $ -- =========== =========== See accompanying notes to consolidated financial statements.
-3- TRIMEDIA ENTERTAINMENT GROUP, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JANUARY 31, 2008 (UNAUDITED) NOTE 1 - FINANCIAL STATEMENTS The accompanying unaudited condensed consolidated financial statements have been prepared by Trimedia Entertainment Group, Inc. ("Trimedia") and Subsidiary (collectively, "the Company"). These statements include all adjustments (consisting only of normal recurring adjustments) which management believes necessary for a fair presentation of the statements and have been prepared on a consistent basis using the accounting policies described in the Summary of Accounting Policies included in the Annual Report on Form 10-KSB for the fiscal year ended October 31, 2007 which the Company filed with the Securities and Exchange Commission on February 13, 2008 (the "Annual Report"). Certain financial information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to those rules and regulations, although the Company believes that the accompanying disclosures are adequate to make the information presented not misleading. The Notes to Financial Statements included in the Annual Report should be read in conjunction with the accompanying interim financial statements. The interim operating results for the three months ended January 31, 2008 may not necessarily be indicative of the operating results expected for the full year. MERGER AND REORGANIZATION On October 1, 2007, Trimedia entered into an Agreement and Plan of Merger (the "Merger Agreement") by and among the Company, TriMedia Acquisition Corp., a wholly owned subsidiary of the Company ("Merger Subsidiary") and VGB Media, Inc. ("VGB"). On that date the Company also entered into a Restructuring Agreement, by and among the Company, 1025 Investments, Inc., IL Resources, Inc., Christopher Schwartz, SPH Investments; Capital Growth Investments and Rufftown Entertainment, Inc. ("Newco") (the "Restructuring Agreement"). The other parties to this Agreement include our former chief executive officer and other of our affiliates. As of November 16, 2007, all the transactions under the Merger Agreement closed (the "Closing"). As provided for in the Merger Agreement, the merger ("Merger") of Merger Subsidiary into VGB with VGB as the surviving corporation has been completed. In connection with the Merger, the shareholder of VGB received 10,000 shares of the Company's newly authorized Series A Convertible Preferred Stock ("Preferred Shares"), valued at $641,800 (Note 6). Each share is convertible into 6,418 shares of the Company's Common Stock or a total of 64,180,000 shares of the Company's Common Stock. This represents 40% of the Company's shares on the Closing on a fully diluted basis as defined in the Merger Agreement (assuming conversion of the Preferred Shares on such date). The Preferred Shares will have voting rights equivalent to the Common Stock into which these shares are convertible. VGB is a newly formed company with substantially no assets or liabilities. It has entered into a distribution agreement and intends to engage in the production, distribution and marketing of entertainment related content after the Merger. As a further condition of the Closing, the Company completed a restructuring pursuant to the terms of the Restructuring Agreement. As a result: (i) certain creditors of the Company converted a portion of their indebtedness ($460,000) into 46,000,000 shares of Common Stock of the Company; (ii) all the assets of the Company, including ownership of all our operating subsidiaries, were contributed to a newly formed Delaware corporation, Newco, in which (A) the Company has a 19% economic interest owned through a class of non-voting common stock with an option to acquire additional interests and (B) the aforesaid creditors (I) initially have an 81% economic interest and the full voting interest represented by a class of voting common stock and (II) a $4,800,000 liquidation preference represented by a newly designated series of preferred stock of Newco and (iii) significantly mostly all liabilities of Parent prior to the closing date or arising from the continuing business were assumed by Newco. In addition, the Company transferred its 10% interest in Battle Rap, LLC as settlement of $250,000 of debt. The Company's investment in Battle Rap, LLC was written off in prior years. -4- TRIMEDIA ENTERTAINMENT GROUP, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JANUARY 31, 2008 (UNAUDITED) NOTE 1 - FINANCIAL STATEMENTS (Continued) The settlement of the debt aggregating $792,584 with creditors were deemed to be related parties and in essence a capital transaction and credited to APIC. Aside from our interest in Newco, after the Merger and closing of the restructuring our business will consist of the entertainment related business VGB intends to conduct. It has entered into one distribution agreement. The following amounts related to the transfer of net assets of our operating subsidiaries under the Restructuring Agreement have been segregated from continuing operations and included in discontinued operations in the consolidated statement of operations: Three Months Ended January 31, 2007 ----------------- Net revenue $ 135,569 Direct costs 97,687 ----------- Gross profit 37,882 Operating expenses 105,374 ----------- Loss from operations (67,492) ----------- Other income (expense) Other income 1,265 Foreign currency exchange (79,794) Forgiveness of indebtedness 3,186,774 ----------- 3,108,245 ----------- Net income from discontinued operations $ 3,040,753 =========== The following assets and liabilities have been segregated and included in assets of discontinued operations and liabilities of discontinued operations, as appropriate, in the consolidated balance sheet as of October 31, 2007 and relate to our operating subsidiaries: October 31, 2007 ------------------- Current assets $ 10,942 Property, plant and equipment less accumulated depreciation 11,145 ------------ Assets of discontinued operations $ 22,087 ============ Current liabilities $ 1,700,819 Loan payable - stockholder 1,100,000 ------------ Liabilities of discontinued operations $ 2,800,819 ============ -5- TRIMEDIA ENTERTAINMENT GROUP, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JANUARY 31, 2008 (UNAUDITED) NOTE 1 - FINANCIAL STATEMENTS (Continued) BASIS OF PRESENTATION The consolidated financial statements include the accounts of Trimedia and its wholly-owned subsidiary. All material inter-company transactions have been eliminated in consolidation. EARNINGS (LOSS) PER SHARE The Company follows Statement of Financial Accounting Standards ("SFAS") No. 128, EARNINGS PER SHARE, resulting in the presentation of basic and diluted earnings (loss) per share. For the three months ended January 31, 2008 and 2007, the basic and diluted earnings (loss) per share are the same, since the exercise price exceeded the market price and the assumed conversion of stock options and warrants would be antidilutive. RECENT ACCOUNTING PRONOUNCEMENTS In June 2006, the Financial Accounting Standards Board (the "FASB") issued Interpretation No. 48 ("FIN 48"), ACCOUNTING FOR UNCERTAINTY IN INCOME TAXES. FIN 48 prescribes detailed guidance for the financial statement recognition, measurement and disclosure of uncertain tax positions recognized in an enterprise's financial statements in accordance with SFAS No. 109, ACCOUNTING FOR INCOME TAXES ("SFAS No. 109"). Tax positions must meet a more-likely-than-not recognition threshold at the effective date to be recognized upon the adoption of FIN 48 and in subsequent periods. FIN 48 has been adopted by the Company as of November 1, 2007, and the provisions of FIN 48 will be applied to all tax positions under SFAS No. 109 after initial adoption. The cumulative effect of applying the provisions of this interpretation will be reported as an adjustment to the opening balance of retained earnings for that fiscal year. The adoption of FIN 48 did not require an adjustment to the Company's consolidated financial statements. In September 2006, the FASB issued SFAS No. 157, FAIR VALUE MEASUREMENTS ("SFAS No. 157"). SFAS No. 157 establishes a framework for measuring fair value and expands disclosures about fair value measurements. The changes to current practice resulting from the application of SFAS No. 157 relate to the definition of fair value, the methods used to measure fair value and the expanded disclosures about fair value measurement. SFAS No. 157 will be effective for fiscal years after November 15, 2007 and interim periods within those fiscal years. The Company does not believe that the adoption of the provisions of SFAS No. 157 will materially impact its financial statements or footnote disclosures. In February 2007, the FASB issued SFAS No. 159, THE FAIR VALUE OPTION FOR FINANCIAL ASSETS AND FINANCIAL LIABILITIES ("SFAS No. 159"). SFAS No. 159 permits entities to choose