U.S. Securities and Exchange Commission

                             Washington, D.C. 20549

                                   FORM 10-KSB

              ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE

                         SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended DECEMBER 31, 2001      Commission File Number 0-30619

                         TRINITY MEDICAL GROUP USA, INC.
--------------------------------------------------------------------------------
         (Exact name of small business issuer specified in its charter)

            Florida                                    68-0438943
--------------------------------------------------------------------------------
(State or other jurisdiction                (IRS Employer Identification Number)
of incorporation or organization)

         30021 Tomas Street, Suite 300, Rancho Santa Margarita, CA 92688
--------------------------------------------------------------------------------
                    (Address of principal executive offices)

                                  949-459-2170
--------------------------------------------------------------------------------
                           (Issuer's telephone number)

        Securities registered pursuant to Section 12(b) of the Act: None

           Securities registered pursuant to Section 12(g) of the Act:
                     Common Stock, $.001 par value per share

Indicate by check mark whether the registrant (1) filed all reports  required to
be filed by  Section 13 or 15(d) of the  Exchange  Act during the past 12 months
(or such shorter  period that the registrant was required to file such reports),
and (2) has been subject to such filing  requirements  for the past 90 days. Yes
(X) No ( )

Indicate by check mark if the disclosures of delinquent  filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrants  knowledge,  in definitive  proxy or information  statements
incorporated  by reference  in Part III of this Form 10-KSB or any  amendment to
this Form 10-KSB. [ ]

The issuer's revenues for the year ended December 31, 2001 were $0.

As of March 11, 2002 there were outstanding  13,436,662  shares of common stock,
par value $0.001 per share.  The  aggregate  market value of the voting stock of
the registrant  held by  non-affiliates  of the registrant  (assuming  officers,
directors and 10%  shareholders  are  affiliates) on March 11, 2002 based on the
average bid and asked price on such date was $2,184,040.

                       DOCUMENTS INCORPORATED BY REFERENCE

None.

         Transitional Small Business Disclosure Format: Yes ( ) No ( X )


<PAGE>

                              INDEX TO FORM 10-KSB

PART I                                                                 PAGE

 ITEM 1  -  BUSINESS.....................................................3

 ITEM 2  -  PROPERTIES..................................................19

 ITEM 3  -  LEGAL PROCEEDINGS...........................................20

 ITEM 4  -  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.........20

PART II

 ITEM 5  -  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
              STOCKHOLDER MATTERS.......................................22

 ITEM 6  -  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
              OPERATION.................................................23

 ITEM 7  -  FINANCIAL STATEMENTS........................................31

 ITEM 8  -  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
              ACCOUNTING AND FINANCIAL DISCLOSURE.......................31


PART III

 ITEM 9  -  DIRECTORS AND OFFICERS OF THE REGISTRANT....................31

 ITEM 10 -  EXECUTIVE COMPENSATION......................................36

 ITEM 11 -  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
              AND MANAGEMENT............................................38

 ITEM 12 -  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS..............39

 ITEM 13 -  EXHIBITS AND REPORTS ON FORM 8-K ...........................41

            SIGNATURES..................................................44


                                       2
<PAGE>

                                     PART I

INFORMATION REGARDING FORWARD LOOKING STATEMENTS.

         This Form 10-KSB contains forward looking statements that involve risks
and  uncertainties.  These  statements  relate to our future plans,  objectives,
expectations and intentions,  and the assumptions  underlying or relating to any
of these statements. These statements may be identified by the use of words such
as "expect," "anticipate," "intend" and "plan." Our actual results,  performance
or achievements could differ materially from those expressed or implied in these
forward-looking  statements.  Factors that could contribute to these differences
include, but are not limited to, those discussed in "Risk Factors" and elsewhere
in this Form 10-KSB.

ITEM 1  - BUSINESS

GENERAL.

         Trinity  Medical  Group  USA,  Inc.  was  incorporated  in the State of
Delaware on September 28, 1998 and  reincorporated in Nevada in November of 1999
with its principal  place of business in California.  Following an Agreement for
the Exchange of Common Stock between Trinity USA and August Project III Corp., a
Florida  corporation,  on December 31, 1999,  August  Project  issued to Trinity
USA's shareholders  5,226,000 shares of its Common Stock in exchange for 100% of
the  outstanding  shares of Trinity  USA. In  addition,  shareholders  of August
Project sold 4,867,000 shares to the shareholders of Trinity USA in exchange for
$175,000.  Following the exchange, the shareholders of Trinity USA owned a total
of 10,093,000 out of a total of 10,226,000 outstanding shares of August Project,
and Trinity USA was a wholly owned  subsidiary of August  Project.  Prior to the
exchange, August Project had been approved for listing on the National Quotation
Service Pink Sheets with the following trading symbol: AUUK. On January 5, 2000,
August Project changed its name to Trinity Medical Group USA, Inc.

         The  10,093,000  shares of common  stock owned by the  shareholders  of
Trinity  USA  consisted  of  9,600,000  shares  owned by  Trinity  USA  founding
shareholders  and  493,000  shares  owned by  service  providers  who  performed
consulting services for Trinity USA during 1999. Trinity USA recorded an expense
of  $229,200  related  to  the  consulting  services  provided,  which  included
identifying exchange and/or acquisition candidates,  due diligence procedures on
August  Project  and  services  related  to the  creation  of our first  private
placement  memorandum.  The founding shareholders have not subsequently sold any
of their shares.

         Trinity USA desired to become a  publicly-held  company.  In October of
1999,  the Chief  Executive  Officer of Trinity USA  commissioned a search for a
publicly-held  company that had been in existence for at least two years and had
an  established  list  of  shareholders.   The  preferred   company  would  have
substantially no operating  history,  liabilities,  and assets.  After review of
nearly a dozen target  companies,  August  Project III Corp.  was  identified in
early December  1999. By purchasing or merging with August Project III,  Trinity
USA believed that it would have greater and faster access to capital to initiate
its business and execute its business  plan. The  acquisition  price of $175,000
was agreed to based on an estimated  discount of the legal and accounting  costs
to do an initial  public  offering and through  comparison of similar  companies
offered  for sale at the time.  No  fairness  opinion  for the  transaction  was
sought.  The  negotiations  were  conducted  on an  "arms-length"  basis in that
neither party had any relations before or after the transaction.  We acquired no
assets or liabilities as a result of the transaction.

     August  Project  III Corp.  was formed on July 10,  1997.  Although  August
Project III Corp. was formed and  incorporated as a Florida  corporation on July
10,  1997,  they had no capital  transactions  or  operating  activities  of any
significance  between  July 10,  1997 and  December  31,  1999,  the date of our
exchange with August Project III Corp.


                                       3
<PAGE>

OUR LICENSED TECHNOLOGY.

         Trinity USA is an  affiliate  of Trinity  Assets  Company  Limited.,  a
Thailand company.  We are a late development stage company with rights to market
an HIV-Immunogen also known as REMUNE, a patented therapeutic vaccine treatment,
designed to induce  specific T cell responses in people  infected with the Human
Immunodeficiency  Virus, or HIV. REMUNE is an immune-based therapy consisting of
whole  inactivated  HIV-1 virus  depleted of its gp120 coat protein based on Dr.
Jonas Salk's vaccine technology.

         REMUNE is designed to stimulate  an  HIV-infected  individual's  immune
system to attack HIV, the virus that causes  AIDS.  We believe that results from
previous   clinical  trials   demonstrate  that  REMUNE   significantly   boosts
HIV-specific  immune  responses  and may induce a positive  virologic  effect in
HIV-infected  individuals.   Furthermore,   we  believe  REMUNE  stimulates  the
production of specific antiviral substances that naturally protect components of
the immune  system from HIV  infection.  Leading HIV clinical  researchers  have
begun to recognize that in order to effectively  stop or slow the progression of
HIV  to  AIDS,  therapies  must  stimulate  HIV-specific  cell  mediated  immune
responses in infected individuals in addition to reducing viral load through the
use of  anti-viral  drugs.  Trinity USA and its  affiliates  completed  Phase II
clinical  trials in  Thailand  where  REMUNE  was used as a sole  treatment  for
individuals infected with HIV.

         In July 2001, Trinity USA, through its affiliate Trinity Assets Company
Limited, filed a new drug application according to the steps for approval by the
Thai Food and Drug  Administration to market,  distribute and manufacture REMUNE
in Thailand.  Approval of REMUNE by the Thai FDA is necessary for the marketing,
distribution and manufacture of REMUNE. If the Thai FDA does not approve REMUNE,
it cannot be marketed,  sold or manufactured in Thailand and Trinity USA will be
unable  to  generate  any  revenue  in  Thailand  or any  other of its  licensed
countries.  If and when the Thai FDA  approves our new drug  application  and we
obtain the necessary export license and Good  Manufacturing  Practice  standards
certificate from the U.S. FDA, we are prepared to immediately  commence the sale
and distribution of REMUNE in Thailand. We can give no assurances, however, that
such approval, license and certificate will be obtained.

CURRENT AND  HISTORICAL  INFORMATION  REGARDING OUR LICENSED  TECHNOLOGY AND OUR
LICENSOR.

         Trinity Medical Group,  Ltd. was formed in 1995 after the principals of
Trinity Medical Group, Ltd. entered into a license and  collaboration  agreement
dated September 15, 1995 with The Immune Response Corporation,  NASDAQ: IMNR, to
develop and market REMUNE in ten Southeast Asian countries  including  Malaysia,
The Philippines,  Singapore,  Sri Lanka,  Myanmar,  Laos, Cambodia,  Vietnam and
Indonesia, with Thailand as the lead nation, for a period of 15 years commencing
on the date of the first  commercial  sale of REMUNE in each  licensed  country.
Trinity  Medical  Group,  Ltd. also entered into a stock  purchase  agreement on
September 15, 1995 with The Immune Response  Corporation  and purchased  333,334
shares of common stock of The Immune  Response  Corporation  at $15 per share on
April 30, 1996. Under the stock purchase agreement,  Trinity Medical Group, Ltd.
was also  obligated to purchase an additional  333,333 shares of common stock of
The Immune  Response  Corporation  at $15 per share upon  receiving the required
marketing  approval from the governing health authority of Thailand for the drug
therapy REMUNE. Trinity Medical Group, Ltd. was further obligated to purchase an
additional 333,333 shares of common stock of The Immune Response  Corporation at
$15 per share upon  receiving  the  required  factory  establishment  license or
approval from the governing health authority of Thailand to manufacture the drug
therapy REMUNE.  These stock purchase obligations of Trinity Medical Group, Ltd.
became the  obligations  of  Trinity  USA as a result of the  collaboration  and
supply  agreement and the assignment  agreement  between Trinity USA and Trinity
Medical Group, Ltd.

         The license and collaboration  agreement between Trinity Medical Group,
Ltd. and The Immune  Response  Corporation,  entered into in 1995,  provided for
possible termination of the license and collaboration agreement if the marketing
approval for REMUNE in Thailand  was not granted  before  December 31, 2000.  On
September 29, 2000, The Immune Response  Corporation and Trinity USA amended the
license and  collaboration  agreement to set the earliest  possible  termination
date to August 31, 2001. On May 8, 2001,  The Immune  Response  Corporation


                                       4
<PAGE>

and Trinity USA amended  the  license  and  collaboration  agreement  to set the
earliest possible termination date to August 31, 2004.

         In  addition,  the license and  collaboration  agreement  provides  for
termination  by The Immune  Response  Corporation  or Trinity USA if Trinity USA
fails to purchase The Immune Response  Corporation's common stock as required by
the stock purchase  agreement within 30 days of the event requiring  purchase of
the common stock.  The license  granted to Trinity USA for the entire  territory
shall  revert to The  Immune  Response  Corporation  if  Trinity  USA  delays or
suspends  development  of  REMUNE  in  Thailand  for more  than 18 months or the
license will revert to The Immune Response Corporation for a specific country if
at any time  Trinity USA elects not to develop or  commercialize  REMUNE in that
country.

         The license and collaboration  agreement,  as amended,  states that The
Immune Response Corporation will manufacture,  sell and deliver to Trinity USA a
quantity of REMUNE equal to Trinity USA's  requirement  of REMUNE for commercial
sale  and  distribution  in its  territory,  up to 25%  of The  Immune  Response
Corporation's  actual  monthly  production of the product.  In the event Trinity
USA's  requirement  of REMUNE exceeds 25% of The Immune  Response  Corporation's
actual  monthly  production of the product,  Trinity USA may request  additional
product  and The  Immune  Response  Corporation,  in its  sole  discretion,  may
manufacture  and sell the additional  product to Trinity USA. Our cost of REMUNE
is  contractually  based upon The Immune  Response  Corporation's  manufacturing
cost, as defined under generally accepted accounting principles,  plus an agreed
upon  markup  percentage.  Trinity USA also has three years from the date of the
first  commercial sale of REMUNE in Thailand to exercise its option to obtain an
exclusive  license  to  manufacture  REMUNE  in  Thailand  solely  for the sale,
distribution and use in Trinity USA's licensed territory.

         REMUNE is produced by The Immune  Response  Corporation at its facility
located in King of Prussia,  Pennsylvania  and also in small  quantities  at its
Carlsbad California pilot plant. The product requires a final production step of
nuclear irradiation which is conducted by a third party at another location;  we
bear no environmental liability for that operation.  When and if the manufacture
is conducted by us, we must find a third party capable of carrying out this step
or apply for and receive permission from the relevant governmental authority for
such  a  facility  to  perform  the  irradiation  process.  If  we  conduct  the
irradiation,  some environmental  liability may result and sufficient safeguards
must be in place to prevent such a liability.  The nuclear  irradiation  sources
are available in Thailand.  Currently, Trinity USA is unfamiliar with the source
of each component  used to make REMUNE.  The King of Prussia  facility  requires
certification  by the U.S. FDA for  compliance  to Good  Manufacturing  Practice
standards.

         The  Immune  Response  Corporation  had a net loss of  $24,498,000  and
$8,756,000  for the year ended December 31, 2000 and the nine month period ended
September  30,  2001,  respectively.  The  Immune  Response  Corporation  had an
accumulated  deficit  of  $219,784,000  as of  September  30,  2001.  The Immune
Response  Corporation  also had working  capital of $3,220,000,  total assets of
$23,266,000 and total  liabilities of $5,519,000 as of September 30, 2001. These
factors  should  be  considered  in making an  investment  in us, as The  Immune
Response  Corporation  is the sole  supplier of REMUNE and, as  discussed in the
"Risk Factors" section of this prospectus,  we will be adversely affected if for
any  reason  the  manufacturing  facility  experiences  down time or The  Immune
Response Corporation does not fulfill its contractual  obligations to provide us
with REMUNE or at amounts sufficient to sustain profitable operations. Since the
facility has no history of volume  production,  we cannot  predict with absolute
certainty that a consistent supply volume can be expected.

         Trinity USA, Trinity Assets Company Limited, and Trinity Medical Group,
Ltd. do not possess any relevant patents or trademarks relating to REMUNE in the
ten  countries  that we have rights to sell REMUNE,  except for a  non-exclusive
right to use The Immune Response  Corporation's  registered  trademark REMUNE(R)
solely  for  the  purpose  of  marketing  and  selling  REMUNE  in our  licensed
territory.  All  patents  and  trademarks  are  owned  by  The  Immune  Response
Corporation  and we are not  certain  as to the  number  and  status of  patents
relating to REMUNE in all ten  countries.  Trinity USA owns the rights to REMUNE
in these ten countries through our license and collaboration  agreement with The
Immune Response  Corporation,  dated September 15, 1995.  Trinity Assets Company
Limited has an exclusive right to market, sell and distribute REMUNE in Thailand
only


                                       5
<PAGE>

under a sublicense and supply agreement dated August 4, 2000. As of November 10,
2000, Trinity Medical Group, Ltd. no longer has REMUNE rights anywhere.

         Trinity USA has an obligation  to purchase up to an additional  666,666
shares of common  stock of The Immune  Response  Corporation.  Trinity  USA must
purchase  333,333 shares within 30 days of receiving  approval to  commercialize
REMUNE in Thailand and an additional  333,333 shares within 30 days of receiving
the required factory establishment license or approval from the governing health
authority of Thailand to  manufacture  REMUNE.  Our ownership  percentage of The
Immune  Response  Corporation's  outstanding  common stock after the purchase of
these shares would be 1.9%,  assuming  the total issued and  outstanding  common
stock of The Immune Response Corporation as of September 30, 2001.

         The  total  cash  requirement  for the  two  remaining  stock  purchase
commitments is $10 million. Trinity USA believes,  however, that the purchase of
The  Immune  Response  Corporations'  common  stock at $15 per  share,  which is
significantly  above the $1.34 close price of their common stock on December 31,
2001, is much more than simply an investment in The Immune Response Corporation.
We believe  the  greater  value of the  payments  is  related  to the  permanent
fulfillment  of our  REMUNE  license  and access to REMUNE  technology  from The
Immune Response Corporation.

         The common stock of The Immune Response Corporation held by Trinity USA
after the  required  stock  purchases  would not be relied  upon for income from
potential  appreciation  or  dividends.   The  shares  of  The  Immune  Response
Corporation received in addition to our acquired license for REMUNE is viewed as
an  additional  asset  which we may or may not  retain.  If we elect to sell our
shares of The Immune Response Corporation,  we would be able to do so under rule
144  after  holding  the  shares  for one year  and  complying  with the  volume
restrictions established by the SEC. Under present market conditions,  where the
price of The Immune Response  Corporation's  common stock is significantly below
$15 per share,  the payments to The Immune  Response  Corporation  for the stock
purchase  would be accounted  for  primarily  as an  intangible  asset,  license
technology.  If we were to fulfill  our stock  purchase  obligations  at a stock
price of $1.34,  the payment premium to be allocated to the licensed  technology
asset would equal $9,106,658.  Since the signing of the stock purchase agreement
over 5 years ago,  however,  The Immune Response  Corporation's  share price has
closed above $15 on several  occasions,  and it is plausible  that  considerable
shareholder  interest  in The Immune  Response  Corporation  would  result  from
Trinity  USA's  success  in gaining  approval  for  REMUNE in  Thailand  and the
ultimate payment of the $10 million.

STATUS OF REMUNE'S DEVELOPMENT AND REGULATORY APPROVAL.

         The Immune  Response  Corporation  is in the final stages of validating
the  commercial  scale  manufacturing  aspects  of REMUNE.  In 2001,  The Immune
Response  Corporation began the process of manufacturing  three commercial scale
lots of REMUNE at its dedicated  manufacturing facility under Good Manufacturing
Practice,  or GMP,  standards.  This process was  initiated by us so that we may
complete our new drug application in Thailand.

         As also  discussed  in the  section of the  prospectus  entitled  "Risk
Factors", in 1999 The Immune Response Corporation  discontinued a 2,526 patient,
Phase  III  clinical   endpoint  trial.  The  trial  was  discontinued   because
differences in clinical  endpoints were not observed between  treatment  groups,
and  extending  the  trial  would  have been  unlikely  to  provide  sufficient,
additional clinical endpoints to permit  statistically  significant  differences
between  the  treatment  groups to be  observed  in the near term.  The  primary
efficacy  endpoint  for the trial was disease  progression  to an AIDS  defining
condition,  or death.  At the time the study began,  this was the only  accepted
endpoint  for  approval  by the  U.S.  FDA  for  vaccines.  However,  since  the
discontinuation  of the 2,526 patient,  Phase III trial, the U.S. FDA has agreed
to accept virologic endpoint trials for the basis of approval for REMUNE,  which
is being applied in Study 202. The discontinuation of the Phase III trial in the
United States,  although  adversely  affecting the timing of The Immune Response
Corporation's commercial approval process of REMUNE in its territory,  including
the United States,  and their stock price,  had no direct impact on Trinity USA;
our Phase II trial utilized  increases in CD4 cell count as the primary endpoint
from the outset, which endpoint was successfully met. The discontinuation of The
Immune Response Corporation trial has had no effect on the Thai


                                       6
<PAGE>

approval process since the data from the Phase III trial conducted in the United
States was never planned to be used as supportive data for Thai review. However,
we believe the  publication  in HIV Medicine on the subset study will be helpful
to support our own data.

         As also  discussed  in the  section of the  prospectus  entitled  "Risk
Factors", The Immune Response  Corporation's primary marketing partner,  Agouron
Pharmaceuticals,  Inc.,  or  Agouron,  a Pfizer  Inc.  company,  terminated  its
collaboration  agreement with The Immune  Response  Corporation on July 5, 2001.
Pfizer  studies in progress at the time of  termination  included  Study 201 and
Study 202. On August 30, 2001, The Immune  Response  Corporation  announced that
after  a  thorough   review  of  the  available   data,   it  informed   Agouron
Pharmaceuticals, Inc. that it did not intend to continue Study 202.

         The Immune Response  Corporation is also currently partially supporting
a clinical  trial in Spain known as STIR 2102. In November  2000, an independent
Data Safety  Monitoring  Board, or DSMB,  recommended that the trial in Spain of
REMUNE plus anti-retroviral  drugs in patients infected with HIV continue to its
conclusion in May 2001. This decision  followed review of efficacy data from the
trial  concerning  viral load, which is the amount of HIV detected in the blood,
and CD4 cell  counts,  which are immune cells  selectively  destroyed by HIV. On
August 30, 2001, The Immune Response Corporation  announced that after reviewing
the data  provided  by the STIR 2102  protocol  and the reports and views of the
protocol  statistician and the three outside  statisticians,  the DSMB expressed
its view that REMUNE shows a positive impact on controlling  virus and the study
had met its primary endpoint (p=0.034).  The Immune Response Corporation further
announced  that in light of both their  decision  not to continue  Study 202 and
because the DSMB  expressed  its view that the primary  endpoint  was met in the
STIR  2102  trial,  they  planned  to  meet  with  the  appropriate   regulatory
authorities  as soon as  possible  in  both  Europe  and  the  U.S.  to  discuss
regulatory  strategies  regarding REMUNE. The data from the Spain trial has also
been  included in Trinity  USA's new drug  application  and was presented to the
Thai FDA in  February  2002 by the  principal  investigator  of the  trial,  Dr.
Eduardo Fernandez-Cruz.

          CD4 cells are  effective in trapping and  deactivating  HIV.  Infected
cells which have CD4 present on the  surface  can attach HIV  emerging  from the
cell when viral production and release occur. HIV has an effective  mechanism of
ceasing the  production  of CD4 in an  infected  cell.  The CD4 cells  gradually
decline in number  because their  production is curbed by HIV. When HIV enters a
cell, it creates an agent that inhibits  further CD4 production.  With decreased
CD4 on the surface,  HIV can replicate within the infected cell and then emerge.
By observing an increase in CD4 in an HIV positive patient,  it infers that many
cells are once again capable of producing CD4 and maintaining a stronger defense
against  viral  reproduction.  The  level  of virus in a  person's  blood  and a
person's CD4 cell count can predict the risk of developing  AIDS. The use of CD4
as an indicator of drug efficacy against HIV is an accepted U.S. FDA marker.

         The  remaining   step  needed  for  the  completion  of  our  new  drug
application, which was submitted to the Thai FDA for commercialization of REMUNE
in July 2001,  is a product  quality  assurance  requirement  from the governing
authority  of the country  where REMUNE is  manufactured,  in this case the U.S.
FDA.  Specifically,  the  product  quality  assurance  requirement  by the  Thai
authorities  is the  issuance  of a GMP  certification  of The  Immune  Response
Corporation's dedicated manufacturing facility in King of Prussia, Pennsylvania.
Since  REMUNE has not been  commercially  approved  in the U.S.  or in any other
country,  our supplier,  The Immune  Response  Corporation,  has not  previously
sought  GMP  certification  of  its  manufacturing  facility  producing  REMUNE.
However,  clinical  trial  materials  of  REMUNE  have been  produced  under GMP
standards.

         In January  2002,  Trinity  USA  announced  that the Thai Food and Drug
Administration   certified  the  REMUNE  manufacturing   facility  as  being  in
compliance with GMP standards. The Thai FDA GMP standards are based on stringent
World Health  Organization  guidelines.  The  certification  followed an on site
inspection  by  Thai  officials  in  November  2001  that  was  performed  as  a
requirement of the new drug  application  process  originated by Trinity USA and
its affiliates, Trinity Assets Company Limited, on July 30, 2001. As a result of
the  certification by the Thai FDA, Trinity USA believes a determination  can be
made by the Thai FDA concerning the  commercialization  of REMUNE in Thailand by
the  end of the  second  quarter  of  2002.  Even  if the  Thai  Food  and  Drug
Administration  approves REMUNE for  commercialization,  Trinity USA believes it
would still be necessary to obtain a GMP  certification  and export license from
the U.S. FDA before  commercial  distribution of REMUNE in


                                       7
<PAGE>

Thailand   could  occur.   Further,   we  believe  that  a  GMP  inspection  and
certification by the U.S. FDA will not occur until at least the first quarter of
2003,  because  of the  time  and  expense  necessary  for The  Immune  Response
Corporation to prepare for such an inspection.  Currently,  The Immune  Response
Corporation does not have the financial  resources to adequately prepare for the
inspection.

         Trinity USA believes that the new drug  application in Thailand will be
accepted based mainly upon the results of our clinical trials in Thailand, which
illustrate  safety and efficacy.  The review of the new drug  application by the
Thai FDA is,  however,  a subjective  process and we can give no assurances that
the  new  drug  application  will be  approved  by the  Thai  FDA so that we may
commercialize REMUNE in Thailand.

         Other requirements for commercialization are import/export  licenses by
Thai and U.S.  authorities.  The Immune Response  Corporation is responsible for
initiating  the export license and Trinity USA,  through  Trinity Assets Company
Limited,  is responsible for initiating the import license.  Should the Thai FDA
approve the use of REMUNE,  the import  license would be judged  principally  on
objective  standards  of whether or not there  will be tariff  requirements  and
matters of assessing product quality,  labeling and authenticity.  These matters
are to the best of our knowledge not cumbersome nor overwhelming.

