pronouncement permits entities to use the
fair value method to measure certain financial assets and liabilities by
electing an irrevocable option to use the fair value method at specified
election dates. After election of the option, subsequent changes in fair value
would result in the recognition of unrealized gains or losses as period costs
during the period the change occurred. SFAS No. 159 becomes effective as of the
beginning of the first fiscal year that begins after November 15, 2007, with
early adoption permitted. However, entities may not retroactively apply the
provisions of SFSS No. 159 to fiscal years preceding the date of adoption. The
adoption of this statement did not have a material effect on the Companys
financial statements.
NOTE
4 TERMINATION AGREEMENT
On May 30, 2008 the Company entered into a termination agreement (the
Termination Agreement) with Aluminum Power Inc. (API), the Companys majority
shareholder at that time which is beneficially owned and controlled by the
Companys Chairman of the Board. The Termination Agreement terminated the
Technology Acquisition Agreement and the Research and Development Agreement
entered into by the Company and API in 2001.
In consideration of the Termination Agreement, Royal HTM Group, Inc, a
company also beneficially owned and controlled by the Companys Chairman of the
Board, cancelled $400,000 of the Companys indebtedness to it. The forgiveness
of debt was accounted for as a credit to additional paid in capital on the
accompanying consolidated balance sheet as of December 31, 2008.
In
addition, the Company entered into an amendment of the Termination Agreement
dated as of July 9, 2008 (the Amendment). Pursuant to the terms of the
Amendment, API transferred 21,000,000 shares of the Companys common stock
owned by it to the Company as further consideration in connection with the
Termination Agreement, to be utilized by the Company solely in connection with
certain acquisitions that the Company is currently exploring. The Amendment
provides that in the event that the Company does not conclude any of such
acquisitions by December 31, 2008, API has the right to reacquire the Company
to reconvey such 21,000,000 shares to it for an aggregate purchase price of
$1,000. A further Amendment No. 2 to the Termination Agreement dated as of
September 24, 2008, extended the December 31, 2008 reconveyance date to
September 23, 2009. Such transaction reduced the number of the issued and
outstanding shares by 21,000,000 resulting in a total of 79,472,328 issued and
outstanding shares as of the date of this report.
NOTE 5 - RISKS AND UNCERTAINTIES
The following risk factors relating to the
Company and its business should be carefully considered:
The Companys subsidiary operates in the
Republic of Moldova.
The Companys wholly owned subsidiary,
Intercomsoft Limited, operates in the Republic of Moldova, a former member of
the Soviet Union with a historically uncertain economic and political climate.
This may have a material adverse impact on the Company and Intercomsoft.
The Company has no current source of revenue.
The Company had no source of revenue for the
year ended December 31, 2008, nor did it have any source of revenue the year
ended December 31, 2007.
The Company has commenced a legal action
against the Government of Moldova.
On or about February 11, 2006, The Company received
a notice from the Government of the Republic of Moldova advising that it did
not intend to renew the Supply Agreement which, unless renewed, expired by its
terms on April 29, 2006. The Company believes that such non-renewal notice was
not sent timely under the applicable provisions of the Supply Agreement and has
contested such non-renewal notice.
- 20 -
On September 18, 2006, Intercomsoft commenced an
action with the International Chamber of Commerce (the ICC), International
Court of Arbitration, in Geneva, Switzerland against the Ministry of Economics
of the Republic of Moldova and the Government of the Republic of Moldova (the
Moldovan Defendants) seeking damages of approximately $41 million for breach
of contract and an injunction prohibiting Moldova from producing further
essential government documents in accordance with the terms of the Supply
Agreement. The Moldova Defendants interposed counterclaims against Intercomsoft
in amounts totaling $30 million. The counterclaims contain certain allegations
of fraud and misrepresentation which the Moldovan Defendants claim occurred
during the performance of the Supply Agreement. Management of the Company and
Intercomsoft have denied any wrongdoing and are contesting the counterclaims.
The Moldovan Defendants contested the action and
objected to the ICCs jurisdiction to hear the arbitration. Hearings were held
before an ICC Arbitral Tribunal in Switzerland on the jurisdictional issue. By
Final Award of the ICC dated July 30, 2008, and subsequently communicated to
Intercomsoft by the ICC, the Arbital Tribunal constituted under the auspices of
the ICC declined jurisdiction over the arbitration. In addition, the Final
Award also assessed costs and fees against Intercomsoft in the amount of
$635,000. The Final Award relates to costs and fees of the arbitration only and
is not a determination on the merits of the action. On March 25, 2009,
Intercomsoft filed a request in the court of the first instance in Geneva
Switzerland for the appointment of an arbitration tribunal.
In addition, the Moldova Defendants have commenced
an action before the International Commercial Court of Arbitration attached to
the Chamber of Commerce and Industry of the Republic of Moldova (Moldovan
Arbitration Court), claiming that it is the proper body to administer any
arbitration between the parties. The claims asserted in the current action are
the same claims asserted by the Moldovan Defendants in the ICC arbitration.
