(Mark One)
| [X] | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2004 |
| [ ] | TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Commission file number 000-26354*
TRIMAINE HOLDINGS, INC.
LIQUIDATING TRUST
(Exact name of
registrant as specified in its charter)
| Washington State or other jurisdiction of incorporation or organization |
91-1636980 (I.R.S. Employer Identification No.) |
| c/o BKM Capital LLC, 255 - 3540 West Sahara Avenue, Las Vegas, Nevada (Address of principal executive offices) |
89102-5816 (Zip Code) |
Registrant’s telephone number (702) 366-6342
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class None |
Name of each exchange on which registered None |
Securities registered pursuant to Section 12(g) of the Act:
None
(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.
[X] Yes [ ] No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (229.405 of this chapter) is not contained herein, and will not be contained, to the best of 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. [ ]
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Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act) [ ] Yes [X] No
State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter.
Note.– If a determination as to whether a particular person or entity is an affiliate cannot be made without involving unreasonable effort and expense, the aggregate market value of the common stock held by non-affiliates may be calculated on the basis of assumptions reasonable under the circumstances, provided that the assumptions are set forth in this Form.
APPLICABLE ONLY TO
REGISTRANTS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE
PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. [ ] Yes [ ] No
(APPLICABLE ONLY TO CORPORATE REGISTRANTS)
Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date.
DOCUMENTS INCORPORATED BY REFERENCE
List hereunder the following documents if incorporated by reference and the Part of the Form 10-K (e.g., Part I, Part II, etc.) into which the document is incorporated: (1) Any annual report to security holders; (2) Any proxy or information statement; and (3) Any prospectus filed pursuant to Rule 424(b) or (c) under the Securities Act of 1933. The listed documents should be clearly described for identification purposes (e.g., annual report to security holders for fiscal year ended December 24, 1980).
* The TriMaine Holdings, Inc. Liquidating Trust is the distributee of the assets and liabilities of TriMaine Holdings, Inc. and files reports under the Commission file number assigned to TriMaine Holdings, Inc. TriMaine Holdings, Inc. filed a Form 15 on February 22, 2005, indicating its notice of termination of registration and filing requirements.
This annual report contains forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as “may”, “will”, “should”, “expects”, “plans”, “anticipates”, “believes”, “estimates”, “predicts”, “potential” or “continue” or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks in the section entitled “Risk Factors”, that may cause our or our industry’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements.
Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.
Our financial statements are stated in United States dollars and are prepared in accordance with United States generally accepted accounting principles. In this annual report, unless otherwise specified, all dollar amounts are expressed in United States dollars.
Unless otherwise indicated, all references to “we”, “us”, “our” and “Trust” means the TriMaine Holdings, Inc. Liquidating Trust and “TriMaine” means TriMaine Holdings, Inc.
TriMaine was incorporated in the State of Washington on September 15, 1993 and commenced operations in April 1994. Until its dissolution, TriMaine was a subsidiary of MFC Bancorp Ltd., which owned approximately 83% of its shares of common stock. A subsidiary of MFC Bancorp Ltd. also owned the 60,000 shares of the preferred stock of TriMaine.
On October 8, 2004, the sole director of TriMaine adopted a Plan to Dissolve (the “Plan to Dissolve”) and directed that the Plan to Dissolve be submitted to TriMaine’s stockholders for approval. TriMaine’s stockholders subsequently approved the Plan to Dissolve at the 2004 Annual and Special Meeting of Stockholders held on December 9, 2004.
The Plan to Dissolve contemplates the orderly sale of all of TriMaine’s assets for cash or such other form of consideration as may be conveniently distributed to TriMaine’s stockholders and the payment of (or provision for) TriMaine’s liabilities and expenses, as well as the establishment of reserves to fund TriMaine’s contingent liabilities. The Plan to Dissolve gives TriMaine’s director, or a trustee appointed by the director, the power to sell any or all of the assets of TriMaine without further approval by the stockholders.
On December 29, 2004, TriMaine transferred its remaining assets to, and its remaining liabilities were assumed by, Mark Steinley (the “Trustee”), as trustee of the TriMaine Holdings, Inc. Liquidating Trust (the “Trust”), in accordance with the Plan to Dissolve and TriMaine was dissolved. The last day of trading of TriMaine’s common stock on the OTC Bulletin Board was December 30, 2004, and TriMaine’s stock transfer books were closed as of the close of business on that date. In addition, on February 22, 2005, TriMaine filed a Form 15 with the Securities and Exchange Commission to terminate the registration of TriMaine’s common stock under Section 12(b) of the Securities Exchange Act of 1934 and its obligation to file periodic reports with the Securities and Exchange Commission.
