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, 2000   Commission File Number 000-30619


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

          Florida                                           68-0438943
--------------------------------------------------------------------------------
(State or other jurisdiction of             (IRS Employer Identification Number)
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, 2000 were $0.

As of March 27, 2001 there were outstanding  11,263,038  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 5%  shareholders  are  affiliates) on March 27, 2001 based on the
closing price on such date was $2,327,279.

                       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..............................................      16

ITEM 3  - LEGAL PROCEEDINGS.......................................      16

ITEM 4 -  SUBMISSION OF MATTERS TO A VOTE OF SECURITY
          HOLDERS.................................................      16

PART II

ITEM 5 - MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
         STOCKHOLDER MATTERS......................................      17

ITEM 6 - MANAGEMENT'S DISCUSSION AND ANALYSIS
         OR PLAN OF OPERATION.....................................      19

ITEM 7 - FINANCIAL STATEMENTS.....................................      24

ITEM 8 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
         ACCOUNTING AND FINANCIAL DISCLOSURE......................      24

PART III

ITEM 9 - DIRECTORS AND OFFICERS OF THE REGISTRANT.................      25

ITEM 10- EXECUTIVE COMPENSATION...................................      29

ITEM 11- SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
         AND MANAGEMENT...........................................      30

ITEM 12- CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS...........      32

ITEM 13- EXHIBITS AND REPORTS ON FORM 8-K ........................      33

SIGNATURES........................................................      35







                                       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 merger,  the  shareholders of the  predecessor  company
owned a total of 10,093,000 out of a total of 10,226,000  outstanding  shares of
August Project.  August Project was the surviving  corporation after the merger.
Prior to the  merger,  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 the
predecessor  company 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 merger 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 merger
with August Project III Corp.

OUR LICENSED TECHNOLOGY.

         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.  In December  1999, as the
result of a reorganization,  we became a Florida corporation.  Trinity USA is an
affiliate of Trinity  Medical  Group,  Ltd., a Thailand  company.  We are a late
development  stage company with rights to market an HIV-
                                       3
<PAGE>

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.

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 the Company amended the
license and  collaboration  agreement to set the earliest  possible  termination
date to August 31, 2001. 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 fixes the price that The Immune
Response  Corporation  will charge  Trinity USA for REMUNE for a period of three
years after the date of the first  commercial  sale of REMUNE in  Thailand,  but
provides for renegotiation of mutually acceptable pricing if The Immune Response
Corporation's  manufacturing cost materially increases during that time. 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
                                       4
<PAGE>

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
may not be found or allowed in  Thailand  and we may have to ship the product to
the United  States for final  processing.  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 $11,313,000 for the
nine  months  ended  September  30,  2000  and  has an  accumulated  deficit  of
$197,843,000 as of September 30, 2000. The Immune Response  Corporation also has
working  capital  of   $31,841,000,   total  assets  of  $49,944,000  and  total
liabilities  of  $6,059,000 as of September  30, 2000.  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  Form  10-KSB,  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  trademark REMUNE(TM) 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 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 2.2%,  assuming  the total issued and  outstanding  common
stock  of  The  Immune  Response  Corporation  as of  September  30,  2000.  The
percentage  of  the  total  assets  of  our  holdings  of  The  Immune  Response
Corporation  stock will be dependent,  however,  on how much capital we raise in
our  current  or  subsequent  offerings  and the price  per share of The  Immune
Response  Corporation's  common stock at the date of our stock purchases.  After
satisfying  the  first of our two  remaining  stock  purchase  commitments,  our
investment in The Immune  Response  Corporation,  together  with our  intangible
asset acquired,  license technology,  would equal approximately 45% of our total
assets,  assuming we achieve our goal of raising approximately $11 million under
our SB-2 registration statement.

         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 $4.25 close price of their  common stock on January 30,
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 $4.25,  the payment premium to be allocated to the licensed  technology
asset would equal $7,166,659.  Since the signing of the stock purchase agreement
over 5 years ago,  however,  The
                                       5
<PAGE>

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  is expected to begin the process of  manufacturing  three
commercial  scale lots of REMUNE at its dedicated  manufacturing  facility under
Good Manufacturing Practice, or GMP, standards.  This process has been initiated
by us so that we may complete our new drug application in Thailand.  Pfizer Inc.
is currently  conducting a pivotal clinical trial, that if successful,  could be
used to  support  a U.S.  Food  and Drug  Administration,  or FDA,  or  European
application  for the  marketing  of REMUNE.  The  pivotal  clinical  trial being
conducted by Pfizer, known as Study 202, and the aforementioned commercial scale
manufacturing  of  REMUNE  are  mutually  exclusive  events.  See  also  related
discussion in the section of this Form 10-KSB entitled "Risk Factors".

         Pfizer studies  currently in progress  include Study 201 and Study 202.
Study 201 is a multicenter,  phase II double-blind  adjuvant-controlled trial to
assess the safety  and  effectiveness  of REMUNE in  patients  receiving  Highly
Active Anti-retroviral Therapy, or HAART, who have a plasma HIV-1 RNA level less
than 50 copies/mL,  and subsequently  discontinue their HAART regimen. Study 202
is a multicenter,  phase III double-blind  adjuvant-controlled trial to evaluate
the virologic and immunologic  effect of REMUNE,  in combination with HAART, for
the treatment of HIV  infection.  Pfizer  expects the results from both of these
studies in 2001.  Pfizer and The Immune Response  Corporation are also currently
conducting a clinical  trial in Spain.  In November  2000, an  independent  Data
Safety  Monitoring  Board  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.

         The remaining step needed for  submission of a new drug  application to
the Thai FDA for  commercialization  of REMUNE 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.  At the request of Trinity USA,
The Immune  Response  Corporation  has  engaged the  services of an  independent
consulting firm to perform an audit and review document compliance for adherence
to GMP standards in the manufacturing of clinical trial materials,  and to issue
an audit report as to their  findings.  The Thai FDA submission will include the
related GMP compliance  audit report,  which the consulting firm is scheduled to
initiate in March 2001 and complete in April 2001.

         Trinity USA believes that the  submission  application in Thailand will
be accepted  based upon the results of our clinical  trials in  Thailand,  which
illustrate  safety  and  efficacy.  We also  believe  that  before  the new drug
application  will be approved by the Thai FDA and we can begin selling REMUNE in
Thailand,  The Immune Response  Corporation's  dedicated  manufacturing facility
producing  commercial  scale lots must be GMP  certified by the U.S. FDA. If the
Thai authorities do not accept the consulting firm's report regarding compliance
with GMP standards of the clinical trial material, we may have to wait until the
fourth quarter of 2001 or later for GMP  certification to occur,  which is after
the date that our license  agreement  with The Immune  Response  Corporation  is
scheduled  to  terminate  if we do not have  commercial  approval  of  REMUNE in
Thailand.  To prevent the  termination  of our license  agreement,  an extension
would have to be negotiated with The Immune Response  Corporation,  allowing for
sufficient  time necessary to obtain GMP  certification  of their  manufacturing
facility and a reasonable  period of time for our  commercial  application to be
reviewed  by the Thai FDA.  Based  upon  discussions  with The  Immune  Response
Corporation,  we believe that an extension of our agreement is feasible and will
not be unreasonably withheld.

                                       6
<PAGE>

         Other requirements for commercialization are import/export  licenses by
Thai and U.S. authorities. Similar requirements were met with no difficulties in
shipment of clinical trial product and we do not expect delays or  complications
due to these requirements.

         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>                              <C>
                |                          |                               |
Thailand        |     A.  Ministry of      | 1A. Import License            |  1A.  To be submitted
                |         Public Health,   |                               |
                |         FDA              | 2A. GMP Certification         |  2A.  Item 1C to be initiated
                |                          |                               |       March  2001.  Item 1B to
                |                          |                               |       be  submitted  upon U.S.
                |                          |                               |       GMP Certification
                |                          |                               |
                |                          | 3A. New Drug Application      |  3A.  Review  of 1A and 2A and
                |                          |     Approval                  |       entire data set
----------------|--------------------------|-------------------------------|----------------------------------
United States   |     B.  U.S. FDA         | 1B. Export License            |  1B.  Requires 2B.
                |                          |                               |
                |                          | 2B. Inspection of IMNR        |  2B.  Could  occur as early as
                |                          |     factory  and  GMP         |       fourth quarter  2001
                |                          |     Certification for         |
                |                          |     REMUNE                    |
                |                          |                               |
                |     C.  The Immune       | 1C. Private GMP audit of      |  1C.  Contracted and to be
                |         Response         |     clinical trial REMUNE     |       initiated in March 2001
                |         Corporation      |     production and receipt of |
                |                          |     related Report            |
                |                          |                               |
--------------------------------------------------------------------------------------------------------------
</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, usually occurs rapidly after approvals such as item 2B and is 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, could occur as early as fourth quarter of 2001. The
submission of REMUNE to the Thai FDA for commercialization is scheduled to occur
in April 2001, after receiving item 1C.

