ITEM 1.
DESCRIPTION OF BUSINESS
General
We were incorporated on May 6, 1953 under the laws of the State of Delaware. Although we are seeking business opportunities, during 2009 and 2008, we had limited operations and generated no revenue. We are not currently engaged in any business operations, or any activities that generate revenue.
Prior operations in the past five years consisted of the activities of our wholly owned subsidiary, Intercomsoft Limited, as more detailed below.
Intercomsoft Limited
Beginning in 1998 and through April 2006, we operated our wholly-owned subsidiary, Intercomsoft Limited, a non-resident Irish company.
Intercomsoft was established to provide computerized photo identification and database management systems for use in the production of secure essential government identification documents such as passports, drivers’ licenses, national identification documents and other forms of essential personal identification.
Although it pursued other opportunities, Intercomsoft’s only customer since inception was the Government of the Republic of Moldova, pursuant to a Contract on Leasing Equipment and Licensing Technology (the “Supply Agreement”) awarded to Intercomsoft in April 1996 by the Ministry of Economics, Republic of Moldova, to provide a National Register of Population and a National Passport System, which expired by its terms on April 29, 2006 and was not renewed.
Under the terms of the Supply Agreement, Intercomsoft supplied all of the equipment, technology, software, materials and consumables utilized by the Government of Moldova for the production of all national passports, drivers’, licenses, vehicle permits, identification cards and other government authorized identification documents used in the Republic of Moldova.
On or about February 11, 2006, we received notice from the Government of the Republic of Moldova that it did not intend to renew the Supply Agreement which, unless renewed, expired by its terms on April 29, 2006. We believe that such notice of non-renewal may not have been sent timely under the applicable provisions of the Supply Agreement and are currently contesting the claimed non-renewal of such Agreement. (See Item 3 - Legal Proceedings).
However, inasmuch as our only current source of revenue was derived from Intercomsoft’s activities under the Supply Agreement, the Company has not generated any revenue since April 2006. This event has had a material adverse effect on Intercomsoft as well as on us.
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.
Through the second quarter of 2003 we engaged in research, development and marketing efforts in connection of the aluminum-air fuel cell technology and actively sought strategic business partners to commercialize it. However, our efforts were not commercially successful and we discontinued development of the technology as of the second quarter of 2003.
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., whose sole shareholder is our Chairman of the Board, cancelled $400,000 of our indebtedness to it.
Subsequently, we entered into an amendment to 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 were to be utilized by us solely in connection with certain acquisitions. The Amendment provided that in the event that we did not conclude any of such acquisitions by December 31, 2008, Aluminum Power had the right to require us to reconvey the 21,000,000 shares to it for a purchase price of $1,000. Further amendments to the Termination Agreement extended the reconveyance date to September 22, 2010. The reconveyance right (“Call Right”) was assignable under the Termination Agreement, as amended.
On March 12, 2010, we received a notice from Royal HTM Group Inc., wherein it advised the Company that on March 4, 2010, Aluminum Power had assigned to Royal HTM Group the Call Right granted to it under the Amendment. On March 12, 2010 Royal HTM Group exercised the Call Right and requested that we issue to it the 21,000,000 shares, which we did on March 15, 2010. Pursuant to the issuance of such shares, Royal HTM Group owns 69,275,000 shares of our common stock.
Our Employees
We currently do not have any full time employees. However, we do have a number of individuals and entities that provide services to us on a consulting or advisory basis.
Transfer Agent
The transfer agent and registrar for our common stock is Interstate Transfer Company, 6084 South 900 East, Suite 101, Salt Lake City, Utah 84121.
ITEM 1A.
ITEM 1A.
RISK FACTORS
You should carefully review and consider the following risks, as well as all other information contained in this Annual Report or incorporated herein by reference, including our consolidated financial statements and the notes to those statements, before you decide to purchase any shares of our common stock. The following risks and uncertainties are not the only ones facing us. Additional risks and uncertainties of which we are currently unaware or which we believe are not material could also nevertheless materially adversely affect our business, financial condition, results of operations, or cash flows. In any case, the value of the shares of our common stock could decline and you could lose all or a portion of your investment in such shares. To the extent any of the information contained in this Annual Report constitutes forward-looking statements or information, the risk factors set forth below must be considered cautionary statements identifying important factors that could cause our actual results for various financial reporting periods to differ materially from those expressed in any forward-looking statements made by or on our behalf and could materially adversely affect our financial condition, results of operations or cash flows. See also, “Statement Regarding Forward-Looking Statements” in Item 6.