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The Trust was established for the sole purpose of winding up TriMaine’s affairs and the liquidation of its assets with no objective to continue or engage in the conduct of a trade or business or cause any of TriMaine’s subsidiaries to continue or engage in the conduct of a trade or business, except as necessary for the orderly liquidation of the Trust’s assets. Pursuant to the Liquidating Trust Agreement dated December 29, 2004 (the “Liquidating Trust Agreement”), each of TriMaine’s stockholders on December 30, 2004 (each, a “Beneficiary”) automatically became the holder of a proportionate share (the “Beneficial Interest”) of the assets of the Trust determined by the ratio of the number of shares of common stock held by the Beneficiary as of the close of business on December 30, 2004 over the total number of shares of common stock issued and outstanding on December 30, 2004. All outstanding shares of TriMaine’s common and preferred stock were automatically deemed cancelled on the effective date of the dissolution. TriMaine’s stockholders on December 30, 2004 were not required to take any action to receive their Beneficial Interest. The rights of Beneficiaries in their Beneficial Interest are not represented by any form of certificate or other instrument. The Trustee maintains a record of the name and address of each Beneficiary and such Beneficiary’s aggregate Beneficial Interest in the Trust. Subject to limited exceptions related to transfer by will, intestate succession or operation of law, the Beneficial Interests are not transferable.
The Trust will terminate upon the earliest of: (1) such time as termination is required by the applicable laws of the State of Washington; (2) the distribution of all of the Trust’s assets in accordance with the terms of the Liquidating Trust Agreement; (3) a majority in interest of the Beneficiaries or the Trustee approves termination; or (4) the expiration of a period of three years from the date assets were first transferred to the Trust (but not before a final liquidation is made). The existence of the Trust may be extended to such later date as the Trustee may designate if he determines that an extension is reasonably necessary to fulfil the purpose of the Trust.
Prior to its dissolution, TriMaine operated in the financial services industry. As part of its financial services business, TriMaine had certain real estate assets which were held for sale. All of the real estate assets, which were transferred to the Trust, were undeveloped properties located in the Puget Sound region of Washington State and consisted of three parcels. Historically, it was the intention of TriMaine, as opportunities arose, to monetize the real estate assets to finance the acquisition of interests in operating businesses and to acquire additional real estate assets. TriMaine intended to develop some of its undeveloped real estate properties, and in certain instances participate in joint venture development arrangements as an interim step in the sale or monetization of a property, and to continue its pre-development work on the properties to the extent necessary to protect or enhance their value. During the period ended December 30, 2004, TriMaine sold its Somerset property for cash consideration of $600,000. On February 22, 2005, the Trust sold its remaining property for cash consideration of $275,000.
The other assets of TriMaine, which have also been transferred to the Trust, consist of cash and marketable securities, including 1,870,000 common shares of MFC Bancorp Ltd., registered in the name of the Trust and Inverness Enterprises Ltd., and 1,870,000 ordinary shares of Blue Earth Refineries, Inc. TriMaine had two wholly-owned subsidiaries, TriMaine Holdings Ltd. (a British Columbia company) and Inverness Enterprises Ltd. (a British Columbia company). TriMaine Holdings Ltd. (a British Columbia company) had no assets or liabilities and was dissolved on March 22, 2005. Inverness Enterprises Ltd. is the owner of 1,370,000 of the 1,870,000 common shares of MFC Bancorp Ltd.
The Trust will first net off the amount of $4.3 million due from MFC Bancorp Ltd. against the $6.9 million due to the holder of the preferred stock, New Image Investment Company Limited, a subsidiary of MFC Bancorp Ltd. The remaining cash and other assets other than 1,765,000 common shares of MFC Bancorp Ltd. and 1,870,000 ordinary shares of Blue Earth Refineries, Inc., will be used to pay any outstanding liabilities of the Trust and the remaining balance owed to the holder of the preferred stock.
Depending on the costs and any liabilities which come to the attention of the Trustee, the Trustee intends on distributing the 1,870,000 common shares of MFC Bancorp Ltd. and the 1,870,000 ordinary shares of Blue Earth Refineries, Inc. to the former preferred and common shareholders of TriMaine. The Trustee currently anticipates that 105,000 common shares of MFC Bancorp Ltd. will be distributed to settle the remaining amounts outstanding to the preferred shareholder, leaving 1,765,000 common shares of MFC Bancorp Ltd. and 1,870,000 ordinary shares of Blue Earth Refineries to be distributed to the former holders of TriMaine’s common stock.
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The principal office of the Trust is located at c/o BKM Capital, 255 — 3540 West Sahara Avenue, Las Vegas, Nevada 89102-5816.
At December 31, 2004, neither TriMaine nor the Trust had any full-time employees. The executive officers of TriMaine devoted such time to the business, prior to the dissolution, as was required and the Trustee of the Trust will devote such time as is required to complete the liquidation of TriMaine pursuant to the Liquidating Trust Agreement.
