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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, 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)
Registrant's telephone number, including area code: (43) 1 240 25 102
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]
Indicate by check mark whether the Registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act). Yes [ ] No [X]
The aggregate market value of the Registrant's voting stock held by
non-affiliates of the Registrant as of June 28, 2002, the last business day of
the Registrant's most recently completed second fiscal quarter, based on the
closing price of the voting stock on the OTC Bulletin Board on such date, was
approximately $931,386.
As of March 15, 2003, there were 15,247,897 shares of the Registrant's common
stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's 2003 Proxy Statement to be filed within 120 days of
the period ended December 31, 2002 are incorporated by reference into Part III
hereof.
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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. Some of these risks and assumptions
include those set forth under the sub-heading "Cautionary Statement Regarding
Forward-Looking Information" in "Management's Discussion and Analysis of
Financial Condition and Results of Operations". Investors are advised that
these cautionary remarks expressly qualify in their entirety all forward-looking
statements attributable to the Corporation or persons acting on its behalf.
Unless required by law, the Corporation does not assume any obligation to update
forward-looking statements based on unanticipated events or changed
expectations. However, investors should carefully review the reports and
documents filed by the Corporation from time to time with the Securities and
Exchange Commission (the "SEC"), particularly its quarterly reports on Form 10-Q
and current reports on Form 8-K.
2
TABLE OF CONTENTS
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PAGE
----
PART I
ITEM 1. BUSINESS 4
ITEM 2. PROPERTIES 5
ITEM 3. LEGAL PROCEEDINGS 5
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITYHOLDERS 5
PART II
ITEM 5. MARKET FOR REGITRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS 6
ITEM 6. SELECTED FINANCIAL DATA 7
ITEM 7. MANAGEMENT'S DICUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS 8
ITEM 7A. QUANTITIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK 11
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 12
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLSOURE 12
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT 13
ITEM 11. EXECUTIVE COMPENSATION 13
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT 13
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS 13
ITEM 14. CONTROLS AND PROCEDURES 13
PART IV
ITEM 15. EXHIBITS, FINANCIALS STATEMENT SCHEDULES, AND
REPORTS ON FORM 8-K 14
SIGNATURES 26
3
PART I
ITEM 1. BUSINESS
THE CORPORATION
TriMaine Holdings, Inc. was incorporated under the laws of the State of
Washington on September 15, 1993 and commenced operations in April 1994. In this
document, unless the context otherwise requires, the "Corporation" or "TriMaine"
refers to TriMaine Holdings, Inc. and its subsidiaries. The Corporation is a
subsidiary of MFC Bancorp Ltd. ("MFC"), which owns approximately 83% 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.
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 the State of Washington. 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.
4
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, 2002, 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 Vienna, Austria.
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 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.
5
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. These are inter-dealer prices, without retail
mark up, mark down or commission and may not necessarily represent actual
transactions.
FISCAL QUARTER ENDED HIGH LOW
---------------------- ------ ------
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
2002
March 31 $ 0.37 $ 0.30
June 30 0.45 0.35
September 30 0.37 0.35
December 31 0.45 0.35
(b) SHAREHOLDERS. At March 15, 2003, the Corporation had approximately 1,601
holders of record of its common stock.
(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.
6
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 year ended December
31, 1998 are included in the financial data presented below. The Corporation
commenced operations in April 1994.
