Back to GetFilings.com
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2001
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
--------- --------
COMMISSION FILE NUMBER 000-26354
TRIMAINE HOLDINGS, INC.
(Exact name of Registrant as specified in its charter)
WASHINGTON 91-1636980
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
17 DAME STREET, DUBLIN 2, IRELAND
(Address of principal executive offices)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (3531) 679-1688
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT: NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
COMMON STOCK, $0.01 PAR VALUE
(Title of Class)
Indicate by check mark whether the Registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ X ]
The aggregate market value of the voting stock held by non-affiliates of the
Registrant was approximately $769,751 as of March 26, 2002, computed on the
basis of the closing price on such date.
As of March 26, 2002, there were 15,322,697 shares of the Registrant's Common
Stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's 2001 Proxy Statement to be filed within 120 days of
the period ended December 31, 2001 are incorporated by reference into Part III.
FORWARD-LOOKING STATEMENTS
Statements in this report, to the extent they are not based on historical
events, constitute forward-looking statements. Forward-looking statements
include, without limitation, statements regarding the outlook for future
operations, forecasts of future costs and expenditures, evaluation of market
conditions, the outcome of legal proceedings, the adequacy of reserves, or other
business plans. Investors are cautioned that forward-looking statements are
subject to an inherent risk that actual results may vary materially from those
described herein. Factors that may result in such variance, in addition to those
accompanying the forward-looking statements, include changes in interest rates,
prices and other economic conditions; actions by competitors; natural phenomena;
actions by government and regulatory authorities; uncertainties associated with
legal proceedings; technological development; future decisions by management in
response to changing conditions; and misjudgments in the course of preparing
forward-looking statements.
2
TABLE OF CONTENTS
-----------------
PAGE
----
PART I
------
ITEM 1. BUSINESS 4
ITEM 2. PROPERTIES 5
ITEM 3. LEGAL PROCEEDINGS 6
ITEM 4. SUBMISSION OF MATTERS TO A VOTE
OF SECURITY HOLDERS 6
PART II
-------
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY
AND RELATED STOCKHOLDER MATTERS 6
ITEM 6. SELECTED FINANCIAL DATA 7
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS 8
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK 9
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 11
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH
ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE 11
PART III
--------
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS
OF THE REGISTRANT 12
ITEM 11. EXECUTIVE COMPENSATION 12
ITEM 12. SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT 12
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS 12
PART IV
-------
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES,
AND REPORTS ON FORM 8-K 12
SIGNATURES 25
3
PART I
------
ITEM 1. BUSINESS
The Corporation
- ---------------
TriMaine Holdings, Inc. was incorporated in the State of Washington on September
15, 1993 and commenced operations in April 1994. In this document, unless the
context otherwise requires, the "Corporation", the "Company" or "TriMaine"
refers to TriMaine Holdings, Inc. and its subsidiaries. The Corporation is a
subsidiary of MFC Bancorp Ltd. ("MFC"), which owns approximately 82.6% of the
Corporation's shares of common stock. A subsidiary of MFC also owns $6 million
of preferred shares in the capital stock of the Corporation.
Business of the Corporation
- ---------------------------
The Corporation operates in the financial services industry. As part of
the financial services industry, the Corporation has certain real estate assets
which are held for sale. All of the Corporation's real estate assets are
located in the Puget Sound region of the State of Washington, are undeveloped
and a substantial portion are in a pre-development state. TriMaine intends, as
opportunities arise, to monetize its real estate assets to finance the
acquisition of interests in operating businesses. TriMaine may also acquire
additional real estate assets. TriMaine intends to develop some of its
undeveloped real estate properties, and in certain instances may participate in
development joint venture arrangements as an interim step in the sale or
monetization of a property, and will continue pre-development work on the
properties to the extent necessary to protect or enhance their value.
The development of real property in the State of Washington is subject to
multiple layers of government regulation, including state law and certain
ordinances of the city and county wherein the property is located.
Environmental regulations at the federal, state and local levels with regard to
wetlands, stormwater retention and discharge, wildlife, tree preservation,
slopes and groundwater recharge have greatly increased the cost and uncertainty
related to the development of property in the State of Washington and have
lengthened the time necessary to receive development permits. Consequently,
fewer developers are buying property in the State of Washington and these
developers tend to wait until the permitting process is near completion before
committing to a purchase.
The type and intensity of development of real property in the State of
Washington is subject to the comprehensive plan and zoning designation of the
property within the city or county in which the property is located. Property
development is also affected by sensitive areas, such as wetlands, streams or
wildlife habitat, located on the site. Both the local government and the Army
Corps of Engineers have jurisdiction over wetland areas. Upon delivery of a
development proposal, the appropriate government agency will examine the site
and delineate wetland areas. These areas must either be left undisturbed with
sufficient buffers for protection or a mitigation plan for the designated areas
must be approved. Due to the broad definition of wetlands, it is common for
undeveloped property in the western Washington area to have some wetlands
designated. The majority of the Corporation's properties have had some wetland
areas designated.
4
In 1990, the Washington State legislature passed the Growth Management Act
("GMA") to "guide the development and adoption of comprehensive plans and
development regulations" in Washington State. The goal of the comprehensive
development plans is to, among other things, reduce the development density in
rural areas, encourage affordable housing and a variety of housing densities,
maintain and conserve natural resource industries and lands and protect and
enhance the environment and the availability of water.
