U.S.
SECURITIES AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-Q
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d)
OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR
THE QUARTERLY PERIOD ENDED
Commission
file number: 000-26971
|
TRIMOL
GROUP, INC.
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|
|
(Exact
Name of Small Business Issuer as it appears in its
charter)
|
|
DELAWARE
(State or
other Jurisdiction of Incorporation or Organization)
13-3859706
(I.R.S.
Employer Identification No.)
1285
Avenue of the Americas, 35
th
Floor
New York, New York
10019
(Address
of principal executive offices)
212.
554.4394
(Issuer’s
Telephone Number)
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 for
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
T
No
£
Indicate
by check mark whether the Registrant has submitted electronically and posted on
its corporate web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding
12 months (or for such shorter period that the Registrant was required to submit
and post such files). Yes
£
No
£
Indicate
by check mark whether the Registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a small reporting
company. Large accelerated filer
£
Accelerated
filer
£
Non-accelerated filer
£
Small
reporting company
T
Indicate
by checkmark whether the Registrant is a shell company (as defined in Rule 12b-2
of the Exchange Act Yes
£
No
T
As of
November 12, 2009, there were 79,472,328 issued and outstanding shares of the
Registrant’s common stock.
TRIMOL
GROUP, INC.
FORM
10-Q
QUARTERLY
REPORT FOR THE PERIOD ENDED SEPTEMBER 30, 2009
TABLE
OF CONTENTS
PART I
- FINANCIAL INFORMATION
ITEM
1.
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3
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4
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5
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6
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7
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ITEM
2.
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11
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ITEM
3.
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14
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ITEM
4.
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14
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PART II - OTHER
INFORMATION
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ITEM
1.
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16
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ITEM
1A
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17
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ITEM
2.
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17
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ITEM
3.
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17
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ITEM
4.
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17
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ITEM
5.
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17
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ITEM
6.
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18
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19
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PART
I - FINANCIAL INFORMATION
ITEM
1
.
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FINANCIAL
STATEMENTS
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CONSOLIDATED
FINANCIAL STATEMENTS
AS OF
SEPTEMBER 30, 2009
TRIMO
L GROUP, INC.
CONSOLIDATED
BALANCE SHEET
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September 30,
2009
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December 31,
2008
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(Unaudited)
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(Audited)
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ASSETS
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Current
assets:
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Cash
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$
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4,000
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$
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4,000
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TOTAL
CURRENT ASSETS
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4,000
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4,000
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TOTAL
ASSETS
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$
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4,000
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$
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4,000
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LIABILITIES
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Current
liabilities:
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Due
to related parties
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$
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3,395,000
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$
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2,735,000
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Accrued
expenses
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1,226,000
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1,196,000
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TOTAL CURRENT
LIABILITIES
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4,621,000
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3,931,000
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SHAREHOLDERS’
DEFICIENCY
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(4,617,000
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)
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(3,927,000
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)
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TOTAL
LIABILITIES AND SHAREHOLDERS’ DEFICIENCY
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$
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4,000
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$
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4,000
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The
accompanying notes are an integral part of the financial
statements
TRIMO
L GROUP, INC.
CONSOLIDATED
STATEMENT OF OPERATIONS
(UNAUDITED)
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NINE
MONTHS ENDED
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THREE
MONTHS ENDED
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September 30, 2009
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September 30, 2008
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September 30, 2009
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September 30, 2008
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REVENUES
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$
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-
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$
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-
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$
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-
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$
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-
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LEGAL
ACTION FEES AND EXPENSES
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-
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635,000
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-
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635,000
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OTHER
OPERATING EXPENSES
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690,000
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754,000
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220,000
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247,000
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TOTAL
EXPENSES
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690,000
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1,389,000
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220,000
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882.000
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NET
LOSS
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$
|
(690,000
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)
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|
$
|
(1,389,000
|
)
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$
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(220,000
|
)
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$
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(882,000
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)
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Net
loss per share (basic and diluted)
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$
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(. 01
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)
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$
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(. 015
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)
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$
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(. 003
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)
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$
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(.011
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)
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WEIGHTED
AVERGE NUMBER OF SHARES OUTSTANDING
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79,472,328
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94,087,712
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79,412,328
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81,526,676
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The
accompanying notes are an integral part of the financial
statements
TRIMO
L GROUP, INC.
