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ITEM 1
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FINANCIAL STATEMENTS
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CONSOLIDATED FINANCIAL STATEMENTS
AS OF MARCH 31, 2014
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TRIMOL GROUP, INC.
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Consolidated balance sheet
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(Unaudited)
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March 31, 2014
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December 31, 2013
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ASSETS
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Current assets:
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Cash
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$
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4,000
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$
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12,000
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TOTAL CURRENT ASSETS
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4,000
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12,000
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TOTAL ASSETS
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$
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4,000
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$
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12,000
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LIABILITIES AND SHAREHOLDERS’ DEFICIENCY
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Current liabilities:
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Related parties
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$
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6,437,000
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$
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6,405,000
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Accrued expenses
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835,000
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836,000
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TOTAL CURRENT LIABILITIES
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7,272,000
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7,241,000
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SHAREHOLDERS’ DEFICIENCY:
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Preferred Stock: $1.00 par value, 10,000 shares authorized, no shares issued and outstanding
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Common Stock: $0.01 par value, 130,000,000 shares authorized, 100,472,328 shares issued and outstanding at March 31, 2014 and December 31, 2013
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1,005,000
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1,005,000
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Additional paid-in capital
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5,739,000
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5,739,000
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Accumulated deficit
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(14,012,000
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)
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(13,973,000
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TOTAL SHAREHOLDERS’ DEFICIENCY
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(7,268,000
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)
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(7,229,000
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)
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TOTAL LIABILITIES AND SHAREHOLDERS’ DEFICIENCY
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$
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4,000
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$
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12,000
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The accompanying notes are an integral part of the financial statements
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TRIMOL GROUP, INC.
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Consolidated statement of operations
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(UNAUDITED)
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Three Months Ended March 31,
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2014
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2013
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REVENUES
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$
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0
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$
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0
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OPERATING EXPENSES
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39,000
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47,000
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NET LOSS
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$
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(39,000
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)
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$
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(47,000
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)
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Net loss per share (basic and diluted)
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(.00
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)
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(.00
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)
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WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING
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100,472,328
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100,472,328
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The accompanying notes are an integral part of the financial statements
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TRIMOL GROUP, INC.
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CONSOLIDATED
STATEMENT OF CASH FLOWS
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(UNAUDITED)
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Three Months Ended March 31,
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2014
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2013
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CASH FLOWS FROM OPERATING ACTIVITIES:
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NET LOSS
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$
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(39,000
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)
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$
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(47,000
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ADJUSTMENTS TO RECONCILE NET LOSS TO NET CASH
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(USED IN) OPERATING ACTIVITIES:
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Accrued expenses to related parties
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15,000
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15,000
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CHANGES IN ASSETS AND LIABILITIES:
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Accrued expenses
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(1,000
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)
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(6,000
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)
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NET CASH (USED IN) OPERATING ACTIVITIES
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(25,000
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)
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(38,000
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CASH FLOWS FROM FINANCING ACTIVITIES:
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Proceeds of loans from related parties
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17,000
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38,000
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NET CASH PROVIDED BY FINANCING ACTIVITIES
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17,000
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38,000
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DECREASE IN CASH
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(8,000
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)
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-
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CASH – BEGINNING OF PERIOD
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12,000
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15,000
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CASH – END OF PERIOD
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$
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4,000
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$
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15,000
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The accompanying notes are an integral part of the financial statements
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TRIMOL GROUP, INC.
Notes
to the consolidated financial statements
MARCH 31, 2014
(Unaudited)
Note
1 - Basis of presentation
The accompanying unaudited financial statements
have been prepared in accordance with accounting principles generally accepted for interim financial information and with the instructions
to Form 10-Q and Article 8 of Regulation S-X relating to smaller reporting companies. Accordingly, they do not include
all of the information and footnotes required by generally accepted accounting principles (“GAAP”) for complete financial
statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary
for a fair presentation have been included. Operating results for the three months March 31, 2014 are not necessarily
indicative of the results that may be expected for the year ended December 31, 2014 or any other period.
The balance sheet at December 31, 2013
has been derived from the audited financial statements at that date but does not include all of the information and footnotes required
by GAAP for complete financial statements.
The accounting policies followed by the
Company are set forth in Note 3 to the Company’s consolidated financial statements in its Annual Report on Form 10-K for
the year ended December 31, 2013.
For further information, refer to the consolidated
financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended December
31, 2013 filed with the Securities and Exchange Commission (“SEC”).
NOTE 2 – GOING CONCERN
The accompanying unaudited consolidated
interim financial statements have been prepared in conformity with GAAP, which contemplates the Company’s continuation as
a going concern.
As of March 31, 2014, the Company does
not have any current operations that generate revenue and has not generated any revenue since April 2006. Further, as shown on
the accompanying balance sheet, the Company’s liabilities exceeded its assets by approximately $7,268,000. These circumstances,
among others, raise substantial doubt about its ability to continue as a going concern. The financial statements do not include
any adjustments that might result from the outcome of this uncertainty.
