U.S.
Securities and Exchange Commission
Washington, D.C. 20549
Form
10-K
ANNUAL REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31,
2011
Commission file number: 000-26971
TRIMOL GROUP, INC.
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(Name
of small business issuer in its charter)
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DELAWARE
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13-3859706
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(State of Incorporation)
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(IRS EMPLOYER ID NO.)
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1221
AVENUE OF THE AMERICAS, SUITE 4200, NEW YORK, NY, 10020
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Address of principal offices)
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Registrant’s Telephone Number: (212) 554-4394
Securities registered under Section 12(b) of the Exchange Act:
None
Securities registered under Section 12(g) of the Exchange Act:
None
Title of Each Class
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Name of each Exchange on which listed
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Common Stock, par value $0.01 per share
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OTC Bulletin Board
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Indicate
by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 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
þ
No
¨
Indicate
by check mark if disclosure of delinquent files pursuant to Item 405 of Regulation S-K (§ 229/405 of this chapter) is not
contained herein, and will not be contained, to the best of Registrant’s knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.
¨
Registrant’s revenues for fiscal
year ended December 31, 2011 were $0.
The aggregate market value of the voting common equity held
by non-affiliates of the Registrant was approximately $2,300 as of June 30, 2011 computed on the basis of a closing price of $0.0001
per share on such date of the Registrant’s common stock as reported on the National Association of Securities Dealers, Inc.’s
Over the Counter Bulletin Board.
Indicate
by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting
company. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. Large
accelerated filer
¨
A
ccelerated filer
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Non-accelerated filer
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Smaller reporting company
þ
Indicate
by check mark whether the Registrant is a shell company as defined in Rule 12b-2 of the Securities Exchange Act of 1934. Yes
¨
No
þ
Transitional
Small Business Disclosure Format (check one): Yes
þ
No
o
The number of shares outstanding of the
Registrant’s common stock, as of March 30, 2012 was 100,472,328.
TABLE OF CONTENTS
Trimol Group Inc. – Form 10-K
Year Ended December 31, 2011
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PART I
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ITEM 1.
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DESCRIPTION OF BUSINESS
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3
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ITEM 1 A
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UNRESOLVED STAFF COMMENTS
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3
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ITEM 1 B
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RISK FACTORS
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4
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ITEM 2.
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DESCRIPTION OF PROPERTY
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8
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ITEM 3.
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LEGAL PROCEEDINGS
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9
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ITEM 4.
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SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
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10
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PART II
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ITEM 5.
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MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
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10
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ITEM 6.
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION
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11
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ITEM 7.
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FINANCIAL STATEMENTS
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13
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Report of Independent Registered Public Accounting Firm
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13
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Consolidated Balance Sheet
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14
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Consolidated Statement of Operations
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15
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Consolidated Statement of Changes in Shareholders’ Deficiency
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16
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Consolidated Statement of Cash Flows
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17
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Notes to Consolidated Financial Statements
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18
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ITEM 8.
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CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
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25
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ITEM 8-A
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CONTROLS AND PROCEDURES
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25
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PART III
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ITEM 9.
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DIRECTORS,
EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH SECTION 16 (a) OF THE EXCHANGE ACT
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27
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ITEM 10.
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EXECUTIVE COMPENSATION
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28
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ITEM 11.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
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32
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ITEM 12.
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
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33
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ITEM 13.
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PRINCIPAL ACCOUNTANT FEES AND SERVICES
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34
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ITEM 14.
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EXHIBITS
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34
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PART I
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ITEM 1.
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DESCRIPTION OF BUSINESS
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Description of the Company
Trimol Group Inc. (OTCBB: TMOL) is a Delaware
corporation. Although we are seeking business opportunities, as of December 31, 2011, and for the past five years, we did not have
any business operations that generated revenue.
Intercomsoft Limited (“Intercomsoft”)
is our wholly owned subsidiary. Although its does not currently have any operations, through April 2006, 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, Intercomsoft provided Moldova with a National Register of Population and a National
Passport System. 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. Moldova
has asserted that the Supply Agreement expired by its terms on April 29, 2006 and was not renewed. The non-renewal of the Supply
Agreement has been disputed by intercomsoft and is the subject of two pending legal actions. (See Item 3 - Legal Proceedings).
As used in this report, unless otherwise
required by the context, Trimol Group, Inc. and its subsidiary are sometimes collectively referred to as the "Company"
or "Trimol Group", or are implicit in the terms "we", "us" and "our".
Our Employees
We currently do not have any full time employees.
Our Chief Executive Officer and our Chief Financial Officer provide their services to us on a part-time basis. We also 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.
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Item 1A
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UNRESOLVED STAFF COMMENTS
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None
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, 2011 nor did we generate any revenue in the year ended December 31, 2010.
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, 2011 our liabilities
exceeded our assets by approximately $6,374,000. This circumstance, among others, raises 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.
While we continue to seek business opportunities,
we have limited operations that consist mainly of administrative and shareholder related 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
Our independent registered public accounting
firm has expressed doubt about our ability to continue as a going concern.
Our financial statements as of December
31, 2011, have been prepared under the assumption that we will continue as a going concern for the next twelve months. Our independent
registered public accounting firm has issued a report on these financial statements that includes a paragraph referring to the
fact that we have not generated any revenues and have a stockholders’ deficiency and expressing substantial doubt as to our
ability to continue as a going concern. Our ability to continue as a going concern is dependent upon, among other things, our ability
to obtain additional equity financing or other capital and, ultimately, to generate revenue and become profitable. Our financial
statements do not include any adjustments that might result from the outcome of this uncertainty.
