<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
/X/ Quarterly report under Section 13 or 15(d) of the Securities Exchange Act
of 1934
For the quarterly period ended June 30, 1998
/ / Transition report under Section 13 or 15(d) of the Exchange Act
For the transition period from to
--------------------- ------------------------
Commission file number 0-28144
---------------------------------------------------------
Trimol Group, Inc.
(Exact Name of Small Business Issuer as Specified in Its Charter)
Delaware 13-3859706
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) 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, Including Area Code)
- --------------------------------------------------------------------------------
(Former Name, Former Address and Former Fiscal Year, if Changed Since Last
Report)
Check whether the issuer: (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes X No
------- -------
<PAGE>
APPLICABLE ONLY TO ISSUERS INVOLVED IN
BANKRUPTCY PROCEEDINGS DURING THE
PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court.
Yes No
----- -----
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: As of June 30, 1998, 12,000,000
shares of Common Stock, par value $.01 per share.
Transitional Small Business Disclosure Format (check one):
Yes No X
----- -----
<PAGE>
TABLE OF CONTENTS
Heading Page
Item 1. Financial Statements...............................................1-10
Condensed Consolidated Balance Sheets as of June 30, 1998
(Unaudited) and December 31, 1997 (Audited).........................1-2
Condensed Consolidated Statements of Operations for the
six months and three months ended June 30, 1998 and 1997
(Unaudited).........................................................3-4
Condensed Consolidated Statements of Cash Flows for the
six months ended June 30, 1998 and 1997 (Unaudited).................5-7
Notes to Condensed Consolidated Financial Statements...............8-10
Item 2. Management's Discussion and Analysis and Results of Operations....11-16
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K..................................16-18
Signatures....................................................................19
(i)
<PAGE>
TRIMOL GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
U.S. Dollars in Thousands
<TABLE>
<CAPTION>
June 30, December 31,
1 9 9 8 1 9 9 7
(Unaudited) (Audited)
----------- ---------
<S> <C> <C>
ASSETS
ASSETS OF BANK BUSINESS
Cash and due from banks ........................... $ 2,633 $ --
Time deposits with banks .......................... 645 --
Securities held to maturity ....................... 1,109 --
Loans ............................................. 9,129 --
Less: allowance for possible loan losses .......... (608) --
Customer's acceptance liabilities ................. 1,196 --
Investments in investee ........................... 3 --
Bank premises and equipment ....................... 949 --
Other accounts receivable and debit balances ...... 393 --
----------- ---------
TOTAL ASSETS OF BANK BUSINESS ..................... 15,449 --
----------- ---------
ASSETS OF INSURANCE BUSINESS
Investments
Short term securities held to maturity ............ 162 --
Long term deposit ................................. 20 --
Capital note ...................................... 12 --
----------- ---------
194 --
----------- ---------
Cash and cash equivalents ......................... 9 --
Outstanding premiums .............................. 10 --
Other accounts receivable ......................... 23 --
----------- ---------
42 --
----------- ---------
Reinsurers' share of reserves
Provision for unearned premiums ................... 48 --
Losses and loss adjustment reserves ............... 128 --
----------- ---------
176 --
----------- ---------
Furniture, equipment and vehicles ................. 82 --
----------- ---------
Other assets ...................................... 45 --
----------- ---------
TOTAL ASSETS OF INSURANCE BUSINESS ................ 539 --
----------- ---------
ASSETS OF OTHER BUSINESSES
Current assets:
Cash and cash equivalents ......................... 265 --
Trade accounts receivable and accrued income ...... 417 405
Related parties receivable ........................ 51 --
Other accounts receivable and debit balances ...... 142 --
Inventories ....................................... 228 --
----------- ---------
1,103 405
----------- ---------
Operating equipment ............................... 265 --
----------- ---------
Property and equipment, net ....................... 6,010 --
----------- ---------
Goodwill .......................................... 86 --
----------- ---------
TOTAL ASSETS OF OTHER BUSINESSES .................. 7,464 405
----------- ---------
TOTAL ASSETS ...................................... $ 23,452 $ 405
----------- ---------
----------- ---------
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements
1
<PAGE>
TRIMOL GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
U.S. Dollars in Thousands
<TABLE>
<CAPTION>
June 30, December 31,
1 9 9 8 1 9 9 7
------- ------------
(Unaudited) (Audited)
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES OF BANK BUSINESS
Deposits:
Non interest bearing deposits ............................. $ 4,514 $ --
Interest bearing deposits ................................. 3,920 --
Deposits of the National Bank ............................. 1,218 --
------- ------
9,652 --
------- ------
Acceptance outstanding .................................... 1,202 --
------- ------
Other liabilities ......................................... 472 --
------- ------
TOTAL LIABILITIES OF BANK BUSINESS ........................ 11,326 --
------- ------
LIABILITIES OF INSURANCE BUSINESS
Losses and loss adjustment reserves ....................... 238 --
Provision for unearned premiums ........................... 77 --
Reinsurance balances payable .............................. 25 --
Deferred policy acquisition costs, net .................... 4 --
Other accounts payable .................................... 43 --
------- ------
