<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 March 31, 1999
|_| 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.
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(Exact Name of Small Business Issuer as Specified in Its Charter)
DELAWARE 13-3859706
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(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
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(Address of Principal Executive Offices)
(212) 554-4394
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(Issuer's Telephone Number, Including Area Code)
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(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 March 31, 1999, 12,039,000
shares of Common Stock, par value $.01 per share.
Transitional Small Business Disclosure Format (check one):
Yes |_| No |X|
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<PAGE>
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION
Heading Page
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Item 1. Financial Statements.......................................F-1-F-8
Item 2. Management's Discussion and Analysis and Results of Operations...1
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.................................7
Signatures...................................................................8
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Trimol Group, Inc.
Condensed consolidated interim financial statements as of March 31, 1999
F-1
<PAGE>
Trimol Group, Inc.
Condensed Consolidated Balance Sheet
<TABLE>
<CAPTION>
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Note March 31, December
1999 31, 1998
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(In Thousands of US Dollars)
<S> <C> <C> <C> <C>
ASSETS
Cash and cash equivalents 4,535 4,173
Interest bearing deposit - 215
Held to maturity securities 1,207 1,136
Loans 5,797 6,343
Less: allowance for possible loan losses (865) (912)
-------------
-----------
Loans, net 4,932 5,431
Reinsurance recoverable 136 148
Property, plant and equipment 7,032 7,165
Other assets 1,538 1,123
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TOTAL ASSETS 19,380 19,391
============= =============
LIABILITIES
Non interest bearing deposits 3,779 2,330
Interest bearing deposits 3,402 4,532
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Total deposits 7,181 6,862
Acceptances outstanding 264
Insurance policy and claim reserves 264 274
Other liabilities 1,847 2,226
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TOTAL LIABILITIES 9,292 9,626
============= =============
MINORITY INTEREST 2,217 2,199
SHAREHOLDERS' EQUITY
Preferred Stock: 10,000 shares authorized of US$ 1.00 par
value, no shares issued and outstanding.
Common Stock: 30,000,000 shares authorized of US$ 0.01 120 120
par value, 12,039,000 and 11,000,000 shares issued and
outstanding respectively.
Additional paid in capital 6,200 6,018
Retained earnings 1,551 1,428
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TOTAL SHAREHOLDERS' EQUITY 7,871 7,566
============= =============
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TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 19,380 19,391
=================================================================================================================
</TABLE>
F-2
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Trimol Group, Inc.
The accompanying notes are an integral part of the unaudited condensed
consolidated financial statements.
Consolidated Statement of Operations
<TABLE>
<CAPTION>
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Note Three Three
months months
ended ended
March March
31, 1999 31, 1998
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(In Thousands of US Dollars, except per share data)
<S> <C> <C> <C>
REVENUES
Revenues from hotel 465 694
Revenues from document processing 903 1,312
Loan interest 271 450
Other interest 174 134
Insurance premiums 18 47
Commissions and fees 290 370
Other revenues 1 36
----------------------------
TOTAL REVENUES 2,122 3,043
Interest expense 233 143
----------------------------
TOTAL REVENUES, NET OF INTEREST EXPENSE 1,889 2,900
============================
PROVISION FOR BENEFITS, CLAIMS AND CREDIT LOSSES
Provision for credit losses 56 64
----------------------------
56 64
============================
OPERATING EXPENSES
Cost of revenue from hotel 299 386
Cost of revenue from document processing 255 511
Other operating expenses 604 645
Result from exchange remeasurement 2 497 124
----------------------------
TOTAL OPERATING EXPENSES 1,663 1,666
============================
----------------------------
INCOME FROM OPERATIONS BEFORE INCOME TAXES AND MINORITY
INTEREST 86 1,170
============================
Provision for income taxes 28 88
Minority interest, net of income taxes 19 44
----------------------------
NET INCOME 123 1,038
============================
Net earnings per share in US$ (basic and diluted) 0.01 0.10
----------------------------
F-3
<PAGE>
Trimol Group, Inc.
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING
12,026,733 10,333,333
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</TABLE>
The accompanying notes are an integral part of the unaudited condensed
consolidated financial statements.