FOR THE YEAR ENDED DECEMBER 31,
------------------------------------------------------------------
2002 2001 2000 1999 1998
---------- ---------- ---------- ---------- ----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
OPERATING DATA
Sales of real estate $ - $ - $ 8,329 $ 225 $ 1,016
Other income $ 515 $ 273 $ 575 $ 361 $ 625
General and
administrative expenses $ 250 $ 1,951 $ 476 $ 409 $ 1,152
Interest expense $ 15 $ 16 $ 167 $ 861 $ 360
Income (loss) from
continuing operations $ 276 $ (1,117) $ 1,742 $ 4,822 $ 466
Net income (loss) $ 276 $ (1,117) $ 1,742 $ 4,822 $ 466
COMMON SHARE DATA(1)
Income (loss) from continuing
operations per common share $ - $ (0.09) $ 0.09 $ 0.42 $ 0.02
Net income (loss) per
common share $ - $ (0.09) $ 0.09 $ 0.42 $ 0.02
Weighted average common
shares outstanding (in thousands) 15,292 15,627 15,838 10,893 10,838
BALANCE SHEET DATA
Working capital $ 5,177 $ 5,301 $ 7,095 $ 4,080 $ (2,287)
Total assets $ 19,647 $ 28,747 $ 17,671 $ 17,843 $ 16,083
Long-term obligations $ - $ - $ - $ - $ -
Total shareholders' equity $ 18,052 $ 23,266 $ 17,223 $ 14,885 $ 8,705
__________________
(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, 2002, 2001 and
2000 should be read in conjunction with the Corporation's audited consolidated
financial statements and related notes included in this annual report. 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, 2002 COMPARED TO THE YEAR
ENDED DECEMBER 31, 2001
Revenues for the year ended December 31, 2002 were $0.5 million, compared to
$0.3 million for the year ended December 31, 2001, and consisted primarily of
investment and interest income. In the years ended December 31, 2002 and 2001,
the Corporation did not sell any real estate.
Costs and expenses for the year ended December 31, 2002 were $0.3 million,
compared to $2.0 million for the year ended December 31, 2001. The Corporation
had no costs related to real estate sales in the years ended December 31, 2002
and 2001. General and administrative expenses decreased to $0.3 million in the
year ended December 31, 2002 from $2.0 million in the year ended December 31,
2001, primarily due to a decrease in consulting services. Interest expense
decreased marginally in the year ended December 31, 2002 from the same period of
2001, primarily as a result of decreased indebtedness.
The Corporation had net income of $0.3 million, or nil per common share, in the
year ended December 31, 2002. In the year ended December 31, 2001, the
Corporation had a net loss of $1.1 million, or $0.09 per common share.
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 of $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.
LIQUIDITY AND CAPITAL RESOURCES
The Corporation had cash and cash equivalents of $3.5 million at December 31,
2002, compared to $5.9 million at December 31, 2001.
Operating activities used cash of $1.4 million in the year ended December 31,
2002, compared to providing cash of $3.6 million in the year ended December 31,
2001. The repayment of amounts borrowed from a subsidiary of MFC used cash of
$1.1 million in the year ended December 31, 2002, compared to borrowings from a
subsidiary of MFC providing cash of $2.0 million in the comparative period of
2001. Net improvements of real estate held for development and sale used cash of
$0.1 million in the year ended December 31, 2002, compared to $0.3 million in
the year ended December 31, 2001. A decrease in accounts payable and accrued
liabilities used cash of $0.1 million in the year ended December 31, 2002,
compared to an increase in the same providing cash of $0.1 million in the year
ended December 31, 2001. A decrease in accounts receivable provided cash of
$3.5 million in the year ended December 31, 2001.
8
Investing activities used cash of $0.7 million in the year ended December 31,
2002 as a result of a loan to an unrelated corporation.
Financing activities used cash of $0.3 million in the year ended December 31,
2002, compared to $0.4 million in the year ended December 31, 2001. A
repurchase by the Corporation of its shares used cash of $28,000 in the year
ended December 31, 2002, compared to $0.1 million in the year ended December 31,
2001. The Corporation paid $0.3 million in dividends on its preferred stock in
the years ended December 31, 2002 and 2001, 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.
CRITICAL ACCOUNTING POLICIES
The preparation of financial statements in conformity with United States
generally accepted accounting principles requires management of the Corporation
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.
The Corporation's management routinely makes judgments and estimates about the
effects of matters that are inherently uncertain. The Corporation has
identified a certain accounting policy, described below, that is most important
to the portrayal of its current financial condition and results of operations.
The Corporation's significant accounting policies are disclosed in Note 1 to the
consolidated financial statements included in this annual report.