Risks Related to Our Current Financial Condition
We have no current source of revenue.
We did not generate any revenue for the year ended December 31, 2009 nor did we generate any revenue in the year ended December 31, 2008.
We have 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.
Our liabilities significantly exceed our assets.
As of December 31, 2009 our liabilities exceeded our assets by approximately $4.6 million. These circumstances, among others, raise substantial doubt about our ability to continue as a going concern
The loss of our executive officers or key personnel would adversely affect our business.
We have substantially discontinued our operations, with the exception of limited administrative activities. Our ability to restructure the business will be dependent on the services of our executive officers and certain key personnel. If we are unable to compensate our existing or future executives we may lack the required leadership to restructure our business
Risks Related to our Securities and Capital Structure
We are not in compliance with rules requiring the adoption of certain corporate governance measures. This may result in shareholders having limited protections against interested director transactions, conflicts of interest and similar matters.
The Sarbanes-Oxley Act of 2002, as well as rule changes proposed and enacted by the SEC and The NASDAQ Stock Market as a result of Sarbanes-Oxley requires the implementation of various measures relating to corporate governance. These measures are designed to enhance the integrity of corporate management and the securities markets. We are not in compliance with the requirement relating to the adoption of a corporate Code of Ethics, we are not in compliance with the requirement relating to the establishment of an audit committee consisting of all independent Board members. We have not established a Compensation Committee. We are not yet in compliance with requirements relating to the distribution to stockholders of annual and interim reports, solicitation of proxies, the holding of stockholders meetings, quorum requirements for such meetings and the rights of stockholders to vote on certain matters. Furthermore, until we comply with such corporate governance measures, the absence of such standards of corporate governance may leave our shareholders without protections against interested director transactions, conflicts of interest and similar matters.
Failure to achieve and maintain effective internal controls in accordance with Section 404 of the Sarbanes-Oxley Act could have a material adverse effect on our business and operating results. In addition, current and potential stockholders could lose confidence in our financial reporting, which could have a material adverse effect on our stock price.
Effective internal controls are necessary for us to provide reliable financial reports and effectively prevent fraud. If we cannot provide reliable financial reports or prevent fraud, our operating results could be harmed.
We are required to document and test our internal control procedures in order to satisfy the requirements of Section 404 of the Sarbanes-Oxley Act, which requires increased control over financial reporting requirements, including annual management assessments of the effectiveness of such internal controls and a report by our independent registered public accounting firm addressing these assessments. If we fail to maintain the adequacy of our internal controls, as such standards are modified, supplemented or amended from time to time, we may not be able to ensure that we can conclude on an ongoing basis that we have effective internal controls over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act. Failure to maintain an effective internal control environment could also cause investors to lose confidence in our reported financial information, which could have a material adverse effect on our stock price.
We do not intend to pay any dividends on our common stock in the foreseeable future.
We currently intend to retain all future earnings, if any, to finance our business activities and do not anticipate paying any cash dividends on our common stock in the foreseeable future.
The limited public trading market may cause volatility in the price of our common stock.
Our common stock is currently traded on the Over the Counter Bulletin Board (“OTCBB”) under the symbol TMOL. The quotation of our common stock on the OTCBB does not assure that a meaningful, consistent and liquid trading market currently exists, and in recent years such market has experienced extreme price and volume fluctuations that have particularly affected the market prices of many smaller companies like ours. Our common stock is thus subject to this volatility. Sales of substantial amounts of our common stock, or the perception that such sales might occur, could adversely affect prevailing market prices of our common stock.