TOTAL LIABILITIES OF INSURANCE BUSINESS ................... 387 --
------- ------
LIABILITIES OF OTHER BUSINESSES
Current liabilities
Related parties payable ................................... 2,069 --
Trade accounts payable .................................... 425 351
Other accounts payable and credit balances ................ 173 --
------- ------
2,667 351
------- ------
Long term liabilities
Deferred taxes ............................................ 41
------- ------
TOTAL LIABILITIES OF OTHER BUSINESSES ..................... 2,708 351
------- ------
TOTAL LIABILITIES ......................................... 14,421 351
------- ------
OUTSIDE SHAREHOLDERS' INTEREST ............................ 2,324 --
------- ------
SHAREHOLDERS' EQUITY
Preferred stock: 10,000 shares authorized of U.S.$100 par
value, 0 and 0 shares issued and outstanding, respectively -- --
Common stock: 30,000,000 shares authorized of U.S.$ 0.01
par value, 12,000,000 and 2,000,000 shares issued and
outstanding, respectively ................................. 120 20
Additional paid in capital ................................ 5,646 --
Retained earnings ......................................... 941 34
------- ------
TOTAL SHAREHOLDERS' EQUITY ................................ 6,707 54
------- ------
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY .................................................... $23,452 $ 405
------- ------
------- ------
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements
2
<PAGE>
TRIMOL GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
U.S. Dollars in Thousands (except per share data)
<TABLE>
<CAPTION>
Three months ended Six months ended
June 30, June 30,
1 9 9 8 1 9 9 7 1 9 9 8 1 9 9 7
------- ------- ------- -------
(Unaudited)
<S> <C> <C> <C> <C>
INCOME
FROM BANK BUSINESS
Interest income
Interest due from banks and time deposits with
Banks .......................................... $ 63 $ -- $ 92 $ --
Interest on securities .......................... 103 -- 194 --
Interest on loans ............................... 565 -- 1,015 --
------- ----- ------- ------
Total interest income ........................... 731 -- 1,301 --
------- ----- ------- ------
Interest expense
Interest on demand deposits ..................... -- -- --
Interest on time deposits ....................... 156 -- 297 --
Interest on deposits from banks ................. 82 -- 84 --
------- ----- ------- ------
Total interest expense .......................... 238 -- 381 --
------- ----- ------- ------
Net interest income ............................. 493 -- 920 --
Allowance for possible loan losses .............. 29 -- (35) --
------- ----- ------- ------
Net interest income after allowance for possible
Loan losses .................................... 522 -- 885 --
------- ----- ------- ------
Non interest income
Financial services fees ......................... 193 -- 359 --
Foreign exchange trading profits and commissions 158 -- 362 --
Other ........................................... 16 -- 33 --
------- ----- ------- ------
Total non interest income ....................... 367 -- 754 --
------- ----- ------- ------
Non interest expense
Salaries and related costs ...................... 257 -- 408 --
Equipment and depreciation ...................... 24 -- 104 --
Maintenance ..................................... 24 -- 44 --
Communication and transportation ................ 22 -- 100 --
Taxes other than income ......................... 5 -- 7 --
Outside services and processing ................. 8 -- 34 --
Marketing and development ....................... 18 -- 47 --
Fees paid ....................................... 19 -- 45 --
Other ........................................... 47 -- 72 --
------- ----- ------- ------
Total non interest expense ...................... 424 -- 861 --
------- ----- ------- ------
Income before income taxes ...................... 465 -- 778 --
Income tax ...................................... 62 -- 108 --
------- ----- ------- ------
NET INCOME FROM BANK BUSINESS ................... 403 670 --
------- ----- ------- ------
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements
3
<PAGE>
TRIMOL GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
U.S. Dollars in Thousands (except per share data)
<TABLE>
<CAPTION>
Three months ended Six months ended
June 30, June 30,
1 9 9 8 1 9 9 7 1 9 9 8 1 9 9 7
------------ ------------ ------------ ------------
(Unaudited)
<S> <C> <C> <C> <C>
FROM INSURANCE BUSINESS
Revenues
Gross insurance premiums written ............... $ 92 $ -- $ 137 $ --
Change in provisions for unearned premiums ..... 3 -- 5 --
------------ ------------ ------------ ------------
Gross premiums earned .......................... 95 -- 142 --
------------ ------------ ------------ ------------
Premiums ceded (reinsured) ..................... (48) -- (72) --
Change in reinsurers' share for unearned premium 2 -- (15) --
------------ ------------ ------------ ------------
Earned premiums ceded .......................... (46) -- (87) --
------------ ------------ ------------ ------------
Net premiums earned ............................ 49 -- 55 --
------------ ------------ ------------ ------------
Interest income, net ........................... 22 -- 36 --
------------ ------------ ------------ ------------
Other revenues
Commission earned from reinsurance ............. 15 -- 26 --
Other income ................................... 18 -- 20 --
------------ ------------ ------------ ------------
33 -- 46 --
------------ ------------ ------------ ------------
Total revenues ................................. 104 -- 137 --
------------ ------------ ------------ ------------
Expenses
losses and loss adjustment expense (income) .... (10) -- 51 --
Reinsurers' share of losses and loss adjustment
expense ........................................ 10 -- (25) --
------------ ------------ ------------ ------------
-- -- 26 --
------------ ------------ ------------ ------------
Other operating expenses ....................... 44 -- 90 --