INVESTMENTS. The Corporation 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.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION
Statements in this annual report that are not reported financial results or
other historical information are "forward-looking statements" within the meaning
of the United States Private Securities Litigation Reform Act of 1995. These
statements are based on present information the Corporation has related to its
existing business circumstances and involve a number of risks and uncertainties,
any of which could cause actual results to differ materially from these
forward-looking statements. Investors are cautioned that the Corporation does
not assume any obligation to update forward-looking statements based on
unanticipated events or changed expectations. Factors that could cause actual
results to differ materially include, but are not limited to:
ENVIRONMENTAL REGULATION. The Corporation is subject to extensive environmental
laws and regulations. Because the Corporation owns real property, various
federal, state and local laws might impose liability on the Corporation
for the cost of removing or remediating various hazardous substances released on
or in the Corporation's property. The Corporation may incur substantial costs
to comply with current environmental requirements or new environmental laws that
might be adopted. In addition, the Corporation may discover currently unknown
environmental problems or conditions in the future and may incur substantial
costs in correcting such problems or conditions.
PROPERTY DEVELOPMENT IN WASHINGTON STATE. 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, have lengthened the time necessary to receive development permits
and may materially adversely affect the operations of the Corporation.
9
ECONOMIC CONDITIONS. The Corporation has significant real estate holdings that
can be difficult to sell in unfavourable economic conditions and that can have
unpredictable decreases in value. This makes it difficult for the Corporation
to vary its investment portfolio and to limit its risk when economic conditions
change. Zoning law changes and changes in environmental protection laws, among
other things, can also lower the value of the Corporation's investments.
PROPERTY TAXES. Property taxes can increase and cause a decline in net property
values. Each of the Corporation's properties is subject to real property taxes.
These real property taxes may increase in the future as property tax rates
change and as the Corporation's properties are assessed or reassessed by tax
authorities. Such increases could reduce the net amount earned by the
Corporation on sales of its properties.
LEGAL PROCEEDINGS. Although the Corporation is not currently subject to any
material legal proceedings, should legal proceedings be initiated against it in
the future, whether in connection with environmental matters or otherwise,
pursuant to which the Corporation is required to pay significant amounts under
an order issued in or to settle such a proceeding, the Corporation's results of
operations and financial condition would be materially adversely affected.
OTHER RISKS. The Corporation's future results could be adversely affected by a
variety of other factors beyond its control, including, but not limited to:
* general economic and business conditions, including changes in interest
rates;
* prices and other economic conditions;
* natural phenomena;
* actions by government authorities, including changes in government
regulation;
* uncertainties associated with legal proceedings;
* future decisions by management in response to changing conditions;
* the Corporation's ability to execute prospective business plans; and
* misjudgments in the course of preparing forward-looking statements.
10
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.
INTEREST RATE RISK
Fluctuations in interest rates may affect the fair value of the fixed
interest rate financial instruments. An increase in market interest rates may
decrease the fair value of the fixed interest rate financial instrument assets.
A decrease in interest rates may increase the fair value of the fixed
interest rate financial instrument assets. The Corporation's financial
instruments which may be sensitive to interest rate fluctuations are a note
receivable. 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, 2002
and 2001, respectively, and expected cash flows from these instruments.
AS AT DECEMBER 31, 2002
(IN THOUSANDS)
EXPECTED FUTURE CASH FLOW
CARRYING FAIR ------------------------------------------------
VALUE VALUE 2003 2004 2005 2006 2007 THEREAFTER
-------- ----- ---- ---- ---- ---- ---- ----------
Note receivable(1) $728 $728 $764 $0 $0 $0 $0 $0
_____________
(1) The Corporation did not have financial instruments subject to interest rate
risk in 2001.
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, 2002
and 2001, respectively, and expected cash flows from these instruments.
AS AT DECEMBER 31, 2002
(IN THOUSANDS)
EXPECTED FUTURE CASH FLOW
CARRYING FAIR ------------------------------------------------
VALUE VALUE 2003 2004 2005 2006 2007 THEREAFTER
-------- ----- ---- ---- ---- ---- ---- ----------
Investments(1) $14 $14 $0 $0 $0 $0 $0 $14
____________
(1) Investments consist of equity securities, which are denominated in Canadian
dollars.
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 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
11
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, 2002 and 2001, respectively,
and expected cash flows from these instruments.
