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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2002
OR
[ ] 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.)
FLOOR 21, MILLENNIUM TOWER, HANDELSKAI 94-96, A-1200, VIENNA, AUSTRIA
(Address of office)
(43) 1 240 25 102
(Registrant's telephone number, including area code)
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 the number of shares outstanding of each of the Registrant's classes of
common stock, as of the latest practicable date:
Class Outstanding at November 13, 2002
----- --------------------------------
Common Stock, 15,293,697
$0.01 par value
FORWARD-LOOKING STATEMENTS
Statements in this report, to the extent that 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, the 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.
PART I. FINANCIAL INFORMATION
---------------------
ITEM 1. FINANCIAL STATEMENTS
TRIMAINE HOLDINGS, INC.
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2002
(UNAUDITED)
2
TRIMAINE HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(DOLLARS IN THOUSANDS)
SEPTEMBER 30, 2002 DECEMBER 31, 2001
------------------ -----------------
ASSETS
Current Assets
Cash and cash equivalents $ 3,538 $ 5,919
Accounts receivable 718 -
Real estate held for development
and sale 1,224 1,149
Other 426 163
--------------- ---------------
Total current assets 5,906 7,231
Securities 13,363 21,516
--------------- ---------------
$ 19,269 $ 28,747
=============== ===============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable $ 10 $ 173
Accrued liabilities 163 166
Advances from affiliates 598 1,591
--------------- ---------------
Total current liabilities 771 1,930
Deferred Income Tax Liability 830 3,551
--------------- ---------------
1,601 5,481
Shareholders' Equity
Preferred stock 1 1
Common stock 153 153
Additional paid-in capital 16,340 16,358
Deficit (882) (683)
Accumulated other comprehensive income 2,056 7,437
--------------- ---------------
Total equity 17,668 23,266
--------------- ---------------
$ 19,269 $ 28,747
=============== ===============
The accompanying notes are an integral part of these financial statements.
3
TRIMAINE HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS (DEFICIT)
(UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
FOR THE NINE FOR THE NINE
MONTHS ENDED MONTHS ENDED
SEPTEMBER 30, 2002 SEPTEMBER 30, 2001
------------------ ------------------
REVENUES
Dividend and other $ 356 $ 423
----------------- ----------------
COSTS AND EXPENSES
General and administrative expenses 194 914
Interest 9 9
----------------- ----------------
203 923
----------------- ----------------
Income (loss) before income tax 153 (500)
Income tax expenses (benefits) 52 (67)
----------------- ----------------
Net income (loss) 101 (433)
Retained earnings (deficit),
beginning of period (683) 734
Dividends paid on preferred shares (300) (300)
----------------- ----------------
Retained earnings (deficit),
end of period $ (882) $ 1
================= ================
Basic and diluted loss per share $ (0.01) $ (0.04)
================= ================
The accompanying notes are an integral part of these financial statements.
4
TRIMAINE HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS (DEFICIT)
(UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
FOR THE THREE FOR THE THREE
MONTHS ENDED MONTHS ENDED
SEPTEMBER 30, 2002 SEPTEMBER 30, 2001
------------------ ------------------
REVENUES
Dividend and other $ 75 $ 49
----------------- -----------------
COSTS AND EXPENSES
General and administrative expenses 91 304
Interest 5 2
----------------- -----------------
96 306
----------------- -----------------
Loss before income tax (21) (257)
Income tax benefits (7) (229)
----------------- -----------------
Net loss (14) (28)
Retained earnings (deficit),
beginning of period (868) 29
----------------- -----------------
Retained earnings (deficit),
end of period $ (882) $ 1
================= =================
Basic and diluted loss per share $ (0.01) $ (0.01)
================= =================
The accompanying notes are an integral part of these financial statements.
5
TRIMAINE HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)
(DOLLARS IN THOUSANDS)
FOR THE NINE FOR THE NINE
MONTHS ENDED MONTHS ENDED
SEPTEMBER 30, 2002 SEPTEMBER 30, 2001
------------------ ------------------
Net income (loss) $ 101 $ (433)
Other comprehensive gain (loss):
Unrealized gain (loss)
on securities, net of taxes (5,381) 3,754
-------------- -------------
Total comprehensive income (loss) $ (5,280) $ 3,321
============== =============
The accompanying notes are an integral part of these financial statements.
6
TRIMAINE HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(UNAUDITED)
(DOLLARS IN THOUSANDS)
FOR THE THREE FOR THE THREE
MONTHS ENDED MONTHS ENDED
SEPTEMBER 30,2002 SEPTEMBER 30, 2001
----------------- -------------------
Net loss $ (14) $ (28)
Other comprehensive gain (loss):
Unrealized gain (loss) on
securities, net of taxes (1,864) 281
--------------- -----------------
Total comprehensive income (loss) $ (1,878) $ 253
=============== ===============
The accompanying notes are an integral part of these financial statements.