Statement of Changes in Shareholders' Equity
<TABLE>
<CAPTION>
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Three months Year ended
ended March December 31,
31, 1999 1998
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(In Thousands of US Dollars)
<S> <C> <C>
COMMON STOCK
Balance, January 1 120 110
Issue of common stock - 10
-----------------------------------
Balance, end of the period 120 120
===================================
ADDITIONAL PAID-IN CAPITAL
Balance, January 1 6,018 5,934
Issue of common stock 182 84
-----------------------------------
Balance, end of the period 6,200 6,018
===================================
RETAINED EARNINGS
Balance, January 1 1,428 (338)
Net income 123 2,950
Dividend paid to outside shareholders - (1,184)
-----------------------------------
Balance, end of the period 1,551 1,428
===================================
-----------------------------------
TOTAL SHAREHOLDERS' EQUITY 7,871 7,566
====================================================================================
</TABLE>
The accompanying notes are an integral part of the unaudited condensed
consolidated financial statements.
F-4
<PAGE>
Trimol Group, Inc.
Condensed Consolidated Statement of Cash Flow
<TABLE>
<CAPTION>
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Three months Three months
ended March ended March
31, 1999 31, 1998
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(In Thousands of US Dollars)
<S> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES
Net income 123 1,038
ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH PROVIDED BY OPERATING
ACTIVITIES
INCOME AND EXPENSES NOT INVOLVING CASH FLOW
Depreciation 166 162
Provision for credit losses 56 64
Minority interest 19 37
-----------------------------------
241 263
-----------------------------------
CHANGES IN ASSETS AND LIABILITIES
Net decrease (increase) in other assets (415) (347)
Net increase (decrease) in other liabilities (653) 201
Net decrease (increase) in reinsurance recoverable 12 (12)
-----------------------------------
(1,056) (158)
-----------------------------------
TOTAL ADJUSTMENTS (815) 105
-----------------------------------
NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES (692) 1,143
===================================
CASH FLOW FROM INVESTING ACTIVITIES
Proceeds from redemptions of securities held to maturity 3,736 3,147
Purchase of securities held to maturity (3,808) (2,913)
Proceeds from sale of equipment - 32
Purchase of equipment (33) (91)
Net decrease (increase) in loans 443 (829)
-----------------------------------
NET CASH PROVIDED (USED) FOR INVESTING ACTIVITIES 338 (654)
===================================
CASH FLOW FROM FINANCING ACTIVITIES
Net decrease in deposits 534 784
Payment of dividends - (713)
Proceeds from issue of share capital 182 -
-----------------------------------
NET CASH PROVIDED (USED )FOR FINANCING ACTIVITIES 716 71
===================================
</TABLE>
F-5
<PAGE>
Trimol Group, Inc.
<TABLE>
<CAPTION>
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(In Thousands of US Dollars)
<S> <C> <C>
Increase in cash and cash equivalents 362 560
Cash and cash equivalents at beginning of period 4,173 4,079
------------------------
CASH AND CASH EQUIVALENTS AT END PERIOD 4,535 4,639
========================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Interest paid 214 220
Income taxes paid 93 40
===============================================================================
</TABLE>
The accompanying notes are an integral part of the unaudited condensed
consolidated financial statements.
F-6
<PAGE>
Trimol Group, Inc.
Notes to the condensed consolidated financial statements
(In Thousands of US Dollars)
NOTE 1 - BASIS OF PRESENTATION
The unaudited condensed consolidated financial statements of Trimol Group, Inc.
(the "Company") 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 consolidated financial statements for the year ended December
31, 1998, included in the Company's Report on Form 10-KSB filed with the
Securities and Exchange Commission on April 14, 1999. 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 - RESULTS FROM EXCHANGE REMEASUREMENT
Since 1997 management considers the Moldovan Leu to be a hyperinflation
currency. Therefore the functional currency of the entities in Moldova is the
United States Dollar which also is the reporting currency of the Company. The
books of record of the Moldovan entities are maintained in the Moldovan Leu.