CONSOLIDATED
STATEMENT OF CASH FLOWS
(UNAUDITED)
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Nine
Months Ended September 30,
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2009
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2008
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CASH
FLOWS FROM OPERATING ACTIVITIES:
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Net
loss
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$
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(690,000
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)
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$
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(1,389,000
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)
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ADJUSTMENTS
TO RECONCILE NET INCOME TO NET CASH USED IN OPERATING
ACTIVITIES:
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Depreciation
of property and equipment
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-
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25,000
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CHANGES
IN ASSETS AND LIABILITIES:
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Accrued
expenses
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30,000
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598,000
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NET
CASH USED IN OPERATING ACTIVITIES
|
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(660,000
|
)
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(766,000
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)
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CASH
FLOW FROM FINANCING ACTIVITIES:
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Proceeds
of loans from related parties
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660,000
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766,000
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NET
CASH PROVIDED BY FINANCING ACTIVITIES
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660,000
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766,000
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INCREASE
(DECREASE) IN CASH
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-
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-
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CASH
– BEGINNING OF PERIOD
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4,000
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4,000
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CASH
– END OF PERIOD
|
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$
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4,000
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$
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4,000
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The
accompanying notes are an integral part of the financial
statements
TRIM
OL GROUP, INC.
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 -
BASIS OF PRESENTATION
The
accompanying unaudited financial statements have been prepared in accordance
with accounting principles generally accepted for interim financial information
and with the instructions to Form 10-Q and Article 8 of Regulation S-X relating
to smaller reporting companies. Accordingly, they do not include all
of the information and footnotes required by generally accepted accounting
principles (“GAAP”) for complete financial statements. In the opinion
of management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been
included. Operating results for the three and nine month periods
ended September 30, 2009 are not necessarily indicative of the results that may
be expected for the year ended December 31, 2009.
The
balance sheet at December 31, 2009 has been derived from the audited financial
statements at that date but does not include all of the information and
footnotes required by GAAP for complete financial statements.
For
further information, refer to the consolidated financial statements and
footnotes thereto included in our Annual Report on Form 10-K for the year ended
December 31, 2008 filed with the Securities and Exchange
Commission.
NOTE 2 –
GOING CONCERN
The
Company does not have any current operations that generate revenue and did not
generate any revenue in year 2009 to date, nor in years 2008 or in
2007. Further, as shown on the accompanying balance sheet, the
Company’s liabilities exceeded its assets by approximately $4,617,000. These
circumstances, among others, raise substantial doubt about its ability to
continue as a going concern. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
NOTE 3 –
OPERATIONS
The
Company owns all of the outstanding shares of Intercomsoft Limited
(“Intercomsoft”) a company which, until April 2006, was engaged in the operation
of a computerized photo identification and database management system utilized
in the production of secure essential government identification documents such
as passports, drivers’ licenses, national identification documents and other
forms of essential personal government identification. As more detailed in Note
5, the Company is pursuing certain legal action related to the operation of
Intercomsoft and since April 2006 has not generated any revenue from business
operations.
NOTE 4 –
TERMINATION AGREEMENT
In
January 2001, the Company acquired the exclusive worldwide license to an
aluminum-air fuel cell technology solely for use with portable consumer
electronic devices, all rights and title to certain technology relating to
aluminum-air fuel cells, and the design and know-how to a converter designed and
developed by a related company. The Company ceased development of
this technology in 2003.
On May
30, 2008 the Company entered into a termination agreement (the “Termination
Agreement”) with Aluminum Power Inc. (API), the Company’s majority shareholder
at that time, which is beneficially owned and controlled by the Company’s
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 Company’s Chairman of the Board,
cancelled $400,000 of the Company’s indebtedness to it. The forgiveness of debt
was accounted for as a credit to additional paid in capital on the consolidated
balance sheet as of September 30, 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 Company’s 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 require 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 and a
further Amendment No 3 extended the December 31, 2008 date to September 22,
2010. Such transaction reduced the number of issued and outstanding
shares by 21,000,000 resulting in a total of 79,472,328 issued and outstanding
shares.