         The pertinent  laws governing  export of drugs and biologics  which are
not approved for use in the U.S. are  contained in the Federal Food,  Drug,  and
Cosmetic  Act.  Under these  statutes,  if REMUNE is not approved for use in the
United States or other listed countries, we may petition the U.S. FDA for export
of REMUNE  under a section of the Federal  Food,  Drug,  and  Cosmetic Act which
requires that the following conditions be met:

1) The  drug  complies  with  the  laws of the  foreign  country  and has  valid
marketing authorization by the responsible authority in that country.

2) The FDA determines that the foreign country to which export is sought has: a)
statutory  or  regulatory  requirements  which  require  the review of drugs for
safety  and  effectiveness  by a  government  entity in that  country  and which
authorizes  marketing  approval of drugs which trained and  experienced  experts
have determined to be safe and effective;  b) regulatory  requirements  that the
experts must be employed by or acting on behalf of the foreign government entity
and base their  determination  on adequate and  well-controlled  investigations,
including  clinical  investigations;  c)  statutory or  regulatory  requirements
pertaining to GMP; d) statutory or regulatory requirements for reporting adverse
events and for  removing  unsafe or  ineffective  drugs from the market;  and e)
statutory  or  regulatory  requirements  which  require  that the  labeling  and
promotion be in accordance with the product's approval.

         We also have the  option to  petition  the FDA for  approval  to export
REMUNE to Thailand  under a separate  section of the  Federal  Food,  Drug,  and
Cosmetic Act by submitting information on the product quality,  potency, safety,
and efficacy  along with a request from the governing  authority of Thailand for
such a  license.  Our  petition  would  include  the raw data from our trials in
Thailand regarding the use of REMUNE without  concomitant use of HAART and label
guidelines that include  recommendations for REMUNE as a sole treatment for HIV.
This petition would take us approximately  one month to construct and would cost
approximately  $50,000 in consultant's fees. The U.S. FDA is required to respond
to  such a  completed  petition  within  60  days  of  filing.  There  can be no
assurance,  however,  that the U.S. FDA will rule  favorably  upon either of the
above mentioned petitions.

         If the  U.S.  FDA  denies  either  of our  petitions,  then we would be
required to await approval of REMUNE in the U.S. or a European  country where it
is currently  being  tested.  In that event,  we would be delayed in our revenue
projections for at least six months,  since such approval,  if it is granted, is
not anticipated until 2003. If REMUNE does not ever gain approval in the U.S. or
Europe, and our petitions for an export license are denied, the only way to sell
REMUNE  in  Thailand  would  be to  construct  our own  manufacturing  plant  in
Thailand,  a process that may take three years and cost millions of dollars, and
would require us to seek  additional  capitalization  for which we cannot ensure
investors  of  success.  If we were  unable to  finance  the  construction  of a
manufacturing plant, we would be forced to cease operations.


                                       8
<PAGE>

         The following table and related narrative summarizes our regulatory and
developmental  milestones  needed  to  obtain  commercialization  of  REMUNE  in
Thailand:
<TABLE>
<CAPTION>

COUNTRY         AGENCY/COMPANY               ITEM                              STATUS
---------------------------------------------------------------------------------------------------------------
<S>                                       <C>                                   <C>
Thailand        A.   Ministry of          1A.  Import License                   1A.  Submitted
                     Public Health, FDA
                                          2A.  Inspection  of IMNR factory      2A.  Completed by Thai FDA.
                                               and GMP  Certification  for           Still needed by U.S. FDA
                                               REMUNE

                                          3A.  New Drug Application             3A.  NDA  Submitted;   review
                                               Approval                              of   1A   and   2A   and
                                                                                     entire data set

United States   B.   U.S. FDA             1B.  Export License                   1B.  Requires 2B and
                                                                                     approval for export in
                                                                                     accordance with
                                                                                     procedures set forth
                                                                                     immediately preceding
                                                                                     this table.

                                          2B.  Inspection  of IMNR factory      2B.  Not expected to occur
                                               and GMP  Certification  for           until at least first
                                               REMUNE                                quarter of 2003.
---------------------------------------------------------------------------------------------------------------
</TABLE>

         The major milestone that needs to be successfully  completed  before we
may commence  commercial sale of REMUNE in Thailand is clearance by the Thai FDA
for a new drug application, item 3A. The import/export clearance, item 1A and 1B
is also  dependent  upon the  manufacturer  supplying  a valid  analysis  of the
product. The certification of the manufacturing facility in accordance with U.S.
FDA Good  Manufacturing  Practice  standards,  item 2B, is not expected to occur
until at least the first quarter of 2003.  Trinity USA,  through  Trinity Assets
Company Limited, submitted a new drug application for REMUNE to the Thai FDA for
commercialization in July 2001 and has subsequently received item 2A.

         The total cost to Trinity USA for obtaining the referenced  items above
is  estimated  to be less  than  $100,000  and has been  included  in our  total
remaining  estimated  research and development costs of $800,000 as discussed in
the section of the prospectus  entitled "Plan of Operation" under the subheading
"Capital requirements, cash flow and other operating considerations". If Trinity
USA is unable to obtain any of the above  referenced  items or is  significantly
delayed in  obtaining  them,  we may be unable to sustain our  business  without
receiving additional capital and we may be unable to retain our licensing rights
to REMUNE.

         We  will  need  approval  from  the  Thailand  Customs  Department  for
importation,  but do not expect any delays or  significant  cost since  clinical
samples have cleared customs in the past. It is possible that Customs may post a
duty on the product,  but this is unlikely since it is not a luxury item nor can
it be made in Thailand at this time.  If Customs were to impose a duty, it could
reduce our market potential.

         Trinity USA expects to reimburse  Trinity  Assets  Company  Limited for
services and consultants used to complete the application process; these charges
are expected to be  approximately  $200,000.  Until full approval is received in
Thailand and product sales begin or we gain sufficient  capital from sale of our
common stock, we will not have sufficient capital to expand our efforts in other
licensed countries. Only after approval of REMUNE in Thailand occurs and revenue
from sales are realized,  would we undertake  the approval  process in the other
countries.  At this time we have not applied  for use in any country  other than
Thailand.


                                       9
<PAGE>

EFFECT OF CURRENT AND FUTURE GOVERNMENTAL REGULATIONS.

         The market  for REMUNE is  profoundly  affected  by current  and future
governmental regulations. A variety of agencies may interfere with the course of
our  business  at any time.  The safety and  efficacy  of the  product  could be
scrutinized by agencies and independent  researchers.  The greatest threat would
occur if unforeseen  adverse side effects appear and patients either become even
more ill or die. To reduce that possibility,  we will undertake significant care
in product  handling  and  storage.  Our first  technical  department  will be a
Quality Assurance team that will be charged with product  stewardship.  In order
to anticipate and comply more rapidly to government regulations,  we will create
a Regulatory  Affairs  Department,  composed of either  full-time or  consulting
professionals that would follow all of the regulatory  agencies in all countries
involved.  To meet these regulatory and product quality assurance  requirements,
it is projected that a staff of three full-time employees plus consultants would
require a budget of between $500,000 and $1 million per year.

         Trinity USA will incur minor costs for  compliance  with  environmental
regulations.  The costs will be for record  keeping  and  creation  of  material
descriptions and labeling required for  transportation and export of REMUNE from
the United States.  Most of these  documents are available from our supplier and
one time conversion to our format will be needed. These requirements will likely
equate to the cost of one part-time  clerical person and the related purchase of
minimal office equipment.

COMPETITIVE BUSINESS ENVIRONMENT.

          We are not aware of another  immune based therapy  against HIV that is
in human clinical trials.  If there are any, we believe it would take five to 10
years to develop,  test, and gain approvals.  There are antiviral treatments for
HIV which are widely  used in the Western  world and are known as Highly  Active
Anti-retroviral  Therapy,  or HAART.  HAART products include AZT, ddi, Viracept,
and Sustiva.  HAART is openly  available in Thailand but used by less than 1% of
the infected population.  The reason HAART is not widely used is due to the high
cost of these drugs. The normal price for HAART treatment is between $10,000 and
$20,000 per year per person.  The average income of Thai's  infected with HIV is
around $3,000 per year.  The expected  price of REMUNE for Thai patients will be
based upon demand and could be in the range of $150 to $500 per dose.  The price
of the  product  from the  manufacturer,  The Immune  Response  Corporation,  is
confidential  and subject to  refinement,  as their  costs may change.  However,
Trinity USA does expect to realize a minimum gross profit of $75 per dose on our
sales to Trinity  Assets  Company  Limited,  as provided by our  sublicense  and
supply agreement with Trinity Assets Company Limited.

         Patients who use HAART are often maligned with side effects, may not be
able to work  while  treated  and may have to remain  hospitalized.  We  believe
REMUNE will be competitive due to a significantly  lower annual  treatment price
of less than  $2,000 per year per person and it being a simple  injection,  at a
minimum of once per quarter,  which has no adverse side effects.  Based upon the
data from our clinical trials, we expect the range of injections to be from four
to six injections per year, which is dependent upon the CD4 cell count and viral
load  present in the HIV infected  individual.  We believe that less than 40% of
patients would require more than four injections per year. However, this regimen
will be studied  further.  We do not believe that the  requirement  of more than
four  injections  per year by certain  patients will  significantly  inhibit the
commercial success of REMUNE in Thailand or the viability of our business model.
Phase I and Phase II clinical trials conducted in Thailand and the United States
form the basis for our  conclusions  that there are no adverse side effects from
the  quarterly  injections  of REMUNE.  A summary of the results of the Phase II
clinical  trial  conducted  in  Thailand  is  presented  in this  section of the
prospectus,  under the  subheading  "Clinical  trials of REMUNE and other REMUNE
programs."

         The Immune Response Corporation has completed several Phase I and Phase
II  clinical  trials  of  REMUNE  in  the  United  States   involving  over  280
HIV-infected  individuals.  We believe these  clinical  trials have suggested no
significant  toxicity or serious side effects  associated  with the product,  as
well as  suggested  the ability of REMUNE to enhance an immune  system  response
against HIV. In an open-label  Phase I clinical  trial,  which began in 1987, 25
HIV-positive individuals were treated with REMUNE. The data suggests that REMUNE


                                       10
<PAGE>

stimulates an immune  response in some  HIV-infected  individuals and we believe
that there is a correlation between such immune response and stabilization of an
individual's health.

         Two Phase II  clinical  trials of REMUNE were  conducted  by The Immune
Response  Corporation to assess the ability of this therapy to stimulate  immune
system responses  against HIV, to evaluate the effect of REMUNE on early markers
of progression in asymptomatic  HIV-infected  individuals and to monitor safety.
We believe the results of these clinical  trials suggest that REMUNE is safe and
well  tolerated  and may have a  favorable  impact on  multiple  markers  of HIV
disease  progression  including  viral  burden,  CD4  cell  count,  HIV-specific
cell-mediated immunity, antibody production and weight gain.

         Programs  of the Thai  government  and  private  charities  make  HAART
available to a small number of the approximately 1 million infected in Thailand.
For example,  Glaxo sells AZT at a 90% discount in Thailand so that treatment is
available for about $1 a day. However, AZT should not be taken alone and its use
may  result  in viral  mutation.  Additionally,  the only  practical  use is for
short-term  use by pregnant  mothers so that their  newborns  are not  infected.
Other HAART drugs are  expensive  to produce and demand in western  countries at
list prices  already  exceeds  supply.  In the future if the price of HAART does
comes down to the level of REMUNE,  we believe they would be used when needed in
conjunction with REMUNE and not as a competitive treatment.

         Other  possible  competitors  include  VaxGen  Company,  who is testing
AidsVax in Thailand as a  preventative  vaccine.  If VaxGen is  successful  with
AidsVax,  the number of infected  individuals  may decrease and lower our market
potential.  VaxGen  believes they are three to 5 years from first use of AidsVax
if current studies prove  successful.  Over the next three years,  the number of
HIV infected  will likely  continue to grow and be above 2 million.  Alternative
treatments such as holistic and traditional  herbal products are widely used for
currently infected people in Southeast Asia because nothing else is available at
affordable  amounts to most of the  infected  population  in this  region of the
world.  Our  business  plan does not  require  that we reach a majority of those
infected  with HIV in order to be  successful.  Over the next  three  years,  we
believe we will have enough  product to treat only 10% of the total  infected in
Thailand.  Thus,  we do feel  competitive  pressure,  even if present,  will not
significantly alter our business plan.

CONTRACTS AND AGREEMENTS WITH AFFILIATED COMPANIES.

         Trinity USA entered  into a  collaboration  and supply  agreement  with
Trinity  Medical Group,  Ltd.,  dated  December 1, 1999.  Under the terms of the
collaboration and supply agreement,  Trinity USA will pay Trinity Medical Group,
Ltd. for research personnel at contractual rates, travel,  laboratory,  facility
and  publication  costs  associated  with  clinical  trials of REMUNE until full
regulatory  approval in Thailand is granted.  The research  personnel  are to be
paid at a rate of $250 per hour for the leading  investigator  and $125 per hour
for  associate  researchers.  The  remainder  of the  aforementioned  costs that
Trinity USA is obligated to pay under the sublicense and supply agreement are to
be paid at actual cost.

         Since inception through December 31, 2001,  Trinity Medical Group, Ltd.
has billed Trinity USA approximately  $983,000 for costs incurred related to the
research and development of the drug REMUNE.  Since inception  through  December
31,  2001,  Trinity  USA has paid  Trinity  Medical  Group,  Ltd.  approximately
$669,000 in cash for amounts  previously  billed.  Trinity USA has paid  Trinity
Medical  Group,  Ltd.  for the costs  incurred as  required by a now  terminated
collaboration and supply  agreement.  Please see the section of this Form 10-KSB
entitled "Certain Relationships and Related Transactions" where the satisfaction
of all amounts owed to Trinity Medical Group, Ltd. is also discussed.

         The collaboration  and supply agreement  provided that Trinity USA make
its best efforts to capitalize  itself with at least $4,000,000  through sale or
subscription  of  shares of common  stock  not to exceed 1 million  shares.  The
requirement  for  Trinity  USA not to exceed 1 million  shares in its attempt to
capitalize  itself was  subsequently  waived.  Trinity USA agreed to prepare and
complete all necessary  documentation  required for  registration of Trinity USA
with the Securities and Exchange Commission as a reporting company, which it has
done by filing a Form 10-SB on May 12,  2000.  In exchange for Trinity USA being
capitalized  and a reporting  company,  Trinity  Medical Group,  Ltd.  agreed to


                                       11
<PAGE>

transfer its license and  collaboration  agreement and stock purchase  agreement
between it and The Immune  Response  Corporation,  dated  September 15, 1995, to
Trinity  USA no later than the first sale of the product  after full  regulatory
approval in Thailand has been granted.

         Trinity USA and Trinity Medical Group,  Ltd. entered into an assignment
agreement on August 3, 2000, whereby all of Trinity Medical Group Ltd.'s rights,
title,  and  interests  in the license  and  collaboration  agreement  and stock
purchase  agreement  were  assigned  to  Trinity  USA.  There was no  accounting
recognition  by  Trinity  USA as a result of the  transfer  of the  license  and
collaboration agreement and the related stock purchase agreement.

         Trinity USA intends to capitalize  future  payments  required under the
stock purchase  agreement to an intangible  asset,  license  technology,  and to
marketable securities, as appropriate. The Immune Response Corporation consented
to the  assignment  of the  rights,  title,  and  interests  in the  license and
collaboration  agreement and stock purchase  agreement by Trinity  Medical Group
Ltd. to Trinity USA on August 3, 2000.  On November  10,  2000,  Trinity USA and
Trinity Medical Group,  Ltd.  terminated the collaboration and supply agreement,
dated December 1, 1999. As discussed below,  Trinity Assets Company Limited will
prospectively  perform the research and  development  of REMUNE and will invoice
Trinity USA in accordance with agreed upon terms.

         On  August  4,  2000,  we  assigned  through a  sublicense  and  supply
agreement the sales, distribution,  manufacturing and marketing rights to REMUNE
in Thailand to Trinity Assets Company  Limited,  an affiliate of Trinity USA and
Trinity Medical Group, Ltd. The manufacturing  rights assigned to Trinity Assets
Company  Limited are  non-exclusive.  Trinity Assets Company  Limited is related
through common  ownership.  The sublicense  and supply  agreement  provides that
Trinity USA will realize a minimum gross profit of $75 per dose from the sale of
REMUNE to Trinity  Assets  Company  Limited in  Thailand  and that  profits,  as
defined,  from the sale of REMUNE in licensed  territories  other than  Thailand
will be shared equally. It is the intent of the parties that if and when Trinity
Assets Company Limited begins to manufacture  REMUNE,  Trinity USA will continue
to realize  revenues  either from the  purchase  and resale of REMUNE to Trinity
Assets Company  Limited or as royalties  from Trinity Assets Company  Limited on
its sales of REMUNE to others.

         Because we expected it to be at least three years before Trinity Assets
Company  Limited  will be able to  manufacture  REMUNE in  Thailand  and  before
Trinity USA obtains the necessary  government  approvals to begin selling REMUNE
in licensed  countries  other than Thailand,  specific terms of the resale gross
profit or royalties have not been  negotiated by the parties at this time. It is
expected that subsequent  negotiation of these terms, likely to occur during the
next year, will be conducted by Dr. James Namnath,  Chief Executive Officer, and
Gary E. Wilson,  Executive Vice President - Finance representing Trinity USA and
Inthanom John Churdboonchart and Orranart Victoria  Churdboonchart  representing
Trinity  Assets Company  Limited.  Because both entities are owned by members of
the Churdboonchart family,  however, the future negotiation of profit or royalty
arrangements  may involve  conflicts  of interest  which could result in limited
royalties  or profits to Trinity  USA. We have  selected  the above  Trinity USA
employees  based upon their  qualifications  to  represent  Trinity USA in these
instances and to reduce potential conflicts of interest that might arise between
the  parties  as  a  result  of  the   affiliated   and  family   relationships.
Additionally,  upon  successful  regulatory  approvals  of REMUNE,  we intend to
modify the current  Board of  Directors so that no member is also a board member
of Trinity Assets Company Limited,  nor will any concurrent employee be involved
in  negotiations  between the two entities.  Mr.  Namnath and Mr. Wilson have no
financial  interest  in Trinity  Assets  Company  Limited  nor have they held or
intend to hold any position with Trinity Assets Company Limited.

         Trinity  USA has also  agreed to  provide  support  to  Trinity  Assets
Company Limited, in the form and substance satisfactory to both parties, for the
warehousing, transportation, and production of any related capital assets, plant
and equipment, etc. which are necessary for the marketing, promoting and selling
of REMUNE in Thailand.  This  support may be in the form of  providing  interest
bearing  loans to Trinity  Assets  Company  Limited or capital,  in exchange for
equity  ownership of Trinity  Assets Company  Limited;  no specific terms of the
support have been negotiated by the parties at this time. Under the terms of the
sublicense  and supply  agreement,  Trinity USA will pay Trinity  Assets Company
Limited for research  personnel,  travel,  laboratory,  facility and publication
costs  associated with clinical trials of REMUNE until full regulatory  approval
in Thailand is granted.  The



                                       12
<PAGE>

research  personnel  are to be paid at a rate of $250 per  hour for the  leading
investigator and $125 per hour for associate  researchers.  The remainder of the
aforementioned  costs that Trinity USA is obligated to pay under the  sublicense
and supply  agreement  are to be paid at actual cost.  Please see the section of
this form 10-KSB entitled "Certain Relationships and Related Transactions" where
the satisfaction of amounts owed to Trinity Assets Company Limited is discussed.

         Prior to full  regulatory  approval,  Trinity  USA is  responsible  for
funding the clinical studies and requirements of the regulatory approval process
for REMUNE in  Thailand,  which  Trinity  Assets  Company  Limited  directs  and
executes in  Thailand.  As  necessary  during this time  frame,  Trinity  Assets
Company Limited is the entity that primarily  interacts with The Immune Response
Corporation  to gather the paperwork  requirements  of the  regulatory  approval
process  and to exchange  relevant  scientific  data.  After  REMUNE  commercial
approval occurs in Thailand,  Trinity USA will interact with The Immune Response
Corporation to establish demand forecasts for REMUNE purchasing,  issue purchase
orders for REMUNE, arrange for shipment of product, process payments for REMUNE,
negotiate  future  changes  to  product  pricing  as  may be  necessary,  and to
negotiate terms of REMUNE manufacturing  technology  transfer.  After commercial
approval for REMUNE  occurs in Thailand,  Trinity USA will interact with Trinity
Assets Company Limited to develop sales forecasts for REMUNE,  process and track
shipment  of  product,  obtain  payments  for  REMUNE,  and  jointly  design and
construct REMUNE handling and packaging facilities.

         Trinity Assets Company Limited was  reorganized to specifically  manage
REMUNE  development,  perform  the  local  regulatory  requirements  and  future
marketing,  sales and distribution  efforts in Thailand.  Trinity USA management
believes  it can  simplify  its  organizational  structure  and  deliver  higher
profitability  by delegating  these  business and  operational  requirements  to
organizations  that  exist  and have  familiarity  in that  particular  economic
region,  rather than attempting to manage the daily affairs and operations which
are 14 time zones  removed.  Our use of Trinity  Assets  Company  Limited as our
current distributor in Thailand was also done to address the Thai Alien Business
Operation   Act  which   requires   entities  who   manufacture   or  distribute
pharmaceuticals  in Thailand to be majority Thai owned.  Although Trinity USA is
currently  majority  Thai  owned,  and  will  be  immediately  following  future
contemplated  private offerings,  it is possible that we would access the United
States  capital  markets by selling or issuing  additional  shares in the future
which may result in us no longer being majority Thai owned.

         Trinity  USA  is  located  within  50  miles  of  The  Immune  Response
Corporation,  the  licensor  and  supplier of REMUNE.  We believe that this will
facilitate  the  efficiency  and  effectiveness  of our operations and assist in
forming a strong partnering relationship with our supplier. The direct purchases
of  REMUNE  by us  are  also  simplified  in  that  there  will  be no  currency
translation  and expected  financing for these  purchases will occur within U.S.
financial institutions.  The sublicense and supply agreement between Trinity USA
and Trinity Assets Company  Limited  directs the majority of profits from REMUNE
sales to Trinity USA,  based upon our current  expected  cost of the product and
the  anticipated  resale price of REMUNE by Trinity  Assets  Company  Limited in
Thailand.  Trinity  Assets  Company  plans to derive  most of its  revenue  from
ancillary services and products necessary for the treatment of infected patients
in its licensed country of Thailand.

CLINICAL TRIALS OF REMUNE AND OTHER REMUNE PROGRAMS.

         In 1999, Dr. Vina  Churdboonchart,  principal  investigator  at Mahidol
University,  with the  collaboration  of  researchers  from  five  leading  Thai
universities,  completed a Phase II double  blind  placebo  controlled  clinical
trial of REMUNE in Thailand, the results of which were submitted to the Thailand
National  Committee on AIDS for review in March,  2000.  In the  clinical  trial
above,  REMUNE was found to increase  mean CD4+ cell counts,  with  increases in
both  cellular and humoral  immune  responses and stable viral load. A follow up
study through  eighty-eight  (88) weeks showed a  significant  decrease of viral
load in 30% of the subjects.  The results of the trial also  indicated  that the
subjects reported no adverse side effects from taking REMUNE.

         The Phase II study conducted by us that is the basis of our application
for a new drug  application  with the Thai FDA  utilized  CD4 cell  counts  as a
primary end point with viral load, CD8, and body weight as secondary markers. In
other tests of potential HIV treatment, additional tests are used as primary and
secondary end points as


                                       13
<PAGE>

the technology to detect such factors becomes available. For example, some tests
also study CD38 cells and Delayed Type  Hypersensitivity  skin tests.  It can be
seen that all studies utilized CD4 as a primary end point marker with viral load
seen in nearly all studies. We believe an indication of CD4 increase will compel
approval of REMUNE by the Thai FDA even though  other  markers  exist.  CD4 cell
increases  have  formed  the  basis  of  other  drug  approvals.   For  example,
Interleukin-2 was recently approved in France, and subsequently in Thailand, for
HIV treatment on the basis of CD4 cell  increases,  although viral load data did
not change.  In our study,  both CD4 increase and viral load  stabilization  and
decreases were reported.  It is possible that the Thai FDA could request further
evidence  of REMUNE  efficacy  beyond  the end points we have  studied;  in that
event,  we are  prepared  to  include  test  results  from The  Immune  Response
Corporation  trials  which  have  additional  end  points.  While we  believe an
indication  of CD4 cell  increase  is  sufficient  for  regulatory  approval  in
Thailand,  there remains the possibility of additional  requirements  beyond the
scope of our studies  and there does not exist an absolute  standard by which an
HIV drug is judged as being efficacious.

         The results of the Phase II controlled trial were presented at the XIII
International   AIDS   Conference   in  Durban,   South   Africa  by  Dr.   Vina
Churdboonchart,  as the principal  investigator  at Mahidol  University with the
collaboration of researchers from five leading Thai universities. The results of
the Phase II clinical  trials in Thailand and other clinical trials using REMUNE
as a treatment for slowing HIV-related disease progression are encouraging.  The
global  burden of  disease  and death  related  to HIV is  increasing  at a rate
unmatched by any other pathogen.  At present,  the most effective  treatment for
slowing HIV-related disease progression,  anti-retroviral medication requiring a
daily multi-pill  regime,  is complicated to administer,  requires close medical
monitoring,  is extremely costly, and can cause significant adverse effects. The
study  conditions  of the  clinical  trials  in  Thailand  allowed  REMUNE to be
assessed  as a  "mono-therapy",  that is,  without any other  anti-viral  drugs.
REMUNE requires a minimum of a once a quarter injection.  As a result, REMUNE is
both more economical and practical for populations similar to those in Thailand.
As released by the Ministry of Public Health of Thailand, the official number of
HIV infected  people in Thailand is 1 million  people.  The estimate for Asia is
approximately 7 million HIV-1 infected people. REMUNE is potentially a very cost
effective  therapy for the  treatment of HIV among  Thailand's  poorest  people.
Follow-up  study  results  have  also been  subsequently  presented  at  various
conferences  in France,  Spain,  and Thailand;  certain of the results have been
published in peer reviewed scientific journals.