During 2009, the shares of our common stock traded on the OTCBB at prices ranging from a low of $0.0005 to a high of $0.02 and in 2008 traded from a low of $0.001 per share to a high of $0.02 per share. The market price of the shares of our common stock, like the securities of many other over-the-counter publicly traded companies, may be highly volatile. Factors such as sales of large numbers of shares of our common stock by existing stockholders and general market and economic conditions may have a significant effect on the market price of our common stock. In addition, U.S. stock markets have experienced extreme price and volume fluctuations in the past. This volatility has significantly affected the market prices of securities of many companies, for reasons frequently unrelated or disproportionate to the operating performance of the specific companies. These broad market fluctuations may adversely affect the market price of our common stock.
The OTCBB is an inter-dealer, over-the-counter market that provides significantly less liquidity than NASDAQ, and quotes for stocks included on the OTCBB are not listed in the financial sections of newspapers, as are those for the NASDAQ Stock Market. The trading price of our common stock may fluctuate significantly in response to various general economic and market conditions which may have a material or adverse effect on the market price of our common stock.
Trading in our common stock over the last 12 months has been limited, so investors may not be able to sell as many of their shares as they want at prevailing prices.
Shares of our common stock are traded on the OTCBB. Limited trading in our common stock may make it difficult for investors who purchase shares of our common stock to sell such shares in the public market at any given time at prevailing prices. Also, the sale of a large block of our common stock could depress the market price of our common stock to a greater degree than a company that typically has a higher volume of trading of its securities.
We cannot predict whether an active market for our common stock will develop in the future. In the absence of an active trading market:
·
Investors may have difficulty buying and selling or obtaining market quotations;
·
Market visibility for our common stock may be limited; and
·
Lack of visibility for our common stock may have a depressive effect on its market price.
Penny stock regulations may impose certain restrictions on marketability of our securities
The Securities and Exchange Commission (the “Commission”) has adopted regulations which generally define a “penny stock” to be any equity security that has a market price (as defined) of less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exceptions. As a result, our common stock is subject to rules that impose additional sales practice requirements on broker-dealers who sell such securities to persons other than established customers and accredited investors (generally those with assets in excess of $1,000,000 or annual income exceeding $200,000, or $300,000 together with their spouse). For transactions covered by these rules, the broker-dealer must make a special suitability determination for the purchase of such securities and have received the purchaser’s written consent to the transaction prior to the purchase. Additionally, for any transaction involving a penny stock, unless exempt, the rules require the delivery, prior to the transaction, of a risk disclosure document mandated by the Commission relating to the penny stock market. The broker-dealer must also disclose the commission payable to both the broker-dealer and the registered representative, current quotations for the securities and, if the broker-dealer is the sole market maker, the broker-dealer must disclose this fact and the broker-dealer’s presumed control over the market. Finally, monthly statements must be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks. Consequently, the “penny stock” rules may restrict the ability of broker-dealers to sell our securities and may affect the ability of investors to sell our securities in the secondary market and the price at which such purchasers can sell any such securities.
Shareholders should be aware that, according to the Commission, the market for penny stocks has suffered in recent years from patterns of fraud and abuse. Such patterns include:
·
Control of the market for the security by one or a few broker-dealers that are often related to the promoter or issuer;
·
Manipulation of prices through prearranged matching of purchases and sales and false and misleading press releases;
·
“Boiler room” practices involving high pressure sales tactics and unrealistic price projections by inexperienced sales persons;
·
Excessive and undisclosed bid-ask differentials and markups by selling broker-dealers; and
·
The wholesale dumping of the same securities by promoters and broker-dealers after prices have been manipulated to a desired level, along with the inevitable collapse of those prices with consequent investor losses.
Purchasers of penny stocks may have certain legal remedies available to them in the event the obligations of the broker-dealer from whom the penny stock was purchased violates or fails to comply with the above obligations or in the event that other state or federal securities laws are violated in connection with the purchase and sale of such securities. Such rights include the right to rescind the purchase of such securities and recover the purchase price paid for them.
Shares eligible for future sale may adversely affect the market
From time to time, certain of our shareholders may be eligible to sell all or some of their shares of our common stock by means of ordinary brokerage transactions in the open market pursuant to Rule 144, subject to certain limitations. Of the 79,472,328 shares of our common stock issued and outstanding as of December 31, 2009, all shares have been issued for more than six months and are eligible for sale in compliance with Rule 144(k).