Under the GMA, the counties in which the Corporation's properties are located
have a several year period in which to develop county-wide growth plans that
will designate those areas in which growth will be accommodated over the next 20
years. As a result of the uncertainty which has arisen from the formulation of
these growth plans, the permitting process relating to the development of
property in these counties has been delayed. It is believed, however, that all
of the Corporation's properties are located in areas where additional growth
will be permitted.
The Corporation intends to use the proceeds from the sale or monetization of its
real estate assets to acquire controlling equity interests in operating
businesses. In addition, the Corporation may seek to exchange its real estate
assets for equity interests in certain other companies. The Corporation will
seek to acquire interests in those companies that it believes its expertise in
financial restructuring and asset management will add value to the Corporation's
investment. In order to accomplish such acquisitions, the Corporation may
engage in joint ventures with affiliated companies.
In December 1998, the Corporation transferred its 50.9% interest in the shares
of common stock of Mymetics Corporation (formerly Ichor Corporation)
("Mymetics") to a wholly-owned subsidiary of MFC.
At December 31, 2000, the Corporation had no full-time employees. The executive
officers of the Corporation devote such time to the business of the Corporation
as is required.
ITEM 2. PROPERTIES
The Corporation has an office in Dublin, Ireland.
The Corporation's undeveloped real estate properties are located in the Puget
Sound region of Washington State and consist of six parcels totalling
approximately 65 acres which are zoned for various commercial uses including
retail, office and business park, and two parcels totalling approximately 32
acres which are zoned for medium to high residential use. The Corporation is
seeking to sell these parcels and does not intend to fully develop the majority
of them prior to sale. The Corporation typically engages in such preliminary
development work as is necessary to maximize the value of the parcels prior to
their sale.
Gig Harbor Property
- -------------------
The Corporation owns approximately 47 acres of undeveloped real property which
was, in early 1997, annexed to the City of Gig Harbor, Washington, which is
located at the west end of the Tacoma Narrows Bridge in Tacoma, Washington. The
annexation provides for much higher intensity development than was allowed under
its previous jurisdiction (Pierce County) and opens the way for a new major
thoroughfare to be built through the middle of the property that connects
5
State Highway 16 and the north entrance of Gig Harbor. Of the total acreage,
29 acres are zoned for medium density (eight units per acre) residential use
and 18 acres are zoned for business park/professional office use. The
Corporation may develop all or a portion of the land through partnerships,
joint ventures or other economic associations with local developers. The
Corporation's current involvement is limited to pre-development work, including
infrastructure (roads, sewer and water services), preliminary permits, market
studies, feasibility studies and related activities.
All utilities are available to the property. The City of Gig Harbor has
completed work on an extension of a street through the property, which provides
access to the site from the City of Gig Harbor and State Highway 16.
ITEM 3. LEGAL PROCEEDINGS
The Corporation is subject to routine litigation incidental to its business from
time to time. The Corporation does not believe that the outcome of such
litigation will have a material adverse effect on its business or financial
condition.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
PART II
-------
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
(a) Market Information. The Corporation's common stock is quoted on the NASD
OTC Bulletin Board under the symbol "TRMH". The following table sets forth the
quarterly high and low sales price per share of the Corporation's common stock
for the periods indicated:
Fiscal Quarter Ended High Low
- -------------------- ---- ---
2000
March 31 $ 0.53 $ 0.06
June 30 0.34 0.13
September 30 0.16 0.13
December 31 0.13 0.13
2001
March 31 $ 0.06 $ 0.06
June 30 0.15 0.07
September 30 0.33 0.15
December 31 0.32 0.20
(b) Shareholders. At March 26, 2002, the Corporation had approximately 1,600
holders of record of its common stock.
6
(c) Dividends. The Corporation has not paid any dividends on its common stock
and does not anticipate that it will pay any dividends in the foreseeable
future.
ITEM 6. SELECTED FINANCIAL DATA
The following table reflects selected consolidated financial data for the
Corporation for each of its last five fiscal years. Effective December 31,
1998, the Corporation transferred its holdings of shares of common stock of
Mymetics. Mymetics' results of operations for the fiscal years ended December
31, 1998 and 1997, respectively, and its assets and liabilities as at December
31, 1997, are included in the financial data presented below. The Corporation
commenced operations in April 1994.
FOR THE YEAR ENDED DECEMBER 31
--------------------------------------------------------
2001 2000 1999 1998 1997
-------- -------- -------- -------- --------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
OPERATING DATA
Sales of real
estate $ - $ 8,329 $ 225 $ 1,016 $ 3,250
Other income $ 273 $ 575 $ 361 $ 625 $ 252
General and
administrative
expenses $ 1,951 $ 476 $ 409 $ 1,152 $ 1,166
Interest expense $ 16 $ 167 $ 861 $ 360 $ 949
Income (loss) from
continuing
operations $ (1,117) $ 1,742 $ 4,822 $ 466 $ 411
Net income (loss) $ (1,117) $ 1,742 $ 4,822 $ 466 $ (2,618)
COMMON SHARE DATA(1)
Income (loss) from
continuing
operations per
common share $ (0.09) $ 0.09 $ 0.42 $ 0.02 $ 0.01
Net income (loss)
per common share $ (0.09) $ 0.09 $ 0.42 $ 0.02 $ (0.27)
Weighted average
common shares
outstanding
(in thousands) 15,627 15,838 10,893 10,838 10,838
BALANCE SHEET DATA
Working capital $ 5,301 $ 7,095 $ 4,080 $ (2,287) $ 3,774
Total assets $ 28,747 $ 17,671 $ 17,843 $ 16,083 $ 15,760
Long-term
obligations - $ - $ - $ - $ 646
Total shareholders'
equity $ 23,266 $ 17,223 $ 14,885 $ 8,705 $ 9,392
- ---------------
(1) Basic and diluted common share data is the same.