to measure many financial instruments and certain other items at fair value that are not currently required to be measured at fair value. The objective is to improve financial reporting by providing entities with the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. SFAS No. 159 also establishes presentation and disclosure requirements designed to facilitate comparisons between entities that choose different measurement attributes for similar types of assets and liabilities. SFAS No. 159 is effective for financial statements issued for fiscal years beginning after November 15, 2007 and will become effective for the Company beginning with the first quarter of 2008. The Company is currently evaluating the impact of SFAS No.159 on its consolidated financial statements and footnote disclosures. -6- TRIMEDIA ENTERTAINMENT GROUP, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JANUARY 31, 2008 (UNAUDITED) NOTE 1 - FINANCIAL STATEMENTS (Continued) On December 4, 2007, the Financial Accounting Standards Board (FASB) issued SFAS No. 160, NONCONTROLLING INTEREST IN CONSOLIDATED FINANCIAL STATEMENTS (SFAS No. 160). SFAS No. 160 requires all entities to report noncontrolling (minority) interests in subsidiaries as equity in the consolidated financial statements. The statement establishes a single method of accounting for changes in a parent's ownership interest in a subsidiary that do not result in deconsolidation and expands disclosures in the consolidated financial statements. SFAS No. 160 is effective for fiscal years beginning after December 15, 2008 and interim periods within those fiscal years. The Company has not yet determined the impact of the adoption of SFAS No. 160 on its financial statements and footnote disclosures. On December 4, 2007, the FASB issued SFAS No.141R, BUSINESS COMBINATIONS (SFAS No. 141R). SFAS No. 141R requires the acquiring entity in a business combination to recognize all the assets acquired and liabilities assumed, establishes the acquisition date fair value as the measurement objective for all assets acquired and liabilities assumed, and requires the acquirer to expand disclosures about the nature and financial effect of the business combination. SFAS No. 141R is effective for business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. The Company has not yet determined the impact of the adoption of SFAS No. 141R on its financial statements and footnote disclosures. NOTE 2 - MANAGEMENT PLANS The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. Since its inception, the Company has incurred significant losses and, as of January 31, 2008 had accumulated losses of $15,637,169. For the three months ended January 31, 2008, the Company's net loss was $736,573 which included $641,800 representing good will impairment in connection with the Company's recent merger. In addition, the Company had negative working capital of $1,017,461, at January 31, 2008. The Company, after the merger and restructuring, raised $200,000 in a convertible note offering (and recently received a subscription of an additional $100,000 investment). As a result of the restructuring: o The Company is not engaged in any business activity other than exploring new businesses and is incurring minimal overhead; o While legally obligated for payment of most of its payables, under the terms of the Restructuring Agreement a third party is obligated to the Company for payment of these obligations and, therefore, the Company does not anticipate having to fund these obligations. While the Company will incur further operating losses and experience negative cash flow in the near future, the Company believes it has sufficient cash, with the expected payment of the additional $100,000 subscription to conduct limited operations until at least November 30, 2008. In addition, if the notes are not converted or extended by November 30, 2008, the Company will need in excess of $300,000 of funds for the repayment of the Notes. -7- TRIMEDIA ENTERTAINMENT GROUP, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JANUARY 31, 2008 (UNAUDITED) NOTE 2 - MANAGEMENT PLANS (Continued) Ultimately the Company's ability to achieve profitability and positive cash flow depends on the Company's ability to generate sufficient revenues from a business it may enter into. While the Company is exploring several possibilities any business will require a additional capital. There can be no assurances that the Company will be able to enter a business to generate sufficient revenues or raise additional capital to achieve and sustain profitability and positive cash flow in the future. These conditions raise substantial doubt about the Company's ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of these uncertainties. The Company has no firm commitments for funding its operations, although it intends to increase its efforts to sell its convertible note. The Company may raise additional capital from the sale of its equity securities. However, there can be no assurances that the Company will be successful in raising sufficient capital to have a material positive effect of the Company's operations and cash flow. There can be no assurance that such funding will be generated or available on terms acceptable to the Company, or at all, or that the commercial exploitation of the Company's products will be economically profitable for the Company. These uncertainties raise substantial doubt about the ability of the Company to continue as a going concern. NOTE 3 - CONVERTIBLE NOTES PAYABLE During the period ended January 31, 2008, the Company issued two convertible notes of $100,000 each with interest at 8% per annum payable at maturity. The above notes mature on November 30, 2008. The warrants were valued at $54,000 using the Black-Scholes option pricing model and reduced the convertible notes as a discount on note and classified the warrants as equity in accordance with EITF 00-19. The convertible notes are being accreted to their maturity value using the interest method. The conversion feature was deemed to have no intrinsic value. Included with each convertible note was a warrant to purchase 5 million shares of the Company's common stock at the exercise price of $.01, due to expire in five years. The warrants vested immediately. NOTE 4 - INCOME TAXES There is no deferred income tax benefit for the losses for the three months ended January 31, 2008 and 2007 since management has determined that the realization of the net deferred tax asset is not assured and has created a valuation allowance for the entire amount of such benefits. There is no current income tax for the three months ended January 31, 2008 and 2007 due to unutilized net operating loss carryforwards. At October 31, 2007, the Company had net operating loss carryforward for federal and state income tax purposes of approximately $19,588,000 (the "NOL carryforwards"), which were available to offset future taxable income, if any, through 2027. However, due to a substantial change in ownership in current and prior years, the use of any NOL carryforward may be limited. Based upon the limited operating history of the Company and losses incurred to date, management has fully reserved the deferred tax asset. -8- TRIMEDIA ENTERTAINMENT GROUP, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JANUARY 31, 2008 (UNAUDITED) NOTE 5 - STOCK BASED COMPENSATION In December 2004, the FASB issued SFAS 123 (revised 2004), SHARE-BASED PAYMENT ("SFAS 123(R)"). SFAS 123(R) supersedes Accounting Principles Board ("APB") Opinion No. 25, ACCOUNTING FOR STOCK ISSUED TO EMPLOYEES, and amends SFAS No. 95, STATEMENT OF CASH FLOWS. Generally, the approach in SFAS 123(R) is similar to the approach described in SFAS 123. However, SFAS 123(R) requires share-based payments to employees, including grants of employee stock options, to be recognized in the income statement based on their fair values at the date of grant. Pro forma disclosure is no longer an alternative. On November 1, 2006, the Company adopted SFAS 123(R) using the modified prospective method as permitted under SFAS 123(R). Under this transition method, compensation cost recognized in the first quarter of 2007 includes compensation cost for all share-based payments granted prior to but not yet vested as of October 31, 2006, based on the grant-date fair value estimated in accordance with the provisions of SFAS 123. In accordance with the modified prospective method of adoption, the Company's results of operations and financial position for prior periods have not been restated. There was no unrecognized compensation cost as of October 31, 2006. The Company uses the Black-Scholes option pricing model to calculate the grant-date fair value of an award. There were no stock options granted during the three months ended January 31, 2008 and 2007. A summary of options is as follows: Shares Option Price Per Weighted Average Outstanding Share Expense Exercise Price ------------- ---------------- ---------------- Options