Risks Related to our wholly owned subsidiary
Intercomsoft Limited (“Intercomsoft”)
Intercomsoft has no operations.
Although it is seeking business opportunities,
Intercomsoft has had no operations since 2006.
Intercomsoft operated in the Republic
of Moldova.
Intercomsoft is a party in two pending legal
actions (as more fully described in Item 3 - Legal Proceedings). Intercomsoft formerly operated in the Republic of Moldova, a country
with a historically uncertain economic and political climate. This may have a material adverse impact on our 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.
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 Securities and Exchange Commission (“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 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 shareholders meetings, quorum
requirements for such meetings and the rights of shareholders 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 shareholders 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 2011, the shares of our common stock
traded on the OTCBB at prices raging from a low of $0.002 to a high of $0.02 per share. Comparatively, during 2010, the shares
of our common stock traded at prices ranging from a low of $0.002 to a high of $0.003 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 twelve 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:
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Investors may have difficulty buying and selling or obtaining market
quotations;
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Market visibility for our common stock may be limited; and
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Lack of visibility for our common stock may have a depressive effect
on its market price.
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Penny stock regulations may impose certain restrictions on
marketability of our securities
The SEC 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 SEC 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 SEC, the market for penny stocks has suffered in recent years from patterns of fraud and abuse. Such patterns include:
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Control of the market for the security by one or a few broker-dealers
that are often related to the promoter or issuer;
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Manipulation of prices through prearranged matching of purchases and
sales and false and misleading press releases;
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“Boiler room” practices involving high pressure sales tactics
and unrealistic price projections by inexperienced sales persons;
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Excessive and undisclosed bid-ask differentials and markups by selling
broker-dealers; and
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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.
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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 100,472,328 shares of our common stock issued and outstanding
as of December 31, 2011, 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.
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ITEM 2.
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DESCRIPTION OF PROPERTY
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We maintain our office at 1221 Avenue of
the Americas, Suite 4200, New York, New York 10020, on a month-to-month tenancy.
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ITEM 3.
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LEGAL PROCEEDINGS
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In the normal course of business, the Company
may become subject to lawsuits and other claims and proceedings. Such matters are subject to uncertainty and outcomes are not predictable
with assurance. Management is not aware of any pending or threatened lawsuits or proceedings which would have a material
effect on the Company’s financial position, liquidity, or results of operations other than as follows:
On March 25,
2009, Intercomsoft commenced an action in the court of first instance in Geneva Switzerland for the appointment of an arbitration
tribunal in connection with its claims 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 pursuant to the terms of the ten year
Supply Agreement under which Intercomsoft had produced, since 1996, essential government documents for the Republic of Moldova
including passports, driver’s licenses, permits and national identification documents (the “Swiss Proceeding”).
The Swiss court granted Intercomsoft’s
request to establish an ad hoc arbitration panel to hear the merits of its claims in such proceeding. Two members of such
panel have been appointed. To date, the Government of Moldova has failed to appear in such action and is currently in default with
respect to its rights to appoint one of the three members of the ad hoc arbitration panel established in the Swiss Proceeding.
The Swiss court is currently awaiting a response from the Government of Moldova regarding service of the judgment establishing
the ad hoc arbitration panel.
The Moldovan
Defendants commenced a proceeding before the International Commercial Court of Arbitration of the Chamber of Commerce and Industry
of the Republic of Moldova
claiming that such court in Moldova was the proper court to administer
any arbitration between the parties in connection with the Supply Agreement. Intercomsoft objected to the jurisdiction
of the Moldovan Arbitration Court.
On July 16, 2010, Intercomsoft was notified that the pending arbitration proceeding
in Moldova was dismissed, without prejudice.
On or about November 5, 2010, the Moldovan
Defendants commenced another action before the courts of Moldova claiming that the Supply Agreement was properly terminated on
April 29, 2006 and seeking legal costs in the amount of approximately $1.6 million (the “Moldovan Proceeding”). On
or about November 24, 2010, Intercomsoft asserted a counterclaim in the Moldovan Proceeding seeking redress for its aforementioned
claims, and seeking damages of approximately $51 million, including interest and penalties which continue to accrue pursuant to
the terms of the Supply Agreement. On July 26, 2011, the District Court in Chisinau, Moldova issued a Judgment rejecting the Moldovan
Defendants’ claim for legal costs of approximately $1.6 million as unfounded, and awarding approximately $35.6 million in
damages to Intercomsoft. The Moldovan Defendants appealed the decision of the Moldovan District Court to the Economic Appeal Court
in Chisinau, Moldova. On December 13, 2011, the Appeal Court partially upheld the Judgment of the District Court, similarly rejecting
the Moldovan Defendants’ claim, and reduced the damage award to Intercomsoft to approximately $20.75 million. The Moldovan
Defendants have appealed the decision of the Appeal Court to the Supreme Court of Justice in Moldova. The case is currently pending
in that court.
There can be no assurance as to the outcome
of such arbitration proceedings and actions.
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ITEM 4.
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SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
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No matters were submitted during the fiscal
year covered by this Annual Report to a vote of security holders, through the solicitation of proxies or otherwise.
PART II
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ITEM 5.
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MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
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Our common stock is quoted and traded on
a limited and sporadic basis on the Over the Counter Bulletin Board (“OTCBB”) under the trading symbol TMOL. The limited
and sporadic trading does not constitute, nor should it be considered, an established public trading market for our common stock.
The following table sets forth the high and low closing bid prices for our common stock for the periods indicated, as reported
by the OTCBB. Such quotations reflect inter-dealer prices, without real mark-ups, mark-downs or commissions, and may not necessarily
represent actual transactions.