7
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion and analysis of the results of operations and financial
condition of the Corporation for the years ended December 31, 2001, 2000 and
1999, respectively, should be read in conjunction with the Corporation's audited
consolidated financial statements and related notes included elsewhere herein.
Certain reclassifications have been made to the prior periods' financial
statements to conform to the current period's presentation.
Results of Operations for the Year Ended December 31, 2001 Compared to the Year
- --------------------------------------------------------------------------------
Ended December 31, 2000
- --------------------------
Revenues for the year ended December 31, 2001 were $0.3 million, compared to
$8.9 million for the year ended December 31, 2000. In the year ended December
31, 2001, the Corporation did not sell any real estate, compared to real estate
sales by $8.3 million in the comparative period of 2000. Dividend and other
income provided cash of $0.3 million in the year ended December 31, 2001,
compared to $0.6 million in the year ended December 31, 2000.
Costs and expenses for the year ended December 31, 2001 were $2.0 million,
compared to $6.3 million for the year ended December 31, 2000. The Corporation
had no costs related to real estate sales in the year ended December 31, 2001,
compared to $3.6 million in costs related to real estate sales in the
comparative period of 2000. General and administrative expenses increased to
$2.0 million in the year ended December 31, 2001 from $0.5 million in the year
ended December 31, 2000, primarily as a result of an increase in services
related to the evaluation of assets and business opportunities in the current
year. Interest expense decreased to $16,000 in the year ended December 31, 2001
from $0.2 million in the same period of 2000, primarily as a result of
decreased indebtedness.
The Corporation had a net loss of $1.1 million, or $0.09 per common share, in
the year ended December 31, 2001. In the year ended December 31, 2000, the
Corporation had net income of $1.7 million, or $0.09 per common share.
Results of Operations for the Year Ended December 31, 2000 Compared to the Year
- --------------------------------------------------------------------------------
Ended December 31, 1999
- --------------------------
Revenues for the year ended December 31, 2000 were $8.9 million, compared to
$0.6 million for the year ended December 31, 1999. In the year ended December
31, 2000, the Corporation sold real estate for $8.3 million, compared to $0.2
million in the comparative period of 1999.
Costs and expenses for the year ended December 31, 2000 were $6.3 million,
compared to $1.4 million for the year ended December 31, 1999. The cost of real
estate sold and related selling costs increased to $3.6 million in the year
ended December 31, 2000 from $0.1 million in the comparative period of 1999,
primarily as a result of an increase in the sale of real estate. Interest
expense decreased to $0.2 million in the year ended December 31, 2000 from $0.9
million in the same period of 1999, primarily as a result of decreased
indebtedness. General and administrative expenses
8
increased marginally in the year ended December 31, 2000, compared to the
year ended December 31, 1999.
The Corporation had net income of $1.7 million, or $0.09 per common share, in
the year ended December 31, 2000. In the year ended December 31, 1999, the
Corporation had net income of $4.8 million, or $0.42 per common share.
Liquidity and Capital Resources
- ----------------------------------
The Corporation had cash of $5.9 million at December 31, 2001, compared to $2.7
million at December 31, 2000.
Net cash provided by operating activities was $3.6 million in the year ended
December 31, 2001, compared to $3.5 million in the year ended December 31, 2000.
Borrowings from a subsidiary of MFC provided cash of $2.0 million in the year
ended December 31, 2001, compared to $44,000 in the comparative period of 2000.
A decrease in accounts receivable provided cash of $3.5 million in the year
ended December 31, 2001, compared to an increase in accounts receivable using
cash of $3.5 million in the same period of 2000. A net increase in real estate
held for development and sale used cash of $0.3 million in the year ended
December 31, 2001, compared to net sales of real estate held for development and
sale providing cash of $2.9 million in the year ended December 31, 2000.
Net proceeds from investing activities was nil in the year ended December 31,
2001. Proceeds from the sale of investments provided cash of $3.6 million in
the year ended December 31, 2000. Purchases of investments used cash of $4.1
million in the year ended December 31, 2000.
Financing activities used cash of $0.4 million in the year ended December 31,
2001, compared to $2.4 million in the year ended December 31, 2000. A share
repurchase used cash of $0.1 million in the year ended December 31, 2001.
Payment of debt used cash of $2.1 million in the year ended December 31, 2000.
The Corporation paid $0.3 million in dividends on its preferred stock in the
years ended December 31, 2001 and 2000, respectively.
The Corporation has no commitments for capital expenditures in relation to its
undeveloped real estate, although it is required to provide funds for
pre-development work on certain parcels in order to enhance their marketability
and sale value.
