10-K 1 doc1.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K [ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2001 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to --------- -------- COMMISSION FILE NUMBER 000-26354 TRIMAINE HOLDINGS, INC. (Exact name of Registrant as specified in its charter) WASHINGTON 91-1636980 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 17 DAME STREET, DUBLIN 2, IRELAND (Address of principal executive offices) REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (3531) 679-1688 SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT: NONE SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: COMMON STOCK, $0.01 PAR VALUE (Title of Class) Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ X ] The aggregate market value of the voting stock held by non-affiliates of the Registrant was approximately $769,751 as of March 26, 2002, computed on the basis of the closing price on such date. As of March 26, 2002, there were 15,322,697 shares of the Registrant's Common Stock outstanding. DOCUMENTS INCORPORATED BY REFERENCE Portions of the Registrant's 2001 Proxy Statement to be filed within 120 days of the period ended December 31, 2001 are incorporated by reference into Part III. FORWARD-LOOKING STATEMENTS Statements in this report, to the extent they are not based on historical events, constitute forward-looking statements. Forward-looking statements include, without limitation, statements regarding the outlook for future operations, forecasts of future costs and expenditures, evaluation of market conditions, the outcome of legal proceedings, the adequacy of reserves, or other business plans. Investors are cautioned that forward-looking statements are subject to an inherent risk that actual results may vary materially from those described herein. Factors that may result in such variance, in addition to those accompanying the forward-looking statements, include changes in interest rates, prices and other economic conditions; actions by competitors; natural phenomena; actions by government and regulatory authorities; uncertainties associated with legal proceedings; technological development; future decisions by management in response to changing conditions; and misjudgments in the course of preparing forward-looking statements. 2 TABLE OF CONTENTS ----------------- PAGE ---- PART I ------ ITEM 1. BUSINESS 4 ITEM 2. PROPERTIES 5 ITEM 3. LEGAL PROCEEDINGS 6 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 6 PART II ------- ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS 6 ITEM 6. SELECTED FINANCIAL DATA 7 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 8 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 9 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 11 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE 11 PART III -------- ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT 12 ITEM 11. EXECUTIVE COMPENSATION 12 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT 12 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS 12 PART IV ------- ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K 12 SIGNATURES 25 3 PART I ------ ITEM 1. BUSINESS The Corporation --------------- TriMaine Holdings, Inc. was incorporated in the State of Washington on September 15, 1993 and commenced operations in April 1994. In this document, unless the context otherwise requires, the "Corporation", the "Company" or "TriMaine" refers to TriMaine Holdings, Inc. and its subsidiaries. The Corporation is a subsidiary of MFC Bancorp Ltd. ("MFC"), which owns approximately 82.6% of the Corporation's shares of common stock. A subsidiary of MFC also owns $6 million of preferred shares in the capital stock of the Corporation. Business of the Corporation --------------------------- The Corporation operates in the financial services industry. As part of the financial services industry, the Corporation has certain real estate assets which are held for sale. All of the Corporation's real estate assets are located in the Puget Sound region of the State of Washington, are undeveloped and a substantial portion are in a pre-development state. TriMaine intends, as opportunities arise, to monetize its real estate assets to finance the acquisition of interests in operating businesses. TriMaine may also acquire additional real estate assets. TriMaine intends to develop some of its undeveloped real estate properties, and in certain instances may participate in development joint venture arrangements as an interim step in the sale or monetization of a property, and will continue pre-development work on the properties to the extent necessary to protect or enhance their value. The development of real property in the State of Washington is subject to multiple layers of government regulation, including state law and certain ordinances of the city and county wherein the property is located. Environmental regulations at the federal, state and local levels with regard to wetlands, stormwater retention and discharge, wildlife, tree preservation, slopes and groundwater recharge have greatly increased the cost and uncertainty related to the development of property in the State of Washington and have lengthened the time necessary to receive development permits. Consequently, fewer developers are buying property in the State of Washington and these developers tend to wait until the permitting process is near completion before committing to a purchase. The type and intensity of development of real property in the State of Washington is subject to