NOTE 3 – SIGNIFICANT ACCOUNTING POLICIES
The preparation of the consolidated interim
financial statements in conformity with accounting principles generally accepted in the United States requires the Company to make
assumptions, estimates and judgments that affect the amounts reported in these consolidated interim financial statements, including
the notes thereto, and related disclosures of commitments and contingencies, if any. The Company relies on historical experience
and on other assumptions believed to be reasonable under the circumstances in making required judgments and estimates. Actual results
could differ materially from those estimates. The significant accounting policies which the Company believes are most critical
to aid in fully understanding or evaluating its reported financial results are set forth in Note 3 included in the Company’s
Annual Report on Form 10-K for the year ended December 31, 2013 filed with the SEC and dated April 11, 2014.
NOTE 4 – OPERATIONS
Although the Company is seeking business
opportunities, as of March 31, 2014, and for the past seven years, it did not have any operations other than administrative operations
and has not generated any revenue since 2006.
NOTE 5 - RELATED PARTY TRANSACTIONS AND
BALANCES
Transactions
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Three Months Ended March 31,
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2014
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2013
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Compensation and related expenses to the Chairman (1)
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$
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7,500
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$
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7,500
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Compensation to the Chief Financial Officer (2)
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7,500
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7,500
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Cash advance from Royal HTM Group, Inc. (3)
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17,000
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38,000
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$
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32,000
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$
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53,000
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1)
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Boris Birshtein serves as the Company’s Chairman of the Board of Directors (the “Chairman”)
and its Chief Executive Officer. Mr. Birshtein owns 50% of Royal HTM Group, Inc., the Company’s majority shareholder.
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2)
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Jack Braverman serves as a member of the Company’s Board of Directors and as the Company’s
Chief Financial Officer. Mr. Braverman owns 50% of Royal HTM Group, Inc., the Company’s majority shareholder.
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3)
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Although it is under no obligation to do so, Royal HTM Group, Inc., a Canadian company owned by
Messrs Birshtein and Braverman, lends funds to the Company (and advances funds on its behalf) to cover the Company’s on-going
expenses.
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Balances
As of March 31, 2014
payables to related parties consist of the following:
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Amount due to Royal HTM Group, Inc.
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$
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3,795,000
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Accrued compensation due to the Chief Financial Officer
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517,000
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Accrued compensation due to the Chairman
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2,125,000
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$
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6,437,000
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These amounts are non-interest bearing and
due on demand.
NOTE 6 - SUBSEQUENT EVENTS
The Company
evaluated all events or transactions that occurred subsequent to March 31, 2014 up to the date these financial statements were
issued and has determined that there are no material subsequent events or transactions which would require recognition or disclosure
in the financial statements.
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ITEM 2.
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
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The following Management's
Discussion and Analysis of Financial Condition and Results of Operations, and other sections in this Quarterly Report, should be
read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2013, as well as our unaudited consolidated
financial statements and notes thereto contained elsewhere in this Quarterly Report on Form 10-Q. Such financial statements are
subject to risks and uncertainties that could cause actual results to differ materially from those described. We expressly disclaim
any obligation or undertaking to update these financial statements in the future.
Description of the Company
Although the Company is
seeking business opportunities, as of March 31, 2014, and since April 2006, we did not have any business operations that generated
revenue.
Intercomsoft Limited (“Intercomsoft”)
is our wholly owned subsidiary. Although its does not currently have any operations, through April 2006, pursuant to a Contract
on Leasing Equipment and Licensing Technology (the “Supply Agreement”) awarded to Intercomsoft in April 1996 by the
Ministry of Economics, Republic of Moldova, Intercomsoft provided Moldova with a National Register of Population and a National
Passport System. Under the terms of the Supply Agreement, Intercomsoft supplied all of the equipment, technology, software, materials
and consumables utilized by the Government of Moldova for the production of all national passports, drivers’ licenses, vehicle
permits, identification cards and other government authorized identification documents used in the Republic of Moldova. Moldova
asserted that the Supply Agreement expired by its terms on April 29, 2006 and was not renewed. The non-renewal of the Supply Agreement
has been disputed by Intercomsoft and is the subject of two pending legal actions. (See Part II Item 1 - Legal Proceedings).
As used in this report,
unless otherwise required by the context, Trimol Group, Inc. and its subsidiary are sometimes collectively referred to as the "Company"
or are implicit in the terms "we", "us" and "our".
RESULTS OF OPERATIONS
During the three month
period ended March 31, 2014, our operations consisted solely of administrative activities, activities concerning exploration of
potential business opportunities and those activities related to pursuing breach of contract claims against the Republic of Moldova
as more fully described herein in Part II Item 1 – Legal Proceedings.
Comparison of Three Month
Period Ended March 31, 2014 to March 31, 2013
During the three months
ended March 31, 2014, we did not generate any revenues from operations and similarly generated no revenues in the comparable period
in 2013.
Total operating expenses
for the three months ended March 31, 2014 were approximately $39,000, and were $47,000 in the comparable three month period in
2013.
Such operating expenses
resulted in a net loss from operations of approximately $39,000 and $47,000 for the three month period ended March 31, 2014 and
2013, respectively.