The Corporation believes that its assets should enable the Corporation to meet
its current ongoing liquidity requirements.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Corporation is exposed to market risks from changes in interest rates,
foreign currency exchange rates and equity prices which may affect its results
of operations and financial condition. The Corporation does not enter into
derivative contracts for its own account to hedge against these risks.
9
Interest Rate Risk
- --------------------
Fluctuations in interest rates may affect the fair value of financial
instruments sensitive to interest rates. An increase in interest rates may
decrease the fair value of financial instrument assets and increase the fair
value of financial instrument liabilities. A decrease in interest rates may
increase the fair value of financial instrument assets and decrease the fair
value of financial instrument liabilities. The Corporation's financial
instruments which may be sensitive to interest rate fluctuations are investments
and debt obligations. The following tables provide information about the
Corporation's exposure to interest rate fluctuations for the carrying amount of
financial instruments that may be sensitive to such fluctuations as at December
31, 2001 and 2000, respectively, and expected cash flows from these instruments.
AS AT DECEMBER 31, 2001
(IN THOUSANDS)
EXPECTED FUTURE CASH FLOW
CARRYING FAIR ------------------------------------------------
VALUE VALUE 2002 2003 2004 2005 2006 THEREAFTER
-------- ----- ---- ---- ---- ---- ---- ----------
Investments $0 $0 $0 $0 $0 $0 $0 $0
AS AT DECEMBER 31, 2000
(IN THOUSANDS)
EXPECTED FUTURE CASH FLOW
CARRYING FAIR ---------------------------------------------
VALUE VALUE 2001 2002 2003 2004 2005 THEREAFTER
-------- ------ ---- ---- ---- ---- ---- ----------
Investments(1) $6,200 $6,200 $0 $0 $0 $0 $0 $6,200
- ---------------
(1) Investments consist of equity securities.
Foreign Currency Exchange Rate Risk
- ---------------------------------------
The reporting currency of the Corporation is the U.S. dollar. The Corporation
holds certain financial instruments denominated in Canadian dollars. A
depreciation of the Canadian dollar against the U.S. dollar will decrease the
fair value of financial instrument assets. An appreciation of the Canadian
dollar against the U.S. dollar will increase the fair value of financial
instrument assets. The Corporation's financial instruments which may be
sensitive to foreign currency exchange rate fluctuations are investments. The
following tables provide information about the Corporation's exposure to foreign
currency exchange rate fluctuations for the carrying amount of financial
instruments that may be sensitive to such fluctuations as at December 31, 2001
and 2000, respectively, and expected cash flows from these instruments.
AS AT DECEMBER 31, 2001
(IN THOUSANDS)
EXPECTED FUTURE CASH FLOW
CARRYING FAIR ---------------------------------------------
VALUE VALUE 2002 2003 2004 2005 2006 THEREAFTER
-------- ----- ---- ---- ---- ---- ---- ----------
Investments(1) $11 $11 $0 $0 $0 $0 $0 $11
- ---------------
(1) Investments consist of equity securities, which are primarily
denominated in Canadian dollars.
10
AS AT DECEMBER 31, 2000
(IN THOUSANDS)
EXPECTED FUTURE CASH FLOW
CARRYING FAIR ---------------------------------------------
VALUE VALUE 2001 2002 2003 2004 2005 THEREAFTER
-------- ------ ---- ---- ---- ---- ---- ----------
Investments(1) $6,222 $6,222 $0 $0 $0 $0 $0 $6,222
- --------------
(1) Investments consist of equity securities, which are primarily
denominated in Canadian dollars.
Equity Price Risk
- -------------------
Changes in trading prices of equity securities may affect the fair value of
equity securities or the fair value of other securities convertible into equity
securities. An increase in trading prices will increase the fair value and a
decrease in trading prices will decrease the fair value of equity securities or
instruments convertible into equity securities. The Corporation's financial
instruments which may be sensitive to fluctuations in equity prices are
investments. The following tables provide information about the Corporation's
exposure to fluctuations in equity prices for the carrying amount of financial
instruments sensitive to such fluctuations as at December 31, 2001 and 2000,
respectively, and expected cash flows from these instruments.
AS AT DECEMBER 31, 2001
(IN THOUSANDS)
EXPECTED FUTURE CASH FLOW
CARRYING FAIR ----------------------------------------
VALUE VALUE 2002 2003 2004 2005 2006 THEREAFTER
-------- ------- ---- ---- ---- ---- ---- ----------
Investments(1) $21,516 $21,516 $0 $0 $0 $0 $0 $21,516
- ---------------
(1) Investments consist of equity securities.
AS AT DECEMBER 31, 2000
(IN THOUSANDS)
EXPECTED FUTURE CASH FLOW
CARRYING FAIR ----------------------------------------
VALUE VALUE 2001 2002 2003 2004 2005 THEREAFTER
-------- ------- ---- ---- ---- ---- ---- ----------
Investments(1) $10,128 $10,128 $0 $0 $0 $0 $0 $10,128
- ------------
(1) Investments consist of equity securities.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The consolidated financial statements and supplementary data required with
respect to this Item 8, and as identified in Item 14 of this annual report, are
included in this annual report commencing on page 14.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
Not applicable.