the comprehensive plan and zoning designation of the property within the city or county in which the property is located. Property development is also affected by sensitive areas, such as wetlands, streams or wildlife habitat, located on the site. Both the local government and the Army Corps of Engineers have jurisdiction over wetland areas. Upon delivery of a development proposal, the appropriate government agency will examine the site and delineate wetland areas. These areas must either be left undisturbed with sufficient buffers for protection or a mitigation plan for the designated areas must be approved. Due to the broad definition of wetlands, it is common for undeveloped property in the western Washington area to have some wetlands designated. The majority of the Corporation's properties have had some wetland areas designated. 4 In 1990, the Washington State legislature passed the Growth Management Act ("GMA") to "guide the development and adoption of comprehensive plans and development regulations" in Washington State. The goal of the comprehensive development plans is to, among other things, reduce the development density in rural areas, encourage affordable housing and a variety of housing densities, maintain and conserve natural resource industries and lands and protect and enhance the environment and the availability of water. Under the GMA, the counties in which the Corporation's properties are located have a several year period in which to develop county-wide growth plans that will designate those areas in which growth will be accommodated over the next 20 years. As a result of the uncertainty which has arisen from the formulation of these growth plans, the permitting process relating to the development of property in these counties has been delayed. It is believed, however, that all of the Corporation's properties are located in areas where additional growth will be permitted. The Corporation intends to use the proceeds from the sale or monetization of its real estate assets to acquire controlling equity interests in operating businesses. In addition, the Corporation may seek to exchange its real estate assets for equity interests in certain other companies. The Corporation will seek to acquire interests in those companies that it believes its expertise in financial restructuring and asset management will add value to the Corporation's investment. In order to accomplish such acquisitions, the Corporation may engage in joint ventures with affiliated companies. In December 1998, the Corporation transferred its 50.9% interest in the shares of common stock of Mymetics Corporation (formerly Ichor Corporation) ("Mymetics") to a wholly-owned subsidiary of MFC. At December 31, 2000, the Corporation had no full-time employees. The executive officers of the Corporation devote such time to the business of the Corporation as is required. ITEM 2. PROPERTIES The Corporation has an office in Dublin, Ireland. The Corporation's undeveloped real estate properties are located in the Puget Sound region of Washington State and consist of six parcels totalling approximately 65 acres which are zoned for various commercial uses including retail, office and business park, and two parcels totalling approximately 32 acres which are zoned for medium to high residential use. The Corporation is seeking to sell these parcels and does not intend to fully develop the majority of them prior to sale. The Corporation typically engages in such preliminary development work as is necessary to maximize the value of the parcels prior to their sale. Gig Harbor Property ------------------- The Corporation owns approximately 47 acres of undeveloped real property which was, in early 1997, annexed to the City of Gig Harbor, Washington, which is located at the west end of the Tacoma Narrows Bridge in Tacoma, Washington. The annexation provides for much higher intensity development than was allowed under its previous jurisdiction (Pierce County) and opens the way for a new major thoroughfare to be built through the middle of the property that connects 5 State Highway 16 and the north entrance of Gig Harbor. Of the total acreage, 29 acres are zoned for medium density (eight units per acre) residential use and 18 acres are zoned for business park/professional office use. The Corporation may develop all or a portion of the land through partnerships, joint ventures or other economic associations with local developers. The Corporation's current involvement is limited to pre-development work, including infrastructure (roads, sewer and water services), preliminary permits, market studies, feasibility studies and related activities. All utilities are available to the property. The City of Gig Harbor has completed work on an extension of a street through the property, which provides access to the site from the City of Gig Harbor and State Highway 16. ITEM 3. LEGAL PROCEEDINGS The Corporation is subject to routine litigation incidental to its business from time to time. The Corporation does not believe that the outcome of such litigation will have a material adverse effect on its business or financial condition. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS Not applicable. PART II ------- ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS (a) Market Information. The Corporation's common stock is quoted on the NASD OTC Bulletin Board under the symbol "TRMH". The following table sets forth the quarterly high and low sales price per share of the Corporation's common stock for the periods indicated:

(b) Shareholders. At March 26, 2002, the Corporation had approximately 1,600 holders of record of its common stock. 6 (c) Dividends. The Corporation has not paid any dividends on its common stock and does not anticipate that it will pay any dividends in the foreseeable future. ITEM 6. SELECTED FINANCIAL DATA The following table reflects selected consolidated financial data for the Corporation for each of its last five fiscal years. Effective December 31, 1998, the Corporation transferred its holdings of shares of common stock of Mymetics. Mymetics' results of operations for the fiscal years ended December 31, 1998 and 1997, respectively, and its assets and liabilities as at December 31, 1997, are included in the financial data presented below. The Corporation commenced operations in April 1994.

--------------- (1) Basic and diluted common share data is the same. 7 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis of the results of operations and financial condition of the Corporation for the years ended December 31, 2001, 2000 and 1999, respectively, should be read in conjunction with the Corporation's audited consolidated financial statements and related notes included elsewhere herein. Certain reclassifications have been made to the prior periods' financial statements to conform to the current period's presentation. Results of Operations for the Year Ended December 31, 2001 Compared to the Year -------------------------------------------------------------------------------- Ended December 31, 2000 -------------------------- Revenues for the year ended December 31, 2001 were $0.3 million, compared to $8.9 million for the year ended December 31, 2000. In the year ended December 31, 2001, the Corporation did not sell any real estate, compared to real estate sales by $8.3 million in the comparative period of 2000. Dividend and other income provided cash of $0.3 million in the year ended December 31, 2001, compared to $0.6 million in the year ended December 31, 2000. Costs and expenses for the year ended December 31, 2001 were $2.0 million, compared to $6.3 million for the year ended December 31, 2000. The Corporation had no costs related to real estate sales in the year ended December 31, 2001, compared to $3.6 million in costs related to real estate sales in the comparative period of 2000. General and administrative expenses increased to $2.0 million in the year ended December 31, 2001 from $0.5 million in the year ended December 31, 2000, primarily as a result of an increase in services related to the evaluation of assets and business opportunities in the current year. Interest expense decreased to $16,000 in the year ended December 31, 2001 from $0.2 million in the same period of 2000, primarily as a result of decreased indebtedness. The Corporation had a net loss of $1.1 million, or $0.09 per common share, in the year ended December 31, 2001. In the year ended December 31, 2000, the Corporation had net income of $1.7 million, or $0.09 per common share. Results of Operations for the Year Ended December 31, 2000 Compared to the Year -------------------------------------------------------------------------------- Ended December 31, 1999 -------------------------- Revenues for the year ended December 31, 2000 were $8.9 million, compared to $0.6 million for the year ended December 31, 1999. In the year ended December 31, 2000, the Corporation sold real estate for $8.3 million, compared to $0.2 million in the comparative period of 1999. Costs and expenses for the year ended December 31, 2000 were $6.3 million, compared to $1.4 million for the year ended December 31, 1999. The cost of real estate sold and related selling costs increased to $3.6 million in the year ended December 31, 2000 from $0.1 million in the comparative period of 1999, primarily as a result of an increase in the sale of real estate. Interest expense decreased to $0.2 million in the year ended December 31, 2000 from $0.9 million in the same period of 1999, primarily as a result of decreased indebtedness. General and administrative expenses 8 increased marginally in the year ended December 31, 2000, compared to the year ended December 31, 1999. The Corporation had net income of $1.7 million, or $0.09 per common share, in the year ended December 31, 2000. In the year ended December 31, 1999, the Corporation had net income of $4.8 million, or $0.42 per common share. Liquidity and Capital Resources ---------------------------------- The Corporation had cash of $5.9 million at December 31, 2001, compared to $2.7 million at December 31, 2000. Net cash provided by operating activities was $3.6 million in the year ended December 31, 2001, compared to $3.5 million in the year ended December 31, 2000. Borrowings from a subsidiary of MFC provided cash of $2.0 million in the year ended December 31, 2001, compared to $44,000 in the comparative period of 2000. A decrease in accounts receivable provided cash of $3.5 million in the year ended December 31, 2001, compared to an increase in accounts receivable using cash of $3.5 million in the same period of 2000. A net increase in real estate held for development and sale used cash of $0.3 million in the year ended December 31, 2001, compared to net sales of real estate held for development and sale providing cash of $2.9 million in the year ended December 31, 2000. Net proceeds from investing activities was nil in the year ended December 31, 2001. Proceeds from the sale of investments provided cash of $3.6 million in the year ended December 31, 2000. Purchases of investments used cash of $4.1 million in the year ended December 31, 2000. Financing activities used cash of $0.4 million in the year ended December 31, 2001, compared to $2.4 million in the year ended December 31, 2000. A share repurchase used cash of $0.1 million in the year ended December 31, 2001. Payment of debt used cash of $2.1 million in the year ended December 31, 2000. The Corporation paid $0.3 million in dividends on its preferred stock in the years ended December 31, 2001 and 2000, respectively. The Corporation has no commitments for capital expenditures in relation to its undeveloped real estate, although it is required to provide funds for pre-development work on certain parcels in order to enhance their marketability and sale value. The Corporation believes that its assets should enable the Corporation to meet its current ongoing liquidity requirements. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The Corporation is exposed to market risks from changes in interest rates, foreign currency exchange rates and equity prices which may affect its results of operations and financial condition. The Corporation does not enter into derivative contracts for its own account to hedge against these risks. 9 Interest Rate Risk -------------------- Fluctuations in interest rates may affect the fair value of financial instruments sensitive to interest rates. An increase in interest rates may decrease the fair value of financial instrument assets and increase the fair value of financial instrument liabilities. A decrease in interest rates may increase the fair value of financial instrument assets and decrease the fair value of financial instrument liabilities. The Corporation's financial instruments which may be sensitive to interest rate fluctuations are investments and debt obligations. The following tables provide information about the Corporation's exposure to interest rate fluctuations for the carrying amount of financial instruments that may be sensitive to such fluctuations as at December 31, 2001 and 2000, respectively, and expected cash flows from these instruments. AS AT DECEMBER 31, 2001 (IN THOUSANDS)