Because the Trust is classified as a liquidating trust, it will be treated as a grantor trust for Federal income tax purposes, and accordingly will not be subject to tax on any income or gain recognized by it. Each Beneficiary will be treated as the owner of his or her pro rata portion of each asset, including cash, received by and held by the Trust and will be required to take into account in computing his own taxable income, his or her pro rata share of each item of income, gain and loss of the Trust.
The Trust will issue an annual information statement to the Beneficiaries with tax information sufficient to enable Beneficiaries to complete their tax returns. Beneficiaries are urged to consult with their own tax advisors as to their own filing requirements and the appropriate tax reporting of this information on their returns.
The Trustee is required to provide to the Beneficiaries and to file with the Securities and Exchange Commission an annual report on Form 10-K and interim reports on Form 8-K whenever, in the opinion of the Trustee, a significant event relating to the Trust’s assets has occurred until the final liquidation is complete.
Generally, there will not be meetings of the Beneficiaries. However, the Trustee may at any time call a meeting of the Beneficiaries to be held at such time and at such place as the Trustee may determine. In addition, holders of a majority of the aggregate Beneficial Interests may require the Trustee to call a meeting of the Beneficiaries. Unless a different percentage is specified in the Liquidating Trust Agreement with respect to a particular matter or applicable law, the approval of Beneficiaries holding at least a majority of the Beneficial Interests is required to take action on any matter voted on by the Beneficiaries. Any Trustee may be removed at any time, with or without cause, by Beneficiaries having at least a majority of the Beneficial Interests.
Much of the information included in this annual report includes or is based upon estimates, projections or other “forward-looking statements”. Such forward-looking statements include any projections or estimates made by us in connection with the liquidation of TriMaine. While these forward-looking statements, and any assumptions upon which they are based, are made in good faith and reflect our current judgment, actual results will almost always vary, sometimes materially, from any estimates, predictions, projections, assumptions, or other future performance suggested herein. The Trustee undertakes no obligation to update forward-looking statements to reflect events or circumstances occurring after the date of such statements.
Such estimates, projections or other “forward-looking statements” involve various risks and uncertainties as outlined below. The Trustee cautions readers of this annual report that important factors in some cases have affected and, in the future, could materially affect actual results and cause actual results to differ materially from the results expressed in any such estimates, projections or other “forward-looking statements”. Readers should also carefully consider the following factors.
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The results of the liquidation could be adversely affected by a variety of factors beyond the Trustee’s control.
The results of the liquidation could be adversely affected by a variety of factors beyond the Trustee’s 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; and future decisions in response to changing conditions.
The Trustee cannot assure the amounts or timing of liquidating distributions.
If values of the Trustee’s assets decline, or if the costs and/or liabilities of the Trust exceed the Trustee’s current estimates, then the Plan to Dissolve may not yield liquidating distributions equal to or greater than the recent market prices of TriMaine’s shares of common stock.
The Beneficiaries could suffer financial losses if our liquidator performs inadequately.
In connection with the Plan to Dissolve, TriMaine engaged the Trustee to serve as our third-party liquidator. If the Trustee performs inadequately, the Beneficiaries could suffer financial harm resulting from unsatisfactory liquidation results, or the expenditure of financial and management resources to remedy any problems, each of which could materially adversely affect the amount and timing of liquidating distributions to the Beneficiaries.
Terms of sales of assets are not subject to approval of the Beneficiaries and may not be satisfactory to all Beneficiaries.
The Trustee has the authority to sell any and all of TriMaine’s assets on such terms as the Trustee determines appropriate. The Beneficiaries will have no opportunity to vote on such matters and will, therefore, have no right to approve or disapprove the terms of such sales. As a result, the terms of sales of assets may not be satisfactory to all Beneficiaries.
The principal office of the Trust is located at c/o BKM Capital, 255 — 3540 West Sahara Avenue, Las Vegas, Nevada 89102-5816. We believe that our existing facilities are adequate for our needs through the end of the year ended December 31, 2005. Should we require additional space at that time, or prior thereto, we believe that such space can be secured on commercially reasonable terms.
TriMaine operated in the financial services industry. As part of its financial services business, TriMaine had certain real estate assets which were held for sale. All of the real estate assets, which were transferred to the Trust, were undeveloped properties located in the Puget Sound region of Washington State and consisted of three parcels. Historically, it was the intention of TriMaine, as opportunities arose, to monetize the real estate assets to finance the acquisition of interests in operating businesses and to acquire additional real estate assets. TriMaine intended to develop some of its undeveloped real estate properties, and in certain instances participate in joint venture development arrangements as an interim step in the sale or monetization of a property, and to continue its pre-development work on the properties to the extent necessary to protect or enhance their value. During the period ended December 30, 2004, TriMaine sold its Somerset property for cash consideration of $600,000. On February 22, 2005, the Trust sold its remaining property for cash consideration of $275,000.
There are no legal proceedings to which the Trust is a party or with respect to which any of its assets is subject.
To our knowledge, TriMaine was not a party to any litigation as at December 30, 2004.