11
PART III
---------
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Incorporated by reference from the Corporation's definitive proxy statement to
be filed within 120 days of the end of the Corporation's fiscal year.
ITEM 11. EXECUTIVE COMPENSATION
Incorporated by reference from the Corporation's definitive proxy statement to
be filed within 120 days of the end of the Corporation's fiscal year.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Incorporated by reference from the Corporation's definitive proxy statement to
be filed within 120 days of the end of the Corporation's fiscal year.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Incorporated by reference from the Corporation's definitive proxy statement to
be filed within 120 days of the end of the Corporation's fiscal year.
12
PART IV
-------
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) (1) Index to Financial Statements
--------------------------------
Independent Auditors' Report
Consolidated Balance Sheets
Consolidated Statements of Operations
Consolidated Statements of Comprehensive Income
Consolidated Statements of Changes in Shareholders' Equity
Consolidated Statements of Cash Flows
Notes to Financial Statements
(2) List of Exhibits
------------------
3.1 Articles of Incorporation.(1)
3.2 Amendment to Articles of Incorporation dated
November 5, 1993.(1)
3.3 Amendment to Articles of Incorporation dated
April 22, 1994.(1)
3.4 Amendment to Articles of Incorporation dated
April 14, 1995.(1)
3.5 Amendment to Articles of Incorporation dated
July 10, 1996. Incorporated by reference to
the Corporation's Form 8-K dated June 27, 1996.
3.6 Amendment to Articles of Incorporation dated
March 23, 2000. Incorporated by reference to the
Corporation's Form 8-K dated March 29, 2000.
3.7 Bylaws.(1)
10.1 Debt Settlement Agreement between the Corporation and
ICHOR Corporation dated September 30, 1997.(2)
10.2 Debt Settlement Agreement between the Corporation and
ICHOR Corporation dated February 20, 1998.(2)
10.3 Purchase Agreement between the Corporation and
MFC Merchant Bank S.A. dated January 4, 1999.
Incorporated by reference to the Schedule 13D/A with
Respect to shares of Ichor dated January 4, 1999.
21 List of subsidiaries of the Registrant.
---------------
(1) Incorporated by reference to the Corporation's
Registration Statement on Form 10-SB.
(2) Incorporated by reference to the Schedule 13D/A
with respect to shares of Ichor dated March 13, 1998.
(b) Reports on Form 8-k
----------------------
None.
13
PETERSON SULLIVAN P.L.L.C.
601 Union Street Suite 2300 Seattle WA 98101 (206) 382-7777 fax 382-7700
Certified Public Accountants
INDEPENDENT AUDITORS' REPORT
----------------------------
To the Board of Directors and Shareholders
Trimaine Holdings, Inc. and Subsidiaries
We have audited the accompanying consolidated balance sheets of Trimaine
Holdings, Inc. and Subsidiaries as of December 31, 2001 and 2000, and the
related statements of operations, comprehensive income, changes in shareholders'
equity, and cash flows for the years ended December 31, 2001, 2000 and 1999.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are
free from material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Trimaine Holdings,
Inc. and Subsidiaries as of December 31, 2001 and 2000, and the results of their
operations and their cash flows for the years ended December 31, 2001, 2000 and
1999, in conformity with accounting principles generally accepted in the United
States.
/s/ Peterson Sullivan P.L.L.C.
February 25, 2002
Seattle, Washington
14
TRIMAINE HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 31, 2001 and 2000
(In Thousands of Dollars)
ASSETS 2001 2000
------- -------
Current Assets
Cash $ 5,919 $ 2,721
Account receivable - 3,481
Receivables from affiliates - 445
Real estate held for development
and sale 1,149 896
Other 163 -
------- -------
Total current assets 7,231 7,543
Investments 21,516 10,128
------- -------
$28,747 $17,671
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable $ 173 $ 100
Accrued liabilities 166 123
Advance from affiliate 1,591 -
Deferred income tax liability - 225
------- -------
Total current liabilities 1,930 448
Deferred Income Tax Liability 3,551 -
------- -------
5,481 448
Shareholders' Equity
Preferred stock, Series B,
$.01 par value, 100,000
shares authorized, 60,000
issued and outstanding at
December 31, 2001 and 2000 1 1
Common stock, $.01 par value,
100,000,000 shares
authorized, 15,322,697 and
15,837,808 issued and
outstanding at December 31, 2001
and 2000 153 158
Additional paid-in capital 16,358 16,468
Retained earnings (deficit) (683) 734
Accumulated other comprehensive
income (loss) 7,437 (138)
------- -------
23,266 17,223
------- -------
$28,747 $17,671
======= =======
The accompanying notes are an integral part of these financial statements.
15
TRIMAINE HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Years Ended December 31, 2001, 2000 and 1999
(In Thousands of Dollars, Except Earnings Per Share)
2001 2000 1999
-------- -------- --------
Revenue
Sales of real estate $ - $ 8,329 $ 225
Dividend and other 273 575 361
-------- -------- --------
273 8,904 586
Costs and expenses
Cost of real estate sold and
related selling costs - 3,631 95
Loss on sale of investments - 1,991 -
General and administrative 1,951 476 409
Interest 16 167 861
-------- -------- --------
1,967 6,265 1,365
-------- -------- --------
(1,694) 2,639 (779)
Other income, gain on disposals
of former subsidiaries
(from related party $4,565 in 1999) - - 5,040
-------- -------- --------
(Loss) income before income tax benefit
(provision) (1,694) 2,639 4,261
`
Deferred income tax benefit (provision) 577 (897) 561
-------- -------- --------
Net (loss) income $ (1,117) $ 1,742 $ 4,822
======== ======== ========
Basic (loss) earnings per common
share $ (.09) $ .09 $ .42
======== ======== ========
The accompanying notes are an integral part of these financial statements.