         In  November  2000,  Trinity  USA  gained  approval  from two  national
committees of the Thai  government,  The Technical  Subcommittee on AIDS Vaccine
Development and the National Ethical  Committee,  Ministry of Public Health,  to
conduct an open label program, known as M903, to treat up to 10,000 individuals.
Results of this program were not required by the Thai FDA in their consideration
of REMUNE for full commercialization. Trinity USA has indefinitely postponed the
initiation of this program until such time that adequate funding for the program
becomes available, if ever.

         Over the last five years, all other U.S. trials of REMUNE by The Immune
Response Corporation and/or Pfizer Inc. have been conducted with HAART therapies
because that is a requirement  of the U.S. FDA.  Since HAART is known to prolong
the lives of HIV infected,  the U.S. FDA has determined  that it would be unfair
to test  patients  by  excluding  a  proven  therapy  from  U.S.  trials  of HIV
treatments.  The Thai trials,  notably the 297 patient Phase II trial designated
2101B, did not utilize HAART because that is not a practical  treatment for most
Thai  people,  who simply  cannot  afford  HAART,  even if it was  available  in
sufficient  amounts in Thailand.  In order for REMUNE to be a commercial success
in Thailand and Southeast  Asia, it must have benefit  without the use of HAART.
The  results of 2101B  indicated  REMUNE  increased  CD4 levels and  resulted in
stabilization  or  decreases in viral load without  using HAART.  Therefore,  if
REMUNE were to be found to be effective only in combination  with HAART,  demand
for REMUNE in Thailand  would be  significantly  less than our current  business
model contemplates.


                                       14
<PAGE>

RISK FACTORS

         In evaluating an investment in Trinity USA and its business,  potential
investors should carefully  consider the following risk factors as well as other
information  set forth  elsewhere in this Form 10-KSB  which  pertain to Trinity
USA.

                       RISKS RELATING TO DISEASE TREATMENT

IF OUR  SUPPLIER  IS UNABLE TO PROVIDE  REMUNE,  WE WILL LOSE OUR SOLE SOURCE OF
PRODUCT AND REVENUE.

         Trinity  USA will lose its only source of revenue if for any reason The
Immune Response Corporation,  the exclusive supplier and manufacturer of REMUNE,
cannot  manufacture  REMUNE at all or at the capacity required for us to sustain
profitable operations.

         The Immune Response Corporation's manufacturing facility has no history
of volume production.  Trinity USA cannot predict with absolute certainty that a
consistent  supply  volume  can  be  expected.   Further,  The  Immune  Response
Corporation  relies on a third  party for the  final  step of the  manufacturing
process. If the existing manufacturing operations prove inadequate, there can be
no assurance that any arrangement with another third party can be established on
a timely  basis,  or that we or The Immune  Response  Corporation  can establish
other manufacturing capacity on a timely basis.

         The U.S. Food and Drug Administration may impose severe restrictions on
the manufacture of REMUNE in the U.S.,  making The Immune  Response  Corporation
incapable of supplying the product to Trinity USA for  distribution in Thailand.
Further,   The  Immune  Response   Corporation  could  not  easily  replace  its
manufacturing capacity if it were unable to use its manufacturing facilities due
to fire,  natural disaster,  equipment  failure or other  difficulty,  or if the
facility  is  not  deemed  to  be  in  compliance   with  the  U.S.  FDA's  Good
Manufacturing Practice standards.

IF NEITHER THE IMMUNE RESPONSE CORPORATION, NOR TRINITY USA, IS ABLE TO SECURE A
LICENSE TO EXPORT  REMUNE FROM THE U.S.  FDA, WE WILL HAVE TO ATTEMPT TO BUILD A
MANUFACTURING FACILITY IN THAILAND OR CEASE OPERATIONS.

         In the event that neither The Immune Response Corporation,  nor Trinity
USA, is able to secure an export  license for REMUNE,  our business plan will be
severely compromised and we may be forced to cease operations.  The U.S. FDA may
approve REMUNE for export based upon any of the following:

o    the results of tests conducted in the United States;
o    approval of REMUNE by the European health authorities;
o    an  application  for an export license based upon approval of REMUNE by the
     Thai health  authorities  and a review by the U.S. FDA, for compliance with
     specific  criteria set forth in the Federal Food, Drug and Cosmetic Act, of
     the  Thai  statutes  and  regulations   governing  the  approval  for  use,
     manufacture  and  recall  of  drugs  subsequently  found  not to be safe or
     effective; or
o    a direct  application in conjunction  with the Thai health  authorities for
     approval of the export of REMUNE  based on an  application  to the U.S. FDA
     including the raw data from the trials of REMUNE conducted in Thailand.

         There can be no  assurance,  however,  that REMUNE will be approved for
use by either the U.S. FDA or the European health authorities,  or that the U.S.
FDA will ever  approve the export of REMUNE.  If the U.S. FDA refuses to approve
the export of REMUNE for  commercial  use in Thailand,  we may choose to build a
manufacturing facility in Thailand capable of producing REMUNE or, if REMUNE may
be exported as an intermediate  product, of completing the manufacturing process
for REMUNE. The cost of constructing a manufacturing  facility in Thailand would
be millions of dollars,  and there can be no assurance  that we would be able to
raise the capital  necessary to fund the building of a  manufacturing  plant. If
neither The Immune Response



                                       15
<PAGE>

Corporation,  nor Trinity USA, can procure an export  license for REMUNE,  sales
may not occur for 2 to 3 additional  years, if ever,  while we seek  alternative
manufacturing options.

IF WE ARE UNABLE TO DISTRIBUTE REMUNE IN THAILAND WITHOUT THE CONCOMITANT USE OF
HIGHLY ACTIVE  ANTI-RETROVIRAL  THERAPY, OR HAART, OUR BUSINESS MODEL MAY NOT BE
VIABLE AND WE MAY BE FORCED TO CEASE OPERATIONS.

         Our  business  model  contemplates  that REMUNE  will be  approved  and
labeled as a mono-therapy in Thailand and in our other licensed countries. If we
are unable to  distribute  REMUNE in  Thailand  without the  concomitant  use of
HAART,  our  business  model  may not be  viable  and we may be  forced to cease
operations  because we believe HAART is not affordable or readily  accessible to
the great  majority of the HIV infected  population  in the  countries  where we
possess license rights.

IF OUR SUPPLIER IS UNABLE TO PROVIDE REMUNE AT A PRICE WHICH CAN BE RESOLD BY US
AT AN AMOUNT THAT IS AFFORDABLE TO THE HIV INFECTED POPULATION IN OUR TERRITORY,
WE MAY NOT BE ABLE TO SUSTAIN PROFITABLE OPERATIONS.

         Our cost of REMUNE is  contractually  based  upon The  Immune  Response
Corporation's manufacturing cost, as defined under generally accepted accounting
principles,  plus an agreed upon markup percentage.  Because The Immune Response
Corporation's  manufacturing  facility has no history of volume  production,  we
cannot  determine with absolute  certainty that the price at which REMUNE may be
resold in our licensed territory will be affordable to a large enough percentage
of the HIV infected population for us to sustain profitable operations.

IF THE IMMUNE RESPONSE  CORPORATION IS UNABLE TO CONTINUE AS A GOING CONCERN, WE
WILL LOSE THE SOLE SUPPLIER OF REMUNE, OUR ONLY PRODUCT.

         The  Immune  Response  Corporation  had a net loss of  $24,498,000  and
$8,756,000  for the year ended December 31, 2000 and the nine month period ended
September  30,  2001,  respectively.  The  Immune  Response  Corporation  had an
accumulated  deficit  of  $219,784,000  as of  September  30,  2001.  The Immune
Response  Corporation  also had working  capital of $3,220,000,  total assets of
$23,266,000 and total liabilities of $5,519,000 as of September 30, 2001.

         Because The Immune Response Corporation is the sole supplier of REMUNE,
their  inability to continue to raise  capital or ultimately  generate  internal
cash flow could adversely  affect our business,  as REMUNE is currently our only
product.

IF THE THAI MINISTRY OF PUBLIC HEALTH OR FOOD AND DRUG  ADMINISTRATION  DOES NOT
APPROVE REMUNE, WE WILL BE UNABLE TO GENERATE ANY REVENUES IN THAILAND.

         Approval of REMUNE by the Thai Food and Drug Administration or Ministry
of Public Health is necessary for the marketing, distribution and manufacture of
REMUNE. If the Thai Food and Drug Administration does not approve REMUNE, REMUNE
cannot be marketed, sold or manufactured in Thailand. Without Thai Food and Drug
Administration approval, we will be unable to generate any revenue in Thailand.

IF WE DO NOT RECEIVE  REQUIRED  MARKETING  APPROVAL  FROM THE  GOVERNING  HEALTH
AUTHORITY OF THAILAND,  WE CANNOT SELL OR DISTRIBUTE REMUNE IN ANY OTHER COUNTRY
IN OUR  LICENSED  TERRITORY  AND WILL BE UNABLE TO  GENERATE  REVENUES  IN THOSE
LOCATIONS.

         We have agreed that we cannot sell or distribute  REMUNE to any country
in the  licensed  territory  unless we have  previously  received  the  required
marketing  approval for REMUNE from the governing  health  authority of Thailand
and we have  diligently  commenced  marketing  REMUNE in Thailand.  If we do not
obtain  the  required  marketing  approval,  we will be unable to  generate  any
revenues in our licensed territory.


                                       16
<PAGE>

         The license and collaboration  agreement,  as amended,  between Trinity
USA and The Immune Response Corporation provides for possible termination of the
license and  collaboration  agreement  if the  marketing  approval for REMUNE in
Thailand is not granted before August 31, 2004.

IF REMUNE BECOMES OBSOLETE  BECAUSE OF THE HIV VIRUS' ABILITY TO MUTATE,  WE MAY
LOSE OUR MARKET FOR REMUNE.

         Our success  depends on the  ability of the  product to benefit  users.
Because of the ability of this virus to mutate, and thereby defeat many forms of
treatment, it is not unreasonable that the product may become obsolete.

IF REMUNE  NO  LONGER  BENEFITS  PATIENTS  THAT USE IT, WE MAY HAVE TO  WITHDRAW
REMUNE FROM THE MARKET.

         Our success will depend, in large part, upon the product  continuing to
show  wide  safety  margins  and  a  low  incidence  of  adverse  side  effects.
Unacceptable  toxicities  or side effects may occur at any time in the course of
clinical trials or, if any products are successfully  developed and approved for
marketing,  during  commercial  use  of  our  products.  The  appearance  of any
unacceptable  toxicities or side effects could interrupt,  limit, delay or abort
the development of any of our products or, if previously  approved,  necessitate
their withdrawal from the market.

IF THE IMMUNE RESPONSE  CORPORATION,  REMUNE'S DEVELOPER,  DOES NOT COMPLETE ITS
CLINICAL  TRIALS OF  REMUNE,  WE MAY NOT BE ABLE TO MARKET  THE  DEVELOPMENT  OF
REMUNE.

         The Immune Response  Corporation must still complete clinical trials of
REMUNE. The results must gain regulatory approvals in the United States or other
countries where these companies may sell REMUNE.  There can be no assurance that
the clinical trials and any subsequent commercialization of REMUNE by The Immune
Response  Corporation will be successfully  completed.  The discontinuation of a
Phase 3 trial of REMUNE due to lack of statistical  difference  between test and
control groups, conducted in the United States, had a material adverse effect on
The Immune Response Corporation.

         On August 30, 2001,  The Immune  Response  Corporation  announced  that
after  a  thorough   review  of  the  available   data,   it  informed   Agouron
Pharmaceuticals,  Inc.,  a Pfizer  Company,  that it did not intend to  continue
Study 202. The decision was based on the fact that the total number of endpoints
(time to virological failure) to date appeared to be falling short of the number
assumed  by  Agouron  in  the  protocol.  Additionally,  the  conditional  power
calculations, which is the estimation of the likelihood of correctly determining
a treatment  effect,  provided by Agouron were  reviewed and revealed that while
the power  could be near  70%,  it could  also be as low as 40%.  Based on these
factors,  The Immune  Response  Corporation  determined  that it would be highly
unlikely  that  Study 202 would be able to  achieve  its  primary  objective  of
determining a treatment effect.

BECAUSE THE IMMUNE  RESPONSE  CORPORATION  AND  AGOURON  HAVE  TERMINATED  THEIR
COLLABORATION AGREEMENT, THE IMMUNE RESPONSE CORPORATION MAY HAVE TO ABANDON THE
DEVELOPMENT OF REMUNE.

         The Immune Response  Corporation's  primary marketing partner,  Agouron
Pharmaceuticals,  Inc.,  or  Agouron,  a Pfizer  Inc.  company,  terminated  its
collaboration agreement with The Immune Response Corporation on July 5, 2001. As
a result,  The Immune  Response  Corporation  may have to abandon REMUNE or seek
additional funding.  The termination of the Agouron/Immune  Response Corporation
collaboration  agreement  has had a material  adverse  effect on both The Immune
Response  Corporation's and Trinity USA's stock price, and therefore our ability
to successfully  raise  additional  capital to complete  REMUNE  development and
effectuate our business plans.

IF TECHNOLOGICAL  CHANGE AND COMPETITION RENDER OUR POTENTIAL PRODUCTS OBSOLETE,
WE MAY HAVE TO CEASE OPERATIONS.

         Trinity USA  anticipates  that REMUNE will face  intense and  increased
competition in the future.  There can be no assurance that existing  products or
new products for the treatment of HIV developed by competitors  will not be more
effective or more effectively  marketed and sold than REMUNE.  The biotechnology
industry  continues


                                       17
<PAGE>

to undergo rapid change, and competition is intense and is expected to increase.
Competitors  may succeed in developing  technologies  and products that are more
effective or affordable than any which are being developed by our supplier,  The
Immune Response Corporation.

IF THE MANUFACTURE OF REMUNE IS CONDUCTED BY TRINITY USA IN THAILAND,  WE MAY BE
EXPOSED TO ENVIRONMENTAL LIABILITY.

         Because REMUNE requires  irradiation as a final processing step, we may
be exposed to environmental liability when and if Trinity USA begins manufacture
of REMUNE in Thailand.  Further, nuclear irradiation sources may not be found in
Thailand and may not be allowed by the Thai government authorities.

                RISKS RELATING TO OUR HISTORY AND FINANCING NEEDS

IF WE ARE UNABLE TO PAY OUR CURRENT  AND FUTURE  OBLIGATIONS  TO TRINITY  ASSETS
COMPANY LIMITED, OUR CURRENT  DISTRIBUTION  STRATEGY COULD BE COMPROMISED AND WE
MAY BE UNABLE TO SELL OUR PRODUCT IN THAILAND.

         Since  Trinity USA has  assigned a  significant  portion of its revenue
rights to Trinity Assets Company Limited,  an affiliate,  Trinity Assets Company
Limited may exercise a  disproportionate  amount of control over future revenues
or profits from the sale of REMUNE in Thailand.  Because both entities are owned
by members of the  Churdboonchart  family,  the future  negotiation of profit or
royalty  arrangements  may involve  conflicts of interest  which could result in
limited royalties or profits to Trinity USA.

         If we are unable to raise  sufficient  capital or  generate  profitable
operations to pay our current and future  obligations  to Trinity Assets Company
Limited,  our  current  distribution  strategy  in  Thailand  and the other nine
licensed countries will be compromised, as our operations are co-dependent.

UNANTICIPATED  CHANGES IN THAI REGULATIONS MAY LIMIT OUR ABILITY TO MANUFACTURE,
SELL OR  DISTRIBUTE  REMUNE IN  THAILAND  WHICH  WOULD  LIMIT OR PREVENT US FROM
GENERATING REVENUES.

         We may be subject to direct regulation by several governmental agencies
in Thailand  in  addition  to  regulations  applicable  to the  development  and
marketing  of  pharmaceutical   products.   The  application  of  new  laws  and
regulations  as well as  political  and economic  events  beyond our control may
limit our ability to  manufacture,  sell and distribute the product in Thailand.
Present Thai law requires  domestic  pharmaceutical  manufacturing and that some
aspects of sales and distribution be conducted by a majority owned Thai company.

OUR FUTURE SUCCESS IS UNPREDICTABLE  DUE TO OUR LIMITED OPERATING  HISTORY,  OUR
HISTORY OF OPERATING LOSSES AND THE UNCERTAINTY OF ACHIEVING PROFITABILITY.

         Due  in  large  part  to  the  significant   research  and  development
expenditures required to identify and validate new drug candidates,  we have not
been profitable and have generated operating losses since our inception in 1998.
We currently have no revenues and we are still in the developmental stage of our
business.  As of December 31, 2001, we had an accumulated deficit of $6,345,831.
We expect to  continue  to incur  losses for at least the next year,  and expect
that these losses could  increase as we continue to expand our sales,  research,
and  marketing  force,   and  our  distribution   facilities  in  an  effort  to
commercialize  REMUNE.  We expect to incur additional losses until such time, if
ever,  that our revenues from the sale of REMUNE cover our  expenses.  Achieving
and maintaining long-term profitability depends on successfully  commercializing
REMUNE.  We  cannot  assure  you  that we will  be  able to  achieve  any of the
foregoing or that we will be profitable  even if we  successfully  commercialize
REMUNE. If the time required to generate  revenues and achieve  profitability is
longer than anticipated, or if we are unable to obtain necessary capital, we may
not be able to fund and continue our operations.


                                       18
<PAGE>

IF WE ARE UNABLE TO RAISE  ADDITIONAL  CAPITAL IN THE NEXT 12 MONTHS,  WE MAY BE
FORCED TO CEASE OPERATIONS.

         Trinity  USA  requires  substantial  capital  to pursue  its  operating
strategy  and  currently  has  limited  cash  for  operations.  Other  than  our
Securities  Purchase  Agreement with La Jolla Cove  Investors,  Inc.,  which was
entered into on January 4, 2002, we do not have any other  commitments to secure
additional  capital and there is no assurance that any  additional  funds needed
will be available on favorable  terms,  if at all. We currently  anticipate that
the net proceeds from our sale of our shares of common stock from future private
placement  offerings  or  through  the future  exercise  of  warrants  under our
Securities Purchase Agreement with La Jolla Cove Investors,  Inc., together with
our  available  funds,  will be  sufficient  to meet our  anticipated  needs for
working  capital and capital  expenditures  through at least the next 12 months.
However,  we may need to raise  additional funds prior to the expiration of this
period.  Until we can obtain revenues  sufficient to fund working capital needs,
Trinity USA will be dependent upon external sources of financing.

         The license and  collaboration  agreement  between  Trinity USA and The
Immune  Response  Corporation  provides for  termination by The Immune  Response
Corporation or Trinity USA if Trinity USA fails to purchase The Immune  Response
Corporation's  common stock, as required by the stock purchase agreement between
the parties, within 30 days of the event requiring purchase of the common stock.
During the next 12 months,  Trinity  USA  expects to pay at least one of the two
remaining  $5 million  payments  to The  Immune  Response  Corporation.  The two
remaining  payments  must be paid upon 1) the approval of REMUNE in Thailand for
commercial sale and 2) receipt of the required factory  establishment license or
approval from the governing health authority of Thailand to manufacture  REMUNE.
If we are  unsuccessful  in  raising  the  necessary  capital  to fund the first
milestone payment, we may lose our licensing rights for REMUNE.

IF WE ARE UNABLE TO GENERATE INTERNAL SOURCES OF LIQUIDITY,  WE MAY BE UNABLE TO
RAISE ADDITIONAL FUNDS WITHOUT SUBORDINATING THE RIGHTS OF HOLDERS OF OUR COMMON
STOCK.

         To date, we have no internal  sources of liquidity and do not expect to
generate any internal cash flow until 2003. Moreover, there is no assurance that
our estimate of our liquidity needs is accurate or that new business development
or other  unforeseen  events  will  not  occur,  resulting  in the need to raise
additional  funds. If we raise  additional funds through the issuance of equity,
equity-related or convertible debt securities, these securities may have rights,
preferences or privileges  senior to those of the rights of Trinity USA's common
stock.  The failure to raise any needed  additional funds will make it difficult
for Trinity USA to sustain or commence its primary business operations.

BECAUSE  TRINITY  USA AND  TRINITY  ASSETS  COMPANY  LIMITED  HAVE A DIRECTOR IN
COMMON,  THERE MAY BE INHERENT  CONFLICTS  OF INTEREST IN THE  EXECUTION BY THIS
DIRECTOR OF HIS DUTIES.

         Trinity USA  currently  has one  director  that is also a director  and
officer of Trinity  Assets  Company  Limited.  This  director  also has a direct
financial interest in both Trinity USA and Trinity Assets Company Limited. While
our  management  believes  that  this  director  will be able  to  exercise  his
fiduciary  duty to our  shareholders,  there may  exist  inherent  conflicts  of
interest in the execution by this director of those duties.  As a result of this
potential conflict,  this director may not negotiate the terms of our current or
prospective  agreements  with Trinity Assets Company Limited as favorably as the
terms  he  would  demand  if he had no  financial  interest  in our  contractual
partner.

ITEM 2  - PROPERTIES

         We own no real property. We lease executive and administrative  offices
at 30021 Tomas, Suite 300, Rancho Santa Margarita, CA 92688. We will lease those
facilities from American Office  Centers,  L.L.C.  for a period of one year. The
size of this  property  is  approximately  500 square  feet and  consists of two
adjoining  executive  offices.   This  facility  will  serve  as  Trinity  USA's
accounting  and  administrative  offices.  The  monthly  rent  expense  for this
facility is approximately  $2,200. We believe that this space will be sufficient
for our  business  purpose for the next twelve  months  because our research and
development  and  distribution  activities  will be


                                       19
<PAGE>

primarily  performed by our affiliate,  Trinity Assets Company  Limited,  during
that time. In the opinion of management, all of our properties and equipment are
adequately covered by insurance.

         Upon sufficient capitalization, we intend to directly purchase or lease
plant,  equipment and secure land leases for a handling and storage  facility in
Thailand, or lend capital to Trinity Assets Company Limited so they may purchase
or lease these  facilities  and land.  The facility will be located close to the
Bangkok  International  Airport and will receive  REMUNE  shipment in bulk.  The
facility  will be built to U.S. FDA Good  Manufacturing  Practice  standards and
provide for climate  controlled  and secure  warehousing.  The estimated cost to
construct the facility is $12 million and will require six months to one year to
construct.  We also estimate that the cost of securing an associated  land lease
in  Thailand is $3 million.  Until we are able to generate  sufficient  internal
cash flow,  raise  sufficient  capital,  or obtain  financing  to  purchase  and
construct a handling and storage facility,  we believe we can rent a facility to
meet our  first 12 months  distribution  needs for  approximately  $500,000.  No
specific property for the handling and storage facility has yet been identified.

ITEM 3  - LEGAL PROCEEDINGS

         There are no legal actions pending against us nor are any legal actions
contemplated.

ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         The  following  matters were  submitted  to a vote of security  holders
during the fourth quarter ended December 31, 2001 through the mailing of a Proxy
Statement in connection  with Trinity USA's 2000 annual meeting of  shareholders
which took place on December 20, 2001. The Company mailed the Proxy Statement on
or about November 19, 2001 soliciting the written consent of the shareholders on
two  proposals.  There were issued and  outstanding  on November 19,  2001,  the
record date, 11,858,120 shares of common stock.


                                       20
<PAGE>


         Proposal  1  solicited  the vote of the  shareholders  to  approve  the
nomination  for  election  of five  directors:  Arun  Churdboonchart,  Dr.  Vina
Churdboonchart,  Orranart Churdboonchart, Dr. James Namnath, and Kenneth Hamlet.
Proposal 1 received the following consents:

          For          8,224,320
          Against      0
          Abstain      0

         Proposal  2  solicited  the  vote of the  shareholders  to  ratify  the
appointment of Grant  Thornton LLP as the Company's  auditors for the year ended
December 31, 2001. Proposal 2 received the following consents:

          For          8,224,320
          Against      0
          Abstain      0


                                       21
<PAGE>

                                     PART II

ITEM 5 - MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
         STOCKHOLDER MATTERS

MARKET INFORMATION

         The  principal  United  States  market in which our common stock is the
NASD Over the Counter  Bulletin  Board.  Our common stock began  trading in July
2000 under the symbol  TMGU.  Firms  making a market in Trinity USA common stock
include Knight Trading,  Herzog,  Heine,  Geduld,  Inc., National Capital,  LLC,
Salomon  Grey and several  others.  We intend to apply for listing on the NASDAQ
Small  Cap or  National  Market  if and  when  we  meet  the  necessary  listing
requirements.

         The range of high and low close price  information for our common stock
for each quarter from July 12, 2000, the date we became a reporting  company and
began trading  through the Pink Sheet Service,  through  December 31, 2001 is as
follows:

                                                          High       Low
                                                          ----       ---
         The third quarter ended September 30, 2000   $   8.00    $  3.00

         The fourth quarter ended December 31, 2000   $   5.00    $  1.06

         The first quarter ended March 31, 2001       $   2.25    $  0.51

         The second quarter ended June 30, 2001       $   5.25    $  0.50

         The third quarter ended September 30, 2001   $   4.05    $  1.38

         The fourth quarter ended December 31, 2001   $   2.15    $  1.15

         The  source of the above  information  is  www.smallcapcenter.com.  The
quotations reflect inter-dealer prices,  without retail mark-up,  mark-down,  or
commission and may not represent actual transactions.