Intercomosoft has objected to the Jurisdiction of the Moldovan Arbitration
Court. There have been no hearings in such arbitration.
There can be no assurance as to the outcome of such
arbitration proceedings and actions.
The Company has terminated its agreement with
Supercom Limited.
Pursuant to a Sales Agreement between Intercomsoft and Supercom Limited
(Supercom) dated August 25, 1995, as amended, Supercom supplied the
equipment, software, technology and consumables utilized by Intercomsoft for
the production of computerized documents under the Supply Agreement. Pursuant
to this agreement, Intercomsoft was provided with the guidance and support
required for the installation and operation of the equipment, as well as the
materials required for its maintenance.
On March 24, 2005, Intercomsoft and Supercom
entered into a Termination Agreement, terminating the Sales Agreement.
Notwithstanding, pursuant to the terms of the Termination Agreement, Supercom,
in consideration of certain payments to be made to it, agreed to continue to
supply Moldova with such equipment, consumables, software and technology during
the remaining term of the Supply Agreement, pursuant to the requirements of the
Supply Agreement. Supercom agreed not to take any action, directly or
indirectly, to interfere with Intercomsofts contractual rights with Moldova or
to, in any way, cause Moldova to terminate or not renew the Supply Agreement
and agreed to pay to Intercomsoft certain amounts specified in the Termination
Agreement as liquidated damages in the event of any breach or default by
Supercom thereunder. Except and as to the extent provided under the Termination
Agreement, Intercomsoft has no other rights to Supercoms proprietary
technology as referred to above.
The Company has no current business
activities that generate revenue.
Although the Company is currently exploring
opportunities, it is not currently engaged in any business activities that
generate revenue.
NOTE 6-SHAREHOLDERS EQUITY
The Company has authorized 130,000,000 shares of $0.01 par value common
stock, of which 79,472,328 shares were issued and outstanding as of December
31, 2008 (See Note 4).
The Company has authorized 10,000 shares of $1.00 par value shares of
Preferred Stock, none of which were issued and outstanding as of December 31, 2007.
- 21 -
NOTE 7-RELATED
PARTY TRANSACTIONS AND BALANCES
Transactions
|
|
|
|
|
|
|
|
|
|
2008
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation and related expenses to
Chairman (1)
|
|
$
|
318,000
|
|
$
|
318,000
|
|
|
|
|
|
|
|
|
|
Cash advance from Royal HTM Group (2)
|
|
|
221,000
|
|
|
106,000
|
|
|
|
|
|
|
|
|
|
Cash advances in the form of direct
payment of expenses by Royal HTM Group (2)
|
|
|
317,000
|
|
|
591,000
|
|
|
|
|
|
|
|
|
|
Business development services (2)
|
|
|
120,000
|
|
|
120,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
976,000
|
|
$
|
1,135,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Mr. Boris Birshtein serves as the Companys
Chairman of the Board of Directors (the Chairman) on a month-to-month
basis.
|
|
|
|
|
(2)
|
The Company has engaged Royal HTM Group, Inc., a
Canadian company beneficially owned and controlled by the Chairman, to render
certain business development services to the Company. Royal HTM Group has
also advanced money to the Company to fund its expenses, and as of May 30,
2008 is the Companys majority shareholder.
|
Balances
Payables
to related parties consist of the following:
|
|
|
|
|
|
|
|
|
|
DECEMBER 31,
|
|
|
|
2008
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount due to the Chairman and a company owned and controlled by such
individual.
|
|
$
|
1,846,000
|
|
$
|
1,587,000
|
|
|
|
|
|
|
|
|
|
Accrued compensation due to the Chairman.
|
|
|
889,000
|
|
|
571,000
|
|
|
|
|
|
|
|
|
|
|
|
$
|
2,735,000
|
|
$
|
2,158,000
|
|
|
|
|
|
|
|
|
|
These amounts are
non-interest bearing and due on demand.
NOTE 8-STOCK
COMPENSATION PLANS
Pursuant to
the Companys 2001 Omnibus Plan, as amended, eligible persons, as defined
therein, may be granted (a) stock options which may be designated as
nonqualified stock options or incentive stock options, (b) stock appreciation
rights, (c) restricted stock awards, (d) performance awards, or (e) other forms
of stock-based incentive awards.
The maximum
number of shares with respect to which the awards may be granted under the 2001
- 22 -
Omnibus Plan,
as amended, is 10,000,000 shares of common stock; provided, however, that such
number of shares of common stock may also be subject to adjustment, from time
to time, at the discretion of the Board of Directors of the Company. The
Company has also issued options outside of the Omnibus Plan.