Quarter Ended
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High
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Low
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December 31, 2011
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$
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0.02
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$
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0.006
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September 30, 2011
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$
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0.02
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$
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0.0001
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June 30, 2011
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$
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0.02
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$
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0.0021
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March 31, 2011
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$
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0.0021
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$
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0.0021
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Quarter Ended
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High
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Low
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December 31, 2010
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$
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0.0021
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$
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0.0021
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September 30, 2010
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$
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0.0095
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$
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0.0011
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June 30 2010
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$
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0.0020
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$
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0.0021
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March 31, 2010
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$
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0.0036
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$
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0.0036
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Holders of Record
At December 31, 2011, there were 415 record
holders of our common stock. The number of record owners was determined from the Company’s shareholder records maintained
by the Company’s transfer agent.
Dividends
There are no restrictions that limit our
ability to pay dividends, other than those generally imposed by applicable state law. 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. 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.
Sale or Issuance of Securities
There were no issuances or sales of our
securities during year 2011. In March 2010 we issued 21,000,000 shares of our common stock to Royal HTM Group, Inc. (“Royal
HTM Group”), our majority shareholder, an entity owned and controlled by the two members of our Board of Directors.
As of December 31, 2011, there were no options
issued and outstanding under the 2001 Omnibus Plan, as amended, nor were there any options outside of such Plan issued and outstanding.
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ITEM 6.
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION
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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
Although it is seeking business opportunities,
the Company did not engage in any business operations that generated revenue in year 2011 or 2010.
Comparison of Year Ended December 31, 2011 to Year Ended
December 31, 2010
During the years ended
December 31, 2011 and December 31, 2010 we generated no revenue.
Total expenses for the year ended December
31, 2011 were $785,000, and were $968,000 in the year ended December 31, 2010, all of which were general corporate and administrative
expenses. Such amounts include accrued compensation due to our officers in the amount of $411,000 in year 2011 and $418,000 in
year 2010.
The reduction in general corporate administrative
expenses in year 2011, as compared to 2010, were the result of the reduction of certain expenses related to consulting services
provided to us by Royal HTM Group, our majority shareholder.
We had a net loss from operations in 2011
of $785,000 and in 2010 we had a net loss of approximately $968,000.
Liquidity & Capital Resources
We have no operations that generate revenue,
and have had no operations that generate revenues since 2006. At December 31, 2011 our cash balance was approximately $12,000 which
is not sufficient to fund our operating expenses for the foreseeable future.
Since 2006, we have funded our operating
expenses from loans and advances provided by our Chairman of the Board and Royal HTM Group, our majority shareholder, a company
owned and controlled by the two members of our Board of Directors. We are dependent upon these loans to fund our future operating
expenses. None of our officers, directors or shareholders are under any obligation to provide us with any future loans or advances.
However, if they do not loan us funds at a time when funds are necessary, we may be forced to suspend our operations.
Our assets are nominal and our liabilities
currently exceed our assets by approximately $6,374,000. These circumstances, among others, raise substantial doubt about our ability
to continue operations.
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
|
FINANCIAL STATEMENTS
|
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We have audited the accompanying consolidated
balance sheets of Trimol Group, Inc. and its subsidiary (the “Company") as of December 31, 2011 and 2010 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 has a shareholders’
deficiency of $6,374,000 at December 31, 2011. 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,
2011 and 2010 and the results of its operations and cash flows for each of the two years in the period ended December 31, 2011
in conformity with accounting principles generally accepted in the United States of America
.
|
/s/ Paritz & Company, P.A.
|
Hackensack, New Jersey
March 16, 2012
TRIMOL GROUP, INC.
|
|
CONSOLIDATED BALANCE SHEETS
|
|
|
DECEMBER 31,
|
|
|
|
2011
|
|
|
2010
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
|
Cash
|
|
$
|
12,000
|
|
|
$
|
8,000
|
|
Total current assets
|
|
|
12,000
|
|
|
|
8,000
|
|
|
|
|
|
|
|
|
|
|
TOTAL ASSETS
|
|
$
|
12,000
|
|
|
$
|
8,000
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS’ DEFICIENCY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
Related parties
|
|
$
|
5,553,000
|
|
|
$
|
4,762,000
|
|
Accrued expenses
|
|
|
833,000
|
|
|
|
835,000
|
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES
|
|
|
6,386,000
|
|
|
|
5,597,000
|
|
|
|
|
|
|
|
|
|
|
SHAREHOLDERS DEFICIENCY
|
|
|
|
|
|
|
|
|
Preferred Stock; $1.00 par value, 10,000 shares authorized, no shares issued and outstanding
|
|
|
|
|
|
|
|
|
Common Stock; $0.01 par value, 130,000,000 shares authorized 100,472,328 issued and outstanding at December 31, 2011 and December 31, 2010
|
|
|
1,005,000
|
|
|
|
1,005,000
|
|
Additional Paid In Capital
|
|
|
5,739,000
|
|
|
|
5,739,000
|
|
Retained Earnings
|
|
|
(13,118,000
|
)
|
|
|
(12,333,000
|
)
|
TOTAL SHAREHOLDERS’ DEFICIENCY
|
|
|
(6,374,000
|
)
|
|
|
(5,589,000
|
)
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND SHAREHOLDERS’ DEFICIENCY
|
|
$
|
12,000
|
|
|
$
|
8,000
|
|
The accompanying notes are an integral part of the
financial statements.