         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 $900,000 as discussed in
the  section  of this  Form  10-KSB  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.

         In November 2000, the Thailand government approved the use of REMUNE in
a program  known as M903. Up to 10,000  individuals  in this program may receive
treatment with REMUNE  provided they have certain levels of immune system cells,
or CD4+ cells,  and viral  loads.  The  multi-site,  open label  program has the
potential to gather the most  extensive  body of data available on the effect of
REMUNE used as the only  anti-viral  therapy and used in combination  with other
drugs.  The ultimate goal of the program is to identify the most  beneficial and
cost-effective  regimen of REMUNE as a treatment for HIV. We believe the results
obtained from this program could benefit not only Thailand, but also the rest of
the world  where AIDS is rampant and  especially  for those who do not have easy
access to  anti-retroviral  drugs.  It is not a requirement of the Thai FDA that
this program be initiated and successfully completed as a condition to receiving
commercial approval to market REMUNE in Thailand.


                                       7
<PAGE>

         Independent of M903 is the application to the Thailand FDA for the full
commercial approval of REMUNE, which is being compiled by Trinity Assets Company
Limited and its  consultant  and is expected to be submitted in April 2001.  The
required scientific data confirming REMUNE's effectiveness for the full approval
has already been  collected in that our Phase II clinical  trial of 297 subjects
has been completed and it is this data, which  illustrates  safety and efficacy,
that will be submitted with our new drug  application to the Thai FDA. The basis
for  our  belief  that  the  required   scientific  data   confirming   REMUNE's
effectiveness for the full approval has already been collected is based upon the
Thai FDA new drug application requirements and the conclusions of our consulting
firm in  Thailand  who is  handling  the  Thai  FDA  submission  of the new drug
application.

         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 $500,000 and are expected to be incurred in the
fourth  quarter of 2000 and the first  quarter of 2001.  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.

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 $2,000 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.


                                       8
<PAGE>

         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  quarterly
injection  which has no  adverse  side  effects.  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 Form 10-KSB,  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
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 can be used  alone for only a few
months,  due to viral  mutation,  and the  only  practical  use is for  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, 2000,  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,  2000,  Trinity  USA has paid  Trinity  Medical  Group,  Ltd.  approximately
$669,000  for amounts  previously  billed.  Trinity USA has paid,  and will pay,
Trinity  Medical  Group,  Ltd.  for  the  costs  incurred  as  required  by  the
collaboration and supply agreement.
                                       9
<PAGE>

         The  collaboration  and supply agreement also 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
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
                                       10
<PAGE>

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 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.

         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 the offering of
shares  under our SB-2  registration  statement,  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.

         On December  24,  1999,  Mahidol  University  in  Thailand  applied for
expanded  testing of REMUNE with the Ministry of Public Health in Thailand.  The
extended  program will be coordinated by Thai  Universities and will

                                       11
<PAGE>

confirm the effectiveness of REMUNE and study the long term effects of REMUNE on
up to 10,000 HIV infected  individuals.  This extended  program of REMUNE is not
connected  to the request for full  commercial  approval to be  presented to the
Thai Food and Drug Administration. The M903 program was approved for the purpose
of clearly  identifying the regimen of treatment for infected  individuals.  The
HIV infected  population has varying degrees of virus present and state of their
immune system.  The patients'  chances of successful  treatment appear to depend
upon the  number  of  REMUNE  doses and could be  assisted  further  with  other
supportive  treatments,  including  brief  treatment with HAART.  The open ended
program has the potential to gather the most extensive body of data available on
the effect of REMUNE used as the only anti-viral therapy and used in combination
with other  drugs.  The  ultimate  goal of the program is to  identify  the most
beneficial  and  cost-effective  regimen of REMUNE as a treatment  for HIV. M903
would be used by us as a means to  accelerate  successful  treatment  when  full
commercialization occurs.

         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 Southeast
Asia is approximately 9 million HIV-1 infected  people.  REMUNE is potentially a
very cost effective  therapy for the treatment of HIV among  Thailand's  poorest
people.


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.

                                       12
<PAGE>

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 $11,313,000 for the
nine  months  ended  September  30,  2000  and  has an  accumulated  deficit  of
$197,843,000 as of September 30, 2000. The Immune Response  Corporation also has
working  capital  of   $31,841,000,   total  assets  of  $49,944,000  and  total
liabilities of $6,059,000 as of September 30, 2000.

         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.

         Neither Trinity USA, nor its affiliate, Trinity Assets Company Limited,
has  submitted  an  application  for  approval  from  the  Thai  Food  and  Drug
Administration to market, distribute and manufacture REMUNE.

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.

         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, 2001.

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  and its primary  marketing  partner,
Pfizer Inc.,  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

                                       13
<PAGE>

commercialization  of REMUNE by The Immune  Response  Corporation  and/or Pfizer
Inc. 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.

IF THE IMMUNE RESPONSE  CORPORATION  TERMINATES ITS COLLABORATION  WITH AGOURON,
THE IMMUNE RESPONSE CORPORATION MAY HAVE TO ABANDON THE DEVELOPMENT OF REMUNE.

     If The Immune Response  Corporation's  primary marketing  partner,  Agouron
Pharmaceuticals,  Inc., or Agouron, a Pfizer Inc. company, does not successfully
complete the current pivotal trial of REMUNE,  The Immune  Response  Corporation
may have to abandon REMUNE or seek additional funding.

IF THE IMMUNE RESPONSE  CORPORATION  COMPLETES ITS CLINICAL TRIALS OF REMUNE AND
BEGINS  TO  MARKET  REMUNE  IN ITS  TERRITORIES,  WE MAY NOT BE  ABLE TO  OBTAIN
SUFFICIENT QUANTITIES OF REMUNE TO SUSTAIN PROFITABLE OPERATIONS.

         The Immune  Response  Corporation  and its primary  marketing  partner,
Pfizer  Inc.,  must still  complete  clinical  trials of  REMUNE.  If The Immune
Response  Corporation and Pfizer Inc.  complete their clinical trials of REMUNE,
and begin to market  REMUNE in their  territories,  we may not be able to obtain
sufficient  quantities of REMUNE to sustain profitable operations or to meet our
long-term  business goals. In addition,  worldwide  demand for REMUNE may exceed
supply  and if the  price  of  REMUNE  increases,  we may not be able to  obtain
quantities  of REMUNE at an  affordable  price which could make it impossible to
successfully execute our business plan.

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 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.

         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.

                                       14
<PAGE>

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,  2000,  we  had  an  accumulated   deficit  of
approximately $3,073,000. We expect to continue to incur losses for at least the
next 3 quarters,  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.

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. 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
require  substantial  working  capital  to fund our  business  and  execute  our
long-term business strategy.  We currently anticipate that the net proceeds from
the  sale of our  shares  of  common  stock  covered  by our  SB-2  registration
statement,  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.

WE WILL NOT GENERATE ANY INTERNAL CASH FLOW UNTIL AT LEAST THE FOURTH QUARTER OF
2001.

         We do not currently  have any revenues and our estimates  indicate that
we  will  not  generate  internal  cash  flows  from  the  sale  of  REMUNE,  if
commercially approved in Thailand, until at least the fourth quarter of 2001. As
we do not  currently  have any  external  sources of funding,  our  inability to
successfully  implement  the  offering  of shares  under  our SB-2  registration
statement  and further  our  business  strategy  may  compromise  our ability to
achieve  our  projected  revenues.  Furthermore,  if we are  required  to  raise
additional  funding,  there is no  assurance  that we would be  successful,  the
failure of which would make it difficult to successfully implement our long-term
business strategy.


