SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
Current Report Pursuant
To Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of report (Date of earliest event reported):
November 17, 2003 (September 1, 2003)
Trinity Learning Corporation
(Exact Name of Registrant as Specified in Its Charter)
Utah
(State of Other Jurisdiction of Incorporation)
0-8924 73-0981865
(Commission File Number) (IRS Employer Identification No.)
1831 Second Street
Berkeley, California 94710
(Address of Principal Executive Offices) (Zip Code)
(510) 540-9300
(Registrant's Telephone Number, Including Zip Code)
Item 7. Financial Statements and Exhibits
Included with this amendment to the Report on Form 8-K for Trinity
Learning Corporation, originally filed with the Securities and Exchange
Commission on September 16, 2003, are the financial statements of River
Murray Training Pty. Ltd., as of June 30, 2003 and June 30, 2002 along with
pro forma financial information giving effect to the acquisition of this
entity.
River Murray Training Pty. Ltd.
Financial Statements
(In U.S. Dollars)
June 30, 2003
and
June 30, 2002
/Letterhead/
Independent Auditors' Report
-----------------------------
To the Board of Directors of
River Murray Training Pty. Ltd.
We have audited the accompanying balance sheets of River Murray Training
Pty. Ltd., (an Australian corporation), as of June 30, 2003 and 2002, and
the related statements of operations, retained earnings, and cash flows for
the 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, in the United States of America. Those standards require that
we plan and perform the audits to obtain reasonable assurance about whether
the financial statements are free of material misstatements. 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 the significant estimates made by
management, as well as evaluating the overall financial statements
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 River Murray Training
Pty. Ltd., as of June 30, 2003 and 2002, and the results of its operations
and its cash flows for the years then ended, in conformity with generally
accepted accounting principles, in the United States of America.
/s/Bierwolf, Nilson & Associates
--------------------------------
Bierwolf, Nilson & Associates
Salt Lake City, Utah
October 22, 2003
River Murray Training Pty. Ltd.
Balance Sheet
(In U.S. Dollars)
June 30, June 30,
2003 2002
----------- -----------
Assets
Current Assets
--------------
Cash $ 48,688 $ 48,062
Accounts Receivable 88,271 28,232
Prepaid Expenses 372 -
----------- -----------
Total Current Assets 137,331 76,294
Property & Equipment (Note 6)
--------------------
Books, Videos & Software 17,545 15,755
Computer & Office Equipment 20,714 18,832
Furniture & Fixtures 7,322 5,827
Vehicles 18,330 -
----------- -----------
Total Property & Equipment 63,911 40,414
Less Accumulated Depreciation (34,119) (20,090)
----------- -----------
Net Property & Equipment 29,792 20,324
----------- -----------
Total Assets $ 167,123 $ 96,618
=========== ===========
Liabilities & Stockholders' Equity
Current Liabilities
-------------------
Accounts Payable $ 9,875 $ 11,428
Accrued Expenses 68,126 33,537
Notes Payable - Related Party (Note 7) 61,011 11,932
Notes Payable - Current Portion 4,907 -
Interest on Notes Payable 2,212 -
----------- -----------
Total Current Liabilities 146,131 56,897
Long Term Liabilities
---------------------
Notes Payable (Note 4) 11,414 -
----------- -----------
Total Long Term Liabilities 11,414 -
----------- -----------
Total Liabilities 157,545 56,897
Stockholders' Equity
--------------------
Common Stock 300 Shares Authorized;
No Par Value; 300 Shares Issued & Outstanding 153 153
Accumulated Earnings (Deficit) 5,819 39,664
Accumulated Other Comprehensive Income 3,606 (96)
----------- -----------
Total Stockholders' Equity 9,578 39,721
----------- -----------
Total Liabilities & Stockholders' Equity $ 167,123 $ 96,618
=========== ===========
5
River Murray Training Pty. Ltd.
Statement of Operations
(In U.S. Dollars)
For the Years Ended June 30
2003 2002
----------- -----------
Revenues
--------
Services Income $ 622,707 $ 548,012
----------- -----------
Total Revenues 622,707 548,012
Expenses
--------
Depreciation & Amortization 14,028 10,513
Salaries & Wages 377,203 80,103
Professional Fees 101,540 280,514
Office Expenses 40,537 30,027
Travel & Entertainment 55,301 36,510
Utilities 1,559 1,509
Rent Expense 13,485 13,848
General & Administrative 44,185 47,093
----------- -----------
Total Expenses 647,838 500,117
----------- -----------
Net Income (Loss) from Operations (25,131) 47,895
Other Income (Expenses)
-----------------------
Interest Income 1,110 -
Interest Expense (2,026) (2,705)
----------- -----------
Total Other Income (Expense) (916) (2,705)
----------- -----------
Net Income (Loss) before taxes (26,047) 45,190
Income Tax Expense 5,889 14,491
----------- -----------
Net Income (Loss) $ (31,936) $ 30,699
=========== ===========
Net (Loss) Per Share $ (106.45) $ 102.33
Weighted Average Shares Outstanding 300 300
Comprehensive Income
--------------------
Net Income (Loss) $ (31,936) $ 30,699
Other Comprehensive Income:
Foreign Currency Translation 3,606 (96)
----------- -----------
Comprehensive Income (Loss) $ (28,330) $ 30,603
=========== ===========
River Murray Training Pty. Ltd.
Statement of Cash Flows
(In U.S. Dollars)
For the Years Ended June 30
2003 2002
----------- -----------
Cash Flows from Operating Activities
------------------------------------
Net Profit or (Loss) $ (31,936) $ 30,699
Adjustments to Reconcile Net Profit
or (Loss) to Net Cash:
Amortization & Depreciation 14,028 10,513
Non Cash Effect from Foreign Currency Translation 3,982 (2,750)
Changes in Operating Assets & Liabilities:
(Increase) Decrease in Accounts Receivable (60,039) 2,866
(Increase) Decrease in Prepaid Expenses (372) -
Increase (Decrease) in Accrued Expenses 34,589 18,236
Increase (Decrease) in Accounts Payable (1,553) (4,635)
Increase (Decrease) in Interest on Notes Payable 2,212 -
----------- -----------
Net Cash (Used) by Operating Activities (39,089) 54,929
Cash Flows from Investing Activities
------------------------------------
Purchase of Property & Equipment (3,672) (12,564)
Purchase of Furniture & Fixtures (1,495) (3,685)
Purchase of Vehicle (18,330) -
----------- -----------
Net Cash (Used) by Investing Activities (23,497) (16,249)
Cash Flows from Financing Activities
------------------------------------
Payments on Note Payable (3,022) -
Payments on Note Payable - Related Party (3,534) (65,820)
Proceeds from Notes Payable - Related Party 50,425 65,484
Proceeds from Note Payable 19,343 -
----------- -----------
Net Cash Provided by Financing Activities 63,212 (336)
----------- -----------
Increase (Decrease) in Cash 626 38,344
Cash at Beginning of Period 48,062 9,718
----------- -----------
Cash at End of Period $ 48,688 $ 48,062
=========== ===========
Disclosures from Operating Activities
-------------------------------------
Interest $ 2,026 $ 2,705
Taxes 5,889 14,491
River Murray Training Pty. Ltd.
Notes to Financial Statements
(In U.S. Dollars)
June 30, 2003
NOTE 1 - Corporate History
River Murray Training Pty. Ltd. ("RMT") was organized June 7, 1999 in
Berri, South Australia. RMT is an Australian training firm specializing in
workplace learning programs for viticulture and other segments of the food
production industry. RMT is based in Australia's major wine production
region and one of its primary regions for agricultural products. RMT is at
the leading edge of workplace training in Australia, empowering client
companies to develop and manage their own sustainable training systems. As
a registered training organization in Australia, RMT has developed a wide
range of nationally accredited programs and short courses to meet the
specific needs of its customers.
