UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One)
þ Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
for the quarterly period ended March 31, 2006.
o 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: 0-50036 TRICELL, INC. (Exact name of registrant as specified in its charter)
Nevada 88-0504530
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification Number)
6 Howard Place, Stoke-on-Trent, Staffordshire, ST1 4NQ United Kingdom (Address of principal executive offices) (Zip Code) 011 44 8707 53 2360 (Registrant’s telephone number, including area code) Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act (Check One): Large accelerated filer o Accelerated Filer o Non-accelerated filer: þ Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ The number of shares of common stock outstanding as of May 11, 2006 was 101,045,877.
Item 1. Financial Statements F-1 Item 2. Management’s Discussion And Analysis of Financial Condition and Results of Operations 2 Item 3. Quantitative and Qualitative Disclosures About Market Risk 6 Item 4. Controls and Procedures 6
PART II — OTHER INFORMATION 7
Item 1. Legal Proceedings 7 Item 6. Exhibits and Reports on Form 8-K 7
INDEX TO EXHIBITS 9 List of Subsidiaries Certification of CEO under Section 302 Certification of CFO under Section 302 Certification of CEO Pursuant to 18 U.S.C. Section 1350 Certification of CFO Pursuant to 18 U.S.C. Section 1350
December 31, March 31, 2006 2005 (Unaudited) (Audited)
ASSETS CURRENT ASSETS Cash and cash equivalents $ 41,912 $ 266,780 VAT receivable, net 5,740,514 1,783,320 Receivable from shareholders — 135,784 Accounts receivable 139,974,861 50,815,920 Prepaid expenses and other current assets 106,126 329,276
Total current assets 145,863,413 53,331,080
Machinery and equipment, net 103,739 137,159
Intangible assets, net of $38,467 and 53,958 58,579 $33,846, respectively
Goodwill 70,915 70,915
TOTAL ASSETS $ 146,092,025 $ 53,597,733
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
CURRENT LIABILITIES Income taxes payable $ 798,065 $ 2,675,072 Accounts payable 139,706,024 51,447,603 Payable to shareholders 697,428 69,173 Accrued expenses and other current liabilities 2,888,206 2,717,019 Deferred tax liability 299,454 327,131
Total current liabilities 144,389,177 57,235,998
STOCKHOLDERS’ EQUITY (DEFICIT) Preferred stock, $0.001 par value, 100,000,000 shares authorized, none issued and outstanding — — Common stock, $0.001 par value, 500,000,000 shares authorized, 101,030,020 and 99,030,020 shares issued and outstanding during 2006 and 2005, respectively 101,030 99,030 Additional paid-in capital 1,018,236 740,980 Retained earnings (accumulated deficit) 240,642 (4,766,367 ) Accumulated other comprehensive income 561,897 640,264 Deferred compensation (218,957 ) (352,172 )
Total stockholders’ equity (deficit) 1,702,848 (3,638,265 )
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) $ 146,092,025 $ 53,597,733
See accompanying notes to consolidated financial statements. F-1
TRICELL INC AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS THREE MONTHS ENDED MARCH 31, 2006 AND 2005 (Unaudited)
2006 2005
SALES $ 383,537,073 $ 56,266,926
COST OF SALES 377,709,316 55,488,722
GROSS PROFIT 5,827,757 778,204
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 3,756,364 560,161
INCOME FROM OPERATIONS 2,071,393 218,043
OTHER INCOME (EXPENSE) Interest expense and other financing costs (667 ) (248,524 ) Other expense (7,007 ) — Gain on net liabilities written off from liquidated subsidiaries 3,620,523 — Interest income 1,357 286
Total Other Income (Expense) 3,614,205 (248,238 )
INCOME (LOSS) BEFORE INCOME TAXES 5,685,598 (30,195 )
INCOME TAX BENEFIT (EXPENSE) 678,589 56,913
NET INCOME (LOSS) $ 5,007,009 $ (87,108 )
EARNINGS (LOSS) PER SHARE — BASIC AND DILUTED $ 0.05 $ —
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING — BASIC AND DILUTED 100,896,687 93,726,031
See accompanying notes to consolidated financial statements. F-2
TRICELL INC AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS THREE MONTHS ENDED MARCH 31, 2006 AND 2005 (Unaudited)
2006 2005
CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) $ 5,007,009 $ (87,108 ) Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 20,638 7,189 Amortization of deferred compensation 133,215 157,504 Shares issued for services 187,000 — (Gain)/loss on net liabilities written off from liquidated subsidiaries (3,620,524 ) Changes in operating assets and liabilities: Inventory — (1,488,027 ) VAT receivable (3,996,923 ) (155,076 ) Accounts receivable (89,307,408 ) (20,469,671 ) Prepaid and other current assets 151,324 — Other receivables (payables), net 764,039 (796,761 ) Accounts payable and accrued expenses 89,697,978 22,057,121 Other Current Liabilities — (22,352 ) Income taxes payable 720,426 56,912
Net Cash Provided By (Used In) Operating Activities (243,226 ) (740,269 )