                                       15
<PAGE>

WE LACK DISINTERESTED, INDEPENDENT DIRECTORS.

         Our directors  have a direct  financial  interest in Trinity USA. While
our  management  believes  that the current  directors  will be able to exercise
their  fiduciary  duties as  directors,  there may exist  inherent  conflicts of
interest in the execution of their duties.

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  $2,100. 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  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 in 2001 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

         No matters  were  submitted  to a vote of security  holders  during the
fourth quarter ended December 31, 2000.
















                                       16
<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 and has
been traded is the Pink Sheet  Service.  Our common stock began  trading in July
2000 under the symbol  TMGU.  Firms  making a market in Trinity USA common stock
include  Knight  Trading and Salomon Grey. We intend to apply for listing of our
shares of common  stock on the Over the  Counter  Bulletin  Board after our SB-2
registration  statement  becomes  effective.  Further,  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 bid 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, 2000 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  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, 2000, there were  approximately 75 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, 2000,  there were 11,263,038
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 Pink  Sheet  Service  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  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:

                                       17
<PAGE>

         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, 2000 is as follows:

         Stock options                                          60,000

         Common stock purchase warrants                         399,350*

         Convertible promissory note                            225,000*

* Amounts  include an estimate for the common stock  purchase  warrant  (225,000
warrant  shares) and common stock issuable upon  conversion of the note (225,000
common shares) that is based upon a discounted,  average  historical share price
prior to and subsequent to the note agreement date of October 19, 2000.

         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 1,719,538 shares of common stock.
This amount  excludes the estimated  399,350  estimated  warrant  shares and the
60,000  stock  options.  The total  number of common  shares  outstanding  as of
December  31,  2000 for  which  Rule 144 would not be  available  is  10,093,000
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  merger  with  August  Project  III Corp.  on
December  31,  1999.  The  10,093,000  shares of common stock can only be resold
through a registered offering,  of which 457,500 of these shares are included in
our SB-2 registration statement.

         The amount of common  equity  that is being or has been  proposed to be
publicly  offered by Trinity  USA  through our SB-2  registration  statement  is
2,000,000 shares of common stock.













                                       18
<PAGE>

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  one  year of  business  history.  Our
estimates  indicate that we will not generate  internal cash flows from the sale
of REMUNE until at least the fourth quarter of 2001. As we do not currently have
any external  sources of funding,  our inability to  successfully  implement the
offering  of  shares  under  our SB-2  registration  statement 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 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 primarily from sale of REMUNE. Other possible sources
of revenue  or income in the 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,  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, 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 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 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 the REMUNE
to Trinity  Assets  Company  Limited  which would sell direct to patients and to
other 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
                                       19
<PAGE>

able to sell 50,000 doses per month, the shipping volume would be 50 liters,  or
about 13 gallons. When product 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  agreement  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.

         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.  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.  The Trinity Assets Company
Limited  distribution network today has five government and University hospitals
and will  add more as a result  of the  M903  program.  Trinity  Assets  Company
Limited expects to have at least 10 treatment centers identified in the next six
months.  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.

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


                                       20
<PAGE>

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 at least
the fourth  quarter of 2001.  For the year ended December 31, 2000, we have used
approximately  $1,164,000 of cash in our  operations.  This cash was provided by
financing  activities  which  included the sale or  subscription  of convertible
notes payable,  common stock units and a convertible  promissory  note. The cash
used in operations  related  primarily to officer salaries and director expenses
and to pay our  affiliates  for  expenses  incurred  related to the research and
development of our product, REMUNE. We expect to incur an additional $900,000 of
research and development expenses during 2001.

         Our current monthly operating  overhead is approximately  $75,000 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
$125,000.  Approximately $55,000 of the total $75,000 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.

         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 require  substantial  working capital to fund our
business.  We currently  anticipate  that the net proceeds  from our sale of our
shares of common stock covered by our SB-2 registration statement, 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. 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.  Currently,  Trinity USA
is attempting to secure up to $300,000 of bridge financing, through a Regulation
S  offering,  which will be used to pay  general  and  administrative  expenses,
including those associated with the filing of our SB-2  registration  statement.
We may borrow up to $100,000  from certain of our  executive  officers,  through
short-term,  unsecured notes with interest rates ranging from 10%-14% per annum,
if our Regulation S offering is unsuccessful.

         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 or Trinity Medical Group,  Ltd. for expenses related to clinical studies
and the regulatory  requirements during 2000 and 2001 could be between $1.5-$2.0
million,  of which  approximately  $669,000 has been paid  through  December 31,
2000. The amounts  currently or  prospectively  payable to Trinity Asset Company
Limited and Trinity  Medical  Group,  Ltd. are expected to be paid from the cash
proceeds to be raised  under the primary  share  offering.  The amounts  owed to
these entities have no definitive  repayment  terms. All amounts paid or payable
to Trinity Asset Company Limited or Trinity  Medical Group,  Ltd. that relate to
research and development expenses have been, or will be, paid under the terms of
the  applicable  sublicense  and supply  agreement or  collaboration  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 65%
billable research hours and 35% 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 not
required by the Thai FDA in their consideration of REMUNE for commercialization.

         Trinity USA expects to underwrite  additional  clinical studies in 2002
to determine if REMUNE is a preventative  vaccine  against HIV and that may cost
up to $3 million.  Trinity USA may also incur significant expenses, from $1.0 to
$1.5 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 in 2001 for a

                                       21
<PAGE>

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.

         If we are able to sell no more than 50% of the  shares of common  stock
being offered under our SB-2 registration  statement,  we would use $2.7 million
dollars of our net proceeds to partially  fulfill our stock purchase  commitment
with The Immune  Response  Corporation,  and we would attempt to borrow the $2.3
million  required to pay the balance of our stock purchase  commitment  from our
affiliates or non-affiliated  third parties, or finance the remaining portion of
our stock commitment with The Immune Response Corporation  directly. We have had
no discussion  with any party  regarding  this  possibility,  and we cannot give
guarantee  that we would be able to borrow funds,  if necessary,  to fulfill our
commitment to The Immune Response Corporation.

         In the event we sell less than 25% of the  common  stock  offered by us
under our SB-2 registration statement, we may be unable to pay our affiliates or
other   non-affiliated   parties   the   necessary   amounts  to   further   the
commercialization  process of REMUNE in  Thailand.  Our  inability  to pay these
parties could compromise the Thai FDA new drug application process,  which could
result in the loss of our license to market REMUNE.

         We intend  to  increase  our  employment  base in the first and  second
quarter  of 2001.  We  intend to add  clinical  study  supervisors,  engineering
consultants,  accounting  staff,  and additional  directors during the first and
second  quarter of 2001. To date,  however,  no additional  directors  have been
specifically  identified.  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 second
quarter  of  2001.  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.















                                       22
<PAGE>

RESULTS OF OPERATIONS.

         The  following  table 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.

<TABLE>
<CAPTION>

                                                                     2000 vs.
                                                                     1999 Inc.
                                           2000         1999          (Dec.)
                                       -----------   ----------     ----------
                                                    (In thousands)

Operating expenses
<S>                                    <C>             <C>          <C>
   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
                                       ===========   ==========     ==========

</TABLE>

YEAR ENDED  DECEMBER 31, 2000 COMPARED TO PERIOD FROM  INCEPTION  (SEPTEMBER 28,
1998) TO DECEMBER 31, 1999.

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.  Trinity  USA  plans  to  incur  approximately  $900,000  of
additional research and development expense related to clinical trials and other
REMUNE programs in Thailand during 2001.  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 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.  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. We plan to increase our
employment  base  further in 2001,  which  could add  approximately  $600,000 in
salaries expense.  We also expect to continue to incur significant  professional
fees related to our SB-2 registration  statement and our required  Reporting Act
filings.


                                       23
<PAGE>

Acquisition Costs

         In connection  with Trinity USA's merger 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
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.