16
TRIMAINE HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
For the Years Ended December 31, 2001, 2000 and 1999
(In Thousands of Dollars)
2001 2000 1999
-------- -------- --------
Net (loss) income $ (1,117) $ 1,742 $ 4,822
Other comprehensive income
(loss), net of tax
Unrealized holding gains
(losses) on securities
arising during
the period 7,575 896 (187)
-------- -------- --------
Comprehensive income $ 6,458 $ 2,638 $ 4,635
======== ======== ========
The accompanying notes are an integral part of these financial statements.
17
TRIMAINE HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
For the Years Ended December 31, 2001, 2000 and 1999
(In Thousands of Dollars)
Number of
Number of Preferred Preferred Additional Retained
Common Common Shares, Shares, Paid-in Earnings
Shares Shares Series B Series B Capital (Deficit)
-------------- ---------------- --------- ----------- ------------ -------------------
Balance at December 31, 1998 10,837,808 $ 108 60,000 $ 1 $ 14,673 $ (5,230)
Sale of common shares 5,000,000 50 - - 1,795 -
Current year change in other
comprehensive income (loss) - - - - - -
Net income for the year - - - - - 4,822
Dividend - - - - - (300)
-------------- ---------------- --------- ----------- ------------ -------------------
Balance at December 31, 1999 15,837,808 158 60,000 1 16,468 (708)
Current year change in other
comprehensive income (loss) - - - - - -
Net income for the year - - - - - 1,742
Dividend - - - - - (300)
-------------- ---------------- --------- ----------- ------------ ------------------
Balance at December 31, 2000 15,837,808 158 60,000 1 16,468 734
Share repurchase (515,111) (5) - - (110) -
Current year change in other
comprehensive income (loss) - - - - - -
Net (loss) for the year - - - - - (1,117)
Dividend - - - - - (300)
-------------- ---------------- --------- ----------- ------------ -------------------
Balance at December 31, 2001 15,322,697 $ 153 60,000 $ 1 $ 16,358 $ (683)
============== ================ ========= =========== ============ ===================
Accumulated
Other
Comprehensive
Income (Loss),
Unrealized
Income (Loss)
on Securities Total
--------------- --------
Balance at December 31, 1998 $ (847) $ 8,705
Sale of common shares - 1,845
Current year change in other
comprehensive income (loss) (187) (187)
Net income for the year - 4,822
Dividend - (300)
--------------- --------
Balance at December 31, 1999 (1,034) 14,885
Current year change in other
comprehensive income (loss) 896 896
Net income for the year - 1,742
Dividend - (300)
--------------- --------
Balance at December 31, 2000 (138) 17,223
Share repurchase - (115)
Current year change in other
comprehensive income (loss) 7,575 7,575
Net (loss) for the year - (1,117)
Dividend - (300)
--------------- --------
Balance at December 31, 2001 $ 7,437 $23,266
=============== ========
The accompanying notes are an integral part of these financial statements.
18
TRIMAINE HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 2001, 2000 and 1999
(In Thousands of Dollars)
2001 2000 1999
-------- -------- --------
Cash Flows from Operating Activities
Net (loss) income $ (1,117) $ 1,742 $ 4,822
Adjustments to reconcile
net (loss) income to
net cash flows from
operating activities
Gain on disposal of former
subsidiaries
(from related party
$4,565 in 1999) - - (5,040)
Loss on sale of investments - 1,991 -
Change in operating assets and
liabilities
Real estate held for
development and sale (253) 2,870 19
Deferred income tax asset - 601 (601)
Accounts receivable 3,481 (3,481) 103
Accounts payable and accrued
liabilities 116 (670) 156
Amount due to affiliates 2,036 44 (4,900)
Deferred income tax liability (577) 297 -
Other (73) 110 8
-------- -------- --------
Net cash flows from operating
activities 3,613 3,504 (5,433)
Cash Flows from Investing Activities
Proceeds from sale of investments - 3,648 5,040
Purchases of investments - (4,138) -
-------- -------- --------
Net cash flows from investing
activities - (490) 5,040
Cash Flows from Financing Activities
Proceeds from debt - - 400
Payment of debt - (2,065) (75)
Proceeds from common stock
issuance - - 1,845
Share repurchase (115) - -
Dividend (300) (300) (300)
-------- -------- --------
Net cash flows from financing
activities (415) (2,365) 1,870
-------- -------- --------
Net increase in cash 3,198 649 1,477
Cash, beginning of year 2,721 2,072 595
-------- -------- --------
Cash, end of year $ 5,919 $ 2,721 $ 2,072
======== ======== ========
Cash paid for interest during years ended December 31, 2001, 2000 and 1999, was
$16, $175 and $867, respectively.
The accompanying notes are an integral part of these financial statements.