CASH FLOWS FROM INVESTING ACTIVITIES Purchase of machinery and equipment (2,538 ) — Loans to third parties — (166,555 )
Net Cash Provided by (Used In) Investing Activities (2,538 ) (166,555 )
CASH FLOWS FROM FINANCING ACTIVITIES Net increase in line of credit — 1,230,431 Borrowing from (repayment to) third parties — 56,759
Net Cash Provided by (Used In) Financing Activities — 1,287,190
NET INCREASE (DECREASE) IN CASH (245,764 ) 380,366
EFFECT OF EXCHANGE RATE ON CASH 20,896 101,494
CASH, BEGINNING OF PERIOD 266,780 6
CASH, END OF PERIOD $ 41,912 $ 481,866
SUPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION: Interest paid during the period $ — $ —
Income taxes paid during the period $ — $ —
See accompanying notes to consolidated financial statements. F-3
NOTE 1 — NATURE OF BUSINESS AND CAPITALIZATION Tricell, Inc. and subsidiaries (Tricell UK Limited, Tricell Limited, Tricell Distribution Limited, Tricell Global Limited (formally Tricell Properties Limited), Ace Telecom Limited and Ace Telecom Trading Limited), collectively referred to as the “Company”. The Company is a worldwide distributor of mobile telephones and other mobile handset accessories. The Company’s corporate offices are located in Stock-On-Trent, United Kingdom. NOTE 2 — BASIS OF PRESENTATION The accompanying unaudited consolidated financial statements were prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q of Regulation S-X. They do not include all information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. However, except as disclosed herein, there has been no material change in information disclosed in the notes to the consolidated financial statements for the year ended December 31, 2005 included in the Company’s Form 10-K filed with the Securities and Exchange Commission. The interim unaudited consolidated financial statements should be read in conjunction with those consolidated financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation, consisting solely of normal recurring adjustments, were made. Operating results for the three months ended March 31, 2006 are not necessarily indicative of the results that may be expected for the year ended December 31, 2006. PRINCIPLES OF CONSOLIDATION The consolidated interim financial statements include the accounts of Tricell, Inc. and its wholly-owned subsidiaries. All significant intercompany transactions and balances have been eliminated in consolidation. NOTE 3 — STOCK OPTIONS The Company adopted Statement of Financial Accounting Standards (“SFAS”) No. 123R, Share-Based Payment , as of January 1, 2006, using the modified prospective application method. This statement requires the recognition of compensation expense when an entity obtains employee services in exchange for stock-based payment transactions. Prior to January 1, 2006, the Company accounted for stock options granted to directors and employees using the intrinsic value method prescribed by Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees , (APB No. 25”) and related interpretations. APB No. 25 required compensation expense be recognized for grants of stock options when the quoted market price of the Company’s common stock on the date the options were granted exceeds an option’s exercise price. The Company did not grant any stock options with an exercise price that was less than the fair market value of the stock at the date of grant during the F-4
period ended March 31, 2005. Accordingly, no compensation cost was recognized in that period in 2005 for its employee stock options in the accompanying financial statements. The Company had adopted the disclosure provisions of Statement of Financial Accounting Standard (”SFAS”) No. 123, Accounting for Stock-Based Compensation , (“SFAS” 123”) and SFAS No. 148, Accounting for Stock-Based Compensation – Transition and Disclosure – an Amendment of FASB Statement No . 123, which require the Company to provide pro forma information regarding net income and net income per share as if compensation cost for the Company’s stock options had been determined under the fair value method prescribed by SFAS No. 123. The Company had not granted any stock options prior to March 31, 2005, and hence there was no pro forma stock compensation expense for the three months ended March 31, 2005. The Company recorded $64,579, net of $27,677 related income tax, as stock compensation expense included in the statement of operations in selling, general, and administrative expense in the three months ended March 31, 2006, related to options outstanding at December 31, 2005. No options were granted in the three months ended March 31, 2006. NOTE 4 — RELATED PARTY TRANSACTIONS As part of the acquisition of ACE there were amounts owed to the Company by their four shareholders of $275,704, these amounts have been repaid in part during 2005 and in full in 2006. As of March 31, 2006 there is a balance payable to the directors/shareholders of $697,428. NOTE 5 — COMMON STOCK ISSUED On January 19, 2006, the board of the directors of the Company approved issuance of 500,000 shares of common stock to each of the four executives of the Company for past services. Accordingly, the Company recorded expense of $187,000 to selling, general, and administrative expense. NOTE 6 — COMPREHENSIVE INCOME (LOSS) Comprehensive income (loss) includes net income (loss) and foreign currency translation adjustments, which are reported separately on the consolidated statements of stockholders’ equity in the Company’s Form 10-K.
