-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, BPZUiRxGCOnmlu7eE4OL87rChxz3l1R/CqqYss2AldOmI8SNV+RcVrJe1wBALU8m ixeZzOJt39ZtoOzaOimN+w== 0001169232-03-006576.txt : 20031113 0001169232-03-006576.hdr.sgml : 20031113 20031113085314 ACCESSION NUMBER: 0001169232-03-006576 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20030930 FILED AS OF DATE: 20031113 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TRIMOL GROUP INC CENTRAL INDEX KEY: 0001011733 STANDARD INDUSTRIAL CLASSIFICATION: COMMERCIAL PRINTING [2750] IRS NUMBER: 133859706 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-28144 FILM NUMBER: 03995815 BUSINESS ADDRESS: STREET 1: 1285 AVENUE OF THE AMERICAS STREET 2: 35TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10019 BUSINESS PHONE: 2125544394 MAIL ADDRESS: STREET 1: 1285 AVENUE OF THE AMERICAS STREET 2: 35TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10019 FORMER COMPANY: FORMER CONFORMED NAME: NUTRONICS INTERNATIONAL INC DATE OF NAME CHANGE: 19960404 10QSB 1 d57416_10-qsb.txt FORM 10QSB U.S. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-QSB |X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2003 |_| TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT For the transition period from ___ to ___ Commission file number: 000-26971 TRIMOL GROUP, INC. (Exact Name of Small Business Issuer as it appears in its charter) DELAWARE (State or other Jurisdiction of Incorporation or Organization) 13-3859706 (I.R.S. Employer Identification No.) 1285 Avenue of the Americas, 35th Floor New York, New York 10019 (Address of principal executive offices) (212) 554-4394 (Issuer's Telephone Number) As of November 13, 2003, there were 101,139,000 issued and outstanding shares of the Company's common stock. Transitional Small Business Disclosure Format (Check one): |_| Yes |X| No Accelerated filer as defined in Rule 12b-2 of the Securities Act of 1934. |_| Yes |X| No TABLE OF CONTENTS PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS ....................................... F-1 - F-9 INDEPENDENT ACCOUNTANTS' REVIEW REPORT ..................... F-1 CONSOLIDATED BALANCE SHEET ................................. F-2 CONSOLIDATED STATEMENT OF OPERATIONS ....................... F-3 CONSOLIDATED STATEMENT OF CASH FLOWS ....................... F-4 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ............. F-5 - F-8 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS AND PLAN OF OPERATION . 2 ITEM 3. CONTROLS AND PROCEDURES .................................... 5 PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS .......................................... 7 ITEM 2. CHANGES IN SECURITIES ...................................... 7 ITEM 3. DEFAULTS UPON SENIOR SECURITIES ............................ 7 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS ........ 7 ITEM 5. OTHER INFORMATION .......................................... 8 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K ........................... 9 SIGNATURES ......................................................... 10 PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS TRIMOL GROUP, INC. CONSOLIDATED FINANCIAL STATEMENTS AS OF SEPTEMBER 30, 2003 INDEPENDENT ACCOUNTANTS' REVIEW REPORT To the Board of Directors and Shareholders of Trimol Group, Inc. We have reviewed the accompanying consolidated balance sheet of Trimol Group, Inc. (the "Company") as of September 30, 2003 and the related consolidated statements of operations and cash flows for the nine and three month periods ended September 30, 2003 and 2002. These financial statements are the responsibility of the Company's management. We conducted our review in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards, the objective of which is to express an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our review, we are not aware of any material modifications that should be made to the consolidated financial statements referred to above for them to be in conformity with generally accepted accounting principles. PARITZ & COMPANY, P.A. Hackensack, New Jersey Date: November 5, 2003 F-1 TRIMOL GROUP, INC. CONSOLIDATED BALANCE SHEET
- -------------------------------------------------------------------------------------------- September 30, 2003 December 31, 2002 (Unaudited) (Audited) - -------------------------------------------------------------------------------------------- ASSETS Current assets: Cash $ 21,000 $ 49,000 Accounts receivable 355,000 302,000 Prepaid expenses 9,000 17,000 --------- --------- TOTAL CURRENT ASSETS 385,000 268,000 Property and equipment, net 79,000 95,000 --------- --------- TOTAL ASSETS $ 464,000 $ 463,000 ========= ========= LIABILITIES Current liabilities: Trade accounts payable $ 113,000 $ 106,000 Accrued expenses 125,000 201,000 Current portion of payables to related parties 411,000 341,000 --------- --------- TOTAL CURRENT LIABILITIES 649,000 648,000 --------- --------- PAYABLES TO RELATED PARTIES 289,000 379,000 SHAREHOLDERS' DEFICIENCY (474,000) (564,000) --------- --------- TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIENCY $ 464,000 $ 463,000 ========= ========= - --------------------------------------------------------------------------------------------
The accompanying notes are an integral part of the financial statements F-2 TRIMOL GROUP, INC. CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