         On December 31, 2001, there were approximately 175 holders of record of
our common stock.  This number does not include any adjustment for  stockholders
owning Trinity USA common stock in street name.  The stock  transfer  records of
the  corporation  indicate that, as of December 31, 2001,  there were 12,958,120
common  shares  outstanding.  We  have  never  paid  dividends,  and  we do  not
anticipate paying any dividends in the near future; instead, we intend to retain
earnings,  if any,  to provide  funds for  general  corporate  purposes  and the
expansion of business.  As well as being  regulated at the federal  level by the
Securities  Exchange  Act of 1934,  the sale and resale of our  common  stock is
regulated at the state level through the Blue Sky laws.

         Our common  stock is listed on the NASD OTC  Bulletin  Board  under the
trading  symbol  TMGU,  but the common  stock  still might not be salable by the
resident  of a  state  in  which  we  have  not  met  the  applicable  Blue  Sky
requirements.  Various  methods are available to brokers who want to fill buy or
sell  orders  for a resident  of such a state,  but the  willingness  to do this
depends heavily on the particular  state or states involved and on the aggregate
value  of the  transaction.  It  also  depends  on  the  brokers  involved.  The
compliance  departments of some brokerage  firms routinely  disallow  trading in
certain stocks - especially  "penny stocks" and others with inadequate levels of
public disclosure, low or suspiciously volatile prices, or smaller market makers
with whom the brokerage firms may be unfamiliar.  There are federal  regulations
that can also  influence  a broker's  willingness  or ability to be  involved in
sales of certain  low-priced  stocks like  Trinity  USA's.  The  Securities  and
Exchange Commission has adopted rules that regulate  broker-dealer  practices in
connection with transactions in these "penny stocks". Generally speaking, "penny
stocks" are equity securities with a price of less than $5 per share, other than
securities  listed on  certain  national  exchanges,  or quoted on the  National
Association of Securities  Dealers  Automated


                                       22
<PAGE>

Quotation  system,  provided  that  current  price and volume  information  with
respect to  transactions in penny stocks is provided by such exchange or system.
If our common stock meets the definition of a "penny stock",  before executing a
transaction not otherwise exempt, a broker-dealer must do the following:

         o     Deliver a standardized  risk disclosure  document prepared by the
               Securities  and Exchange  Commission  that  provides  information
               about penny stocks and the nature and level of risks in the penny
               stock market.

         o     Provide the customer with bid and offer quotations for our common
               stock, the compensation of the  broker-dealer and the salesperson
               in the transaction,  and monthly account  statements  showing the
               market value of each penny stock held in the customer's account.

         o     Make a special,  written determination that our common stock is a
               suitable investment for the purchaser and receive the purchaser's
               written   agreement   to  the   transaction.   These   disclosure
               requirements may have the effect of reducing the level of trading
               activity in the secondary market for our common stock if it is or
               becomes  subject to the penny stock rules. If our common stock is
               or becomes  subject to the penny stock  rules,  shareholders  may
               find it more  difficult to sell the stock in their units  because
               of the regulatory and paperwork burden a broker has to deal with.
               Considering  that it is  unlikely  that a broker  will  make much
               money off penny stock  transactions,  a shareholder might find it
               hard to get a broker to execute trades of our common stock.

         The amount of common equity that is subject to  outstanding  options or
warrants to purchase,  or securities  convertible  into common equity of Trinity
USA as of December 31, 2001 is as follows:

         Stock options                        725,000

         Common stock purchase warrants       1,058,667*

         Convertible promissory note          366,972*

* Amounts  include an estimate for the common stock  purchase  warrant  (366,972
warrant  shares)  and the common  stock  issuable  upon  conversion  of the note
(366,972  common  shares)  based  upon  the  conversion  terms of the  note,  as
calculated assuming conversion at December 31, 2001.

         As of December 31, 2001, the amount of common equity that could be sold
pursuant to Rule 144 under the  Securities Act or that Trinity USA has agreed to
register  under the  Securities  Act for sale by security  holders is 12,320,620
shares of common stock.  This amount  excludes the estimated  1,058,667  warrant
shares  and the  725,000  stock  options.  The total  number  of  common  shares
outstanding as of December 31, 2001 for which Rule 144 would not be available is
100,000 shares. Rule 144 is not available based upon the Securities and Exchange
Commission's   position  regarding   business   combinations  with  blank  check
companies,  such as Trinity  USA's  exchange  with August  Project III Corp.  on
December 31, 1999. The 100,000 shares of common stock can only be resold through
a registered offering.

ITEM 6 - MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

                                PLAN OF OPERATION

GENERAL OVERVIEW.

         We  have  minimal  operations,  nominal  assets  and no  revenues  from
operations.  We have only  approximately  two  years of  business  history.  Our
estimates  indicate that we will not generate  internal cash flows from the sale
of REMUNE  until  2003.  As we do not  currently  have any  external  sources of
funding,  our  inability  to


                                       23
<PAGE>

successfully  implement future public or private placement offerings and further
our  business  strategy  may  compromise  our ability to achieve  our  projected
revenues.

         Our goal is to develop our initial product,  REMUNE,  so that it may be
sold  throughout  our licensed  territory.  We intend to support the  regulatory
approvals  in Thailand and then  distribute  the product  first in Thailand.  We
later intend to engage in sub-license and supply  agreements with parties in our
licensed  territory  countries who will carry out local regulatory  requirements
related to new drug  applications,  distribution and product support for REMUNE.
In Thailand, we have sub-licensed our rights to REMUNE to Trinity Assets Company
Limited.

DISTRIBUTION AND REVENUE GOALS.

         The Trinity USA business  plan  includes the  establishment  of revenue
over the first three  years after  commercial  approval  primarily  from sale of
REMUNE.  Other possible  sources of revenue or income in these first three years
include license fees for the development of REMUNE in one of the other countries
in Trinity USA's territory and research grants from public and private  sources.
Trinity  USA would  focus its  workforce  on  developing  expertise  in  REMUNE,
international  trade  logistics and tax  management,  foreign  currency and cash
management,   effective  product  demand   forecasting,   and  ensuring  product
integrity.  In the first year that we receive commercial approval for REMUNE and
have  received  the  necessary  export  approval  from  the U.S.  FDA,  we would
establish an engineering team to oversee the development of a handling, storage,
and  manufacturing  plant in Thailand.  After  establishing  reliable and steady
revenue  from REMUNE in  Thailand,  Trinity USA plans to create its own research
and development capability in the United States and elsewhere to develop new and
improved products. Trinity USA plans to acquire related technology as discovered
by an  internal  business  unit  dedicated  to that  goal or  through  strategic
acquisitions. For the first three to five years after commercialization, Trinity
USA  plans  to  derive  almost  all  of its  revenue  from  sale  of  REMUNE  to
distributors in our licensed countries.

         Trinity USA does not plan to sell REMUNE directly to patients, doctors,
clinics,  or  hospitals.  Trinity  USA would fund  further  studies of REMUNE to
expand its market potential with formula improvements and more use patterns; for
example, we believe REMUNE should be studied as a preventative  vaccine for HIV.
In the five to fifteen year time frame,  Trinity USA hopes to have  developed or
acquired additional products for markets around the world.

         We plan to demonstrate  shareholder  value by maintaining a significant
gross profit margin while  minimizing  our selling,  general and  administrative
expenses.  Without  a large  burden  for  past  research  and  development,  the
outsourcing of our sales function to distributors  in our licensed  territories,
and a business plan mindful of expense  management  and operating  cash flow, we
believe it is possible to have selling, general and administrative costs of less
than $3 million per year in the first three years after  commercialization while
gross profit  potential  could rise to $35 million or higher.  We base our third
year gross profit projection on a minimum gross profit of $75 per dose of REMUNE
sold, as provided by our existing agreement with Trinity Assets Company Limited,
and a sales volume of 500,000 REMUNE  injections sold; that number of injections
represents  about  125,000  patients  - the  estimated  total  number  of people
infected with HIV in Thailand alone is between 1 and 2 million.

         We  believe  distribution  of  REMUNE  would  be to only  Thailand  for
approximately  three years, or until approval is received in each governing body
of our nine other licensed countries.  Trinity USA plans to distribute REMUNE to
Trinity  Assets  Company  Limited  which  would  sell  to  specialized  clinics,
hospitals,  and drug distributors.  Trinity USA will forecast demand and receive
orders  for  REMUNE  and  arrange  for the  shipment  of product by air from the
manufacturer in the United States.

         Initially, the product would be made by The Immune Response Corporation
in its King of Prussia  plant.  The  product  may be shipped in bulk and is very
compact;  one liter of product can produce  1,000 doses.  If we are able to sell
50,000  doses per month,  the shipping  volume  would be 50 liters,  or about 13
gallons.  When product


                                       24
<PAGE>

arrives in Thailand,  it will be kept at a Trinity USA or Trinity Assets Company
Limited  owned  or  leased  facility  with  high  security,  controlled  climate
warehouse, and independent power supply. The cost of shipping, including special
refrigeration  and  security,  would be minimal and product  would be in transit
less than 24 hours.  The sale of REMUNE to other  countries  will occur  after a
willing party(s) is found that will pay for licensing rights and guide the local
regulatory  approvals  needed for  commercialization.  Other  countries would be
supplied out of the Thailand  warehouse.  Packaging and labeling will eventually
occur in Thailand.  Trinity  Assets  Company  Limited is  responsible  for local
distribution and has to our knowledge,  obtained  collaboration  agreements from
all five of the study centers used in clinical trials to remain as access points
for the product. More treatment centers will be added as needed.

         The  manufacture  of REMUNE will  initially  be performed by The Immune
Response  Corporation  for at least  the  first  three  years  after  regulatory
approval in Thailand is obtained.  We have the rights to acquire the  technology
to  manufacture  REMUNE  from  The  Immune  Response  Corporation.   Subject  to
successful  negotiation for the technology transfer and payment of $5 million to
The  Immune  Response  Corporation,  it will  take no less  than  two  years  to
construct our own plant and begin  production of REMUNE.  A production  pipeline
requires 6 to 12 months from start of production to the first  complete  product
doses being  available  for sale.  Because the process  also  requires a nuclear
irradiation  process,  we must find a third party  capable of carrying  out this
step,  or we would need to apply for and receive  permission  from the  relevant
governmental  authority for such a facility to perform the irradiation  process.
We are aware,  however,  of a Thai government  irradiation center which we could
apply to use.

         In addition,  Trinity USA plans to  distribute  REMUNE  throughout  our
licensed  countries in Southeast Asia using normal channels of distribution  for
pharmaceuticals,  probably with  distributors  that have experience with syringe
delivery products. There are a number of pharmaceutical  distributors in each of
these  countries  and it is  normal  for drug  manufacturers  to rely  upon them
instead  of trying to do direct  sales.  In  Thailand  there  will be a multiple
distribution   system  -  through  Trinity  Assets  Company  Limited,   existing
pharmaceutical  distributors,  and  possibly  through  the  Thailand  government
authorities.  As discussed above, Trinity Assets Company Limited has established
a delivery  network of clinics and hospitals  that were involved in previous and
current  clinical  trials  and can  administer  REMUNE  presently.  Through  the
previous and current  studies,  the Trinity Assets Company Limited  distribution
network today has five government and University  hospitals and will add more as
we approach commercial approval in Thailand and demand dictates.  Trinity Assets
Company Limited expects to have at least 10 treatment centers  identified by the
end of 2002.  Each center is expected  to handle a minimum of 100  patients  per
day,  which  would  total  365,000  injections  per year.  By the third  year of
operations, the Thailand distributors are projected to be able to administer one
million  injections per year. We believe one million  injections per year is the
maximum  number  of doses  available  for the first  three  years.  One  million
injections will treat about 250,000 patients or 12 - 25% of the total reportedly
infected in Thailand.

          In summary,  we will  accept  orders for REMUNE  from  Trinity  Assets
Company Limited,  currently our only licensed distributor in Thailand;  then, we
will  requisition  product  from the sole  supplier of REMUNE at this time,  The
Immune  Response  Corporation.  Trinity Assets Company  Limited cannot  purchase
product  directly  from The Immune  Response  Corporation.  Only  Trinity USA is
contractually  able  to do  so.  According  to the  terms  of  the  license  and
collaboration agreement between Trinity USA and The Immune Response Corporation,
only Trinity USA shall supply sales forecasts to The Immune Response Corporation
based upon anticipated  demand,  and only Trinity USA will be extended credit by
The Immune Response  Corporation.  Also,  only Trinity USA may negotiate  future
product pricing with The Immune  Response  Corporation and we are the only party
able to obtain the  manufacturing  knowledge  needed to produce  the  product in
Thailand in the future. We have established a minimum sales price between us and
Trinity  Assets  Company  Limited that provides for a minimum of $75.00 per dose
above our cost as purchased from The Immune Response  Corporation.  We also have
specific payment terms with Trinity Assets Company Limited which provide for the
payment of our product cost, plus costs of shipping and other direct expenses at
the time of delivery; and, Trinity Assets Company Limited must pay the remainder
of our sales price within 90 days.


                                       25
<PAGE>

CAPITAL REQUIREMENTS, CASH FLOW AND OTHER OPERATING CONSIDERATIONS.

         Trinity  USA  requires  substantial  capital  to pursue  its  operating
strategy  and  currently  has limited cash for  operations.  Until we can obtain
revenues sufficient to fund working capital needs, Trinity USA will be dependent
upon  external  sources of financing.  To date,  we have no internal  sources of
liquidity and do not expect to generate any internal  cash flow until 2003.  For
the year ended December 31, 2001, we used approximately  $845,000 of cash in our
operations.  This cash was provided by financing  activities  which included the
sale or  subscription  of common stock units, a convertible  promissory note and
the issuance of officer notes payable in the first and second  quarters of 2001.
The  cash  used  in  operations   related  primarily  to  officer  salaries  and
professional fees incurred in connection with our required SEC filings.

         Our current monthly operating  overhead is approximately  $70,000 which
amount will increase if and as we expand our operations.  This estimate excludes
our average monthly  research and development  expenses to date of approximately
$100,000.  Approximately $40,000 of the total $70,000 monthly operating overhead
relates  to  officer  salaries  and  director  expenses.  When we hire the seven
additional  employees  mentioned  in more  detail  below,  we expect it will add
approximately $45,000 per month to our operating overhead.

        Other  than  our  Securities  Purchase  Agreement  with  La  Jolla  Cove
Investors,  Inc.,  which was entered into on January 4, 2002, we do not have any
other  commitments to secure  additional  capital and there is no assurance that
any additional  funds needed will be available on favorable terms, if at all. We
currently anticipate that the net proceeds from our sale of our shares of common
stock from future private placement  offerings or through the future exercise of
warrants under our Securities  Purchase  Agreement with La Jolla Cove Investors,
Inc.,  together  with  our  available  funds,  will be  sufficient  to meet  our
anticipated needs for working capital and capital  expenditures through December
2002.  However, we may need to raise additional funds prior to the expiration of
this period.  Until we can obtain  revenues  sufficient to fund working  capital
needs,  Trinity  USA will be  dependent  upon  external  sources  of  financing.
Moreover,  there is no  assurance  that our estimate of our  liquidity  needs is
accurate or that new business  development or other  unforeseen  events will not
occur,  resulting in the need to raise  additional  funds.  From the date of our
Securities  Purchase  Agreement through March 11, 2002, La Jolla Cove Investors,
Inc. has converted  $19,000 of principal on our $125,000  convertible  debenture
with them,  which has provided  Trinity USA with $95,000 of additional  cash and
has resulted in the issuance of 290,592 shares of our common stock.

         During the next 12 months,  Trinity  USA expects to pay at least one of
the two remaining $5 million  payments to The Immune Response  Corporation.  The
two  remaining  payments must be paid upon 1) the approval of REMUNE in Thailand
for commercial sale and 2) receipt of the required factory establishment license
or approval  from the  governing  health  authority  of Thailand to  manufacture
REMUNE.  The amount  that  Trinity USA  expects to pay  Trinity  Assets  Company
Limited for expenses  incurred  related to clinical  studies and the  regulatory
requirements   during  2001  and  2002  could  be  between  $1.1-$1.4   million,
approximately  $800,000 of which is expected to be incurred in 2002. The amounts
currently or prospectively payable to Trinity Asset Company Limited are expected
to be paid from the cash  proceeds to be raised under  future  private or public
offerings.  The amounts  owed to these  entities  have no  definitive  repayment
terms.  All amounts paid or payable to Trinity Asset Company Limited that relate
to research and development expenses have been, or will be, paid under the terms
of the sublicense and supply agreement. Our obligations to pay for such expenses
extend only until full regulatory approval for the sale of REMUNE in Thailand is
granted.

         The total amounts billed to date by our  affiliates in connection  with
our REMUNE  development  program in Thailand have been in the  proportion of 80%
billable research hours and 20% actual, direct expenses.  The research personnel
have been  billed at a rate of $250 per hour for the  leading  investigator  and
$125 per hour for  associate  researchers.  The direct  expenses  that have been
billed to date relate  primarily to reference  laboratory  costs associated with
quarterly  analysis of the test subjects'  immune  response to the drug therapy,
REMUNE. The individuals that continue to receive REMUNE, and whom are subject to
this quarterly  analysis,  are from our Phase II clinical  trial.  This clinical
trial has been  approved  for an  additional  two  years.  We  believe  that the
clinical  trial,  known  as  Protocol  2101B,  will  become  one of the  longest
scientific  examinations  of Immune Based Therapy,  or IBT, for humans  infected
with HIV. The approval by two national  committees  of the Thai  government  was
made with  supporting  requests from the attending  physicians  and patients for
continued  access to REMUNE.  With these  approvals,  patients  in the study can
continue to receive REMUNE treatment.  Results of the study continuation are


                                       26
<PAGE>

not   required   by  the  Thai  FDA  in  their   consideration   of  REMUNE  for
commercialization.  However , the results  from the study  continuation  will be
used to support REMUNE registration.

         In 2002, Trinity USA may incur significant expenses,  from $1.0 to $2.0
million,  in the application of regulatory  approvals in other  countries.  Upon
sufficient  capitalization,  we also intend to directly purchase or lease plant,
equipment  and secure  land  leases  for a  handling  and  storage  facility  in
Thailand, or lend capital to Trinity Assets Company Limited so they may purchase
or lease these  facilities  and land.  The facility will be located close to the
Bangkok  International  Airport and will receive  REMUNE  shipment in bulk.  The
facility  will be built to U.S. FDA Good  Manufacturing  Practice  standards and
provide for climate  controlled  and secure  warehousing.  The estimated cost to
construct the facility is $12 million and will require six months to one year to
construct. The capital for this project would be provided by product revenue and
the sale of shares of capital stock,  issuance of debt or financing by a banking
institution.  Until we are able to generate sufficient internal cash flow, raise
sufficient capital, or obtain financing to purchase and construct a handling and
storage facility,  we believe we can rent a facility to meet our first 12 months
distribution needs for approximately $500,000.

         We intend to  increase  our  employment  base in the  second  and third
quarters  of 2002.  We intend to add  clinical  study  supervisors,  engineering
consultants,  accounting  staff, and additional  directors during the second and
third  quarters of 2002.  From our present level of 3 full-time  employees and 1
part-time employee, who is our president,  Dr. Vina Churdboonchart,  we estimate
having about 11 employees  and/or  contract  consultants by the end of the third
quarter  of  2002.  We  expect  that  of  the  seven  additional   employees  or
consultants,  3 will be part-time employees (accounting,  logistics,  and sales)
and 4 will be full-time employees or contract consultants  (Engineering,  Public
Relations, Regulatory Affairs, and Research and Development).

         Dr. Vina  Churdboonchart  spends  approximately  10 hours per week,  or
approximately  15% of her work week,  in her duties as president of Trinity USA.
She spends approximately 50 hours per week in her duties with Mahidol University
as an associate  professor and the Project  Coordinator  for clinical  trails of
HIV-1  Immunogen,  or  REMUNE.  Within  this  project,  Dr.  Vina  oversees  and
coordinates the REMUNE clinical studies and programs in Thailand.

RESULTS OF OPERATIONS.

         The following  tables sets forth,  for the periods  indicated,  certain
items in Trinity USA's statements of operations and the change in each item from
the prior period.

Year ended December 31, 2001 compared to year ended December 31, 2000.

                                          2001           2000            Change
                                          ----           ----            ------
                                                         (In thousands)
Operating expenses

   Research and development               $1,227        $1,007        $  220
   General and administrative              1,251           974           277
                                          ------        ------        ------

          Total operating expenses         2,478         1,981           497
                                          ------        ------        ------

Other expense
   Interest and other expense, net           794           226           568
                                          ------        ------        ------

Net Loss                                  $3,272        $2,207        $1,065
                                          ======        ======        ======


                                       27
<PAGE>

Research and Development Expense

Research and development expense increased 21.8% to $1.2 million in 2001 from $1
million in 2000. The research and development expenses relate to clinical trials
and  continuing  studies for REMUNE in  Thailand,  which are being  conducted by
Trinity Assets Company Limited under a sublicense and supply  agreement  between
Trinity USA and Trinity Assets Company Limited.  The increase in expense in 2001
over 2000 relates  primarily to the direct costs of treating  patients under our
continuing  study and the  compilation  and  presentation  of clinical trial and
study results of REMUNE at 3 AIDS/HIV  conferences  throughout the world in 2001
and to related  publications  in  peer-reviewed  medical  journals.  Billings to
Trinity USA for R&D related services average  approximately  $100,000 per month.
Trinity USA plans to incur  approximately  $800,000 of  additional  research and
development  expense  related to clinical  trials and other  REMUNE  programs in
Thailand during 2002. Those expenses could be  significantly  higher if we begin
to apply for commercialization of REMUNE in our other nine licensed countries.

General and Administrative Expense

General and administrative expenses increased 28.4% to $1.3 million in 2001 from
$1 million in 2000.  This  increase  resulted  primarily  from the  increase  in
officer  salaries,  professional  fees associated with several SB-2 registration
statement  filings  during 2001 and  non-cash  charges  associated  with issuing
warrants  to an  investment  banking  firm  during  2001.  Trinity  USA's  Chief
Financial  Officer was hired in the last quarter of 2000 and drew a  contractual
salary in 2001 for the entire year.  The  increase in salaries  year on year was
partially  offset by a 50%  voluntary  salary  reduction by our Chief  Executive
Officer in September  2001. The value of the warrants  granted to the investment
banking  firm during 2001 was  approximately  $146,000.  We plan to increase our
employment  base  further in 2002,  which  could add  approximately  $500,000 in
salaries expense.  We also expect to continue to incur significant  professional
fees related to the filings of possible additional  registration  statements and
our required Reporting Act filings.

Interest and Other Expense, net

Net  interest  and  other  expense  increased  251.3% to  $794,000  in 2001 from
$226,000  in 2000.  This  increase  was  primarily  due to  $654,000 of non-cash
interest  charges   associated  with  the  intrinsic  value  of  the  beneficial
conversion feature on two $500,000  convertible  promissory notes. In 2000, only
$147,000 of such charges were incurred.

Net Loss

Trinity USA's net loss increased 48.2% to $3.3 million in 2001 from $2.2 million
in 2000. This increase was primarily due to the items mentioned above.


                                       28
<PAGE>

Year ended  December 31, 2000 compared to period from  inception  (September 28,
1998) to December 31, 1999.

                                            2000           1999          Change
                                            ----           ----          ------
                                                       (In thousands)

Operating expenses

   Research and development               $ 1,007        $   294        $   713
   General and administrative                 974            150            824
   Acquisition costs                           --            404           (404)
                                          -------        -------        --------

          Total operating expenses          1,981            848          1,133
                                          -------        -------        --------
Other expense

   Interest and other expense, net            226             18            208
                                          -------        -------        --------

Net Loss                                  $ 2,207        $   866        $ 1,341
                                          =======        =======        =======

Research and Development Expense

Research and development expense increased 242.5% to $1 million in 2000 from $.3
million in 1999. The research and development expenses relate to clinical trials
and extended access programs for REMUNE in Thailand.  In December 1999, we began
to incur research and  development  expenses in connection  with a collaboration
and supply  agreement with Trinity Medical Group,  Ltd. The increase in research
and  development  expense  from 1999 is primarily a result of our funding a full
year of  research  and  development  as opposed to only a portion of the year in
1999.

General and Administrative Expense

General and administrative  expenses increased 549.3% to $1 million in 2000 from
$.2 million in fiscal 1999. This increase  resulted  primarily from the increase
in officer salaries and  professional  fees associated with our Form 10SB filing
in May  2000,  subsequent  Reporting  Act  filings,  as  required,  and our SB-2
registration  statement  declared  effective by the SEC on May 23, 2001.  During
1999, we had only  approximately  three months of business activity and paid our
CEO only for three  months of services,  totaling  $45,000.  Trinity  USA's only
other employee in 1999, its President, received no compensation. During 2000, we
added a Chief  Financial  Officer and a Corporate  Secretary  which  contributed
approximately  $150,000  in  officer  salaries.  Also,  the CEO was paid for the
entire year,  which  contributed to the increase in officer  salaries expense by
$223,000.  The  aforementioned  professional  fees were  approximately  $240,000
compared to only $20,000 in 1999.

Acquisition Costs

In  connection  with Trinity  USA's  exchange  with August  Project III Corp. on
December  31,  1999,  we incurred  an  acquisition  fee of $175,000  and related
professional service fees of $229,000. No acquisitions occurred during 2000, nor
are any expected to occur during 2001.

Interest and Other Expense, net

Net  interest  and other  expense  increased  1155.6% to  $226,000  in 2000 from
$18,000 in 1999.  This increase was primarily due to a $147,000  interest charge
associated  with the intrinsic value of the beneficial  conversion  feature


                                       29
<PAGE>

on a $500,000 convertible  promissory note. Also, we incurred nearly a full year
of interest on 10% convertible notes payable,  which were principally  issued in
the last quarter of 1999 and were converted in December of 2000.

Net Loss

Trinity USA's net loss increased 154.8% to $2.2 million in 2000 from $.9 million
in 1999. This increase was primarily due to the items mentioned above.

ITEM 7  - FINANCIAL STATEMENTS

         The required financial statements appear at the end of this report, and
are incorporated herein by reference.  See index to financial statements at page
F-1.