outstanding, October 31, 2007 and January 31, 2008 8,036,707 $0.01 to $1.50 $0.62 ============ ================ ================ The options that are exercisable at January 31, 2008 are summarized as follows: Weighted Average Number of Options Remaining Currently Weighted Average Option Price Contractual Life Exercisable Exercise Price ------------ ---------------- ----------- -------------- $0.01 to $1.50 7.21 years 8,036,707 $0.62 -9- TRIMEDIA ENTERTAINMENT GROUP, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JANUARY 31, 2008 (UNAUDITED) NOTE 5 - STOCK BASED COMPENSATION (Continued) A summary of the warrants issued by the Company is as follows: Number of Option Price Per Weighted Average Shares Share Range Exercise Price ------ ----------- -------------- Warrants outstanding at October 31, 2007 4,941,667 $0.45 to $1.06 $0.61 Warrants granted 10,000,000 $0.01 0.01 Warrants expired (666,667) $1.25 (0.06) Warrants outstanding at January 31, 2008 14,275,000 $0.01 to $1.06 $0.16 Warrants that are exercisable at January 31, 2008 are summarized as follows: Weighted Average Number of Warrants Remaining Currently Weighted Average Warrant Price Contractual Life Exercisable Exercise Price ------------- ---------------- ----------- -------------- $0.01 to $1.50 4.09 years 14,275,000 $0.16 Note 6 - IMPAIRMENT LOSS During the three months ended January 31, 2008, the Company recorded an impairment loss of $641,800 on its investment in VGB. -10- ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and related notes appearing elsewhere in this report. This discussion and analysis contains forward-looking statements that involve risks, uncertainties, and assumptions. The actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors, including but not limited to the risks discussed in this report. OVERVIEW Through the end of fiscal 2007 we were a multimedia entertainment company that has film and music operations. As of October 2007 and during most all of fiscal 2007 we did not have sufficient cash to implement our business plan. For the year ended October 31, 2007 the Company's net income was $1,907,933 (primarily due forgiveness of debt). In addition, the Company had negative working capital of $7,208,408 at October 31, 2007 and experienced negative cash flow from operations of $ 315,370 and $1,981,277 for the years ended October 31, 2007 and 2006. The Company had total liabilities of approximately $8,300,000 of which the outstanding debt was in the aggregate principal amount of approximately $5,400,000 as of October 31, 2007. Accordingly, the Company had only minimal operations in fiscal 2007 and would have required a significant amount of cash to fund its then operations and to continue its business. On November 16, 2007 the Company pursuant to an Agreement and Plan of Merger (the " Merger Agreement") by and among the Company, TriMedia Acquisition Corp., a wholly owned subsidiary of the Company ("Merger Subsidiary") and VGB Media, Inc. ("VGB") completed the merger of VGB with Merger Subsidiary. On that date the Company also completed a restructuring pursuant to a Restructuring Agreement, by and among the Company, certain creditors and its chief executive. As a result of these transactions (i) certain creditors of the Company converted a portion of their indebtedness into 46,000,000 shares of Common Stock of the Company; (ii) all the assets of Company, including ownership of all our operating subsidiaries, were contributed to a newly formed Delaware corporation ("Newco") in which the Company will have an economic interest and (iii) significantly all liabilities of the Company prior to the closing date or arising from the continuing business were assumed by Newco. As a result of that transaction substantially all liabilities were satisfied or assumed and we will not have to fund the operations of the prior business. For accounting purposes the prior has been treated as a discontinued business. New Management desires to pursue various aspects of the entertainment business and is considering several avenues. At the present time we have no operations. The following discussion and analysis should be read in conjunction with the consolidated financial statements and the related notes thereto included in this Form 10-QSB. CRITICAL ACCOUNTING POLICIES In presenting our financial statements in conformity with accounting principles generally accepted in the United States, we are required to make estimates and assumptions that affect the amounts reported therein. Several of the estimates and assumptions we are required to make relate to matters that are inherently uncertain as they pertain to future events. However, events that are outside of our control cannot be predicted and, as such, they cannot be contemplated in evaluating such estimates and assumptions. If there is a significant unfavorable change to current conditions, it will likely result in a material adverse impact to our consolidated results of operations, financial position and in liquidity. We believe that the estimates and assumptions we used when preparing our financial statements were the most appropriate at that time. Presented below are those accounting policies that we believe require subjective and complex judgments that could potentially affect reported results. -11- The discussion in the following two sections were appliciable to our discontinued business and may not be relevant on a going forward basis. REVENUE RECOGNITION We recognize revenue from the sale or licensing of films and nonrefundable minimum guarantees from customers upon meeting all recognition requirements of Statement of Position ("SOP") 00-2, "Accounting by Producers or Distributors of Films". According to SOP 00-2, an entity should recognize revenue from a sale or licensing arrangement of a film when all of the following conditions are met: o persuasive evidence of a sale or licensing arrangement with a customer exists; o the film is complete and, in accordance with the terms of the arrangement, has been delivered or is available for immediate and unconditional delivery; o the license period of the arrangement has begun and the customer can begin its exploitation, exhibition, or sale; o the arrangement fee is fixed or determinable; and o collection of the arrangement fee is reasonably assured. If we do not meet any one of the preceding conditions, then we will defer recognizing revenue until all of the conditions are met. CAPITALIZED FILM COSTS Costs of making motion picture films that are produced for sale to third parties are stated at the lower of cost, less accumulated amortization, or fair value. In accordance with SOP 00-2, we expense film costs based on the ratio of the current period gross revenues to estimated total gross revenues from all sources on an individual production basis. This ratio requires the use of estimates based on management's knowledge and experience. Due to the uncertainty of future estimated revenues from films in production, we normally write off film costs as they occur. ARTIST COMPENSATION COSTS The amount of royalties earned by artists, as adjusted for anticipated returns, is charged to expense in the period in which the sale of the record takes place. Advance royalty paid to an artist is reported as an asset only if the past performance and current popularity of the artist to whom the advance is made provide a sound basis for estimating that the amount of the advance will be recoverable from future royalties earned by the artist. Capitalized advances are charged to expense as subsequent royalties are earned by the artist. Any portion of capitalized advances that appear not to be fully recoverable from future royalties to be earned from the artist are charged to expense during the period in which the loss becomes evident. RESULTS OF OPERATIONS COMPARISON OF QUARTER ENDED JANUARY 31, 2008 (FIRST QUARTER 2008) TO QUARTER ENDED JANUARY 31, 2007 (FIRST QUARTER 2007) First Quarter First Quarter Change % 2008 2007 -------------------------------------------------- Net Revenues -0- -0- -0- -0- Direct Costs -0- -0- -0- -0- Operating Expenses 99,773 395,108 (295,335) (74.7) Other Income (Expense) (636,800) 4,150 640,950 (154.4) Net Income (Loss) From (736,573) (345,615) (88.4) ContinuedOperations (390,958) Net Income (Loss) From 3,040,753 Discontinued Operations -0- 3,040,753 (100.0) Net Income (Loss) (736,573) 2,649,795 (3,386,368) (127.8) -12- The Company had no net revenue or direct costs for First Quarter 2008 as the Company had completed it restructuring and discontinued its prior business. New management was exploring possible business directions and had not commenced additional operations. Because any net revenue or direct costs occurring in First Quarter 2007 related to our discontinued business it is reflected in calculating our Net Income (Loss) From Discontinued Operations for such period. The $295,335 decrease in Operating Expenses was primarily