- -------------------------------------------------------------------------------------------------------------------- NINE MONTHS ENDED THREE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, 2003 2002 2003 2002 - -------------------------------------------------------------------------------------------------------------------- REVENUES $ 3,108,000 $ 4,110,000 $ 1,192,000 $ 1,338,000 OPERATING EXPENSES: Cost of revenues 962,000 1,341,000 378,000 467,000 Marketing and promotion 802,000 1,266,000 342,000 408,000 Research and development 170,000 260,000 -- 62,000 Other operating expenses 1,136,000 1,038,000 462,000 380,000 ------------ ------------ ------------ ------------ TOTAL OPERATING EXPENSES 3,070,000 3,905,000 1,182,000 1,317,000 ------------ ------------ ------------ ------------ NET INCOME $ 38,000 $ 205,000 $ 10,000 $ 21,000 ============ ============ ============ ============ Net income (loss) per share (basic and diluted) .0004 .0002 .0001 .0002 ============ ============ ============ ============ WEIGHTED AVERGE NUMBER OF SHARES OUTSTANDING 101,139,000 100,180,026 101,139,000 100,421,609 ============ ============ ============ ============ - --------------------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of the financial statements F-3 TRIMOL GROUP, INC. CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
- ----------------------------------------------------------------------------------- Nine Months Ended September 30, 2003 2002 - ----------------------------------------------------------------------------------- CASH FLOWS FROM OPERATING ACTIVITIES: NET INCOME $ 38,000 $ 205,000 ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES: Depreciation of property and equipment 16,000 1,000 Stock based compensation 52,000 31,000 CHANGES IN ASSETS AND LIABILITIES: Accounts receivable (53,000) 172,000 Prepaid expenses 8,000 -- Accounts payable 7,000 (23,000) Accrued expenses (76,000) (142,000) --------- --------- NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES (8,000) 244,000 --------- --------- CASH FLOWS FROM INVESTING ACTIVITIES: Acquisition of property and equipment -- (18,000) --------- --------- NET CASH USED IN INVESTING ACTIVITIES -- (18,000) --------- --------- CASH FLOW FROM FINANCING ACTIVITIES: Net repayment of loans to related parties (20,000) (185,000) --------- --------- NET CASH USED IN FINANCING ACTIVITIES (20,000) (185,000) --------- --------- INCREASE (DECREASE) IN CASH (28,000) 41,000 CASH - BEGINNING OF PERIOD 49,000 44,000 --------- --------- CASH - END OF PERIOD $ 21,000 $ 85,000 ========= ========= Supplemental disclosures of cash flow information: Interest paid $ -- $ -- ========= ========= Income taxes paid $ 1,000 $ 1,000 ========= ========= - -----------------------------------------------------------------------------------
The accompanying notes are an integral part of the financial statements F-4 TRIMOL GROUP, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 - BASIS OF PRESENTATION The unaudited consolidated financial statements of Trimol Group, Inc. (the "Company") as of September 30, 2003 and for the nine and three month periods ended September 30, 2003 and 2002 included herein have been prepared on the same basis as those of the Annual Report on Form 10-KSB for the year ended December 31, 2002. In the opinion of management, all adjustments (consisting only of those which are normal and recurring) necessary for a fair presentation have been included. The results of operations for interim periods are not necessarily indicative of the results to be expected for a full fiscal year. Certain financial information that is normally included in annual financial statements prepared in accordance with generally accepted accounting principles, but is not required for interim reporting purposes, has been condensed or omitted. The accompanying unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes included in the Company's Annual Report on Form 10-KSB for the year ended December 31, 2002. NOTE 2 - OPERATIONS The Company owns all of the outstanding shares of Intercomsoft Limited ("Intercomsoft"), a non-resident Irish company which provides proprietary technology, equipment and auxiliary materials used in the production of secure essential government documents such as passports, driver's licenses and ID cards pursuant to an agreement for such proprietary technology which expires in less than three years. As of the third quarter 2003, Intercomsoft is the Company's only operating entity. The Company has an exclusive worldwide license to make, use and sell a mechanically rechargeable metal-air (aluminum) fuel cell solely for use with consumer portable electronic devices, all rights and title to certain technology relating to metal-air (aluminum) fuel cells, and the design and know-how to a converter designed and developed by a related company. Substantially all of the research and development costs related to this technology are allocated from the majority shareholder of the Company (see Note 4). All research and development efforts were suspended in the second quarter 2003. NOTE 3-RISKS AND UNCERTAINTIES The following factors relating to the Company and its business should be carefully considered: (a) Intercomsoft's only customer is the Government of the Republic of Moldova's Ministry of Economics. Moldova is a former Republic of the Soviet Union and the political and economic situation of such Republic has historically been unstable. Should the Government of the Republic of Moldova default under the agreement referred to in Note 2 or discontinue the use of Intercomsoft's services under such agreement, the Company would likely have limited recourse. If for any reason (or for no reason) the agreement was terminated, the terms were materially or adversely amended, or business reduced, such event would have a material adverse effect on Intercomsoft. The agreement expires in less than three years. F-5 (b) Through a joint venture with Aluminum-Power, Inc. ("API"), the Company's majority shareholder, the Company pursued research and development of its aluminum-air