Translation loss ............................... 1 -- 3 --
------------ ------------ ------------ ------------
45 -- 93 --
------------ ------------ ------------ ------------
Total expenses ................................. 45 -- 119 --
------------ ------------ ------------ ------------
NET INCOME FROM INSURANCE BUSINESS ............. 59 -- 18 --
------------ ------------ ------------ ------------
FROM OTHER BUSINESSES
Revenues ....................................... 1,741 1,110 3,740 2,443
Cost of revenues ............................... 864 370 1,755 1,058
------------ ------------ ------------ ------------
Gross profit ................................... 877 740 1,985 1,385
Selling, administrative and general expenses ... 202 26 413 54
------------ ------------ ------------ ------------
Income before financing income ................. 675 714 1,572 1,331
Financing income, net .......................... 2 -- 8 --
------------ ------------ ------------ ------------
Income from regular operations ................. 677 714 1,580 1,331
Other expenses ................................. -- -- 5 --
------------ ------------ ------------ ------------
Income before income taxes ..................... 677 714 1,575 1,331
Income taxes ................................... 43 -- 85 --
------------ ------------ ------------ ------------
NET INCOME FROM OTHER BUSINESSES ............... 634 714 1,490 1,331
------------ ------------ ------------ ------------
TOTAL INCOME BEFORE OUTSIDE
SHAREHOLDERS' INTEREST IN NET INCOME ......... 1,096 714 2,178 1,331
OUTSIDE SHAREHOLDERS' INTEREST IN NET
INCOME ...................................... 62 -- 106 --
------------ ------------ ------------ ------------
TOTAL NET INCOME ............................... $ 1,034 $ 714 $ 2,072 $ 1,331
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
NET EARNINGS PER SHARE FOR THE PERIOD .......... 0.086 0.357 0.18 0.666
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
WEIGHTED AVERAGE NUMBER OF SHARES
OUTSTANDING ................................ 12,000,000 2,000,000 11,666,667 2,000,000
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements
4
<PAGE>
TRIMOL GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
U.S. Dollars in Thousands
<TABLE>
<CAPTION>
Six months ended
June 30,
1 9 9 8 1 9 9 7
------- -------
<S> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES
Net income .......................................................... $ 2,072 $ 1,331
Adjustments to reconcile net income to net cash provided (used) by
operating activities (Annex A) ................................... 654 (1,284)
------- -------
NET CASH PROVIDED BY OPERATING ACTIVITIES ........................... 2,726 47
------- -------
CASH FLOW FROM INVESTING ACTIVITIES
Cash flow from bank business
Proceeds from redemptions of securities held to maturity ............ 7,703 --
Purchases of securities held to maturity ............................ (7,146) --
Net increase in securities purchased under resale agreements ........ (211) --
Net increase in time deposits with banks ............................ (4,273) --
Net increase in loans ............................................... (88) --
Purchases of premises and equipment ................................. (1) --
Sale of investees ................................................... 12 --
------- -------
Net cash used by bank business ...................................... (4,004) --
------- -------
Cash flow from insurance business
Repayment of leasing transaction .................................... 8 --
Acquisition of furniture, equipment and vehicles .................... (6) --
Proceeds from sale of securities held to maturity ................... 106 --
Investment in long term deposit ..................................... (3) --
Investment in capital note .......................................... (3) --
------- -------
Net cash provided by insurance business ............................. 102 --
------- -------
Cash flow from other businesses
Acquisition of subsidiaries consolidated for the first time (Annex B) 4,079 --
Purchases of property and equipment ................................. (31) --
Proceeds from realization of property and equipment ................. 35 --
------- -------
Net cash provided by other businesses ............................... 4,083 --
------- -------
TOTAL NET CASH PROVIDED BY INVESTING ACTIVITIES ..................... 187 --
------- -------
CASH FLOW FROM FINANCING ACTIVITIES
Cash flow from bank business
Net increase in non-interest bearing deposits ...................... 2,514 --
Net decrease in interest bearing deposits ........................... (2,408) --
Net increase in deposits from banks ................................. 1,218 --
------- -------
Net cash provided by bank business .................................. 1,324 --
------- -------
Cash flow from other businesses
Divdend to minority shareholders .................................... (1,251) --
Decrease in account due from related parties ........................ (79) --
------- -------
Net cash used by other businesses ................................... (1,330) --
------- -------
TOTAL NET CASH USED BY FINANCING ACTIVITIES ........................ (6) --
------- -------
INCREASE IN CASH AND CASH EQUIVALENTS ............................... 2,907 47
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD .................... -- 15
------- -------
CASH AND CASH EQUIVALENTS AT END OF PERIOD .......................... $ 2,907 $ 62
------- -------
------- -------
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements
5
<PAGE>
TRIMOL GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
U.S. Dollars in Thousands
ANNEX A - Adjustments to reconcile net income to net cash provided (used) in
operating activities
<TABLE>
<CAPTION>
Six months ended
June 30,
1 9 9 8 1 9 9 7
------- -------
(Unaudited)
<S> <C> <C>
INCOME AND EXPENSES NOT INVOLVING CASH FLOW
Bank business
Allowance for possible loan losses and doubtful accounts ......... $ 35 $ --
------- -------