ITEM 8  - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
                 ACCOUNTING AND FINANCIAL DISCLOSURE

         None.


                                       30


                                    PART III

ITEM 9 - DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
                COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT

DIRECTORS AS OF DECEMBER 31, 2001

                        PRESENT PRINCIPAL OCCUPATION AND
<TABLE>
<CAPTION>

                                                  PRINCIPAL OCCUPATION DURING LAST                    DIRECTOR
NAME AND AGE                                        FIVE YEARS; OTHER ACTIVITIES                        SINCE

<S>                                  <C>                                                                <C>
Mr. Arun  Churdboonchart             Mr. Arun  Churdboonchart  joined Trinity USA as its chairman       1999
Age 60                               in December 1999. He is a former member of the Thai National
                                     Senate,  March 1996 to March 1999,  and  chairman of Trinity
                                     Group, 1975 to present:  a diversified Thai corporation that
                                     owns real estate, hotels, retail stores, and a Bangkok radio
                                     station.  Mr.  Churdboonchart is a founder and a Director of
                                     Trinity Medical Group, Ltd., September 1995 to present.

                                     Mr.  Churdboonchart  received  a  B.S.  degree  in  Business
                                     Administration from California State University,  Long Beach
                                     in 1970.  Mr.  Arun  Churdboonchart  is married to Dr.  Vina
                                     Churdboonchart, President, and is the father of Director Mr.
                                     Inthanom John  Churdboonchart.  Mr. Arun  Churdboonchart  is
                                     also  the   brother-in-law  of  Dr.  James  Namnath,   Chief
                                     Executive  Officer,  and Ms.  Elizabeth  Namnath,  Corporate
                                     Secretary.

Dr. Vina Churdboonchart              Dr. Vina Churdboonchart  joined Trinity USA as President and       1999
Age 56                               a Director in December  1999.  She is a former member of the
                                     Thai  Legislature,  March 1991 to March  1992,  and a former
                                     Thai  Senate  member,  March  1992 to March  1996.  She is a
                                     co-founder  of  Trinity  Medical  Group,   Ltd.,  which  was
                                     established  in September  1995, a Bangkok  based  privately
                                     held company which  sponsored the clinical  trials of REMUNE
                                     in Thailand  from  September  1995 to November  2000.  Since
                                     1971,  she has  been a member  of the  Faculty  of  Science,
                                     Mahidol University. At Mahidol University,  she had been the
                                     principal  investigator  of dengue  hemorrhagic  fever.  Her
                                     research efforts have been supported by the U.S.  Government
                                     (USAID)  and the  World  Health  Organization.  She has many
                                     published  studies,   including  findings  accepted  in  the
                                     Journal  of  AIDS,   Vaccine   Journal,   and  Clinical  and
                                     Diagnostic   Laboratory   Immunology.

                                     Dr.  Churdboonchart  received her doctorate in  Pathobiology
                                     from Mahidol  University in 1984. She



                                               31
<PAGE>

                                                  PRINCIPAL OCCUPATION DURING LAST                    DIRECTOR
NAME AND AGE                                        FIVE YEARS; OTHER ACTIVITIES                        SINCE


                                     received  her  bachelors   degree  from   California   State
                                     University,  Long Beach in 1970. Dr. Vina  Churdboonchart is
                                     married to Mr. Arun  Churdboonchart,  Chairman of the Board,
                                     and  is  the   mother  of   Director   Mr.   Inthanom   John
                                     Churdboonchart. Dr. Vina Churdboonchart is the sister of Dr.
                                     James  Namnath,   Chief  Executive  Officer,  and  Elizabeth
                                     Namnath, Corporate Secretary.


Mr. Inthanom John Churdboonchart     Mr.  Inthanom  John  Churdboonchart  graduated  from Gonzaga       1999
Age 34                               University  in 1992 with a B.S. in Computer Aid Design.  Mr.
                                     Churdboonchart  also  received a Mini  Masters  of  Business
                                     Administration  in  Factory  Management  from  Chulalongkorn
                                     University  in  June  1996.  Mr.  Churdboonchart  began  his
                                     professional  career assisting the Managing Director of Kaew
                                     Kanch Industry and Mining in January 1994. He established AV
                                     Studio Company,  Ltd. in 1995 and at present is the managing
                                     director of AV Studio.  AV Studio is a recording  studio and
                                     public   relations   company  which  produces  and  promotes
                                     recording  artists in Thailand.  In March 2000, Mr. Inthanom
                                     launched  Discazine  Company,  Ltd.,  which is a promotional
                                     magazine  for the music  industry.  Mr.  Churdboonchart  was
                                     Managing  Director of Trinity  Assets  Company  Limited from
                                     1990 to August 2001 and joined  Trinity USA as a Director in
                                     December 1999.  Inthanom John  Churdboonchart  is the son of
                                     Arun and Vina  Churdboonchart  and the  nephew of Dr.  James
                                     Namnath,  Chief Executive  Officer,  and Elizabeth  Namnath,
                                     Corporate Secretary.

Dr. James S. Namnath                 Dr. James S. Namnath joined  Trinity USA as Chief  Executive       1998
Age 45                               Officer  and  a  Director  in  September   1998  and  is  an
                                     experienced  senior  executive of high  technology  and life
                                     sciences  companies.  He has managed the U.S.  portfolio  of
                                     assets and operations for Trinity Medical Group,  Ltd. since
                                     its inception.  Dr. Namnath was the Chief Executive  Officer
                                     of JennerNet Software Company,  an Internet focused provider
                                     of information systems to the personnel  industry.  Prior to
                                     starting his own  corporate  ventures in March of 1994,  Dr.
                                     Namnath was a Senior  Manager at Monsanto  Company from June
                                     1992 to March 1994 and  Chevron  Corporation  from  December
                                     1989 to June 1992.  For over nine years he was the Principal
                                     Scientist and Manager of Product Chemistry for the Ortho and
                                     Roundup  homeowner  brands:  products  which have  extensive
                                     government   regulatory    guidelines.    He   started   his
                                     professional     career    with    Lever     Brothers    and


                                               32
<PAGE>

                                     Cheeseborough-Ponds   in  December  1986:  leading  consumer
                                     product companies where his research led to several valuable
                                     patents.  Dr. Namnath is an experienced  computer programmer
                                     with  over 25  years of  experience  and  certifications  in
                                     business and accounting  systems.  Dr. Namnath  received his
                                     doctorate in Physical  Chemistry in 1983 from the University
                                     of Southern California.  He earned two bachelor degrees from
                                     the  University of  California,  Santa Barbara in 1978.  Dr.
                                     James  Namnath is the  brother of Dr.  Vina  Churdboonchart,
                                     President, and Elizabeth Namnath, Corporate Secretary. He is
                                     also  the   brother-in-law   of  Mr.  Arun   Churdboonchart,
                                     Chairman,  and the  uncle  of  Director  Mr.  Inthanom  John
                                     Churdboonchart.

Mr. Kenneth Hamlet                   Mr. Kenneth Hamlet is currently chairman of the board of TEC       2001
Age 56                               International,  an international organization of CEOs. He is
                                     also vice chairman and  president of Affinity2,  a web-based
                                     portal  designed to offer products and services to small- to
                                     medium- sized businesses.  Concurrently,  he is president of
                                     Knowledge Universe Executive  Education and Conferences LLC.
                                     In addition, Mr. Hamlet serves on several corporate boards.

                                     Mr. Hamlet has a wide spectrum of CEO and Board  experience,
                                     most notably his tenure from 1982 to 1991 as  president  and
                                     CEO of Holiday Inns Inc., the largest hospitality concern in
                                     the world. During his tenure at Holiday Inns Inc, Mr. Hamlet
                                     helped to introduce two new brands,  was instrumental in the
                                     acquisition of Harrah's and participated in the $2.5 billion
                                     recapitalization of Holiday Corp. in 1987. Under his tenure,
                                     he  assisted  Holiday  Corporation  with the  launch  of the
                                     following  brands:  Harrah's Gaming,  Hampton Inns,  Embassy
                                     Suites,  Residence  Inn as well as the  company's  namesake,
                                     Holiday Inns.

                                     Mr.  Hamlet is  currently a member of the World  Presidents'
                                     Organization,  Chief  Executives  Organization,   Chairmen's
                                     Round Table,  Scripps Trauma Services  Advisory  Board,  San
                                     Diego  Chamber of Commerce  Business  Round Table,  American
                                     Hotel  &  Motel   Association,   the   National   Restaurant
                                     Association,  and he  serves on the  board of  Advisors  for
                                     Cornell University's School of Hotel Administration.
</TABLE>


                                               33
<PAGE>

         During the fiscal year ended December 31, 2001,  Trinity USA's Board of
Directors  held 3  meetings,  which  were  attended  by 80% of the then  current
directors in person or by telephone.

         All directors hold office until the next annual meeting of stockholders
and the  election  and  qualification  of their  successors.  Directors  receive
compensation  for serving on the Board of Directors as described  below.  Unless
otherwise  provided  by existing  employment  agreements,  officers  are elected
annually by the Board of Directors and serve at the discretion of the Board.

COMPENSATION OF DIRECTORS

         During  2001,  Trinity  USA paid  $2,500  to its  Directors  for  their
services as directors  and  reimbursed  its directors  approximately  $5,000 for
their attendance at meetings. The Director Compensation Policy is as follows:

Each outside director will be paid $2,500 per full board meeting attended,  plus
reimbursement  for  reasonable  out-of-pocket  expenses  incurred.  Each outside
director  will also be paid $1,000 for each  committee  meeting  attended,  plus
reimbursement for reasonable out-of-pocket expenses incurred.

Each  employee/inside   director  shall  receive  reimbursement  for  reasonable
out-of-pocket  expenses  incurred  in  attendance  of full  board  meetings  and
committee meetings.

Equity Compensation

Outside  directors  shall receive  options to purchase  25,000 shares of Trinity
USA's Common Stock upon election or appointment to the Board of Directors. These
options  shall have an  exercise  price  equal to the fair  market  value of the
Common  Stock  on the  date of  grant.  The  options  will  vest in four  annual
installments on each of the first four  anniversaries  of the date of grant and,
if held for at least  six  months,  vest in full  upon  the  outside  director's
retirement, death or disability. In addition, each outside director will receive
on the date of each  Annual  Meeting of the  Stockholders  an option to purchase
5,000 shares of Trinity USA's Common Stock with a one-year  vesting period.  All
options  granted to such directors also vest in the event Trinity USA is subject
to a change in control.

Additional equity compensation,  or equity compensation with different terms, to
outside directors, if any, may be granted at the discretion of the full board or
by the compensation committee of the board when such committee is formed.

EXECUTIVE OFFICERS AS OF DECEMBER 31, 2001

         The  executive  officers  of Trinity  USA as of  December  31, 2001 are
listed below.  There is no  arrangement or  understanding  between any executive
officer and any other person regarding selection as an officer.


                                       34
<PAGE>

NAME                          AGE     POSITION
----                          ---     --------

Arun Churdboonchart           60      Chairman of the Board

Dr. Vina Churdboonchart       56      President and Director

Dr. James S. Namnath          45      Chief Executive Officer and Director

Gary E. Wilson                35      Chief  Financial  Officer,  Executive Vice
                                      President - Finance, Treasurer

Elizabeth Namnath             50      Corporate Secretary

Gary E. Wilson                        Mr. Gary E. Wilson, CPA graduated from the
                                      University of Michigan in 1991 with a B.A.
                                      in Economics,  Business Administration and
                                      Accounting.  Prior to joining  Trinity USA
                                      in September 2000, Mr. Wilson was a Senior
                                      Assurance   Services  Manager  with  Grant
                                      Thornton LLP where he served as an auditor
                                      and   professional   business  advisor  to
                                      publicly-held     and      privately-owned
                                      Manufacturing/Distribution,  Life Sciences
                                      and High Technology companies. As a Senior
                                      Assurance  Services Manager,  he regularly
                                      advised  senior   management  and  various
                                      boards  of  directors  on  Best   Business
                                      Practices, Inventory Management, Strategic
                                      Planning,  Stock Option  Plans,  Financing
                                      Options  and  Solutions,   Capital  Market
                                      Transactions,    Internal   Controls   and
                                      Accounting and Auditing matters.

Elizabeth Namnath                     Ms.  Elizabeth  Namnath joined Trinity USA
                                      as  Corporate  Secretary in April 2000 and
                                      is an experienced senior manager.  She was
                                      a manager  at Maginet  Corporation,  April
                                      1994  to  December  1998,  a  pay-per-view
                                      movie provider, in Singapore and Thailand.
                                      She  served  as  regional   manager   from
                                      January    1997    to    December    1998,
                                      establishing  operations  in  four  cities
                                      throughout   Southeast   Asia.   Prior  to
                                      Maginet, she worked as General Manager for
                                      Trinity Silom Hotel in Bangkok,  Thailand,
                                      1990 to 1994.

                                      Elizabeth  received  her  B.A.  degree  in
                                      Communications     with     a     Business
                                      Administration minor from California State
                                      University,  Long Beach in 1974. Elizabeth
                                      Namnath   is  the   sister  of  Dr.   Vina
                                      Churdboonchart,  President,  and Dr. James
                                      Namnath,  Chief Executive Officer.  She is
                                      also  the   sister-in-law   of  Mr.   Arun
                                      Churdboonchart,  Chairman, and the aunt of
                                      Director Mr. Inthanom John Churdboonchart.

COMPLIANCE WITH SECTION 16 (A) OF THE EXCHANGE ACT

         Section 16 (a) of the  Securities  Exchange Act requires the  Company's
Officers,  Directors, and persons who own more than 10% of a registered class of
the  Company's  equity  securities  to file reports of ownership  and changes in
ownership  with the SEC and NASD.  Officers,  Directors,  and  greater  than 10%
beneficial  owners are  required by SEC


                                       35
<PAGE>

regulation  to furnish the Company  with copies of all Section 16 (a) forms they
file.  The Company  believes  that all filing  requirements  were  complied with
applicable to its Officers, Directors, and greater than 10% beneficial owners.

ITEM 10 - EXECUTIVE COMPENSATION

         The following  table provides  certain summary  information  concerning
compensation  earned for services  rendered in all capacities to Trinity USA for
the year ended  December  31, 2001 by the Chief  Executive  Officer,  and by the
other  most  highly  compensated  executive  officers  of  Trinity  USA,  "Named
Executive  Officers".  This  information  includes  the  dollar  amount  of base
salaries,  bonus  awards,  stock  options  and all other  compensation,  if any,
whether paid or deferred.
<TABLE>
<CAPTION>

                                               ANNUAL COMPENSATION                          LONG-TERM COMPENSATION
                  ------------------------------------------------------------------   ----------------------------------

                                               Other         Restricted   Securities               All
                                               Annual        Stock        Underlying   LTIP        Other
Name and                  Salary     Bonus     Compensation  Compensation Award(s)     Options/    Payouts   Compensation
Position          Year    ($)        ($)       ($)           ($)          ($)          SARs (#)    ($)       ($)
--------          -----   ------     -----     ------------  ---------------------     --------    -------   ------------
<S>               <C>     <C>        <C>          <C>             <C>          <C>        <C>         <C>        <C>
Dr. James S.      2001    125,000       -         3,906           -            -           -          -          -
Namnath, CEO

Dr. James S.      2000    268,000       -           -             -            -           -          -          -
Namnath, CEO

Gary E. Wilson,   2001    160,000    16,000       5,641           -            -           -          -          -
CFO

Gary E. Wilson,   2000    160,000    29,333       4,708           -            -           -          -          -
CFO
</TABLE>

         The following table summarizes  certain  information as of December 31,
2001  concerning  the stock  option  grants to  Trinity  USA's  Named  Executive
Officers  made for the year  ended  December  31,  2001.  No stock  appreciation
rights,  restricted  stock  awards or  long-term  performance  awards  have been
granted as of the date hereof and no options have been exercised.



                                       36
<PAGE>
<TABLE>
<CAPTION>

                      OPTION/SAR GRANTS IN LAST FISCAL YEAR
                               (INDIVIDUAL GRANTS)

                                         Percent of
                                         total
                       Number of         options/SARs
                       securities        granted to
                       underlying        employees or      Exercise or
                       options/SARs      directors in      base price      Expiration
 Name and Position     granted           fiscal year       ($/Sh)          Date
 -----------------     ------------      -------------     -----------     ----------
<S>                    <C>               <C>               <C>             <C>
 Gary E. Wilson
 CFO                   50,000            7.8               1.80            9/5/11

 Gary E. Wilson
 CFO                   50,000            7.8               1.30            12/20/11
                       ------            ---
     Total             100,000           15.6
                       =======           ====

 Dr. James S. Namnath
 CEO                   125,000           19.4              1.30            12/20/11
</TABLE>

EMPLOYMENT CONTRACTS

In 1999,  Trinity USA entered  into an  employment  agreement  with Dr. James S.
Namnath  (shareholder),  whereby he would serve as Trinity USA's Chief Executive
Officer.  Dr. Namnath's  employment  would be conducted under contract  services
with his then present  employer,  NotesETC,  Inc. until such time  ("Milestone")
that the Company  either begins sale of REMUNE product or is approved for public
trading of its common  shares in the United  States equity market as a reporting
company; after this time, he would be directly employed by Trinity USA on a full
time basis.

         Until Milestone,  his compensation  would be at a rate of $250 per hour
but not to exceed 60 hours per month  ($15,000).  After  Milestone,  his  salary
would be $35,000  per  month.  In August of 2000,  the terms of this  employment
agreement  were  modified to provide for a monthly  salary  amount of $25,000 as
opposed to $35,000 per month.  The  agreement  expired on December 31, 2000.  On
February 2, 2001,  Trinity USA entered into a new employment  agreement with its
Chief  Executive  Officer and Director,  Dr. James Namnath,  whereby the Officer
will be paid a  minimum  annual  salary of  $300,000.  The  agreement  currently
expires on  February  1, 2003.  If the Officer is  terminated  without  cause as
defined,  the minimum salary and certain other benefits must continue to be paid
through the remaining  term of the employment  agreement.  On September 1, 2001,
Trinity  USA's Chief  Executive  Officer  voluntarily  reduced his  contractual,
annual base compensation by 50% to $150,000 for an indefinite period of time.

         On September 5, 2000, Trinity USA entered into an employment agreement,
which has an initial term of two years, with its Chief Financial  Officer,  Gary
E.  Wilson,  whereby he will be paid a minimum  annual  salary of  $160,000  and
receive a minimum annual bonus equal to 10% of his annual salary.  The agreement
currently  expires on September  5, 2003.  Mr.  Wilson was also  granted  50,000
non-statutory  stock  options  with a term of 10 years and an exercise  price of
$4.00.  Mr. Wilson will receive a minimum of 50,000  additional stock options on
each anniversary  date of the employment  agreement with an exercise price equal
to the fair value of the stock at the date of grant. If Mr. Wilson is terminated
without cause, as defined in the agreement, Trinity USA must continue to pay him
the minimum salary,  bonus and certain other benefits through the remaining term
of the employment agreement.

            On June 1, 2001,  Trinity USA amended its employment  agreement with
its Chief Financial Officer to provide that if during the term of the employment
agreement Trinity USA signs a Letter of Intent, or similar  agreement,  to merge
with another  company,  to sell its common stock, its assets or licensing rights
it has or will have  related  to the drug  therapy  REMUNE,  the  Officer  shall
immediately  receive  100,000 shares of Trinity USA's common stock at no cost to
the Officer.  Also, in the event Trinity USA's ownership  substantially changes,
as  defined  by  ownership  of more  than  50% plus one  share of  common  stock
exchanged,  the Officer must be compensated an additional two years of salary in
one  payment  due at the  close of the  stock  transaction  or Board  assignment
wherein  transfer  of  control,  and  thus  succession,  has  occurred,  or  the
employment agreement must be extended for an additional three years.

            On June 1, 2001,  Trinity  USA  entered  into a two year  employment
agreement  with its  Corporate  Secretary,  whereby the  Officer  will be paid a
minimum annual salary of $99,000. On September 15, 2001, the Officer voluntarily
reduced her contractual,  annual base  compensation to $90,000 for an indefinite
period of time. In connection with entering into the employment  agreement,  the
Officer was granted 10,000  non-qualified  stock options with a term of 10 years
and an exercise price of $1.72.  The closing price of Trinity USA's common stock
was  equal to the  exercise  price  at the  date of  grant.  If the  Officer  is
terminated  without  cause,  as defined,  the minimum  salary and certain  other
benefits must continue to be paid through the remaining  term of the  employment
agreement.  If during the term of this employment  agreement Trinity USA signs a
Letter of Intent, or similar agreement,  to merge with another company,  to sell
its common stock,  its assets or licensing rights it has or will have related to
the drug therapy REMUNE, the Officer shall immediately receive 100,000 shares of
Trinity USA's common stock at no cost to the Officer. Also, in the event Trinity
USA's ownership  substantially changes, as defined by ownership of more than 50%
plus one share of common stock  exchanged,  the Officer must be  compensated  an
additional  two  years of salary  in one  payment  due at the close of the stock
transaction  or  Board  assignment   wherein  transfer  of  control,   and  thus
succession,  has occurred,  or the employment  agreement must be extended for an
additional three years.


                                       37
<PAGE>

ITEM 11 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
          MANAGEMENT

         The  following  table  sets forth  certain  information  regarding  the
beneficial ownership of our common stock as of December 31, 2001 by:

         o  each person or entity known by us to be the beneficial owner of more
            than 5% of the outstanding shares of common stock;

         o  each of our directors and named executive officers; and

         o  our directors and executive officers as a group.



                              Number of Shares                       Address of
                              of Common Stock       Percentage of    Beneficial
Name of Beneficial Owners     Beneficially Owned    Ownership        Owners(11)
-------------------------     ------------------    -------------    ----------

Dr. James Namnath (1)             495,000           3.8
Dr. Vina Churdboonchart (2)     2,400,000          18.5
Arun Churdboonchart (3)         1,850,000          14.3
Inthanom Churdboonchart (4)     1,850,000          14.3
Orranart Churdboonchart (5)     1,850,000          14.3
Elizabeth Namnath (6)             110,000           0.8
Gary E. Wilson (7)(8)             160,000           1.2
Kenneth B. Hamlet (9)              60,000           0.5
Trinity Assets Company
   Limited (10)                 1,000,000           7.7
Directors and Executive
   Officers as a Group          6,925,000          53.4

(1)     CEO and Director.  Dr.  Namnath's shares of our common stock are held of
        record by the Trinity Partners Trust;  however, Dr. Namnath retains sole
        voting and dispositive  power over all of the shares.  Dr. James Namnath
        is the

                                       38
<PAGE>

        brother of Dr. Vina  Churdboonchart  and  Elizabeth  Namnath.  Dr. James
        Namnath is the uncle of Director Inthanom Churdboonchart and of Orranart
        Churdboonchart.   Of  the  495,000  shares  beneficially  owned  125,000
        represent  those shares  issuable under stock  options,  which are fully
        vested.
(2)     President and Director.  Includes  1,800,000  shares of our common stock
        held of record by the Churdboonchart Trinity Trust Account; however, Dr.
        Churdboonchart holds sole voting and dispositive power over all of these
        shares.  Dr.  Churdboonchart is the wife of Arun  Churdboonchart and the
        mother   of   Director   Inthanom   Churdboonchart   and   of   Orranart
        Churdboonchart.  Of the  2,400,000  shares  beneficially  owned  150,000
        represent  those shares  issuable under stock  options,  which are fully
        vested.
(3)     Director.  Includes  1,800,000 shares of our common stock held of record
        by  the  Churdboonchart   Trinity  Trust  Account;   however,  Mr.  Arun
        Churdboonchart holds sole voting and dispositive power over all of these
        shares. Mr. Churdboonchart is the husband of Dr. Vina Churdboonchart and
        the  father  of  Director  Inthanom   Churdboonchart   and  of  Orranart
        Churdboonchart.  Of  the  1,850,000  shares  beneficially  owned  50,000
        represent  those shares  issuable under stock  options,  which are fully
        vested.
(4)     Director.  Includes  1,800,000 shares of our common stock held of record
        by the  Churdboonchart  Trinity Trust  Account;  however,  Mr.  Inthanom
        Churdboonchart holds sole voting and dispositive power over all of these
        shares. Mr. Inthanom  Churdboonchart is the son of Dr. Vina and Mr. Arun
        Churdboonchart and is the brother of Ms. Orranart Churdboonchart. Of the
        1,850,000  shares  beneficially  owned  50,000  represent  those  shares
        issuable  under stock  options,  which are fully  vested.
(5)     Includes  1,800,000  shares of our  common  stock  held of record by the
        Churdboonchart Trinity Trust Account;  however, Ms. Churdboonchart holds
        sole  voting  and  dispositive  power  over  all of  these  shares.  Ms.
        Churdboonchart  is the daughter of Dr. Vina and Mr. Arun  Churdboonchart
        and the brother of Mr. Inthanom Churdboonchart.  Of the 1,850,000 shares
        beneficially  owned 50,000  represent  those shares issuable under stock
        options,  which are fully  vested.
(6)     Corporate  Secretary.  Elizabeth  Namnath  is the  sister  of Dr.  James
        Namnath and Dr. Vina  Churdboonchart.  Elizabeth  Namnath is the aunt of
        Director Inthanom Churdboonchart and of Orranart Churdboonchart.  Of the
        110,000 shares beneficially owned 60,000 represent those shares issuable
        under  stock  options,  which are  fully  vested.
(7)     Chief Financial Officer, Executive Vice President - Finance, Treasurer
(8)     The 160,000 shares  beneficially  owned  represent those shares issuable
        under  stock  options.  Mr.  Wilson  has the right to acquire a total of
        122,500  shares of common stock  through the  exercise of these  options
        through February 28, 2002 based upon a contractual vesting schedule. The
        vesting of the remaining  options,  however,  may be accelerated  during
        that time frame if Trinity  USA's stock trades at or greater than $11.44
        for 10 consecutive days or Trinity USA signs a letter of intent to merge
        with or be acquired by another company or sells substantially all of its
        assets.
(9)     The 60,000 shares  beneficially  owned  represent  those shares issuable
        under  stock  options.  Mr.  Hamlet  has the right to acquire a total of
        10,000  shares of common  stock  through the  exercise of these  options
        through February 28, 2002.
(10)    Mr. Inthanom  Churdboonchart,  Director,  who is the son of Dr. Vina and
        Mr.   Arun   Churdboonchart   and  is  the   brother  of  Ms.   Orranart
        Churdboonchart, owns 49% of Trinity Assets Company Limited. Ms. Orranart
        Churdboonchart also owns 49% of Trinity Assets Company Limited.
(11)    Unless otherwise  stated,  the address for each beneficial owner is care
        of Trinity  Medical  Group USA,  Inc.,  30021 Tomas  Street,  Suite 300,
        Rancho Santa Margarita, California 92688.