Three Months Ended March 31, 2006 2005 Net income (loss) $ 5,007,009 $ (87,108 ) Foreign currency translation adjustment, net of tax (78,368 ) 72,163
Comprehensive income (loss) $ 4,928,641 $ (14,945 )
NOTE 7 — CONCENTRATIONS As of March 31, 2006, the Company had three customers that accounted for approximately 46%, 16%, and 11% of the Company’s accounts receivable balance. As of December 31, 2005, the Company had four customers that accounted for approximately 40%, 22%, 22%, and 12% of the Company’s accounts receivable balance. Net sales to customers in excess of 10% of net sales approximated the following during the three months ended March 31, 2006 and 2005:
Customer 2006 2005 A 21 % 77 % B 14 % —
Net purchases from vendors in excess of 10% of total purchases approximated the following during the three months ended March 31, 2006 and 2005:
Vendor 2006 2005 A 20 % 55 % B 18 % 17 % C 18 % 11 %
Revenues from the United Kingdom and other countries were as follows during the three months ended March 31, 2006 and 2005:
Three Months Ended March 31, 2006 2005 UK $ 210,055,669 $ 53,438,722 Portugal 63,228,212 2,098,259 Netherlands 55,866,559 — Luxemburg 25,822,610 — Spain 11,547,603 — Cyprus 17,016,420 — United States — 729,945
NOTE 8 — BANKRUPCTY PROCEEDINGS On January 28, 2006, the Company was notified that two of the Company’s wholly owned subsidiaries, Tricell International Limited (“Tricell International”) and Tricell (UK) Limited (“Tricell UK”), were moved from administration, a United Kingdom equivalent of Chapter 11 reorganization, to creditors’ voluntary liquidation, a United Kingdom equivalent of Chapter 7 liquidation. Neither Tricell nor other subsidiaries have provided any guarantees or security interests to the creditors of either Tricell International or Tricell UK. As a result of this liquidation, as of January 27, 2006, the assets and liabilities of Tricell UK and Tricell International were removed from the Company’s consolidated financial statements, resulting in a gain on net liabilities written off from liquidated subsidiaries of approximately $3,621,000, as reflected in the consolidated statements of operations. F-7
ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations Forward-looking Information This information statement contains forward-looking statements. For this purpose, any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. These statements relate to future events or to our future financial performance. In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential” or “continue” or the negative of such terms or other comparable terminology. These statements are only predictions. Actual events or results may differ materially. There are a number of factors that could cause our actual results to differ materially from those indicated by such forward-looking statements. Although the Company believes that the expectations reflected in the forward-looking statements are reasonable, it cannot guarantee future results, levels of activity, performance, or achievements. Moreover, it does not assume responsibility for the accuracy and completeness of such forward-looking statements. The Company is under no duty to update any of the forward-looking statements after the date of this information statement to conform such statements to actual results. The foregoing management’s discussion and analysis should be read in conjunction with the Company’s financial statements and the notes herein. Overview Our profitability increased significantly during the quarter ended March 31, 2006, as we focused our trading operations into improved gross profit margins (without reducing gross revenues). We have achieved this by retaining and reinvesting the working capital generated from our profitable trading operations during 2005 and continuing in early 2006. We anticipate that our current operations will maintain this level of revenue and profitability throughout the remainder of 2006. Our primary area of operations is the wireless sector, where we will continue our wholesale international distribution of mobile handsets and electronic equipment. We are continuing to see market growth and an increased demand for our services, in addition to the expansion of our products into new markets, which we plan to include the United States. These factors are expected to be complimented by developing improved relationships with the wireless manufacturers and the expansion of our integrated logistics services. 2