Therefore remeasurement into the United States Dollar obviates translation. The
remeasurement process produces the same result as if the Moldovan entity's books
of record had been initially recorded in the United States Dollar. To accomplish
that result, it is necessary to use historical exchange rates between the United
States Dollar and the Moldovan Leu in the remeasurement process for certain
accounts (the current rate is used for all others). To accomplish that result it
is also necessary to recognize currently in income all exchange gains and losses
from remeasurement of monetary assets and liabilities that are not denominated
in the United States Dollar. Only exchange gains and losses arising from these
two remeasurements are recognized in results from exchange remeasurement.
NOTE 3 - STOCK-BASED COMPENSATION PLAN
On February 25, 1999, the Company entered into Employment Agreements with Boris
Birshstein, Chairman of the Board and Ted Shapiro and Robert L. Blessey,
President and Chief Executive Officer and Secretary, respectively. The
Employment Agreements are for a term of five years commencing January 1, 1999.
In addition to the provisions for annual salaries and other benefits, the
Employment Agreements provide for stock-based compensation. For every USD
1,000,000 of Excess Net Pre-Tax Profits Boris Birshtein will receive 100,000
incentive warrants up to a maximum of 1,000,000 of such warrants per year. Ted
Shapiro and Robert L. Blessey will each receive 50,000 incentive warrants up to
a maximum of 1,000,000 of such warrants each per year. The warrants will have a
five year term and will be exercisable at the market price of the Company's
Common Stock on the date of issuance. Excess Net Pre-Tax Profit is defined as
the amount by which net pre-tax profit in a year exceeds the net pre-tax profit
in the immediately preceding year.
F-7
<PAGE>
Trimol Group, Inc.
As at March 31, 1999 no such warrants were outstanding.
F-8
<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
The Company through its wholly-owned subsidiaries; owns 65% of the issued
and outstanding shares of capital stock of the Jolly Alon Limited, a Moldovan
corporation ("Hotel"), that operates and manages the Jolly Alon Hotel in
Chisinau, 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 Commerciala pe Actiuni "Export-Import", a Moldovan Corporation
("Bank"), which owns a commercial bank in Moldova; 100% of the issued and
outstanding shares of capital stock of Exim Asent, S.A. a Moldovan corporation
which owns a property and casualty insurance business in Moldova ("Insurance
Company"); and 100% of the issued and outstanding shares of capital stock of
Intercomsoft, Ltd. ("Intercomsoft") which is the exclusive supplier to the
Government of the Republic of Moldova of the technology and equipment required
to manufacture secured essential government documents (e.g., passports, drivers'
licenses, etc.). 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. As the Bank, the Hotel, the Insurance
Company and Intercomsoft were entities under common control during the fiscal
year ended December 31, 1998 and the three month periods ended March 31, 1998
("1st Quarter 98") and March 31, 1999 ("1st Quarter 99"), their individual
operations for those periods are compared below following the Company
discussion.
The acquisition of Intercomsoft has been accounted for in a manner similar
to a pooling of interest since the Company and Intercomsoft were 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.
The Official currency of the Republic of Moldova is the Moldovan Leu.
As a result of the economic crisis in Russia, the Moldovan Leu has
experienced significant devaluation as it relates to the U.S. dollar. This
"exchange rate loss" has led to a charge of $497,000 against 1st Quarter 99
profits.
- 1 -
<PAGE>
COMPARISON OF 1ST QUARTER 99 TO 1ST QUARTER 98
The Company
From 1st Quarter 1998 to 1st Quarter 1999, the Company's revenues declined
by approximately $921,000 or approximately 30% from approximately $3,043,000 to
$2,122,000, respectively. The economic crisis in Russia has caused an economic
slowdown in Moldova which has resulted in less disposable income to the Moldovan
population. Operating expenses remained static in raw dollar terms approximately
$1,666,000 and $1,663,000, in 1st Quarter 1998 and 1st Quarter 1999,
respectively. Measured as a percentage of revenues, total operating expenses,
were approximately 55% and 78% for 1st Quarter 1998 and 1st Quarter 1999,
respectively.