Depreciation ..................................................... 100 --
Increase in deferred taxes ....................................... 39 --
------- -------
174 --
------- -------
Insurance business
Depreciation ..................................................... 6 --
------- -------
Other businesses
Outside shareholders' interest in net earnings ................... 106 --
Depreciation ..................................................... 159 --
Increase in deferred taxes ....................................... 23 --
Loss from realization of property and equipment .................. 4 --
Increase in provision for vacation ............................... 2 --
------- -------
294 --
------- -------
CHANGES IN ASSETS AND LIABILITIES
Bank business
Net increase in interest receivable .............................. (18) --
Net increase in other receivables ................................ (22) --
Net increase in interest payable ................................. 66 --
Net decrease in accrued expenses ................................. (58) --
------- -------
(32) --
------- -------
Insurance business
Decrease in outstanding premiums ................................. 29 --
Increase in other accounts receivable ............................ (19) --
Increase in unearned premiums reserve, net ....................... 16 --
Increase in losses and loss adjustment reserves, net ............. 17 --
Decrease in reinsurers' accounts ................................. (18) --
Decrease in deferred policy acquisition costs, net ............... (6) --
------- -------
Increase in other accounts payable ............................... 15 --
------- -------
34 --
------- -------
Other businesses
Decrease (increase) in trade accounts receivable and accrued income 24 (128)
Decrease in other accounts receivable and debit balances ......... 30 --
Decrease in inventories and operating equipment .................. 10 --
Increase (decrease) in trade accounts payable .................... 6 (1,156)
Increase in other accounts payable and credit balances ........... 108 --
------- -------
178 (1,284)
------- -------
TOTAL ADJUSTMENTS ................................................ $ 654 $(1,284)
------- -------
------- -------
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements
6
<PAGE>
TRIMOL GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
U.S. Dollars in Thousands
ANNEX B - Acquisition of subsidiaries consolidated for the first time *
<TABLE>
<CAPTION>
Six months ended
June 30,
1 9 9 8 1 9 9 7
------- ---------
(Unaudited)
<S> <C> <C>
Assets and liabilities on acquisition
Deficit in working capital (excluding cash) ................... $ 3,671 $
Real estate ................................................... (7,511) --
Investment in investees ....................................... (24) --
Investment in affiliated companies ............................ 5,746 --
Long term debt ................................................ 16 --
Goodwill ...................................................... (91) --
Outside shareholders' interest ................................ 2,272 --
------- ---------
Net cash provided from acquisition of subsidiaries consolidated
for the first time ............................................ $ 4,079 $ --
------- ---------
------- ---------
</TABLE>
* For details about the acquisition see note 2(a)
The accompanying notes are an integral part of these condensed consolidated
financial statements
7
<PAGE>
TRIMOL GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 1 - Basis of Presentation
The unaudited condensed consolidated financial statements of Trimol
Group, Inc. (the "Company"), formerly Nutronics International, Inc.,
included herein have been prepared in accordance with generally
accepted accounting principles for interim financial information,
pursuant to the rules and regulations of the Securities and Exchange
Commission applicable to quarterly reports on Form 10-QSB, and do not
include all of the information and note disclosures required by
generally accepted accounting principles for complete financial
statements. These statements should be read in conjunction with the
audited financial statements and notes thereto for the nine month
period ended September 30, 1997, included in the Company's Report on
Form 8-K/ A filed with the Securities and Exchange Commission on March
6, 1998. In the opinion of management, all adjustments (consisting
only of normal and recurring adjustments) 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 the full fiscal year.
Note 2 - Business combination
(a) As of January 6, 1998, pursuant to an Agreement and Plan of
Reorganization, the Company acquired from Magnum Associates Ltd.
and Starbeam Ltd all of the issued and outstanding shares of the
capital stock of Exim Asint S.A. and of Banca Comerciale pe
Actiuni "Export - Import", and 65% of the issued and outstanding
shares of the capital stock of Jolly Alon Limited (collectively
referred to as the "Target Companies"), in exchange for an
aggregate of 10,000,000 shares of the Company's common stock, par
value $0.01 per share.
This transaction was accounted for using the reverse purchase
method. The excess amount of purchase price over net assets
purchased amounted to $90,909 and was attributed to goodwill
which is amortized by the straight line method over 10 years.
The operating results and cash flows of the Target Companies are
included in the consolidated financial statements since the date
of acquisition.
The Target Companies operate in Moldova, and their currency of
operation is the Moldovan Leu (MDL). Until December 31, 1997,
Moldova was considered to be a country with hyper-inflation, as
the rate of inflation in the three years preceding 1996 reached
more than 100%. From January 1, 1998, according to the Statements
of Financial Accounting Standards (SFAS) No. 52, "Foreign
Currency Translation", of the Financial Accounting Standards
Board (FASB) of the United States, Moldova should no longer be
considered to be a country with a hyper-inflationary environment.