Proposed Acquisition of N2J Limited We are in negotiations to acquire N2J Limited, a United Kingdom limited company, pursuant to the terms of a Letter of Intent (LOI) dated April 14, 2006. The LOI is subject to the execution of a definitive agreement, and thereafter to the approval of our shareholders. In the event we acquire N2J, we will have a broader platform of markets to sell our products. We believe N2J’s ability to liberally conduct trading from the United Kingdom will provide synergies to both Ace and Tricell as their network of purchasers and suppliers will now only be enhanced. We believe that the acquisition will significantly accelerate future profitability. We intend to seek the approval of our shareholders to acquire N2J at our 2006 annual meeting. According to the terms of the LOI, we would acquire 100% of N2J from the in exchange for a total of 210 million shares of our common stock. However, of the total 210 million shares to be issued the acquisition specifies that Tricell will have the right to purchase 120 million shares over a twelve month period at a fixed price of $0.11 per share. Tricell will only be entitled to repurchase a maximum of 10 million shares per month, and may repurchase less shares in the event N2J’s operating profit is not at least $1.5 million per month. The purchase of these shares would be financed through the operating profits of N2J. The remaining 90 million shares issuable to the N2J Shareholders would be subject to a four year vesting schedule. The remaining 90 million Shares (“non-Put Shares”) will vest in four equal annual installments, beginning on January 1, 2007 and ending on January 1, 2010. The non-Put Shares will only vest if the N2J Shareholders remain employed by Tricell at the time of vesting. A performance guarantee will require that N2J earn $18 million in operating profit within twelve months of acquisition, or otherwise forfeit a number of the 210 million shares equal to any proportionate shortfall between the actual profits and the target of $18 million. Tricell and N2J are currently negotiating the final terms of a definitive acquisition agreement, and conducting due diligence in anticipation of the acquisition. Tricell anticipates submitting the N2J acquisition to a vote of security holders at its 2006 annual meeting, which is expected to be held within the next few months. Future Sales Strategy To deliver our strategy we will: Continue to build our relationships with wireless manufacturers, broadening our portfolio with these manufacturers and expanding the number of customer to whom we supply; Expand the geographic coverage of our operations in Eastern Europe, Asia and North America; and Develop and expand our service offering to deliver integrated logistic services to the handset manufacturers and network operators, enabling them to more effectively address their markets, including the distribution, marketing and selling of airtime services. 3
The size and relative lack of saturation of this market are the primary reasons why we anticipate trying to gain further entry in the United States market. Results of Operations
The improvements in revenue and gross profit resulted when our 2006 trading operations were expanded relative to our trading operations conducted in the quarter ended March 31, 2005. Further enhancing our results for the quarter ended March 31, 2006 as compared to the same period in 2005 was focus on improved gross profit margins as compared to our 2005 operations due to our ongoing efforts to reduce our cost of sales and economies of scale.
Qtr Ended Qtr Ended Percent March 31, 2006 March 31, 2005 Increase Increase Selling, General and Administrative Expenses $ 3,756,364 $ 560,161 $ 3,196,203 571 % Income from Operations $ 2,071,393 $ 218,043 $ 1,853,350 850 %
Although our selling, general and administrative (SGA) expenses increased, the relative increase for the first quarter of 2006 when compared with the same period of 2005 was 571%, which is less than the 582% increase in our total revenue for the first quarter of 2006 compared to 2005. This 571% increase is related to our increase in trading operations and increased revenue which requires that our administrative expenses increase. However, the lesser increase of SGA expense of 571% when compared to our revenue increase of 582% is the result of our efforts to reduce costs, and to streamline our operations. The significant improvement of 850% in income from operations is the result of our increased revenues, relatively decreased cost of sales, and our relatively lower selling, general and administrative expenses.