AS AT DECEMBER 31, 2002
(IN THOUSANDS)
EXPECTED FUTURE CASH FLOW
CARRYING FAIR ------------------------------------------------
VALUE VALUE 2003 2004 2005 2006 2007 THEREAFTER
-------- ----- ---- ---- ---- ---- ---- ----------
Investments(1) $13,741 $13,741 $0 $0 $0 $0 $0 $13,741
_____________
(1) Investments consist of equity securities.
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.
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 15 of this annual report, are
included in this annual report commencing on page 15.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable.
12
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.
ITEM 14. CONTROLS AND PROCEDURES
Within 90 days prior to the date of this report, the Corporation carried out an
evaluation, under the supervision and with the participation of the
Corporation's principal executive officer and principal financial officer, of
the effectiveness of the design and operation of the Corporation's disclosure
controls and procedures. Based on this evaluation, the Corporation's principal
executive officer and principal financial officer concluded that the
Corporation's disclosure controls and procedures are effective in timely
alerting them to material information required to be included in its 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, the Corporation reviewed its internal controls, and there
have been no significant changes in its internal controls or in other factors
that could significantly affect those controls subsequent to the date of their
last evaluation.
13
PART IV
ITEM 15. 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 Corporation
dated January 4, 1999.
21 List of subsidiaries of the Registrant.
99.1 Certification.
______________
(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 Corporation dated March 13, 1998.
(b) REPORTS ON FORM 8-K
None.
14
- --------------------------------------------------------------------------------
PETERSON SULLIVAN PLLC
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, 2002 and 2001, and the
related statements of operations, comprehensive income, changes in shareholders'
equity, and cash flows for the years ended December 31, 2002, 2001 and 2000.
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, 2002 and 2001, and the results of their
operations and their cash flows for the years ended December 31, 2002, 2001 and
2000, in conformity with accounting principles generally accepted in the United
States.
/s/ Peterson Sullivan PLLC
February 27, 2003
Seattle, Washington
15
TRIMAINE HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 31, 2002 and 2001
(In Thousands of Dollars)
ASSETS 2002 2001
-------- --------
Current Assets
Cash and cash equivalents $ 3,494 $ 5,919
Note receivable 728 -
Real estate held for development and sale 1,242 1,149
Others 442 163
-------- --------
Total current assets 5,906 7,231
Investments 13,741 21,516
-------- --------
$19,647 $28,747
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable $ 45 $ 173
Accrued liabilities 178 166
Advances from affiliates 506 1,591
-------- --------
Total current liabilities 729 1,930
Deferred Income Tax Liability 866 3,551
-------- --------
1,595 5,481
Shareholders' Equity
Preferred stock, Series B, $.01 par value 100,000
shares authorized, 60,000 issued and outstanding
at December 31, 2002 and 2001 1 1
Common stock, $.01 par value, 100,000,000 shares
authorized, 15,247,897 and 15,322,697 issued
and outstanding at December 31, 2002 and 2001 152 153
Additional paid-in capital 16,331 16,358
Accumulated deficit (707) (683)
Accumulated other comprehensive income 2,275 7,437
-------- --------
18,052 23,266
-------- --------
$19,647 $28,747
======== ========
The accompanying notes are an integral part of these financial statements.
16
TRIMAINE HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Years Ended December 31, 2002, 2001 and 2000
(In Thousands of Dollars, Except Per Share Data)
2002 2001 2000
------ ------ ------
Revenues
Sales of real estate $ - $ - $8,329
Dividend and other 515 273 575
------ ------- ------
515 273 8,904
Costs and expenses
Cost of real estate sold and related selling
costs - - 3,631
Loss on sale of investments - - 1,991
General and administrative 250 1,951 476
Interest 15 16 167
------ ------- ------
265 1,967 6,265
------ ------- ------
Income (loss) before income tax
benefit (provision) 250 (1,694) 2,639
Deferred income tax benefit (provision) 26 577 (897)
------ ------- ------
Net income (loss) $ 276 $(1,117) $1,742
====== ======= ======
Basic earnings (loss) per common share $ - $ (.09) $ .09
====== ======= ======
The accompanying notes are an integral part of these financial statements.