TRIMOL GROUP, INC.
|
|
CONSOLIDATED STATEMENTS OF OPERATIONS
|
|
|
YEAR ENDED DECEMBER 31,
|
|
|
|
2011
|
|
|
2010
|
|
|
|
|
|
|
|
|
REVENUES
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
GENERAL AND ADMINISTRATIVE EXPENSES
|
|
|
785,000
|
|
|
|
968,000
|
|
|
|
|
|
|
|
|
|
|
NET LOSS
|
|
$
|
(785,000
|
)
|
|
$
|
(968,000
|
)
|
|
|
|
|
|
|
|
|
|
Net loss per share (Basic and Diluted)
|
|
$
|
(.01
|
)
|
|
$
|
(.01
|
)
|
|
|
|
|
|
|
|
|
|
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING-BASIC AND DILUTED
|
|
|
100,472,328
|
|
|
|
96,387,396
|
|
The accompanying notes are an integral part of the
financial statements
TRIMOL GROUP, INC.
|
|
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ DEFICIENCY
|
|
|
COMMON STOCK
|
|
|
ADDITIONAL
|
|
|
|
|
|
|
|
|
|
SHARES
|
|
|
|
|
|
PAID-IN
|
|
|
|
|
|
|
|
|
|
OUTSTANDING
|
|
|
AMOUNT
|
|
|
CAPITAL
|
|
|
DEFICIT
|
|
|
TOTAL
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BALANCE- JANUARY 1, 2010
|
|
|
79,472,328
|
|
|
$
|
795,000
|
|
|
$
|
5,949,000
|
|
|
$
|
(11,365,000
|
)
|
|
$
|
(4,621,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EXERCISE OF CALL OPTION
|
|
|
21,000,000
|
|
|
|
210,000
|
|
|
|
(210,000
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET LOSS
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(968,000
|
)
|
|
|
(968,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BALANCE- DECEMBER 31, 2010
|
|
|
100,472,328
|
|
|
|
1,005,000
|
|
|
|
5,739,000
|
|
|
|
(12,333,000
|
)
|
|
|
(5,589,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET LOSS
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(785,000
|
)
|
|
|
(785,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BALANCE - DECEMBER 31, 2011
|
|
|
100,472,328
|
|
|
$
|
1,005,000
|
|
|
$
|
5,739,000
|
|
|
$
|
(13,118,000
|
)
|
|
$
|
(6,374,000
|
)
|
The accompanying notes are an integral part of the financial
statements
TRIMOL GROUP, INC.
|
|
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
|
YEAR ENDED DECEMBER 31,
|
|
|
|
2011
|
|
|
2010
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM OPERATING ACTIVITIES
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(785,000
|
)
|
|
$
|
(968,000
|
)
|
ADJUSTMENTS TO RECONCILE NET LOSS TO NET CASH USED IN OPERATING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accrued expenses to related parties
|
|
|
582,000
|
|
|
|
743,000
|
|
|
|
|
|
|
|
|
|
|
CHANGES IN OPERATING ASSETS AND LIABILITIES
|
|
|
|
|
|
|
|
|
Accrued expenses
|
|
|
(2,000
|
)
|
|
|
1,000
|
|
|
|
|
|
|
|
|
|
|
NET CASH USED IN OPERATING ACTIVITIES
|
|
|
(205,000
|
)
|
|
|
(224,000
|
)
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
Proceeds from related parties
|
|
|
209,000
|
|
|
|
219,000
|
|
|
|
|
|
|
|
|
|
|
NET CASH PROVIDED BY FINANCING ACTIVITIES
|
|
|
209,000
|
|
|
|
219,000
|
|
|
|
|
|
|
|
|
|
|
INCREASE (DECREASE) IN CASH
|
|
|
4,000
|
|
|
|
(5,000
|
)
|
|
|
|
|
|
|
|
|
|
CASH - BEGINNING OF YEAR
|
|
|
8,000
|
|
|
|
13,000
|
|
|
|
|
|
|
|
|
|
|
CASH - END OF YEAR
|
|
$
|
12,000
|
|
|
$
|
8,000
|
|
The accompanying notes are an integral part of the financial
statements.
TRIMOL GROUP, INC.
|
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
NOTE 1 – DESCRIPTION OF BUSINESS
Trimol Group, Inc. (the “Company”) was incorporated
in 1953 in Delaware. Although the Company is seeking business opportunities, as of December 31, 2011, and for the past five years,
it did not have any operations other than administrative operations and did not have any business operations that generated revenue.
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 legal actions related to the prior operations of Intercomsoft.
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 2011 or in 2010, nor has it generated any revenue since April 2006. Further, as shown on the accompanying
balance sheet, the Company has a shareholder’s deficiency of $6,374,000. 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.
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 2011 or in year 2010, nor has it generated revenue since April 2006.
Income Taxes
The Company uses the asset and liability method of accounting
for income taxes in accordance with ASC Topic 740, “Income Taxes.” Under this method, income tax expense is recognized
for the amount of: (i) taxes payable or refundable for the current year and (ii) deferred tax consequences of temporary differences
resulting from matters that have been recognized in an entity’s financial statements or tax returns. Deferred tax assets
and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates
is recognized in the results of operations in the period that includes the enactment date. A valuation allowance is provided to
reduce the deferred tax assets reported if based on the weight of the available positive and negative evidence, it is more likely
than not some portion or all of the deferred tax assets will not be realized.
ASC Topic 740.10.30 clarifies the accounting for uncertainty
in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and measurement
attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return.
ASC Topic 740.10.40 provides guidance on derecognition, classification, interest and penalties, accounting in interim periods,
disclosure, and transition. The Company has no material uncertain tax positions for any of the reporting periods presented.