In general, pursuant to Rule 144, a stockholder (or stockholders whose shares are aggregated) who has satisfied a six-month holding period may, under certain circumstances, sell within any three-month period a number of securities which does not exceed the greater of 1% of the then outstanding shares of common stock or the average weekly trading volume of the class during the four calendar weeks prior to such sale. Rule 144 also permits, under certain circumstances, the sale of securities, without any limitation, by a non-affiliate of the Company that has satisfied a six-month holding period. Any substantial sale of our common stock pursuant to Rule 144 may have an adverse effect on the market price of our publicly traded securities.
ITEM 2.
ITEM 2.
DESCRIPTION OF PROPERTY
We maintain our office at 1221 Avenue of the Americas, Suite 4200, New York, New York 10020, on a month-to-month tenancy.
ITEM 3.
ITEM 3.
LEGAL PROCEEDINGS
On September 18, 2006, Intercomsoft commenced an action before 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 Arbitral 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 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 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 nominated an arbitrator in accordance with the default judgment, however, the Moldovan Defendants failed to nominate an arbitrator within the requisite time frame. The Swiss court will nominate a second arbitrator for the Moldovan Defendants.
In addition, the Moldovan Defendants commenced a proceeding in Moldova before the International Commercial Court of Arbitration attached to the Chamber of Commerce and Industry of the Republic of Moldova, claiming that it is the proper body to administer any arbitration between the parties. The claims asserted in the current action pending before the Swiss courts are the same claims asserted by the Moldovan Defendants in the ICC arbitration. Intercomsoft 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. At the Tribunal’s direction, the parties submitted their respective positions on the request to suspend the proceedings and consideration of settlement, which submissions were complete by November 13, 2009. On December 11, 2009, the Tribunal suspended the proceedings for a period of three months. The Tribunal has not yet resumed the proceedings.
Given the anticipated continued expenses relating to the prosecution by Intercomsoft of its claims against the Government of Moldova in the pending lawsuit in the Swiss Courts, and the related Moldovan arbitration proceeding, we are exploring a potential sale of Intercomsoft. There can be no assurance that we will consummate any such sale or if so, what the terms will be of any such transaction. In addition, there can be no assurance as to the outcome of such arbitration proceedings and actions.
ITEM 4.
ITEM 4.
SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted during the fiscal year covered by this Annual Report to a vote of security holders, through the solicitation of proxies or otherwise.
PART II
ITEM 5.
ITEM 5.
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Our common stock is quoted and traded on a limited and sporadic basis on the Over the Counter Bulletin Board (“OTCBB”) under the trading symbol TMOL. The limited and sporadic trading does not constitute, nor should it be considered, an established public trading market for our common stock. The following table sets forth the high and low closing bid prices for our common stock for the periods indicated, as reported by the OTCBB. Such quotations reflect inter-dealer prices, without real mark-ups, mark-downs or commissions, and may not necessarily represent actual transactions. We had 414 stockholders of record as of December 31, 2009.
We have not declared any cash dividends on our common stock for the last two fiscal years and do not anticipate declaring any in the near future. There are no restrictions that limit our ability to pay dividends, other than those generally imposed by applicable state law. The future payment of dividends, if any, on our common stock is within the sole discretion of the Board of Directors and will depend, in part, on our earnings, capital requirements, financial condition, and other relevant factors, as determined by the Board.
There was no issuance or sales of our securities during year 2009 or 2008.
During the fiscal year ended December 31, 2009 and 2008, there were no options issued, exercised or cancelled pursuant to the 2001 Omnibus Plan, as amended.
As of December 31, 2009, 1,000,000 options were issued and outstanding under the 2001 Omnibus Plan, as amended, and 3,000,000 options which were issued outside of such Plan were issued and outstanding. There were no options issued or exercised during the year 2009. As of the date of the filing of this Report, all of such options expired and were not renewed.
ITEM 6.
ITEM 6.