NOTE 5 -
RISKS AND UNCERTAINTIES
The
following risk factors relating to the Company and its business should be
carefully considered:
The Company has no current
source of revenue.
The
Company had no source of revenue for the three or nine month period ended
September 30, 2009, nor did it have any source of revenue in the years ended
December 31, 2008 and December 31, 2007.
The Company has commenced a
legal action against the Government of Moldova.
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. Although
Intercomsoft performed all of its obligations and responsibilities under the
Supply Agreement during its ten year term without objection by the Moldovan
defendants, the Moldova Defendants nevertheless interposed counterclaims against
Intercomsoft in amounts totaling $30 million. Intercomsoft has denied any
wrongdoing and contested the counterclaims.
The
Moldovan Defendants contested the action and objected to the ICC’s 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, the Arbital Tribunal 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 over the jurisdiction of the ICC
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. On October
21, 2009, the Swiss court issued a default judgment in Intercomsoft’s
favor. Intercomsoft has until November 26, 2009 to nominate an
arbitrator. If the Moldovan Defendants fail to nominate an
arbitrator in accordance with the default judgment, the Swiss court will
nominate a second one.
In
addition, the Moldova Defendants have commenced a proceeding 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. On October 7, 2009, the Moldovan Defendants requested a
suspension of the proceedings before the Moldovan Arbitration Court for a period
of not less than four months based on difficulties they claim to have
encountered retaining new counsel and the reorganization of the Moldovan
government. The Tribunal has directed the parties to submit their
respective positions on the request to suspend the proceedings and likelihood of
settlement, which submissions will be complete by November 13,
2009. The hearing previously scheduled for October 19, 2009 was
cancelled by the Tribunal, and no further hearings are currently
scheduled.
There can
be no assurance as to the outcome of such arbitration proceedings and
actions.
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 -
RELATED PARTY TRANSACTIONS AND BALANCES
Transactions
|
|
Nine
Months Ended September 30,
|
|
|
|
2009
|
|
|
2008
|
|
Compensation
and related expenses to Chairman (1)
|
|
$
|
218,000
|
|
|
$
|
239,000
|
|
|
|
|
|
|
|
|
|
|
Cash
advance from Royal HTM Group (2)
|
|
|
108,000
|
|
|
|
194,000
|
|
|
|
|
|
|
|
|
|
|
Cash
advances in the form of direct payment of expenses by Royal HTM
Group (2)
|
|
|
255,000
|
|
|
|
272,000
|
|
|
|
|
|
|
|
|
|
|
Business
development services (2)
|
|
|
90,000
|
|
|
|
90,000
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
671,000
|
|
|
$
|
795,000
|
|
|
1)
|
Mr.
Boris Birshtein serves as the Company’s Chairman of the Board of Directors
(the “Chairman”) on a month-to-month basis. Additionally, on May 1, 2009,
he was appointed as the Company’s Chief Executive
Officer.
|
|
2)
|
Royal
HTM Group, Inc., a Canadian company beneficially owned and controlled by
the Chairman, renders certain business development services to the Company
and is the Company’s majority shareholder. Royal HTM Group has advanced
approximately $2,200,000 as of September 30, 2009 to, or on behalf of the
Company, to fund its expenses.
|
Balances
As of
September 30, 2009 payables to related parties consist of the
following:
Amount
due to the Chairman and a company owned and controlled by such
individual.
|
|
$
|
2,299,000
|
|
|
|
|
|
|
Accrued
compensation due to the Chairman.
|
|
|
1,096,000
|
|
|
|
$
|
3,395,000
|
|
These
amounts are non-interest bearing and due on demand.
NOTE
7-STOCK COMPENSATION PLANS
During the three and nine months ended
September 30, 2009, the Company did not issue any options to purchase its common
stock, nor were any options or warrants cancelled or exercised. As of
September 30, 2009 the total options outstanding were 6,870,000, of which
3,870,000 were issued pursuant to the 2001 Omnibus Plan, as
amended
.
NOTE 8 -
SEGMENT INFORMATION
The
Company’s operations are classified into two reportable segments. The
segments consist of Intercomsoft, and general and administrative expenses
incurred for corporate purposes.
