Change in Directors or Principal Officers, Other Events, Financial Statemen
Item 5.02. Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers.
Effective November 15, 2007, the board of directors authorized the new CEO, William R. Dunavant to appoint Wilson W. Hendricks III as the Company's COO. Mr. Hendricks was a past Director, Asia Pacific Region, for KPMG Consulting's Communications and Content practice. The board also authorized Mr. Dunavant to enter into an employment agreement with Mr. Hendricks. A copy of his resume will be available shortly on the Company's website.
The board also authorized, at Mr. Dunavant's request, the division the Office of the President into two separate designations, "China" and "US", so that, effective immediately, Sergio Luz is now the "President-China" of the Company; the "President-US office is vacant.
Item 8.01 Other Events
The Company has reached agreements with three parties that as of November 16, 2007 immediately reduce the Company's total current liabilities by approximately $2,742,000
The three parties agreed to cancel the debt owed them pursuant to various agreements with the Company. These cancellations represent an immediate reduction from the total current liabilities.
The first such agreement was reached with Mr. James MacKay, individually, ("MacKay"). As stated in the November 14, 2007 Form 10-QSB, as of September 30, 2007 Mr. MacKay is owed $462,500 representing all compensation earned by him and expenses owed him since he joined the Company. He has agreed to cancel that amount in full.
The second such agreement was reached with The MacKay Group Limited ("MKG"). As reported in the Company's Form 8-K filed August 17, 2007, according to financial records relating to TPID Beijing,as of August 2007 MKG had advanced approximately US$1 million to or for TPID Beijing and its anti-counterfeiting/product authentication operations. Also, as
reported in the Company's August 17, 2007 Form 8-K, on August 15, 2007, MKG executed a binding term sheet to provide the Company with a line of credit of up to One Hundred Fifty Thousand Dollars (US$150,000) to help fund the initiatives and operations in China and the U.S. The terms and conditions were described in the Company's August 17, 2007 Form 8-K. MKG has agreed to cancel these amounts, approximately $1,150,000, in full.
The third such agreement was reached with Sure Trace Security Corporation ("SSTY"). As stated in the November 14, 2007 Form 10-QSB, as of September 30, 2007, On January 4, 2007, the Company entered into a Restructuring Agreement with Sure Trace Security Corporation. (the "Restructuring Agreement"). Pursuant to the Restructuring Agreement, the Company acquired a 40% ownership interest in the Chinese JV Company, held by SSTY, STA, and Chan.
Under the Restructuring Agreement, the Company agreed, in part:
To pay SSTY a royalty in the amount of 2% of its gross receipts which the Company actually receives and collects from customers outside China, Hong Kong, and Macau for a period of 2 years commencing as of January 4, 2007 the "Royalty"); and
To pay SSTY, on an interest-free basis, within 3 years of the effective date of the Restructuring Agreement $1,130,000, minus the amount of penalties and interest TPID must pay the former control block holder under the Amended Payment Agreement (the "Subject Payment").
In return for the Licensing Rights defined below, SSTY agreed to cancel its rights to receive the Royalty and to cancel in full, the total Subject Payment of $1,130,000 effective immediately.
The Company has agreed to grant SSTY, or its assignee or designee, the exclusive worldwide Licensing Rights in and to any home consumer applications of the Company's anti-counterfeiting and authentication technologies intended for self-application/use by the consumer soley on his/her personal items, including, but not limited to, S-DNA and related technologies that exist and as they may be developed in the future, in all channels of direct response and consumer distribution. Subject to the Company and SSTY reaching mutually acceptable terms in the manner and form to be mutually agreed upon by the parties within 30 days of the date of this letter agreement. SSTY shall also be granted the right to sub-license others to air and/or sell through broadcast and cable television media via telemarketing, direct mail, package inserts, syndication and any other direct response marketing media and via catalogue, internet and related electronic marketing, retail sales and any other means and the non-exclusive right to use the copyrights, trademarks, patents, service marks and trade names in connection with their sales thereof.
Item 9.01. Financial Statements, Pro forma Financial Information and Exhibits.
TPDI has not done it's run yet. It is a different company than it was a couple years ago. They now own 100% of the Chinese JV and if just one huge contract and it appears that they have some huge government contracts in the works. When revenues start coming in, the r/s will not matter and if they post huge revenues prior to the r/s and this goes back up to .18 then we would have an $18 stock. Also I don;t think you would see the typical fall in shareprice post split because of the revenues, especially if it is a 1.3 billion dollar contract.
The seminar was attended by leaders and enterprises from Beijing, Shanghai, Guangdong, Hubei, Zhejiang and Liaoning Provinces, all of whom agreed with AQSIQ?s endorsement of TPID?s technology and provided comments on implementation."