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 operations should be read in conjunction with our financial statements and notes thereto contained elsewhere in this report.
Results of Operations
General
The Company did not engage in any business operations that generated revenue in year 2009 or 2008.
Comparison of Year Ended December 31, 2009 to Year Ended December 31, 2008
During the year ended December 31, 2009 and December 31, 2008 we generated no revenue.
Total expenses for the year ended December 21, 2009 were $694,000 all of which were general corporate and administrative expenses and in 2008 were $1,652,000 which consisted of $662,000 from Intercomsoft and $990,000 of general corporate and administrative expenses. The reduction of general corporate and administrative expenses in 2009 resulted from reduced corporate overhead. The significant non-recurring expense of Intercomsoft in year 2008 was the result of the assessment of costs and fees against it in the amount of $635,000 in connection with a legal action (See Legal Proceedings).
We had a net loss from operations in 2009 of $694,000 and a net loss of in 2008 of approximately $1,652,000.
Liquidity & Capital Resources
We have no operations that generate revenue, and have had no revenues since April 2006. With the expiration and non-renewal of Intercomsoft’s Supply Agreement in April 2006, our sole source of revenue ended. Our sole source of funding since such date has been loans and advances from our Chairman of the Board and Royal HTM Group, Inc., our majority shareholder, whose sole shareholder is our Chairman of the Board. We will need to pursue future business opportunities in order to sustain continued operations.
Forward Looking Statements
Certain statements contained in this Annual Report, including, without limitation, statements containing the words “believes,” “anticipates,” “estimates,” “expects,” “projections,” and words of similar import, constitute “forward-looking statements.” You should not place undue reliance on these forward-looking statements. Our actual results could differ materially from those anticipated in these forward-looking statements for many reasons, including risks faced by us which are described in this Report and the other documents we file with the Securities and Exchange Commission (“SEC”).
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 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 7
ITEM 7
FINANCIAL STATEMENTS
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Shareholders of
Trimol Group, Inc.
We have audited the accompanying consolidated balance sheets of Trimol Group, Inc. and its subsidiary (the “Company") as of December 31, 2009 and 2008 and the related consolidated statements of operations, changes in shareholders' deficiency and cash flows for the years then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting, accordingly we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has not generated any revenue since April 2006 and, as shown on the accompanying balance sheet, the Company’s liabilities exceeded its assets by $4,621,000. 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.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2009 and 2008 and the results of its operations and cash flows for each of the two years in the period ended December 31, 2009 in conformity with accounting principles generally accepted in the United States of America.
/s/ Paritz & Company, P.A.
PARITZ & COMPANY, P.A.
Dated: March 25, 2010
Certified Public Accountants
Hackensack, New Jersey
TRIMOL GROUP, INC.
CONSOLIDATED BALANCE SHEETS
The accompanying notes are an integral part of the financial statements.
TRIMOL GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
The accompanying notes are an integral part of the financial statements
TRIMOL GROUP, INC.
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ DEFICIENCY
The accompanying notes are an integral part of the financial statements.
TRIMOL GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
The accompanying notes are an integral part of the financial statements.
TRIMOL GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - ORGANIZATION AND OPERATIONS
Trimol Group, Inc. (the “Company”) was incorporated in 1953 in Delaware and 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 a pending legal action related to the operation of Intercomsoft and in 2009 and 2008 did not generate any revenue from business operations.
Additionally, as more detailed in Note 4, until May 30, 2008, the Company had an 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 had ceased development of this technology in 2003.
NOTE 2 - GOING CONCERN
The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplate our continuation as a going concern. However, the Company does not have any current operations that generate revenue and did not generate any revenue in year 2009 or in 2008, nor has it generated any revenue since April 2006. Further, as shown on the accompanying balance sheet, the Company’s liabilities exceed its assets by $4,621,000. 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 - SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The consolidated financial statements of the Company include the accounts of the Company and its wholly-owned subsidiary, Intercomsoft. Intercompany transactions and balances have been eliminated in consolidation.
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Impairment of Long-lived Assets
The Company reviews long-lived assets for impairment when circumstances indicate the carrying value of an asset may not be recoverable. If an impairment exists an adjustment is made to write the asset down to its fair value, and a loss is recorded as the difference between the carrying value and the fair value.