RMT maintains 350 training modules with the majority in the wine
sector. Other modules include training for retail services, small business
office administration and front-line management. RMT's customers are the
major wine producing companies in Australia receiving government funding
for vocational training.
NOTE 2 - Significant Accounting Policies
A. The Company uses the accrual method of accounting.
B. Revenues and directly related expenses are recognized in the period
when the goods are shipped to the customer.
C. The Company considers all short term, highly liquid investments that
are readily convertible, within three months, to known amounts as cash
equivalents. The Company currently has no cash equivalents.
D. Foreign Currency Translation / Remeasurement Policy: Assets and
liabilities that occur in foreign countries are recorded at historical
cost and translated at exchange rates in effect at the end of the
year. Income Statement accounts are translated at the average
exchange rates for the year. Translation gains and losses shall be
recorded as a separate line item in the equity section of the
financial statements.
E. Depreciation: The cost of property and equipment is depreciated over
the estimated useful lives of the related assets. The cost of
leasehold improvements is depreciated (amortized) over the lesser of
the length of the related assets or the estimated lives of the assets.
Depreciation is computed on the straight line method for reporting
purposes and for tax purposes.
F. Use of Estimates: The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and reported
amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
River Murray Training Pty. Ltd.
Notes to Financial Statements
(In U.S. Dollars)
June 30, 2003
NOTE 3 - New Technical Pronouncements
In October 2002, SFAS Number 147, "Acquisitions of Certain Financial
Institutions an amendment of FASB Statements Numbers 72 and 144 and FASB
Interpretation Number 9" was issued to be used in acquisitions of financial
institutions after October 1, 2002. It is anticipated that SFAS 147 will
have no effect upon the Company's financial statements.
In December 2002, SFAS Number 148, "Accounting for Stock-Based
Compensation Transition and Disclosure -- an amendment of FASB Statement
Number 123" was issued for fiscal years beginning after December 15, 2003.
Adoption of SFAS 148 will not have an impact on the Company's financial
statements at June 30, 2003.
In April 2003, SFAS Number 149, "Amendment of Statement 133 on
Derivative Instruments and Hedging Activities" was issued for fiscal
quarters that began prior to June 15, 2003. Adoption of SFAS 149 will have
no effect upon the Company's financial statements.
In May 2003, SFAS Number 150, "Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and Equity" was issued
for the first interim period beginning after June 15, 2003. It is
anticipated that SFAS 150 will have no effect upon the Company's financial
statements.
NOTE 4 - Notes Payable
The Company has the following notes payable obligations 2003 2002
--------- ---------
Note Payable to bank due October 29, 2004, plus interest
payable annually at 9.5%, secured by vehicle. $ 16,321 $ -
--------- ---------
Total 16,321 -
Less Current Maturities (4,907) -
--------- ---------
Total Notes Payables $ 11,414 $ -
========= =========
Following are maturities of long-term debt for each of the next two fiscal
years;
Year Amount
---- -------------
2004 $ 4,907
2005 11,414
------------
Total $ 16,321
============
River Murray Training Pty. Ltd.
Notes to Financial Statements
(In U.S. Dollars)
June 30, 2003
NOTE 5 - Operating Leases
On May 1, 2002, the Company signed a lease agreement to lease
commercial space for its corporate offices. The Company pays $7,333 per
annum or monthly payments of $611. In addition, the Company is obligated
to insure and pay all associated taxes and surcharges related to the
premises. The term of the lease expires on April 30, 2005. The lease
agreement allows the Company to renew the lease term at the end of three
years for a second term of no less than three years. The office building
is located at 18 Strawbridge Street, Berri, South Australia.
On July 28, 2000, the Company signed a lease agreement with Canon
Finance Australia Ltd, for a Digital Canon Copier. The term of the lease
is for five years. The monthly payments including goods and services tax
amount to $339. The last payment is due on June 28, 2005. Upon completion
of the lease agreement, the Company has the option to purchase the Canon
copier for AU$1.00.
The following is a schedule of future minimum payments under operating
leases as of June 30, 2003.
Building Copier
Periods Amounts Amounts
--------- ---------- ----------
2004 $ 7,333 $ 4,067
2005 $ 6,111 $ 4,067
---------- ----------
Totals $ 13,444 $ 8,134
========== ==========
Rent expense entering into the determination of net loss follows:
Year Ended June 30
2003 2002
----------- -----------
Minimum rent on operating leases $ 13,485 $ 13,848
----------- -----------
Total Rent Expense $ 13,485 $ 13,848
=========== ===========
NOTE 6 - Depreciation
The Company capitalizes furniture and equipment purchases in amounts
based on local jurisdiction. Capitalized amounts are depreciated over the
useful life of the assets using the straight-line method of depreciation.
Scheduled below are the assets, costs, depreciation expense, and
accumulated depreciation at June 30, 2003 and 2002.
Scheduled below are the assets, costs and accumulated depreciation at June
30, 2003 and 2002.
River Murray Training Pty. Ltd.
Notes to Financial Statements
(In U.S. Dollars)
June 30, 2003
Accumulated
Asset Cost Depreciation Expense Depreciation
---------------------- --------------------- ----------------------
06/30/2003 06/30/2002 06/30/2003 06/30/2002 06/30/2003 06/30/2002
---------- ---------- ---------- ---------- ---------- ----------
Books, Videos &
Software $ 17,545 $ 15,755 $ 4,765 $ 4,463 $ 13,568 $ 8,803
Computers & Office
Equipment 20,714 18,832 5,269 5,276 15,194 9,925
Furniture &
Fixtures 7,322 5,827 1,245 774 2,608 1,363
Vehicles 18,330 - 2,749 - 2,749 -
---------- ---------- ---------- ---------- ---------- ----------
Balance $ 63,911 $ 40,414 $ 14,028 $ 10,513 $ 34,119 $ 20,091
========== ========== ========== ========== ========== ==========
NOTE 7 - Related Party Transactions
In 2002, Officer's of the Company loaned the Company a total of
$14,122. The loans are unsecured, non-interest bearing, and due on demand.
In 2003, Officer's of the Company loaned the Company an additional
$50,525. Loans in the amount of $46,698 are unsecured, carry an annual
interest rate of 7 percent, and are due on demand. Interest has been
accrued in the amount of $2,212. The remaining $3,827 in loans are
unsecured, non-interest bearing, and due on demand.
During the current year, payments to Officer's of the Company amounted
to $3,534.
NOTE 8 - Net Operating Loss Carryforward for Income Tax Purposes
The Company has incurred losses that can be carried forward to offset
future earnings if conditions of the Internal Revenue Codes are met. These
losses are as follows:
Year of Expiration
Loss Amount Date
-------------- -------------- --------------
2002 $ - 2022
2003 31,936 2023
The Company has adopted FASB 109 to account for income taxes. The
Company currently has no issues that create timing differences that would
mandate deferred tax expense. Net operating losses would create possible
tax assets in future years. Due to the uncertainty as to the utilization
of net operating loss carryforwards an evaluation allowance has been made
to the extent of any tax benefit that net operating losses may generate.
River Murray Training Pty. Ltd.
Notes to Financial Statements
(In U.S. Dollars)
June 30, 2003
NOTE 8 - Net Operating Loss Carryforward for Income Tax Purposes continued
2003
-----------
Current Tax Asset Value of Net Operating Loss Carryforwards at
Current Prevailing Federal Tax Rate $ 12,774
Evaluation Allowance (12,774)
-----------
Net Tax Asset $ -
===========
Current Income Tax Expense $ -
Deferred Income Tax Benefit -
NOTE 9 - Subsequent Events
On September 1, 2003, the Company completed a transaction with Trinity
Learning Corporation ("TLC"), (a Corporation based in the United States of
America), wherein, the Company received 700,000 shares of restricted TLC
common stock in exchange for all of RMT issued and outstanding shares of
common stock. The Company also received $49,000 in cash to satisfy loans
advanced to the Company by its former shareholders.