A summary of
the Companys option activity is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
Inside
Plan
|
|
Outside
Plan
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
January 1, 2007
|
|
|
3,870,000
|
|
|
5,250,000
|
|
|
9,120,000
|
|
|
|
|
|
|
|
|
|
|
|
|
Granted
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercised
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cancelled,
year-end 2007
|
|
|
|
|
|
(2,250,000
|
)
|
|
(2,250,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
December 31, 2008 and 2007
|
|
|
3,870,000
|
|
|
3,000,000
|
|
|
6,870,000
|
|
|
|
|
|
|
|
|
|
|
|
|
The following
table summarizes information regarding stock options outstanding at December
31, 2008:
|
|
|
|
|
|
|
|
|
|
Exercise
Price
Range
|
|
Number of
Options
Outstanding
|
|
Weighted
Average
Remaining
Contractual Life
|
|
Weighted
Average
Exercise
Price
|
|
Number of
Shares
Exercisable
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ 0.01
|
|
6,870,000
|
|
1.1
|
|
0.01
|
|
6,870,000
|
|
NOTE 9-INCOME
TAX
The Companys
income tax benefit differs from the expected income tax benefit by applying the
U.S. Federal statutory rate of 34% to net income (loss) as follows:
|
|
|
|
|
|
|
|
|
|
DECEMBER 31,
|
|
|
|
2008
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax
(benefit) at statutory rate of 34%
|
|
$
|
(562,000
|
)
|
$
|
(450,000
|
)
|
|
|
|
|
|
|
|
|
Net
operating loss carryforward (used) not utilized
|
|
|
562,000
|
|
|
450,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
- 23 -
Deferred tax
assets and liabilities consist of:
|
|
|
|
|
|
|
|
|
|
DECEMBER 31,
|
|
|
|
2008
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred tax
assets (liabilities):
|
|
|
|
|
|
|
|
Amortization of intangibles
|
|
$
|
(4,470,000
|
)
|
$
|
(3,935,000
|
)
|
Net operating loss carryforward
|
|
|
3,358,000
|
|
|
2,796,000
|
|
Capital loss carryforward
|
|
|
2,706,000
|
|
|
2,706,000
|
|
|
|
|
|
|
|
|
|
|
|
|
1,594,000
|
|
|
1,567,000
|
|
Valuation
allowance (see Note 2)
|
|
|
(1,594,000
|
)
|
|
(1,567,000
|
)
|
|
|
|
|
|
|
|
|
|
|
$
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
NOTE
10-SEGMENT INFORMATION
The Companys
operations are classified into two reportable segments. The segments consist of
Intercomsoft, which produced computerized identification documents, and general
and administrative expenses incurred for corporate purposes.
YEAR ENDED
DECEMBER 31, 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
Intercomsoft
|
|
Corporate and
Administrative
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
|
|
|
662,000
|
|
|
990,000
|
|
|
1,652,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
(662,000
|
)
|
$
|
(990,000
|
)
|
$
|
(1,652,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
YEAR ENDED
DECEMBER 31, 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Intercomsoft
|
|
Corporate and
Administrative
|
|
Total
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
|
|
|
(34,000
|
)
|
|
1,233,000
|
|
|
1,267,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
(34,000
|
)
|
$
|
(1,233,000
|
)
|
$
|
(1,267,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
- 24 -
|
|
I
TEM 8.
|
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
|
None.
|
|
I
TEM 8 A.
|
CONTROLS AND PROCEDURES
|
Evaluation of Disclosure Controls and
Procedures
As
of the end of the period covered by this Annual Report, the Company carried
out, under the supervision and with the participation of the Companys
management, including its Chief Executive Officer and Chief Financial Officer,
an evaluation of the effectiveness of the design and operation of the Companys
disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e)
under the Securities Exchange Act of 1934) in ensuring that information
required to be disclosed by the Company in its reports is recorded, processed,
summarized and reported within the required time periods. In carrying out that
evaluation, management identified a material weakness (as defined in Public
Company Accounting Oversight Board Standard No. 2) in our internal control over
financial reporting regarding a lack of adequate segregation of duties.
Accordingly, based on their evaluation of our disclosure controls and
procedures as of December 31, 2008, the Companys Chief Executive Officer and
its Chief Financial Officer have concluded that, as of that date, the Companys
controls and procedures were not effective for the purposes described above.
There
was no change in the Companys internal control over financial reporting (as
defined in Rule 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934)
during the period ended December 31, 2008 that has materially affected or is
reasonably likely to materially affect the Companys internal control over
financial reporting.
Managements Report on Internal Control over
Financial Reporting
Management
of the Company is responsible for establishing and maintaining adequate
internal control over financial reporting as defined in Rule 13a-15(f) under
the Securities Exchange Act of 1934. We have assessed the effectiveness of
those internal controls as of December 31, 2007, using the Committee of
Sponsoring Organizations of the Treadway Commission (COSO)
Internal Control Intergrated Framework
as a basis for our assessment.
Because
of inherent limitations, internal control over financial reporting may not
prevent or detect misstatements. Projections of any evaluation of effectiveness
to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies
and procedures may deteriorate. All internal control systems, no matter how
well designed, have inherent limitations. Therefore, even those systems
determined to be effective can provide only reasonable assurance with respect
to financial statement preparation and presentation.
- 25 -
A
material weakness in internal controls is a deficiency in internal control, or
combination of control deficiencies, that adversely affects the Companys
ability to initiate, authorize, record, process, or report external financial
data reliably in accordance with accounting principles generally accepted in
the United States of America such that there is more than a remote likelihood
that a material misstatement of the Companys annual or interim financial
statements that is more than inconsequential will not be prevented or detected.