Qtr Ended Qtr Ended Percent March 31, 2006 March 31, 2005 Increase Increase Income from Operations $ 2,071,393 $ 218,043 $ 1,853,350 850 % Other Income (Expense) $ 3,614,205 $ (248,238 ) $ 3,862,443 1556 % Income Tax Expense $ 678,589 $ 56,913 $ 621,676 1092 % Net Income (loss) $ 5,007,009 $ (87,108 ) $ 5,094,117 5848 %
The increase in other income is almost entirely due to our write off of $3,620,523 of net liabilities when two of our subsidiaries were liquidated in January 2006. This other income added significantly to our already increased income from operations, resulting in net income of $5,007,009 for the quarter ended March 31, 2006, as compared to net loss of $87,108 for the same quarter year ended 2005. Tricell’s increased profit is also the result of both our expandable operations, as well as our reduced cost of capital. For all of the first quarter of 2006, Tricell resumed internally financing its trading activities with cash flow from operations, whereas an external line of credit was used to finance operations for most of 2005. 4
Liquidity and Capital Resources As of March 31, 2006, our cash and cash equivalents were $41,912, as compared to $266,780 as of March 31, 2005. The decrease is primarily due to our discontinuation of the Telco loan and subsequent trading with income from operations. Cash used in operating activities for the quarter ended March 31, 2006 was $243,226 as compared to cash used in operating activities for the same period of 2005 of $740,269. The improvement is mainly attributable to net income for the quarter ended March 31, 2006. Cash used in investing activity decreased to $2,538 for the quarter ended March 31, 2006 as compared to cash used in investing activity of $166,555 for the same period in 2005. This increase is primarily the result of a decrease in loans to third parties, from $166,555 for the quarter ended March 31, 2005 to $0 for the same period in 2006. Cash provided by financing activities for the quarter ended March 31, 2006 was $0, as compared to cash provided by financing activities of $1,287,190 for the same period in 2005. The decrease in cash provided by financing activities reflects the decrease in borrowing from line of credit, from $1,230,431 in for the quarter ended March 31, 2005 to $0 for the same period in 2006 and a decrease in borrowing from third parties, from $56,759 in the quarter ended March 31, 2005 to $0 for the same period in 2006. We believe we have sufficient cash to satisfy our operating requirements for twelve months. We have the ability to restrict our expenditures to the extent cash is not available related to working capital for our operations. If the cash reserves are not enough to satisfy our operating needs and we are unable to generate revenues, we will seek bank loans on favorable terms and/or sell additional shares of our equity securities to secure the cash required to conduct our business operations for the next twelve (12) months. Contractual Obligations Obligations under non-cancelable agreements at December 31, 2005 were as follows:
Payments Due by Period More Less than 3-5 Than Total One Year 1-3 Years Years 5 Years Long-Term Debt Obligations $ — $ — $ — $ — $ — Capital Lease Obligations — — — — — Operating Lease Obligations 515,640 51,564 103,128 103,128 257,820 Purchase Obligations — — — — — Other Long-Term Liabilities Reflected on the Registrant’s Balance Sheet Under GAAP — — — — —
Off-Balance Sheet Arrangements We do not participate in transactions that generate relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structure finance or special purpose entities (“SPEs”), which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes as part of our ongoing business. As of March 31, 2006, we were not involved in any unconsolidated SPE transactions. ITEM 3. Quantitative and Qualitative Disclosure about Market Risk We have never owned or traded market risk sensitive instruments, or equivalent instruments from which future cash flows can be realized. Our major market risk is changes in foreign currency exchange rates relative to the British Pound, which could impact our results of operations and financial condition. Foreign exchange risk arises from our exposure to fluctuations in foreign currency exchange rates because our reporting currency is the United States dollar. Management seeks to minimize the exposure to foreign currency fluctuations through natural internal offsets to the fullest extent possible. Specifically, we attempt to affect every one of our sales