On May 11, 2007 the Registrant entered into an acquisition agreement (the "Acquisition Agreement") with Sichuan Valencia Trading Limited ("SVTL"), a Chinese limited liability company duly organized under Chinese law. A copy of the Acquisition Agreement is attached hereto as Exhibit 10.1. The reader is advised to review the agreement in its entirety.
Immediately prior to the execution of the Acquisition Agreement, SVTL owned 20% of the total interests, rights, assets, shares, and/or other ownership interests of True Product ID Technology (Beijing) Limited, formerly known as Sure Trace Technology (Beijing) Limited (the "Chinese JV Company"), a Chinese technology limited liability corporation duly formed and organized under Chinese law (the "SVTL 20% Chinese JV Interest"). Under the Acquisition Agreement, SVTL sold to the Registrant the STVL 20% Chinese JV Interest in return for 100 million restricted common shares of the Registrant. As set forth in more detail in the Acquisition Agreement and prior SEC filings, the 100 million shares was less than 50% of the approximately 209 million shares provided as a dividend to shareholders of TPID US' former parent, Sure Trace Security Corporation, which resulted in TPID US' being a separate independent entity entitled to receive approximately 42.5% of the revenues of the Chinese JV Company. With its January 2007 acquisition of 40% of the Chinese JV Company and the acquisition of the SVTL 20% Chinese JV Interest, the Registrant now owns 60% of the total ownership interests of the Chinese JV Company, allowing the Registrant to, among other things, recognize 100% of the revenues of the Chinese JV Company in accordance with applicable consolidation, revenue recognition, accounting, and other principles, guidelines and standards.
Under the Acquisition Agreement, SVTL representative, Sergio da Luz, was appointed to the Registrant's Board of Directors, and SVTL agreed to, inter alia, standard non-competition and confidentiality provisions. See Article III of the attached Acquisition Agreement.
Entry into a Material Definitive Agreement, Change in Directors or Principa
Item 1.01. Entry into a Material Definitive Agreement On March 4, 2008, we entered into a new Employment Agreement (the "Employment Agreement") with Wilson W. Hendricks, III.
Under the terms of the Employment Agreement, Mr. Hendricks will serve as our chief executive officer ("CEO") for a period of three years. As CEO, Mr. Hendricks will report solely and directly to our Board of Directors. During his term of employment, Mr. Hendricks will earn a base salary of no less than $240,000 per year. In addition to base salary, Mr. Hendricks will be entitled to receive 500,000 restricted shares of the Registrant's common stock immediately upon completion of the Registrant's 100 to 1 reverse split. Mr. Hendricks will also have an opportunity to receive an additional 500,000 restricted shares of the Registrant's common stock at the end of the first year of his contract, based on his performance of certain performance criteria which the Company's Compensation Committee will determine after execution of the contract.
Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. As set forth in the Registrant's Form 8-K filed February 19, 2008, the official Chinese documents known as the "Red Hat" documents have been filed regarding the new joint venture between the Registrant and two organizations affiliated with the State General Administration for Quality Supervision, Inspection and Quarantine of the People's Republic of China ("AQSIQ") to roll out Registrant's Chinese National Gas Tank Contract and Project with AQSIQ.
Given these developments and the impending roll out of Registrant's Chinese National Gas Tank Contract and Project with AQSIQ, on March 4, 2008, the board of directors (the "Board") of the Registrant approved the appointment of the current chief operating officer of the Registrant, Wilson Hendricks III, a past Director, Asia Pacific Region, for KPMG Consulting's Communications and Content Practice, as the Registrant's new chief executive officer ("CEO"). The Board also approved the appointment of Mr. Hendricks as a member of the Registrant's Board.
Prior to joining the Registrant as its chief operating officer in November 2007, Mr. Hendricks was a Director with BearingPoint, Inc. (formerly KPMG Consulting), where he was a member of BearingPoint's Communications and Content practice. Mr. Hendricks was a founding member of KPMG Consulting's wireless group. As a Director with KPMG Consulting's Asia Pacific Region, Mr. Hendricks was responsible for starting the KPMG Consulting's Asia Pacific Region's communications practice. Mr. Hendricks most recent BearingPoint assignment was as Operations Director for the Department of Homeland Security/Transportation Security Authorities TWIC Program. Mr. Hendricks has extensively resided and worked in China and Hong Kong.
Believing that the Company's interests in the roll-out of its Chinese National Gas Tank Contract with AQSIQ are best served by an international roll-out/implementation expert such as Hendricks now taking over the CEO position of the Registrant, the Registrant's current CEO and
chairman of the Registrant's board of directors, William R. Dunavant, has voluntarily agreed to step down as CEO and as a director of the Registrant, and will assume the position of Managing Director of Global Strategic Initiatives of the Registrant.