The Company was unable to reduce operating expenses in proportion to
reduced revenues, flowing in part from accounting adjustments/losses incurred
due to the devaluation of the Moldovan Leu, which escalated from approximately
$124,000, or 4% of revenues, in 1st Quarter 98 to approximately $497,000, or 23%
of revenues, in 1st Quarter 99.
In 1st Quarter 98 the Company had net income of approximately $1,038,000,
or 34% of revenues. In 1st Quarter 99, income declined from 1st Quarter 98 by
approximately $915,000 to approximately $123,000, or 6% of revenues. Had the
accounting adjustments/losses incurred due to the devaluation remained constant
as a percentage of revenues, the Company's net income would have approximated
$535,000 or 25% of revenues in 1st Quarter 99 (assuming all of other components
of the Company profit and loss statement had also been constant).
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.
During 1st Quarter 99, the Bank had interest income of approximately
$392,000, a decrease of approximately $178,000 or approximately 31% from the 1st
Quarter 98 interest income level of approximately $570,000. The largest
component of the Bank's interest income was interest earned on loans which was
approximately $271,000 and $450,000, or approximately 69% and 79% of the Bank's
total interest income during 1st Quarter 99 and 1st Quarter 98, respectively.
The decrease both in dollars and as a percentage of interest income of interest
earned on loans was the result of the economic crisis in Russia and the related
economic slowdown in Moldova, as described above. The remaining components of
the Bank's interest income were interest earned on securities and interest
earned on deposits with correspondent banks. During 1st Quarter 99, the Bank
earned approximately $87,000 in interest on securities, approximately 22% of the
Bank's total interest income in 1st Quarter 99, and approximately $34,000 or
approximately 9% of its total interest income from interest earned on deposits
with correspondent banks. During the 1st Quarter 98, the Bank earned
approximately $91,000 in
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<PAGE>
interest on securities, approximately 16% of the Bank's total interest income in
1st Quarter 98 and approximately $29,000 or 5% of its interest income from
interest earned on deposits with correspondent banks. The reason for the
foregoing declines in interest earned on securities and on deposits with
correspondent banks was the Bank's greater focus on commercial loans which have
a greater return than securities and deposits with correspondent banks and
management allocating less funds to securities investments and deposits with
local banks.
In addition to interest income, the Bank also had non-interest income of
approximately $326,000 during 1st Quarter 99 in comparison to approximately
$387,000 in 1st Quarter 98, a decline of approximately $61,000 or 16%. The
principal component of the Bank's non-interest income was exchange trading and
commissions of approximately $149,000 and $204,000 which represented
approximately 46% and 53% of the Bank's non-interest income during 1st Quarter
99 and 1st Quarter 98. Another component of the Bank's non-interest income was
financial advisory service fees of approximately $148,000 and $166,000 which
represented approximately 45% and 43% of the Bank's non-interest income during
1st Quarter 99, respectively, representing a decline of approximately $18,000 or
11%. Both the decline in financial advisory service fees and exchange trading
and non-interest income were related to the devaluation of the Moldovan Leu.
Financial advisory service fees are paid in the Moldovan Leu and represented
less U.S. dollars when converted. Although the Bank's allowance for possible
loan losses increased in raw dollars from approximately $602,000 in 1st Quarter
98 to approximately $865,000 in 1st Quarter 99, when the allowance is measured
as a percentage of the amount of outstanding loans (approximately $5,662,000 and
$5,797,000 in 1st Quarter 98 and 1st Quarter 99, respectively,) the increase
represented an approximate 4% increase.
Expenses. Offsetting the Bank's interest income during 1st Quarter 99 was
interest expense of approximately $233,000, approximately 59% of interest
income, comprised principally of interest paid on deposits. During 1st Quarter
98, interest expense was approximately $143,000 or 25% of total interest income.