and purchase transactions effected in British Pounds to eliminate currency fluctuations entirely. We further attempt to minimize currency fluctuation risk by effecting purchases of equipment and subsequent resale of such equipment as expeditiously as possible and immediately thereafter convert foreign funds to British Pounds as to minimize the amount of time we are exposed to currency fluctuation. As of March 31, 2006, we had not engaged in any currency arbitrage or hedging activities, although we may in the future. Our debt is not subject to one measure of interest, therefore, the debt is somewhat diversified against interest rate increases. ITEM 4. Controls and Procedures We carried out an evaluation, under the supervision and with the participation of our management, including our chief executive officer and chief financial officer, of the effectiveness of our disclosure controls and procedures as defined in Rule 13a-15(e) of the Exchange Act, as of the end of the period covered by this quarterly report. Based upon that evaluation, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this report to provide reasonable assurance that information required to be disclosed by the Company in the reports that the Company files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. There were no changes in our internal control over financial reporting that occurred during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. 6
PART II — OTHER INFORMATION ITEM 1. Legal Proceedings The Company is not a party to any legal proceedings and is unaware of any pending or threatened legal proceedings. ITEM 6. Exhibits and Reports on Form 8-K (a) Exhibits. Exhibits required to be attached by Item 601 of Regulation S-K are listed in the Index to Exhibits beginning on page 15 of this Form 10-Q, which is incorporated herein by reference. 7
SIGNATURES In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized this 15th day of May, 2006.
TRICELL, INC.
/s/ Neil Pursell By: Neil Pursell, Chief Financial Officer
EXHIBIT NO. DESCRIPTION 3(i) Articles of Incorporation of the Company. (Incorporated by reference from the Company’s Form 10-SB12G, file number 000-50036, filed on October 11, 2002.)
3(ii) Bylaws of the Company. (Incorporated by reference from the Company’s Form 10-SB12G, file number 000-50036, filed on October 11, 2002.)
10.1 Loan Agreement, dated February 14, 2005, by and between Tricell Distribution Ltd. and Telco Invest Limited (filed as Exhibit 10 to the Company’s Current Report on Form 10-K filed on June 10, 2005, and incorporated herein by reference).
10.2 Employment Agreement, dated January 26, 2006, by and between the Company and Neil Pursell (filed as Exhibit 10.2 to the Company’s Annual Report on Form 10-K filed on April 17, 2006, and incorporated herein by reference)
10.3 Employment Agreement, dated January 26, 2006, by and between the Company and James Reed (filed as Exhibit 10.3 to the Company’s Annual Report on Form 10-K filed on April 17, 2006, and incorporated herein by reference)
10.4 Employment Agreement, dated January 26, 2006, by and between the Company and Adrian John Sumnall (filed as Exhibit 10.4 to the Company’s Annual Report on Form 10-K filed on April 17, 2006, and incorporated herein by reference)
10.5 Employment Agreement, dated January 26, 2006, by and between the Company and Neil Proctor (filed as Exhibit 10.5 to the Company’s Annual Report on Form 10-K filed on April 17, 2006, and incorporated herein by reference)
10.6 Sale Agreement, dated June 30, 2005, by and between the Company and James Reed, Neil Pursell, John Sumnall, and Neil Proctor (filed as Exhibit 10 to the Company’s Current Report on Form 8-K filed on July 7, 2005, and incorporated herein by reference).
10.7 Letter of Intent dated April 14, 2006 executed by and between the Company and the owners of N2J Limited (filed as Exhibit 10.7 to the Company’s Annual Report on Form 10-K filed on April 17, 2006, and incorporated herein by reference)
21 List of Subsidiaries
31(i) Certification of Chief Executive Officer of Tricell, Inc. under Section 302 of the Sarbanes-Oxley Act of 2002.
31(ii) Certification of Chief Financial Officer of Tricell, Inc. under Section 302 of the Sarbanes-Oxley Act of 2002.
32(i) Certification of Chief Executive Officer of Tricell, Inc. Pursuant to 18 U.S.C. §1350
32(ii) Certification of Chief Financial Officer of Tricell, Inc. Pursuant to 18 U.S.C. §1350
9
EXHIBIT 21 List of Subsidiaries 1. Tricell Distribution Limited, a United Kingdom limited company.