Trinity Learning Corporation
Unaudited Pro Forma Consolidated Financial Statements
June 30, 2003
Trinity Learning Corporation
Unaudited Pro Forma Consolidated Balance Sheet
June 30, 2003
-------------
Assets
------
Current Assets
Cash $ 135,199
Accounts Receivable 130,990
Interest Receivable 41
Prepaid Expense 98,316
-------------
Total Current Assets 364,546
-------------
Property & Equipment (Note 3)
Furniture & Equipment 83,177
Accumulated Depreciation (7,824)
-------------
Net Property & Equipment 75,353
-------------
Intangible Asset (Note 4)
Technology-Based Asset 1,458,734
Accumulated Amortization (167,747)
-------------
Net Intangible Asset 1,290,987
-------------
Other Assets
Notes Receivable (Note 5) 25,000
Other Assets 94,003
-------------
Total Other Assets 119,003
-------------
Total Assets $ 1,849,889
=============
Continued
Trinity Learning Corporation
Unaudited Pro Forma Consolidated Balance Sheet
June 30, 2003
-------------
Liabilities and Stockholders' Equity
------------------------------------
Current Liabilities
Accounts Payable $ 401,747
Accrued Expenses 338,396
Interest Payable 66,199
Notes Payable (Notes 7 & 8) 4,907
Notes Payable - Related Party (Notes 7 & 8) 2,208,162
-------------
Total Current Liabilities 3,019,411
-------------
Long Term Liabilities
Notes Payable (Note 8) 11,414
-------------
Total Long Term Liabilities 11,414
-------------
Total Liabilities 3,030,825
-------------
Stockholders' Equity
Preferred Stock, 10,000,000 Shares at No Par Value;
No Shares Issued and Outstanding -
Common Stock, 100,000,000 Shares Authorized at No
Par Value; 15,656,641 Shares and 49,774 Shares
Issued and Outstanding, Respectively 10,043,447
Accumulated Deficit (11,188,913)
Subscription Receivable (35,000)
Other Comprehensive Income (470)
-------------
Total Stockholders' Equity (1,180,936)
-------------
Total Liabilities and Stockholders' Equity $ 1,849,889
=============
The accompanying notes are an integral part of these financial statements.
Trinity Learning Corporation
Unaudited Pro Forma Consolidated Statement of Operations
June 30, 2003
-------------
Revenue $ 790,497
------- -------------
Expenses
--------
Salaries & Benefits 1,420,326
Professional Fees 539,376
General & Administrative 273,116
Travel & Entertainment 237,894
Depreciation & Amortization 189,525
Rent 58,009
Office Expense 87,432
-------------
Total Expenses 2,805,678
-------------
Income (Loss) from Operations (2,015,181)
-------------
Other Income (Expenses)
-----------------------
Interest Income 623
Interest Expense (78,891)
Foreign Currency Gain/(Loss) (4,582)
-------------
Total Other Income (Expenses) (82,250)
-------------
Income (Loss) Before Taxes (2,098,031)
Taxes 5,889
-------------
Net Income (Loss) $ (2,103,920)
=============
Net Loss Per Common Share $ (0.23)
=============
Weighted Average Shares Outstanding 9,064,218
=============
A summary of the components of other comprehensive income for the
transition period from October 1, 2002 to June 30, 2003 is as follows:
June 30, 2003
--------------------------
Before Tax After Tax
Amount Amount
------------ -------------
Net Income (Loss) $(2,098,031) $ (2,103,920)
Foreign Currency Translation (470) (470)
------------ -------------
Total Other Comprehensive Income $(2,098,501) $ (2,104,390)
============ =============
The accompanying notes are an integral part of these financial statements.
Trinity Learning Corporation
Notes to the Financial Statements
June 30, 2003
NOTE 1 - Corporate History
Trinity Learning Corporation ("Trinity," "the Company" or "we") was
incorporated on April 14, 1975 in Oklahoma under the name U.S. Mineral &
Royalty Corp. as an oil and gas exploration, development and operating
company. In 1989, the Company changed its name to Habersham Energy
Company. Historically, the Company was engaged in the business of
acquiring and producing oil and gas properties, but did not have any
business activity from 1995 to 2002. Pursuant to its reorganization in
2002, the Company changed its domicile to Utah, amended its capital
structure and changed its name to Trinity Companies Inc., then, in March
2003, to Trinity Learning Corporation. Until adoption of its recent
operating strategy in 2002, the Company had not had any business activity
since 1995.
Pursuant to a series of related transactions that closed on October 1,
2002, ("the Acquisition Date") the Company issued 3,000,000 restricted
shares of its common stock, issued $1,000,000 in convertible promissory
notes and assumed $222,151 in indebtedness to acquire Competency Based
Learning, Inc. (CBL-California), a California corporation and two related
Australian companies, Competency Based Learning, Pty. Ltd. ACN 084 763 780
("CBL-Australia") and ACN 082 126 501 Pty. Ltd. (collectively referred to
as "CBL"). The transactions were effected through CBL Global Corp. ("CBL
Global"), a wholly-owned subsidiary.
On June 16, 2003, we completed a recapitalization of our common stock
by (i) effecting a reverse split of our outstanding common stock on the
basis of one share for each 250 shares owned, with each resulting
fractional share being rounded up to the nearest whole share, and (ii)
subsequently effecting a forward split by dividend to all shareholders of
record, pro rata, on the basis of 250 shares for each one share owned.
The record date for the reverse and forward splits was June 4, 2003.
Immediately prior to the recapitalization, we had 13,419,774 shares of
common stock outstanding. Following the recapitalization and the
cancellation of 108,226 shares of common stock beneficially owned by
members of management, we had 13,419,774 shares of common stock
outstanding.
On August 6, 2003, our board of directors approved a change in our
fiscal year-end from September 30 to June 30 to align with those of the
companies we had already acquired or were at that time in the process of
acquiring. The information presented in this transition report on Form 10-
KSB relates to the period October 1, 2002 through June 30, 2003.
On September 1, 2003, we completed the acquisition of all of the
issued and outstanding shares of River Murray Training Pty Ltd ("RMT") an
Australian company that is in the business of providing workplace training
programs for various segments of the food production industry, including
viticulture and horticulture. In consideration for the shares of RMT we
issued 700,000 restricted shares of our common stock, of which 350,000
shares are subject to the terms of an escrow agreement as collateral for
the indemnification obligations of the former RMT shareholders. We also
loaned US$49,000 to RMT for the purpose of repaying outstanding loans
advanced to RMT by its former shareholders.
NOTE 2 - Significant Accounting Policies
A. Method of Accounting. The Company uses the accrual method of
accounting.
B. Revenue and Expense Recognition. Revenues and directly related
expenses are recognized in the financial statements in the period when
the goods are shipped to the customer.
C. Cash and Cash Equivalents. The Company considers all short-term,
highly liquid investments that are readily convertible within three
months to known amounts, as cash equivalents.
D. Depreciation and Amortization. The cost of property and equipment is
depreciated over the estimated useful lives of the related assets.
The cost of leasehold improvements is amortized over the lesser of the
length of the lease of the related assets or the estimated lives of
the assets. Depreciation and amortization is computed on the
straight-line method.
E. Use of Estimates. The preparation of the financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the amounts
reported in the financial statements and accompanying notes. Actual
results could differ from those estimates.
F. Consolidation Policies. The accompanying consolidated financial
statements include the accounts of the Company and its wholly owned
subsidiaries. Intercompany transactions and balances have been
eliminated in consolidation.