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 Measurements
The Company adopted the provisions of ASC Topic 820, “Fair
Value Measurements and Disclosures”, which defines fair value as used in numerous accounting pronouncements, establishes
a framework for measuring fair value and expands disclosure of fair value measurements.
The estimated fair value of certain financial instruments, including
cash and cash equivalents, payables to related parties, and accounts payable and accrued expenses are carried at historical cost
basis, which approximates their fair values because of the short-term nature of these instruments.
ASC 820 defines fair value as the exchange price that would
be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset
or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value
hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring
fair value. ASC 820 describes three levels of inputs that may be used to measure fair value:
Level 1 — quoted prices in active markets for identical
assets or liabilities
Level 2 — quoted prices for similar assets and liabilities
in active markets or inputs that are observable
Level 3 — inputs that are unobservable (for example cash
flow modeling inputs based on assumptions)
New Accounting Pronouncements
From time to time, new accounting pronouncements
are issued by the Financial Accounting Standards Board or other standard setting bodies that may have an impact on the Company’s
accounting and reporting. The Company believes that such recently issued accounting pronouncements and other authoritative guidance
for which the effective date is in the future either will not have an impact on its accounting or reporting or that such impact
will not be material to its financial position, results of operations, and cash flows when implemented.
NOTE 4 - RISKS AND UNCERTAINTIES
In addition to the risk factors set forth
in Part 1, Item 1B herein of the Company’s Annual Report, the following risk factor relating to the Company’s subsidiary
should be carefully considered:
The Company’s subsidiary operated
in the Republic of Moldova.
The Company’s wholly owned subsidiary, Intercomsoft, 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.
NOTE 5 - LEGAL PROCEEDINGS
In the normal course of business, the Company may become subject
to lawsuits and other claims and proceedings. Such matters are subject to uncertainty and outcomes are not predictable with assurance.
Management is not aware of any pending or threatened lawsuits or proceedings which would have a material effect on the Company’s
financial position, liquidity, or results of operations other than as follows:
On March 25, 2009, Intercomsoft commenced
an action in the court of first instance in Geneva Switzerland for the appointment of an arbitration tribunal in connection with
its claims against
the Ministry of Economics of the Republic of Moldova and the Government of the Republic of Moldova (the
“Moldovan Defendants”) seeking damages for breach of contract and an injunction prohibiting Moldova from producing
further essential government documents pursuant to the terms of the ten year Supply Agreement under which Intercomsoft had produced,
since 1996, essential government documents for the Republic of Moldova including passports, driver’s licenses, permits and
national identification documents (the “Swiss Proceeding”).
The Swiss court granted Intercomsoft’s request to establish
an ad hoc arbitration panel to hear the merits of its claims in the Swiss Proceeding. Two members of such panel have been
appointed. To date, the Government of Moldova has failed to appear in the Swiss Proceeding and is currently in default with respect
to its rights to appoint one of the three members of the ad hoc arbitration panel established in the Swiss Proceeding. The
Swiss court is currently awaiting a response from the Government of Moldova regarding service of the judgment establishing the
ad hoc arbitration panel. There can be no assurance as to the outcome of the Swiss Proceeding.
In a separate action, on or about November 5, 2010, the Moldovan
Defendants commenced another action before the courts of Moldova claiming that the Supply Agreement was properly terminated on
April 29, 2006 and seeking legal costs in the amount of approximately $1.6 million (the “Moldovan Proceeding”). On
or about November 24, 2010, Intercomsoft asserted a counterclaim in the Moldovan Proceeding seeking redress for its aforementioned
claims, and seeking damages of approximately $51 million, including interest and penalties which continue to accrue pursuant to
the terms of the Supply Agreement. On July 26, 2011, the District Court in Chisinau, Moldova issued a Judgment rejecting the Moldovan
Defendant’s claim for legal costs of approximately $1.6 million as unfounded, and awarding approximately $35.6 million in
damages to Intercomsoft. The Moldovan Defendants appealed the decision of the Moldovan District Court to the Economic Appeal Court
in Chisinau, Moldova. On December 13, 2011, the Appeal Court partially upheld the Judgment of the District Court, similarly rejecting
the Moldovan Defendant’s claim, and reduced the damage award to Intercomsoft to approximately $20.75 million. The Moldovan
Defendants have appealed the decision of the Appeal Court to the Supreme Court of Justice in Moldova. The case is currently pending
in that court.
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, 100,472,328 of which were issued and outstanding as of December 31, 2011.
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, 2011.
NOTE 7 - RELATED PARTY TRANSACTIONS
AND BALANCES
In May 2008 Royal HTM Group, Inc. (“Royal HTM Group”), a company owned and
controlled by the Company’s two directors, cancelled $400,000 of the Company’s indebtedness to it in exchange for
a call right on 21,000,000 shares of the Company’s common stock. In March 2010 Royal HTM Group exercised such
call right and the Company issued to it 21,000,000 shares of its common stock.
Additionally, the following schedule sets
forth various obligations of the Company to related parties.