Property and Equipment
Property and equipment are recorded at cost. Depreciation is provided for financial reporting purposes on the straight-line method in amounts sufficient to amortize the cost of the related asset over its estimated useful life.
Maintenance, repairs and minor renewals are charged to expense when incurred. Replacements and major renewals are capitalized.
Revenue Recognition
Historically, revenue from Intercomsoft was recognized upon the quantity of product (number of computerized documents) produced during the period reported. However, Intercomsoft did not generate any revenue in year 2009 or in year 2008, nor has it generated revenue since April 2006.
Income Taxes
The Company recognizes deferred tax assets and liabilities related to the expected future tax consequences of events that have been recognized in the Company’s financial statements and tax returns. However, if it is more likely than not that some portion or all of the net deferred tax assets will not be realized, a valuation allowance is established and the tax benefit is not recognized in the statements of operations.
Income (Loss) Per Share
Income (loss) per share of common stock has been computed on the basis of the weighted average number of shares of common stock outstanding. Diluted earnings per share are based on the weighted average number of shares and common stock equivalents outstanding. The Company had no common stock equivalents outstanding during the periods presented.
Comprehensive Income
Comprehensive income is defined as any change in equity from transactions and other events originating from non-owner sources, and is included as accumulated comprehensive income in the Statements of Changes in Shareholders’ Equity.
Fair Value of Financial Instruments
The carrying value of short-term financial instruments arising in the ordinary course of business approximates fair value because of the relatively short period of time between their origination and expected realization.
New Accounting Pronouncements
As of September 2009, the Company adopted Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC” or the “Codification”) 105-10 (formerly FASB Statement No. 168 “FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles). This standard establishes only two levels of U.S. generally accepted accounting principles (“GAAP”), authoritative and nonauthoritative. The Codification became the single source of authoritative, nongovernmental GAAP, except for rules and interpretive releases of the SEC, which are sources of authoritative GAAP for SEC registrants. All other non-grandfathered, non-SEC accounting literature not included in the Codification became nonauthoritative. ASC 105-10 does not change previously issued GAAP, but reorganizes GAAP into Topics. In circumstances where previous standards require a revision, the FASB will issue an Accounting Standards Update (“ASU”) on the Topic. Our adoption of ASC 105-10 did not have any impact on the Company’s financial statements.
NOTE 4 - TERMINATION AGREEMENT
On May 30, 2008 the Company entered into a termination agreement (the “Termination Agreement”) with Aluminum Power Inc. (“AP”I), 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 accompanying consolidated balance sheet as of December 31, 2008.
Subsequently, the Company entered into an amendment of the Termination Agreement dated as of July 9, 2008 (the “Amendment”). Pursuant to the terms to 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 was exploring. The Amendment provided that in the event that the Company did not conclude any of such acquisitions by December 31, 2008, API had the right to reacquire the Company to reconvey such 21,000,000 shares to it for an aggregate purchase price of $1,000. Further Amendments to the Termination Agreement extended the December 31, 2008 reconveyance date to September 22, 2010, respectively. 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 December 31, 2009.
NOTE 5 - RISKS AND UNCERTAINTIES
The following risk factors relating to the Company and its business should be carefully considered:
The Company’s subsidiary operates in the Republic of Moldova.
The Company’s wholly owned subsidiary, Intercomsoft Limited, formerly operated 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’s ability to collect on any judgment that may result from certain legal actions the Company has brought against the government of the Republic of Moldova for fees
The Company has not generated any revenue in over four years.
The Company had no source of revenue for the year ended December 31, 2009, nor did it have any source of revenue for the year ended December 31, 2008 and has not generated any revenue since April 2006.
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.
The Company has commenced a legal action against the Government of Moldova.
On September 18, 2006, Intercomsoft commenced an action before 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 Arbitral 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 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 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 nominated an arbitrator in accordance with the default judgment, however, the Moldovan Defendants failed to nominate an arbitrator within the requisite time frame. The Swiss court will nominate a second arbitrator for the Moldovan Defendants.