G. Foreign Currency Translation/Remeasurement Policy. Assets and
liabilities that occur in foreign currencies are recorded at
historical cost and translated at exchange rates in effect at the end
of the reporting period. Statement of Operations accounts are
translated at the average exchange rates for the year. Translation
gains and losses are recorded as Other Comprehensive Income in the
Equity section of the Balance Sheet.
H. Purchase Accounting. The purchase value of fixed assets purchased in
the acquisition of CBL and RMT were determined based on their
historical value less accumulated depreciation. All other assets were
valued at their current value and a technology-based intangible asset
was recorded.
NOTE 3 - Fixed Assets
The Company capitalizes furniture and equipment purchases in excess of
$5,000 or at lower amounts based on local jurisdiction. Capitalized
amounts are depreciated over the useful life of the assets using the
straight-line method of depreciation. Scheduled below are the assets,
cost, depreciation expense, and accumulated depreciation at June 30, 2003
and September 30, 2002.
Accumulated
Asset Cost Depreciation Expense Depreciation
--------------------- --------------------- ---------------------
06/30/2003 09/30/2002 06/30/2003 09/30/2002 06/30/2003 09/30/2002
---------- ---------- ---------- ---------- ---------- ----------
Furniture &
Equipment $ 83,117 $ 6,151 $ 21,778 $ 80 $ 7,824 $ 80
NOTE 4 Technology-Based Intangible Assets
The Company capitalized technology-based intangible assets in its
acquisition of CBL and RMT. The amount capitalized is equal to the
difference between the consideration paid for the subsidiaries including
any liabilities assumed and the value of the other assets acquired. Other
assets were valued at the current value at the date of the acquisition
including the net value of fixed assets, historical price less accumulated
depreciation. The technology-based intangible assets are being amortized
over a five-year period using the straight-line method. The value assigned
to the technology-based intangible assets are considered appropriate based
on average annual revenues earned from licensing of these asset over the
two year period prior to the acquisitions and the expectation that future
revenues for the five year period subsequent to the acquisition will equal
or exceed these amounts. Scheduled below is the total asset cost,
amortization expense and accumulated amortization at June 30, 2003.
Accumulated
Asset Cost Amortization Expense Amortization
---------------------- --------------------- ---------------------
06/30/2003 09/30/2002 06/30/2003 09/30/2002 06/30/2003 09/30/2002
----------- ---------- ---------- ---------- ---------- ----------
Intangible
Asset $1,458,734 $ - $ 167,747 $ - $ 167,747 $ -
NOTE 5 Notes Receivable
On June 5, 2003, we agreed to lend TouchVision, Inc. ("TouchVision")
$50,000 in two equal installments of $25,000 each. Interest accrues on the
unpaid principal amount of the note at a rate equal to six percent per
year. Interest accrued under the note is paid annually, with the first
payment due June 5, 2004. All unpaid principal and interest are due June
29, 2005. At June 30, 2003, $25,000 had been advanced to TouchVision and
accrued interest totaled $41.
NOTE 6 - Operating Leases
In July 2003, the Company signed a lease agreement for new office
space at 1831 Second Street in Berkeley, California. The lease term
commenced September 1, 2003 and will expire on May 31, 2004. The Company
will pay a minimum of $5,025 per month. The Company paid $10,050 upon the
execution of the lease that includes $5,025 security deposit that may be
refunded at the end of the lease.
CBL-Australia leases contiguous office space pursuant to two separate
lease agreements for its operations located in Queensland, Australia. The
term of the first lease expires in January 2004 with a three year option to
renew. The monthly rental amount of that lease is $2,471. The term of the
second lease expires in January 2007 with a three year option to renew.
The monthly rental amount of that lease is $2,140. CBL-Australia also
leases a car for use by Brian Kennedy, its chief executive officer. The
lease expires in October 2005; the monthly rental amount is $338.
On May 1, 2002, RMT signed a lease agreement for its corporate office
in Berri, South Australia. RMT pays $7,333 per annum or monthly payments
of $611. In addition, RMT is obligated to insure and pay all associated
taxes and surcharges related to the premises. The term of the lease
expires on April 30, 2005. The lease agreement allows RMT to renew the
lease term at the end of three years for a second term of no less than
three years. RMT also leases a copy machine. The term of the lease is for
five years. The monthly payments including goods and services tax amount
to $339. The last payment is due on June 28, 2005. Upon completion of the
lease agreement, RMT has the option to purchase the copier for AU$1.00.
Total Minimum Lease Commitments as of June 30, 2003:
Calendar Year Amount
----------- -----------
2003 $ 55,491
2004 67,432
2005 36,053
2006 29,607
Thereafter 2,477
-----------
Total $ 191,060
===========
NOTE 7 Related Party Transactions
In 2002, Ms. Barbara and Ms. Ildi Hayman, officers of RMT, loaned RMT
a total of $14,122. The loans are unsecured, non-interest bearing, and due
on demand. In 2003, Ms. McPherson and Ms. Hayman loaned RMT an additional
$50,525. Loans in the amount of $46,698 are unsecured, carry an annual
interest rate of 7 percent, and are due on demand. Interest has been
accrued in the amount of $2,212. The remaining $3,827 in loans are
unsecured, non-interest bearing, and due on demand. During the current
year, payments to Ms. McPherson and Ms. Hayman amounted to $3,534. As part
of its acquisition of RMT, the Company loaned US$49,000 to RMT for the
purpose of repaying outstanding loans for funds advanced to RMT by Ms.
McPherson and Ms. Hayman.
As of July 15, 2002, Trinity entered in a two-year Advisory Agreement
with Kings Peak Advisors, LLC ("KPA") with automatic renewal for a 12-month
period. Under the terms of the Advisory Agreement, KPA will provide the
Company with general corporate, financial, business development and
investment advisory services on a non-exclusive basis. These services
include assisting with the identification of placement agents,
underwriters, lenders and other sources of financing, as well as additional
qualified independent directors and members of management. KPA is a
private company whose principals are Douglas Cole and Edward Mooney, who
are officers and directors of Trinity, and Mr. Theodore Swindells.
The Advisory Agreement provides that KPA will be compensated for its
various advisory services as follows: (i) for general corporate advisory
services, an initial retainer of $25,000 and a fee of $20,000 per month
throughout the term of the agreement, which monthly fee amount is payable,
at KPA's option, in shares of common stock at a price per share equal to
$0.025; (ii) for financial advisory services, a fee based on 10% of the
gross proceeds of any equity financings and/or 1.5% of any gross proceeds
of debt financings that are completed by underwriters or placement agents
introduced by KPA, as well as any fees which may be due to KPA for its
assistance in identifying prospective investors pursuant to terms and
conditions of offering memoranda issued by the Company; (iii) for merger
and acquisition services involving a transaction resulting from a contact
provided by KPA, a sliding fee based on a percentage of the value of the
transaction, subject to an additional $100,000 bonus in the event the
transaction is valued at $3,000,000 or more; (iv) in respect of general
business development advisory services, a fee to be negotiated with KPA
based upon certain agreed-upon fee parameters between the parties; and (v)
in respect of debt, credit or leasing facilities, a fee to be negotiated on
a case-by-case basis.
Trinity acknowledged that it was indebted to KPA for prior services
rendered since April 1, 2002 in the amount of $30,000, up to 50% of which
amount is payable, at KPA's option, in shares of common stock at a price
per share of $0.025. The total number of shares of common stock issuable
to KPA under the Advisory Agreement may not exceed 4,400,000 shares.
Through June 30, 2003, KPA had earned a total of $285,000 under the
Advisory Agreement, $110,000 of which was converted into 4,400,000 shares
of common stock in March 2003. Of the balance of $175,000, $134,132 has
been paid to KPA, leaving a balance owing at June 30, 2003 of $40,868.