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No matters were submitted to a vote of the Beneficiaries during the period ended December 31, 2004, through the solicitation of proxies or otherwise.
The stockholders of TriMaine approved the Plan to Dissolve at the 2004 Annual and Special Meeting of Stockholders held on December 9, 2004. Proxies were solicited by the management of TriMaine pursuant to Regulation 14A under the Act. The Schedule 14A sent by the Company to its shareholders set out the sole matter to be voted upon at the meeting being the proposal to dissolve the Company. The number of votes cast for this proposal was 12,828,104, the votes cast against this proposal was 73,195, and no votes were withheld.
There is no public market for the sale of the Beneficial Interests of the Trust. The Trustee under the terms of the Liquidating Trust Agreement will not allow for the transfer of such ownership except by will, intestate succession or operation of law. At January 20, 2005, there were 1,481 record holders in the Trust.
Until December 30, 2004, TriMaine’s common stock was quoted on the OTC Bulletin Board under the symbol “TRMH”. The last day of trading of our common stock was December 30, 2004. On February 22, 2005, TriMaine filed a Form 15 with the Securities and Exchange Commission to terminate the registration of its common stock under Section 12(b) of the Securities Exchange Act of 1934 and its obligation to file periodic reports with the Securities and Exchange Commission. The following table sets forth, for the periods indicated, the high and low sales prices for our common stock on the OTC Bulletin Board:
| OTC Bulletin Board (1) | ||
|---|---|---|
| Quarter Ended | High | Low |
| December 31, 2004 | $2.01 | $1.72 |
| September 30, 2004 | $1.55 | $1.25 |
| June 30, 2004 | $1.85 | $1.48 |
| March 31, 2004 | $2.00 | $0.60 |
| December 31, 2003 | $0.55 | $0.35 |
| September 30, 2003 | $0.49 | $0.35 |
| June 30, 2003 | $0.45 | $0.35 |
| March 31, 2003 | $0.35 | $0.35 |
| (1) | These prices were taken from Silicon Investor. Such over-the-counter market quotations reflect inter-dealer prices, without retail mark-up, mark down or commission and may not necessarily represent actual transactions. |
Our common shares were issued in registered form and Intrawest Transfer Co., Inc., of 100 – 1981 East Murray Holladay Road, Salt Lake City, Utah 84117, telephone number 801-272-9294 and facsimile number 801-277-3147, was the registrar and transfer agent for the common stock of the Company.
On December 30, 2004, the shareholders’ list for our common stock showed 1,481 registered stockholders and 15,217,097 shares issued and outstanding. The last trade price for our common stock on December 30, 2004, as reported on the OTC Bulletin Board, was $2.01.
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Dividend Policy
During the period ended December 30, 2004, we did not pay any cash dividends to any holders of our shares of common stock but accrued or paid a dividend of $598,361 to the holders of our preferred stock.
Recent Sales of Unregistered Securities
No securities were sold or issued by us during the quarter or the period ended December 30, 2004 without the registration of the securities under the Securities Act of 1933 in reliance on exemptions from such registration requirements.
Equity Compensation Plan Information
We have not adopted any equity compensation plans.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers
During the period ended December 30, 2004, TriMaine did not purchase any of its shares of common stock.
SELECTED CONSOLIDATED FINANCIAL DATA
The Trust began operations as of December 29, 2004 and the Trust did not have any activities in 2004.
The selected consolidated financial data presented below for the five fiscal years ended December 31 is derived from TriMaine’s audited consolidated financial statements except for the fiscal period ended December 30, 2004 which consolidated financial statements were unaudited. The following selected financial data should be read in conjunction with the Consolidated Financial Statements and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included at Item 7 of this annual report. The statement of operations data and the balance sheet data are derived from our Consolidated Financial Statements prepared in accordance with accounting principles generally accepted in the United States. All amounts in the table are in thousands, except per share amounts.