AS AT DECEMBER 31, 2000 (IN THOUSANDS)

--------------- (1) Investments consist of equity securities. Foreign Currency Exchange Rate Risk --------------------------------------- The reporting currency of the Corporation is the U.S. dollar. The Corporation holds certain financial instruments denominated in Canadian dollars. A depreciation of the Canadian dollar against the U.S. dollar will decrease the fair value of financial instrument assets. An appreciation of the Canadian dollar against the U.S. dollar will increase the fair value of financial instrument assets. The Corporation's financial instruments which may be sensitive to foreign currency exchange rate fluctuations are investments. The following tables provide information about the Corporation's exposure to foreign currency exchange rate fluctuations for the carrying amount of financial instruments that may be sensitive to such fluctuations as at December 31, 2001 and 2000, respectively, and expected cash flows from these instruments. AS AT DECEMBER 31, 2001 (IN THOUSANDS)

--------------- (1) Investments consist of equity securities, which are primarily denominated in Canadian dollars. 10 AS AT DECEMBER 31, 2000 (IN THOUSANDS)

-------------- (1) Investments consist of equity securities, which are primarily denominated in Canadian dollars. Equity Price Risk ------------------- Changes in trading prices of equity securities may affect the fair value of equity securities or the fair value of other securities convertible into equity securities. An increase in trading prices will increase the fair value and a decrease in trading prices will decrease the fair value of equity securities or instruments convertible into equity securities. The Corporation's financial instruments which may be sensitive to fluctuations in equity prices are investments. The following tables provide information about the Corporation's exposure to fluctuations in equity prices for the carrying amount of financial instruments sensitive to such fluctuations as at December 31, 2001 and 2000, respectively, and expected cash flows from these instruments. AS AT DECEMBER 31, 2001 (IN THOUSANDS)

--------------- (1) Investments consist of equity securities. AS AT DECEMBER 31, 2000 (IN THOUSANDS)