However, due to uncertainties regarding the economic situation in
Moldova, it has been decided to continue remeasuring the
Company's financial statements in U.S. dollars.
(b) Pursuant to a Stock Purchase Agreement dated May 3, 1998, to
which the Company was a party, on May 6, 1998, the Company
acquired all of the issued and outstanding shares of capital
stock of Intercomsoft Limited, an Irish corporation
("Intercomsoft"), in exchange for 1,000,000 shares of the
Company's common stock, par value $ 0.01 per share.
The acquisition of Intercomsoft has been accounted for in a manner
similar to a pooling of interest since the Company and
Intercomsoft are enterprises under common control. The Company's
financial statements have been restated to include the results of
operation, financial position and cash flows of Intercomsoft for
all periods presented as though it had always been a part of the
Company.
8
<PAGE>
TRIMOL GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 2 - Business Combination (Continued)
The six month period condensed consolidated financial statements
include premerger revenues and net income of the Company and
Intercomsoft as follows:
<TABLE>
<CAPTION>
Revenues Net income
---------- ----------
U.S. Dollars In Thousands
-------------------------
<S> <C> <C>
The Company - three months ended March 31, 1998 (Unaudited) $ 1,677 $ 323
Intercomsoft - three months ended March 31, 1998 (Unaudited) 1,312 715
The Company (including Intercomsoft) - three months
ended June 30, 1998 (Unaudited) ........................ 2,943 1,034
---------- ----------
Combined ................................................... $ 5,932 $ 2,072
---------- ----------
---------- ----------
</TABLE>
A reconciliation of consolidated revenues and net income as
originally reported and as restated follows:
<TABLE>
<CAPTION>
Six months Three months
ended ended
June 30, June 30,
1997 1997
------ ------
U.S. Dollars In Thousands
<S> <C> <C>
Revenues
As reported by the Company (Unaudited) $ -- $ --
As reported by Intercomsoft (Unaudited) 2,443 1,110
------ ------
As restated ........................... $2,443 $1,110
------ ------
------ ------
Net income
As reported by the Company (Unaudited) $ -- $ --
As reported by Intercomsoft (Unaudited) 1,331 714
------ ------
As restated ........................... $1,331 $ 714
------ ------
------ ------
</TABLE>
Note 3 - Business Segment Information
(a) Since the financial position and the operational results of the
bank business and insurance business are presented separately in
the condensed consolidated financial statements of the Company,
this note pertains only to the other business sector.
(b) The other business sector includes the activities of two
companies which are considered by the Company as separate
segments:
Jolly Alon Limited - operates and manages the Jolly Alon Hotel in
Kishinev, Moldova. The principal guests of the hotel are business
persons from all over the world, diplomats and some local
companies which rent stores and offices located on hotel
property.
Intercomsoft Limited - imports equipment and auxiliary materials
utilized for the production of computerized documents (passports,
drivers' licenses, vehicle registrations and identification
cards), and the software required for the operation of this
equipment, and leases these items to the Moldovan Ministry of
Economics, which is Intercomsoft's sole client.
9
<PAGE>
TRIMOL GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 3 - Business Segment Information (Continued)
(c)The periods of six months and three months ended June 30, 1997
include only the activities of Intercomsoft (see note 2).
<TABLE>
<CAPTION>
Hotel
business Intercomsoft Adjustments Consolidated
------- ------------ ----------- ------------
U.S.. Dollars In Thousands
<S> <C> <C> <C> <C>
Six months ended June 30, 1998
Revenues from external customers $ 1,403 $ 2,337 $ -- $ 3,740
Intersegment revenues .......... 31 -- (31) --
------- ------- ------- -------
Total revenues ................. $ 1,434 $ 2,337 $ (31) $ 3,740
------- ------- ------- -------
------- ------- ------- -------
Income before income taxes ..... $ 387 $ 1,244 $ (10) $ 1,621
Income taxes ................... (85) -- -- (85)
Other expenses ................. -- -- (46) (46)
------- ------- ------- -------
Net income ..................... $ 302 $ 1,244 $ (56) $ 1,490
------- ------- ------- -------
------- ------- ------- -------
Three months ended June 30, 1998
Revenues from external customers $ 716 $ 1,025 $ -- $ 1,741
Intersegment revenues .......... 24 -- (24) --
------- ------- ------- -------
Total revenues ................. $ 740 $ 1,025 $ (24) $ 1,741
------- ------- ------- -------
------- ------- ------- -------
Income before income taxes ..... $ 219 $ 529 $ (32) $ 716
Income taxes ................... (43) -- -- (43)
Other expenses ................. -- -- (39) (39)
------- ------- ------- -------
Net income ..................... $ 176 $ 529 $ (71) $ 634
------- ------- ------- -------
------- ------- ------- -------
As of June 30, 1998
Segment assets ................. $ 6,955 $ 534 $ (170) $ 7,319
Other assets ................... -- -- 145 145
------- ------- ------- -------
Total assets ................... $ 6,955 $ 534 $ (25) $ 7,464
------- ------- ------- -------
------- ------- ------- -------
</TABLE>
10
<PAGE>
Item 2. Management's Discussion and Analysis and Results of Operations
RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction
with the Company's financial statements and notes thereto appearing elsewhere in
this report.