19
TRIMAINE HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
(In Thousands of Dollars, Except for Per Share Amounts)
Note 1. Nature of Operations and Significant Accounting Policies
Nature of Operations
- ----------------------
Trimaine Holdings, Inc. ("the Company") is in the financial services industry.
The Company is a subsidiary of MFC Bancorp, Ltd. ("MFC"), a Canadian
corporation.
Principles of Consolidation
- -----------------------------
The consolidated financial statements include the accounts of the Company and
its wholly-owned subsidiaries. All significant intercompany accounts and
transactions have been eliminated.
Cash
- ----
Cash balances are occasionally in excess of federally insured amounts.
Investments
- -----------
The Company holds certain of its marketable investments as available-for-sale
securities which are stated at fair value. Any unrealized holding gains or
losses of available-for-sale securities are reported as a separate component of
comprehensive income until realized. If a loss in value in available-for-sale
securities is considered to be other than temporary, it is recognized in the
determination of net income. Cost is based on the specific identification
method to determine realized gains or losses. Investments in nonmarketable
securities (consisting of preferred stock of MFC at December 31, 2000 and 1999)
are stated at the lower of cost or net realizable value. Management
periodically reviews the financial status of the issuers of nonmarketable
securities. If, based on this review, management determines that future
estimated undiscounted cash flows from these investments is less than carrying
value, a loss will be recorded.
Real Estate Held for Development and Sale
- -----------------------------------------------
Real estate held for development and sale is stated at cost unless the estimated
future undiscounted cash flows expected to result from disposition is less than
carrying value, in which case a loss is recognized based on the fair value of
similar real estate in the same geographic region. No such losses have been
recorded in these consolidated financial statements. The Company's real estate
is being actively marketed and is, therefore, classified as a current asset.
20
Note 1. (Continued)
- ---------------------
Environmental Conservation
- ---------------------------
Liabilities for environmental conservation are recorded when it is probable that
obligations have been incurred and the amounts can be reasonably estimated. Any
potential recoveries of such liabilities are to be recorded when there is an
agreement with a reimbursing entity. No such liabilities were recorded in these
consolidated financial statements.
Taxes on Income
- -----------------
The Company accounts for income taxes under an asset and liability approach that
requires the recognition of deferred tax assets and liabilities for expected
future tax consequences of events that have been recognized in the Company's
financial statements or tax returns. In estimating future tax consequences, the
Company generally considers all expected future events other than enactments of
changes in the tax laws or rates.
Earnings Per Share
- --------------------
Basic earnings per share is computed by dividing income available to common
shareholders by the weighted average number of common shares outstanding in the
period. Diluted earnings per share takes into consideration common shares
outstanding (computed under basic earnings per share) and potentially dilutive
common shares; however, there were no dilutive securities for 2001, 2000 and
1999.
The weighted average number of shares outstanding was 15,626,879, 15,837,808 and
10,892,603 for the years ended December 31, 2001, 2000 and 1999, respectively.
The income to compute the amount attributable to common shareholders includes
the recognition of preferred stock dividends in arrears of $300 for each of the
years ended December 31, 2001, 2000 and 1999.
Use of Estimates
- ------------------
The preparation of financial statements in conformity with United States
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amount of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Segment Information
- --------------------
Management operates the Company as one segment, financial services. Information
for management purposes does not require the segmenting of financial services
activities. Operating revenues are realized primarily from third party sources
in the United States. All long-lived assets are located in the United States.
Since there is one segment, no additional segment disclosures are considered
necessary.
21
(Note 1. Continued)
- ---------------------
New Accounting Standards
- --------------------------
Statement of Financial Accounting Standards No. 142, "Goodwill and Other
Intangible Assets," is to be applied starting with years beginning after
December 15, 2001. This standard addresses how intangible assets, other than
those acquired in a business combination, should be accounted for. Goodwill and
intangible assets that have indefinite useful lives will no longer be amortized
but will be tested annually for impairment.
Statement of Financial Accounting Standards No. 143, "Accounting for Asset
Retirement Obligations," is effective for years beginning after June 15, 2002.
This standard addresses accounting and reporting for obligations associated with
the retirement of tangible long-lived assets and associated retirement costs.
Statement of Financial Accounting Standards No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets," is effective for years beginning
after December 15, 2001. This standard supersedes the previous standard on this
issue as well as others which dealt with accounting for discontinued operations
and the elimination of an exception to consolidation.
Management believes these standards will not affect the Company's consolidated
financial statements.
Note 2. Investments
The Company has investments in available-for-sale securities which have been
classified as long-term at December 31, 2001, 2000 and 1999. These securities
may be summarized as follows:
2001 2000 1999
-------- -------- --------
Fair value of securities
at December 31 (of which
$21,505 represents 1,870,000
shares of MFC common stock
in 2001, and $3,906 and $4,438
represents 500,000 shares in
2000 and 1999, respectively) $ 21,516 $ 3,928 $ 4,605
Cost of securities at December
31 (of which $10,215 represents
1,870,000 shares of MFC common
stock in 2001, and $4,015 and
$4,830 represents 500,000 shares
in 2000 and 1999, respectively) 10,248 4,138 5,639
-------- -------- --------
Unrealized gain (loss) at
December 31 $ 11,268 $ (210) $ (1,034)
======== ======== ========
22
Note 2. (Continued)
At December 31, 2000 and 1999, long-term investments included 82,200 MFC Class A
Preferred Shares, Series 1, carried at the original cost of $6,200. No trading
market existed for these shares. Based on management's review of the financial
status of MFC, fair value was determined to be equal to cost. The Company
received $270, $281 and $274 in dividends in 2001, 2000 and 1999, respectively,
on the preferred shares. These shares were converted into 1,370,000 common
shares of MFC during 2001.