In the course of making our assessment of the effectiveness of internal
controls over financial reporting, we identified a material weakness in our
internal control over financial reporting. This material weakness consisted of
inadequate staffing and supervision within the bookkeeping and accounting
operations of our company. The relatively small number of individuals who have
bookkeeping and accounting functions prevents us from segregating duties within
our internal control system. The inadequate segregation of duties is a weakness
because it could lead to the untimely identification and resolution of
accounting and disclosure matters or could lead to a failure to perform timely
and effective reviews.
As
we are not aware of any instance in which the Company failed to identify or
resolve a disclosure matter or failed to perform a timely and effective review,
we determined that the addition of personnel to our bookkeeping and accounting
operations is not an efficient use of our very limited resources at this time
and not in the interest of our shareholders.
This
Annual Report does not include an attestation report of the Companys
registered public accounting firm regarding internal control over financial
reporting. Managements report was not subject to attestation by the Companys
registered public accounting firm pursuant to temporary rules of the Securities
and Exchange Commission that permit the Company to provide only managements
report in this Annual Report.
P
ART III
|
|
I
TEM 9.
|
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
|
Directors and Executive Officers
Our
officers are elected by, and serve at the pleasure of, our Board of Directors.
The names and ages of our directors and executive officers as of December 31,
2008, are set forth below. Our By-laws provide for not less than three and not
more than fifteen directors.
|
|
|
|
|
|
NAME
|
|
|
AGE
|
|
POSITION WITH COMPANY
|
|
|
|
|
|
|
|
|
|
|
|
Boris
Birshtein
|
|
62
|
|
Chairman of
the Board of Directors
|
|
|
|
|
|
Yuri
Benenson
|
|
55
|
|
Director;
Chief Executive Officer
|
|
|
|
|
|
Walter J.
Perchal
|
|
58
|
|
Director
|
|
|
|
|
|
Jack
Braverman
|
|
40
|
|
Director;
Chief Financial Officer
|
- 26 -
Background of Executive Officers and
Directors
Boris Birshtein
has served as our Chairman of the Board of Directors since January 1998. From
1994 to May 2006, Mr. Birshtein served as the Chairman of the Board of
Directors of Banca Commercialia pe Actiuni Export Import, a former subsidiary
of ours, and since 1997 he has been the Chairman of the Board and principal
shareholder of Royal HTM Group, Inc., our majority shareholder as of May 30,
2008. Since 1999, Mr. Birshtein has served as the Chairman of Eontech Group
Inc., of which he is the principal shareholder and of Aluminum-Power Inc. Since
1996 Mr. Birshtein has served as the Chairman of World Assets (Media) Inc. Mr.
Birshtein holds PhDs in Philosophy and Economics.
Yuri Benenson
has
served as a member of our Board of Directors and our Chief Executive Officer
since May 2003. From 1997 to May 2006 Mr. Benenson served as a member of the
Board of Directors of Banca Commerciala pe Actiuni Export Import Bank and
since 1997 as Vice President of EXIM Asint, S.A., both of which are our former
subsidiaries, and from January 2004 has served as a member of the management
team of Intercomsoft Limited, our subsidiary. Mr. Benenson holds a masters
degree in Finance and Economics from Vilnius State University.
Jack Braverman
has
served as a member of our Board of Directors and our Chief Financial Officer
since January 2004. Mr. Braverman has worked with Mr. Birshtein, his uncle and
our Chairman of the Board, in a number of capacities since 1997, including his
service as President of Eontech Group, Inc. from July 1999 to date, President
of Royal HTM Group, Inc., our majority shareholder, from December 1997 to April
2001 and as Vice President and Chief Financial Officer of Royal HTM Group, Inc.
from April 2001 to date, as well as serving as Vice President of Aluminum-Power
Inc. since January 2001. Mr. Braverman holds a BA in Economics from the
University of Western Ontario.
Walter J. Perchal
has served as member of our Board of Directors since February 2001. Since 1997,
Mr. Perchal has served as the President and Chief Executive Officer of IC Inc.,
a consulting firm, which provides consulting services in North America, Europe
and Asia. For the past 27 years, Mr. Perchal has served as an adjunct Professor
at York University in Toronto, Canada.
Section 16(a) Beneficial Ownership Reporting
Compliance
We
are not aware of any person who was a director, officer, or beneficial owner of
more than ten percent (10%) of our common stock and who failed to file reports
required by Section 16(a) of the Securities Exchange Act of 1934 in a timely
manner.
- 27 -
|
|
I
TEM 10.
|
EXECUTIVE COMPENSATION
|
For
the years ended December 31, 2008 and 2007, the following individuals received
the following compensation for services rendered to us. See Employment
Agreements for a description of compensation arrangements entered into by us
with certain of our executive officers and directors.