due to a decrease in activity of the Company immediately after the restructuring. Operating Expenses are generally the costs of operating our business and include salaries, advertising, professional and consulting fees, rent and utilities, travel and costs related to financing activities. The $636, 800 increase in Other Expense in First Quarter 2008 due to an impairment expense of $ 641,800 . This expense arose in connection with the acquisition of VGB. The Company valued the consideration of the shares issued for the acquisition at $641,800 the aggregate market value of the Company's common stock at the time. Because the value of the VGB stock was negligible at the time of the acquisition, the Company considered the entire resulting goodwill without value and wrote this amount off immediately as an impairment. Because it is reflected in Net Income From Discontinued Operations for First Quarter 2007, Other Income for such period does not include forgiveness of indebtedness income of $3,186,774 due to repayment of a line of credit at maturity with collateral of a third party held on deposit by our lender, offset by a foreign currency exchange loss of $79,794. Our Net Loss was $736,573 during First Quarter 2008 compared to Net Income of $2,649,795 during the First Quarter 2007. This was because we had Net Income From Discontinued Operations of $3,040,753 in such period primarily resulting from forgiveness of debt discussed above. CHANGES IN FINANCIAL POSITION, LIQUIDITY AND CAPITAL RESOURCES First Quarter First Quarter Change Percentage 2008 2007 ------------------------------------------------- Cash Flows From Operating Activities (112,303) (130,514) 18,211 (13.9) Cash Flows From Investing Activities -0- 66,110 (66,110) (100.0) Cash Flows From Financing Activities 200,000 62,150 137,850 221.2 The use of cash from operations in First Quarter 2008 was due primarily to our Net Loss of,$ 736,573 principally offset by non-cash charges for Impairment of approximately $641,800 and other cash items resulting in the expenditure of $17,530 in operations. . In First Quarter 2008, no cash was derived or expended as result of investing activities. In First Quarter 2008, $ 200,000 cash provided by financing activities represented monies derived from our convertible note warrant private offering. As a result of the foregoing the Company used $112,303 of cash and had $87,930 remaining as of January 31, 2008.As of March 12,2008 we had approximately $29,200 in cash before the expected receipt of $100,000 for the additional subscription referred to in the following paragraph. Since its inception, the Company has incurred significant losses and, as of January 31, 2008 had accumulated losses of $15,637,169..For the three months ended January 31, 2008, the Company's net loss was $736,573 which included $641,800 representing good will impairment in connection with the Company's recent merger. In addition, the Company had negative working capital of $1,017,461, at January 31, 2008. The Company, after the merger and restructuring, raised $200,000 in a convertible note offering (and subsequent to January 31, 2008 has recently obtained a subscription for an additional $100,000 from its convertible note and warrant offering). As a result of the restructuring: o The Company is not engaged in any business activity other than exploring new businesses and is incurring minimal overhead; o While legally obligated for payment of most of its payables, under the terms of the Restructuring Agreement a third party is obligated to the Company for payment of these obligations and the Company does not anticipate these obligations will result in cash outlays. -13- While the Company will incur further operating losses and experience negative cash flow in the near future, the Company believe it has sufficient cash to conduct limited operations until at least November 30,2008. If addition, if the Notes are not converted or extended by November 30, 2008 the Company will need in excess of $300,000 of funds for the repayment of the Notes. New Management desires to pursue various aspects of the entertainment business and is considering several avenues. At the present time we have no operations. No matter what business we pursue we shall need additional capital, the amount of which will depend upon on our business operations. In the event that we are unable to raise these funds, we will then be required to delay our plans to implement any new business. The nature of our business is such that significant cash outlays are required to produce and acquire entertainment content including films, television programs, music soundtracks and albums. However, net revenues from these projects are earned over an extended period of time after their completion or acquisition. Accordingly, we will require a significant amount of cash to fund our present operations and to continue to grow our business. Any business entered into will require financing s for the foreseeable future. Therefore we will be dependent on continued access to external sources of financing. Our current financing strategy is to sell our securities to raise a substantial amount of our working capital. OFF-BALANCE SHEET ARRANGEMENTS There were no off-balance sheet arrangements during the three months ended January 31, 2008 that have or are reasonably likely to have, a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to our interests. ITEM 3A(T). CONTROLS AND PROCEDURES As of January 31, 2008 we carried out an evaluation of the effectiveness of the design and operation of our "disclosure controls and procedures" (as defined in the Exchange Act Rules 13a-15(e) and 15d-15(e)) under the supervision and with the participation of our management, including Jason Meyers our Chief Executive Officer and Chief Financial Officer. Based upon that evaluation, Mr. Meyers concluded that our disclosure controls and procedures are effective. Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act are recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to management to allow timely decisions regarding required disclosure. -14- PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS New management has been advised that a default judgement has been taken against it for L111,001_ in a United Kingdom action. The Company is considering several steps including negotiation and pursuing claims under the restructuring Agreement. At this time it has not determined what course of action it will take. ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS. During the three months ended January 31, 2008 we sold two units of our securities in a private placement. Each unit consisted of $100,000 note and warrants to purchase 5,000,000 of our shares at an exercise price of one cent ($.01), The notes are convertible at any time prior to payment. The conversion price is one cent ($.01). The securities were issued pursuant to Section 4(2) of the Securities Act of 1933 and are exempt from the registration requirements under that act. ITEM 6. EXHIBITS EXHIBIT NUMBER DESCRIPTION OF EXHIBIT - -------- ---------------------------------------------------------------------- 10.49 8 % Convertible Note Due November 30, 2008 10.50 Warrant to purchase shares of common stock expiring November 30, 2012 31.1 Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32.2 Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. - -------------------------------------------------------------------------------- -15- SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. TRIMEDIA ENTERTAINMENT GROUP, INC. Date: March 17, 2008 /s/ Jason Meyers ----------------- Jason Meyers Chief Executive Officer and Chief Financial Officer (principal financial officer and principal accounting officer) -16- EX-10.49 2 note.txt 8% CONVERTIBLE NOTE $ No. ------------------- ---------------- 8 % CONVERTIBLE NOTE DUE NOVEMBER 30, 2008 Neither this Note, nor any shares of Common Stock or other securities issued on the conversion hereof, has been registered under the Securities Act of 1933, as amended (the "Act"). The Note has been (and any shares of Common Stock or other securities issued upon conversion thereof will be) acquired for investment and must be held indefinitely unless subsequently registered under the Act or in the opinion of counsel to the Company, an exemption from registration under the Act is available. Trimedia Entertainment Group, Inc. (the "Company" or "Borrower") for value received, hereby promises to pay to the order of ("Holder") whose address is , Attn. , the principal sum of Dollars ($__________________) on November 30, 2008 or such earlier date as provided herein (the "Maturity Date") with interest thereon from the date of issuance at the rate of eight (8 %) percent per annum. Interest shall be payable in arrears upon the then outstanding principal amount on the Maturity Date. This eight (8 %) percent Convertible Note (the "Note") is one of a series of similar Notes issued pursuant to a Subscription Agreement (the "Subscription Agreement") among the Company, Holder and other holders and dated as of November 19, 2008 and executed from time to time thereafter. All Holders shall collectively be referred to as the "Holders" or "Investors" and all Notes issued pursuant to the Subscription Agreements shall be referred to as the "Notes". All references in this Note to dollar amounts shall be to United States dollars. 