THREE
MONTHS ENDED SEPTEMBER 30, 2009
|
|
Intercomsoft
|
|
|
Corporate
and Administrative
|
|
|
Total
|
|
Net
sales
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Operating
expenses
|
|
|
-
|
|
|
|
220,000
|
|
|
|
220,000
|
|
Net
loss
|
|
$
|
-
|
|
|
$
|
(220,000
|
)
|
|
$
|
(220,000
|
)
|
THREE
MONTHS ENDED SEPTEMBER 30, 2008
|
|
Intercomsoft
|
|
|
Corporate
and Administrative
|
|
|
Total
|
|
Net
sales
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Total
expenses
|
|
|
644,000
|
|
|
|
238,000
|
|
|
|
882,000
|
|
Net
loss
|
|
$
|
(644,000
|
)
|
|
$
|
(238,000
|
)
|
|
$
|
(882,000
|
)
|
NINE
MONTHS ENDED SEPTEMBER 30, 2009
|
|
Intercomsoft
|
|
|
Corporate
and Administrative
|
|
|
Total
|
|
Net
sales
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Operating
expenses
|
|
|
-
|
|
|
|
690,000
|
|
|
|
690,000
|
|
Net
loss
|
|
$
|
-
|
|
|
$
|
(690,000
|
)
|
|
$
|
(690,000
|
)
|
NINE
MONTHS ENDED SEPTEMBER 30, 2008
|
|
Intercomsoft
|
|
|
Corporate
and Administrative
|
|
|
Total
|
|
Net
sales
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Operating
expenses
|
|
|
661,000
|
|
|
|
728,000
|
|
|
|
1,389,000
|
|
Net
loss
|
|
$
|
(661,000
|
)
|
|
$
|
(728,000
|
)
|
|
$
|
(1,389,000
|
)
|
ITEM
2.
|
MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATION
|
The
following management's discussion and analysis of financial condition and
results of operation should be read in conjunction with our Annual Report on
Form 10-K for the year ended December 31, 2008, as well as our unaudited
consolidated financial statements and notes thereto contained elsewhere in this
Quarterly Report on Form 10-Q. Such statements are subject to risks
and uncertainties that could cause actual results to differ materially from
those described. We expressly disclaim any obligation or undertaking to update
these statements in the future.
OPERATIONS
Business
Development
From 1998
through April 2006 we operated our wholly-owned subsidiary Intercomsoft Limited,
a company established to operate a computerized photo identification and
database management system.
Additionally,
until May 30, 2008, we had an exclusive worldwide license to a mechanically
rechargeable aluminum-air fuel cell technology for use with portable consumer
electronic devices, a technology that we acquired in January 2001 but had
discontinued efforts to develop in 2003.
However,
other than certain legal actions related to Intercomsoft’s Supply Agreement as
more detailed in Part II Item 1 of this report entitled
Legal Proceedings,
although
we are seeking other opportunities, we are not currently engaged in
any business operations or activities.
Intercomsoft
Ltd.
Intercomsoft,
Ltd. was established to operate a computerized photo identification and database
management system utilized in the production of secure essential government
identification documents such as passports, driver’s licenses, national
identification documents and other such forms of essential personal
identification.
Intercomsoft’s
only customer since inception was the Government of the Republic of Moldova,
pursuant to a ten (10) year Contract on Leasing Equipment and Licensing
Technology (the “Supply Agreement”) entered into in April 1996. The
Supply Agreement expired in April 2006 and was not renewed.
We are
currently involved in legal actions in connection with the Supply Agreement, as
set forth in detail in Part II Item 1 of this Report entitled
Legal
Proceedings
.
Aluminum-Air
Fuel Cell Technology
In
January 2001 we acquired an exclusive worldwide license to a mechanically
rechargeable aluminum-air fuel cell technology solely for use with portable
consumer electronic devices, all rights and title to a certain technology
relating to aluminum-air fuel cells and the design and know how to a converter
designed and developed by Aluminum-Power, Inc. (“Aluminum Power”), our majority
shareholder at that time, an entity beneficially owned and controlled by our
Chairman of the Board.
In the
second quarter of 2003 we discontinued our research and development efforts on
such technology and did not actively pursue the development of it since such
time.