Note 3. Preferred Stock
The Company's Preferred Shares, Series B are voting and require that dividends
be paid annually at 5% in arrears on December 31 (amounting to approximately
$300 at December 31, 2001). Should dividends not be paid as required, interest
at 8% is to be accrued on the unpaid amount. The Company may redeem these
shares at any time at an aggregate price which includes all unpaid dividends,
accrued interest and a redemption premium of 10% based on the amount paid for
the shares. Upon liquidation, these shares are entitled to receive the same
amounts as redemption in priority to the common or other shares. As long as any
of the Preferred Shares, Series B remain outstanding, the Company cannot pay
dividends on common or other junior shares, redeem less than all of these shares
or issue additional preferred stock unless all unpaid dividends including
interest have been paid. In any event, no shares may be issued in priority to
the Preferred Shares, Series B without the approval of the preferred
shareholders. All 60,000 issued and outstanding shares are held by a subsidiary
of MFC.
Note 4. Income Tax
The reconciliation of income tax computed at the U.S. federal statutory rate to
the Company's effective tax for years ended December 31 is as follows:
2001 2000 999
-------- -------- --------
Tax at U.S. statutory rate $ 576 $ (897) $ (1,449)
Tax basis in disposed shares - - 732
Decrease (increase) in
valuation allowance - - 1,185
Other 1 - 93
-------- -------- --------
Deferred income tax benefit
(provision) $ 577 $ (897) $ 561
======== ======== ========
23
Note 4. (Continued)
The significant components of the Company's deferred tax asset and liability are
as follows:
2001 2000
======== ========
Available net operating loss carryforwards $ 76 $ 156
Comprehensive (gain) loss (3,831) 72
Tax basis in real estate acquired in excess
of carrying value 171 174
Other 33 -
-------- --------
(3,551) 402
Deferral of gain on sale of real estate - (627)
------- --------
Net deferred tax liability $(3,551) $ (225)
======= ========
The Company's net operating loss carryforwards of $223 will expire in the year
ending December 31, 2018.
Note 5. Transactions With Affiliates
The Company paid MFC $541 for investment management services during
2001. The Company received an advance of $1,591 from MFC which is
outstanding at December 31, 2001. This amount will be paid in the near term
without interest. Management believes that fair value approximates cost based
on near term collection.
MFC charged the Company a management fee of $150, $150 and $300 during 2001,
2000 and 1999, respectively.
The Company acquired 107,952 of its common shares from MFC for $22 in cash.
The Company has receivables from affiliates of none and $445 at December 31,
2001 and 2000, respectively. Management estimates that the fair value of the
receivables approximates carrying value based on similar transactions in the
market.
The Company had a deposit with a banking subsidiary of MFC of $2,294 at December
31, 2000.
MFC earned a fee of $167 during 2000 for the sale of real estate.
24
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
Date: March 28, 2002 TRIMAINE HOLDINGS, INC.
By: /s/ Michael J. Smith
----------------------------
Michael J. Smith
President, Chief Financial
Officer and Director
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.
/s/ Michael J. Smith Date: March 28, 2002
- -----------------------------
Michael J. Smith
President, Chief Financial
Officer and Director
/s/ Roy Zanatta Date: March 28, 2002
- -----------------------------
Roy Zanatta
Director
/s/ Young Soo Ko Date: March 28, 2002
- -----------------------------
Young Soo Ko
Director
25
EXHIBIT INDEX
Exhibit Number Description
- --------------- -----------
3.1 Articles of Incorporation.(1)
3.2 Amendment to Articles of Incorporation
dated November 5, 1993.(1)
3.3 Amendment to Articles of Incorporation
dated April 22, 1994.(1)
3.4 Amendment to Articles of Incorporation
dated April 14, 1995.(1)
3.5 Amendment to Articles of Incorporation
dated July 10, 1996. Incorporated by
reference to the Corporation's Form 8-K
dated June 27, 1996.
3.6 Amendment to Articles of Incorporation dated
March 23, 2000. Incorporated by reference to
the Corporation's Form 8-K dated March 29, 2000.
3.7 Bylaws.(1)
10.1 Debt Settlement Agreement between the Corporation
and ICHOR Corporation dated September 30, 1997.(2)
10.2 Debt Settlement Agreement between the Corporation
and ICHOR Corporation dated February 20, 1998.(2)
10.3 Purchase Agreement between the Corporation and MFC
Merchant Bank S.A. dated January 4, 1999.
Incorporated by reference to the Schedule 13D/A
with respect to shares of Ichor dated
January 4, 1999.
21 List of subsidiaries of the Registrant.
- ---------------
(1) Incorporated by reference to the Corporation's Registration Statement
on Form 10-SB.
(2) Incorporated by reference to the Schedule 13D/A with respect to shares
of Ichor dated March 13, 1998.
EXHIBIT 21