1. PAYMENT. Principal and interest on this Note shall be payable in lawful currency of the United States at such office or bank as the Holder, from time to time, may specify in writing to the Company at least five days prior to the Maturity Date or any other payment date. All Notes of this issue rank equally and ratably without priority over one another. Interest should be calculated for each Interest Period (as defined below) on the basis of a 360-day year comprised of twelve 30-day months. In any case, when the Maturity Date shall be a day other than a business day in the State of New York, then payment of principal or interest need not be made on such date at such place, but may be made on the preceding business day with the same force and effect as if made on the date of maturity. All payments of principal of this Note shall reduce the unpaid principal balance due hereunder, but shall not extinguish this Note until the entire principal balance and all accrued interest hereon has been paid in full. 2. CONVERSION. The Holder of this Note shall have conversion rights as follows, exercisable upon written notice to the Company at any time after the amendment of the Certificate of Incorporation of the Company to increase the authorized number of shares of Common Stock of the Company and until the Maturity Date ("Conversion Period"): 2.1 2.1 GENERAL The Holder shall have the right during the Conversion Period to convert any outstanding and unpaid Principal Amount of this Note, and, the interest accrued on the Note to such date, ("Outstanding Obligation") into fully paid and non assessable shares of common stock of the Company as such stock exists on the date of issuance of this Note, or any shares of capital stock of Borrower into which such stock shall hereafter be changed or reclassified (the "Common Stock") at the conversion price ("Conversion Price") at a price equal to $. 01. Conversion shall be subject to a minimum conversion amount of $10,000, or, if less, the remaining Outstanding Obligation. The number of shares of Common Stock to be issued upon Conversion pursuant to this Section 2.1 shall be determined by dividing the (i) Outstanding Obligation on the Conversion Date, as hereinafter defined, that Holder desires to convert by (ii) the Conversion Price. For purposes hereof, the "Market Price" shall mean: the 4:00 p.m. closing bid prices (or where applicable the closing price) for the Common Stock on the OTC Pink Sheets, NASD OTC Bulletin Board, NASDAQ Small Cap Market, NASDAQ National Market System, American Stock Exchange, or New York Stock Exchange (whichever of the foregoing is at the time the principal trading exchange or market for the Common Stock, the "Principal Market"), or if the shares are not then trading on a Principal Market, such other market or exchange where the Common Stock is listed or traded. 2.2 RESERVATION OF SHARES. During the period the conversion right exists, subject to the the amendment of the Certificate of Incorporation of the Company to increase the authorized number of shares of Common Stock of the Company, the Borrower will reserve from its authorized and unissued Common Stock a sufficient number of shares to provide for the issuance of Common Stock upon the full conversion of this Note. The Borrower represents that upon issuance, such shares will be duly and validly issued, fully paid and non-assessable. The Borrower agrees that its issuance of this Note shall constitute full authority to its officers, agents, and transfer agents who are charged with the duty of executing and issuing stock certificates to execute and issue the necessary certificates for shares of Common Stock upon the conversion of this Note. 2.3 MECHANICS OF CONVERSION. A Holder may exercise the right to convert this Note by delivering to the Company, at the address set forth below , the following: a Note accompanied by a duly executed Notice of Conversion (in the form annexed hereto) for the shares of Common Stock being acquired. Upon such deliveries, the Holder shall be entitled to receive a certificate or -2- certificates for the shares of Common Stock acquired thereby. The conversion rights represented by each Note are exercisable at the option of the Holder thereof, in whole or in part. Notes may be converted to purchase all or part of the shares of Common Stock. In the case of the conversion of less than the principal amount of the Note, the Borrower shall cancel said Note upon the surrender thereof and shall execute and deliver a new Note of like tenor for the balance of the principal amount thereunder. Each date on which a Note with a completed Notice of Conversion is delivered by Holder to the Borrower in accordance with the provisions hereof shall be deemed a Conversion Date (the "CONVERSION DATE"). In the case of the exercise of the conversion rights set forth herein the conversion privilege shall be deemed to have been exercised and the Common Stock issuable upon such conversion shall be deemed to have been issued on the Conversion Date. As soon as practicable after the Conversion Date and in any event within five (5) business days thereafter, the Borrower at its expense (including the payment by it of any applicable issue taxes) will cause to be issued in the name of and delivered to the Holder, or as such Holder (upon payment by such holder of any applicable transfer taxes) may direct in compliance with applicable securities laws, a certificate or certificates for the number of duly and validly issued, fully paid and nonassessable shares of Common Stock to which such Holder shall be entitled on such conversion, plus, at the Borrower's election, in lieu of any fractional share to which such holder would otherwise be entitled, cash equal to such fraction multiplied by the then Market Price of one full share or an additional share, together with any other stock or other securities and property (including cash, where applicable) to which such Holder is entitled upon such conversion. 2.4 ADJUSTED FIXED CONVERSION PRICE. (a) STOCK SPLITS AND DIVIDENDS. If outstanding shares of the Common Stock shall be subdivided into a greater number of shares or a dividend in common stock shall be paid in respect of common stock, the Conversion Price in effect immediately prior to such subdivision or dividend shall simultaneously with the effectiveness of such subdivision or dividend be proportionately reduced. If outstanding shares of Common Stock shall be combined into a smaller number of shares, the Conversion Price in effect immediately prior to such combination shall, simultaneously with the effectiveness of such combination, be proportionately increased. (b) RECLASSIFICATION, ETC. In case there occurs any reclassification or change of the outstanding securities of the Borrower or any corporate reorganization on or after the date hereof, then and in each such case the Holder, upon the exercise hereof at any time after the consummation of such reclassification, change or reorganization, shall be entitled to receive, in lieu of Common Stock, the stock or other securities or property to which such Holder would have been entitled upon such consummation if such Holder had converted this Note immediately prior thereto, all subject to further adjustment pursuant to the provisions of this Sections 2.4. 3. COVENANTS OF THE COMPANY. The Company covenants and agrees that, except as otherwise permitted by the Note, or consented to in writing by the holder of the Note: (a) GOOD STANDING. The Company will maintain its corporate existence and good standing in its state of incorporation and qualification as a foreign corporation in each jurisdiction in which the conduct of its business or the nature of its properties require such qualification. -3- (b) COMPLIANCE WITH LAWS. The Company will comply in all material respects with all such laws, rules, regulations, ordinances and other binding directives of courts or other governmental authorities as apply to the Company, its assets, business activities or personnel. (c) NOTICE OF DEFAULT. The Company will promptly give the Holder written notice of (i) the occurrence of any event which is, or with the passage of time or notice or both, could become an event of default under the Note; (ii) any default under any senior indebtedness, if the effect of such default is to permit the holder or holders of such indebtedness to cause such indebtedness to become due and payable prior to the stated maturity thereof. 4. EVENTS OF DEFAULT. 