On May
30, 2008 we entered into a termination agreement (the “Termination Agreement”)
with Aluminum Power terminating the Technology Acquisition Agreement and the
Research and Development Agreement entered into by us and Aluminum Power in
2001. In consideration of the Termination Agreement, Royal HTM Group, Inc, a
company beneficially owned and controlled by the Company’s Chairman of the
Board, cancelled $400,000 of our indebtedness to it.
Additionally,
we entered into an amendment of the Termination Agreement dated as of July 9,
2008 (the “Amendment”). Pursuant to the terms of the Amendment, Aluminum Power
transferred to us 21,000,000 shares of our common stock owned by it as further
consideration in connection with the Termination Agreement. Such
shares are to be utilized by us solely in connection with certain acquisitions
that we are currently exploring. The Amendment provided that in the event that
we do not conclude any of such acquisitions by December 31, 2008, Aluminum Power
has the right to require us to reconvey such 21,000,000 shares to it for a
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 and a further Amendment No. 3 dated
September 23, 2009 extended such date to September 22, 2010.
RESULTS
OF OPERATIONS
General
During
the three and nine month period ended September 30, 2009, our operations
consisted solely of administrative activities, activities surrounding
exploration of certain acquisitions and those related to pursuing the breach of
contract claims against the Republic of Moldova as more fully described in Part
II Item 1 herein.
Comparison
of Three Month Period Ended September 30, 2009 to September 30,
2008
During
the three months ended September 30, 2009, we generated no revenues from
operations and similarly generated no revenues in the comparative period in
2008.
Total
expenses for the three months ended September 30, 2009, were approximately
$220,000, all of which consisted of general corporate and administrative
expenses. For the same period in 2008, general and administrative expenses
aggregated approximately $882,000, which consisted of $644,000 of Intercomsoft
expenses, $9,000 of which was machinery and equipment depreciation and $635,000
of which was related to a legal action, as described herein in Part II, Item 1 –
Legal Proceedings, and $238,000 of which were general and corporate
administrative expenses.
We had a
net loss from operations of approximately $220,000 for the three month period
ended September 30, 2009, as compared to a net loss of approximately $882,000
for the same period in 2008. The significant difference in the comparative
periods result from the non-recurring expenses related to a legal action (See
Part II, Item 1 – Legal Proceedings).
Comparison
of Nine Month Period Ended September 30, 2009 to September 30, 2008
During
the nine months ended September 30, 2009, we generated no revenues from
operations and similarly generated no revenues in the comparative period in
2008.
Total
expenses for the nine months ended September 30, 2009, were approximately
$690,000, all of which consisted of general corporate and administrative
expenses. For the same period in 2008, general and administrative expenses
aggregated approximately $1,389,000, which consisted of $661,000 of Intercomsoft
expenses of which $635,000 was a non-recurring expense related to a legal
action, as described herein in Part II, Item 1 – Legal Proceedings, and $728,000
of which were general and corporate administrative expenses.
We had a
net loss from operations of approximately $690,000 for the nine month period
ended September 30, 2009, as compared to a net loss of approximately $1,389,000
for the same period in 2008. The significant difference in the
comparative periods results from the non-recurring legal expenses in
2008.
Liquidity
& Capital Resources
Intercomsoft’s
Supply Agreement expired by its terms in April 2006. Moldova failed to pay us
for certain amounts due thereunder and our sole source of revenue ended at that
time. For additional information on this matter, see Part II Item 1
of this report entitled
Legal
Proceedings
.
We have
not generated any revenue since the first quarter 2006 and have funded our
limited operations through loans and advances from our Chairman of the Board and
companies owned or controlled by him.
Our
assets are nominal and our liabilities currently exceed our assets by
$4,617,000. These circumstances, among others, raise substantial
doubt about our ability to continue operations.
Off-Balance
Sheet Arrangements
We have
no off-balance sheet arrangements.
Stock
Compensation Plans
There
were no options to purchase shares of our common stock cancelled, issued or
exercised during the three or nine month period ended September 30,
2009. As of September 30, 2009, the total number of shares of our
common stock reserved for issuance under options outstanding was 6,870,000, of
which options to purchase 3,870,000 shares were issued pursuant to our 2001
Omnibus Plan, as amended.