7
TRIMAINE HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(DOLLARS IN THOUSANDS)
FOR THE NINE FOR THE NINE
MONTHS ENDED MONTHS ENDED
SEPTEMBER 30, 2002 SEPTEMBER 30, 2001
------------------ ------------------
Cash Flows from Operating Activities
Net income (loss) from operation $ 101 $ (433)
Adjustments to reconcile net income
(loss) to net cash provided by
(used in) operating activities - -
Changes in current assets and liabilities:
Accounts receivable (718) 3,423
Real estate held for development and sale (75) (148)
Advances from affiliates - 403
Accounts payable and accrued liabilities (166) 7
Amount due to affiliates (993) -
Income tax liabilities - 404
Deferred income tax liabilities 51 (473)
Other (263) (6)
-------------- ---------------
Net cash provided by (used in)
operating activities (2,063) 3,177
Cash Flows from Investing Activities
Increase in note receivable - (1,111)
-------------- ---------------
Net cash used in investing
activities - (1,111)
Cash Flows from Financing Activities
Repurchase of common shares (18) (100)
Dividend (300) (300)
-------------- ---------------
Net cash used in financing
activities (318) (400)
-------------- ---------------
Change in cash and cash equivalents (2,381) 1,666
Cash and cash equivalents,
beginning of period 5,919 2,721
-------------- ---------------
Cash and cash equivalents, end of period $ 3,538 $ 4,387
============== ===============
The accompanying notes are an integral part of these financial statements.
8
TRIMAINE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2002
(UNAUDITED)
NOTE 1. BASIS OF PRESENTATION
The interim period consolidated financial statements contained herein have been
prepared by the Registrant pursuant to the rules and regulations of the United
States Securities and Exchange Commission. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with accounting principles generally accepted in the United States have been
condensed or omitted pursuant to such rules and regulations. These interim
period statements should be read together with the audited consolidated
financial statements and accompanying notes included in the Registrant's latest
annual report on Form 10-K for the year ended December 31, 2001. In the opinion
of the Registrant, the unaudited consolidated financial statements contained
herein contain all adjustments necessary in order to present a fair statement of
the results for the interim periods presented.
NOTE 2. EARNINGS (LOSS) PER SHARE
Basic earnings (loss) per share is computed by dividing income (loss) available
to common shareholders by the weighted average number of shares outstanding
during the period.
The weighted average number of shares outstanding was 15,303,435 and 15,718,615
for the nine month periods ended September 30, 2002 and 2001, respectively. The
weighted average number of shares outstanding was 15,285,822 and 15,509,389 for
the three months periods ended September 30, 2002 and 2001, respectively. The
income to compute the amount attributable to common shareholders includes the
recognition of preferred stock dividend of $225,000 in the nine months
ended September 30, 2002 and $75,000 in the three months ended September
30, 2002.
9
PART I. FINANCIAL INFORMATION
---------------------
ITEM 2. 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 TriMaine Holdings, Inc. (the "Corporation") for the nine and three
month periods ended September 30, 2002 should be read in conjunction with the
consolidated financial statements and related notes included elsewhere in this
quarterly report.
RESULTS OF OPERATIONS - NINE MONTHS ENDED SEPTEMBER 30, 2002
Revenues were $0.4 million for each of the nine months ended September 30, 2002
and 2001, consisting primarily of dividends received on shares held by the
Corporation, and investment and interest income.
Costs and expenses for the nine months ended September 30, 2002 decreased to
$0.2 million from $0.9 million in the comparative period of 2001, primarily as a
result of reduced general and administrative expenses due to a decrease in
consulting services. Interest expense was $9,000 in each of the nine months
ended September 30, 2002 and 2001.
Net income for the nine months ended September 30, 2002 was $0.1 million, or a
loss of $ 0.01 per common share, compared to a net loss of $0.4 million, or
$0.04 per common share, for the nine months ended September 30, 2001.
RESULTS OF OPERATIONS - THREE MONTHS ENDED SEPTEMBER 30, 2002
Revenues increased to $75,000 for the three months ended September 30, 2002 from
$49,000 for the comparable period of 2001, consisting primarily of investment
and interest income.
Costs and expenses decreased to $0.1 million in the three months ended September
30, 2002 from $0.3 million in the three months ended September 30, 2001,
primarily as a result of reduced general and administrative expenses due to a
decrease in consulting services. Interest expense increased marginally in the
three months ended September 30, 2002 from the same period of 2001.
Net loss for the three months ended September 30, 2002 was $14,000, or $0.01 per
common share, compared to $28,000, or $0.01 per common share, for the three
months ended September 30, 2001.
LIQUIDITY AND CAPITAL RESOURCES
The Corporation had cash and cash equivalents of $3.5 million at September 30,
2002, compared to $5.9 million at December 31, 2001.