                                       24
<PAGE>

                                    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, 2000

<TABLE>
<CAPTION>
                                                  PRESENT PRINCIPAL OCCUPATION AND
                                                  PRINCIPAL OCCUPATION DURING LAST                    DIRECTOR
NAME AND AGE                                        FIVE YEARS; OTHER ACTIVITIES                        SINCE
------------                                        ----------------------------                        -----

<S>                                  <C>                                                                <C>
Arun Churdboonchart                  Mr. Arun  Churdboonchart  joined  Trinity USA as a Director        1999
Age 59                               in  December  1999.  He is a  former  member  of  the  Thai
                                     National   Senate,   March  1996  to  March  1999,   and  a
                                     co-chairman   of  Trinity   Group,   1975  to  present:   a
                                     diversified Thai corporation that owns real estate, hotels,
                                     retail  stores,  and a  Bangkok  radio  station.  Prior  to
                                     founding the Trinity Group  companies,  Mr.  Churdboonchart
                                     established AC Machinery in April 1971,  which is currently
                                     Bangkok's largest distributor of marine engine spare parts.
                                     He has  served as the  chairman  of AC  Machinery  from its
                                     inception to the present date.

                                     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
                                     Directors  Mr.   Inthanom  John   Churdboonchart   and  Ms.
                                     Orranart Victoria  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        1999
Age 55                               and 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 founder of Trinity Medical Group, Ltd., September 1995 to
                                     present,  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, which
                                     has two medical schools, Siriraj and Ramathibodi,  with two
                                     university-affiliated hospitals. At Mahidol University, she
                                     had been the principal  investigator of dengue  hemorrhagic
                                     fever.  Her  research  efforts  have been  supported by the
                                     World Health Organization.  She has many published studies,
                                     including  findings  accepted  in the  Journal  of AIDS and
                                     Vaccine Journal.


</TABLE>
                                       25
<PAGE>

<TABLE>
<CAPTION>
                                                  PRESENT PRINCIPAL OCCUPATION AND
                                                  PRINCIPAL OCCUPATION DURING LAST                    DIRECTOR
NAME AND AGE                                        FIVE YEARS; OTHER ACTIVITIES                        SINCE
------------                                        ----------------------------                        -----
<S>                                  <C>                                                               <C>
                                     Dr.  Churdboonchart  received her doctorate in Pathobiology
                                     from Mahidol University in 1984. She 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
                                     Directors Mr. Inthanom John Churdboonchart and Ms. Orranart
                                     Victoria  Churdboonchart.  Dr. Vina  Churdboonchart  is the
                                     sister of Dr. James Namnath,  Chief Executive Officer,  and
                                     Elizabeth Namnath, Corporate Secretary.

Inthanom John Churdboonchart         Mr.  Inthanom John  Churdboonchart  graduated  from Gonzaga        1999
Age 33                               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 has been Managing Director of
                                     Trinity  Assets  Company  Limited  since  1990  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.  He
                                     is   also   the   brother   of   Ms.   Orranart    Victoria
                                     Churdboonchart, Director.

Orranart Victoria Churdboonchart     Ms.  Orranart   Victoria   Churdboonchart   graduated  from        1999
Age 30                               Chulalongkorn  University  in 1991 with a B.A.  in  Applied
                                     Arts.  Ms.   Churdboonchart  also  received  a  Masters  of
                                     Business  Administration from Pepperdine University in June
                                     1995.  She began her career in January 1996  assisting  the
                                     Vice  President  of The  Trinity  Complex  and has been the
                                     Chief  Financial  Officer of Trinity  Medical  Group,  Ltd.
                                     since  May  1996.  In  August  1998,   Ms.   Churdboonchart
                                     established  and is the managing  director of Learning Home
                                     International    Kindergarten.    As   the   founder,   she
                                     established  the  direction  and initial  curriculum of the
                                     school.    As  the   managing   director,   she   sets  the
                                     educational  standards  and  quality of the faculty and the
                                     organization  and  oversees  the  financial  matters of the
                                     school.   Ms.   Churdboonchart  joined  Trinity  USA  as  a
                                     Director    in    December    1999.    Orranart    Victoria
                                     Churdboonchart   is  the   daughter   of  Arun   and   Vina
                                     Churdboonchart  and the niece of Dr. James  Namnath,  Chief
                                     Executive  Officer,   and  Elizabeth   Namnath,   Corporate
                                     Secretary.  She is also the  sister  of Mr.  Inthanom  John
                                     Churdboonchart, Director.
</TABLE>
                                       26
<PAGE>

<TABLE>
<CAPTION>
                                                  PRESENT PRINCIPAL OCCUPATION AND
                                                  PRINCIPAL OCCUPATION DURING LAST                    DIRECTOR
NAME AND AGE                                        FIVE YEARS; OTHER ACTIVITIES                        SINCE
------------                                        ----------------------------                        -----
<S>                                  <C>                                                               <C>
Dr. James S. Namnath                 Dr. James S. Namnath joined Trinity USA as Chief  Executive        1998
Age 44                               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 is the founder,  Chairman of the
                                     Board,  and Chief Financial  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  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 Directors  Mr.  Inthanom  John  Churdboonchart
                                     and Ms. Orranart Victoria Churdboonchart.

</TABLE>

         During the fiscal year ended December 31, 2000, the Company's  Board of
Directors  held 3  meetings,  which  were  attended  by 67% 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 2000,  Trinity USA paid  Inthanom John  Churdboonchart  and Arun
Churdboonchart  $40,000  and  $30,000,   respectively,  for  their  services  as
directors.  Trinity USA pays its  directors up to $10,000 per meeting,  which is
inclusive of all associated  travel and lodging costs.  During 2000,  certain of
Trinity USA's  directors  chose not to be paid for some or all of their services
as directors.


                                       27
<PAGE>

EXECUTIVE OFFICERS AS OF DECEMBER 31, 2000

         The  executive  officers  of the  Company as of  December  31, 2000 are
listed below.  There is no  arrangement or  understanding  between any executive
officer and any other person regarding selection as an officer.

<TABLE>
<CAPTION>

NAME                          AGE     POSITION
----                          ---     --------
<S>                           <C>     <C>
Arun Churdboonchart           59      Chairman of the Board

Dr. Vina Churdboonchart       55      President and Director

Dr. James S. Namnath          44      Chief Executive Officer and Director

Gary E. Wilson                34      Chief Financial Officer, Executive Vice President - Finance, Treasurer

Elizabeth Namnath             49      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 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  Directors  Mr.  Inthanom  John  Churdboonchart  and  Ms.  Orranart
                                      Victoria Churdboonchart.
</TABLE>


                                       28
<PAGE>

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  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, 2000 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   LTIP        All
                                               Annual        Stock        Underlying   Options/    Other
Name and                  Salary     Bonus     Compen-       Compen-      Award(s)     SARs        Payouts   Compensation
Position          Year    ($)        ($)       sation($)     sation($)    ($)          (#)         ($)           ($)
--------          ----    ---        ----      ---------     ---------    ---          ---         ---           ---
<S>               <C>     <C>        <C>       <C>           <C>          <C>          <C>         <C>       <C>
Dr. James S.      2000    268,000    0              -             -            -           -          -           -
Namnath,
CEO

Gary E.           2000    160,000    29,333       4,708           -            -           -          -           -
Wilson,
CFO

</TABLE>


         The following table summarizes  certain  information as of December 31,
2000  concerning  the stock  option  grants to  Trinity  USA's  Named  Executive
Officers  made for the year  ended  December  31,  2000.  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.


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


<TABLE>
<CAPTION>
                       Number of         Percent of total
                       securities        options/SARs
                       underlying        granted to        Exercise or
 Name and              options/SARs      employees in      base price      Expiration
 Position              granted           fiscal year       ($/Sh)          Date
 ---------             -------           -----------       ------          ----
<S>                    <C>               <C>               <C>             <C>
 Gary E. Wilson        50,000            83                4.00            9/5/10
 CFO

 Gary E. Wilson        10,000            17                2.50            12/20/10
 CFO

</TABLE>





                                       29
<PAGE>

EMPLOYMENT CONTRACTS

         In December 1999 Trinity USA entered into an employment  agreement with
Dr. James S. Namnath, who is a shareholder,  the CEO and a Director,  whereby he
would serve as Trinity USA's Chief Executive  Officer.  The agreement  specified
that Dr. Namnath's  employment  would be conducted under contract  services with
his then  present  employer,  NotesETC,  Inc.  until  Trinity USA begins sale of
REMUNE,  its shares of common stock have been approved for trading in the equity
markets or Trinity USA becomes a reporting  company under U.S.  securities laws.
At that time, he would be directly employed by Trinity USA on a full time basis.
Because Trinity USA became a reporting  company in July 2000, Dr. Namnath became
employed,  as CEO,  on a full time basis.  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 one-year employment
agreement  with its Chief  Executive  Officer and director,  Dr. James  Namnath,
whereby he will be paid a minimum  annual salary of $300,000.  If Dr. Namnath is
terminated without cause, as defined in the agreement, Trinity USA must continue
to pay him the minimum salary and certain other  benefits  through the remaining
term of the employment agreement.