Offsetting the Bank's non-interest income during 1st Quarter 98 and 1st
Quarter 99 was non-interest expenses of approximately $437,000 and $299,000,
respectively, comprised principally of salaries and related costs of
approximately $151,000 and $108,000, respectively, communication and
transportation expenses of approximately $78,000 and $9,000, respectively,
approximately $26,000 and $46,000 of outside services and processing costs,
respectively, and approximately $29,000 and $15,000 of marketing and development
costs, respectively. From 1st Quarter 98 to 1st Quarter 99 budget cutting
measures resulted in reductions in communications and transportation expenses
and outside services and processing costs. Marketing and development costs
increased from 1st Quarter 98 to 1st Quarter 99 to counter increased competition
from new banks. Salaries increased from 1st Quarter 98 to 1st Quarter 99 as a
result of increased Bank staffing levels.
Net Income. For 1st Quarter 99, the Bank's net interest income, after
allowance for possible loan losses of approximately $56,000, was approximately
$104,000 with non-interest
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<PAGE>
income and revenues combined of approximately $326,000. The Bank's 1st Quarter
99 income was offset by interest expenses of approximately $233,000 and
non-interest expenses of $299,000 thereby reducing income before taxes to
approximately $131,000, with income taxes of approximately $3,000 resulting in
net income of approximately $128,000 from the Bank's business in 1st Quarter 99.
Net income was approximately 18% of the Bank's aggregated total non-interest
income and interest income for 1st Quarter 99. During 1st Quarter 98, the Bank's
net interest income, after allowance for possible loan losses of approximately
$64,000, was approximately $363,000 with non-interest income of approximately
$387,000. The Bank's 1st Quarter 98 income was offset by interest expenses of
approximately $143,000 and non-interest expenses of approximately $437,000,
which reduced income before taxes to approximately $313,000, with income taxes
reducing net income to approximately $267,000 in 1st Quarter 98. Net income was
approximately 28% of the Bank's aggregated total non-interest income and
interest income for 1st Quarter 98. Net income declined both in dollars and as a
percentage of revenues due to the economic crisis in Russia and the related
economic slowdown in Moldova, as described above.
The Hotel
During 1st Quarter 99, the Hotel's revenues of approximately $465,000 were
principally derived from (a) rental of guest accommodations (approximately
$295,000 or 63% of the Hotel's revenues); (b) restaurant operations
(approximately $67,000 or 2% of the Hotel's revenues); and (c) leasing of stores
and offices (approximately $81,000 or 17% of the Hotel's revenues). 1st Quarter
99 Hotel revenues declined by approximately $229,000 or approximately 33% from
approximately $694,000 in 1st Quarter 98.
Total cost of revenues for the Hotel were approximately $386,000 and
$299,000 for 1st Quarter 98 and 1st Quarter 99, or approximately 57% and 64% of
Hotel revenues, respectively.
The Hotel experienced a decline in revenues of approximately $229,000 from
1st Quarter 98 to 1st Quarter 99 principally caused by a decline in revenues
from restaurant operation flowing from increased restaurant competition and a
reduced level of disposable income due to the devaluation of the Moldovan Leu.
This decline was offset by new management's budget cutting measures resulting in
the Hotel running more efficiently with labor and related expenses, operating
equipment purchases and maintenance costs all declining. Also offsetting the
decline in revenues was reduced costs of food and beverage, flowing from the
reduced demand and cost cutting measures which reduced selling, general and
administrative expenses.
The end result of the foregoing was that in 1st Quarter 99 the Hotel
realized a profit of approximately $53,000 (or 11% of revenues) while in 1st
Quarter 98 the Hotel derived net income of approximately $148,000 or 21% of its
revenues, representing a decrease of $95,000 or a negative variance of 10% when
net income is measured as a percentage of revenues. The foregoing dollar amounts
are stated before giving effect to the minority (35%) interest of the Republic
of Moldova.
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<PAGE>
Intercomsoft
Intercomsoft derives its revenue from being the exclusive supplier of the
technology required to produce secure essential documents (e.g., passports,
drivers' licenses, etc.), to the Government of the Republic of Moldova. During
1st Quarter 98 and 1st Quarter 99, Intercomsoft had revenues from operations of
approximately $1,312,000 and $903,000, respectively. Management attributes this
approximate 31% decrease in revenues to the Russian economic crisis and
Moldovan's having less disposable income. However, Intercomsoft was able to
reduce its cost of revenues which were approximately $511,000, or 39% of its
revenues in 1st Quarter 98, to approximately $255,000 or 28% of its revenues in
1st Quarter 99. This decline in cost of revenues is the result of a decline in
equipment expenditures. Intercomsoft was able to maintain its profitability with
net income in 1st Quarter 99 of approximately $637,000 from approximately
$715,000 in 1st Quarter 98.