Summary Compensation Table
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annual
Compensation
|
|
Long
Term Compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AWARDS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
& Principal Position
|
|
Year
|
|
Salary
($)
|
|
Other
Annual
Compensation
($)
|
|
Securities
Underlying
Options/ SARs
|
|
All
Other
Compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Boris
Birshtein
|
|
2008
|
|
$
|
276,570
|
(1)
|
$
|
72,144
|
(2)
|
|
|
|
|
|
Chairman
of the Board
|
|
2007
|
|
$
|
276,570
|
(1)
|
$
|
72,162
|
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Yuri
Benenson
|
|
2008
|
|
$
|
|
|
|
84,300
|
(4)
|
|
|
|
|
|
Chief
Executive Officer
|
|
2007
|
|
$
|
|
|
|
104,216
|
(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jack
Braverman
|
|
2008
|
|
$
|
90,000
|
(5)
|
$
|
21,216
|
(7)
|
|
|
|
|
|
Chief
Financial Officer
|
|
2007
|
|
$
|
94,416
|
(6)
|
$
|
17,559
|
(7)
|
|
|
|
|
|
|
|
|
(1)
|
Such
amount was accrued but not paid to Mr. Birshtein.
|
|
|
(2)
|
Such
amount represents a monthly expense allowance $1,800 totaling $21,600
annually, all of which was accrued but not paid, and $50,544 for auto
lease and insurance premiums paid on behalf of Mr. Birshtein
|
|
|
(3)
|
Such
amount represents a monthly expense allowance $1,800 totaling $21,600
annually, all of which was accrued but not paid, and $50,562 for auto
lease and insurance premiums paid on behalf of Mr. Birshtein
|
|
|
(4)
|
Such
amount was paid by Royal HTM Group, Inc., on behalf of Trimol Group, Inc.
to Galant International Investments Ltd, an entity in which Mr. Benenson
is an officer.
|
|
|
(5)
|
Such
amount was accrued but not paid to
Mr.
Braverman
|
|
|
(6)
|
Of such
amount $25,116 was paid to Mr. Braverman and $69,300 was accrued and remains
unpaid.
|
|
|
(7)
|
Such
amounts represent auto lease and insurance premiums paid on behalf of
Mr. Braverman.
|
Options/SAR Grants in Last Fiscal Year to
Officers and Directors
In
2008 there were no options granted pursuant to the 2001 Omnibus Plan, as
amended and no outstanding options were exercised during 2008.
Compensation of Directors
All
of our outside Directors are entitled to receive an attendance fee of $2,000
for each meeting of the Board of Directors attended up to a maximum of $8,000
for any 12-month period. During the fiscal years ended December 31, 2008 and
2007, there were
- 28 -
no such
payments made to any outside Director.
Employment Agreements
The
employment agreement with Boris Birshtein, our Chairman of the Board of
Directors, expired on December 31, 2003 and was not renewed. Thereafter,
pursuant to a letter agreement dated March 10, 2004 between he and us, Mr.
Birshtein agreed to continue to serve as our Chairman of the Board of Directors
on a month-to-month basis on substantially the same terms as were provided for
in his prior employment agreement including, among other things, a monthly
consulting fee of $23,047 and a monthly expense allowance of $1,800. We were
unable to make any payments to Mr. Birshtein in year 2008 or year 2007 and all
of such amounts due to him have been accrued.
2001 Omnibus Plan, As Amended
In
January 2001, our Board of Directors adopted the 2001 Omnibus Plan, which
became effective in February 2001 after stockholder approval. In June 2001, our
Board of Directors approved a resolution to increase the maximum aggregate
number of shares that may be issued under the 2001 Omnibus Plan. Thereafter,
the stockholders approved the increase of the authorized number of shares
issuable pursuant to the 2001 Omnibus Plan from 4,000,000 shares to 10,000,000
shares. This amendment became effective in August 2001.
Summary of 2001
Omnibus Plan, as amended
Qualified
directors, officers, employees, consultants and advisors of ours and our
subsidiaries are eligible to receive (a) stock options (Options), which may
be designated as nonqualified stock options (NQSOs) or incentive stock
options (ISOs), (b) stock appreciation rights (SARs), (c) restricted stock
awards (Restricted Stock), (d) performance awards (Performance Awards) or
(e) other forms of stock-based incentive awards (collectively, the Awards). A
director, officer, employee, consultant or advisor who has been granted an
Option is referred to herein as an Optionee and a director, officer,
employee, consultant or advisor who has been granted any other type of Award is
referred to herein as a Participant.
The
Omnibus Committee administers the 2001 Omnibus Plan, as amended, and has full
discretion and exclusive power to (a) select the directors, officers,
employees, consultants and advisors who will participate in the 2001 Omnibus
Plan, as amended, and grant Awards to such directors, officers, employees,
consultants and advisors, (b) determine the time at which such Awards shall be
granted and the terms and conditions with respect to such Awards to the extent
not inconsistent with the provisions of the 2001 Omnibus Plan, as amended, and
(c) resolve all questions relating to the administration of the 2001 Omnibus
Plan, as amended. Members of the Omnibus Committee receive no compensation for
their services in connection with the administration of the 2001 Omnibus Plan,
as amended.