4.1 DEFAULTS. Each of the following shall constitute an event of default ("Event of Default") hereunder: i. Any failure to pay interest or principal on this Note within ten days after the same becomes due. ii. The entry of any judgment against the Company or the issuance or entry of any attachment or lien in each case in an amount in excess of $100,000 against the Company's property if undischarged, unbound or undismissed for a period of 90 days. iii. The insolvency or bankruptcy of the Company or the making of an assignment for the benefit of creditors or the consent to the appointment of a receiver or trustee or other officer of a court or other tribunal over the Company or for a substantial part of its assets or properties. iv. The institution of bankruptcy, reorganization, insolvency or liquidation proceedings by or against the Company and, if against it, where such proceeding is consented to by it or remains undismissed for 60 days. 4.2 CONSEQUENCES OF EVENTS OF DEFAULT. Upon an occurrence of an event of default of the kind specified above the entire unpaid principal amount of the Note, together with all unpaid interest thereon shall immediately and forthwith be due and payable upon notice, by the Holder. 4.3 ATTORNEYS' FEES. The Company agrees to pay any and all reasonable costs, including attorneys' fees, incurred by the Holder in the enforcement or collection of this Note. The failure to assert any rights hereunder or under any law shall not be deemed a waiver thereof. -4- 5. COMPANY WAIVER. The Company waives presentment, demand, notice, protest and all other notices in connection with the delivery, acceptance, performance, default or enforcement of this Note, and assents to any extension or postponement of the time of payment or any other indulgence. 6. SURVIVAL. All terms, statements, conditions, covenants, representations, warranties and agreements herein contained shall be effective as long as obligations arising hereunder remain unpaid. 7. NOTICES. Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earliest of (a) one business day following the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number specified below, (b) four business days following the date of mailing, if sent by U.S. overnight courier service, or (c) upon actual receipt by the party to whom such notice is required to be given. The addresses for such notices and communications are those set forth below, or such other address as may be designated in writing hereafter, in the same manner, by such person. If to the Company: TriMedia Entertainment Group, Inc. 115 East 57th Street, 11th Floor New York, NY 10022 Attention: President Fax No.: 212.820.9763 With a copy to: Michael DiGiovanna, Esq. 212 Carnegie Center Princeton, New Jersey 0854 If to Holder: At the address set forth on the signature page of the Subscription Agreement. 8. SEVERABILITY OF PROVISIONS. In case any one or more of the provisions contained in the Note should be invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired thereby. -5- 9. SUCCESSORS AND ASSIGNS. This Note shall be binding upon, enforceable by and shall inure to the benefit of the Holder hereof and the Company, or their respective permitted successors or assigns, provided that the Company shall be entitled to assume the payee named herein is the holder of the Note unless notified to the contrary by such payee in writing to the Company which notice shall designate an address to which notices shall be mailed. 10. CHOICE OF LAW. This Agreement shall be governed by and construed in accordance with the laws of the State of New York. 11. REGISTERED HOLDER. The Company may for all purposes treat the registered holders on its books and records of this Note as the Holder. 12. DENOMINATIONS. Note (and any Note issued in exchange, upon transfer or upon conversion) may be issued in a minimum principal amount of $10,000 (or such lesser amount upon a conversion in part of a Note provided such lesser amount represents such Holder's entire holding of Notes). 13. NO AMENDMENT. No provision of this Note may be amended, altered or modified without the written agreement of the Holder and the Company. 14. NO VOTING RIGHTS. This Note shall not entitle the Holder hereof to any of the rights of a stockholder of the Company, including without limitation, the right to vote, to receive dividends and other distributions, or to attend any meetings of stockholders or any other proceedings of the Company. 15. LOST OR DESTROYED NOTE. If this Note shall be mutilated, lost, stolen or destroyed, the Company shall execute and deliver, in exchange and substitution for and upon cancellation of a mutilated Note, or in lieu of or in substitution for a lost, stolen or destroyed Note, a new Note for the principal amount of this Note so mutilated, lost, stolen or destroyed but only upon receipt of evidence of such loss, theft or destruction of such Note, and of the ownership thereof, and indemnity, if requested, all reasonably satisfactory to the Company. SIGNATURE APPEARS ON NEXT PAGE -6- Trimedia Entertainment Group, Inc. --------------------------------- NAME: TITLE: -7- Trimedia Entertainment Group, Inc. NOTICE OF CONVERSION 8% CONVERTIBLE NOTE DUE NOVEMBER 30, 2008 (To be executed by the Holders in order to convert the Note or portion thereof) The undersigned hereby irrevocably elects to convert $________ of the principal amount of Note No.__________ into shares of Common Stock, (the "Common Stock"), of Trimedia Entertainment Group, Inc. (the "Company") as of the date of conversion (which shall be the first date of receipt by the Company of this Notice of Conversion, whether by facsimile or otherwise). If shares are to be issued in the name of a person other than the undersigned, the undersigned will pay all transfer taxes payable with respect thereto and is delivering herewith such certificates or representation letters as reasonably requested by the Company or its Transfer Agent. No fee will be charged to the Holder for any conversion, except for transfer taxes, if any. If the stock certificate is to be made out in another person's name, fill in the form below: (Print or type other person's name, address and zip code) (Insert assignee's U.S. social security or tax identification number, if any) Conversion calculations: --------------------------------------------- DATE OF CONVERSION APPLICABLE CONVERSION PRICE $ --------------------------- PRINCIPAL AMOUNT CONVERTED $ -------------------------- Accrued Interest $ Total number of shares [Name of Holder] By: ---------------------------------------- Name: Title: (if an entity) -8- Trimedia Entertainment Group, Inc. 8 % CONVERTIBLE NOTE DUE NOVEMBER 30, 2008 ASSIGNMENT FORM To assign this Note, fill in the form below: I, or we, assign and transfer this Note to ----------------------------------------------- ----------------------------------------------- ----------------------------------------------- (Print or type assignee's name, address and zip code) ----------------------------------------------- (Insert assignee's social security or tax identification number, if any) and irrevocably appoint ________________________________, as agent to transfer this Note on the books of the Company. The agent may substitute another to act for him. Date: -------------- ------------------------------------------- (Sign exactly as your name appears on the face of this Note) ASSIGNMENT IS SUBJECT TO TRANSFER RESTRICTIONS SET FORTH IN THIS NOTE -9- EX-10.50 3 warrant.txt WARRANT NEITHER THIS WARRANT NOR ANY SHARES OF COMMON STOCK OR OTHER SECURITIES ISSUED ON THE EXERCISE HEREOF, HAS BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"). THE NOTE HAS BEEN (AND ANY SHARES OF COMMON STOCK OR OTHER SECURITIES ISSUED UPON CONVERSION THEREOF WILL BE) ACQUIRED FOR INVESTMENT AND MUST BE HELD INDEFINITELY UNLESS SUBSEQUENTLY REGISTERED UNDER THE ACT OR IN THE OPINION OF COUNSEL TO THE COMPANY, AN EXEMPTION FROM REGISTRATION UNDER THE ACT IS AVAILABLE. THIS WARRANT SHALL BE VOID AFTER 5:00 P.M. EASTERN TIME ON NOVEMBER 30, 2012 (THE "EXPIRATION DATE"). ---------------- PWNo. __ TRIMEDIA ENTERTAINMENT GROUP, INC. WARRANT TO PURCHASE SHARES OF COMMON STOCK FOR VALUE RECEIVED, __________________________________________ ("WARRANTHOLDER"), is entitled to purchase, subject to the provisions of this Warrant, __________________ shares ("WARRANT SHARES") of the common stock, ("COMMON STOCK") of TriMedia Entertainment Group, Inc., a Delaware corporation ("COMPANY"), at any time not later than 5:00 P.M., Eastern time, on the Expiration Date (as defined above). The exercise price initially shall be equal to one cent ($.01) per share and such exercise price and the exercise price in effect hereinafter shall be referred to as ("WARRANT PRICE"). The number of Warrant Shares purchasable upon exercise of this Warrant and the Warrant Price shall be subject to adjustment from time to time as described herein. This Warrant is one of a series of similar Warrants issued pursuant