         On  September 5, 2000,  Trinity USA entered into a two-year  employment
agreement 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.  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.

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, 2000 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.






                                       30
<PAGE>

<TABLE>
<CAPTION>
                                           Number of Shares of Common
                                                    Stock                 Percentage of       Address of Beneficial
Name of Beneficial Owners                     Beneficially Owned             Ownership              Owners (9)
-------------------------                     ------------------             ---------              ---------
<S>                                           <C>                            <C>               <C>
Dr. James Namnath (1)                                400,000                     3.6

Dr. Vina Churdboonchart (2)                        2,250,000                    19.9

Arun Churdboonchart (3)                            1,800,000                    16.0

Inthanom Churdboonchart (4)                        1,800,000                    16.0

Orranart Churdboonchart (5)                        1,800,000                    16.0

Elizabeth Namnath (6)                                 50,000                     0.4

Gary E. Wilson (7)(8)                                 60,000                     0.5

Directors and Executive Officers as
     a Group                                       8,160,000                    72.4

(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 brother of Dr. Vina  Churdboonchart  and  Elizabeth  Namnath.  Dr. James Namnath is the uncle of Directors
     Inthanom Churdboonchart and Orranart Churdboonchart.
(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  Directors  Inthanom  and
     Orranart Churdboonchart.
(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  Directors  Inthanom  and
     Orranart Churdboonchart.
(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.
(5)  Director.  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.
(6)  Corporate   Secretary.   Elizabeth   Namnath  is  the  sister  of  Dr.   James   Namnath   and  Dr.   Vina
     Churdboonchart.   Elizabeth  Namnath  is  the  aunt  of  Directors   Inthanom   Churdboonchart   and  Orranart
     Churdboonchart.
(7)  Chief Financial Officer, Executive Vice President - Finance, Treasurer
(8)  The 60,000 shares  beneficially owned represent those shares issuable under stock options.  Mr. Wilson has the
     right to acquire a total of 30,000 shares of common stock through the exercise of these options  through March
     1, 2001 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 $16.00 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)  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.
</TABLE>


                                                        31
<PAGE>

ITEM 12 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         The  Churdboonchart  Trinity  Trust owns  approximately  64% of Trinity
USA's common stock. The  beneficiaries of The  Churdboonchart  Trinity Trust are
also the majority  owners of Trinity  Medical  Group,  Ltd.  and Trinity  Assets
Company Limited.

         The beneficiaries of The Churdboonchart Trinity Trust and the owners of
Trinity Medical Group, Ltd. and Trinity Assets Company Limited are as follows:

<TABLE>
<CAPTION>
                                                           Beneficiary
                                                          Percentage in         Ownership             Ownership
                                                               The            Percentage in         Percentage in
                                  Position/Tile with     Churdboonchart      Trinity Medical        Trinity Assets
   Named Beneficiary/Owner           Trinity USA          Trinity Trust        Group, Ltd.         Company Limited
   -----------------------           -----------          -------------        -----------         ---------------
<S>                             <C>                       <C>                  <C>                 <C>
Dr. Vina Churdboonchart         Director & President           25%                 25%                   0%
Arun Churdboonchart             Director                       25%                 25%                   0%
Inthanom Churdboonchart         Director                       25%                 25%                   49%
Orranart Churdboonchart         Director                       25%                 25%                   49%

</TABLE>


         Since inception through December 31, 2000,  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,  2000,  Trinity  USA has paid  Trinity  Medical  Group,  Ltd.  approximately
$669,000 for amounts previously billed.

         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 Form 10-KSB
entitled  "Business"  where the terms and  conditions of this agreement are more
fully presented.

         Since  inception  through  December 31, 2000,  Trinity  Assets  Company
Limited has billed  Trinity USA  approximately  $318,000 for services  under the
sublicense  and supply  agreement and  approximately  $318,000 is due to Trinity
Assets Company Limited as of that date.  Since Trinity USA's  inception  through
December 31, 2000, no amounts have been paid or loaned to Trinity Assets Company
Limited.  All of the  amounts  billed by Trinity  Assets  Company  Limited  were
related to research and development  services  provided in the fourth quarter of
2000 related to the drug REMUNE.

         Trinity USA entered  into a  collaboration  and supply  agreement  with
Trinity Medical Group,  Ltd., dated December 1, 1999.  Please see the section of
this Form 10-KSB  entitled  "Business"  where the terms and  conditions  of this
agreement are more fully presented.

         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,  "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.

         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


                                       32
<PAGE>

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 "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 merger 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 merger.

ITEM 13 - EXHIBITS AND REPORTS ON FORM 8-K

A)   EXHIBITS:

         2.1   Agreement  for the Exchange of Common Stock by and among August
               Project III Corp. (1)

         3.1   State of Florida  Articles  of  Incorporation  of August  Project
               III dated July 1997 (1)

         3.2   State  of  Florida   Certificate  of  Amendment  of  the
               Certificate of Incorporation  of  the company  dated January
               2000 (1)

         3.3   By-Laws of the company (1)

         4.1   Registration Rights Agreement (1)

         4.2   Promissory Note (1)

         4.3   Registration Rights Agreement (1)

         4.4   Form of Common Stock Purchase Warrant (1)

         4.5   Subscription Agreement (1)

         4.6   Convertible Promissory Note (1)

         4.7   Common Stock Unit Acknowledgement Letter (2)

         10.1  Sublicense and Supply Agreement  between the company and Trinity
               Assets Company Limited dated August 4, 2000 (1)

         10.2  Supplement to Sublicense  and Supply  Agreement  between the
               company and Trinity Assets  Company  Limited  dated August 5,
               2000 (1)

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


                                       33
<PAGE>

         10.4  Assignment Agreement between Trinity Medical Group, Ltd. and the
               company dated August 3, 2000 (1)

         10.5  Gary E. Wilson's Employment Agreement (1)

         10.6  Dr. James S. Namnath's Employment Contract (1)


         10.7  License and  Collaboration  Agreement  between  Trinity  Medical
               Group, Ltd. and The Immune Response Corporation dated September
               15, 1995(2)+

         10.8  Stock  Purchase  Agreement  between  Trinity  Medical Group, Ltd.
               and The Immune Response Corporation dated September 15, 1995(2)

         10.9  Great Offices, Inc./American Office Centers, L.L.C. Sublease(3)

         10.10 Dr. James S. Namnath's Employment Agreement, dated February 2,
               2001(3)

         (1)   Filed with the Company's Registration Statement on Form SB-2
               filed on October 20, 2000.
         (2)   Filed with the Company's amended Registration Statement on Form
               SB-2 filed on December 22, 2000.
         (3)   Filed with the Company's amended Registration Statement on Form
               SB-2 filed on February 13, 2001.
          +    Confidential  treatment  has been  requested  with  respect  to
               certain portions of this agreement.

B)  REPORTS ON FORM 8-K

    There were no reports filed on Form 8-K during the fourth quarter of 2000.













                                       34
<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 28, 2001               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.

SIGNATURE                              TITLE                      DATE

/s/ Gary E. Wilson                Executive V.P. - Finance,
------------------                Chief Financial Officer,
Gary E. Wilson                    Treasurer                    March 28, 2001


/s/ Dr. Vina Churdboonchart       President and Director       March 28, 2001
---------------------------
Dr. Vina Churdboonchart

/s/ Inthanom John Churdboonchart  Director                     March 28, 2001
--------------------------------
Inthanom John Churdboonchart

















                                       35
<PAGE>

                              FINANCIAL STATEMENTS

FINANCIAL  STATEMENTS AND REPORT OF INDEPENDENT  CERTIFIED PUBLIC ACCOUNTANTS AS
OF DECEMBER  31, 2000 AND 1999 AND FOR THE YEAR ENDED  DECEMBER 31, 2000 AND FOR
THE PERIODS FROM INCEPTION (SEPTEMBER 28, 1998) TO DECEMBER 31, 2000 AND 1999.