Transactions
|
|
2011
|
|
|
2010
|
|
|
|
|
|
|
|
|
Compensation and related expenses of the Company’s Chairman of the Board and Chief Executive Officer (1)
|
|
$
|
291,000
|
|
|
$
|
298,000
|
|
|
|
|
|
|
|
|
|
|
Compensation of the Company’s Chief Financial Officer (2)
|
|
|
120,000
|
|
|
|
120,000
|
|
|
|
|
|
|
|
|
|
|
Cash advances from Royal HTM Group (3)
|
|
|
209,000
|
|
|
|
219,000
|
|
|
|
|
|
|
|
|
|
|
Cash advances in the form of direct payment of expenses by Royal HTM Group (3)
|
|
|
36,000
|
|
|
|
200,000
|
|
|
|
|
|
|
|
|
|
|
Business development services provided by Royal HTM Group (3)
|
|
|
120,000
|
|
|
|
120,000
|
|
|
|
|
|
|
|
|
|
|
Royal HTM Group expense allowance (4)
|
|
|
15,000
|
|
|
|
-
|
|
|
|
$
|
791,000
|
|
|
$
|
957,000
|
|
|
1)
|
Boris Birshtein serves as the Company’s Chairman of the Board of Directors and its Chief
Executive Officer on a month-to-month basis. Mr. Birshtein owns 50% of Royal HTM Group, our majority shareholder.
|
|
2)
|
Jack Braverman serves as a member of the Company’s Board of Directors and as the Company’s
Chief Financial Officer on a month-to-month basis. Mr. Braverman owns 50% of Royal HTM Group, our majority shareholder.
|
|
3)
|
Royal HTM Group, a Canadian company owned and controlled by the Company’s two members of
its Board of Directors, renders 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.
|
|
4)
|
Effective April 1, 2011 the Company agreed to a quarterly expense allowance of $5,000 for Royal
HTM Group for expenses incurred in connection with its business development services rendered to the Company.
|
Balances
Payables to related parties
consist of the following:
|
|
DECEMBER 31,
|
|
|
|
2011
|
|
|
2010
|
|
Amount due to Royal HTM Group
|
|
$
|
3,403,000
|
|
|
$
|
3,023,000
|
|
|
|
|
|
|
|
|
|
|
Accrued compensation due to the Company’s Chief Financial Officer
|
|
|
360,000
|
|
|
|
240,000
|
|
|
|
|
|
|
|
|
|
|
Accrued compensation due to the Company’s Chairman of the Board
|
|
|
1,790,000
|
|
|
|
1,499,000
|
|
|
|
$
|
5,553,000
|
|
|
$
|
4,762,000
|
|
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.
As of December 31, 2011, there are no options
issued and outstanding under the Company’s 2001 Omnibus Plan, as amended.
A summary of the Company’s option activity
is as follows:
|
|
Inside
Plan
|
|
|
Outside
Plan
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
Balance – January 1, 2010
|
|
|
1,000,000
|
|
|
|
3,000,000
|
|
|
|
4,000,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Granted
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercised
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expired
|
|
|
1,000,000
|
|
|
|
3,000,000
|
|
|
|
4,000,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance – December 31, 2010 and 2011
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
As of December 31, 2011, all of the previously
issued options both inside and outside of the Omnibus Plan, as amended, 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:
|
|
DECEMBER 31,
|
|
|
2011
|
|
|
2010
|
|
|
|
|
|
|
|
|
Income tax benefit at statutory rate of 34%
|
|
$
|
267,000
|
|
|
$
|
329,000
|
|
Change in valuation allowance
|
|
|
(267,000
|
)
|
|
|
(329,000
|
)
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Deferred tax assets consist of:
|
|
DECEMBER 31,
|
|
|
|
2011
|
|
|
2010
|
|
|
|
|
|
|
|
|
Deferred tax assets (liabilities):
|
|
|
|
|
|
|
|
|
Net operating loss carryforward
|
|
|
7,286,000
|
|
|
|
7,020,000
|
|
|
|
|
7,286,000
|
|
|
|
7,020,000
|
|
Valuation allowance (see Note 2)
|
|
|
(7,286,000
|
)
|
|
|
(7,020,000
|
)
|
|
|
$
|
-
|
|
|
$
|
-
|
|
For the year ended December 31, 2011, the Company had approximately
$21,400,000 of federal and state net operating loss carryovers (“NOLs”) which begin to expire in 2026. The NOLs may
be subject to limitation under Internal Revenue Code Section 382 should there be a greater than 50% ownership change as determined
under regulations.
In assessing the realization of deferred tax assets, management
considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized. The ultimate
realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those
temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future
taxable income and tax planning strategies in making this assessment. Based on the assessment, the Company has established a full
valuation allowance against all of the deferred tax assets for every period because it is more likely than not that all of the
deferred tax assets will not be realized.
We are currently open to audit for all years ended
December
31, 2001
to present because of our large NOL carryforwards. However, we are only open to additional tax assessments under
the Internal Revenue Code statute of limitations for the years ended
December 31, 2008
to present;
however, we do not currently have any ongoing tax examinations.
NOTE 10 - SUBSEQUENT EVENTS
The Company evaluated all events or transactions that occurred
subsequent to December 31, 2011 to the date these financial statements were issued and has determined that there are no material
subsequent events or transactions which would require recognition or disclosure in the financial statements.
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 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, 2011, 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, 2011 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, 2011, 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.
|
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, 2011, are set forth below.