| Fiscal Year Ended December 31(1)(2) (in thousands) | |||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2004(2) | 2003 | 2002 | 2001 | 2000 | |||||||||||||
| OPERATING DATA | |||||||||||||||||
| Sales of Real Estate | $ | 600 | $ | 2,150 | $ | -- | $ | -- | $ | 8,329 | |||||||
| Other Income | $ | 12,454 | (4) | $ | 20 | $ | 515 | $ | 273 | $ | 575 | ||||||
| General and Administrative Expenses | $ | 539 | $ | 406 | $ | 250 | $ | 1,951 | $ | 476 | |||||||
| Interest expense | $ | 48 | $ | 11 | $ | 15 | $ | 16 | $ | 167 | |||||||
| Income (loss) from continuing operations | $ | 11,419 | $ | 529 | $ | 276 | $ | (1,117 | ) | $ | 1,742 | ||||||
| Net income (loss) | $ | 11,419 | $ | 529 | $ | 276 | $ | (1,117 | ) | $ | 1,742 | ||||||
COMMON SHARE DATA(3) | |||||||||||||||||
| Income (loss) from continuing operations | $ | 0.75 | $ | 0.02 | $ | -- | $ | (0.09 | ) | $ | 0.09 | ||||||
| per common share | |||||||||||||||||
| Net income (loss) per common share | $ | 0.75 | $ | 0.02 | $ | -- | $ | (0.09 | ) | $ | 0.09 | ||||||
| Weighted average common shares | 15,217 | 15,226 | 15,292 | 15,627 | 15,838 | ||||||||||||
| outstanding (in thousands) | |||||||||||||||||
BALANCE SHEET DATA | |||||||||||||||||
| Working Capital | N/A | $ | 5,149 | $ | 5,177 | $ | 5,301 | $ | 7,095 | ||||||||
| Total assets | N/A | $ | 40,975 | $ | 19,647 | $ | 28,747 | $ | 17,671 | ||||||||
| Long-term obligations | N/A | $ | -- | $ | -- | $ | -- | $ | -- | ||||||||
| Total shareholders' equity | N/A | $ | 32,002 | $ | 18,052 | $ | 23,266 | $ | 17,223 | ||||||||
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| (1) | See Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operation. |
| (2) | For 2004, the fiscal period ended December 30, 2004 and the statements are unaudited. |
| (3) | Basic and diluted common share data is the same. |
| (4) | Includes unrealized gain on investment valuation amount $12.5 million. |
Item 7. Management’s Discussions and Analysis of Financial Condition and Results of Operation.
Overview
The following discussion should be read in conjunction with the consolidated financial statements and notes thereto appearing elsewhere in this annual report.
As a result of the adoption of the Plan to Dissolve and its approval by TriMaine’s stockholders, the Trust adopted the liquidation basis of accounting for all periods subsequent to December 29, 2004. In accordance with the liquidation basis of accounting, assets are stated at their estimated net realizable value and liabilities are stated at their estimated settlement amounts, including estimated costs associated with carrying out the liquidation. Actual values realized for assets and settlement of liabilities may differ materially from the amounts estimated. Factors that may cause such variations include, among other factors, the possibility that assets may not be sold on the terms currently provided, and the other risk factors discussed in this annual report.
The Trust
On December 9, 2004, the shareholders of TriMaine approved the Plan to Dissolve. On December 29, 2004, TriMaine transferred all of its assets to, and its remaining liabilities were assumed by, the Trust and TriMaine was dissolved. The last day for trading of TriMaine’s common stock on the OTC Bulletin Board was December 30, 2004. On February 22, 2005, TriMaine filed a Form 15 with the Securities and Exchange Commission terminating the registration of TriMaine’s common stock under section 12(b) of the Securities Exchange Act of 1934 and its obligations to file periodic reports with the Securities and Exchange Commission.
Pursuant to the Plan to Dissolve, on December 29, 2004, TriMaine transferred the following remaining assets and liabilities to the Trust:
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| (in thousands) | |
Cash and cash equivalents |
$ 51 |
| Receivables | 416 |
| Real estate held for sale | 240 |
| Due from affiliates | 4,278 |
| Investments | 22,889 |
| Accounts payable | (40) |
| Accrued liabilities | (119) |
| Preferred stock redemption payable | (6,898) |
| Net assets in liquidation | $ 20,817 |
The Trust was established for the sole purpose of winding up TriMaine’s affairs and the liquidation of its assets. The Trust has sold all of TriMaine’s remaining real estate assets in 2005 and the Trust’s assets currently consist of cash and marketable securities.
The Trust will first net off the amount of $4.3 million due from MFC Bancorp Ltd. against the $6.9 million due to the holder of the preferred stock, New Image Investment Company Limited, a subsidiary of MFC Bancorp Ltd. The remaining cash and other assets other than 1,765,000 common shares of MFC Bancorp Ltd. and 1,870,000 ordinary shares of Blue Earth Refineries, Inc., will be used to pay any outstanding liabilities of the Trust and the remaining balance owed to the holder of the preferred stock.
After the distribution to the preferred shareholder, the Trustee anticipates that there will be 1,765,000 common shares of MFC Bancorp Ltd. and 1,870,000 ordinary shares of Blue Earth Refineries, Inc. available for distribution to the Beneficiaries who previously owned shares of common stock of TriMaine.
Results of Operations for TriMaine for the Fiscal Periods Ended December 30, 2004 and December 31, 2003
Revenues of TriMaine for the period ended December 30, 2004 were $13.1 million, compared to $2.2 million for the year ended December 31, 2003. Revenues for the period ended December 30, 2004 consisted primarily of sales proceeds of real estate of $0.6 million and unrealized gain on investment valuation amount $12.5 million.