ITEM 12 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         The  Churdboonchart  Trinity  Trust owns  approximately  56% of Trinity
USA's common stock.  Some of the  beneficiaries  of The  Churdboonchart  Trinity
Trust, namely Mr. Inthanom Churdboonchart and Ms. Orranart  Churdboonchart,  are
also the majority owners of Trinity Assets Company Limited.

         Prior to  August  8,  2001,  the  beneficiaries  of The  Churdboonchart
Trinity Trust,  as listed in the table below,  were also the majority  owners of
Trinity  Medical Group,  Ltd.;  each  beneficiary  owned 25% of Trinity  Medical
Group,


                                       39
<PAGE>

Ltd. On August 8, 2001,  Trinity Assets Company Limited acquired over 99% of the
shares of Trinity  Medical Group,  Ltd.,  whereby  Trinity  Medical Group,  Ltd.
became a subsidiary of Trinity Assets Company  Limited.  As discussed  below, on
November 10, 2000,  Trinity USA and Trinity Medical Group,  Ltd.  terminated the
collaboration  and supply  agreement,  dated  December 1, 1999.  Trinity  Assets
Company  Limited was  reorganized  to  specifically  manage REMUNE  development,
perform  the local  regulatory  requirements  and  future  marketing,  sales and
distribution  efforts in Thailand,  in accordance with our sublicense and supply
agreement  entered into on August 4, 2000. As such,  Trinity Medical Group, Ltd.
has  essentially  become a  non-operating  subsidiary of Trinity  Assets Company
Limited.

         The beneficiaries of The Churdboonchart Trinity Trust and the owners of
Trinity Assets Company Limited are as follows:

                                                                     Ownership
                                                                     Percentage
                                                Beneficiary          in Trinity
                          Position/Title        Percentage in        Assets
                          with                  the Churdboonchart   Company
Named Beneficiary/Owner   Trinity USA           Trinity Trust        Limited
-----------------------   -----------           -------------        -------

Dr. Vina Churdboonchart   Director & President           25%            0%
Arun Churdboonchart       Director                       25%            0%
Inthanom Churdboonchart   Director                       25%            49%
Orranart Churdboonchart   None                           25%            49%

         Since  inception  through  December 31, 2001 and during the years ended
December  31, 2001 and 2000  Trinity  Medical  Group,  Ltd.  billed  Trinity USA
approximately  $983,000,  $0 and  $689,000,  respectively,  for  costs  incurred
related to the research and  development  of the drug  REMUNE.  Since  inception
through  December 31, 2001,  Trinity USA has paid Trinity  Medical  Group,  Ltd.
approximately  $694,000 for amounts previously billed. In December 2001, Trinity
USA satisfied all remaining  amounts owed to Trinity Medical Group, Ltd. through
the  issuance of Trinity  USA's  common stock (see also  paragraph  below).  All
amounts billed by Trinity Medical Group,  Ltd. were provided for under the terms
and conditions of the Collaboration and Supply Agreement dated December 1, 1999.

         On August 4, 2000  Trinity USA  entered  into a  sublicense  and supply
agreement  with  Trinity  Assets  Company  Limited,  which  assigned  the sales,
distribution, potential manufacturing and marketing rights of REMUNE in Thailand
to Trinity Assets  Company  Limited.  Please see the section of this  prospectus
entitled  "Description  of  Business"  where the terms  and  conditions  of this
agreement are more fully presented.

         Since  inception  through  December 31, 2001 and during the years ended
December 31, 2001 and 2000,  Trinity Assets  Company  Limited billed Trinity USA
approximately  $1,545,000,  $1,227,000  and  $318,000,  respectively,  for costs
incurred  related to the research  and  development  of the drug  REMUNE.  Since
inception  through  December  31,  2001,  approximately  $7,000 has been paid to
Trinity Assets Company Limited for amounts  previously billed. In December 2001,
Trinity USA  satisfied  $1,050,701  of amounts  owed to Trinity  Assets  Company
Limited  through  the  issuance  of the  Trinity  USA's  common  stock (see also
paragraph  below).  As of December  31, 2001,  Trinity USA owes  Trinity  Assets
Company Limited  $487,849.  All amounts billed by Trinity Assets Company Limited
were provided for under the terms and  conditions of the  Sublicense  and Supply
Agreement, dated August 4, 2000.

         Trinity USA entered  into a  collaboration  and supply  agreement  with
Trinity Medical Group,  Ltd., dated December 1, 1999.  Please see the section of
this  prospectus  entitled   "Description  of  Business"  where  the  terms  and
conditions of this agreement are more fully presented.


                                       40
<PAGE>

         Trinity USA and Trinity Medical Group,  Ltd. entered into an assignment
agreement  on August 3, 2000,  whereby  all of  Trinity  Medical  Group,  Ltd.'s
rights,  title,  and  interests in the license and  collaboration  agreement and
obligations  under  the  stock  purchase  agreement  with  The  Immune  Response
Corporation were assigned to Trinity USA.

         On November  10,  2000,  Trinity USA and Trinity  Medical  Group,  Ltd.
terminated the collaboration  and supply  agreement,  dated December 1, 1999. As
discussed in the section  entitled,  "Description  of Business",  Trinity Assets
Company  Limited will  prospectively  perform the research  and  development  of
REMUNE and will invoice Trinity USA in accordance  with agreed upon  contractual
terms.

         In December  2001,  Trinity USA issued  1,000,000  shares of its common
stock to  Trinity  Assets  Company  Limited to  satisfy  its entire  outstanding
liability of $289,299 to Trinity Medical Group Ltd., a non-operating  subsidiary
of Trinity  Assets  Company  Limited,  as of  November  30,  2001 and to satisfy
$1,050,701 of its outstanding  liability to Trinity Assets Company Limited as of
November 30, 2001. The price per share utilized in this transaction,  $1.34, was
equal to the average  closing price of Trinity USA's stock for the five business
days  preceding  the date that the parties  agreed to settle all or a portion of
the amounts owed by Trinity USA as of November 30, 2001.  Immediately  after the
transaction was completed,  Trinity Assets Company  Limited owned  approximately
7.7% of Trinity USA's issued and outstanding common stock.

         Article XII of the Articles of  Incorporation of Trinity USA state that
no  contract  or  transaction  between  Trinity  USA  and  any  person,  firm or
corporation  will be affected by the fact that one of our  officers or directors
has a direct  interest in the contract or the third  party.  As a result of this
provision, Trinity USA's affiliates and members of the Churdboonchart family may
enter into contracts or transactions  with Trinity USA without being affected by
the fact that members of the Churdboonchart  family are officers or directors of
Trinity USA. However,  Trinity USA has implemented procedures for negotiation of
terms between  Trinity USA and its affiliates to avoid  conflicts of interest as
described  under  the  subheading   entitled   "Contracts  and  agreements  with
affiliated companies" under the section entitled "Description of Business."

         The promoters of Trinity USA were Black Hills Investment Corp., Eastern
Frontier Trust,  Baldwin Family Trust, Steve Devanney,  Atlas Equity, Bob Rubin,
Ron McDonald,  and Coleman Abbe.  These  promoters  received  493,000  shares of
Trinity USA's common stock in exchange for providing consulting services related
to  assisting  Trinity USA in becoming a public  company  and  providing  advice
regarding raising capital in the public markets. Trinity USA did not acquire any
assets from the promoters.

         The promoters of August Project III Corp.  were Eric Littman and Dennis
Sturm who owned  3,867,000  and  1,000,000  shares of August  Project III Corp.,
respectively,  prior to the exchange  with Trinity USA.  Eric Littman and Dennis
Sturm retained a total of 100,000 shares of Trinity USA's common stock after the
completion of the exchange.

ITEM 13 - EXHIBITS AND REPORTS ON FORM 8-K

         (A) EXHIBITS

         EXHIBIT  DESCRIPTION

          2.1     Agreement for the Exchange of Common Stock by and among August
                  Project III Corp.

          3.1     State of Florida  Articles of  Incorporation of August Project
                  III dated July 1997

          3.2     State of Florida  Certificate of Amendment of the  Certificate
                  of Incorporation of Trinity USA dated January 2000



                                       41
<PAGE>

          3.3     By-Laws of Trinity USA

          4.1     Registration Rights Agreement

          4.2     Promissory Note

          4.3     Registration Rights Agreement

          4.4     Form of Common Stock Purchase Warrant

          4.5     Subscription Agreement

          4.6     Convertible Promissory Note

          4.7     Common Stock Unit Acknowledgement Letter

          4.8     Convertible Promissory Note (2)

          4.9     Subscription Agreement (2)

          4.10    Form of Common Stock Purchase Warrants (3)

          4.11    Form of Common Stock Subscription Agreement (4)

          4.12    Form of Promissory Note Subscription Agreement (4)

          4.13    Form of Promissory Note (4)

          4.14    Conversion of Debt Agreement  between  Trinity USA and Trinity
                  Assets Company Limited dated December 27, 2001 (5)

          4.15    Securities Purchase Agreement between Trinity USA and La Jolla
                  Cove Investors, Inc. dated January 4, 2002 (5)

          4.16    Registration Rights Agreement between Trinity USA and La Jolla
                  Cove Investors, Inc. dated January 4, 2002 (5)

          4.17    Convertible  Debenture  issued by Trinity USA to La Jolla Cove
                  Investors, Inc. due January 4, 2003 (5)

          4.18    Common  Stock  Purchase  Warrant  issued by Trinity  USA to La
                  Jolla Cove Investors, Inc. on January 4, 2002 (5)

          5.1     Legal Opinion of Jenkens & Gilchrist Parker Chapin LLP

          10.1    Sublicense  and  Supply  Agreement  between  Trinity  USA  and
                  Trinity Medical Group, Ltd. dated as of August 4, 2000

          10.2    Supplement to Sublicense and Supply Agreement  between Trinity
                  USA and Trinity Assets Company Limited dated August 5, 2000

          10.3    Amendment  No. 1 to the  License and  Collaboration  Agreement
                  dated September 29, 2000


                                       42
<PAGE>

          10.4    Assignment  Agreement  between Trinity Medical Group, Ltd. and
                  Trinity USA dated August 3, 2000

          10.5    Gary E. Wilson's Employment Agreement

          10.6    Dr. James S. Namnath's Employment Contract

          10.7    License and  Collaboration  Agreement  between Trinity Medical
                  Group,   Ltd.  and  The  Immune  Response   Corporation  dated
                  September 15, 1995+

          10.8    Stock Purchase  Agreement  between Trinity Medical Group, Ltd.
                  and The Immune Response Corporation dated September 15, 1995

          10.9    Great Offices, Inc./American Office Centers, L.L.C. Sublease

          10.10   Dr. James S. Namnath's Employment Agreement, dated February 2,
                  2001

          10.11   Amendment  No. 2 to the  License and  Collaboration  Agreement
                  dated May 8, 2001(1)+

          10.12   Amendment No. 1 to Gary E. Wilson's Employment Agreement (2)

          10.13   Elizabeth S. Namnath's Employment Agreement (2)

          10.14   Investment Banker Engagement Letter (3)

                  --------------------------------------------------------------

+ Confidential  treatment has been requested and granted with respect to certain
portions of this agreement.

(1)     Filed on May 11, 2001 with Trinity USA's Form 10-QSB for the three month
        period ended March 31, 2001.

(2)     Filed on August 14,  2001 with  Trinity  USA's  Form  10-QSB for the six
        month period ended June 30, 2001.

(3)     Filed on August 17, 2001 with Trinity  USA's  Registration  Statement on
        Form SB-2.

(4)     Filed on  November 8, 2001 with  Trinity  USA's Form 10-QSB for the nine
        month period ended September 30, 2001.

(5)     Filed on January 4, 2002 with Trinity  USA's  Registration  Statement on
        Form SB-2.


B)      REPORTS ON FORM 8-K

        There  were no reports  filed on Form 8-K  during the fourth  quarter of
        2001.


                                       43
<PAGE>


SIGNATURES

         Pursuant to the  requirements  of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

                                               TRINITY MEDICAL GROUP USA, INC.


Date: March 18, 2002                           By: /s/ James S. Namnath
                                                 ----------------------
                                               Name:  James S. Namnath
                                               Title: Chief Executive Officer
                                                      and Director

         Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
this  report has been  signed  below by the  following  persons on behalf of the
registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>

SIGNATURE                                  TITLE                        DATE

<S>                                        <C>                           <C>
/s/ Gary E. Wilson                         Executive V.P. - Finance,    March 18, 2002
------------------------------------       Chief Financial Officer,
Gary E. Wilson                             Treasurer


/s/ Dr. Vina Churdboonchart                President and Director       March 18, 2002
------------------------------------
Dr. Vina Churdboonchart

/s/ Inthanom John Churdboonchart           Director                     March 18, 2002
--------------------------------
Inthanom John Churdboonchart
</TABLE>


                                       44
<PAGE>




                              FINANCIAL STATEMENTS

FINANCIAL  STATEMENTS AND REPORT OF INDEPENDENT  CERTIFIED PUBLIC ACCOUNTANTS AS
OF DECEMBER 31, 2001 AND 2000 AND FOR THE YEARS ENDED DECEMBER 31, 2001 AND 2000
AND FOR THE PERIOD FROM INCEPTION (SEPTEMBER 28, 1998) TO DECEMBER 31, 2001.



                          INDEX TO FINANCIAL STATEMENTS

                                                                            PAGE




Report of Independent Certified Public Accountants ..........................F-2
Balance Sheets     ..........................................................F-3
Statements of Operations.....................................................F-4
Statement of Stockholders' Deficit...........................................F-5
Statements of Cash Flows.....................................................F-6
Notes to Financial Statements................................................F-7



                                      F-1
<PAGE>




               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS


The Board of Directors
Trinity Medical Group USA, Inc.

We have audited the  accompanying  balance sheets of Trinity  Medical Group USA,
Inc. (a company in the development  stage) as of December 31, 2001 and 2000, and
the related statements of operations,  stockholders'  deficit and cash flows for
the years ended  December 31, 2001 and 2000,  and for the period from  inception
(September 28, 1998) to December 31, 2001.  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 auditing standards generally accepted
in the  United  States of  America.  Those  standards  require  that we plan and
perform the audit to obtain  reasonable  assurance  about  whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects, the financial position of Trinity Medical Group USA, Inc.
as of December 31, 2001 and 2000, and the results of its operations and its cash
flows for the years ended  December  31, 2001 and 2000,  and for the period from
inception  (September  28,  1998) to  December  31,  2001,  in  conformity  with
accounting principles generally accepted in the United States of America.

The  accompanying  financial  statements  have been  prepared  assuming that the
Company  will  continue as a going  concern.  The Company is not yet  generating
revenues and, as shown in the financial  statements,  has incurred losses in its
development  stage.  Also,  as  discussed  in Note C, the Company  has  incurred
substantial  obligations and will need to raise  additional  capital to complete
its development activities.  These factors, among others as discussed in Note C,
raise  substantial  doubt  about the  Company's  ability to  continue as a going
concern.  Management's  plans  are  also  discussed  in  Note C.  The  financial
statements do not include any adjustments  that might result from the outcome of
this uncertainty.


/s/ Grant Thornton LLP


Irvine, California
February 7, 2002



                                      F-2
<PAGE>


<TABLE>
<CAPTION>


                         TRINITY MEDICAL GROUP USA, INC.
                      (a company in the development stage)
                                 BALANCE SHEETS
                                  December 31,

                                     ASSETS

                                                                           2001                 2000
                                                                    -------------------   ------------------
<S>                                                                           <C>                 <C>
Current Assets:
       Cash and cash equivalents                                              $ 68,922            $ 117,056
       Prepaid expenses and deposits                                            58,450                4,245
                                                                    -------------------   ------------------
            Total current assets                                               127,372              121,301
                                                                    -------------------   ------------------
Furniture and equipment
       Office furniture and fixtures                                             6,088                6,088
       Office equipment                                                          4,973                4,973
                                                                    -------------------   ------------------
                                                                                11,061               11,061
            Less accumulated depreciation                                       (3,543)                (667)
                                                                    -------------------   ------------------
                 Furniture and equipment, net                                    7,518               10,394
                                                                    -------------------   ------------------
                      Total assets                                           $ 134,890            $ 131,695
                                                                    ===================   ==================
                      LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
       Accounts payable                                                      $ 165,531             $ 17,861
       Payable to affiliate                                                    487,849              632,249
       Accrued liabilities                                                     116,736              157,431
       Deferred compensation                                                         -               12,500
       Notes payable to officers                                                30,500                    -
       Insurance note payable                                                   23,489                    -
       Convertible promissory note                                             400,000              500,000
                                                                    -------------------   ------------------
            Total current liabilities                                        1,224,105            1,320,041
                                                                    -------------------   ------------------
Stockholders' deficit:
       Common stock, $.001 par value, 50,000,000 shares
            authorized, 12,958,120 and 11,263,038 shares
            issued and outstanding                                              12,958               11,263
       Additional paid-in capital                                            5,243,658            1,873,908
       Deficit accumulated during the development stage                     (6,345,831)          (3,073,517)
                                                                    -------------------   ------------------
                      Total stockholders' deficit                           (1,089,215)          (1,188,346)
                                                                    -------------------   ------------------
                      Total liabilities and stockholders' deficit            $ 134,890            $ 131,695
                                                                    ===================   ==================
</TABLE>

        The accompanying notes are an integral part of these statements.


                                      F-3
<PAGE>


                         TRINITY MEDICAL GROUP USA, INC.
                      (a company in the development stage)
                            STATEMENTS OF OPERATIONS
             For the Years Ended December 31, 2001 and 2000, and the
         Period from Inception (September 28, 1998) to December 31, 2001

<TABLE>
<CAPTION>

                                                 Period
                                             from Inception           Year Ended December 31,
                                                   to            -------------------------------
                                           December 31, 2001         2001               2000
                                          ------------------     -------------     -------------
<S>                                            <C>               <C>               <C>
Operating expenses:
    Research and development                   $ (2,528,553)     $ (1,227,304)     $ (1,007,249)
    General and administrative                   (2,375,073)       (1,251,179)         (973,654)
    Acquisition costs                              (404,200)               --                --
                                               -------------     -------------     -------------
                Total operating expenses         (5,307,826)       (2,478,483)       (1,980,903)
                                               -------------     -------------     -------------
Other income (expense):
    Interest income                                   5,059             1,545             1,486
    Interest expense                             (1,034,619)         (795,376)         (227,898)
    Loss on sale of investments                      (8,445)               --                --
                                               -------------     -------------     -------------
                                                 (1,038,005)         (793,831)         (226,412)
                                               -------------     -------------     -------------
                Net Loss                       $ (6,345,831)     $ (3,272,314)     $ (2,207,315)
                                               =============     =============     =============
    Basic and diluted loss per common
       share                                                          $ (0.28)          $ (0.21)
                                                                      ========     =============
    Basic and diluted weighted average
       common shares outstanding                                   11,494,471        10,289,970
                                                                   ===========       ===========
</TABLE>

        The accompanying notes are an integral part of these statements.



                                      F-4
<PAGE>


                         TRINITY MEDICAL GROUP USA, INC.
                      (a company in the development stage)
                       STATEMENT OF STOCKHOLDERS' DEFICIT
     For the Period from Inception (September 28, 1998) to December 31, 2001

<TABLE>
<CAPTION>


                                                                                                 Deficit
                                                                                                Accumulated
                                                         Common Stock         Additional        During the
                                                  --------------------------    Paid-in         Development
                                                     Shares        Amount       Capital           Stage          Total
                                                  -------------  ----------- -------------    -------------- --------------
<S>                                                 <C>            <C>        <C>              <C>            <C>

 Balance at inception                                       --     $     --   $        --      $         --   $         --
 Common stock issued to
   founding shareholders                             9,600,000        9,600            --                --          9,600
 Common stock issued for services                      493,000          493       228,707                --        229,200
 Common stock issued to various
   shareholders in connection with
   August Project III Corp. merger                     133,000          133          (133)               --             --
 Net loss                                                   --           --            --          (866,202)      (866,202)
                                                    ----------     --------   -----------      ------------   ------------
 Balance at December 31, 1999                       10,226,000       10,226       228,574          (866,202)      (627,402)
 Sale of common stock units                            158,500          158       570,442                --        570,600
 Conversion of convertible notes payable and
   related accrued interest and commissions            878,538          879       928,340                --        929,219
 Intrinsic value of beneficial conversion
   associated with convertible promissory note              --           --       146,552                --        146,552
 Net loss                                                   --           --             -        (2,207,315)    (2,207,315)
                                                    ----------     --------   -----------      ------------   ------------
 Balance at December 31, 2000                       11,263,038     $ 11,263   $ 1,873,908      $ (3,073,517)  $ (1,188,346)
 Conversion of convertible promissory notes
   and related accrued interest                        418,324          419       657,333                --        657,752
 Intrinsic value of beneficial conversion
   associated with convertible promissory notes             --           --       653,982                --        653,982
 Exercise of common stock warrants                       7,000            7        27,993                --         28,000
 Fair value of common stock warrants issued
   in connection with financings                            --           --       203,350                --        203,350
 Fair value of common stock options issued
   in connection with services rendered                     --           --        59,600                --         59,600
 Capital contribution related to forgiveness
   of deferred compensation by shareholder                  --           --       143,545                --        143,545
 Sale of common stock units                            250,505          250       264,750                --        265,000
 Conversion of  promissory note
   and related accrued interest                         19,253           19        20,197                --         20,216
 Conversion of payable to affiliates                 1,000,000        1,000     1,339,000                --      1,340,000
 Net loss                                                   --           --            --        (3,272,314)    (3,272,314)
                                                    ----------     --------   -----------      ------------   ------------
 Balance at December 31, 2001                       12,958,120     $ 12,958   $ 5,243,658      $ (6,345,831)  $ (1,089,215)
                                                    ==========     ========   ===========      ============   ============
</TABLE>

        The accompanying notes are an integral part of these statements.


                                      F-5
<PAGE>


                         TRINITY MEDICAL GROUP USA, INC.
                      (a company in the development stage)
                            STATEMENTS OF CASH FLOWS
             For the Years Ended December 31, 2001 and 2000, and the
         Period from Inception (September 28, 1998) to December 31, 2001

<TABLE>
<CAPTION>
                                                              Period
                                                          from Inception     Year Ended December 31,
                                                               to        -------------------------------
                                                        December 31, 2001     2001            2000
                                                        ---------------  ---------------  --------------
<S>                                                       <C>              <C>             <C>
Cash flows from operating activities:
    Net loss                                              $ (6,345,831)    $ (3,272,314)   $ (2,207,315)
    Adjustments to reconcile net loss to net
      cash used in operating activities:
       Depreciation                                              3,543            2,876             667
       Stock issued for services and interest payment          385,919               --         156,719
       Stock options issued for services and warrants
         issued in connection with financings                  262,950          262,950              --
       Intrinsic value of beneficial conversion                800,534          653,982         146,552
       Loss on sale of investments                               8,445               --              --
       Changes in assets and liabilities:
          Income tax refund receivable                              --               --          18,951
          Prepaid expenses and deposits                         12,018           16,263          (4,245)
          Accounts payable                                     165,531          147,670           7,518
          Payable to affiliate                               1,827,849        1,195,600         632,249
          Accrued liabilities and deferred compensation        318,249          148,318          85,336
                                                        ---------------  ---------------  --------------
             Net cash used in operating activities          (2,560,793)        (844,655)     (1,163,568)
                                                        ---------------  ---------------  --------------
Cash flows from investing activities:
    Purchases of fixed assets                                  (11,061)              --         (11,061)
    Purchases of investments                                   (69,330)              --              --
    Proceeds from sale of investments                           60,885               --              --
                                                        ---------------  ---------------  --------------
             Net cash used in investing activities             (19,506)              --         (11,061)
                                                        ---------------  ---------------  --------------
Cash flows from financing activities:
    Proceeds from issuance of convertible notes payable        772,500               --          40,000
    Proceeds from issuance of notes payable to officers         90,500           90,500              --
    Repayments on notes payable to officers                    (60,000)         (60,000)             --
    Proceeds from issuance of promissory note                   20,000           20,000              --
    Repayments on insurance note payable                       (46,979)         (46,979)             --
    Proceeds from issuance of convertible promissory                --               --
       notes                                                 1,000,000          500,000         500,000
    Net proceeds from sale of common stock units               835,600          265,000         570,600
    Proceeds from exercise of common stock warrants             28,000           28,000              --
    Collection of subscription receivable                        9,600               --           9,600
                                                        ---------------  ---------------  --------------
             Net cash provided by financing activities       2,649,221          796,521       1,120,200
                                                        ---------------  ---------------  --------------
             Net increase (decrease) in cash and
                cash equivalents                                68,922          (48,134)        (54,429)
Cash and cash equivalents - beginning of period                     --          117,056         171,485
                                                        ---------------  ---------------  --------------
Cash and cash equivalents - end of period               $       68,922   $       68,922   $     117,056
                                                        ===============  ===============  ==============
</TABLE>

        The accompanying notes are an integral part of these statements.