General
Trimol Group, Inc., a Delaware corporation (the "Company"), through its
wholly-owned subsidiaries, owns 65% of the issued and outstanding shares of
capital stock of Jolly Alon Limited, a Moldovan corporation (the "Hotel"), in
Kishinev, Moldova, with the remaining thirty-five (35%) percent of the issued
and outstanding shares of capital stock of the Hotel being owned by the
Government of the Republic of Moldova; 100% of the issued and outstanding shares
of capital stock of Banca Comerciala pe Actiuni "Export-Import," a Moldovan
commercial bank (the "Bank"); 100% of the issued and outstanding shares of
capital stock of Exim Asint S.A., a Moldovan property and casualty insurer (the
"Insurance Company"); and 100% of the issued and outstanding shares of capital
stock of Intercomsoft Limited, an Irish corporation ("Intercomsoft") that is the
exclusive supplier to the Government of the Republic of Moldova of secured
essential government documents (e.g. passports, drivers' licenses, etc.).
Intercomsoft, together with the Bank, the Hotel, and the Insurance Company are
sometimes hereinafter collectively referred to as the "Operating Entities." The
Company's interests in the Bank, the Hotel and the Insurance Company were
acquired on January 6, 1998. The Company's interest in Intercomsoft was acquired
on May 6, 1998.
For at least three years prior to January 6, 1998 the Company had no
material operations. As a result, a discussion comparing the Company's
operations as of and at the end of the three and six months ending June 30, 1998
to the comparative periods in 1997 would be of no value except in the instance
of Intercomsoft which was under common control. The acquisition of Intercomsoft
has been accounted for in a manner similar to a pooling of interest since the
Company and Intercomsoft are enterprises under common control. The Company's
financial statements have been restated to include the results of operation,
financial position and cash flows of Intercomsoft for all periods presented as
though it had always been a part of the Company. As a consequence, comparisons
cannot be made between fiscal years 1997 and 1998.
The Bank
Revenues. The Bank derives its revenue from charging fees for its
services, interest charged on loans, interest earned on funds deposited in
correspondent banks and investing in securities issued by the Moldovan
government.
11
<PAGE>
During the three and six month periods ended June 30, 1998, ("2nd
Quarter 1998" and "Six Months 1998," respectively), the Bank had interest
income of approximately $731,000 and $1,301,000, respectively. The largest
component of the Bank's interest income was interest earned on loans, which
was approximately $565,000 and $1,015,000 or approximately 77% and 78% of the
Bank's total interest income during the 2nd Quarter 1998 and Six Months 1998,
respectively. The remaining components of the Bank's interest income were
interest earned on securities and interest earned on deposits with
correspondent banks. During the 2nd Quarter 1998 and Six Months 1998, the
Bank earned approximately $103,000 and $194,000 in interest on securities,
representing approximately 14% and 15%, respectively, of the Bank's total
interest income during the foregoing periods. During those same periods the
Bank earned approximately $63,000 and $92,000 or approximately 9% and 7%,
respectively, of its interest income from interest earned on deposits with
correspondent banks. In addition to interest income, the Bank also had
non-interest income of approximately $367,000 and $754,000 during the 2nd
Quarter 1998 and Six Months 1998, respectively. A principal component of the
Bank's non-interest income consisted of financial service fees of
approximately $193,000 and $359,000 or approximately 53% and 48% of the
Bank's non-interest income during the 2nd Quarter 1998 and Six Months 1998,
respectively. The remaining component of the Bank's non-interest income was
foreign exchange trading and commissions of approximately $158,000 and
$362,000, which represented approximately 43% and 48% of the Bank's
non-interest income during the 2nd Quarter 1998 and Six Months 1998,
respectively.
Expenses. Offsetting the Bank's interest income during the 2nd
Quarter 1998 and Six Months 1998 was interest expense of approximately
$238,000 and $381,000, respectively, comprised principally of approximately
$156,000 and $297,000 of interest paid on time deposits or approximately 21%
and 23%, respectively, of total interest income for the foregoing periods.
Also offsetting the Bank's interest income was interest due to other banks on
their time deposits with the Bank of approximately $82,000 and $84,000, or
approximately 11% and 6% of the Bank's interest income during the 2nd Quarter
1998 and Six Months 1998, respectively. Offsetting the Bank's non-interest
income during the 2nd Quarter 1998 were non-interest expenses of
approximately $424,000, comprised principally of salaries and related costs
of approximately $257,000, with all other non-interest expenses during this
period totalling approximately $167,000. During Six Months 1998 non-interest
expenses consisted principally of salaries of approximately $408,000,
equipment and depreciation of approximately $104,000 and communication and
transportation expenses of approximately $100,000.