fuel cell technology for two years. Such research and development was suspended in the second quarter of 2003 until such time, if any, as the Company is able to obtain financing to proceed with such efforts as additional capital will be required in order to further develop this technology before it can be commercially exploited. There can be no assurance that additional financing will be available on commercially reasonable terms or at all. If adequate funds are not available, or are not available on acceptable terms, the Company may not be able to further develop the technology. Such inability to obtain additional financing when needed would have a negative impact on the Company. If additional funds are raised through the issuance of equity or convertible debt securities, the percentage ownership of the existing shareholders will be reduced, and the holders of such securities may have rights, preferences and privileges senior to those of the holders of shares of the Company's common stock. Although the United States Patent and Trademark Office has issued several patents on the technology, there can be no assurances that any additional patents will issue or to what extent, if any, such patents will provide protection from competitors or others and there can be no assurances that such technology will be marketable and/or profitable. The Company continues to believe in the potential of the technology and has not changed its opinion as to the benefits the technology could make in the field of alternative power. However, management has concluded that due to the extraordinary time and enormous costs involved, continued research and development efforts are not justified at this time. NOTE 4-RELATED PARTY TRANSACTIONS AND BALANCES At September 30, 2003, amounts payable to related parties consist of the following: Cash advances from a company owned by the Chairman of the Board ("Chairman") of the Company. (1) $ 80,000 Accrued compensation due to the Chairman (See Note 5) (2) 331,000 Due to API (3) 289,000 -------- 700,000 Less current portion 411,000 -------- $289,000 ======== (1) These amounts are non-interest bearing and due on demand. (2) Of this amount $260,000 is due June 1, 2004 and $71,000 is due on demand. (3) This amount bears interest at 2% per annum and is due July 1, 2006. Research and development expenses allocated from API for the three months ended September 30, 2003 and 2002, were approximately $0 and $49,000, respectively, and for the nine months ended September 30, 2003 and 2002 aggregated $170,000 and $161,000, respectively. F-6 NOTE 5-COMMITMENTS AND GENERAL COMMENTS Intercomsoft is party to an agreement for the purchase of equipment, software and consumables for the production of computerized documents. As part of this agreement, Intercomsoft is provided with guidance and support required for the installation and operation of the equipment, as well as the materials required for its maintenance. In addition to the cost of the merchandise under the above noted agreement, Intercomsoft is obligated to pay 25% of its profits to the supplier of the equipment, software and consumables, as provided under the agreement. The Company has an employment agreement with its Chairman which expires December 31, 2003 and provides for base annual compensation of $250,000. In addition, the employment agreement provides that for every $1,000,000 of the Company's excess net pre-tax profits, as defined thereunder, generated by the Company in the determining year, the Chairman will receive incentive warrants ("Incentive Warrants") to purchase an aggregate of 100,000 shares of the Company's common stock up to a maximum of 1,000,000 shares of common stock per year at an exercise price equal to the closing price of the Company's common stock on the issue date. As of September 30, 2003, no Incentive Warrants were outstanding. In February 2000, the Company issued warrants to purchase 1,400,000 shares of its common stock to three employees, 400,000 of which were canceled on January 28, 2003. The remaining warrants may be exercised for a period of five years at an exercise price of $.50 per share and contain an anti-dilution provision. On May 30, 2002 the Company issued 100,000 shares of its common stock to an outside consultant which were valued at $20,000 for services rendered in connection with the Company's research and development. On September 5, 2002 the Company issued 1,000,000 shares of its common stock to two employees for services to be rendered from September 1, 2002 to August 31, 2003 pursuant to a letter agreement entered into with each of such employees. These shares were valued at $78,000, the fair market value of the Company's common stock on the date of issuance, and amortized over the life of the agreement. These employees resigned from the Company in May 2003, therefore, the unamortized amount was expensed during the second quarter of 2003. During the three and nine months ended September 30, 2003, the Company canceled 500,000 and 3,800,000 options to purchase its common stock, respectively, previously issued under its 2001 Omnibus Plan, as amended. There were no options issued during the same period. As of September 30, 2003, the total options outstanding were 6,870,000, of which 4,320,000 were issued pursuant to the 2001 Omnibus Plan, as amended. F-7 NOTE 6-SEGMENT INFORMATION The Company's operations are classified into two reportable segments plus corporate and administrative functions. The segments consist of Intercomsoft, which produces secure essential government identification documents, research and development of an aluminum-air fuel cell technology acquired from a related party, and general and administrative expenses incurred for corporate purposes.