                                      F-6
<PAGE>

                         TRINITY MEDICAL GROUP USA, INC.
                      (a company in the development stage)
                          NOTES TO FINANCIAL STATEMENTS
                           December 31, 2001 and 2000


NOTE A - COMPANY BACKGROUND

Trinity   Medical  Group  USA,  Inc.   ("the  Company"  or  "Trinity  USA")  was
incorporated  in the State of Delaware on September 28, 1998 and  reincorporated
in  Nevada  in  November  of 1999  with  its  principal  place  of  business  in
California.  In December  1999, as the result of a  reorganization,  the Company
became a Florida corporation.

Trinity  USA is an  affiliate  of Trinity  Assets  Company  Limited  and Trinity
Medical  Group,  Ltd., a majority  owned,  non-operating  subsidiary  of Trinity
Assets Company Limited.  Both Trinity Assets Company Limited and Trinity Medical
Group, Ltd. are Thailand  companies.  The Company is a development stage company
with  rights  to  market an  HIV-Immunogen  also  known as  REMUNE,  a  patented
therapeutic  vaccine treatment,  designed to induce specific T cell responses in
people  infected  with the  Human  Immunodeficiency  Virus  (HIV).  REMUNE is an
immune-based therapy consisting of whole inactivated HIV-1 virus depleted of its
gp120 coat protein based on Dr. Jonas Salk's vaccine technology.

The Company  acquired the  licensing  rights to develop and market REMUNE in ten
Southeast Asian countries including Malaysia,  The Philippines,  Singapore,  Sri
Lanka, Myanmar, Laos, Cambodia, Vietnam and Indonesia, with Thailand as the lead
nation, from The Immune Response  Corporation.  The Immune Response  Corporation
will be responsible for  manufacturing and supplying REMUNE to the Company if it
is approved for commercialization in Thailand.

On  December  31,  1999,  Trinity USA and August  Project  III Corp.,  a Florida
corporation,  entered into an Agreement  for the Exchange of Common  Stock.  The
transaction  was described as a "reverse  merger".  August Project III Corp. was
the  surviving  legal  entity  after the merger,  but Trinity USA  remained  the
accounting  acquirer.  The merger was  accounted  for as a  recapitalization  of
Trinity  USA. In January  2000,  August  Project  III Corp.  changed its name to
Trinity Medical Group USA, Inc.

As part of the Agreement for the Exchange of Common  Stock,  August  Project III
Corp.  issued  5,226,000  common  shares to the  shareholders  of Trinity USA in
exchange for all of the  outstanding  common shares of Trinity USA.  Trinity USA
common  shares  were  subsequently  cancelled.  In  addition,  certain  original
shareholders of August Project III Corp. sold 4,867,000 common shares to Trinity
USA in exchange  for  $175,000.  Trinity USA recorded  the  acquisition  cost of
$175,000 as an expense in 1999.  Immediately  following the merger, the original
shareholders of Trinity USA owned a total of 10,093,000 shares of August Project
III Corp., or 98.69% of the total 10,226,000  outstanding  shares as of December
31, 1999.


NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Cash and cash equivalents

The Company  considers all money market funds and demand  deposits with original
maturities of ninety days or less to be cash  equivalents.  The cash equivalents
are readily redeemable and their fair value approximates cost.


                                      F-7
<PAGE>


                         TRINITY MEDICAL GROUP USA, INC.
                      (a company in the development stage)
                          NOTES TO FINANCIAL STATEMENTS
                           December 31, 2001 and 2000


Income Taxes

Deferred tax assets and  liabilities  are recorded for  differences  between the
financial statement and tax basis of the assets and liabilities that will result
in taxable or  deductible  amounts in the future  based on enacted  tax laws and
rates  applicable to the periods in which the differences are expected to affect
taxable income.  Valuation  allowances are established  when necessary to reduce
deferred tax assets to the amount expected to be realized. Income tax expense is
recorded  for the amount of income  tax  payable  or  refundable  for the period
increased  or  decreased  by the change in deferred  tax assets and  liabilities
during the period.

Research and Development Costs

The Company  incurs  costs in the research and  development  of a drug  therapy,
REMUNE,  including  costs  for phase I and II  clinical  trials  and  additional
studies of REMUNE in Thailand. Such costs are charged to expense as incurred.

Stock-Based Compensation

Stock-based  compensation  issued to non-employees is recorded based on the fair
value of the consideration  received or the fair value of the equity instruments
issued, whichever is more reliably measurable.

Fair Value of Financial Instruments

The  carrying  amounts  reported  in  the  balance  sheets  for  cash  and  cash
equivalents,  accounts payable,  accrued liabilities and convertible  promissory
notes  and  debentures  approximate  fair  value.  These  financial  instruments
approximate  their fair value due to the relatively short period of time between
origination of the instruments and their expected realization or settlement.

Furniture and Equipment

Furniture and equipment are recorded at cost. Depreciation is provided using the
straight-line  method over the  estimated  useful  lives of the related  assets,
which  range  from  three  to five  years.  The  cost  and  related  accumulated
depreciation  of  furniture  and  equipment  sold or  otherwise  disposed of are
removed from the accounts and the resulting  gains or losses are included in the
statement of operations.

Loss per Share

Basic net loss per share is  computed  by  dividing  the net loss  available  to
common  stockholders  for the period by the  weighted  average  number of common
shares  outstanding  during the period.  Incremental common shares issuable upon
the exercise of stock  options and warrants are included in the  computation  of
diluted net loss per share to the extent such shares are dilutive.

Excluded  from the  computation  of basic and diluted loss per common share were
stock options and warrants  outstanding for the purchase of 1,416,695  shares of
common stock as of December 31, 2001 because the representative share increments
would be antidilutive. Also excluded from the computation of basic and


                                      F-8
<PAGE>


                         TRINITY MEDICAL GROUP USA, INC.
                      (a company in the development stage)
                          NOTES TO FINANCIAL STATEMENTS
                           December 31, 2001 and 2000


diluted loss per common share were an estimated  367,000  shares of common stock
issuable as of December 31, 2001 upon the conversion of a convertible promissory
note  (see  Note  J)  because  the  representative  share  increments  would  be
antidilutive.

Use of Estimates

The preparation of financial  statements in accordance  with generally  accepted
accounting principles requires management to make estimates and assumptions that
affect the  reported  amounts  of assets  and  liabilities  and  disclosures  of
contingent assets and liabilities at the date of the financial  statements,  and
the  reported  amounts of revenues  and expenses during the  reporting  periods.
Accordingly, actual results could differ from those estimates and assumptions.


Note C - GOING CONCERN

The  accompanying  financial  statements  have been  prepared on a going concern
basis,  which  contemplates  the  realization of assets and the  satisfaction of
liabilities  in the  normal  course  of  business.  As  shown  in the  financial
statements,  the Company is in the  development  stage and, at December 31, 2001
has accumulated losses amounting to $6,345,831.  For the year ended December 31,
2001,  and for the period from  inception  to December 31, 2001 the Company used
$844,655 and $2,560,793,  respectively, of cash in its operations. Additionally,
the Company had a working  capital  deficit of  $1,096,733  and a  stockholders'
deficit of $1,089,215 at December 31, 2001.

The Company's  initial  efforts have focused on the research and  development of
REMUNE (through  Trinity Medical Group,  Ltd. or Trinity Assets Company Limited)
and securing sales and marketing  rights in Thailand.  In July 2001 the Company,
through  its  affiliate  Trinity  Assets  Company  Limited,  filed  a  new  drug
application  for  approval by the Thai Food and Drug  Administration  to market,
distribute and  manufacture  REMUNE in Thailand.  In January 2002, the Thai Food
and Drug Administration  certified the REMUNE manufacturing facility as being in
compliance  with  World  Health   Organization  Good   Manufacturing   Practices
standards.  Final  commercial  approval of REMUNE by the Thai FDA,  however,  is
pending.  The Company has additional  government approvals to secure in order to
begin the process of  commercialization.  The U.S. Food and Drug  Administration
must  certify the  facility  that will  manufacture  the product and approve the
export of the product.  The Company will require  substantial  capital to pursue
its operating strategy and currently has limited cash for operations.  There can
be no assurance that management will be successful in raising the necessary cash
to fund its  continuing  operations  or in obtaining  the  necessary  government
approvals  for the  manufacture  and sale of REMUNE.  The  Company's  ability to
continue as a going  concern  will depend upon these  factors and the success of
future operations.

The  Immune  Response   Corporation's   primary   marketing   partner,   Agouron
Pharmaceuticals,  Inc.,  or  Agouron,  a Pfizer  Inc.  company,  terminated  its
collaboration agreement with The Immune Response Corporation on July 5, 2001. As
a result, The Immune Response Corporation, our Licensor of REMUNE, may be unable
to  successfully  complete  current  or future  trials of REMUNE  and The Immune
Response  Corporation may have to abandon REMUNE or seek additional funding. The
termination of the Agouron/Immune  Response Corporation  collaboration agreement
has had a material adverse effect on both The Immune Response  Corporation's and
the Company's stock price,  which may therefore  adversely effect our ability to
successfully  raise  additional  capital  to  complete  REMUNE  development  and
effectuate our


                                      F-9
<PAGE>


                         TRINITY MEDICAL GROUP USA, INC.
                      (a company in the development stage)
                          NOTES TO FINANCIAL STATEMENTS
                           December 31, 2001 and 2000


business plans. Additionally,  The Immune Response Corporation has stated in its
Form 10-Q for the period ended  September 30, 2001, that they will need to raise
substantial  additional capital to fund their operations beyond 2001. The Immune
Response  Corporation  further  stated that if they are unable to raise adequate
capital, it would have a material adverse effect on them and would cause them to
cease  operations,  at  which  time  they  may  not be  able  to  satisfy  their
obligations.  Because The Immune  Response  Corporation  is the sole supplier of
REMUNE,  their  inability to continue to raise  capital or  ultimately  generate
internal cash flow could adversely  affect our business,  as REMUNE is currently
our only product.

The Company requires substantial capital to pursue its operating strategy, which
includes  commercialization  of the drug REMUNE,  and currently has limited cash
for operations. Until the Company can obtain revenues sufficient to fund working
capital needs and additional  research and development costs necessary to obtain
the regulatory  approvals for  commercialization,  the Company will be dependent
upon  external  sources of  financing.  Other than as  described  in Note S, the
Company does not have any other  commitments  to secure  additional  capital and
there is no  assurance  that any  additional  funds  needed will be available on
favorable terms, if at all. These factors, among others, raise substantial doubt
about the  Company's  ability to  continue  as a going  concern.  The  financial
statements do not include any  adjustments  relating to the  recoverability  and
classification  of recorded asset amounts or the amounts and  classification  of
liabilities  that might be necessary should the Company be unable to continue as
a going concern for a reasonable period of time.


NOTE D - LICENSED TECHNOLOGY

Trinity  Medical Group,  Ltd. was formed in 1995 after the principals of Trinity
Medical Group,  Ltd.  entered into a License and  Collaboration  Agreement dated
September 15, 1995 with The Immune  Response  Corporation  to develop and market
REMUNE in ten Southeast Asian countries  including  Malaysia,  The  Philippines,
Singapore,  Sri Lanka,  Myanmar,  Laos,  Cambodia,  Vietnam and Indonesia,  with
Thailand as the lead nation,  for a period of 15 years commencing on the date of
the first  commercial sale of REMUNE in each licensed  country.  Trinity Medical
Group,  Ltd. also entered into a Stock Purchase  Agreement on September 15, 1995
with The Immune  Response  Corporation  and purchased  333,334  shares of common
stock of The Immune  Response  Corporation  at $15 per share on April 30,  1996.
Under the  Stock  Purchase  Agreement,  Trinity  Medical  Group,  Ltd.  was also
obligated to purchase an additional 333,333 shares of common stock of The Immune
Response  Corporation  at $15 per share upon  receiving  the required  marketing
approval  from the governing  health  authority of Thailand for the drug therapy
REMUNE.  Trinity  Medical  Group,  Ltd.  was  further  obligated  to purchase an
additional 333,333 shares of common stock of The Immune Response  Corporation at
$15 per share upon  receiving  the  required  factory  establishment  license or
approval from the governing health authority of Thailand to manufacture the drug
therapy REMUNE.  These stock purchase obligations of Trinity Medical Group, Ltd.
became the  obligations  of  Trinity  USA as a result of the  Collaboration  and
Supply  Agreement and an Assignment  Agreement  between  Trinity USA and Trinity
Medical Group, Ltd. (see Note M).

The License and Collaboration  Agreement between Trinity Medical Group, Ltd. and
The Immune  Response  Corporation,  entered into in 1995,  provided for possible
termination of the License and Collaboration Agreement if the marketing approval
for REMUNE in Thailand was not granted before December 31, 2000. On May 8, 2001,
the  Company  and The  Immune  Response  Corporation  amended  the  License  and
Collaboration  Agreement to set the earliest possible termination date to August
31, 2004. The amendment to the License and  Collaboration  Agreement also states
that The Immune  Response  Corporation  will  manufacture,  sell and  deliver to
Trinity USA a quantity of REMUNE equal to Trinity USA's requirement of


                                      F-10
<PAGE>


                         TRINITY MEDICAL GROUP USA, INC.
                      (a company in the development stage)
                          NOTES TO FINANCIAL STATEMENTS
                           December 31, 2001 and 2000


REMUNE for commercial sale and  distribution in its territory,  up to 25% of The
Immune Response  Corporation's  actual monthly production of the product. In the
event Trinity USA's  requirement  of REMUNE  exceeds 25% of The Immune  Response
Corporation's  actual  monthly  production,  Trinity USA may request  additional
product  and The  Immune  Response  Corporation,  in its  sole  discretion,  may
manufacture  and sell the additional  product to Trinity USA. The Company's cost
of  REMUNE  is  contractually  based  upon  The  Immune  Response  Corporation's
manufacturing cost, as defined under generally accepted  accounting  principles,
plus an  agreed  upon  markup  percentage.  The  amendment  to the  License  and
Collaboration  Agreement  eliminates  the  requirement  for the  Company  to pay
royalties to The Immune  Response  Corporation as a result of sales of REMUNE in
the Company's licensed territories.

Trinity USA has three years from the date of the first commercial sale of REMUNE
in Thailand to exercise its option to obtain an exclusive license to manufacture
REMUNE in Thailand  solely for the sale,  distribution  and use in Trinity USA's
licensed territory.


NOTE E - NEW ACCOUNTING PRONOUNCEMENTS

In July 2001, the Financial  Accounting  Standards  Board issued  Statements No.
141,  "Business  Combinations"  ("SFAS  141") and No.  142  "Goodwill  and Other
Intangible  Assets"  ("SFAS  142").  SFAS 141  supersedes  APB  Opinion  No. 16,
"Business   Combinations"   and  FASB   Statement   No.  38,   "Accounting   for
Pre-acquisition  Contingencies of Purchased Enterprises".  SFAS 141 is effective
for fiscal years  beginning  after June 30, 2001 and requires  that all business
combinations be accounted for by a single method, the purchase method.  SFAS 142
supersedes APB Opinion No. 17, "Intangible  Assets".  SFAS 142, is effective for
fiscal years  beginning  after  December 15, 2001 and provides that all existing
and newly acquired  goodwill and intangible assets with indefinite lives will no
longer be amortized but will be tested for impairment  annually and written down
only when  impaired.  Although it is still  reviewing  the  provisions  of these
Statements,  management's  preliminary  assessment is that these Statements will
not have a material  impact on the  Company's  financial  position or results of
operations.

In August 2001, the Financial Accounting Standards Board ("FASB") issued FAS No.
143,  "Accounting for Asset Retirement  Obligations."  This statement  addresses
financial   accounting  and  reporting  for  obligations   associated  with  the
retirement of tangible  long-lived  assets and the associated  asset  retirement
costs.  It applies to all entities  and legal  obligations  associated  with the
retirement of long-lived assets that result from the acquisition,  construction,
development  and/or normal  operation of long-lived  assets,  except for certain
obligations  of lessees.  This  statement is effective for financial  statements
issued for fiscal years  beginning  after June 15, 2002.  Management has not yet
determined the impact of the adoption of FAS No. 143 on the Company's  financial
position or results of operations.

In August 2001, the FASB issued FAS No. 144,  "Accounting  for the Impairment or
Disposal of Long-Lived Assets." FAS No. 144 addresses  financial  accounting and
reporting  for the  impairment  or disposal of  long-lived  assets.  FAS No. 144
supersedes FAS No. 121,  "Accounting  for the Impairment of Long-Lived  Assets,"
and the  accounting and reporting  provisions of APB Opinion No. 30,  "Reporting
the Results of  Operations--Reporting  the Effects of Disposal of a Segment of a
Business,  and  Extraordinary,  Unusual and  Infrequently  Occurring  Events and
Transactions,"  for the  disposal  of a segment  of a  business  (as  previously
defined  in that  Opinion).  The  provisions  of FAS No. 144 are  effective  for
financial  statements issued for fiscal years beginning after December 15, 2001,
with early application encouraged and generally are to be applied


                                      F-11
<PAGE>


                         TRINITY MEDICAL GROUP USA, INC.
                      (a company in the development stage)
                          NOTES TO FINANCIAL STATEMENTS
                           December 31, 2001 and 2000


prospectively.  Management  has not yet determined the impact of the adoption of
FAS No. 144 on the Company's financial position or results of operations.


NOTE F - DEFERRED COMPENSATION

The Company had deferred the  compensation of its Chief  Executive  Officer from
December  31, 2000  through May 31,  2001 in order to conserve  cash.  The Chief
Executive Officer is also one of the Company's founding shareholders.  The total
compensation  deferred  was  $137,500.  The  outstanding  deferred  compensation
balance  bore  interest at prime plus 2% and was due on demand.  On September 1,
2001, the Chief  Executive  Officer  forgave the deferred  compensation  and the
related accrued interest  totaling  $143,545.  The Company recorded the deferred
compensation forgiveness as a contribution of capital.


Note G- CONVERTIBLE NOTES PAYABLE

In connection with a December 1999 private  placement,  the Company issued 154.5
notes to "accredited  investors".  The notes were sold in units with a unit cost
of $5,000  consisting of a $5,000,  10% per annum note of the Company due August
31, 2001,  convertible into 5,000 shares of the Company's  common stock,  $0.001
par value per share.  The aggregate  offering price was $772,500 and the Company
received  net proceeds of  approximately  $767,500.  On December  11, 2000,  the
Company  converted the total principal balance of these notes ($772,500) and the
related accrued interest ($84,469) and commissions ($72,250) into 878,538 shares
of its common stock.


NOTE H - NOTES PAYABLE TO OFFICERS

During 2001 the Company  borrowed,  through the issuance of five separate notes,
$90,500 from its Chief Executive Officer and its Corporate Secretary.  The notes
payable  are  uncollateralized,  bear  interest at 15% per annum and are due the
earlier of one year from the date of the notes or the date on which the  Company
receives a minimum of $200,000 of  financing  through the issuance of its common
stock or debt (or both) to  non-affiliated  persons or  entities.  Although  the
Company has obtained financing in excess of $200,000 since the issuance of these
notes,  only $65,000 of principal has been repaid to the  Officers.  The Company
repaid  $50,000  in July 2001 and  $5,000 in  October  2001,  December  2001 and
January 2002.


NOTE I - INSURANCE NOTE PAYABLE

On July 1, 2001 the Company obtained Directors and Officers Liability Insurance
for an aggregate coverage amount of $3,000,000. The total annual premiums on the
insurance policy are approximately $108,000, of which approximately $70,500 was
financed at an annual rate of 9.76% over a period of 9 months. The outstanding
balance of the insurance note payable at December 31, 2001 is $23,489.


                                      F-12
<PAGE>


                         TRINITY MEDICAL GROUP USA, INC.
                      (a company in the development stage)
                          NOTES TO FINANCIAL STATEMENTS
                           December 31, 2001 and 2000


NOTE J - CONVERTIBLE PROMISSORY NOTES

On October 19, 2000,  in  connection  with a Regulation S offering,  the Company
issued a $500,000  convertible  promissory  note to an  institutional  investor,
RoyCap Inc. The note had a maturity  date of October 19, 2001 and bore  interest
at 8% per annum, with interest payments due and payable semi-annually.  The note
was convertible at the conversion price equal to the lesser of (i) $4.00 or (ii)
80% of the average closing bid price of the common stock, par value $0.001,  for
the ten (10) consecutive trading days preceding the conversion date. The Company
recorded  a charge to  interest  expense  of  $146,552  in  connection  with the
issuance of this note. The charge  represents the entire  intrinsic value of the
beneficial conversion feature as calculated at the date of issuance. The Company
received  net  proceeds  of  approximately  $450,000  under this  offering.  The
offering costs of $50,000 were charged to expense.

On June 22, 2001, RoyCap Inc. converted the $500,000 convertible promissory note
dated October 19, 2000, and related accrued  interest and liquidated  damages of
$57,752,  into 319,666  shares of the  Company's  common stock.  In addition,  a
warrant to purchase  319,666 shares of the Company's common stock at an exercise
price of $4.00 per share  until  June 22,  2006 was  granted as per the terms of
this note.  The Company  recorded an  additional  charge to interest  expense of
$353,448 for the fair value of the beneficial conversion feature.

On June 29, 2001, in connection with a Regulation S offering, the Company issued
a $500,000  convertible  promissory note to RoyCap Inc. The note matures on June
29, 2002 and bears  interest at 8% per annum,  with  interest  payments  due and
payable  semi-annually.  The Company  received  net  proceeds  of  approximately
$450,000  under this  offering.  The  offering  costs of $50,000 were charged to
expense.  The note is convertible at the conversion price equal to the lesser of
(i) $4.00 or (ii) 80% of the average closing bid price of the common stock,  par
value $0.001, for the ten (10) consecutive trading days preceding the conversion
date.  The  Company  recorded  a charge  to  interest  expense  of  $250,668  in
connection  with the  issuance of this note.  The charge  represents  the entire
intrinsic value of the beneficial  conversion  feature as calculated at the date
of issuance.  The note is convertible at the option of the holder for the entire
term of the note. The note is convertible at the option of the Company  provided
that the  registration  statement to be filed to register the underlying  common
shares and warrant  shares has been effective for ninety (90)  consecutive  days
and the  Company's  common stock has had a closing bid price equal to or greater
than $4.00 for the five (5)  consecutive  trading days preceding the delivery of
the conversion  notice. On the date of conversion,  the Company shall also issue
to the  holder a warrant  to  purchase  such  number of shares of the  company's
common stock equal to aggregate the number of shares of common stock issued upon
conversion of this note. The warrant shall have an exercise price equal to $4.00
per  share  and  shall  have a term of five  years  from its  date of  issuance.
Interest accruing on the note is payable,  at the option of the Company, in cash
or in accordance with the aforementioned  conversion terms of the note. No value
has been assigned to the warrants.  Upon  conversion of the note and the related
issuance  of the  warrants,  a charge to interest  expense of  $249,332  will be
recorded for the allocated fair value of the warrants.

The  covenants of the note prevent the Company from  pledging any of its assets,
including  licenses,  to any third party or incurring any indebtedness senior to
the  note.  The  covenants  of the note  also  required  the  Company  to file a
registration statement by August 14, 2001 and to use its reasonable best efforts
to cause the registration  statement to be declared  effective by the Securities
and Exchange  Commission (SEC) within 90 days of the issuance of the note and to
respond to the SEC's review comments within 5


                                      F-13
<PAGE>


                         TRINITY MEDICAL GROUP USA, INC.
                      (a company in the development stage)
                          NOTES TO FINANCIAL STATEMENTS
                           December 31, 2001 and 2000


business days. The  registration  statement was filed on August 17, 2001 and was
declared  effective  on August 27,  2001.  The Company  also  granted  piggyback
registration rights with respect to the warrant shares.

On November 8, 2001, RoyCap Inc.  converted  $100,000 of the $500,000  principal
balance outstanding on the convertible promissory note dated June 29, 2001, into
98,658 shares of the Company's common stock. In addition,  a warrant to purchase
98,658  shares of the Company's  common stock at an exercise  price of $4.00 per
share  until  November  8, 2006 was  granted as per the terms of this note.  The
Company  recorded an  additional  charge to interest  expense of $49,866 for the
fair value of the beneficial  conversion  feature  associated  with the warrants
issued.


Note K - COMMON STOCK UNITS AND PROMISSORY NOTE

On June 21, 2000, the Company began to raise additional  capital under a private
placement  offering.  A maximum of 175 preferred  stock units at $4,000 per unit
were  initially  offered in the private  placement.  Because the Company was not
authorized to issue  preferred  stock,  the units were  subsequently  changed to
common stock units.  Each unit consisted of one thousand shares of the Company's
common stock, par value $.001, and a non-callable  common stock purchase warrant
(the "Warrant"). Each of the Warrants entitles the registered holder to purchase
up to one thousand  shares of the common stock at a price of $4.00 per share for
a period of 24 months from the date of the Private  Placement  Prospectus,  July
24, 2000.  The common  shares and the Warrant  included in the units will not be
separately  transferable  until 90 days after the date of the Prospectus or such
earlier  date as the Company  may  determine.  The  Company  received a total of
$634,000  through this  private  placement  offering,  for an aggregate of 158.5
units sold. The net proceeds to the Company were $570,600, after commissions.

On September  26, 2001,  the Company sold 50,505  shares of its common stock for
$.99 per share to a foreign  investor.  In  connection  therewith,  the  Company
issued a 5 year warrant to purchase  5,000 shares of the Company's  common stock
at an exercise  price of $1.98 per share.  The net  proceeds to the Company were
$45,000, after a 10% cash commission which was expensed.

On  October  1,  2001,  the  Company  issued  a  $20,000  promissory  note to an
accredited  investor.  The note had a maturity  date on or before  November  15,
2001,  bore  interest at 10% per annum and was  uncollateralized.  In connection
with the issuance of the promissory note, the Company issued the Holder a 5-year
warrant to purchase  2,000 shares of the  Company's  common stock at an exercise
price of  $1.80  per  share.  The  Company  paid  the  selling  agent a 10% cash
commission totaling $2,000, which was expensed.  The promissory note and related
accrued interest were converted into 19,253 shares of the Company's common stock
on November 12, 2001.