Operating activities used cash of $2.1 million in the nine months ended
September 30, 2002, compared to providing cash of $3.2 million in the nine
months ended September 30, 2001. A decrease in amounts due to affiliates used
cash of $1.0 million in the nine months ended September 30, 2002. An increase in
accounts receivable used cash of $0.7 million in the nine months ended
10
September 30, 2002, compared to a decrease in same providing cash of $3.4
million in the comparable period in 2001. An increase in real estate held for
development and sale used cash of $0.1 million in each of the nine months
ended September 30, 2002 and 2001. A decrease in accounts payable and accrued
liabilities used cash of $0.2 million in the nine months ended September 30,
2002, compared to an increase in same providing cash of $7,000 in comparable
period of 2001. Changes in other current assets and liabilities used cash of
$0.3 million in the current period, compared to $6,000 in the comparable
period of 2001.
Investing activities used no cash in the nine months ended September 30, 2002.
Investing activities used cash of $1.1 million in the nine months ended
September 30, 2001 as a result of an increase in a note receivable.
Financing activities used cash of $0.3 million in the nine months ended
September 30, 2002, compared to $0.4 million in the nine months ended September
30, 2001. The Corporation paid $0.3 million in dividends on its preferred stock
in the nine months ended September 30, 2002 and 2001, respectively.
The Corporation has no commitments for capital expenditures in relation to its
undeveloped real estate, although it may need 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 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK
Reference is made to the Corporation's annual report on Form 10-K for the fiscal
year ended December 31, 2001 for information concerning market risk.
ITEM 4. DISCLOSURE CONTROLS AND PROCEDURES
Within 90 days prior to the date of this report, we carried out an evaluation,
under the supervision and with the participation of our principal executive
officer and principal financial officer, of the effectiveness of the design and
operation of our disclosure controls and procedures. Based on this evaluation,
our principal executive officer and principal financial officer concluded that
our disclosure controls and procedures are effective in timely alerting him to
material information required to be included in our periodic reports filed with
the SEC. It should be noted that the design of any system of controls is based
in part upon certain assumptions about the likelihood of certain events, and
there can be no assurance that any design will succeed in achieving its stated
goals under all future conditions, regardless of how remote. In addition, we
reviewed our internal controls, and there have been no significant changes in
our internal controls or in other factors that could significantly affect those
controls subsequent to the date of their last evaluation.
11
PART II. OTHER INFORMATION
-----------------
ITEM 1. LEGAL PROCEEDINGS
Reference is made to the Corporation's annual report on Form 10-K for the fiscal
year ended December 31, 2001 for information concerning legal proceedings.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Corporation held its annual meeting of shareholders on July 12, 2002. At
the meeting, Michael J. Smith was elected as a Class I director of the
Corporation for a term expiring at the annual meeting of shareholders in 2005
and Young Soo Ko was elected as a Class II director of the Corporation for a
term expiring at the annual meeting of shareholders in 2003. The voting results
for the election of directors were as follows:
ABSTENTIONS AND
VOTES FOR VOTES WITHHELD BROKER NON-VOTES
--------- -------------- ----------------
Michael J. Smith 9,346,030 15,477 -
Young Soo Ko 9,346,030 15,477 -
Roy Zanatta continued his term as a director of the Corporation.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
99.1 - Certification of Periodic Report
(b) REPORTS ON FORM 8-K
None
12
SIGNATURES
Pursuant to the requirements 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.
Dated: November 13, 2002
TRIMAINE HOLDINGS, INC.
By: /s/ Michael J. Smith
-------------------------------
Michael J. Smith, President and
Chief Financial Officer
13
CERTIFICATION OF PERIODIC REPORT
I, Michael Smith, President and Chief Financial Officer of TriMaine Holdings,
Inc. (the "Registrant"), certify, pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002, that:
1. I have reviewed this quarterly report on Form 10-Q of TriMaine Holdings,
Inc.;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the period
covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the Registrant as of, and for, the periods presented
in this quarterly report;
4. The Registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the Registrant
and have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the Registrant, including its
consolidated subsidiaries, is made known to us by others with
those entities, particularly during the period in which this
quarterly report is being prepared;
b) evaluated the effectiveness of the Registrant's disclosure
controls and procedures as of a date within 90 days prior
to the filing date of this quarterly report (the "Evaluation
Date"); and
c) presented in this quarterly report our conclusions about
the effectiveness of the disclosure controls and procedures
based on our evaluation as of the Evaluation Date;
5. The Registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the Registrant's auditors and the audit
committee of the Registrant's board of directors (or persons performing
the equivalent functions):
a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the Registrant's
ability to record, process, summarize and report financial
data and have identified for the Registrant's auditors any
material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management
or other employees who have a significant role in the
Registrant's internal controls; and
6. The Registrant's other certifying officers and I have indicated in this
quarterly report whether there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant
deficiencies and material weaknesses.
Date: November 13, 2002
/s/ Michael J. Smith
-----------------------------------------
Michael J. Smith
President and Chief Financial Officer
14
EXHIBIT 99.1