Research and Corporate and Intercomsoft Development Administrative Total ------------ ----------- -------------- ----- NINE MONTHS ENDED SEPTEMBER 30, 2003 Net sales $ 3,108,000 $ -- $ -- $ 3,108,000 Operating expenses 1,856,000 170,000 1,044,000 3,070,000 ----------- ----------- ----------- ----------- Net income (loss) $ 1,252,000 $ (170,000) $(1,044,000) $ 38,000 =========== =========== =========== =========== NINE MONTHS ENDED SEPTEMBER 30, 2002 Net sales $ 4,110,000 $ -- $ -- $ 4,110,000 Operating expenses 2,647,000 260,000 998,000 3,905,000 ----------- ----------- ----------- ----------- Net income (loss) $ 1,463,000 $ (260,000) $ (998,000) $ 205,000 =========== =========== =========== =========== THREE MONTHS ENDED SEPTEMBER 30, 2003 Net sales $ 1,192,000 $ -- $ -- $ 1,192,000 Operating expenses 748,000 -- 434,000 1,182,000 ----------- ----------- ----------- ----------- Net income (loss) $ 444,000 $ -- $ (434,000) $ 10,000 =========== =========== =========== =========== THREE MONTHS ENDED SEPTEMBER 30, 2002 Net sales $ 1,338,000 $ -- $ -- $ 1,338,000 Operating expenses 888,000 62,000 367,000 1,317,000 ----------- ----------- ----------- ----------- Net income (loss) $ 450,000 $ (62,000) $ (367,000) $ 21,000 =========== =========== =========== ===========
F-8 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS AND PLAN OF OPERATION The following management's discussion and analysis of financial condition and results of operation should be read in conjunction with our unaudited consolidated financial statements and notes thereto contained elsewhere in this report. PLAN OF OPERATION General We operate Intercomsoft, Ltd. ("Intercomsoft"), a wholly owned subsidiary acquired by us in the second quarter of 1998. Intercomsoft is a technology-intensive company engaged in the operation of a computerized photo identification and database management system utilized in the production of a variety of secure essential government identification documents such as passports, driver's licenses, national identification documents and other such forms of essential personal identification. Other potential applications of the technology include police and military use, access control, high security identification and government and corporate identification products, among many others. In addition, the technology has potential applications for national population database management, border control and vehicle tracking, immigration management and smart card applications for both business and government such as retirement benefit plans and health, welfare, insurance and social security programs. Intercomsoft utilizes a technology, the rights to which it acquired from Supercom, Ltd., an Israeli corporation, pursuant to a Sales Agreement dated August 25, 1995 with an initial term of ten years with an automatic ten-year extension, unless either party provides written notification to the other of termination prior to the expiration of the initial ten-year term. Although it is seeking other opportunities, Intercomsoft's only customer at present, and since 1996, is the Government of the Republic of Moldova, pursuant to a ten-year agreement awarded to it in April 1996 by the Ministry of Economics, Republic of Moldova, to provide a National Register of Population and a National Passport System. Under the terms of this agreement, Intercomsoft supplies all of the equipment, technology, software, materials and consumables necessary to produce all national passports, drivers' licenses, vehicle permits, identification cards and other government authorized identification documents in the Republic of Moldova. If and to the extent that other such opportunities are presented to us in the future, we will be required to obtain substantial capital in order to pursue any such opportunities. There can be no assurances that such capital, if and when needed, will be available to us. We currently derive all of our revenues and income pursuant to Intercomsoft's agreement with the Government of the Republic of Moldova. The Government of the Republic of Moldova has historically been unstable and we would have limited recourse should the Government default under 2 the agreement or discontinue use of Intercomsoft's services provided for under the agreement. If for any reason (or for no reason) such agreement was terminated, the terms were materially amended, or business reduced, such event would have a material adverse effect on us. Currently, the Government has the right to terminate the agreement in less than three years. In addition, in the first quarter of 2001, we acquired certain rights from Aluminum-Power, Inc. ("Aluminum-Power"), our majority shareholder, to an aluminum-air fuel cell technology for use in portable consumer electronic products and devices such as cellular telephones and laptop computers. Since the acquisition of such rights, we have continued to expend funds in connection with research, development and marketing efforts for such technology as well as patent prosecution. However, in the second quarter of 2003, after the expenditure of in excess of $1,000,000 on research and development since our acquisition of the technology, we suspended research and development efforts as management concluded