As of August 8, 2002, Trinity formalized a Debt Conversion Agreement
with Global Marketing Associates, Inc. ("GMA"), holder of a convertible
promissory note (the "GMA Note") in the principal amount of $166,963,
pursuant to which the principal amount of the note, along with accrued
interest thereon, was made convertible, under certain conditions, into
3,200,000 shares of common stock. The GMA Note was originally issued in
November 2000 to the Company's former attorneys and was subsequently
acquired by Pacific Management Services, Inc., who assigned the note to
GMA; both entities are unrelated to Trinity. GMA subsequently assigned the
right to acquire 2,600,000 of the 3,200,000 shares of common stock into
which the note is convertible, to several persons, including Messrs. Cole,
Mooney and Swindells. Pursuant to the assignment, Messrs. Cole and Mooney
each acquired the right to acquire 600,000 shares of the common stock into
which the GMA Note is convertible and Mr. Swindells acquired the right to
acquire 1,000,000 shares. Fifty percent of the shares issuable upon the
conversion of the GMA Note are subject to a two-year lock-up provision that
restricts transfer of such shares without prior written consent of
Trinity's board of directors. As of January 2003, 3,200,000 shares of our
common stock had been issued pursuant to the terms of the GMA Note.
Pursuant to the acquisition of CBL on October 1, 2002 described in
Note 1 above, we issued to shareholders of CBL two convertible promissory
notes in the amounts of $485,000 and $515,000. The notes accrue interest
at 7% per annum and are considered due and payable upon the earlier of
September 1, 2004 or the date, upon which we close an equity financing, the
net proceeds of which, together with the net proceeds of all equity
financing conducted by the Company after the Acquisition Date, equal or
exceeds $10,000,000. The conversion price on the notes is $2.00 per share
of common stock. At June 30, 2003, accrued interest totaled $52,356.
At the Acquisition Date, we issued two unsecured promissory notes in
the amount of $222,151 to cancel three unsecured promissory notes
previously issued by CBL-Australia and CBL-California to its shareholders,
Messrs. Scammell and Kennedy. The notes accrue interest at 7% per annum
and are considered due and payable upon the earlier of the September 1,
2003 or the date, upon which the company closes an equity financing, the
net proceeds of which, together with the net proceeds of all equity
financing conducted by us after the Acquisition Date, equal or exceeds
$3,000,000. At June 30, 2003, accrued interest totaled $11,631. The notes
were due and payable on September 1, 2003 for which the payment has not
been made pending the outcome of a lawsuit filed against Messrs. Scammell
and Kennedy, see Note 14, Subsequent Events.
Concurrent with its acquisition of CBL, Trinity (i) issued promissory
notes to certain individuals and entities for a total principal amount of
$500,000 ("Bridge Financing Amount"), such notes ("Bridge Financing Notes")
are convertible under certain conditions into shares of common stock, and
(ii) in connection with the issuance of the Bridge Financing Notes, issued
warrants ("Bridge Financing Warrants") to the holders of the Notes to
purchase additional shares of Common Stock. Of the Bridge Financing
Amount, $55,000 was advanced by KPA and $120,000 by Mr. Swindells.
The Bridge Financing Notes bear interest at a rate of 9% per annum and
are due one year from the date of the respective notes, unless
automatically converted upon the closing by the Company of an equity
financing consisting of at least 500,000 shares of common stock. On May
19, 2003, the principal amount of $500,000 and accrued interest of $34,745
on the respective notes were converted into 1,336,867 shares of common
stock at $0.40 per share. The Bridge Financing Warrants are exercisable for
a period of one year at a price of $0.05 per share, and contain a net
issuance provision whereby the holders may elect a cashless exercise of
such warrants based on the fair market value of the common stock at the
time of conversion.
From time to time, since inception of our current operating strategy,
Mr. Swindells has provided short-term working capital loans on a non-
interest bearing basis. During our previous fiscal year, we were advanced
$145,000 by Mr. Theodore Swindells, and during the transition period from
October 1, 2002 to June 30, 2003, we were advanced an additional $780,000
by Mr. Swindells. The principal may be converted into such other debt or
equity securities financings that we may issue in private offerings while
the loan is outstanding. In September 2003, we repaid $500,000 on the
$925,000 note balance then outstanding.
NOTE 8 - Notes Payable
At June 30, 2003, notes payable to accredited investors and related
parties totaled $2,147,151 as compared with $811,963 at September 30, 2002.
The notes bear interest between the rates of 0% and 9.5% per annum, some of
which are secured by our common stock or certain assets in our
subsidiaries. Certain notes are convertible into the Company's common
stock.
June September
30, 2003 30, 2002
------------ ------------
Convertible Bridge Financing notes payable to investors
due between June 15, 2003 and September 15, 2003 plus
accrued interest at a rate of 9% per annum. On May 19,
2003, $445,000 was converted to common stock, see Note 7. $ - $ 445,000
Unsecured convertible notes payable due on December 1,
2003, see Note 7. 925,000 145,000
Unsecured convertible notes payable convertible after
August 2002 plus accrued interest at a rate of 6% per
annum. As of January 2003, $104,352 was converted to
common stock, see Note 7. - 104,352
Unsecured convertible notes payable to related parties
convertible after August 2002 plus accrued interest at
a rate of 6% per annum. As of January 2003, $62,611
was converted to common stock, see Note 7. - 62,611
Note payable to bank due October 29, 2004, plus interest
payable annually at 9.5%, secured by vehicle. 16,321 -
Convertible Bridge Financing notes payable to related
parties due between June 15, 2003 and September 15, 2003,
plus accrued interest at a rate of 9% per annum. On May
19, 2003, $55,000 was converted to common stock, see Note 7. - 55,000
Note payable to related parties, see Note 7 for due date,
interest payable at a rate of 7% per annum. 61,011 11,932
Unsecured notes payable to related parties, see Note 7
for due date, interest payable at a rate of 7% per annum. 222,151 -
Convertible notes payable to related parties, see Note 7
for due date, plus accrued interest at a rate of 7% per
annum. 1,000,000 -
------------ ------------
Total Notes Payable 2,224,483 823,895
Less: Current Maturities (2,213,069) (823,895)
------------ ------------
Long Term Notes Payable $ 11,414 $ -
============ ============
NOTE 9 - Stockholders' Equity
On February 5, 2002, the Company effected a one hundred for one (100
for 1) reverse split. No shareholder was reversed below 100 shares.
Shareholders with 100 shares or less, prior to the reverse, were not
affected.
On May 5, 2002, the Company amended its Articles of Incorporation to
reflect a change in par value from $0.10 per share to no par value per
share. Accordingly, this change effecting the common stock and additional
paid in capital values has been retroactively applied to all prior years.
On October 1, 2002, the Company issued a total of 3,000,000 shares of
common stock in conjunction with its acquisition of CBL-Australia and CBL-
California at $0.025 per share. Accordingly, $75,000 has been charged to
common stock to reflect the total cost of the shares.
On October 1, 2002, the Company authorized a Stock Purchase Agreement
in order to retain qualified directors and officers. The Stock Purchase
Agreement allows various directors to purchase an aggregate of 1,200,000
shares of the Company's common stock at a price of $0.025 per share. The
purchase price shall be payable by each Purchaser in the form of the
cancellation of the Company's obligation to pay the various Purchasers a
total of $30,000 as compensation for services already performed by
Purchaser for the Company.
On October 2, 2002, the Company issued 1,070,000 shares of common
stock in settlement of outstanding amounts due for services rendered to the
Company. These shares were issued at $0.025 per share totaling $26,750.
On October 21, 2002, the Company adopted and approved the "2002 Stock
Plan" which was approved by the Company's shareholders at its special
shareholder meeting on December 2, 2002. The Plan authorizes issuance of
3,000,000 shares to be increased by 500,000 shares annually. The plan
expires in ten years. As of June 30, 2003, 2,447,000 options have been
granted at prices ranging from $0.05 per share to $0.50 per share of which
963,625 were vested as of June 30, 2003.