NAME
|
|
AGE
|
|
POSITION WITH COMPANY
|
|
|
|
|
|
Boris Birshtein
|
|
65
|
|
Chairman of the Board of Directors and Chief Executive Officer
|
Jack Braverman
|
|
43
|
|
Director; Chief Financial Officer
|
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 May 2009
he has also served as the President and Chief Executive Officer of Intercomsoft Limited, our wholly owned subsidiary and since
June 2009 has served as a director of such subsidiary. Additionally, since 1997 he has been the Chairman of the Board, President
and a principal shareholder of Royal HTM Group, our majority shareholder. Since 1999, Mr. Birshtein served as the Chairman of Eontech
Group Inc., of which he was the principal shareholder, until its dissolution in 2010 and served as the Chairman of the Board of
Aluminum-Power Inc. from 1999 until its dissolution in 2010. 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 and has served as the Vice President,
Treasurer and Secretary of Intercomsoft Limited, our wholly owned subsidiary, since May 2009 and since June 2009 has served as
a director of such subsidiary. Mr. Braverman has served as the President of Royal HTM Group, our majority shareholder, since October
2010 (and previously served as its President from December 1997 through April 2001 and its Vice President from May 2001 to September
2010), and as of October 2010 is a principal shareholder of such entity. Mr. Braverman also served as the President of Eontech
Group, Inc. from July 1999 to its dissolution in 2010, and as the Vice President of Aluminum-Power Inc. from January 2001 to November
2004 and as its President from November 2004 to its dissolution in 2010. Mr. Braverman holds a BA in Economics from the University
of Western Ontario.
Board of Directors
Our By-laws provide, among other things,
that the Board of Directors will consist of not less than two and not more than fifteen directors. All Directors serve for one
year or such longer period until their successors are elected and qualify. The Board of Directors appoints our officers and their
terms of office are, unless otherwise provided in employment contracts, at the discretion of the Board of Directors. In 2011 our
Board of Directors was comprised of two members, who are related to one another. Mr. Birshtein, our Chairman of the Board and Chief
Executive Officer, is the uncle of Mr. Braverman, who is a director and our Chief Financial Officer.
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.
|
EXECUTIVE COMPENSATION
|
For the years ended December 31, 2011 and
2010, the following individuals were entitled to receive the following compensation for services rendered to us. See “Employment
Agreements” for a description of compensation arrangements entered into by us with certain of our executive officers and
directors.
Summary Compensation Table
|
|
|
|
|
Annual Compensation
|
|
|
Long Term Compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
AWARDS
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Annual
|
|
|
Securities
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation
|
|
|
Underlying
|
|
|
All Other
|
|
Name & Principal Position
|
|
Year
|
|
|
Salary ($)
|
|
|
($)
|
|
|
Options/ SARs
|
|
|
Compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Boris Birshtein
|
|
|
2011
|
|
|
$
|
276,570
|
(1)
|
|
$
|
21,600
|
(2)
|
|
|
-
|
|
|
|
|
|
Chairman of the Board
|
|
|
2010
|
|
|
$
|
276,570
|
(1)
|
|
$
|
72,000
|
(3)
|
|
|
-
|
|
|
|
|
|
Chief Executive Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jack Braverman
|
|
|
2011
|
|
|
$
|
120,000
|
(4)
|
|
|
|
|
|
|
-
|
|
|
|
|
|
Chief Financial Officer
|
|
|
2010
|
|
|
$
|
120,000
|
(4)
|
|
$
|
15,000
|
(5)
|
|
|
-
|
|
|
|
|
|
|
(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, which was accrued but not paid to
Mr. Birshtein.
|
|
(3)
|
Such amount represents a monthly expense allowance of $1,800, totaling $21,600 annually, which was accrued but not paid to
Mr. Birshtein, and approximately $50,000 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 2011 there were no options issued or
outstanding pursuant to the 2001 Omnibus Plan, as amended.
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, 2011 and 2010, we had no outside directors and, accordingly, there were no payments
made to any outside Director.
Employment Agreements
The employment agreement
with Boris Birshtein, our Chairman of the Board of Directors, expired on December 31, 2003 and was not renewed. Thereafter, pursuant
to a letter agreement dated March 10, 2004 between he and us, Mr. Birshtein agreed to continue to serve as our Chairman of the
Board of Directors on a month-to-month basis on substantially the same terms as were provided for in his prior employment agreement
including, among other things, a monthly consulting fee of $23,047 and a monthly expense allowance of $1,800. We were unable to
make any payments to Mr. Birshtein in years 2011 and 2010 and all of such amounts due to him have been accrued. In May 2008, Mr.
Birshtein agreed to also serve as our Chief Executive Officer, a position for which he is not compensated.
2001 Omnibus Plan, As
Amended
In January 2001, our Board of Directors
adopted the 2001 Omnibus Plan, which became effective in February 2001 after shareholder 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 shareholders 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. In December 2010 our Board of Directors approved a
resolution extending the 2001 Omnibus Plan for a period of five years, to January 2016.
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.
Pursuant to a resolution of the Company’s
Board of Directions on December 13, 2010, no Awards may be granted under the 2001 Omnibus Plan, as amended, on or after January
2, 2016, but Awards granted prior to such date may be exercised in accordance with their terms.
As of December 31, 2011,
of the 10,000,000
shares of our common stock reserved for issuance under the 2001 Omnibus Plan, as amended, there were no options issued or outstanding.
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 shareholders who were known by us to be the beneficial
owners of more than 5% of our common stock as of December 31, 2011, 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
.
|
|
AMOUNT AND NATURE OF
|
|
|
PERCENT OF CLASS
|
|
NAME OF BENEFICIAL OWNER
|
|
BENEFICIAL
OWNER (1)
|
|
|
(1)
|
|
|
|
|
|
|
|
|
Boris Birshtein
|
|
|
42,284,500
|
(2)
|
|
|
42
|
%
|
1221 Avenue of the Americas, Suite 4200
|
|
|
|
|
|
|
|
|
New York, New York, 10020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Royal HTM Group, Inc.