The
Omnibus Committee may grant NQSOs or ISOs that are evidenced by stock option
agreements. A NQSO is a right to purchase a specific number of shares of common
stock during such time as the Omnibus Committee may determine, not to
- 29 -
exceed ten
years, at a price determined by the Omnibus Committee that, unless deemed
otherwise by the Omnibus Committee, is not less than the fair market value of
the common stock on the date the NQSO is granted. An ISO is an Option that
meets the requirements of Section 422 of the Internal Revenue Code of 1986, as
amended (the Code). No ISOs may be granted under the 2001 Omnibus Plan, as
amended, to an employee who owns more than 10% of our outstanding voting stock
(Ten Percent Stockholder) unless the option price is at least 110% of the
fair market value of the common stock on the date of grant and the ISO is not
exercisable more than five years after it is granted. In the case of an
employee who is not a Ten Percent Stockholder, no ISO may be exercisable more
than ten years after the date the ISO is granted and the exercise price of the
ISO shall not be less than the fair market value of the common stock on the
date the ISO is granted. Further, no employee may be granted ISOs that first
become exercisable during a calendar year for the purchase of common stock with
an aggregate fair market value (determined on the date of grant of each ISO) in
excess of $100,000. An ISO (or any installment thereof) counts against the
annual limitation only in the year it first becomes exercisable.
The
exercise price of the common stock subject to a NQSO or ISO may be paid in cash
or, at the discretion of the Omnibus Committee, by a promissory note or by the
tender of common stock owned by the Option holder or through a combination
thereof. The Omnibus Committee may provide for the exercise of Options in
installments and upon such terms, conditions and restrictions as it may
determine.
An
SAR is a right granted to a Participant to receive, upon surrender of the
right, but without payment, an amount payable in cash. The amount payable with
respect to each SAR shall be based on the excess, if any, of the fair market
value of a share of common stock on the exercise date over the exercise price
of the SAR, which will not be less than the fair market value of the common
stock on the date the SAR is granted. In the case of an SAR granted in tandem
with an ISO to an employee who is a Ten Percent Stockholder, the exercise price
shall not be less than 110% of the fair market value of a share of common stock
on the date the SAR is granted.
Restricted
Stock is common stock that is issued to a Participant at a price determined by
the Omnibus Committee, which price per share may not be less than the par value
of the common stock, and is subject to restrictions on transfer and/or such
other restrictions on incidents of ownership as the Omnibus Committee may
determine.
A
Performance Award granted under the 2001 Omnibus Plan, as amended (a) may be
denominated or payable to the Participant in cash, common stock (including,
without limitation, Restricted Stock), other securities or other Awards and (b)
shall confer on the Participant the right to receive payments, in whole or in
part, upon the achievement of such performance goals during such performance
periods as the Omnibus Committee shall establish. Subject to the terms of the
2001 Omnibus Plan, as amended, and any applicable Award agreement, the
performance goals to be achieved during any performance period, the length of
any performance period, the amount of any Performance Award granted and the
amount of any payment or transfer to be made pursuant to any Performance Award
shall be determined by the Omnibus Committee.
The
Omnibus Committee may grant Awards under the 2001 Omnibus Plan, as amended,
that provide the Participants with the right to purchase common stock or that
are valued by reference to the fair market value of the common stock
(including, but not
- 30 -
limited to,
phantom securities or dividend equivalents). Such Awards shall be in a form
determined by the Omnibus Committee (and may include terms contingent upon a
change of control of the Company); provided that such Awards shall not be
inconsistent with the terms and purposes of the 2001 Omnibus Plan, as amended.
The
Omnibus Committee determines the price of each such Award and may accept any
lawful consideration.
The
Omnibus Committee may at any time, amend, suspend or terminate the 2001 Omnibus
Plan, as amended; provided, however, that (a) no change in any Awards
previously granted may be made without the consent of the holder thereof and
(b) no amendment (other than an amendment authorized to reflect any merger,
consolidation, reorganization or the like to which we are a party or any
reclassification, stock split, combination of shares or the like) may be made
increasing the aggregate number of shares of the common stock with respect to
which Awards may be granted or changing the class of persons eligible to
receive Awards, without the approval of the holders of a majority of our
outstanding voting shares.
In
the event a Change in Control (as defined in the 2001 Omnibus Plan, as amended)
occurs, then, notwithstanding any provision of the 2001 Omnibus Plan, as
amended, or of any provisions of any Award agreements entered into between any
Optionee or Participant and us to the contrary, all Awards that have not
expired and which are then held by any Optionee or Participant (or the person
or persons to whom any deceased Optionees or Participants rights have been
transferred) shall, as of the date of such Change of Control, become fully and
immediately vested and exercisable and may be exercised for the remaining term
of such Awards.
If
we became a party to any merger, consolidation, reorganization or the like, the
Omnibus Committee has the power to substitute new Awards or have the Awards be
assumed by another corporation. In the event of a reclassification, stock
split, combination of shares or the like, the Omnibus Committee shall
conclusively determine the appropriate adjustments.