Available
information
Reports
Filed with the Securities and Exchange Commission
We are
subject to the informational requirements of the Securities Exchange Act of
1934, as amended (the “Exchange Act”), and, in accordance therewith, file
reports, proxy and information statements and other information with the
Securities and Exchange Commission (the “SEC”).
All
reports filed by us with the SEC are available free of charge via EDGAR through
the SEC web site at
www.sec.gov
. In
addition, the public may read and copy materials we file with the SEC at the
public reference facilities maintained by the SEC at its public reference room
located at 100 F Street, N.E. Washington, D.C. 20549. We will
also provide copies of such material to investors upon written
request.
No person
has been authorized to give any information or to make any representation other
than as contained or incorporated by reference in this Annual Report and, if
given or made, such information or representation must not be relied upon as
having been authorized by us.
ITEM
3.
|
QUANTITATIVE
AND QUALITATIVE DISCLOSURE ABOUT MARKET
RISK
|
Not
applicable.
ITEM
4.
|
CONTROLS
AND PROCEDURES
|
Evaluation
of Disclosure Controls and Procedures
Our
management is responsible for establishing and maintaining disclosure controls
and procedures that are designed to ensure that information required to be
disclosed in our reports, as defined in Rule 13a-15(f) under the Securities
Exchange Act of 1934 (the “Exchange Act”) is recorded, processed, summarized and
reported within the time periods specified in the rules and forms of the
Securities and Exchange Commission (the “SEC”), and that such information is
accumulated and communicated to our management to allow timely decisions
regarding required disclosure based closely on the definition of “disclosure
controls and procedures” in Rule 15d-15(e) under the Exchange Act. In designing
and evaluating the disclosure controls and procedures, management recognized
that any controls and procedures, no matter how well designed and operated, can
provide only reasonable assurance of achieving the desired control objectives,
and management necessarily was required to apply its judgment in evaluating the
cost-benefit relationship of possible controls and procedures.
As of the
end of the period covered by this Quarterly Report, we carried out, under the
supervision and with the participation of our management, including our Chief
Executive Officer and our Chief Financial Officer, an evaluation of the
effectiveness of the design and operation of our disclosure controls and
procedures to ensure that information required to be disclosed by us in this
Quarterly Report was 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
September 30, 2009, our Chief Executive Officer and our Chief Financial Officer
have concluded that, as of that date, our controls and procedures were not
effective for the purposes described above.
There was
no change in our internal control over financial reporting (as defined in Rule
13a-15(f) and 15d-15(f) under the Exchange Act) during the period ended
September 30, 2009 that has materially affected or is reasonably likely to
materially affect our internal control over financial reporting.
Management’s
Report on Internal Control over Financial Reporting
Our
management 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 September 30, 2009, using the Committee of
Sponsoring Organizations of the Treadway Commission (“COSO”)
Internal Control – Integrated
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.
A
material weakness in internal controls is a deficiency in internal control, or
combination of control deficiencies, that adversely affects our 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 our 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 we 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
Quarterly Report does not include an attestation report of our registered public
accounting firm regarding internal control over financial
reporting. Management’s report was not subject to attestation by our
registered public accounting firm pursuant to temporary rules of the Securities
and Exchange Commission that permit us to provide only management’s report in
this Quarterly Report.
PART
II - OTHER INFORMATION
ITEM
1.
|
LEGAL
PROCEEDINGS
|
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. Although
Intercomsoft performed all of its obligations and responsibilities under the
Supply Agreement during its ten year term without objection by the Moldovan
Defendants, the Moldova Defendants nevertheless interposed counterclaims against
Intercomsoft in amounts totaling $30 million. Intercomsoft has denied any
wrongdoing and contested the counterclaims.
The
Moldovan Defendants contested the action and objected to the ICC’s 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, the Arbital Tribunal 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 over the jurisdiction of the ICC
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. On October
21, 2009, the Swiss court issued a default judgment in Intercomsoft’s
favor. Intercomsoft has until November 26, 2009 to nominate an
arbitrator. If the Moldovan Defendants fail to nominate an
arbitrator in accordance with the default judgment, the Swiss court will
nominate a second one.