|
|
|
|
|
|
|
|
|
100 King Street West, Suite 5600
|
|
|
|
|
|
|
|
|
Toronto, Ontario M5X 1C9
|
|
|
69,275,000
|
(3)
|
|
|
69
|
%
|
|
|
|
|
|
|
|
|
|
Jack Braverman
|
|
|
35,637,500
|
(4)
|
|
|
35
|
%
|
1221 Avenue of the Americas, Suite 4200
|
|
|
|
|
|
|
|
|
New York, NY 10020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
P.L.T. International, Inc
|
|
|
8,225,000
|
|
|
|
8
|
%
|
7300 Yonge Street
|
|
|
|
|
|
|
|
|
Toronto, Ontario L4J 7Y5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Executive Officers and
|
|
|
77,922,000
|
|
|
|
77
|
%
|
Directors as a Group (2 persons) (5)
|
|
|
|
|
|
|
|
|
|
(1)
|
Based on a total of 100,472,328 shares of common stock issued and outstanding as of December 31, 2011.
|
|
(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 one half of the 69,275,000 shares of our common
stock owned by Royal HTM Group, of which Mr. Birshtein is a 50% shareholder.
|
|
(3)
|
Royal HTM Group is our majority shareholder. Mr. Birshtein and Mr. Braverman each own 50% of Royal HTM Group.
|
|
(4)
|
Represents 1,000,000 shares of our common stock owned directly by Mr. Braverman and one half of the 69,275,000 shares of our
common stock owned by Royal HTM Group, of which Mr. Braverman is a 50% shareholder.
|
|
(5)
|
Includes Messrs. Birshtein and Braverman.
|
|
ITEM 12.
|
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
|
Mr. Boris Birshtein, Chairman of our Board
of Directors and our Chief Executive Officer and Jack Braverman, a member of our Board of Directors and our Chief Financial Officer,
own or control approximately 77% of our issued and outstanding shares of common stock.
Our Chief Executive Officer
During 2011 we accrued $291,000 due to Mr.
Birshtein for services related to his performance as the Chairman of the Board and in 2010 we accrued $298,000 of such compensation.
We have been unable to pay any compensation to Mr. Birshtein in over five years and at December 31, 2011 we owe Mr. Birshtein approximately
$1,790,000.
Our Chief Financial Officer
During each of 2011 and 2010, we accrued
$120,000 in compensation due to Mr. Braverman related to his performance of services as our Chief Financial Officer. We have been
unable to pay any compensation to Mr. Braverman in three years and at December 31, 2011 we owe Mr. Braverman approximately $360,000.
Our Majority Shareholder
Royal HTM Group, a Canadian company owned
and controlled by Messrs. Birshtein and Braverman, is our majority shareholder and renders certain business development services
to us. We agreed to pay Royal HTM Group $120,000 annually in connection with such business development services, but have been
unable to pay it any of such fees since 2006. During each of 2011 and 2010 we accrued $120,000 for such business development services.
During 2011 Royal HTM Group lent us approximately
$209,000 to cover on-going operating expenses and advanced approximately $36,000 on our behalf. In 2010 Royal HTM Group lent us
approximately $219,000 to cover on-going expenses and advanced approximately $200,000 on our behalf.
In May 2008 Royal HTM Group, cancelled $400,000
of the Company’s indebtedness to it in exchange for, among other things, a call right on 21,000,000 shares of our common
stock. In March 2010 Royal HTM Group, exercised such call right and we issued to it 21,000,000 shares of our common stock.
As of December 31, 2011, we owe Royal HTM
Group approximately $3,403,000 representing accrued consulting fees as well as loans and advances to the Company since 2006 to
cover on-going operating expenses. Such amount is non-interest bearing and is due on demand.
|
ITEM 13.
|
PRINCIPAL ACCOUNTANT FEES AND SERVICES
|
Paritz &
Company, P.A. (“Paritz”)
serves as our principal accountant. In 2011, Paritz billed us $25,500 for audit and
review fees and $2,550 for tax return preparation and related fees. In 2010 Paritz billed us $25,500 for audit and review fees
and $2,750 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.
The exhibits listed below are filed as part
of this Annual Report.
Exhibit
|
|
Document
|
|
|
|
3.1
|
|
Articles of Incorporation (incorporated by reference to the Registration Statement on Form 10-SB filed with the Securities and Exchange Commission under File No. 000-28144).
|
|
|
|
3.2
|
|
By-laws (incorporated by reference to the Registration Statement on Form 10-SB filed with the Securities and Exchange Commission under File No. 28144).
|
|
|
|
21
|
|
Subsidiary of the Registrant.
|
|
|
|
23
|
|
Consent of Independent Registered Public Accounting Firm
|
|
|
|
31.1
|
|
Chief Executive Officer Certification
|
|
|
|
31.2
|
|
Chief Financial Officer Certification
|
|
|
|
32.1
|
|
Chief Executive Officer Certification pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
|
|
|
32.2
|
|
Chief Financial Officer Certification pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
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 30
th
day of March, 2012.
TRIMOL GROUP, INC.
By:
|
/s/ Boris Birshtein
|
|
Name:
|
Boris Birshtein
|
Title:
|
Chief Executive Officer (Principal Executive Officer)
|
By:
|
/s/ Jack Braverman
|
|
Name:
|
Jack Braverman
|
Title:
|
Chief Financial Officer
|
In accordance with
the Exchange Act, this report has been signed by the following persons on behalf of the registrant and in the capacities set forth
below, on March 30, 2012.
By:
|
/s/ Boris Birshtein
|
|
Name:
|
Boris Birshtein
|
Title:
|
Director
|
By:
|
/s/ Jack Braverman
|
|
Name:
|
Jack Braverman
|
Title:
|
Director
|
Grafico Azioni Trimol (CE) (USOTC:TMOL)
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