17
TRIMAINE HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
For the Years Ended December 31, 2002, 2001 and 2000
(In Thousands of Dollars)
2002 2001 2000
-------- -------- --------
Net income (loss) $ 276 $(1,117) $ 1,742
Other comprehensive income (loss), net of tax
Unrealized holding gains (losses)
on securities arising during the period (5,162) 7,575 896
------- ------- --------
Comprehensive (loss) income $(4,886) $ 6,458 $ 2,638
======= ======= ========
The accompanying notes are an integral part of these financial statements.
18
TRIMAINE HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
For the Years Ended December 31, 2002, 2001 and 2000
(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, 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)
Share repurchase (74,800) (1) - - (27) -
Current year change in other
comprehensive income (loss) - - - - - -
Net income for the year - - - - - 276
Dividend - - - - - (300)
Balance at December 31, 2002 15,247,897 $ 152 $ 60,000 $ 1 $ 16,331 $ (707)
Accumulated
Other
Comprehensive
Income (Loss),
Unrealized
Income (Loss)
on Securities Total
--------------- --------
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
Share repurchase - (28)
Current year change in other
comprehensive income (loss) (5,162) (5,162)
Net income for the year - 276
Dividend - (300)
Balance at December 31, 2002. $ 2,275 $ 18,052
The accompanying notes are an integral part of these financial statements.
19
TRIMAINE HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 2002, 2001 and 2000
(In Thousands of Dollars)
2002 2001 2000
-------- -------- --------
Cash Flows from Operating Activities
Net income (loss) $ 276 $(1,117) $ 1,742
Adjustments to reconcile net income (loss) to
Net cash flows from operating activities
Dividend-in-kind (46) - -
Loss on sale of investments - - 1,991
Changes in operating assets and liabilities
Real estate held for development and sale (93) (253) 2,870
Deferred income tax asset - - 601
Accounts receivable - 3,481 (3,481)
Accounts payable and accrued liabilities (116) 116 (670)
Amount due to affiliates (1,085) 2,036 44
Deferred income tax liability (26) (577) 297
Other (279) (73) 110
------- ------- -------
Net cash flows from operating activities (1,369) 3,613 3,504
Cash Flows from Investing Activities
Increase in note receivable (728) - -
Proceeds from sale of investments - - 3,648
Purchases of investments - - (4,138)
------- ------- -------
Net cash flows from investing activities (728) - (490)
Cash Flows from Financing Activities
Payment of debt - - (2,065)
Share repurchase (28) (115) -
Dividend (300) (300) (300)
------- ------- -------
Net cash flows from financing activities (328) (415) (2,365)
------- ------- ------
Net increase (decrease) in cash and
cash equivalents (2,425) 3,198 649
Cash and cash equivalents, beginning of year 5,919 2,721 2,072
------- ------- ------
Cash and cash equivalents, end of year $ 3,494 $ 5,919 $ 2,721
======= ======= =======
Cash paid for interest during years ended December 31, 2002, 2001 and 2000, was $14, $16 and $175,
respectively.
The accompanying notes are an integral part of these financial statements.
20
TRIMAINE HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED 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 and Cash Equivalents
- ----------------------------
Cash and cash equivalents include highly liquid investments with original
maturities of three months or less and are generally interest bearing.
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.
Real Estate Held for Development and Sale
- -----------------------------------------------
Profit or loss on sales of real estate is recognized when the amount of revenue
is determinable, certain down payment requirements are met and no significant
further involvement remains with respect to the real estate being sold. The
real estate is located in the western portion of Washington.
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.
21
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 2002, 2001 and
2000.
The weighted average number of shares outstanding was 15,291,990, 15,626,879 and
15,837,808 for the years ended December 31, 2002, 2001 and 2000, 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, 2002, 2001 and 2000.
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.
New Accounting Standards
- --------------------------
Statements of Financial Accounting Standards ("SFAS") No. 145 and 146 are
generally modifications to previously adopted standards. A part of SFAS 145 is
effective for years beginning after May 15, 2002, and SFAS 146 is effective for
years beginning after December 31, 2002. These new standards do not have an
effect on the Company's consolidated financial statements.