During the period November 15, 2002 to January 21, 2003, we issued
3,200,000 shares in exchange for $166,953, respectively of unsecured notes
payable. The original amount of the note was $166,963 (See Notes 7 and 8).
Between January and April 2003, we received subscriptions to our
December 2002 Private Placement Memorandum totaling $250,000 from outside
investors to purchase 250,000 units at a price of $1.00 per unit. Each
unit entitles the holder to two shares of our common stock and two three
year warrants, each to purchase an additional share of common stock for
$1.00 per share. If all warrants are fully exercised by the holder of such
warrants, a bonus warrant will be issued entitling the holder to purchase
one additional share of common stock for $2.00.
On March 20, 2003, we issued 4,400,000 shares of common stock in
settlement of $110,000 of amounts due to Kings Peak Advisory, LLC (see Note
7).
On May 19, 2003, we issued 1,250,000 and 86,867 shares of the common
stock in exchange for the total principal Bridge Financing Notes of
$500,000 and the accrued interest payable on such notes of $34,745,
respectively (see Note 7).
On June 16, 2003, we completed a recapitalization of its common stock
by effecting a reverse split of its outstanding common stock on the basis
of one share for each 250 shares owned, with each resulting fractional
share being rounded up to the nearest whole share, and subsequently
effecting a forward split by dividend to all shareholders of record, pro
rata, on the basis of 250 shares for each one share owned. Immediately
prior to the recapitalization, we had 13,419,774 shares of common stock
outstanding. Following the recapitalization and the cancellation of
108,226 shares of common stock beneficially owned by members of management,
the Company had 13,419,774 shares of common stock outstanding.
Between June and October 2003, we received subscriptions to our May
2003 Private Placement Memorandum ("May 2003 PPM") totaling $5,143,300 from
outside investors to purchase 5,143,300 units at a price of $1.00 per unit.
Each unit entitles the holder to two shares of our common stock and two
three year warrants, each to purchase an additional share of common stock
for $1.00 per share. If all warrants are fully exercised by the holder of
such warrants, a bonus warrant will be issued entitling the holder to
purchase one additional share of common stock for $2.00. In connection
with the May 2003 Private Placement, we issued to various financial
advisors, 567,160 additional shares of our common stock and five-year
warrants to purchase 207,050 shares of our common stock.
On September 1, 2003, we completed the acquisition of all of the
issued and outstanding shares of River Murray Training Pty Ltd ("RMT") an
Australian company that is in the business of providing workplace training
programs for various segments of the food production industry, including
viticulture and horticulture. In consideration for the shares of RMT we
issued 700,000 restricted shares of our common stock, of which 350,000
shares are subject to the terms of an escrow agreement as collateral for
the indemnification obligations of the former RMT shareholders.
NOTE 10 Stock Option Plan
On December 2, 2002, at a special meeting of our shareholders, the
2002 Stock Plan was approved. The maximum aggregate number of shares that
may be optioned and sold under the plan is the total of (a) 3,000,000
shares, (b) an annual 500,000 increase to be added on the last day of each
fiscal year beginning in 2003 unless a lesser amount is determined by the
board of directors. The plan became effective with its adoption and
remains in effect for ten years unless terminated earlier. Options granted
under the plan vest 25% on the day of the grant and the remaining 75% vests
monthly over the next 36 months. The following schedule summarizes the
activity during the nine-month transition period ended June 30, 2003.
2002 STOCK PLAN
--------------------------
Weighted
Average
Number of Exercise
Shares Price
------------ ------------
Outstanding at October 1, 2002 - $ -
Options Granted 2,447,000 $ 0.23
Options Exercised - -
Options Canceled - -
------------ ------------
Options Outstanding at June 30, 2003 2,447,000 $ 0.23
============ ============
Options Exercisable at June 30, 2003 963,625 $ 0.22
============ ============
In accordance with Statement of Financial Accounting Standards Number 123,
"Accounting for Stock-Based Compensation", option expense of $76,774 was
recognized for the nine-month transition period ended June 30, 2003.
June 30, 2003
-------------
Five-Year Risk Free Interest Rate 3.01%
Dividend Yield nil
Volatility nil
Average Expected Term (Years to Exercise) 4.4
Stock options outstanding and exercisable under 2002 Stock Plan as of
June 30, 2003 are as follows:
Average
Weighted Remaining Weighted
Range of Number of Average Contractual Number Average
Exercise Options Exercise Life of Options Exercise
Price Granted Price (Years) Vested Price
----------- ----------- ----------- ----------- ----------- -----------
$0.05 600,000 $0.05 4.3 262,500 $0.05
$0.25 1,589,000 $0.25 4.3 624,813 $0.25
$0.50 258,000 $0.50 4.6 76,313 $0.50
NOTE 11 - Income Taxes
Income tax expense includes federal and state taxes currently payable
and deferred taxes arising from timing differences between income for
financial reporting and income tax purposes.
The Company has adopted Statement of Financial Accounting Standards
Number 109 ("SFAS 109") "Accounting for Income Taxes." SFAS 109 requires
an asset and liability approach for financial accounting and reporting for
income tax purposes. This statement recognizes (a) the amount of taxes
payable or refundable for the current year and (b) deferred tax liabilities
and assets for future tax consequences of events that have been recognized
in the financial statements or tax returns.
Deferred income taxes result from temporary differences in the
recognition of accounting transactions for tax and financial reporting
purposes. There were no temporary differences at June 30, 2003 and
earlier years; accordingly, no deferred tax liabilities have been
recognized for all years.
The Company has cumulative net operating loss carryforwards of over
$11,100,000 at June 30, 2003 and $9,100,000 at September 30, 2002. No
effect has been shown in the financial statements for the net operating
loss carryforwards as the likelihood of future tax benefit from such net
operating loss carryforwards is not probable. Accordingly, the potential
tax benefits of the net operating loss carryforwards at June 30, 2003 and
September 30, 2002 have been offset by valuation reserves of the same
amount.
Deferred tax assets and the valuation account at June 30, 2003 and at
September 30, 2002 are as follows:
June September
Deferred Tax Assets 30, 2003 30, 2002
------------------- ------------ ------------
Net Operating Loss Carryforwards $ 4,600,000 $ 3,800,000
Valuation Allowance (4,600,000) (3,800,000)
------------ ------------
Total $ - $ -
============ ============
NOTE 12 - Net Earnings (Loss) Per Share
Basic earnings (loss) per common share ("BEPS") are based on the
weighted-average number of common shares outstanding during each period.
Diluted earnings (loss) per common share ("DEPS") are based on shares
outstanding (computed under BEPS) plus dilutive potential common shares.
Shares from the exercise of the outstanding options were not included in
the computation of DEPS, because their inclusion would have been
antidilutive for the nine months ended June 30, 2003.
The following data shows the shares used in the computing loss per
common share including dilutive potential common stock at June 30, 2003:
Amount
------------
Common shares outstanding including 700,000 shares issued
to RMT shareholders at June 30, 2003 15,656,641
============
Weighted average number of common shares including 700,000
shares issued to RMT shareholders used in basic EPS
dilutive effect of options 9,064,218
============
Weighted-average number of common shares and dilutive
potential common shares including 700,000 shares
issued to RMT shareholder used in diluted EPS 9,064,218
============
NOTE 13 - Going Concern
Our financial statements are prepared using generally accepted
accounting principles applicable to a going concern, which contemplates the
realization of assets and liquidation of liabilities in the normal course
of business. Currently, we do not have significant cash or other material
assets, nor do we have an established source of revenues sufficient to
cover our operating costs and to allow us to continue as a going concern.