------------ (1) Investments consist of equity securities. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The consolidated financial statements and supplementary data required with respect to this Item 8, and as identified in Item 14 of this annual report, are included in this annual report commencing on page 14. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE Not applicable. 11 PART III --------- ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT Incorporated by reference from the Corporation's definitive proxy statement to be filed within 120 days of the end of the Corporation's fiscal year. ITEM 11. EXECUTIVE COMPENSATION Incorporated by reference from the Corporation's definitive proxy statement to be filed within 120 days of the end of the Corporation's fiscal year. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT Incorporated by reference from the Corporation's definitive proxy statement to be filed within 120 days of the end of the Corporation's fiscal year. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS Incorporated by reference from the Corporation's definitive proxy statement to be filed within 120 days of the end of the Corporation's fiscal year. 12 PART IV ------- ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K (a) (1) Index to Financial Statements -------------------------------- Independent Auditors' Report Consolidated Balance Sheets Consolidated Statements of Operations Consolidated Statements of Comprehensive Income Consolidated Statements of Changes in Shareholders' Equity Consolidated Statements of Cash Flows Notes to Financial Statements (2) List of Exhibits ------------------ 3.1 Articles of Incorporation.(1) 3.2 Amendment to Articles of Incorporation dated November 5, 1993.(1) 3.3 Amendment to Articles of Incorporation dated April 22, 1994.(1) 3.4 Amendment to Articles of Incorporation dated April 14, 1995.(1) 3.5 Amendment to Articles of Incorporation dated July 10, 1996. Incorporated by reference to the Corporation's Form 8-K dated June 27, 1996. 3.6 Amendment to Articles of Incorporation dated March 23, 2000. Incorporated by reference to the Corporation's Form 8-K dated March 29, 2000. 3.7 Bylaws.(1) 10.1 Debt Settlement Agreement between the Corporation and ICHOR Corporation dated September 30, 1997.(2) 10.2 Debt Settlement Agreement between the Corporation and ICHOR Corporation dated February 20, 1998.(2) 10.3 Purchase Agreement between the Corporation and MFC Merchant Bank S.A. dated January 4, 1999. Incorporated by reference to the Schedule 13D/A with Respect to shares of Ichor dated January 4, 1999. 21 List of subsidiaries of the Registrant. --------------- (1) Incorporated by reference to the Corporation's Registration Statement on Form 10-SB. (2) Incorporated by reference to the Schedule 13D/A with respect to shares of Ichor dated March 13, 1998. (b) Reports on Form 8-k ---------------------- None. 13 PETERSON SULLIVAN P.L.L.C. 601 Union Street Suite 2300 Seattle WA 98101 (206) 382-7777 fax 382-7700 Certified Public Accountants INDEPENDENT AUDITORS' REPORT ---------------------------- To the Board of Directors and Shareholders Trimaine Holdings, Inc. and Subsidiaries We have audited the accompanying consolidated balance sheets of Trimaine Holdings, Inc. and Subsidiaries as of December 31, 2001 and 2000, and the related statements of operations, comprehensive income, changes in shareholders' equity, and cash flows for the years ended December 31, 2001, 2000 and 1999. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Trimaine Holdings, Inc. and Subsidiaries as of December 31, 2001 and 2000, and the results of their operations and their cash flows for the years ended December 31, 2001, 2000 and 1999, in conformity with accounting principles generally accepted in the United States. /s/ Peterson Sullivan P.L.L.C. February 25, 2002 Seattle, Washington 14 TRIMAINE HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS December 31, 2001 and 2000 (In Thousands of Dollars)

The accompanying notes are an integral part of these financial statements. 15 TRIMAINE HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS For the Years Ended December 31, 2001, 2000 and 1999 (In Thousands of Dollars, Except Earnings Per Share)

The accompanying notes are an integral part of these financial statements. 16 TRIMAINE HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME For the Years Ended December 31, 2001, 2000 and 1999 (In Thousands of Dollars)

The accompanying notes are an integral part of these financial statements. 17 TRIMAINE HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY For the Years Ended December 31, 2001, 2000 and 1999 (In Thousands of Dollars)

The accompanying notes are an integral part of these financial statements. 18 TRIMAINE HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS For the Years Ended December 31, 2001, 2000 and 1999 (In Thousands of Dollars)