In addition, the Moldovan Defendants commenced a proceeding in Moldova before the International Commercial Court of Arbitration attached to the Chamber of Commerce and Industry of the Republic of Moldova, claiming that it is the proper body to administer any arbitration between the parties. The claims asserted in the current action pending before the Swiss courts are the same claims asserted by the Moldovan Defendants in the ICC arbitration. Intercomsoft 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. At the Tribunal’s direction, the parties submitted their respective positions on the request to suspend the proceedings and consideration of settlement, which submissions were complete by November 13, 2009. On December 11, 2009, the Tribunal suspended the proceedings for a period of three months. The Tribunal has not yet resumed the proceedings.
Given the anticipated continued expenses relating to the prosecution by Intercomsoft of its claims against the Government of Moldova in the pending lawsuit in the Swiss Courts, and the related Moldovan arbitration proceeding, we are exploring a potential sale of Intercomsoft. There can be no assurance that the Company will consummate any such sale or if so, what the terms will be of any such transaction. In addition, there can be no assurance as to the outcome of such arbitration proceedings and actions.
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, 2009 (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, 2009.
NOTE 7 - RELATED PARTY TRANSACTIONS AND BALANCES
Transactions
(1)
Boris Birshtein serves as the Company’s Chairman of the Board of Directors (the “Chairman”) on a month-to-month basis and also serves as it Chief Executive Officer.
(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 is the Company’s majority shareholder.
Balances
Payables to related parties consist of the following:
These amounts are non-interest bearing and due on demand.
NOTE 8 - STOCK COMPENSATION PLANS
Pursuant to the Company’s 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 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 Company’s option activity is as follows:
The following table summarizes information regarding stock options outstanding at December 31, 2009:
As of the filing date of this Report, all of the options both inside and outside of the Omnibus Plan have expired.
NOTE 9 - INCOME TAX
The Company’s 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:
Deferred tax assets and liabilities consist of:
NOTE 10 - SEGMENT INFORMATION
The Company’s 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, 2009
YEAR ENDED DECEMBER 31, 2008
NOTE 11 - SUBSEQUENT EVENTS
On March 12, 2010, the Company received a notice from Royal HTM Group, wherein it advised the Company that on March 4, 2010, Aluminum Power had assigned to Royal HTM Group the Call Right granted to it under the Termination Agreement, as amended. On March 12, 2010 Royal HTM Group exercised the Call Right and requested that the Company issue to it the 21,000,000 shares. Such shares were issued to Royal HTM Group on March 15, 2010. Upon the issuance of the shares, Royal HTM Group owns 69,275,000 shares of the Company’s common stock
As of March 31, 2010, the Company evaluated all events or transactions that occurred after December 31, 2009 and has determined that there is no material or recognizable subsequent events or transactions which would require disclosure in the financial statements, other than as noted herein.
Subsequent events were evaluated as of April 5, 2010, the day the financial statement were available to be issued.
ITEM 8.
ITEM 8.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
ITEM 8 A.
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 Annual Report, the Company carried out, under the supervision and with the participation of the Company’s management, including its Chief Executive Officer and Chief Financial Officer, an evaluation of the effectiveness of the design and operation of the Company’s 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, 2009, the Company’s Chief Executive Officer and its Chief Financial Officer have concluded that, as of that date, the Company’s controls and procedures were not effective for the purposes described above.
There was no change in the Company’s 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, 2009 that has materially affected or is reasonably likely to materially affect the Company’s internal control over financial reporting.
Management’s 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, 2009, 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.
A material weakness in internal controls is a deficiency in internal control, or combination of control deficiencies, that adversely affects the Company’s 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 Company’s 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 Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the Company to provide only management’s report in this Annual Report.
PART III
ITEM 9.
ITEM 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, 2009, are set forth below. In May, 2009, we amended our By-laws providing for, among other things, a Board of Directors that consists of not less than two and not more than fifteen directors.
Background of Executive Officers and Directors
Boris Birshtein has served as our Chairman of the Board of Directors since January 1998 and as our Chief Executive Officer since May 2009. Since 1997 he has been the Chairman of the Board, President and principal shareholder of Royal HTM Group, Inc., our majority shareholder. 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.