Net Income. The Bank's net interest income for the 2nd Quarter 1998
was approximately $522,000. However, non-interest expenses during this period
of approximately $424,000 exceeded non-interest income of approximately
$367,000 by approximately $57,000, thereby reducing the Bank's income before
taxes to approximately $465,000 during the 2nd Quarter 1998. Income taxes of
approximately $62,000 on the Bank's income reduced the Bank's net income to
approximately $403,000 during the 2nd Quarter 1998. During Six Months 1998,
the Bank's net interest income was approximately $885,000 with non-interest
income of approximately $754,000. Both were offset by non-interest expenses
of $861,000, thereby
12
<PAGE>
reducing income before taxes to approximately $778,000 with income taxes of
approximately $108,000 resulting in net income of approximately $670,000 from
the Bank's business for the Six Months 1998.
The Insurance Company
Although the Insurance Company began operations in 1995 it has not yet
matured and is still in its growth stage. The Insurance Company derives its
revenues from premium payments from its insureds and from the investment of its
insurance reserves. Although the Insurance Company earned approximately $95,000
and $142,000 in gross premiums during the 2nd Quarter 1998 and Six Months 1998,
respectively, earned premiums ceded to reinsurers approximated $46,000 and
$87,000 during the foregoing periods resulting in approximately $49,000 and
$55,000, respectively, in net premiums earned of the Insurance Company's total
revenues of approximately $104,000 and $137,000 for the 2nd Quarter 1998 and Six
Months 1998, respectively. During the 2nd Quarter 1998 and Six Months 1998, the
Insurance Company also received net interest income of approximately $22,000 and
$36,000, commissions earned from reinsurance of approximately $15,000 and
$26,000 and $18,000 and $20,000 from other income, respectively. The Insurance
Company's total expenses of approximately $45,000 and $119,000, respectively,
for the 2nd Quarter 1998 and Six Months 1998, consisted principally of other
operating expenses of approximately $44,000 and $90,000, resulting in net income
of approximately $59,000 and $18,000, respectively, during this period.
Other Businesses
The Company's other businesses consisted of the Hotel and Intercomsoft.
Hotel
During the 2nd Quarter 1998 and Six Months 1998, the Hotel derived
revenues of approximately $716,000 and $1,403,000, respectively, from room
rentals of guest accommodations, leasing of office space, and restaurant
operations. The Hotel's approximate $380,000 in revenue costs during the 2nd
Quarter 1998 represented approximately 53% of the Hotel's revenues, leaving a
gross profit of approximately $336,000 for that period. The Hotel's
approximate $766,000 in revenue costs for the Six Months 1998 represented
approximately 55% of the Hotel's revenues, leaving a gross profit of
approximately $637,000 for that period.
Selling, administrative and general expenses for the Hotel's 2nd
Quarter 1998 were approximately $143,000 or 20% of the Hotel's revenues for that
period. Principal deductions from revenues before net income for that period
were (a) the above noted revenue costs, (b) the above selling, administrative
and general expenses; and (c) income taxes of approximately $43,000 or 6% of
revenues. Selling, administrative and general expenses for the Hotel's Six
Months 1998 were approximately $278,000 or 20% of the Hotel's revenues for that
period.
13
<PAGE>
Principal deductions from revenues for that period before net income were
substantially similar in kind to the Hotel's 2nd Quarter 1998 deductions.
The Hotel's net income during the 2nd Quarter 1998 and Six Months 1998
was approximately $136,000 and $277,000, or approximately 19% and 20% of its
revenues, respectively.
Intercomsoft
Three Months Ended June 30, 1998 compared to Three Months Ended June
30, 1997. During the Second Quarter 1998 Intercomsoft had revenues of
approximately $1,025,000, a decline of approximately $85,000, or 8%, from the
comparable period in the prior year ("2nd Quarter 1997"). Additionally, cost of
revenues increased from approximately $370,000 during the 2nd Quarter 1997, or
33.3% of revenues, by approximately $107,000 to approximately $477,000, or 46.5%
of revenues, during the 2nd Quarter 1998. Operating expenses remained fairly
constant during the 2nd Quarter 1997 (approximately $26,000 or 2.3% of revenues)
and the 2nd Quarter 1998 (approximately $11,000 or 1.1% of revenues). Net income
for the 2nd Quarter 1998 declined approximately $177,000, or 25%, from
approximately $714,000 in net income for the 2nd Quarter 1997, or approximately
64.3% of revenues, to approximately $537,000, or approximately 52.4% of
revenues, for the 2nd Quarter 1998.
Six Months Ended June 30, 1998 compared to Six Months Ended June 30,
1997. Revenues for the Six Months 1998 of approximately $2,337,000 represented a
decrease of approximately $106,000, or 4.3%, from revenues of approximately
$2,443,000 for the comparable period in the prior year ("Six Months 1997"). Cost
of revenue declined slightly, by approximately $68,000 from the Six Months 1997
level of approximately $1,057,000, or 43.3% of revenues, to approximately
$989,000, or 42.3% of revenues for the Six Months 1998. Total operating expenses
increased by approximately $35,000 from approximately $54,000, or 2.2% of
revenues for Six Months 1997 to approximately $89,000, or 3.8% of revenues for
Six Months 1998. Net income declined by approximately $72,000, or 5.4%, to
approximately $1,259,000, or 53.9% of revenues, for Six Months 1998 from
approximately $1,331,000, or 54.5% of revenues, for Six Months 1997.