We do not currently possess a financial institution source of financing and
we cannot be certain that our existing sources of cash will be adequate to
meet our liquidity requirements. However, we have undertaken the following
to meet our liquidity requirements:
(a) Seek additional equity funding through private placements to
raise sufficient funds to continue operations and fund its
ongoing development, merger and acquisition activities. In May
2003, we commenced a $5,000,000 private placement, the proceeds
of which will be used for (i) corporate administration, (ii) the
expansion of subsidiary operations, and (iii) expenses and funds
advanced for acquisitions in 2003. In conjunction with the
private placement, we have engaged various financial advisory
firms and other finders to identify prospective investors. We
completed the private offering on October 31, 2003.
(b) Continue conversion of certain outstanding loans and payables
into common stock in order to reduce future cash obligations;
(c) Generate sufficient cash flow to sustain and grow subsidiary
operations and, if possible, create excess cash flow for
corporate administrative expenses through our operating
subsidiaries; and
(d) Identify prospective acquisition targets with sufficient cash
flow to fund subsidiary operations, as well as potentially
generating operating cash flow that may sustain corporate
administrative expenses.
Trinity's future capital requirements will depend on its ability to
successfully implement these initiatives and other factors, including our
ability to maintain our existing customer base and to expand our customer
base into new geographic markets, and overall financial market conditions
in the United States and other countries where we will seek prospective
investors.
NOTE 14 - New Technical Pronouncements
In October 2002, Statement of Financial Accounting Standards Number
147 ("SFAS 147"), "Acquisitions of Certain Financial Institutions -- an
amendment of FASB Statements Numbers 72 and 144 and FASB Interpretation
Number 9" was issued to be used in acquisitions of financial institutions
after October 1, 2002. It is anticipated that SFAS 147 will have no effect
upon the Company's financial statements.
In December 2002, Statement of Financial Accounting Standards Number
148 ("SFAS 148"), "Accounting for Stock-Based Compensation -- Transition and
Disclosure -- an amendment of FASB Statement Number 123" was issued for
fiscal years beginning after December 15, 2003. It is anticipated that
SFAS 148 will have no effect upon the Company's financial statements.
In April 2003, Statement of Financial Accounting Standards Number 149
("SFAS 149"), "Amendment of Statement 133 on Derivative Instruments and
Hedging Activities" was issued for fiscal quarters that began prior to June
15, 2003. Adoption of SFAS 149 will have no effect upon the Company's
financial statements.
In May 2003, Statement of Financial Accounting Standards Number 150
("SFAS 150"), "Accounting for Certain Financial Instruments with
Characteristics of Both Liabilities and Equity" was issued for the first
interim period beginning after June 15, 2003. The Company anticipates that
SFAS 150 may impact the accounting for certain future acquisitions and the
anticipated distribution of stock for services.
NOTE 15 - Subsequent Events
On July 8, 2003, we issued a five-year warrant to Merriman, Curran,
Ford & Co. a financial service company, to purchase up to 20,000 shares of
our common stock for a period of five years at $0.50 per share in
consideration for financial advisory services provided to us by the firm.
On September 1, 2003, we completed the acquisition of all of the
issued and outstanding shares of TouchVision, a California corporation that
is in the business of providing technology-enabled information and learning
systems to healthcare providers, financial services companies and other
industry segments. In consideration for the TouchVision shares, we issued
an aggregate of 1,250,000 restricted shares of our common stock, of which
312,500 shares are subject to the terms of an escrow agreement as
collateral for the indemnification obligations of the former TouchVision
shareholders. We also agreed to loan to TouchVision the sum of $20,000 per
month for the twelve-month period following closing, to be used for working
capital. We had previously loaned TouchVision the sum of $50,000 in June,
2003 by way of bridge financing pending completion of the acquisition. In
connection with the acquisition, TouchVision entered into substantially
similar employment agreements with each of Messrs. Gregory L. Roche and
Larry J. Mahar, the former principals of TouchVision, which have a term of
two years and provide for annual salaries of $120,000. In conjunction with
the acquisition of TouchVision, we issued 735,000 stock options pursuant to
the 2002 Stock Plan at $0.50 per share.
On September 1, 2003, we completed the acquisition of all of the
issued and outstanding shares of River Murray Training Pty Ltd ("RMT") an
Australian company that is in the business of providing workplace training
programs for various segments of the food production industry, including
viticulture and horticulture. In consideration for the shares of RMT we
issued 700,000 restricted shares of our common stock, of which 350,000
shares are subject to the terms of an escrow agreement as collateral for
the indemnification obligations of the former RMT shareholders. We also
loaned US$49,000 to RMT for the purpose of repaying outstanding loans
advanced to RMT by its former shareholders.
On September 1, 2003, we completed the acquisition of 51% of the issued
and outstanding shares of Ayrshire Trading Limited, a British Virgin Islands
company ("Ayrshire") that owns 95% of Riverbend Group Holdings
(Proprietary) Limited ("Riverbend"), a South African company that provides
learning services to corporations and individuals in South Africa. We also
acquired the option to purchase the remaining 49% of Ayrshire. In
consideration for the Ayrshire shares, we issued a convertible non-
interest-bearing promissory note in the amount of $20,000, which amount is
convertible from time to time but no later than December 30, 2006 into a
maximum of 2,000,000 shares of our common stock. Of these shares, up to
400,000 may be withheld in satisfaction for any breach of warranties by the
former shareholders of Ayrshire. The Ayrshire shares are subject to escrow
and pledge agreements will be reconveyed to the former shareholders in the
event of a default by us of certain terms and conditions of the acquisition
agreements, including, among other things, a voluntary or involuntary
bankruptcy proceeding involving us or the failure by us to list our shares
of common stock on a major stock exchange by December 30, 2006.
As further consideration for the Ayrshire shares, we agreed to make a
non-interest-bearing loan of $1,000,000 to Ayrshire, $300,000 of which was
advanced at closing and $700,000 was advanced On November 3, 2003. We may
exercise an option to acquire the remaining 49% of Ayrshire in
consideration for the issuance of 1,500,000 shares of our common stock,
subject to certain adjustments.
During the period June 1, 2003 to October 31, 2003, we sold by way of
private placement an aggregate of 5,143,300 units at a price of $1.00 per
unit, for aggregate consideration of $5,143,300. Each unit comprised two
shares of our common stock and two warrants, each exercisable for one
additional share of our common stock. In addition, each unit carried the
right to acquire an additional warrant to purchase, under certain
conditions, up to one additional share of common stock. In connection with
the private placement, we paid $448,105 in commissions and issued to
various financial advisors, 567,160 additional shares of our common stock
and five-year warrants to purchase 207,050 shares of our common stock. In
our opinion, the offer and sale of these securities was exempt by virtue
of Section 4(2) of the Securities Act and the rules promulgated
thereunder.
On September 12, 2003, we filed a Complaint in the United States
District Court for the District of Utah, Central Division, against CBL
Global Corporation (f/k/a CBL Acquisition Corporation), and Robert Stephen
Scammell, the sole shareholder of CBL-California, (Case No. 2:03CV00798DAK)
alleging, among other things, that Scammell and CBL-California provided us
with misstated financial statements prior to our merger in October 2002
with CBL-California and CBL Global. On September 18, 2003, we filed a
First Amended Complaint and Jury Demand, which added as defendants CBL-
Global and Brian Kennedy, the sole shareholder of CBL-Australia. The First
Amended Complaint alleges causes of action for violations of Section 10(b)
of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated
thereunder, for violations of Section 20(a) of the Securities Exchange Act
of 1934, for declaratory relief and breach of contract, for common law
fraud, and for negligent misrepresentation.
The First Amended Complaint alleges, among other things, that the
defendants were advised by CBL-California's accountant on September 18,
2002 that CBL-California's financial statements were misstated, and alleges
that new restated financial statements were issued on September 19, 2002.