that, due to the enormous costs involved in this effort, continued research and development was not justified at this time. RESULTS OF OPERATIONS General During the period ended September 30, 2003, our operations consisted solely of the activities of Intercomsoft. As more fully described above, Intercomsoft currently operates in and derives its revenues solely from services performed for the Government of the Republic of Moldova pursuant to an agreement with such Government. Although Intercomsoft is seeking to expand its services to areas outside of the Republic of Moldova, the uncertain economy and political instability in the Republic of Moldova could result in the termination or loss of such agreement, thereby having a material adverse effect on us. Comparison of Three Months Ended September 30, 2003 to Three Months Ended September 30, 2002. During the three months ended September 30, 2003, we had revenues resulting solely from Intercomsoft's production of government documents in the Republic of Moldova of approximately $1,192,000 as compared to 1,338,000 for the same period in 2002, a decrease of approximately 11%. The continuing decrease in revenue was due to a number of factors. In 2001 Romania and Moldova introduced passport requirements between their two countries which led to an increase in passport issuances to the residents of Moldova in 2001 and 2002. In addition, beginning in 2001 and continuing to date, a program of public awareness was launched by us encouraging the renewal of various forms of government licenses and registrations and reminding individuals to renew expiring documents, resulting in an increase in the issuance of such replacement documents. Increased marketing efforts by us and cross marketing to individuals during passport renewals and/or issuances also led to an increase in the sale of collateral documentation including drivers' licenses and other government issued identification documents. However, in spite of our efforts, we believe that the 3 continuing decrease in revenue throughout the first three quarters of 2003 is due to a leveling off and stabilizing of the production of government documents, which rose dramatically in the latter part of 2001 and during 2002. During the three months ended September 30, 2003, Intercomsoft's costs associated with generating these revenues were $378,000 or 32% of revenues as compared to $467,000 or 35% of revenues for the same period in 2002. This resulted in gross profit for Intercomsoft of $814,000 for the three month period ended September 30, 2003 as compared to $871,000 for the same period in 2002, a decrease of approximately 7%. General and administrative expenses for the three months ended September 30, 2003, were approximately $462,000, which consisted of $29,000 of Intercomsoft expenses and $433,000 of general corporate and administrative expenses. For the same period in 2002, general and administrative expenses aggregated approximately $380,000, which consisted of $15,000 of Intercomsoft expenses and $365,000 of general corporate and administrative expenses. The increase of 22% was due to an increase in travel expenses related to the exploration of business opportunities for Intercomsoft. Public relations, marketing and advertising expenses for the three months ended September 30, 2003 were $342,000, all of which were related to efforts to expand the use of Intercomsoft's services. For the same period in 2002, such expenses aggregated approximately $408,000, which consisted of $406,000 of Intercomsoft expenses and $2,000 of on-going public awareness program expenses with respect to our aluminum-air fuel cell technology. The decrease of $64,000 in public relations, marketing and advertising expenses of Intercomsoft resulted from the reduction in commissions paid pursuant to various marketing agreements, which are based on revenues generated in the period. Beginning in the first quarter of 2001, we began our research and development program in connection with the aluminum-air fuel cell technology acquired in such period, together with our majority shareholder Aluminum-Power. In the second quarter of 2003, together with Aluminum-Power, we suspended research and development efforts. There were no research and development costs for the three month period ended September 30, 2003, as compared to $62,000 for the same period in 2002. The decrease in research and development costs are the result of the discontinuance of research and development efforts in the 2nd quarter of 2003. We had a net profit from operations of approximately $10,000 for the three month period ended September 30, 2003 as compared to a net profit of $21,000 for the same period in 2002 which resulted from all of the reasons set forth above. Comparison of Nine Months Ended September 30, 2003 to Nine Months Ended September 30, 2002. During the nine months ended September 30, 2003, we had revenues resulting solely from Intercomsoft's production of government documents in the Republic of Moldova of approximately $3,108,000 as compared to $4,110,000 for the same period in 2002, a decrease of approximately 24%. The decrease in revenue was due to a number of factors. In 2001 Romania and Moldova introduced passport requirements between their two