The Company
During the 2nd Quarter 1998 and Six Months 1998, the Company had total
income before outside shareholder's interest in net income of approximately
$1,096,000 and $2,178,000, respectively; from which were deducted the sums of
approximately $62,000 and $106,000, respectively, which were deducted for the
outside shareholder's interest in net income representing the Government of
Moldova's interest in the Hotel. Accordingly, the Company's resulting net income
was approximately $1,034,000 and $2,072,000, for the 2nd Quarter 1998 and Six
Months 1998, respectively. The Company's net earnings per share were
approximately $0.086 and $0.18 per share for the 2nd Quarter 1998 and Six Months
1998, respectively.
14
<PAGE>
LIQUIDITY & CAPITAL RESOURCES
The Company believes that its existing source of liquidity and its
current revenues and cash flow, will be adequate to sustain its current
operations and to satisfy its current working capital and capital expenditure
requirements for the next twelve months.
The Company plans to continue seeking other acquisition candidates
which may be acquired through the issuance of securities and/or the payment of
available cash, or both.
15
<PAGE>
PART II
OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit No. Description of Document
- ----------- -----------------------
2 Agreement and Plan of Reorganization, effective January 6, 1998,
by and among the Company, Edward F. Cowle, H. DeWorth Williams,
Gold Hill Mines, Inc., Magnum Associates Ltd. and Starbeam,
Ltd.(1)
2A Registrant's Certificate of Incorporation(2)
3 By-Laws(2)
4 Specimen of Certificate of Common Stock(2)
21 List of Subsidiaries(3)
(b) Reports on Form 8-K
(1) In a Current Report on Form 8-K dated May 20, 1998, the Company
disclosed that pursuant to a Stock Purchase Agreement dated May 3, 1998, the
Company acquired all of the issued and outstanding capital stock of
Intercomsoft. See Item 2 above.
(2) In a Current Report on Form 8-KA dated July 20, 1998, the Company
disclosed the following financial statements of the Company and Intercomsoft:
- --------
(1) Incorporated by reference to the Company's Report on Form 8-K, filed
on January 6, 1998, as amended by the Company's Form 8-KA on March 6,
1998.
(2) Incorporated by reference to the Company's Registration Statement on
Form 10-SB.
(3) Incorporated by reference to the Company's Report on Form 10-KSB for
its fiscal year ended December 31, 1997.
16
<PAGE>
UNAUDITED PROFORMA CONSOLIDATED FINANCIAL INFORMATION
OF THE COMPANY
Description of Transactions
Unaudited Proforma Consolidated Balance Sheet
Unaudited Proforma Consolidated Statement
of Operations
Notes to the Unaudited Proforma Consolidated
Financial Statements
INTERCOMSOFT FINANCIAL STATEMENTS AS AT
AND FOR THE YEAR ENDED DECEMBER 31, 1997
Report of Independent Auditors
Balance Sheets as of December 31, 1996 and 1997
Statements of Operations for the Years Ended
December 31, 1996 and 1997
Statements of Shareholders' Equity for the Years Ended
December 31, 1996 and 1997
Statements of Cash Flows for the Years Ended
December 31, 1996 and 1997
Notes to the Financial Statements
INTERCOMSOFT FINANCIAL STATEMENTS AS AT
AND FOR THE YEAR ENDED DECEMBER 31, 1996
Report of Independent Auditors
Balance Sheets as of December 31, 1995 and 1996
Statements of Operations for the 11 Months Ended
December 31, 1995 and for the Year Ended
December 31, 1996
Statements of Shareholders' Equity for the 11 Months Ended
December 31, 1995 and for the Year Ended
December 31, 1996
Statements of Cash Flows for the 11 Months Ended
December 31, 1995 and for the Year Ended
December 31, 1996
Notes to the Financial Statements
17
<PAGE>
INTERCOMSOFT FINANCIAL STATEMENTS AS AT
AND FOR THE QUARTER ENDING MARCH 31, 1998
Balance Sheets as of March 31, 1998
Statements of Operations for the 3 Months Ended
March 31, 1998
Statements of Shareholders' Equity for the 3 Months Ended
March 31, 1998
Statements of Cash Flows for the 3 Months Ended
March 31, 1998
Notes to the Financial Statements
18
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Exchange Act, the
Registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
TRIMOL GROUP, INC.
Dated: August 14, 1998 By:/s/Ted Shapiro
-------------------------------------
Ted Shapiro, Chief Executive Officer
and President
Dated: August 14, 1998 By:/s/Shmuel Gurfinkel
-------------------------------------
Shmuel Gurfinkel, Chief Financial Officer
19
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<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> APR-01-1998
<PERIOD-END> JUN-30-1998
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<SECURITIES> 1,271
<RECEIVABLES> 1,036
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<INVENTORY> 228
<CURRENT-ASSETS> 1,103
<PP&E> 7,224
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0
0
<COMMON> 120
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<TOTAL-LIABILITY-AND-EQUITY> 23,452
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