to a Subscription Agreement (the "Subscription Agreement") among the Company, Holder and other holders and dated as of November 19, 2007 and executed from time to time thereafter. All Holders shall collectively be referred to as the "Holders" or "Investors" and all Warrants issued pursuant to the Subscription Agreements shall be referred to as the "Warrants". All references in this Warrant to dollar amounts shall be to United States dollars. Section 1. REGISTRATION. The Company shall maintain books for the transfer and registration of the Warrant. Upon the initial issuance of this Warrant, the Company shall issue and register the Warrant in the name of the Warrantholder. -1- Section 2. TRANSFERS. As provided herein, this Warrant may be transferred only pursuant to a registration statement filed under the Securities Act of 1933, as amended ("SECURITIES ACT"), or an exemption from such registration. Subject to such restrictions, the Company shall transfer this Warrant from time to time upon the books to be maintained by the Company for that purpose, upon surrender thereof for transfer properly endorsed or accompanied by appropriate instructions for transfer and such other documents as may be reasonably required by the Company, including, if required by the Company, an opinion of its counsel to the effect that such transfer is exempt from the registration requirements of the Securities Act, to establish that such transfer is being made in accordance with the terms hereof, and a new Warrant shall be issued to the transferee and the surrendered Warrant shall be canceled by the Company. Section 3. EXERCISE OF WARRANT. (a) Subject to the provisions hereof, Warrantholder may exercise this Warrant in whole or in part (in minimum amounts of 10,000 Warrants, or if less, the remaining unexercised Warrants) at any time prior to its expiration. upon surrender of the Warrant, together with delivery of the duly executed Warrant Exercise Form attached hereto as with , payment by cash, certified check or wire transfer of funds for the aggregate Warrant Price for that number of Warrant Shares then being purchased, to the Company during normal business hours on any business day at the Company's principal executive offices (or such other office or agency of the Company as it may designate by notice to the holder hereof). (b) The Warrant Shares so purchased shall be deemed to be issued to the holder hereof or such holder's designee, as the record owner of such shares, as of the close of business on the date on which (i) this Warrant shall have been surrendered or delivered (or evidence of loss, theft or destruction thereof and security or indemnity satisfactory to the Company)and (ii) the Warrant Price shall have been paid and the completed Warrant Exercise Form shall have been delivered. Certificates for the Warrant Shares so purchased, representing the aggregate number of shares specified in the Warrant Exercise Form , shall be delivered to the holder hereof within a reasonable time, not exceeding five business days, after this Warrant shall have been so exercised. The certificates so delivered shall be in such denominations as may be requested by the holder hereof and shall be registered in the name of such holder or such other name as shall be designated by such holder. If this Warrant shall have been exercised only in part, then, unless this Warrant has expired, the Company shall, at its expense, at the time of delivery of such certificates, deliver to the holder a new Warrant representing the number of shares with respect to which this Warrant shall not then have been exercised. As used in this Agreement, "business day" means a day, other than a Saturday or Sunday, on which banks in New York City are open for the general transaction of business. Section 4. COMPLIANCE WITH THE SECURITIES ACT OF 1933. The Company may cause the legend set forth on the first page of this Warrant to be set forth on each Warrant or similar legend on any security issued or issuable upon exercise of this Warrant, unless counsel for the Company is of the opinion as to any such security that such legend is unnecessary. -2- Section 5. PAYMENT OF TAXES. The Company will pay any documentary stamp taxes attributable to the initial issuance of Warrant Shares issuable upon the exercise of the Warrant; provided, however, that the Company shall not be required to pay any tax or taxes which may be payable in respect of any transfer involved in the issuance or delivery of any certificates for Warrant Shares in a name other than that of the registered holder of this Warrant in respect of which such shares are issued, and in such case, the Company shall not be required to issue or deliver any certificate for Warrant Shares or any Warrant until the person requesting the same has paid to the Company the amount of such tax or has established to the Company's reasonable satisfaction that such tax has been paid. The holder shall be responsible for income taxes due under federal, state or other law, if any such tax is due. Section 6. MUTILATED OR MISSING WARRANTS. In case this Warrant shall be mutilated, lost, stolen, or destroyed, the Company shall issue in exchange and substitution of and upon cancellation of the mutilated Warrant, or in lieu of and substitution for the Warrant lost, stolen or destroyed, a new Warrant of like tenor and for the purchase of a like number of Warrant Shares, but only upon receipt of evidence reasonably satisfactory to the Company of such loss, theft or destruction of the Warrant, and with respect to a lost, stolen or destroyed Warrant, reasonable indemnity or bond with respect thereto, if requested by the Company. Section 7. RESERVATION OF COMMON STOCK. The Company hereby covenants, represents and warrants that after the amendment of the Certificate of Incorporation of the Company to increase the authorized number of shares of Common Stock of the Company, the Company shall reserve, and shall at all applicable times keep reserved until issued (if necessary) as contemplated by this SECTION 7, out of the authorized and unissued shares of Common Stock, sufficient shares to provide for the exercise of the rights of purchase represented by this Warrant. The Company agrees that all Warrant Shares issued upon due exercise of the Warrant shall be, at the time of delivery of the certificates for such Warrant Shares, duly authorized, validly issued, fully paid and non-assessable shares of Common Stock of the Company. Section 8. ADJUSTMENTS UPON STOCK EVENTS AND STOCK ISSUANCES., The Warrant Price and number of Warrant Shares subject to this Warrant shall be subject to adjustment from time to time as set forth hereinafter. (a). If outstanding shares of the common stock shall be subdivided into a greater number of shares or a dividend in common stock shall be paid in respect of common stock, the Warrant Price in effect immediately prior to such subdivision or dividend shall simultaneously with the effectiveness of such subdivision or dividend be proportionately reduced. If outstanding shares of common stock shall be combined into a smaller number of shares, the Exercise Price in effect immediately prior to such combination shall, simultaneously with the effectiveness of such combination, be proportionately increased . (b) . In case there occurs any reclassification or change of the outstanding securities of the Company or any corporate reorganization on or after the date hereof, then and in each such case the Holder, upon the exercise hereof at any time after the consummation of such reclassification, change or reorganization, shall be entitled to receive, in lieu of Common Stock, the stock -3- or other securities or property to which such Holder would have been entitled upon such consummation if such Holder had converted this Note immediately prior thereto, all subject to further adjustment pursuant to the provisions of this Sections 8. Section 9. FRACTIONAL INTEREST. The Company shall not be required to issue fractions of Warrant Shares upon the exercise of this Warrant. If any fractional share of Common Stock would, except for the provisions of the first sentence of this SECTION 9, be deliverable upon such exercise, the Company, in lieu of delivering such fractional share, shall pay to the exercising holder of this Warrant an amount in cash equal to the Market Value of such fractional share of Common Stock on the date of exercise. For purposes hereof, the "MARKET PRICE" shall mean: the 4:00 p.m. closing bid prices (or where applicable the closing price) for the Common Stock on the OTC Pink Sheets, NASD OTC Bulletin Board, NASDAQ Small Cap Market, NASDAQ National Market System, American Stock Exchange, or New York Stock Exchange (whichever of the foregoing is at the time the principal trading exchange or market for the Common Stock, or if the shares are not then trading on a Principal Market, such other market or exchange where the Common Stock is listed or traded. Section 10. NOTICES OF ADJUSTMENTS. Upon the happening of any event requiring an adjustment of the Warrant Price or the number of Warrant Shares purchasable hereunder, the Company shall promptly give written notice thereof to the Warrantholder at the address appearing in the records of the Company, stating the adjusted Warrant Price and/or the adjusted number of Warrant Shares resulting from such event and setting forth in reasonable detail the method of calculation and the facts upon which such calculation is based. Failure to give such notice to the Warrantholder or any defect therein shall not affect the legality or validity of the subject adjustment. Section 11. BENEFITS. Nothing in this Warrant shall be construed to give any person, firm or corporation (other than the Company and the Warrantholder) any legal or equitable right, remedy or claim, it being agreed that this Warrant shall be for the sole and exclusive benefit of the Company and the Warrantholder. .. Section 12. NOTICE OF CERTAIN EVENTS. The Company shall give the Warrantholder at least 20 days' prior written notice before the earlier of the establishment of any record date in connection with, or any closing or effective date for, any of the events described in Sections 8(a) or 8 (b) hereof. Section 13. NOTICES. Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earliest of (a) one business day following the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number specified below, (b) four business days -4- following the date of mailing, if sent by U.S. overnight courier service, or (c) upon actual receipt by the party to whom such notice is required to be given. The addresses for such notices and communications are those set forth below, or such other address as may be designated in writing hereafter, in the same manner, by such person. IF TO THE COMPANY: TriMedia Entertainment Group, Inc. 115 East 57th Street, 11th Floor New York, NY 10022 Attention: President Fax No.: 212.820.9763 IF TO THE HOLDER AT THE ADDRESSES SET FORTH IN THE SUBSCRIPTION AGREEMENT Section 14. SUCCESSORS. All the covenants and provisions hereof by or for the benefit of the Warrantholder shall bind and inure to the benefit of its respective successors and assigns hereunder. Section 15. GOVERNING LAW. This Warrant shall be governed by, and construed in accordance with, the internal laws of the State of New York, without reference to the choice of law provisions thereof. The Company and, by accepting this Warrant, the Warrantholder, each irrevocably submits to the exclusive jurisdiction of the courts of the State of New York located in Manhattan County and the United States District Court for the Southern District of New York for the purpose of any suit, action, proceeding or judgment relating to or arising out of this Warrant and the transactions contemplated hereby. Service of process in connection with any such suit, action or proceeding may be served on each party hereto anywhere in the world by the same methods as are specified for the giving of notices under this Warrant. The Company and, by accepting this Warrant, the Warrantholder, each irrevocably consents to the jurisdiction of any such court in any such suit, action or proceeding and to the laying of venue in such court Section 16. NO RIGHTS AS SHAREHOLDER. Prior to the exercise of this Warrant, the Warrantholder shall not have or exercise any rights as a shareholder of the Company by virtue of its ownership of this Warrant unless specifically set forth herein. Section 17. AMENDMENTS. This Warrant shall not be amended without the prior written consent of the Company and the then current Warrantholder. Section 18. SECTION HEADINGS. The section headings in this Warrant are for the convenience of the Company and the Warrantholder and in no way alter, modify, amend, limit or restrict the provisions hereof. -5- IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed, as of ____________, 200__ TriMedia Entertainment Group, Inc. By:___________________________ Name: ________________________ Title: ________________________ -6- TRIMEDIA ENTERTAINMENT GROUP, INC. WARRANT EXERCISE FORM To: TriMedia Entertainment Group, Inc. The undersigned hereby irrevocably elects to exercise the right of purchase represented by the within Warrant ("Warrant") for, and to purchase thereunder by the payment of the Warrant Price and surrender of the Warrant, _______________ shares of Common Stock ("Warrant Shares") provided for therein, and requests that certificates for the Warrant Shares be issued as follows: ------------------------------- Name -------------------------------- Address ================================ Federal Tax ID or Social Security No. and delivered by |_| certified mail to the above address, or |_| electronically (provide DWAC Instructions:___________________), or |_| other (specify: __________________________________________). and, if the number of Warrant Shares shall not be all the Warrant Shares purchasable upon exercise of the Warrant, that a new Warrant for the balance of the Warrant Shares purchasable upon exercise of this Warrant be registered in the name of the undersigned Warrantholder or the undersigned's Assignee as below indicated and delivered to the address stated below. Dated: ___________________, ____ Note: The signature must correspond with the name of the registered holder as written on the first page of the Warrant in every particular, without alteration or enlargement or any change whatever, unless the Warrant has been assigned. Signature:_____________________ ______________________________ Name (please print) ______________________________ ______________________________ Address ------------------------------ Federal Identification or Social Security No. Assignee: ============================== -7- ASSIGNMENT FORM To assign this Warrant, fill in the form below: I, or we, assign and transfer this Warrant to =============================================== ----------------------------------------------- (Print or type assignee's name, address and zip code) ----------------------------------------------- (Insert assignee's social security or tax identification number, if any) and irrevocably appoint ---------------------------------------------------- as agent to transfer this Note on the books of the Company. The agent may substitute another to act for him. Date: -------------- --------------------------------------------- (Sign exactly as your name appears on the face of this Warrant) ASSIGNMENT IS SUBJECT TO TRANSFER RESTRICTIONS SET FORTH IN THIS WARRANT ------------------------------- -8- EX-31.1 4 exh31-1.txt EXHIBIT 31.1 Certification of Principal Executive Officer required by SEC Rule 13a-14(a) (17 CFR 240.13a-14(a)) or Rule 15d-14(a) (17 CFR 240.15d-14(a)) I, Jason Meyers, certify that: 1. I have reviewed this quarterly report on Form 10-QSB of TriMedia Entertainment Group, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods presented in this quarterly report; 4. The small business issuer's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b) Evaluated the effectiveness of the small business issuer's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and c) Disclosed in this report any change in the small business issuer's internal control over financial reporting that occurred during the small business issuer's most recent fiscal quarter (the small business issuer's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer's internal control over financial reporting; and 5. The small business issuer's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer's auditors and the audit committee of the small business issuer's board of directors (or persons performing the equivalent functions): a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuer's ability to record, process, summarize and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer's internal control over financial reporting. March 17, 2008 By: /s/ Jason Meyers ----------------- Jason Meyers Chief Executive Officer and Chief Financial Officer EX-32.1 5 exh32-1.txt EXHIBIT 32.1 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report on Form 10-QSB for the period ending January 31, 2007 as filed with the Securities and Exchange Commission by TriMedia Entertainment Group, Inc. (the "Company") on the date hereof (the "Report"), Jason Meyers, Chief Executive Officer and Chief Financial Officer of the Company, certifies, pursuant to 18 U.S.C. 1350, as adopted pursuant to 906 of the Sarbanes-Oxley Act of 2002, that: 1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company. March 17, 2008 /s/ Jason Meyers ------------------- Jason Meyers Chief Executive Officer and Chief Financial Officer This certification accompanies the Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended. A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act of 2002 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request. -----END PRIVACY-ENHANCED MESSAGE-----