No
Award granted under the 2001 Omnibus Plan, as amended, may be sold, pledged,
assigned or transferred other than by will or the laws of descent and
distribution, and except in the case of the death or disability of an Optionee
or a Participant, Awards shall be exercisable during the lifetime of the
Optionee or Participant only by that individual.
No
Awards may be granted under the 2001 Omnibus Plan, as amended, on or after
January 2, 2011, but Awards granted prior to such date may be exercised in
accordance with their terms.
As
of December 31, 2008, of the 10,000,000 shares of our common stock reserved for
issuance under the 2001 Omnibus Plan, as amended, options to acquire 3,870,000
shares of our common stock were outstanding.
- 31 -
|
|
ITEM 11.
|
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
|
The
following table sets forth information concerning the beneficial ownership of
shares of our common stock with respect to stockholders who were known by us to
be the beneficial owners of more than 5% of our common stock as of December 31,
2008, and our officers and directors, individually and as a group. Unless
otherwise indicated, the beneficial owner has sole voting and investment power
with respect to such shares of common stock.
Beneficial
ownership is determined in accordance with the rules of the Securities and
Exchange Commission and generally includes voting or investment power with
respect to securities. In accordance with the Securities and Exchange
Commission rules, shares of our common stock which may be acquired upon
exercise of stock options or warrants which are currently exercisable or which
become exercisable within 60 days of the date of the table are deemed beneficially
owned by the holders of such securities. Subject to community property laws,
where applicable, the persons or entities named in the table below have sole
voting and investment power with respect to all shares of our common stock
indicated as beneficially owned by them.
|
|
|
|
|
|
|
|
|
|
As of December 31, 2008
(1)
|
|
|
NAME OF BENEFICIAL OWNER
|
|
AMOUNT AND NATURE OF
BENEFICIAL OWNER
|
|
PERCENT OF CLASS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Boris
Birshtein
1285 Avenue of the
Americas, 35
th
Floor
New York, New York, 10019
|
|
56,922,000
|
(2)
|
|
66
|
%
|
|
|
|
|
|
|
|
|
|
Royal HTM
Group
87 Scollard Street
Toronto, Ontario M5R 1G4
|
|
48,275,000
|
(3)
|
|
56
|
%
|
|
|
|
|
|
|
|
|
|
Yuri
Benenson
1285 Avenue of the
Americas, 35
th
Floor
New York, NY10019
|
|
1,000,000
|
|
|
1.16
|
%
|
|
|
|
|
|
|
|
|
|
Jack
Braverman
1285 Avenue of the
Americas, 35
th
Floor
New York, NY 10019
|
|
1,500,000
|
(4)
|
|
1.74
|
%
|
|
|
|
|
|
|
|
|
|
Walter J.
Perchal
1285 Avenue of the Americas, 35
th
Floor
New York, New York, 10019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
P.L.T.
International, Inc
87 Scollard Street
Toronto, Ontario M5R 1G4
|
|
8,225,000
|
|
|
9.5
|
%
|
|
|
|
|
|
|
|
|
|
All Executive Officers and
Directors as a Group (4 persons) (5)
|
|
59,422,000
|
|
|
68.82
|
%
|
|
|
|
|
|
|
|
|
|
(1)
|
Based on a total of
86,342,328 shares of common stock, which includes: (i) 79,472,328 shares of
common stock issued and outstanding as of December 31, 2008; (ii) options to
purchase 3,870,000 shares of our common stock granted pursuant to the 2001
Omnibus
|
- 32 -
|
|
|
|
|
Plan, as amended; and,
(iii) options to purchase 3,000,000 shares of our common stock granted
outside of the 2001 Omnibus Plan, as amended.
|
|
|
|
|
(2)
|
Represents 4,737,000
shares of our common stock owned directly by Mr. Birshtein; 3,910,000 shares
of our common stock owned by Magnum Associates, Inc., of which Mr. Birshtein
is the sole shareholder; and, 48,275,000 shares of our common stock owned by
Royal HTM Group, of which Mr. Birshtein is an indirect owner.
|
|
|
|
|
(3)
|
Royal HTM Group is our
majority shareholder. Mr. Birshetin, is an indirect owner of Royal HTM Group.
|
|
|
|
|
(4)
|
Consists of 1,000,000
shares of our common stock and an option granted on November 2, 2004, under
our 2001 Omnibus Plan, as amended, to purchase up to 500,000 shares of our
common stock. Such option has a term of five years and an exercise price of
$0.01 per share.
|
|
|
|
|
(5)
|
Includes Messrs.
Birshtein, Benenson, Braverman and Perchal.
|
|
|
ITEM 12.
|
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
|
During
each of 2008 and 2007, we accrued $276,000 in compensation and $21,600 in
expenses due to Mr. Boris Birshtein related to his performance as the Chairman
of the Board.
During
2005 we engaged Royal HTM Group, Inc., a Canadian company beneficially owned
and controlled by our Chairman of the Board, to render certain business
development services to us. During each of 2008 and 2007 we accrued $120,000
for such services. As of May 2008, Royal HTM Group became our majority
shareholder.