countries which led to an increase in passport 4 issuances to the residents of Moldova in 2001 and 2002. In addition, beginning in 2001 and continuing to date, a program of public awareness was launched by us encouraging the renewal of various forms of government licenses and registrations and reminding individuals to renew expiring documents, resulting in an increase in the issuance of such replacement documents. Increased marketing efforts by us and cross marketing to individuals during passport renewals and/or issuances also led to an increase in the sale of collateral documentation including drivers' licenses and other government issued identification documents. However, in spite of our efforts, we believe that the decrease in revenue throughout the first three quarters of 2003 is due to the stabilization of the production of documents, which rose dramatically in the latter part of 2001 and during 2002. During the nine months ended September 30, 2003, Intercomsoft's costs associated with generating these revenues were $962,000 or 32% of revenues as compared to $1,341,000 or 33% of revenues for the same period in 2002. This resulted in gross profit for Intercomsoft of $2,146,000 for the nine month period ended September 30, 2003 as compared to $2,769,000 for the same period in 2002, a decrease of approximately 22%. General and administrative expenses for the nine months ended September 30, 2003, were approximately $1,136,000, which consisted of $93,000 of Intercomsoft expenses and $1,043,000 of general corporate and administrative expenses. For the same period in 2002, general and administrative expenses aggregated approximately $1,038,000, which consisted of $46,000 of Intercomsoft expenses and $992,000 of general corporate and administrative expenses, an increase of $98,000, or 9%, which resulted from an increase in travel expenses related to the exploration of business opportunities for Intercomsoft. Public relations, marketing and advertising expenses for the nine months ended September 30, 2003, were $802,000, all of which were related to efforts to expand the use of Intercomsoft's services. For the same period in 2002, such expenses aggregated approximately $1,266,000, which consisted of $1,260,000 of Intercomsoft expenses and $6,000 of on-going public awareness program expenses with respect to our aluminum-air fuel cell technology. The decrease of $458,000 in public relations, marketing and advertising expenses of Intercomsoft is a direct result of the reduction in commissions paid pursuant to various marketing agreements, which are based on revenues generated in the period. Beginning in the first quarter of 2001, we began our research and development program in connection with the aluminum-air fuel cell technology acquired in such period, together with our majority shareholder Aluminum-Power. In the second quarter of 2003, together with Aluminum-Power, we suspended research and development efforts. Our research and development costs for the nine month period ended September 30, 2003 were $170,000 as compared to $260,000 for the same period in 2002. The decrease in research and development costs resulted from a gearing down of research and development in the first quarter of 2003, termination of the operations of the R&D Center in Toronto, Ontario, Canada and a discontinuance of such research and development activities in the second quarter of 2003. We had a net profit from operations of approximately $38,000 for the nine month period ended September 30, 2003, as compared to a net profit of $205,000 for the same period in 2002 which resulted from all of the reasons set forth above. 5 Liquidity & Capital Resources Our joint venture with Aluminum-Power to fund research and development of an aluminum-air fuel cell technology has added additional costs and expenses. As of September 30, 2003, we had expended in excess of $1,000,000 toward research and development since our acquisition of the technology in January 2001 and we owed Aluminum-Power approximately $289,000 in accrued research and development costs, payable on July 1, 2006 and bearing interest at a rate of 2% per annum. At September 30, 2003, we owed Boris Birshtein, the Chairman of the Board, $331,000 in unpaid compensation due to him pursuant to his employment agreement with us. Of this amount, $260,000 is due June 1, 2004 pursuant to a promissory note and $71,000 is due on demand. Although we believe we have adequate capital to fund current operations for fiscal year 2003, we may seek additional funding through public or private financing or other arrangements. Such additional funding may be obtained by bank borrowings, public offerings, or private placements of equity or debt securities, loans from shareholders, or a combination of the foregoing. There is no assurance that if we seek such funding, it will be available to us. CAUTIONARY STATEMENT RELATING TO FORWARD LOOKING STATEMENTS This Quarterly Report on Form 10-QSB contains forward looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act, as amended, which are intended to be covered by the safe harbors created thereby. Investors are cautioned that all forward-looking statements involve risk and uncertainty. Although we believe that the assumptions underlying