The Insurance Company
Although the Insurance Company began operations in 1995 it is still in a
development 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 $47,000 and $40,000 in gross
premiums during 1st Quarter 98 and 1st Quarter 99, respectively, earned premiums
ceded to reinsurers approximated $41,000 and $20,000 in those years resulting in
approximately $6,000 and $20,000 in net premiums earned of the Insurance
Company's total revenues of approximately $33,000 and $48,000 for 1st Quarter 98
and 1st Quarter 99, respectively. During 1st Quarter 98 and 1st Quarter 99, the
Insurance Company also received net interest income of approximately $14,000 and
$19,000, respectively. During 1st Quarter 98 and 1st Quarter 99, the Insurance
Company also had approximately $2,000 and $3,000 of other income, respectively,
and reinsurance commissions of approximately $11,000 and $6,000. The Insurance
Company's total expenses of approximately $71,000 in 1st Quarter 99 resulted in
a net loss of approximately $23,000 during 1st Quarter 99 as compared to a net
income of approximately $41,000 in 1st Quarter 98 following total expenses of
$74,000.
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 has no current plans for material capital
expenditures.
The Company plans to continue seeking other acquisition candidates, both
domestically and internationally, which may be acquired through the issuance of
securities and/or the payment of available cash, or both.
- 5 -
<PAGE>
Year 2000 Compliance
The Company is aware of the issues associated with the programming code in
existing computer systems as the millennium (Year 2000) approaches. The "Year
2000" problem is pervasive and complex as virtually every computer operation
will be affected in some way by the rollover of the latter two digit year value
to 00. The issue is whether computer systems will properly recognize date
sensitive information when the year changes to 2000. Systems that do not
properly recognize such information could generate erroneous data or cause a
system to fail. Management of the Company, however, has assessed the "Year 2000"
compliance expense and related potential effect on the Company's earnings and
believes it is compliant as to the Hotel, Insurance Company, Intercomsoft and
itself. Most of the recordkeeping of the Hotel, Insurance Company and
Intercomsoft is done in manual format or with a manual back-up. Computerized
information is kept on staff PCs which are believed to be year 2000 compliant,
as to the Hotel, Insurance Company, Intercomsoft and the Company. Additionally,
in the locale of the operations of the Operating Entities computerized record
creation and maintenance is not widespread and the Hotel, Insurance Company and
Intercomsoft clientele and supply bases are not believed to be computer
dependent. The Bank has performed an analysis of its Year 2000 Compliance. The
Bank's Year 2000 remediation plan is expected to be completed in the summer of
1999 at an approximate cost of $20,000. The Bank has received assurances from
most of its key customers, clients and vendors that they are Year 2000
compliant. The Bank has received assurances from all of its key vendors which
sell and/or maintain software to or from it, as the case may be, that the key
vendors software is Year 2000 compliant.
The foregoing discussion and analysis should be read in conjunction with
the Company's financial statements and notes thereto appearing elsewhere in this
report.
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<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 Incorporation2
3 By-Laws2
4 Specimen of Certificate of Common Stock2
21 List of Subsidiaries3
(b) REPORTS ON FORM 8-K
No Current Report on Form 8-K was filed during the Quarter Ended March 31,
1999.
- ---------------------
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, 1998.
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<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: May 20, 1999 By: /s/ TED SHAPIRO
---------------------------------------------
Ted Shapiro, Chief Executive Officer
and President
Dated: May 20, 1999 By: /s/ SHMUEL GURFINKEL
---------------------------------------------
Shmuel Gurfinkel, Chief Financial Officer
- 8 -
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from registrant's
unaudited financial statements as of and for the three months ended March 31,
1999 and is qualified in its entirety by reference to such financial statements.
</LEGEND>
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120
0
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