During
2008 Royal HTM Group lent us $221,000 to cover on-going operating expenses and
advanced $317,000 on our behalf, and in 2007 lent us $106,000 to cover our
operating expenses and advanced $591,000 on our behalf. As of December 31,
2008, we owe Royal HTM Group approximately $1,826,000. Such amount is
non-interest bearing and is due on demand.
|
|
ITEM 13.
|
PRINCIPAL ACCOUNTANT FEES AND SERVICES
|
Paritz
& Company, P.A. (Paritz) serves as our principal accountant. In 2008,
Paritz billed us $25,500 for audit and review fees and $3,250 for tax return
preparation and related fees.
Our
Board of Directors approves the engagement of an accountant to render all audit
and non-audit services prior to the engagement of the accountant based upon a
proposal by the accountant of estimated fees and scope of the engagement. Our
Board of Directors has received the written disclosure and the letter from
Paritz required by Independence Standards Board Standard No. 1, as currently in
effect, and has discussed with Paritz their independence.
The
exhibits listed below are filed as part of this Annual Report.
- 33 -
|
|
|
Exhibit
|
|
Document
|
|
|
|
|
|
|
3.1
|
|
Articles of
Incorporation (incorporated by reference to the Registration Statement on
Form 10-SB filed with the Securities and Exchange Commission under File No.
000-28144).
|
|
|
|
3.2
|
|
By-laws (incorporated
by reference to the Registration Statement on Form 10-SB filed with the
Securities and Exchange Commission under File No. 28144).
|
|
|
|
4
|
|
January 24,
2001 Definitive Information Statement filed with the Securities and Exchange
Commission (incorporated herein by reference).
|
|
|
|
4.1
|
|
July 19,
2001 Information Statement filed with the Securities and Exchange Commission
(incorporated herein by reference).
|
|
|
|
10.1
|
|
January 11,
2001 Technology Acquisition Agreement between Trimol Group, Inc. and
Aluminum-Power Inc. (incorporated herein by reference to the Definitive
Information Statement filed with the Securities and Exchange Commission).
|
|
|
|
10.2
|
|
January 11,
2001 License Agreement between Trimol Group, Inc. and Aluminum-Power Inc.
(incorporated herein by reference to the Definitive Information Statement
filed with the Securities and Exchange Commission).
|
|
|
|
10.3
|
|
July 1, 2001
Research & Development Agreement between Aluminum-Power Inc. and Trimol
Group, Inc. (incorporated herein by reference to Form 10-KSB filed with the
Securities and Exchange Commission for the year ended December 31, 2001).
|
|
|
|
10.4
|
|
March 24,
2005 Termination Agreement between Intercomsoft Limited and Supercom Limited
(incorporated herein by reference to Form 8-K filed with the Securities and
Exchange Commission on March 28, 2005).
|
|
|
|
10.5
|
|
May 31, 2008
Termination Agreement by and between Trimol Group, Inc. and Aluminum Power,
Inc. (filed as an exhibit to Current Report Form 8-K as filed with the
Securities and Exchange Commission on June 3, 2008 and incorporated herein by
reference thereto).
|
|
|
|
10.6
|
|
July 9, 2008
Amendment No. 1 To Termination Agreement by and between Trimol Group, Inc.
and Aluminum Power Inc. (filed as an exhibit to Current Report Form 8-K as
filed with the Securities and Exchange Commission on July 16, 2008 and
incorporated herein by reference thereto).
|
|
|
|
21
|
|
Subsidiary of the Registrant.
|
- 34 -
- 35 -
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, this 15
th
day of April,
2009.
|
|
TRIMOL GROUP, INC.
|
|
|
By:
|
/s/ Yuri
Benenson
|
|
|
Name:
|
Yuri
Benenson
|
Title:
|
Chief
Executive Officer and Director
|
|
|
By:
|
/s/ Jack
Braverman
|
|
|
Name:
|
Jack
Braverman
|
Title:
|
Chief
Financial Officer and Director
|
In
accordance
with the Exchange Act, this report has been signed below by the following
persons on behalf of the registrant and in the capacities and on the dates
indicated.
|
|
|
By:
|
/s/ Boris
Birshtein
|
Date: April
15, 2009
|
|
|
|
Name:
|
Boris
Birshtein
|
|
Title:
|
Chairman of
the Board and Director
|
|
|
|
|
By:
|
/s/ Yuri
Benenson
|
Date: April 15, 2009
|
|
|
|
Name
|
Yuri
Benenson
|
|
Titles:
|
Chief
Executive Officer and Director
|
|
|
|
|
By:
|
/s/ Jack
Braverman
|
Date: April
15, 2009
|
|
|
|
Name:
|
Jack
Braverman
|
|
Title:
|
Chief
Financial Officer and Director
|
|
|
|
|
By:
|
/s/ Walter
Perchal
|
Date: April
15, 2009
|
|
|
|
Name:
|
Walter
Perchal
|
|
Title:
|
Director
|
|
- 36 -