the forward looking statements are reasonable, any assumptions could be inaccurate, and therefore, there can be no assurance that these statements will prove to be accurate. In light of these uncertainties inherent in forward-looking statements, the inclusion of such information should not be regarded as a representation by us, or anyone affiliated with us, that our objectives and plans will be achieved. ITEM 3. CONTROLS AND PROCEDURES Based upon their evaluation of our internal controls, disclosure controls and procedures within 90 days of the filing of this report, our Chief Executive Officer and Chief Financial Officer have concluded that the effectiveness of such controls and procedures is satisfactory. Further, there were no significant changes in our internal controls or in any other factors that could significantly affect those controls subsequent to the date of their evaluation. 6 PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS None. ITEM 2. CHANGES IN SECURITIES On February 28, 2000, we issued warrants to purchase 400,000 shares of our common stock to Robert L. Blessey, a former officer. On January 28, 2003, Mr. Blessey agreed to the cancellation of such warrants and surrendered same to us. On September 5, 2002 we issued 500,000 shares of our common stock to each of Alexander M. Gordin and Gary Shokin in partial compensation for services to be rendered by them from such date through August 2003. Pursuant to an agreement entered into with each of Mr. Gordin and Mr. Shokin, such shares were to be earned by each of them over the course of the twelve month period of the agreement, based on their continued employment by us through such period. On May 1, 2003, both Mr. Gordin and Mr. Shokin resigned from their positions with us. As part of their exit compensation plan, we accelerated the vesting of the remaining portion of the unvested shares effective as of May 1, 2003. During the three months ended September 30, 2003, we cancelled 500,000 options to purchase our common stock, which were previously issued under our 2001 Omnibus Plan, as amended. There were no options issued during the same period. As of September 30, 2003, the total options outstanding were 6,870,000, of which 4,320,000 were issued pursuant to the 2001 Omnibus Plan, as amended. ITEM 3. DEFAULTS UPON SENIOR SECURITIES None. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None. 7 ITEM 5. OTHER INFORMATION On January 15, 2003, Vijay Sharma resigned as a member of our Board of Directors. On January 31, 2003, the consulting agreements for each of Donald W. Kirk, our Chief Scientific Officer, Rafi Ferry, our Marketing Director, and Vijay Sharma expired. None of the agreements were renewed. Mr. Ferry continued to work for us on a month to month basis subsequent to the expiration of his consulting agreement in January. Mr. Ferry resigned on May 1, 2003, to pursue other business activities. On February 12, 2003, we entered into a Termination Agreement with Eontech R&D, Aluminum-Power Inc, AGGI Limited and Eontech Group, Inc. terminating an agreement for research and development efforts between the parties originally entered into in August 2001 in connection with research and development efforts on our aluminum-air fuel cell technology, and cancelled options to purchase shares of our common stock issued in connection with same. On March 12, 2003, Eontech R&D Inc. filed a Certificate of Dissolution with the State of Delaware dissolving the corporation. Since our acquisition of the aluminum-air fuel cell technology for use in portable consumer electronic devices, together with our majority shareholder Aluminum-Power, we have continued to advance research and development with the goal of commercial exploitation of such technology. Aluminum-Power advised us by letter dated March 31, 2003 that to date it spent in excess of $3,000,000 on research and development related to our aluminum-air fuel cell technology and aggressively pursued licensing opportunities and sought possible joint venture partners, private financing and investment capital in an effort to support its on-going research and development efforts. It further advised us that it has been unable to secure additional funding for the continuation of such efforts, other than shareholder loans which have provided the funds noted above. In addition, Aluminum-Power indicated that it found the development time line and cost for research and development to be significantly in excess of what it had originally anticipated and advised us that it has elected to suspend any further research and development efforts in connection with the aluminum-air fuel cell at this time because it does not believe that it would be prudent for either it or us to expend any additional research and development funds on the technology until it can evaluate the prospects and feasibility of further development and marketing opportunities. Accordingly, our research and developments efforts were suspended in the second quarter of 2003 and will remain so until such time, if any, that Aluminum-Power resumes its research and development efforts on our behalf, or we are able to obtain financing to proceed with such efforts on our own. Although research and development efforts have been suspended, we continue to believe in the potential for of our technology and have not changed our opinion as to the potential benefits our technology could make in the field of alternative power. However, management has concluded that due to the extraordinary time and enormous costs involved, continued research and development efforts at this time are not justified. 