                          INDEX TO FINANCIAL STATEMENTS

                                                                          PAGE
                                                                          ----

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS.........................F-2

FINANCIAL STATEMENTS

   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, 2000 and 1999, and
the related statements of operations,  stockholders'  deficit and cash flows for
the year ended December 31, 2000 and for the periods from  inception  (September
28,  1998) to December 31, 2000 and 1999.  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, 2000 and 1999, and the results of its operations and its cash
flows for the year ended  December 31, 2000 and for the periods  from  inception
(September  28,  1998)  to  December  31,  2000 and  1999,  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 2, 2001




                                      F-2
<PAGE>
                        Trinity Medical Group USA, Inc.
                      (a company in the development stage)
                                 BALANCE SHEETS
                                  December 31,
<TABLE>
<CAPTION>
                                     ASSETS
                                                                                   2000                 1999
                                                                             ------------------   ------------------
Current Assets:
<S>                                                                                  <C>                  <C>
      Cash                                                                           $ 117,056            $ 171,485
      Subscription receivable                                                                -                9,600
      Income tax refund receivable                                                           -               18,951
      Prepaid expenses and deposits                                                      4,245                    -
                                                                             ------------------   ------------------

           Total current assets                                                        121,301              200,036
                                                                             ------------------   ------------------

Property and equipment
      Office furniture and fixtures                                                      6,088                    -
      Office equipment                                                                   4,973                    -
                                                                             ------------------   ------------------
                                                                                        11,061                    -
           Less accumulated depreciation                                                  (667)                   -
                                                                             ------------------   ------------------
                Net property and equipment                                              10,394                    -
                                                                             ------------------   ------------------

                     Total assets                                                    $ 131,695            $ 200,036
                                                                             ==================   ==================

                      LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
      Accounts payable                                                                $ 17,861             $ 10,343
      Payable to affiliates                                                            632,249                    -
      Accrued liabilities                                                              169,931               84,595
      Convertible promissory note                                                      500,000                    -
                                                                             ------------------   ------------------
           Total current liabilities                                                 1,320,041               94,938
                                                                             ------------------   ------------------

Convertible notes payable                                                                    -              732,500

Stockholders' deficit:
      Common stock, $.001 par value, 50,000,000 shares
           authorized, 11,263,038 and 10,226,000 shares
           issued and outstanding                                                       11,263               10,226
      Additional paid-in capital                                                     1,873,908              228,574
      Deficit accumulated during the development stage                              (3,073,517)            (866,202)
                                                                             ------------------   ------------------
                     Total stockholders' deficit                                    (1,188,346)            (627,402)
                                                                             ------------------   ------------------

                     Total liabilities and stockholders' deficit                     $ 131,695           $  200,036
                                                                             ==================   ==================
</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 Year Ended December 31, 2000 and the Periods from Inception
               (September 28, 1998) to December 31, 2000 and 1999
<TABLE>
<CAPTION>

                                                          Period                                                 Period
                                                      from Inception                                         from Inception
                                                            to                      Year Ended                     to
                                                    December 31, 2000           December 31, 2000          December 31, 1999
                                                  -----------------------     -----------------------    -----------------------
<S>                                                         <C>                         <C>                          <C>
Operating expenses:
     Research and development                               $ (1,301,249)               $ (1,007,249)                $ (294,000)
     General and administrative                               (1,123,894)                   (973,654)                  (150,240)
     Acquisition costs                                          (404,200)                          -                   (404,200)
                                                  -----------------------     -----------------------    -----------------------
                 Total operating expenses                     (2,829,343)                 (1,980,903)                  (848,440)
                                                  -----------------------     -----------------------    -----------------------

Other income (expense):
     Interest income                                               3,514                       1,486                      2,028
     Interest expense                                           (239,243)                   (227,898)                   (11,345)
     Loss on sale of investments                                  (8,445)                          -                     (8,445)
                                                  -----------------------     -----------------------    -----------------------
                                                                (244,174)                   (226,412)                   (17,762)
                                                  -----------------------     -----------------------    -----------------------
                 Net Loss                                   $ (3,073,517)               $ (2,207,315)                $ (866,202)
                                                  =======================     =======================    =======================

     Basic and diluted loss per common
        share                                                                                $ (0.21)                   $ (0.08)
                                                                              =======================    =======================
     Basic and diluted weighted average
        common shares outstanding                                                         10,289,970                 10,226,000
                                                                              =======================    =======================
</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, 2000
<TABLE>
<CAPTION>
                                                                                                    Deficit
                                                                                                  Accumulated
                                                         Common Stock            Additional        During the
                                                 ----------------------------     Paid-in         Development
                                                     Shares        Amount         Capital            Stage             Total
                                                 --------------  ------------  --------------   ----------------  ---------------
<S>                                                  <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)
                                                 ==============  ============  ==============   ================  ===============
</TABLE>

        The accompanying notes are an integral part of this statement.

                                      F-5
<PAGE>

                        Trinity Medical Group USA, Inc.
                      (a company in the development stage)
                            STATEMENTS OF CASH FLOWS
      For the Year Ended December 31, 2000 and the Periods from Inception
               (September 28, 1998) to December 31, 2000 and 1999
<TABLE>
<CAPTION>
                                                                      Period                                     Period
                                                                  from Inception                             from Inception
                                                                        to                Year Ended               to
                                                                December 31, 2000     December 31, 2000    December 31, 1999
                                                                -------------------   -------------------  -------------------
 Cash flows from operating activities:
<S>                                                                   <C>                   <C>                    <C>
      Net loss                                                        $ (3,073,517)         $ (2,207,315)          $ (866,202)
      Adjustments to reconcile net loss to net
        cash used in operating activities:
          Depreciation                                                         667                   667                    -
          Stock issued for services and interest payment                   385,919               156,719              229,200
          Intrinsic value of beneficial conversion                         146,552               146,552                    -
          Loss on sale of investments                                        8,445                     -                8,445
          Changes in assets and liabilities:
             Income tax refund receivable                                        -                18,951              (18,951)
             Prepaid expenses and deposits                                  (4,245)               (4,245)                   -
             Accounts payable                                               17,861                 7,518               10,343
             Payable to affiliates                                         632,249               632,249                    -
             Accrued liabilities                                           169,931                85,336               84,595
                                                                -------------------   -------------------  -------------------
                 Net cash used in operating activities                  (1,716,138)           (1,163,568)            (552,570)
                                                                -------------------   -------------------  -------------------

 Cash flows from  investing activities:
      Purchases of fixed assets                                            (11,061)              (11,061)                   -
      Purchases of investments                                             (69,330)                    -              (69,330)
      Proceeds from sale of investments                                     60,885                     -               60,885
                                                                -------------------   -------------------  -------------------
                 Net cash used in investing activities                     (19,506)              (11,061)              (8,445)
                                                                -------------------   -------------------  -------------------

 Cash flows from financing activities:
      Proceeds from issuance of convertible notes payable                  772,500                40,000              732,500
      Proceeds from issuance of convertible promissory
          note                                                             500,000               500,000                    -
      Net proceeds from sale of common stock units                         570,600               570,600                    -
      Collection of subscription receivable                                  9,600                 9,600                    -
                                                                -------------------   -------------------  -------------------

                 Net cash provided by financing activities               1,852,700             1,120,200              732,500
                                                                -------------------   -------------------  -------------------
                 Net increase (decrease) in cash and
                    cash equivalents                                       117,056               (54,429)             171,485
 Cash and cash equivalents - beginning of period                                 -               171,485                    -
                                                                -------------------   -------------------  -------------------

 Cash and cash equivalents - end of period                               $ 117,056             $ 117,056            $ 171,485
                                                                ===================   ===================  ===================

 Non-cash investing and financing activities:
      Issuance of common stock to founding shareholders
          in exchange for subscription receivable                          $ 9,600                   $ -              $ 9,600
                                                                ===================   ===================  ===================

      Conversion of convertible notes payable and
          related accrued interest and commissions
          to common stock                                                $ 929,219             $ 929,219                  $ -
                                                                ===================   ===================  ===================
</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, 2000 and 1999

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.  Although the Company was formed and incorporated
as a Delaware  Corporation  on September  28,  1998,  the Company had no capital
transactions or operating  activities of any significance  between September 28,
1998 and December 31, 1998.  Accordingly,  the Company has presented comparative
financial  statements  for the period from  inception  (September  28,  1998) to
December 31, 1999.