Cash paid for interest during years ended December 31, 2001, 2000 and 1999, was $16, $175 and $867, respectively. The accompanying notes are an integral part of these financial statements. 19 TRIMAINE HOLDINGS, INC. AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS (In Thousands of Dollars, Except for Per Share Amounts) Note 1. Nature of Operations and Significant Accounting Policies Nature of Operations ---------------------- Trimaine Holdings, Inc. ("the Company") is in the financial services industry. The Company is a subsidiary of MFC Bancorp, Ltd. ("MFC"), a Canadian corporation. Principles of Consolidation ----------------------------- The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated. Cash ---- Cash balances are occasionally in excess of federally insured amounts. Investments ----------- The Company holds certain of its marketable investments as available-for-sale securities which are stated at fair value. Any unrealized holding gains or losses of available-for-sale securities are reported as a separate component of comprehensive income until realized. If a loss in value in available-for-sale securities is considered to be other than temporary, it is recognized in the determination of net income. Cost is based on the specific identification method to determine realized gains or losses. Investments in nonmarketable securities (consisting of preferred stock of MFC at December 31, 2000 and 1999) are stated at the lower of cost or net realizable value. Management periodically reviews the financial status of the issuers of nonmarketable securities. If, based on this review, management determines that future estimated undiscounted cash flows from these investments is less than carrying value, a loss will be recorded. Real Estate Held for Development and Sale ----------------------------------------------- Real estate held for development and sale is stated at cost unless the estimated future undiscounted cash flows expected to result from disposition is less than carrying value, in which case a loss is recognized based on the fair value of similar real estate in the same geographic region. No such losses have been recorded in these consolidated financial statements. The Company's real estate is being actively marketed and is, therefore, classified as a current asset. 20 Note 1. (Continued) --------------------- Environmental Conservation --------------------------- Liabilities for environmental conservation are recorded when it is probable that obligations have been incurred and the amounts can be reasonably estimated. Any potential recoveries of such liabilities are to be recorded when there is an agreement with a reimbursing entity. No such liabilities were recorded in these consolidated financial statements. Taxes on Income ----------------- The Company accounts for income taxes under an asset and liability approach that requires the recognition of deferred tax assets and liabilities for expected future tax consequences of events that have been recognized in the Company's financial statements or tax returns. In estimating future tax consequences, the Company generally considers all expected future events other than enactments of changes in the tax laws or rates. Earnings Per Share -------------------- Basic earnings per share is computed by dividing income available to common shareholders by the weighted average number of common shares outstanding in the period. Diluted earnings per share takes into consideration common shares outstanding (computed under basic earnings per share) and potentially dilutive common shares; however, there were no dilutive securities for 2001, 2000 and 1999. The weighted average number of shares outstanding was 15,626,879, 15,837,808 and 10,892,603 for the years ended December 31, 2001, 2000 and 1999, respectively. The income to compute the amount attributable to common shareholders includes the recognition of preferred stock dividends in arrears of $300 for each of the years ended December 31, 2001, 2000 and 1999. Use of Estimates ------------------ The preparation of financial statements in conformity with United States generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Segment Information -------------------- Management operates the Company as one segment, financial services. Information for management purposes does not require the segmenting of financial services activities. Operating revenues are realized primarily from third party sources in the United States. All long-lived assets are located in the United States. Since there is one segment, no additional segment disclosures are considered necessary. 21 (Note 1. Continued) --------------------- New Accounting Standards -------------------------- Statement of Financial Accounting Standards No. 142, "Goodwill and Other Intangible Assets," is to be applied starting with years beginning after December 15, 2001. This standard addresses how intangible assets, other than those acquired in a business combination, should be accounted for. Goodwill and intangible assets that have indefinite useful lives will no longer be amortized but will be tested annually for impairment. Statement of Financial Accounting Standards No. 143, "Accounting for Asset Retirement Obligations," is effective for years beginning after June 15, 2002. This standard addresses accounting and reporting for obligations associated with the retirement of tangible long-lived assets and associated retirement costs. Statement of Financial Accounting Standards No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets," is effective for years beginning after December 15, 2001. This standard supersedes the previous standard on this issue as well as others which dealt with accounting for discontinued operations and the elimination of an exception to consolidation. Management believes these standards will not affect the Company's consolidated financial statements. Note 2. Investments The Company has investments in available-for-sale securities which have been classified as long-term at December 31, 2001, 2000 and 1999. These securities may be summarized as follows:

22 Note 2. (Continued) At December 31, 2000 and 1999, long-term investments included 82,200 MFC Class A Preferred Shares, Series 1, carried at the original cost of $6,200. No trading market existed for these shares. Based on management's review of the financial status of MFC, fair value was determined to be equal to cost. The Company received $270, $281 and $274 in dividends in 2001, 2000 and 1999, respectively, on the preferred shares. These shares were converted into 1,370,000 common shares of MFC during 2001. Note 3. Preferred Stock The Company's Preferred Shares, Series B are voting and require that dividends be paid annually at 5% in arrears on December 31 (amounting to approximately $300 at December 31, 2001). Should dividends not be paid as required, interest at 8% is to be accrued on the unpaid amount. The Company may redeem these shares at any time at an aggregate price which includes all unpaid dividends, accrued interest and a redemption premium of 10% based on the amount paid for the shares. Upon liquidation, these shares are entitled to receive the same amounts as redemption in priority to the common or other shares. As long as any of the Preferred Shares, Series B remain outstanding, the Company cannot pay dividends on common or other junior shares, redeem less than all of these shares or issue additional preferred stock unless all unpaid dividends including interest have been paid. In any event, no shares may be issued in priority to the Preferred Shares, Series B without the approval of the preferred shareholders. All 60,000 issued and outstanding shares are held by a subsidiary of MFC. Note 4. Income Tax The reconciliation of income tax computed at the U.S. federal statutory rate to the Company's effective tax for years ended December 31 is as follows:

23 Note 4. (Continued) The significant components of the Company's deferred tax asset and liability are as follows:

The Company's net operating loss carryforwards of $223 will expire in the year ending December 31, 2018. Note 5. Transactions With Affiliates The Company paid MFC $541 for investment management services during 2001. The Company received an advance of $1,591 from MFC which is outstanding at December 31, 2001. This amount will be paid in the near term without interest. Management believes that fair value approximates cost based on near term collection. MFC charged the Company a management fee of $150, $150 and $300 during 2001, 2000 and 1999, respectively. The Company acquired 107,952 of its common shares from MFC for $22 in cash. The Company has receivables from affiliates of none and $445 at December 31, 2001 and 2000, respectively. Management estimates that the fair value of the receivables approximates carrying value based on similar transactions in the market. The Company had a deposit with a banking subsidiary of MFC of $2,294 at December 31, 2000. MFC earned a fee of $167 during 2000 for the sale of real estate. 24 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Date: March 28, 2002 TRIMAINE HOLDINGS, INC. By: /s/ Michael J. Smith ---------------------------- Michael J. Smith President, Chief Financial Officer and Director Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated. /s/ Michael J. Smith Date: March 28, 2002 ----------------------------- Michael J. Smith President, Chief Financial Officer and Director /s/ Roy Zanatta Date: March 28, 2002 ----------------------------- Roy Zanatta Director /s/ Young Soo Ko Date: March 28, 2002 ----------------------------- Young Soo Ko Director 25 EXHIBIT INDEX Exhibit Number Description --------------- ----------- 3.1 Articles of Incorporation.(1) 3.2 Amendment to Articles of Incorporation dated November 5, 1993.(1) 3.3 Amendment to Articles of Incorporation dated April 22, 1994.(1) 3.4 Amendment to Articles of Incorporation dated April 14, 1995.(1) 3.5 Amendment to Articles of Incorporation dated July 10, 1996. Incorporated by reference to the Corporation's Form 8-K dated June 27, 1996. 3.6 Amendment to Articles of Incorporation dated March 23, 2000. Incorporated by reference to the Corporation's Form 8-K dated March 29, 2000. 3.7 Bylaws.(1) 10.1 Debt Settlement Agreement between the Corporation and ICHOR Corporation dated September 30, 1997.(2) 10.2 Debt Settlement Agreement between the Corporation and ICHOR Corporation dated February 20, 1998.(2) 10.3 Purchase Agreement between the Corporation and MFC Merchant Bank S.A. dated January 4, 1999. Incorporated by reference to the Schedule 13D/A with respect to shares of Ichor dated January 4, 1999. 21 List of subsidiaries of the Registrant. --------------- (1) Incorporated by reference to the Corporation's Registration Statement on Form 10-SB. (2) Incorporated by reference to the Schedule 13D/A with respect to shares of Ichor dated March 13, 1998. EXHIBIT 21

TRIMAINE HOLDINGS INC 10-K