8 On April 30, 2003, our one year sublease expired for our offices at 25 Broad Street, New York, New York. We did not renew such sublease. On May 1, 2003, Alexander M. Gordin a director and our President and Chief Executive Officer and Gary Shokin, our Vice President and Secretary, resigned from their positions with us to pursue other business interests. In connection with such resignations, we entered into an agreement with each of Messrs. Gordin and Shokin which provided for releases and indemnification and the vesting of certain shares of our common stock to which such individuals were entitled under a prior agreement with us. On May 1, 2003, Yuri Benenson agreed to serve as our Chief Executive Officer, replacing Mr. Gordin. On May 6, 2003 Michael Jay Solomon resigned as a member of our Board of Directors. On May 12, 2003, the Board of Directors appointed Yuri Benenson, our Chief Executive Officer, and Shmuel Gurfinkel, our Chief Financial Officer, to our Board of Directors. Accordingly, as of May 12, 2003, our Board of Directors was comprised of Boris Birshtein, Chairman, Yuri Benenson, Shmuel Gurfinkel and Walter Perchal. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) The exhibits listed below are filed as part of this Quarterly Report for the period ended September 30, 2003. Exhibit No. Document ----------- -------- 31.1 Certification Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. CEO Certification 31.2 Certification Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. CFO Certification. 32.1 Chief Executive Officer Certification 32.2 Chief Financial Officer Certification (b) There were no Reports on Form 8-K filed during the quarter ended September 30, 2003. 9 SIGNATURES In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. TRIMOL GROUP, INC. Date: November 13, 2003 By: /s/ Yuri Benenson -------------------------------- Name: Yuri Benenson Title: Chief Executive Officer By: /s/ Shmuel Gurfinkel -------------------------------- Name: Shmuel Gurfinkel Title: Chief Financial Officer 10 EX-31.1 3 d57416_ex31-1.txt SECTION 302 CERTIFICATION EXHIBIT 31.1 CHIEF EXECUTIVE OFFICER CERTIFICATION I, Yuri Benenson, certify that: 1. I have reviewed this quarterly report on Form 10-QSB of Trimol Group, Inc. 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly repot; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant, and we have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b) evaluated the effectiveness of this registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function): a) All significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. November 13, 2003 By /s/ Yuri Benenson --------------------------- Chief Executive Officer 11 EX-31.2 4 d57416_ex31-2.txt SECTION 302 CERTIFICATION EXHIBIT 31.2 CHIEF FINANCIAL OFFICER CERTIFICATION I, Shmuel Gurfinkel, certify that: 1. I have reviewed this quarterly report on Form 10-QSB of Trimol Group, Inc. 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly repot; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant, and we have: a. designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b. evaluated the effectiveness of this registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and c. presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function): a. All significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b. any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. November 13, 2003 By /s/ Shmuel Gurfinkel ------------------------- Chief Financial Officer 12 EX-32.1 5 d57416_ex32-1.txt SECTION 906 CERTIFICATION EXHIBIT 32.1 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report of Trimol Group, Inc. (the "Company") on Form 10-QSB for the period ending September 30, 2003, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), the undersigned Chief Executive Officer of the Company hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 that: (1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and (2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of and for the periods covered in the Report. /s/ Yuri Benenson ----------------- Yuri Benenson Chief Executive Officer TRIMOL GROUP, INC. November 13, 2003 13 EX-32.2 6 d57416_ex32-2.txt SECTION 906 CERTIFICATION EXHIBIT 32.2 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report of Trimol Group, Inc. (the "Company") on Form 10-QSB for the period ending September 30, 2003, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), the undersigned Chief Financial Officer of the Company hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 that: (1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and (2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of and for the periods covered in the Report. /s/ Shmuel Gurfinkel -------------------- Shmuel Gurfinkel Chief Financial Officer TRIMOL GROUP, INC. November 13, 2003 14 -----END PRIVACY-ENHANCED MESSAGE-----