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. from January 2001 to November 2004 and as its President from November 2004 to date. Mr. Braverman holds a BA in Economics from the University of Western Ontario.
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.
ITEM 10.
ITEM 10.
EXECUTIVE COMPENSATION
For the years ended December 31, 2009 and 2008, 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
_____________________________________
(1)
Such amount was accrued but not paid to Mr. Birshtein.
(2)
Such amount represents a monthly expense allowance of $1,800 totaling $21,600 annually, all of which was accrued but not paid, and $49,500 for auto lease and insurance premiums paid on behalf of Mr. Birshtein.
(3)
Such amount represents a monthly expense allowance of $1,800 totaling $21,600 annually, all of which was accrued but not paid, and approximately $50,500 for auto lease and insurance premiums paid on behalf of Mr. Birshtein.
(4)
Such amount was accrued but not paid to Mr. Braverman
(5)
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 2009 there were no options granted pursuant to the 2001 Omnibus Plan, as amended and no outstanding options were exercised during 2009.
Compensation of Directors
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, 2009 and 2008, there were no such payments made to any outside Director. As of December 31, 2009 we have no outside directors.
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. In May 2008, Mr. Birshtein agreed to also serve as our Chief Executive Officer, a position for which he is not compensated. We were unable to make any payments to Mr. Birshtein in years 2009 and 2008 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 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 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 Optionee’s or Participant's 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, 2009, of the 10,000,000 shares of our common stock reserved for issuance under the 2001 Omnibus Plan, as amended, options to acquire 1,000,000 shares of our common stock were outstanding, which subsequently expired on February 17, 2010 at such time there were no options issued or outstanding under the 2001 Omnibus Plan, as amended.
ITEM 11.
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, 2009, 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.
- - - - - - - - - - - - -
(1)
Based on a total of 83,472,328 shares of common stock, which includes: (i) 79,472,328 shares of common stock issued and outstanding as of December 31, 2009; (ii) options to purchase 1,000,000 shares of our common stock granted pursuant to the 2001 Omnibus 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 the sole shareholder.
(3)
Royal HTM Group is our majority shareholder. Mr. Birshtein, is the sole shareholder of Royal HTM Group.
(4)
Includes Messrs. Birshtein and Braverman.
ITEM 12.
ITEM 12.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During each of 2009 and 2008, 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. Additionally, approximately $49,500 and $50,000 was paid on Mr. Birshtein’s behalf for vehicle leasing and insurance expense in each of years 2009 and 2008, respectively.
During 2005 we engaged Royal HTM Group, Inc., a Canadian company owned and controlled by our Chairman of the Board, to render certain business development services to us. During each of 2009 and 2008 we accrued $120,000 for such services. In May 2008, Royal HTM Group became our majority shareholder.
During 2009 Royal HTM Group lent us $221,000 to cover on-going expenses and advanced $313,000 on our behalf. In 2008 Royal HTM Group lent us $221,000 to cover on-going operating expenses and advanced $317,000 on our behalf. As of December 31, 2009, we owe Royal HTM Group approximately $2,479,000. Such amount is non-interest bearing and is due on demand.
ITEM 13.
ITEM 13.
PRINCIPAL ACCOUNTANT FEES AND SERVICES
Paritz & Company, P.A. (“Paritz”) serves as our principal accountant. In 2009, Paritz billed us $25,500 for audit and review fees and $2,500 for tax return preparation and related fees. 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 Director’s 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.
ITEM 14.
ITEM 14.
EXHIBITS
The exhibits listed below are filed as part of this Annual Report.
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 5th day of April, 2010.
TRIMOL GROUP, INC.
By:
/s/ Boris Birshtein
Name:
Boris Birshtein
Title:
Chief Executive Officer and Chairman of the Board of Directors
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 5, 2010
Name:
Boris Birshtein
Title:
Chief Executive Officer and Chairman of the Board of Directors
By:
/s/ Jack Braverman
Date: April 5, 2010
Name:
Jack Braverman
Title:
Chief Financial Officer and Director