The First Amended Complaint alleges, however, that the restated financial
statements were not provided to us prior to the October 1, 2002 closing of
the merger. The First Amended Complaint seeks damages in an amount to be
proven at trial, but which amount presently is estimated to exceed, at a
minimum, the full amount of the consideration paid by us and CBL Global in
the merger, as well as treble damages, and attorneys' fees. The First
Amended Complaint also seeks a declaration that we (i) are entitled to
retain certain of our shares of common stock that were issued in connection
with the acquisition of CBL and placed in escrow, (ii) are entitled to set-
off amounts owed to Messrs. Scammell and Kennedy pursuant to the CBL
acquisition; and (iii) are entitled to seek the return of the shares of our
common stock that have already have been distributed to defendants Messrs.
Kennedy and Scammell in the merger. We intend to vigorously pursue our
claims against the defendants.
On September 18, 2003 we announced that we had entered into a
definitive agreement to acquire majority control of IRCA (Pty.) Ltd.
("IRCA"), an international firm specializing in corporate learning,
certification, and risk mitigation in the areas of safety, health
environment, and quality assurance ("SHEQ"). We anticipate closing this
transaction within the next 30 days. IRCA is headquartered in South Africa
and also operates international sales offices and operations in the United
Kingdom and the United States. We will acquire majority interest in IRCA
through a combination of stock and cash payments. The definitive agreement
contains certain closing conditions and certain future provisions that will
enable Trinity to acquire full ownership of IRCA and its various operating
subsidiaries.
Trinity Learning Corporation
Supplementary Schedules
Unaudited Pro Forma Consolidating Financial Statements
For the Period Ended
June 30, 2003
Trinity Learning Corporation
Unaudited Pro Forma Consolidating Balance Sheet
June 30, 2003
Adjustments
Trinity River -----------------------
Learning Murray
Corporation Training Debits Credits Total
----------- ----------- ----------- ----------- -----------
Assets
------
Current Assets
Cash $ 86,511 $ 48,688 $ 135,199
Accounts Receivable 42,719 88,271 130,990
Interest Receivable 41 - 41
Prepaid Expenses 97,944 372 98,316
----------- ----------- -----------
Total Current Assets 227,215 137,331 364,546
Property & Equipment
Furniture &
Equipment 53,385 63,911 a) 34,119 83,177
Accumulated
Amortization (7,824) (34,119) a) 34,119 (7,824)
----------- ----------- -----------
Net Property &
Equipment 45,561 29,792 75,353
----------- ----------- -----------
Intangible Assets
Technology-Based
Asset 1,118,312 - b) 340,422 1,458,734
Accumulated
Amortization (167,747) - (167,747)
----------- ----------- -----------
Net Intangible
Assets 950,565 - 1,290,987
Other Assets
Notes Receivable 25,000 - 25,000
Other Assets 94,003 - 94,003
----------- ----------- -----------
Total Other
Assets 119,003 - 119,003
----------- ----------- -----------
Total Assets $ 1,342,344 $ 167,123 $ 1,849,889
=========== =========== ===========
Continued
Trinity Learning Corporation
Unaudited Pro Forma Consolidating Balance Sheet
June 30, 2003
Adjustments
Trinity River -----------------------
Learning Murray
Corporation Training Debits Credits Total
----------- ----------- ----------- ----------- -----------
Liabilities and Equity
----------------------
Current Liabilities
Accounts Payable $ 391,872 $ 9,875 $ 401,747
Accrued Expense 270,270 68,126 338,396
Interest Payable 63,987 2,212 66,199
Notes Payable -
Current Portion - 4,907 4,907
Notes Payable -
Related Party 2,147,151 61,011 2,208,162
----------- ----------- -----------
Total Current
Liabilities 2,873,280 146,131 3,019,411
----------- ----------- -----------
Long Term Liabilities
Notes Payable -
Related Party - 11,414 11,414
----------- ----------- -----------
Total Long Term
Liabilities - 11,414 11,414
----------- ----------- -----------
Total Liabilities 2,873,280 157,545 3,030,825
----------- ----------- -----------
Stockholders' Equity
Preferred Stock - - -
Common Stock 9,693,447 153 b) 153 b) 350,000 10,043,447
Accumulated Earnings
(Deficit) (11,188,913) 5,819 b) 5,819 (11,188,913)
Subscription
Receivable (35,000) - (35,000)
Other Comprehensive
Income (470) 3,606 b) 3,606 (470)
----------- ----------- -----------
Total Stockholders'
Equity (1,530,936) 9,578 (1,180,936)
----------- ----------- -----------
Total Liabilities
& Stockholders'
Equity $1,342,344 $ 167,123 $1,849,889
=========== =========== ===========
Continued
Trinity Learning Corporation
Unaudited Pro Forma Consolidating Balance Sheet
June 30, 2003
a) To record RMT fixed assets at their fair value based on historical book
value less accrued depreciation
Debits Credits
----------- -----------
Furniture and Equipment $ 34,119
Accumulated Depreciation $ 34,119
b) To record the issuance of 700,000 shares of Trinity Learning Common Stock, No Par
Value, at $0.50 per share for a total of $350,000, the cancellation of River Murray
Stockholders' Equity and the net investment in River Murray Training as a Technology
Based - Intangible Asset.
Debits Credits
----------- -----------
Technology-Based Asset $ 340,422
Common Stock - River Murray Training 153
Accumulated Earning - River Murray Training 5,819
Other Comprehensive Income 3,606
Common Stock - Trinity Learning Corporation $ 350,000
Trinity Learning Corporation
Unaudited Pro Forma Consolidating Statement of Operations
Trinity
Learning River Murray
Corporation Training
-------------- --------------
Transition For the
Period October Fiscal
1, 2002 to Year Ended
June 30, 2003 June 30, 2002 Total
-------------- -------------- --------------
Revenue $ 167,790 $ 622,707 $ 790,497
------- -------------- -------------- --------------
Expenses
--------
Salaries & Benefits 1,043,123 377,203 1,420,326
Professional Fees 437,836 101,540 539,376
General & Administrative 228,931 44,185 273,116
Travel & Entertainment 182,593 55,301 237,894
Depreciation & Amortization 175,497 14,028 189,525
Rent 44,524 13,485 58,009
Office Expense 45,336 42,096 87,432
-------------- -------------- --------------
Total Expense 2,157,840 647,838 2,805,678
-------------- -------------- --------------
Income (Loss) from Operations (1,990,050) (25,131) (2,015,181)
-------------- -------------- --------------
Other Income (Expenses)
-----------------------
Interest Income (487) 1,110 623
Interest (Expense) (76,865) (2,026) (78,891)
Foreign Currency Gain/(Loss) (4,582) - (4,582)
-------------- -------------- --------------
Total Other Income (Expenses) (81,934) (916) (82,850)
-------------- -------------- --------------
Income (Loss) Before Taxes (2,071,984) (26,047) (2,098,031)
Taxes - 5,889 5,889
-------------- -------------- --------------
Net Income (Loss) $ (2,071,984) $ (31,936) $ (2,103,920)
============== ============== ==============
Net Income (Loss) Per Share $ (0.25) $ (0.23)
============== ==============
Weighted Average Shares Outstanding 8,364,218 700,000 9,064,218
============== ============== ==============
A summary of the components of other comprehensive income for the transition period
from October 1, 2002 to June 30, 2003 is as follows:
Transition Period October
1, 2002 to June 30, 2003
-----------------------------
Before After
Tax Amount Tax Amount
-------------- --------------
Net Income (Loss) $ (2,098,031) $ (2,103,920)
Foreign Currency Translation (470) (470)
-------------- --------------
Total Other Comprehensive Income $ (2,098,501) $ (2,104,390)
============== ==============
See accompanying notes to financial statements.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
TRINITY LEARNING CORPORATION
Date: November 17, 2003 By: /S/ Douglas D. Cole
------------------------------------
Douglas D. Cole
Chief Executive Officer