In November 2001, the Company sold a total of 200,000 shares of its common stock
for prices ranging from $1.00 to $1.10 per share to four  accredited  investors.
In connection therewith,  the Company issued 5-year warrants to purchase a total
of 42,500 shares of the Company's  common stock at exercise  prices ranging from
$2.00 to $2.40 per share.  The net  proceeds  from the sale of the common  stock
were $193,500, after a 10% cash commission which was expensed.


                                      F-14
<PAGE>


                         TRINITY MEDICAL GROUP USA, INC.
                      (a company in the development stage)
                          NOTES TO FINANCIAL STATEMENTS
                           December 31, 2001 and 2000


NOTE L - STOCK OPTIONS AND WARRANTS

On June 1, 2001, two investors  exercised  warrants to purchase a total of 7,000
shares of the Company's common stock at $4.00 per share, resulting in $28,000 of
cash proceeds to the Company.

On June 1, 2001 the Company  granted 10,000  non-qualified  stock options to its
corporate secretary in connection with the execution of an employment  agreement
(see  Note N).  The  options  are fully  vested,  have a term of 10 years and an
exercise  price of $1.72 per share,  which was equal to the closing price of the
Company's common stock on the date of grant.

On June 15, 2001 the Company  granted  20,000  non-qualified  stock options to a
consultant who performs investor relation services for the Company.  The options
are fully  vested,  have a term of 10 years and an  exercise  price of $3.00 per
share. The Company recorded an expense (general and  administrative)  of $59,600
related to this  option  grant,  which was  calculated  using the  Black-Scholes
option-pricing model.

On June 22,  2001 the Company  signed an  engagement  letter with an  investment
banking firm to  introduce  certain  institutional  investors to the Company and
also  to  advise  the  Company  regarding  potential  investment  terms  by such
investors.  In  connection  therewith,  the Company  issued a 5-year  warrant to
purchase  25,000  shares of the Company's  common stock at an exercise  price of
$2.00 per share.  The warrant  became  exercisable on July 22, 2001. The Company
recorded an expense  (general  and  administrative)  of $91,000  related to this
warrant  grant,  which was  calculated  using the  Black-Scholes  option-pricing
model.

The engagement letter with the investment banking firm also provides that in the
event there is a financing  transaction  within twelve months following the date
of the  engagement  letter,  between  the  Company  and  any  of  the  potential
investors, the Company will pay to the investment banking firm a cash fee of 10%
of the total amount  invested.  In addition,  the  investment  banking firm will
receive,  as part of their  compensation,  five year  warrants to  purchase  the
Company's common stock (the "Transaction  Warrants").  The number of Transaction
Warrants  will be  calculated at 10% of the  aggregate  gross  principal  amount
received in the  Transaction,  exercisable  at a price equal to the lower of the
price paid by investors or average  closing bid prices of the  Company's  common
stock for the 25 business days preceding the closing of the Transaction.

On June 29, 2001, in connection with the financing transaction described in Note
J, the Company issued a 5 year,  fully  exercisable  Transaction  Warrant to the
investment  banking firm to purchase 16,521 shares of the Company's common stock
at an exercise price of $2.76 per share. The Company  recorded  interest expense
of  $57,750  related  to this  warrant  grant,  which was  calculated  using the
Black-Scholes  option-pricing  model.  During July 2001, the Company paid a cash
fee of $50,000 to the investment  banking firm in connection with this financing
transaction. The cash fee was expensed by the Company.

On September 5, 2001, in connection with an employment agreement dated September
5, 2000,  the Company  granted 50,000  non-qualified  stock options to its Chief
Financial  Officer.  The options vest ratably over two years,  have a term of 10
years and an exercise  price of $1.80 per share,  which was equal to the closing
price of the Company's common stock on the date of grant.

On September 26, 2001, the Company granted 25,000 non-qualified stock options to
a director in connection with his nomination to the Company's board of directors
on that date.  Fifty-percent  of the options vest after six months from the date
of grant and the  remaining  fifty-percent  vest after one year from the date of
grant.


                                      F-15
<PAGE>


                         TRINITY MEDICAL GROUP USA, INC.
                      (a company in the development stage)
                          NOTES TO FINANCIAL STATEMENTS
                           December 31, 2001 and 2000


The options  have a term of 10 years and an  exercise  price of $1.65 per share,
which was equal to the closing price of the  Company's  common stock on the date
of grant.

In December  2001,  the Company  issued to an  investment  banking firm a 5 year
warrant to purchase a total of 15,000 shares of the Company's common stock at an
exercise price of $1.00 per share.  The Company recorded an expense (general and
administrative)  of approximately  $55,000 related to this warrant grant,  which
was calculated using the Black-Scholes option-pricing model.

On December 20, 2001, the Company granted a total of 560,000 non-qualified stock
options to its officers and directors.  The options are fully vested, except for
25,000  options which vest ratably over 4 years,  have a term of 10 years and an
exercise  price of $1.30 per share,  which was equal to the closing price of the
Company's common stock on the date of grant.

A summary of changes in common stock  options and warrants  during 2000 and 2001
is as follows:


                                                                       Weighted
                                                                       Average
                                                   Number of           Exercise
                                                    Shares              Price
                                                   ---------           --------

OPTIONS:
Outstanding at December 31, 1999                          --            $    --
Granted                                               60,000            $  3.75
Exercised                                                 --            $    --
Cancelled                                                 --            $    --
                                                   ---------
Outstanding at December 31, 2000                      60,000            $  3.75
Granted                                              665,000            $  1.41
Exercised                                                 --            $    --
Cancelled                                                 --            $    --
                                                   ---------
Outstanding at December 31, 2001                     725,000            $  1.60
                                                   =========
Options exercisable
 (vested) at December 31, 2001                       633,202            $  1.60
                                                   =========
WARRANTS:
Outstanding at December 31, 1999                          --            $    --
Granted                                              174,350            $  4.00
Exercised                                                 --            $    --
Cancelled                                                 --            $    --
                                                   ---------
Outstanding at December 31, 2000                     174,350            $  4.00
Granted                                              524,345            $  3.59
Exercised                                             (7,000)           $  4.00
Cancelled                                                 --            $    --
                                                   ---------
Outstanding at December 31, 2001                     691,695            $  3.69
                                                   =========
Warrants exercisable
 (vested) at December 31, 2001                       691,695            $  3.69
                                                   =========


                                      F-16
<PAGE>


                         TRINITY MEDICAL GROUP USA, INC.
                      (a company in the development stage)
                          NOTES TO FINANCIAL STATEMENTS
                           December 31, 2001 and 2000


Stock - Based Compensation

FASB Statement 123,  "Accounting  for  Stock-Based  Compensation,"  requires the
Company to provide pro forma  information  regarding net loss and loss per share
as if  compensation  cost for the  Company's  stock  option  issuances  had been
determined  in  accordance  with the fair value based method  prescribed in FASB
Statement 123. The Company  estimates the fair value of each stock option at the
grant date by using the  Black-Scholes  option-pricing  model with the following
weighted-average  assumptions used for grants in fiscal 2001 and 2000:  dividend
yield of zero percent,  risk-free  interest rate of 4.9 and 6.0 percent for 2001
and 2000, respectively, expected lives of five years, and expected volatility of
150. Under provisions of FASB Statement 123, the Company's net loss and loss per
share  for 2001 and 2000  would  have  been increased to the pro  forma  amounts
indicated below:

<TABLE>
<CAPTION>

                                                                 2001                      2000
                                                            -------------             -------------
<S>                                                         <C>                       <C>
Net Loss
         As reported                                        $ (3,272,314)             $ (2,207,315)
         FAS 123 effect                                     $   (779,000)             $   (96,400)
                                                            -------------             -------------
         Pro forma                                          $ (4,051,314)             $ (2,303,715)
                                                            =============             =============

Loss per share
         As reported - Basic and Diluted                    $      (0.28)             $    (0.21)
         Pro forma - Basic and Diluted                      $      (0.35)             $    (0.22)

         Basic and Diluted Weighted
           Average Shares Outstanding                          11,494,471                10,289,970
                                                            =============             =============
</TABLE>


The following table summarizes  information  about stock options  outstanding at
December 31, 2001:

<TABLE>
<CAPTION>

                                            Outstanding                                   Exercisable
                           --------------------------------------------------      ----------------------------
                              Number       Weighted Average      Weighted            Number        Weighted
     Range of              Outstanding        Remaining           Average          Exercisable      Average
  Exercise Prices            12/31/01   Contract Life (Years)  Exercise Price        12/31/01    Exercise Price
-----------------------------------------------------------------------------      ----------------------------
   <S>                       <C>              <C>              <C>                   <C>         <C>
   $3.00 - $4.00              70,000          8.91             $  3.71                70,000     $ 3.71
   $1.72 - $2.50              70,000          9.55             $  1.89                28,014     $ 2.02
   $1.30 - $1.65             585,000          9.97             $  1.31               535,188     $ 1.30
-----------------------------------------------------------------------------      ----------------------------
   $1.30 - $4.00             725,000          9.82             $  1.60               633,202     $ 1.60
=============================================================================      ============================
</TABLE>


                                      F-17
<PAGE>


                         TRINITY MEDICAL GROUP USA, INC.
                      (a company in the development stage)
                          NOTES TO FINANCIAL STATEMENTS
                           December 31, 2001 and 2000


NOTE M - RELATED PARTY TRANSACTIONS

The Company  entered  into a  Collaboration  and Supply  Agreement  with Trinity
Medical  Group,   Ltd.,   dated  December  1,  1999.  Under  the  terms  of  the
Collaboration and Supply Agreement,  the Company will pay Trinity Medical Group,
Ltd. for research personnel at contractual rates, travel,  laboratory,  facility
and  publication  costs  associated  with  clinical  trials of REMUNE until full
regulatory approval in Thailand is granted. Since inception through December 31,
2001 and during the years  ended  December  31, 2001 and 2000,  Trinity  Medical
Group,  Ltd.  billed  the  Company  approximately  $983,000,  $0  and  $689,000,
respectively,  for costs incurred related to the research and development of the
drug REMUNE.  Since  inception  through  December 31, 2001, the Company has paid
Trinity  Medical  Group,  Ltd.  approximately  $694,000  for amounts  previously
billed.  In December 2001, the Company  satisfied all remaining  amounts owed to
Trinity Medical Group,  Ltd.  through the issuance of the Company's common stock
(see also last paragraph in this Note).  All amounts  billed by Trinity  Medical
Group,   Ltd.  were  provided  for  under  the  terms  and   conditions  of  the
Collaboration and Supply Agreement dated December 1, 1999.

The  Collaboration  and Supply Agreement also provided that the Company make its
best  efforts to  capitalize  itself with at least  $4,000,000  through  sale or
subscription  of  shares of common  stock  not to exceed 1 million  shares.  The
requirement  for the  Company  not to exceed 1 million  shares in its attempt to
capitalize  itself was  subsequently  waived.  The Company agreed to prepare and
complete all necessary  documentation  required for  registration of the Company
with the Securities and Exchange Commission as a reporting company, which it has
done by filing a Form 10-SB on May 12, 2000.  In exchange for the Company  being
capitalized  and a reporting  company,  Trinity  Medical Group,  Ltd.  agreed to
transfer its License and  Collaboration  Agreement and Stock Purchase  Agreement
between it and The Immune Response Corporation, dated September 15, 1995, to the
Company  no later  than the first  sale of the  product  after  full  regulatory
approval in Thailand has been granted.

The Company and Trinity Medical Group, Ltd. entered into an Assignment Agreement
on August 3, 2000, whereby all of Trinity Medical Group,  Ltd.'s rights,  title,
and  interests in the License and  Collaboration  agreement  and Stock  Purchase
Agreement were assigned to the Company.  There was no accounting  recognition by
the  Company  as a result  of the  transfer  of the  License  and  Collaboration
Agreement and the related Stock Purchase Agreement.

On August  4,  2000,  The  Company  assigned  through a  Sublicense  and  Supply
Agreement the sales, distribution,  manufacturing and marketing rights to REMUNE
in Thailand to Trinity Assets Company Limited. The manufacturing rights assigned
to Trinity  Assets  Company  Limited are  non-exclusive.  Trinity Assets Company
Limited is related  through common  ownership.  One of the Company's  directors,
Inthanom John  Churdboonchart,  is a beneficial  owner of the  Company's  common
stock and is a 49% shareholder of Trinity Assets Company Limited. The Sublicense
and Supply  Agreement  provides  that the Company will  realize a minimum  gross
profit from the sale of REMUNE to Trinity Assets Company Limited in Thailand and
that profits, as defined,  from the sale of REMUNE in licensed territories other
than  Thailand will be shared  equally.  It is the intent of the parties that if
and when Trinity  Assets  Company  Limited  begins to  manufacture  REMUNE,  the
Company will continue to realize revenues either from the purchase and resale of
REMUNE to Trinity  Assets  Company  Limited or as royalties  from Trinity Assets
Company  Limited on its sales of REMUNE to others.  Specific terms of the resale
gross profit or royalties have not been negotiated by the parties at this time.


                                      F-18
<PAGE>


                         TRINITY MEDICAL GROUP USA, INC.
                      (a company in the development stage)
                          NOTES TO FINANCIAL STATEMENTS
                           December 31, 2001 and 2000


The Company has also agreed to provide support to Trinity Assets Company Limited
(in the form and substance  satisfactory  to both parties) for the  warehousing,
transportation,  and  production  of  any  related  capital  assets,  plant  and
equipment, etc. which are necessary for the marketing,  promoting and selling of
REMUNE  in  Thailand.  This  support  may be in the form of  providing  interest
bearing  loans to Trinity  Assets  Company  Limited or capital,  in exchange for
equity  ownership of Trinity  Assets Company  Limited;  no specific terms of the
support have been negotiated by the parties at this time. Under the terms of the
Sublicense  and Supply  Agreement,  the Company will pay Trinity  Assets Company
Limited for  specified  research  personnel,  travel,  laboratory,  facility and
publication   costs  associated  with  clinical  trials  of  REMUNE  until  full
regulatory approval in Thailand is granted.

Since  inception  through  December 31, 2001 and during the years ended December
31,  2001  and  2000,   Trinity  Assets  Company   Limited  billed  the  Company
approximately  $1,545,000,  $1,227,000  and  $318,000,  respectively,  for costs
incurred  related to the research  and  development  of the drug  REMUNE.  Since
inception  through  December  31,  2001,  approximately  $7,000 has been paid to
Trinity Assets Company Limited for amounts  previously billed. In December 2001,
the Company  satisfied  $1,050,701  of amounts  owed to Trinity  Assets  Company
Limited  through  the  issuance  of the  Company's  common  stock (see also last
paragraph  in this Note).  As of December  31,  2001,  the Company  owes Trinity
Assets Company Limited  $487,849,  which is presented as Payable to Affiliate on
the  accompanying  balance  sheet.  All amounts billed by Trinity Assets Company
Limited were provided for under the terms and  conditions of the  Sublicense and
Supply Agreement, dated August 4, 2000.

On November 10, 2000, the Company and Trinity Medical Group, Ltd. terminated the
Collaboration  and Supply  Agreement,  dated  December 1, 1999.  Trinity  Assets
Company  Limited will  prospectively  perform the research  and  development  of
REMUNE and will invoice the Company in connection  with the terms and conditions
of the Sublicense and Supply Agreement between the two parties.

In December 2001,  the Company  entered into a Conversion of Debt Agreement with
Trinity Assets Company  Limited whereby the Company issued  1,000,000  shares of
its  common  stock to Trinity  Assets  Company  Limited  to  satisfy  its entire
outstanding liability to Trinity Medical Group Ltd., a non-operating  subsidiary
of Trinity  Assets  Company  Limited,  as of  November  30,  2001 and to satisfy
$1,050,701 of its outstanding  liability to Trinity Assets Company Limited as of
November 30, 2001. The price per share utilized in this transaction,  $1.34, was
equal to the average  closing price of the Company's stock for the five business
days  preceding  the date that the parties  agreed to settle all or a portion of
the amounts owed by the Company as of November 30, 2001.  Immediately  after the
transaction was completed,  Trinity Assets Company  Limited owned  approximately
7.7% of the Company's issued and outstanding common stock.


NOTE N - COMMITMENTS

In 1999,  the Company  entered into an  employment  agreement  with Dr. James S.
Namnath  (shareholder),  whereby he would serve as the Company's Chief Executive
Officer.  Dr. Namnath's  employment  would be conducted under contract  services
with his then present  employer,  NotesETC,  Inc. until such time  ("Milestone")
that the Company  either begins sale of REMUNE product or is approved for public
trading of its common  shares in the United  States equity market as a reporting
company; after this time, he would be directly employed by the Company on a full
time basis.


                                      F-19
<PAGE>



                         TRINITY MEDICAL GROUP USA, INC.
                      (a company in the development stage)
                          NOTES TO FINANCIAL STATEMENTS
                           December 31, 2001 and 2000


Until Milestone, his compensation would be at a rate of $250 per hour but not to
exceed  60 hours per month  ($15,000).  After  Milestone,  his  salary  would be
$35,000 per month.  In August of 2000,  the terms of this  employment  agreement
were  modified to provide for a monthly  salary  amount of $25,000 as opposed to
$35,000 per month.  The  agreement  expired on December 31, 2000. On February 2,
2001,  the  Company  entered  into a new  employment  agreement  with its  Chief
Executive Officer and Director,  Dr. James Namnath,  whereby the Officer will be
paid a minimum  annual salary of $300,000.  The agreement  currently  expires on
February 1, 2003.  If the Officer is terminated  without  cause as defined,  the
minimum  salary and certain other  benefits must continue to be paid through the
remaining term of the employment agreement.  On September 1, 2001, the Company's
Chief  Executive  Officer  voluntarily  reduced  his  contractual,  annual  base
compensation by 50% to $150,000 for an indefinite period of time.

On September 5, 2000,  Trinity USA entered into an employment  agreement,  which
has an initial  term of two years,  with its Chief  Financial  Officer,  Gary E.
Wilson,  whereby he will be paid a minimum annual salary of $160,000 and receive
a  minimum  annual  bonus  equal  to 10% of his  annual  salary.  The  agreement
currently  expires on  September 5, 2003.  The Officer was also  granted  50,000
non-statutory  stock  options  with a term of 10 years at an  exercise  price of
$4.00.  The market price of the Company's common stock was equal to the exercise
price at the date of  grant.  The  Officer  will  receive  a  minimum  of 50,000
additional stock options on each  anniversary date of the employment  agreement.
If the Officer is terminated without cause as defined, the minimum salary, bonus
and certain other  benefits must continue to be paid through the remaining  term
of the employment agreement.

On June 1, 2001,  the Company  amended its  employment  agreement with its Chief
Financial Officer to provide that if during the term of the employment agreement
the  Company  signs a Letter of  Intent,  or  similar  agreement,  to merge with
another company, to sell its common stock, its assets or licensing rights it has
or will have related to the drug therapy REMUNE,  the Officer shall  immediately
receive 100,000 shares of the Company's  common stock at no cost to the Officer.
Also, in the event the Company's ownership  substantially changes, as defined by
ownership of more than 50% plus one share of common stock exchanged, the Officer
must be  compensated an additional two years of salary in one payment due at the
close of the stock transaction or Board assignment  wherein transfer of control,
and thus succession,  has occurred, or the employment agreement must be extended
for an additional three years.

On June 1, 2001, the Company entered into a two year  employment  agreement with
its  Corporate  Secretary,  whereby  the Officer  will be paid a minimum  annual
salary of $99,000.  On September 15, 2001, the Officer  voluntarily  reduced her
contractual,  annual base  compensation  to $90,000 for an indefinite  period of
time. In connection with entering into the employment agreement, the Officer was
granted  10,000  non-qualified  stock  options  with a term of 10  years  and an
exercise  price of $1.72.  The closing price of the  Company's  common stock was
equal to the exercise  price at the date of grant.  If the Officer is terminated
without  cause,  as defined,  the minimum salary and certain other benefits must
continue to be paid through the remaining term of the employment  agreement.  If
during  the term of this  employment  agreement  the  Company  signs a Letter of
Intent, or similar agreement,  to merge with another company, to sell its common
stock,  its assets or  licensing  rights it has or will have related to the drug
therapy  REMUNE,  the Officer shall  immediately  receive  100,000 shares of the
Company's  common  stock  at no cost to the  Officer.  Also,  in the  event  the
Company's ownership  substantially changes, as defined by ownership of more than
50% plus one share of common stock exchanged, the Officer must be compensated an
additional  two  years of salary  in one  payment  due at the close of the stock
transaction  or  Board  assignment   wherein  transfer  of  control,   and  thus
succession,  has occurred,  or the employment  agreement must be extended for an
additional three years.



                                      F-20
<PAGE>


                         TRINITY MEDICAL GROUP USA, INC.
                      (a company in the development stage)
                          NOTES TO FINANCIAL STATEMENTS
                           December 31, 2001 and 2000


In January 2000, the Company entered into a  non-cancelable  operating lease for
office facilities and general administrative  services in Las Vegas, Nevada. The
lease  expired in January 2001. In September  2000,  the Company  entered into a
non-cancelable  operating lease for office facilities and general administrative
services in Rancho Santa  Margarita,  California  which expired in November 2001
and  was  renewed  for  an  additional  year.  The  monthly  rental  expense  is
approximately $2,200 for this facility.  Rent expense was approximately  $25,200
and $16,700 for the years ended December 31, 2001 and 2000, respectively.


NOTE O - CONCENTRATION OF CREDIT RISK

The Company has cash deposits at U.S. banks and financial institutions which, at
times,  exceeds federally insured limits.  The Company is exposed to credit loss
for amounts in excess of insured limits in the event of  non-performance  by the
institution; however, the Company does not anticipate such non-performance.


NOTE P - STOCK ISSUED FOR SERVICES

During 1999,  the Company  issued 493,000 shares of common stock in exchange for
consulting  services provided.  The expense related to such services of $229,200
was determined based upon the fair value of the services received.


NOTE Q - INCOME TAXES

No provision for federal and state income taxes has been recorded as the Company
has incurred net  operating  losses  through  December 31, 2001. At December 31,
2001,  the Company has net  operating  loss  carryforwards  available  to offset
future taxable income for federal tax purposes of approximately $5,282,000; such
carryforwards  expire in various years through 2021. Deferred tax assets include
these net  operating  loss  carryforwards  as well as certain  expenses that are
reported  for book and tax  purposes  in  different  periods.  The  Company  has
provided  a  valuation  allowance  to  offset  all  deferred  assets  due to the
uncertainty of realization.



                                      F-21
<PAGE>



                         TRINITY MEDICAL GROUP USA, INC.
                      (a company in the development stage)
                          NOTES TO FINANCIAL STATEMENTS
                           December 31, 2001 and 2000


NOTE R - NONCASH INVESTING AND FINANCING ACTIVITIES

A supplemental  schedule to the Statement of Cash Flows of noncash investing and
financing activities is presented below:

<TABLE>
<CAPTION>
                                                            Period
                                                        from Inception         Year Ended December 31,
                                                               to         -------------------------------
                                                       December 31, 2001       2001            2000
                                                       -----------------  -------------------------------
<S>                                                      <C>               <C>              <C>
 Non-cash investing and financing activities:
   Conversion of convertible notes payable and
     related accrued interest and commissions
     to common stock                                     $   929,219       $        --      $ 929,219
                                                         ===========       ===========      =========
   Conversion of convertible promissory notes and
     related accrued interest to common stock            $   657,752       $   657,752      $      --
                                                         ===========       ===========      =========

   Directors and officers insurance premium financing    $    70,468       $    70,468      $      --
                                                         ===========       ===========      =========
   Deferred compensation forgiveness by founding
     shareholder                                         $   143,545       $   143,545      $      --
                                                         ===========       ===========      =========
   Conversion of promissory note and related
     accrued interest to common stock                    $    20,216       $    20,216      $      --
                                                         ===========       ===========      =========
   Conversion of payable to affiliates
     to common stock                                     $ 1,340,000       $ 1,340,000      $      --
                                                         ===========       ===========      =========
</TABLE>


NOTE S - SUBSEQUENT EVENT

In January 2002,  the Company  executed a Securities  Purchase  Agreement with a
private placement investment company for the purchase of $125,000 of Convertible
Debentures  due in January 2003.  The debenture  bears  interest at 9.50% and is
payable monthly.  The debenture is convertible at a price equal to the lesser of
$4.00 or 83% of the average of the three  lowest  closing  market  prices of the
Company's common stock during the 20 day period prior to the conversion.  At the
time of  conversion  of the  debenture,  the  Company  will  issue to the holder
warrants to purchase an amount of common stock equal to five times the number of
shares issued upon the conversion of the  debenture,  at which time the warrants
will be exercised by the holder.  The  warrants are  exercisable  at the related
conversion price of the debenture. The maximum ownership position in the Company
that the holder may obtain, however, is limited to 9.99% of the Company's issued
and  outstanding  common stock.  The proceeds  received will be allocated to the
debt and equity  instruments  issued based on their  relative fair values on the
date of issuance.  The Company will record a charge to interest  expense for the
intrinsic value of the beneficial  conversion  feature as calculated at the date
of issuance.  Upon  conversion of the debenture and the related  issuance of the
warrants,  a charge to interest  expense will also be recorded for the allocated
fair value of the warrants.


                                      F-22
<PAGE>

                         TRINITY MEDICAL GROUP USA, INC.
                      (a company in the development stage)
                          NOTES TO FINANCIAL STATEMENTS
                           December 31, 2001 and 2000


In accordance with the terms of the Securities Purchase  Agreement,  the Company
received  $50,000  of  the  $125,000  Convertible  Debenture  upon  filing  of a
registration  statement to register the  underlying  shares and $75,000 when the
registration  statement was declared  effective by the  Securities  and Exchange
Commission on January 11, 2002.



                                      F-23