Costs and expenses for the period ended December 30, 2004 were $1.6 million, compared to $1.4 million for the year ended December 31, 2003. Costs related to real estate sales for the period ended December 30, 2004 were $0.4 million compared to $0.9 million in 2003. General and administrative expenses increased to $0.5 million for the period ended December 30, 2004 from $0.4 million in the year ended December 2003.
TriMaine had net income of $11.4 million, or $0.75 per common share, for the period ended December 30, 2004 compared to $0.5 million, or $0.02 per common share, during the year ended December 31, 2003.
Results of Operations for the Fiscal Years Ended December 31, 2003 and December 31, 2002
Revenues of TriMaine for the year ended December 31, 2003 were $2.2 million, compared to $0.5 million for the year ended December 31, 2002, and consisted primarily of sales of real estate. In the year ended December 31, 2002, TriMaine did not sell any real estate.
Costs and expenses for the year ended December 31, 2003 were $1.4 million, compared to $0.3 million for the year ended December 31, 2002. The cost related to real estate sales in the year ended December 31, 2003 was $0.9. TriMaine had no costs related to real estate sales in the year ended December 31, 2002. General and administrative expenses increased to $0.4 million in the year ended December 31, 2003 from $0.3 million in the year ended December 31, 2002, primarily due to the management fee charged by MFC Bancorp increased from $0.2 million for the year ended December 31, 2002 to $0.3 million for the year ended December 31, 2003. Interest expense decreased marginally in the year ended December 31, 2003 from the same period of 2002, primarily as a result of decreased indebtedness.
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TriMaine had net income of $0.5 million, or $0.02 per common share, in the year ended December 31, 2003. In the year ended December 31, 2002, TriMaine had a net income of $0.3 million, or nil per common share.
Contractual Obligations and Off-Balance Sheet Arrangements
TriMaine had no long-term debt, capital lease, operating lease, purchase or other long term commitments and liabilities. TriMaine had no commitments for capital expenditures in relation to our undeveloped real estate.
Critical Accounting Policies
The preparation of financial statements in conformity with United States generally accepted accounting principles required the Trust to adopt the liquidation basis of accounting. Under the liquidation basis of accounting, assets are stated at their estimated net realizable values and liabilities, including a reserve for estimated costs during the period of liquidation of $80 at December 31, 2004, are stated at their anticipated settlement amounts. The reserve for estimated costs during the period of liquidation is included with accrued expenses in the statement of net assets in liquidation.
The valuation of investments as of December 31, 2004, is based on estimates as determined by independent appraisals. The valuations of other assets and liabilities under the liquidation basis of accounting are based on the Trustee’s estimates as of December 31, 2004. The actual values realized for assets and settlement of liabilities may differ materially from the amounts estimated.
Investments
The Trust holds 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.
TriMaine was exposed to market risk from changes in foreign currency exchange rates which could have impacted its results of operations and financial condition. TriMaine did 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 market interest rates may increase the fair value of the fixed interest rate financial instrument assets. TriMaine did not have financial instruments subject to interest rate risk in 2004 or 2003.
Foreign Currency Exchange Rate Risk
The reporting currency of TriMaine and the Trust is the United States dollar. The Trust holds certain financial instruments denominated in Canadian dollars. A depreciation of the Canadian dollar against the US dollar will decrease the fair value of financial instrument assets. An appreciation of the Canadian dollar against the US dollar will increase the fair value of financial instrument assets. Financial instruments which may be sensitive to foreign currency exchange rate fluctuations are investments. The following table provides information about 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, 2003, and expected cash flows from these instruments. As of December 31, 2004, there was no foreign currency exchange rate risk.
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| As at December 31, 2003 (in thousands) |
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|---|---|---|---|---|---|---|---|---|
| Expected Future Cash Flow | ||||||||
| Carrying Value | Fair Value | 2004 | 2005 | 2006 | 2007 | 2008 | Thereafter | |
| Investments(1) | $12 | $12 | $0 | $0 | $0 | $0 | $0 | $12 |
| (1) | Investments consists 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. Financial instruments which may be sensitive to fluctuations in equity prices are investments. The following tables provide information about our exposure to fluctuations in equity prices for the carrying amount of financial instruments sensitive to such fluctuations as at December 31, 2004 and 2003, respectively, and expected cash flows from these instruments. As of December 31, 2004, there was no equity price risk as the shares held by the Trust will be distributed to the beneficiaries in kind.