Trinity USA is an affiliate of Trinity Medical Group,  Ltd., a Thailand company.
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.

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.

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.

                                      F-7
<PAGE>

                         Trinity Medical Group USA, Inc.
                      (a company in the development stage)
                          NOTES TO FINANCIAL STATEMENTS
                           December 31, 2000 and 1999

Research and Development Costs

The Company  incurred  costs in the research and  development of a drug therapy,
REMUNE.  These costs were incurred for phase I and II clinical  trials 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
note 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.

Property and Equipment

Property 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 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 234,350  shares of
common stock as of December 31, 2000 because the representative share increments
would be  antidilutive.  Also excluded from the computation of basic and diluted
loss per common share were an estimated  225,000 shares of common stock issuable
as of December 31, 2000 upon the  conversion  of a convertible  promissory  note
(see Note G) 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  period.
Accordingly, actual results could differ from those estimates and assumptions.

Reclassifications

Certain  reclassifications  have been made to the 1999  financial  statements to
conform with the current period presentation.



                                      F-8
<PAGE>

                         Trinity Medical Group USA, Inc.
                      (a company in the development stage)
                          NOTES TO FINANCIAL STATEMENTS
                           December 31, 2000 and 1999

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, 2000
has accumulated losses amounting to $3,073,517.  For the year ended December 31,
2000,  and for the period from  inception  to December 31, 2000 the Company used
$1,163,568   and   $1,716,138,   respectively,   of  cash  in  its   operations.
Additionally,  the Company has a working  capital  deficit of  $1,198,740  and a
stockholders' deficit of $1,188,346 at December 31, 2000.

The Company or its affiliate,  Trinity Assets Company  Limited (see Note J), has
not yet  submitted  an  application  for an approval  from the Thai  Ministry of
Health or Food and Drug  Administration  to market,  distribute and  manufacture
REMUNE.  The remaining  step needed for submission of REMUNE to the Thai FDA for
commercialization is a product quality assurance  requirement from the U.S. Food
and Drug  Administration.  The Immune  Response  Corporation,  the  licensor and
exclusive  supplier of REMUNE,  has engaged an  independent  consulting  firm to
perform an audit of their compliance with Good Manufacturing Practice standards,
or GMP, used to produce the clinical trial  quantities and to ultimately  render
an opinion to that effect.  The Company's Thai FDA  submission  will include the
related GMP compliance  audit report,  which the consulting firm is scheduled to
initiate in March 2001 and complete in April 2001. The Company believes that the
submission  application  will be accepted with the  stipulation  that commercial
product  will have U.S. FDA Good  Manufacturing  Practice  certification  before
being sold in Thailand.  If the Thai  authorities  do not accept the  consulting
firm's report  regarding  compliance  with GMP  standards of the clinical  trial
product,  the Company may have to wait until the fourth  quarter of 2001 for GMP
certification by the U.S. FDA to occur.

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,  it
cannot be  marketed,  sold or  manufactured  in Thailand and the Company will be
unable  to  generate  any  revenue  in  Thailand  or any  other of its  licensed
countries.

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.   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.

The Company  intends to market REMUNE in the  countries  where it has the rights
through partners or affiliated firms,  which will carry out the local regulatory
requirements,  distribution,  and  product  support  (see Note J).  The  Company
intends to finance the aforementioned  activities through a secondary  offering.
The Company filed a  registration  statement on Form SB-2 on October 20, 2000 to
register  2,000,000  common shares to be sold by the Company directly or through
underwriters or dealers from time to time.

The Company's  initial  efforts have focused on the research and  development of
REMUNE (through  Trinity Medical Group,  Ltd. or Trinity Assets Company Limited,
affiliates of the Company) and securing sales and marketing  rights in Thailand.
There can be no assurance  that  management  will be  successful  in raising the
necessary  funds to  complete  the  clinical  trials and  obtain  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.

                                      F-9

<PAGE>

                         Trinity Medical Group USA, Inc.
                      (a company in the development stage)
                          NOTES TO FINANCIAL STATEMENTS
                           December 31, 2000 and 1999

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 J).

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. 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 fixes the price that The Immune Response
Corporation will charge Trinity USA for REMUNE for a period of three years after
the date of the first  commercial  sale of REMUNE in Thailand,  but provides for
renegotiation   of   mutually   acceptable   pricing  if  The  Immune   Response
Corporation's  manufacturing cost materially increases during that time. 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.

                                      F-10

<PAGE>

                         Trinity Medical Group USA, Inc.
                      (a company in the development stage)
                          NOTES TO FINANCIAL STATEMENTS
                           December 31, 2000 and 1999

NOTE E - NEW ACCOUNTING PRONOUNCEMENTS

In June 1998, the Financial  Accounting  Standards  Board (SFAS) issued SFAS No.
133, "Accounting for Derivative  Instruments and Hedging Activities" (as amended
by SFAS No. 138).  SFAS No. 133 is effective  for fiscal years  beginning  after
June 15, 2000. SFAS No. 133 requires that all derivative instruments be recorded
on the  balance  sheet  at  their  fair  value.  Changes  in the  fair  value of
derivatives are recorded each period in current earnings or other  comprehensive
income,  depending  on whether a  derivative  is  designated  as part of a hedge
transaction and, if it is, the type of hedge  transaction.  The Company does not
expect  that the  adoption  of SFAS No. 133 will have a  material  impact on its
financial statements.

In March 2000,  the  Securities  and  Exchange  Commission  (SEC)  issued  Staff
Accounting  Bulletin  (SAB) No. 101B.  SAB 101B delays the effective date of SAB
101,  "Revenue  Recognition in Financial  Statements," to the fourth quarter for
fiscal years  beginning  after December 15, 1999.  SAB 101 provides  guidance on
revenue  recognition  and the SEC staff's views on the application of accounting
principles  to  selected  revenue  recognition  issues.  The  Company  does  not
anticipate  that the  application  of this  pronouncement  will have a  material
impact on its financial statements.

In March 2000, the Financial  Accounting  Standards Board issued  Interpretation
No.  44  (FIN  44),  "Accounting  for  Certain   Transactions   involving  Stock
Compensation."  FIN 44 clarifies the application of Accounting  Principles Board
Opinion No. 25 (APB 25) and is  effective  July 1, 2000.  FIN 44  clarifies  the
definition  of  "employee"  for  purposes of applying  APB 25, the  criteria for
determining  whether a plan qualifies as a noncompensatory  plan, the accounting
consequence of various  modifications  to the terms of a previously  fixed stock
option or award, and the accounting for an exchange of stock compensation awards
in a business combination. The adoption of FIN 44 did not have a material impact
on the Company's financial statements.

NOTE F- 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 G - CONVERTIBLE PROMISSORY NOTE

On October 19, 2000,  in  connection  with a Section 4(2) exempt  offering,  the
Company  issued  a  $500,000  convertible  promissory  note  to  an  "accredited
investor".  The note  matures on October 19,  2001 and bears  interest at 8% per
annum,  with  interest  payments  due and  payable  semi-annually.  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  $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 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  filed on Form SB-2 on October 20, 2000 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


                                      F-11
<PAGE>

                         Trinity Medical Group USA, Inc.
                      (a company in the development stage)
                          NOTES TO FINANCIAL STATEMENTS
                           December 31, 2000 and 1999

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.

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  require  Trinity  USA 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
business days. We have received assurances from the note holder,  however,  that
although we have taken  longer than 5 days to respond to the SEC's  comments the
note holder will not  exercise  its default  rights,  which would  result in the
principal and accrued  interest  becoming  immediately  due. If the registration
statement is not declared effective within 120 days of the issuance of the note,
Trinity USA must pay as liquidated  damages 2% of the purchase price of the note
for each  30-day  period  until the  statement  is  effective.  Trinity USA also
granted  piggyback  registration  rights with respect to the warrant shares.  If
this  registration  statement is not declared  effective  within 120 days of the
issuance  of the note,  Trinity  USA must pay as  liquidated  damages  2% of the
purchase  price of the note  for each  30-day  period  until  the  statement  is
effective.  Therefore,  the total liquidated damages that may need to be paid if
this  registration  statement is not declared  effective  within 120 days of the
issuance  of the note is 4% of the  purchase  price of the note for each  30-day
period until the statement is effective.