22
Note 2. Note Receivable
The Company has an unsecured note receivable for $728 stated at its principal
balance at December 31, 2002, from an unrelated corporation. The note is due on
demand and bears interest at 5% which is recognized as earned. Based on a
review of the financial viability of the note issuer, management of the Company
has determined that no allowance is necessary at December 31, 2002. Management
believes fair value approximates cost based on near term collection.
Note 3. Investments
The Company has investments in available-for-sale securities which have been
classified as long-term at December 31, 2002, 2001 and 2000. These securities
may be summarized as follows:
2002 2001 2000
-------- -------- --------
Fair value of securities
at December 31 (of which
$13,558 and $21,505
represents 1,870,000 shares
of MFC common stock in 2002
and 2001, respectively, and
$3,906 represents 500,000
shares in 2000) $ 13,741 $ 21,516 $ 3,928
Cost of securities at
December 31 (of which
$10,215 represents
1,870,000 shares of MFC
common stock in both 2002
and 2001, and $4,015
represents 500,000 shares 10,293 10,248 4,138
in 2000) --------- --------- ---------
Unrealized gain (loss)
at December 31 $ 3,448 $ 11,268 $ (210)
========= ========= =========
During 2001 and 2000, the Company held 82,200 MFC Class A Preferred Shares,
Series 1, which were converted into 1,370,000 common shares of MFC during 2001.
The Company received $270 and $281 in dividends in 2001 and 2000, respectively,
on these shares.
23
Note 4. 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, 2002). 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 5. 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:
2002 2001 2000
------ ----- ------
Tax at U.S. statutory rate $ (85) $ 576 $(897)
Nontaxable gains 92 - -
Other 19 1 -
----- ----- -----
Deferred income tax benefit (provision) $ 26 $ 577 $(897)
===== ===== =====
The significant components of the Company's deferred tax asset and liability are
as follows:
2002 2001
======== ========
Available net operating loss carryforwards $ 176 $ 76
Comprehensive gain (1,172) (3,831)
Tax basis in real estate acquired in excess of
carrying value 153 171
Other (23) 33
------- -------
Net deferred tax liability $ (866) $(3,551)
======= =======
24
The Company's net operating loss carryforwards of $517 will expire in the
following years ending December 31:
2018 $ 200
2022 317
--------------
$ 517
==============
Note 6. Transactions with Affiliates
During 2002, the Company received a dividend-in-kind from MFC which was recorded
at its fair value of $46. This amount is included in dividend and other income.
In 2001, the Company received an advance from MFC of which $506 and $1,591 was
outstanding at December 31, 2002 and 2001, respectively. The remaining amount
will be paid in the near term without interest. Management believes that fair
value approximates cost based on near term collection.
The Company paid MFC $541 for investment management services during 2001.
MFC charged the Company a management fee of $150 during 2002, 2001 and 2000.
The Company acquired 107,952 of its common shares from MFC for $22 in cash
during 2001.
MFC earned a fee of $167 during 2000 for the sale of real estate.
25
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, 2003 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, 2003
- -------------------------
Michael J. Smith
President, Chief Financial
Officer and Director
/s/ Roy Zanatta Date: March 28, 2003
- -------------------------
Roy Zanatta
Director
/s/ Young Soo Ko Date: March 28, 2003
- -------------------------
Young Soo Ko
Director
26
CERTIFICATION
I, Michael J. Smith, certify that:
1. I have reviewed this annual report on Form 10-K of Trimaine Holdings,
Inc. (the "Registrant");
2. Based on my knowledge, this annual 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 annual report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual 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 annual 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 within
those entities, particularly during the period in which this
annual 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 annual report (the "Evaluation Date"); and
c) presented in this annual 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 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
annual 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: March 28, 2003
/s/ Michael J. Smith
-----------------------
Michael J. Smith
President and Chief
Financial Officer
27
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
Corporation dated January 4, 1999.
21 List of subsidiaries of the Registrant.
99.1 Certification.
__________________
(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 Corporation dated March 13, 1998.
28
EXHIBIT 21