Liquidity & Capital
Resources
We have not generated
any revenue since the first quarter of 2006. At March 31, 2014 our cash balance was approximately $4,000 which is not sufficient
to fund our operating expenses for the foreseeable future.
For more than seven years,
we have funded our operating expenses from loans and advances provided by our Chairman of the Board and Royal HTM Group, Inc.,
our majority shareholder, a company owned and controlled by our Chief Executive Officer and Chief Financial Officer, who also serve
as the two members of our Board of Directors. We are dependent upon these loans and advances to fund our future operating expenses.
None of our officers,
directors or shareholders are under any obligation to provide us with any future loans or advances. However, if they do not loan
or advance us funds at a time when funds are necessary, we may be forced to suspend our limited operations.
Our assets are nominal
and our liabilities currently exceed our assets by approximately $7,268,000. These circumstances, among others, raise substantial
doubt about our ability to continue operations.
Off-Balance Sheet
Arrangements
We have no off-balance
sheet arrangements.
Stock Compensation
Plans
There were no options
to purchase shares of our common stock issued or exercised during the three month period ended March 31, 2014, and as of such date
we have no options to purchase shares of our common stock issued or outstanding.
Available information
We are subject to the
informational requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and, in accordance
therewith, file reports, proxy and information statements and other information with the SEC.
All reports filed by us
with the SEC are available free of charge via EDGAR through the SEC web site at
www.sec.gov
. In addition, the public may
read and copy materials we file with the SEC at the public reference facilities maintained by the SEC at its public reference room
located at 100 F Street, N.E. Washington, D.C. 20549. We will also provide copies of such material to shareholders upon written
request.
No person has been authorized
to give any information or to make any representation other than as contained or incorporated by reference in this Quarterly Report
and, if given or made, such information or representation must not be relied upon as having been authorized by us.
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ITEM 4.
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CONTROLS AND PROCEDURES
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Evaluation of Disclosure Controls and
Procedures
Our management is responsible
for establishing and maintaining disclosure controls and procedures that are designed to ensure that information required to be
disclosed in our reports, as defined in Rule 13a-15(f) under the Exchange Act is recorded, processed, summarized and reported within
the time periods specified in the rules and forms of the SEC, and that such information is accumulated and communicated to our
management to allow timely decisions regarding required disclosure based closely on the definition of “disclosure controls
and procedures” in Rule 15d-15(e) under the Exchange Act. In designing and evaluating the disclosure controls and procedures,
management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance
of achieving the desired control objectives, and management necessarily was required to apply its judgment in evaluating the cost-benefit
relationship of possible controls and procedures.
As of the end of the period
covered by this Quarterly Report, we carried out, under the supervision and with the participation of our Chief Executive Officer
and our Chief Financial Officer, an evaluation of the effectiveness of the design and operation of our disclosure controls and
procedures to ensure that information required to be disclosed by us in this Quarterly Report was recorded, processed, summarized
and reported within the required time periods. In carrying out that evaluation, management identified a material weakness
(as defined in Public Company Accounting Oversight Board Standard No. 2) in our internal control over financial reporting regarding
a lack of adequate segregation of duties. Accordingly, based on their evaluation of our disclosure controls and procedures
as of March 31, 2014, our Chief Executive Officer and our Chief Financial Officer have concluded that, as of that date, our controls
and procedures were not effective for the purposes described above.
There was no change in
our internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act) during the period
ended March 31, 2014, that has materially affected or is reasonably likely to materially affect our internal control over financial
reporting.
Management’s Report on Internal Control
over Financial Reporting
Our management is responsible
for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) under the Exchange
Act. We have assessed the effectiveness of those internal controls as of March 31, 2014, using the Committee of Sponsoring
Organizations of the Treadway Commission (“COSO”)
Internal Control – Integrated Framework
as a basis for
our assessment.
Because of inherent limitations,
internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or
that the degree of compliance with the policies and procedures may deteriorate. All internal control systems, no matter
how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only
reasonable assurance with respect to financial statement preparation and presentation.
A material weakness in
internal controls is a deficiency in internal control, or combination of control deficiencies, that adversely affects our ability
to initiate, authorize, record, process, or report external financial data reliably in accordance with accounting principles generally
accepted in the United States of America such that there is more than a remote likelihood that a material misstatement of our annual
or interim financial statements that is more than inconsequential will not be prevented or detected. In the course of
making our assessment of the effectiveness of internal controls over financial reporting, we identified a material weakness in
our internal control over financial reporting. This material weakness consisted of inadequate staffing and supervision
within the bookkeeping and accounting operations of our company. The relatively small number of individuals who have
bookkeeping and accounting functions prevents us from segregating duties within our internal control system. The inadequate
segregation of duties is a weakness because it could lead to the untimely identification and resolution of accounting and disclosure
matters or could lead to a failure to perform timely and effective reviews.
As we are not aware of
any instance in which we failed to identify or resolve a disclosure matter or failed to perform a timely and effective review,
we determined that the addition of personnel to our bookkeeping and accounting operations is not an efficient use of our very limited
resources at this time and not in the interest of our shareholders.