| As at December 31, 2003 (in thousands) |
||||||||
|---|---|---|---|---|---|---|---|---|
| Expected Future Cash Flow | ||||||||
| Carrying Value | Fair Value | 2004 | 2005 | 2006 | 2007 | 2008 | Thereafter | |
| Investments(1) | $34,985 | $34,985 | $0 | $0 | $0 | $0 | $0 | $34,985 |
| (1) | Investments consists of equity securities. |
| Selected 2004 Quarterly Data (in thousands, except per share amounts) |
|||||
|---|---|---|---|---|---|
| Fiscal 2004 | 1st Quarter Fiscal 2004 |
2nd Quarter Fiscal 2004 |
3rd Quarter Fiscal 2004 |
4th Quarter Fiscal 2004 |
Fiscal 2004 |
| Revenues | $ 6 | $ 12 | $ 7 | $13,029(1) | $13,054 |
| Net income (loss) | $(104) | $(99) | $14 | $11,608 | $11,419 |
| Basic and diluted earnings (loss) per share |
$(0.01) | $(0.02) | $0.00 | $ 0.77 | $ 0.75 |
11
| (1) | Includes revaluation of investment. |
| Selected 2003 Quarterly Data (in thousands, except per share amounts) |
|||||
|---|---|---|---|---|---|
| Fiscal 2003 | 1st Quarter Fiscal 2003 |
2nd Quarter Fiscal 2003 |
3rd Quarter Fiscal 2003 |
4th Quarter Fiscal 2003 |
Fiscal 2003 |
| Revenues | $(38) | $44 | $ 8 | $2,156 | $2,170 |
| Net income (loss) | $(133) | $33 | $(9) | $ 638 | $ 529 |
| Basic and diluted earnings (loss) per shares |
$(0.01) | $0.00 | $(0.01) | $ 0.04 | $ 0.02 |
Financial Statements filed as part of this Annual Report on Form 10-K
Our financial statements are stated in United States dollars (US$) and are prepared in accordance with United States generally accepted accounting Principles applied on the liquidation basis of accounting.
The Independent Auditors’ Report dated March 25, 2005.
Statement of Net Assets in Liquidation at December 31, 2004.
Statement of Changes in Net Assets in Liquidation for the period from December 29, 2004 (inception) to December 31, 2004.
Notes to Financial Statements.
12
To the Trustee and
BeneficiariesTriMaine
Holdings, Inc. Liquidating Trust
We have audited the accompanying statement of net assets in liquidation of the TriMaine Holdings, Inc. Liquidating Trust (“the Trust”) as of December 31, 2004, and the related statement of changes in net assets in liquidation for the period from December 29, 2004, to December 31, 2004. These financial statements are the responsibility of the Trust’s management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (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 audit provides a reasonable basis for our opinion.
As described in Note 1 to the financial statements, the Trust was established on December 29, 2004, to liquidate the assets and pay all liabilities of the Trust and, thus, the Trust prepares its financial statements on the liquidation basis of accounting.
In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets in liquidation of the Trust as of December 31, 2004, and the changes in its net assets in liquidation for the period from December 29, 2004, to December 31, 2004, in conformity with U.S. generally accepted accounting principles.
/s/ Peterson Sullivan PLLC
Seattle, Washington
March
25, 2005
13
STATEMENT OF NET ASSETS
IN LIQUIDATION
December 31, 2004
(In Thousands of
Dollars)
| ASSETS | |
Cash |
$ 51 |
| Receivables | 416 |
| Real estate held for sale | 240 |
| Due from a beneficiary | 4,278 |
| Investments | 22,889 |
| Total assets | 27,874 |
LIABILITIES AND NET ASSETS IN LIQUIDATION | |
Accounts payable |
40 |
| Accrued expenses | 119 |
| Preferred stock redemption payable | 6,898 |
| Total liabilities | 7,057 |
| Net assets in liquidation | $20,817 |
See Notes to Financial Statements
14
STATEMENT OF CHANGES IN
NET ASSETS IN LIQUIDATION
For the Period From December 29, 2004 (inception) to December
31, 2004
(In Thousands of
Dollars, Except Per Unit and Unit Amounts)
| Net assets at December 29, 2004 (inception) | $ | -- | |||
Transfer of net assets to the Trust | 20,817 | ||||
Net income (loss) for the period | -- | ||||
| Net assets at December 31, 2004 | $ | 20,817 | |||
| Basic and diluted earnings per unit | $ | -- | |||
| Weighted average number of units outstanding | 15,217,097 | ||||
See Notes to Financial Statements
15
NOTES TO FINANCIAL
STATEMENTS
(In Thousands of
Dollars)
On December 29, 2004, the TriMaine Holdings, Inc. Liquidating Trust (“the Trust”) was established as a trust in the State of Washington. The Trust is the successor to TriMaine Holdings, Inc., a Washington corporation (“the Company”), which operated in the financial services industry. In 2004, the Company’s shareholders approved a plan of liquidation. The plan of liquidation contemplated the orderly sale of all of the Company’s assets for cash or such other form of consideration as may be conveniently distributed to the Company’s stockholders and the payment of (or provision for) the Company’s liabilities and expenses.