In
addition, the Moldova Defendants have commenced a proceeding 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. On October 7, 2009, the Moldovan Defendants requested a
suspension of the proceedings before the Moldovan Arbitration Court for a period
of not less than four months based on difficulties they claim to have
encountered retaining new counsel and the reorganization of the Moldovan
government. The Tribunal has directed the parties to submit their
respective positions on the request to suspend the proceedings and likelihood of
settlement, which submissions will be complete by November 13,
2009. The hearing previously scheduled for October 19, 2009 was
cancelled by the Tribunal, and no further hearings are currently
scheduled.
There can
be no assurance as to the outcome of such arbitration proceedings and
actions.
For
information regarding factors that could affect the Company’s results of
operations, financial condition or liquidity, see the risk factors as disclosed
in the Company’s most recent Annual Report on Form 10-K. There have been no
material changes from the risk factors previously disclosed in the Company’s
most recent Annual Report on Form 10-K.
ITEM
2.
|
UNREGISTERED
SALES OF EQUITY SECURITIES AND USE OF
PROCEEDS
|
None
ITEM
3.
|
DEFAULTS
UPON SENIOR SECURITIES
|
None.
ITEM
4.
|
SUBMISSION
OF MATTERS TO A VOTE OF SECURITY
HOLDERS
|
None.
ITEM
5.
|
OTHER
INFORMATION
|
On May 1,
2009, the Company amended its By Laws providing for, among other things, a Board
of Directors that consists of not less than two, but not more than fifteen
members. Additionally, on May 1, 2009 the Company established a Code
of Ethics establishing general guidelines for conducting the Company’s business
consistent with the highest standards of business ethics.
On May 1,
2009, Yuri Benenson and Walter Perchal resigned as members of the Company’s
Board of Directors. Additionally, on such date, Mr. Benenson
resigned as the Company’s Chief Executive Officer. Boris Birshtein,
the Company’s Chairman of the Board, was appointed as the Company’s Chief
Executive Officer effective with Mr. Benenson’s resignation.
Related
Party Transactions
During
the three month period ended September 30, we accrued an aggregate of $69,000
($23,000 per month) in compensation and $5,400 ($1,800 per month) in expenses
due to Boris Birshtein related to his performance as our Chairman of the
Board. For the nine month period ended September 30, 2009 we accrued
an aggregate of $207,000 in compensation and $16,200 in expenses due to Mr.
Birshtein.
During
the nine month period ended September 30, 2009 we borrowed an aggregate of
approximately $363,000 from our Chairman of the Board and Royal HTM Group, Inc.,
a Canadian company beneficially owned and controlled by such individual, to meet
on-going operational expenses. Such amount is non-interest bearing and is due on
demand.
Royal HTM
Group renders certain business development services to us on an on-going
basis. During the three month period ended September 30, 2009 we
accrued an aggregate of $30,000 ($10,000 per month) for consulting fees due to
Royal HTM Group for such services and $90,000 for the nine month
period. Such amount is non-interest bearing and is due on
demand.
The
exhibits listed below are filed as part of this Quarterly Report for the period
ended September 30, 2009:
|
3.0
|
Amended
and Restated By Laws of Trimol Group Inc. (filed with the SEC as an
exhibit to the Company’s first quarter 2009 quarterly report on Form 10-Q
and incorporated herewith by reference
thereto).
|
|
|
Chief
Executive Officer Certification pursuant Section 302 of the Sarbanes-Oxley
Act of 2002.
|
|
|
Chief
Financial Officer Certification pursuant Section 302 of the Sarbanes-Oxley
Act of 2002.
|
|
|
Chief
Executive Officer Certification pursuant Section 906 of the Sarbanes-Oxley
Act of 2002.
|
|
|
Chief
Financial Officer Certification pursuant Section 906 of the Sarbanes-Oxley
Act of 2002.
|
SIGN
ATURES
In
accordance with the requirements of the Exchange Act, the registrant caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized.
|
TRIMOL
GROUP, INC.
|
|
|
|
|
Date: November
13, 2009
|
By: /s/ Boris
Birshtein
|
|
Name:
Boris Birshtein
|
|
Title:
Chief Executive Officer
|
|
|
|
|
|
By: /s/ Jack
Braverman
|
|
Name:
Jack Braverman
|
|
Title:
Chief Financial Officer
|
19
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