Trinity USA received net proceeds of  approximately  $450,000  under this exempt
offering.  The proceeds  from this exempt  offering will be used to meet Trinity
USA's continuing  operating expense  requirements,  including the cost of filing
the aforementioned Registration Statement.

NOTE H- COMMON STOCK UNITS

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. Net proceeds to the Company were $570,600, after commissions.


                                      F-12

<PAGE>

                         Trinity Medical Group USA, Inc.
                      (a company in the development stage)
                          NOTES TO FINANCIAL STATEMENTS
                           December 31, 2000 and 1999

NOTE I- STOCK OPTIONS AND WARRANTS

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


                                                                    WEIGHTED
                                                                    AVERAGE
                                                  NUMBER OF         EXERCISE
                                                   SHARES            PRICE
------------------------------------------------------------       ----------
OPTIONS:
Outstanding at December 31, 1999                           0       $       -
Granted                                               60,000       $    3.75
Exercised                                                  0       $       -
Cancelled                                                  0       $       -
                                                ------------
Outstanding at December 31, 2000                      60,000       $    3.75
                                                ============
Options exercisable
 (vested) at December 31, 2000                        30,000       $    3.50
                                                ============

WARRANTS:
Outstanding at December 31, 1999                           0       $       -
Granted                                              174,350       $    4.00
Exercised                                                  0       $       -
Cancelled                                                  0       $       -
                                                ------------
Outstanding at December 31, 2000                     174,350       $    4.00
                                                ============

Warrants exercisable
 (vested) at December 31, 2000                       174,350       $    4.00
                                                ============

No stock options or warrants were issued during 1999.  The  non-statutory  stock
options were issued to Trinity USA's Chief  Financial  Officer (see Note K). The
exercise  price of the options  were equal to or greater  than the fair value of
the common stock at the grant dates.

The warrants  were issued in  connection  with a Common Stock Unit Offering (see
Note H),  whereby  158,500  warrants  were  issued to the  investors  and 15,850
warrants were issued to the placement agents.

Stock - Based Compensation

FASB Statement 123,  "Accounting  for  Stock-Based  Compensation,"  requires the
Company to provide  pro forma  information  regarding  net income and income 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 2000:  dividend yield of
zero  percent,  risk-free  interest  rate of 6 percent,  expected  lives of five
years, and expected volatility of 150.

                                      F-13
<PAGE>

                         Trinity Medical Group USA, Inc.
                      (a company in the development stage)
                          NOTES TO FINANCIAL STATEMENTS
                           December 31, 2000 and 1999

Under the  accounting  provisions of FASB  Statement 123, the Company's net loss
and loss per share for 2000  would have been  reduced  to the pro forma  amounts
indicated below:

Net Loss
        As reported                              $ (2,207,315)
        FAS 123 effect                              $ (96,400)
                                                 ------------
        Pro forma                                $ (2,303,715)
                                                 ============
Loss per share
        As reported - Basic and Diluted               $ (0.21)
        Pro forma - Basic and Diluted                 $ (0.22)

        Basic and Diluted Weighted
          Average Shares Outstanding               10,289,970
                                                 ============

The  following  table  summarizes  information  about stock options and warrants
outstanding at December 31, 2000:

<TABLE>
<CAPTION>

                                             OUTSTANDING                                         EXERCISABLE
                           -------------------------------------------------------   -------------------------------
                              NUMBER         WEIGHTED AVERAGE        WEIGHTED             NUMBER          WEIGHTED
            RANGE OF        OUTSTANDING         REMAINING             AVERAGE           EXERCISABLE        AVERAGE
         EXERCISE PRICES     12/31/00     CONTRACT LIFE (YEARS)   EXERCISE PRICE         12/31/00      EXERCISE PRICE
         -------------------------------------------------------------------------   -------------------------------
OPTIONS:
<S>           <C>                  <C>             <C>                 <C>                     <C>          <C>
              $4.00                50,000          9.66                $ 4.00                  20,000       $ 4.00
              $2.50                10,000         10.00                $ 2.50                  10,000       $ 2.50
         -------------------------------------------------------------------------   -------------------------------
          $2.50 - 4.00             60,000          9.72                $ 3.75                  30,000       $ 3.50
         =========================================================================   ===============================

WARRANTS:

              $4.00               174,350          1.58                $ 4.00                 174,350       $ 4.00
         =========================================================================   ===============================
</TABLE>

NOTE J- RELATED PARTY TRANSACTIONS

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. Since inception through December 31,
1999 and during the year ended December 31, 2000,  Trinity  Medical Group,  Ltd.
billed Trinity USA approximately $294,000 and $689,300,  respectively, for costs
incurred  related to the research  and  development  of the drug  REMUNE.  Since
inception through December 31, 1999 and during the year ended December 31, 2000,
Trinity  USA  paid  Trinity  Medical  Group,  Ltd.  approximately  $294,000  and
$375,000,  respectively, for amounts previously billed. As of December 31, 2000,
the Company has also recorded a liability for amounts payable to Trinity Medical
Group, Ltd. in the amount of

                                      F-14
<PAGE>

                         Trinity Medical Group USA, Inc.
                      (a company in the development stage)
                          NOTES TO FINANCIAL STATEMENTS
                           December 31, 2000 and 1999

$314,299, which is included in Payable to Affiliates on the accompanying balance
sheet. The amounts paid or payable to Trinity Medical Group,  Ltd. were incurred
by the Company under the terms and  conditions of the  Collaboration  and Supply
Agreement dated December 1, 1999.

The  Collaboration  and Supply Agreement also 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
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.

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,  an affiliate of the Company 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.  Two  of  the  Company's  directors,  Inthanom  John
Churdboonchart  and Orranart Victoria  Churdboonchart,  are beneficial owners of
the  Company's  common  stock and are  shareholders  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.

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, 1999 and during the year ended December 31,
2000,  Trinity Assets Company  Limited billed Trinity USA  approximately  $0 and
$317,950,   respectively,  for  costs  incurred  related  to  the  research  and
development of the drug REMUNE.  Since inception  through  December 31, 2000, no
amounts have been paid to Trinity Assets Company for amounts  previously billed.
As of December 31, 2000, the Company has also recorded a liability

                                      F-15
<PAGE>

                         Trinity Medical Group USA, Inc.
                      (a company in the development stage)
                          NOTES TO FINANCIAL STATEMENTS
                           December 31, 2000 and 1999

for amounts payable to Trinity Assets Company Limited in the amount of $317,950,
which is included in Payable to Affiliates on the  accompanying  balance  sheet.
The amounts  payable to Trinity  Assets  Company  Limited  were  incurred by the
Company 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  Trinity USA in connection with the terms and conditions
of the Sublicense and Supply Agreement between the two parties.

NOTE K - 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.

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  one-year  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.  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 5, 2000, the Company entered into a two year  employment  agreement
with its Chief  Financial  Officer,  whereby the Officer  will be paid a minimum
annual salary of $160,000 and receive a minimum annual bonus equal to 10% of the
annual salary amount.  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.

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 expires in November 2001.
The monthly  rental  expense is  approximately  $2,200 for this  facility.  Rent
expense was  approximately  $16,700 for the year ended  December 31, 2000 and $0
for the period from inception to December 31, 1999.

                                      F-16
<PAGE>

                         Trinity Medical Group USA, Inc.
                      (a company in the development stage)
                          NOTES TO FINANCIAL STATEMENTS
                           December 31, 2000 and 1999

NOTE L - CONCENTRATION OF CREDIT RISK

The Company has cash  deposits at U.S.  banks and financial  institutions  which
exceed federally  insured limits at December 31, 2000. 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 M - 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 N - INCOME TAXES

No provision for federal and state income taxes has been recorded as the Company
has incurred net  operating  losses  through  December 31, 2000. At December 31,
2000,  the Company has net  operating  loss  carryforwards  available  to offset
future taxable income for federal tax purposes of approximately $3,070,000; such
carryforwards  expire in various years through 2020. 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-17