The Trust was established for the sole purpose of winding up the Company’s affairs, liquidating its assets, and paying its liabilities with no objective to continue or engage in the conduct of a trade or business or cause any subsidiary to continue or engage in the conduct of a trade or business, except as necessary for the orderly liquidation of the Trust’s assets. All assets of the Company were transferred to, and its remaining liabilities assumed by, the Trust on December 29, 2004, and the Company was dissolved on December 30, 2004. Based on the date the Trust was established and the date assets were transferred to it, there was no net income or loss for the period ended December 31, 2004.
On the date of dissolution, stockholders of the Company (a “Beneficiary”) automatically became the holders of one unit of beneficial interest (a “Unit”) in the Trust for each share of Company common stock then held of record by such stockholders, and all outstanding shares of Company common stock were automatically deemed cancelled. Stockholders of the Company on the record date were not required to take any action to receive their Units. The rights of Beneficiaries in their Units are not represented by any form of certificate or other instrument. The Trustee maintains a record of the name and address of each Beneficiary and such Beneficiary’s aggregate Units in the Trust. Subject to limited exceptions related to transfer by will, intestate succession, or operation of law, the Units are not transferable, nor does a Beneficiary have authority or power to sell or in any other manner dispose of any Units.
Prior to dissolution, the Company was an 83% owned subsidiary of MFC Bancorp Ltd. and its Subsidiaries (“MFC”). Subsequent to the dissolution MFC has an 83% interest in the Trust.
16
In addition, MFC owned all the preferred stock of the Company. The preferred stock of the Company was treated as a liability of the Trust in the amount of $6,898 at December 31, 2004, pursuant to the liquidation rights of the preferred stockholders. The amount due from a beneficiary is due from MFC and will be offset against the preferred stock redemption payable in 2005.
The Trust will terminate upon the earliest of: (1) such time as termination is required by the applicable laws of the State of Washington; (2) the distribution of all of the Trust’s assets in accordance with the terms of the liquidating trust agreement; (3) a majority in interest of the Beneficiaries or the Trustee approves termination; or (4) the expiration of a period of three years from the date assets were first transferred to the Trust (but not before a final liquidation is made). The existence of the Trust may be extended to such later date as the Trustee may designate if the Trustee determines that an extension is reasonably necessary to fulfil the purpose of the Trust.
Based on the Trust’s purpose (to liquidate remaining assets and settle outstanding liabilities), the Trust has adopted the liquidation basis of accounting. Under the liquidation basis of accounting, assets are stated at their estimated net realizable values and liabilities, including a reserve for estimated costs during the period of liquidation of $80 at December 31, 2004, are stated at their anticipated settlement amounts. The reserve for estimated costs during the period of liquidation is included with accrued expenses in the statement of net assets in liquidation.
The valuation of investments as of December 31, 2004, is based on estimates as determined by independent appraisals. The valuations of other assets and liabilities under the liquidation basis of accounting are based on the Trustees’ estimates as of December 31, 2004. The actual values realized for assets and settlement of liabilities may differ materially from the amounts estimated.
Cash includes a checking account held at a bank.
Investments at December 31, 2004, consist of stock in a publicly traded financial services company (MFC) in the amount of $22,440 and stock in a non-public company (Blue Earth Refineries, Inc.) in the amount of $449. Blue Earth Refineries, Inc. is involved in cobalt processing primarily in Uganda. These investments are recorded at their fair value as determined by an appraisal obtained by the Trustee. The Trust holds 1,870,000 shares (approximately 11%) of each company.
17
The real estate held for sale was sold in 2005 at its carrying value.
The Trust will be treated as a grantor trust and, accordingly, will not be subject to federal or state income tax on any income earned or gain recognized by the Trust. Each Beneficiary of the Trust will be treated as the owner of his or her allocable portion of each of the assets received and held by the Trust, and will be required to report on his or her federal and state income tax return his or her allocable share of taxable income, including gains and losses recognized by the Trust. Accordingly, there is no provision for federal or state income taxes in the accompanying financial statements.
Earnings per unit is computed by dividing income available to unit holders by the weighted average number of units outstanding in the period. As there are no dilutive securities outstanding, basic and diluted earnings per unit are the same.
The preparation of financial statements in conformity with accounting principles generally accepted in the United States 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.
Accounting standards becoming effective subsequent to December 31, 2004, are not expected to have an effect on the Trust’s financial statements as the Trust uses the liquidation basis of accounting.
18
Not applicable.
As required by Rule 13a-15 under the Exchange Act, as at December 30, 2004 (being the end of the period covered by this annual report) TriMaine has carried out an evaluation of the effectiveness of the design and operation of its disclosure controls and procedures. This evaluation was carried out with the participation of TriMaine’s pre-dissolution management, including its president and chief executive officer. Based upon that evaluation, TriMaine’s president and chief executive officer concluded that its disclosure controls and procedures were effective. With TriMaine’s dissolution on December 30, 2004, TriMaine’s assets were transferred to the Trust, its sole purpose is to liquidate such assets for the benefit of the Beneficiaries and will design and operate the necessary disclosure controls and procedures.