2. Tricell Global Limited, a United Kingdom limited company.
3. Ace Telecom Limited, a United Kingdom limited company.
4. Ace Telecom Trading Limited, a United Kingdom limited company.
EXHIBIT 31(i) CERTIFICATION I, Andre Salt, Chief Executive Officer of Tricell, Inc., certify that: 1. I have reviewed this report on Form 10-Q for the quarter ended March 31, 2006 of Tricell, Inc.; 2. Based on my knowledge, this 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 report; 3. Based on my knowledge, the financial statements, and other financial information included in this 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 report; 4. The registrant’s other certifying officer(s) and I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: (a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to myself by others within those entities, particularly during the period in which this report is being prepared; (b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designated under my supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report my conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (d) disclosed in this report any change in the registrant’s internal controls over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially effect, the registrant’s internal controls over financial reporting; and 5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): (a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and (b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. Date: May 15, 2006
/s/ Andre Salt
Andre Salt Chief Executive Officer
EXHIBIT 31(ii) CERTIFICATION I, Neil Pursell, Chief Financial Officer of Tricell, Inc., certify that: 1. I have reviewed this report on Form 10-Q for the quarter ended March 31, 2006 of Tricell, Inc.; 2. Based on my knowledge, this 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 report; 3. Based on my knowledge, the financial statements, and other financial information included in this 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 report; 4. The registrant’s other certifying officer(s) and I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: (a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to myself by others within those entities, particularly during the period in which this report is being prepared; (b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designated under my supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report my conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (d) disclosed in this report any change in the registrant’s internal controls over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially effect, the registrant’s internal controls over financial reporting; and 5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): (a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and (b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. Date: May 15, 2006
/s/ Neil Pursell
Neil Pursell Chief Financial Officer
EXHIBIT 32(i) CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 Pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United States Code), the undersigned officer of Tricell, Inc. (the “Company”), does hereby certify, to such officer’s knowledge, that: (a) the report on Form 10-Q for the period ended March 31, 2006 (the “Form 10-Q”) of the Company fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (b) the information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company. Dated: May 15, 2006
/s/ Andre Salt
Andre Salt Chief Executive Officer
EXHIBIT 32(ii) CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 Pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United States Code), the undersigned officer of Tricell, Inc. (the “Company”), does hereby certify, to such officer’s knowledge, that: (a) the report on Form 10-Q for the period ended March 31, 2006 (the “Form 10-Q”) of the Company fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (b) the information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company. Dated: May 15, 2006
/s/ Neil Pursell Neil Pursell Chief Financial Officer
-------------------- The difference between genius and stupidity is that genius has its limits Posts: 10204 | From: NYC | Registered: Mar 2006
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The number of shares of common stock outstanding as of May 11, 2006 was 101,045,877.
-------------------- *I'm not a financial expert or advisor, everything stated is my opinion* Posts: 1680 | From: NC | Registered: Jan 2006
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I just put an order in..to be in line early. Looks like a good one to bet on. Might at least double in the short term.
-------------------- Making it a little at a time....Now is the time to determine if you are a man or a mouse. Posts: 1543 | From: Ogilvie, MN, US | Registered: Apr 2004
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For more information, please visit Tricell's website at http://www.tricellinc.comPosts: 3255 | From: Los Angeles California | Registered: Jan 2006
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How do they only have $5 million in profit when they made $385m in revenue?
-------------------- *I'm not a financial expert or advisor, everything stated is my opinion* Posts: 1680 | From: NC | Registered: Jan 2006
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-------------------- Making it a little at a time....Now is the time to determine if you are a man or a mouse. Posts: 1543 | From: Ogilvie, MN, US | Registered: Apr 2004
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Tricell is engaged in mobile phone operations in the secondary market, or after market, which involves transactions other than those directly between the mobile phone manufacturer and the retailer. We attempt to obtain our products at the best prices available and distribute these products to markets around the world at varying levels of maturity.
Posts: 287 | Registered: Mar 2005
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Don't place orders yet...that causes the gap up, which is bad for those of us looking to get in
Posts: 781 | From: NE PA | Registered: Jan 2006
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Do you really think that whether or not you get in early will make any difference?
-------------------- Making it a little at a time....Now is the time to determine if you are a man or a mouse. Posts: 1543 | From: Ogilvie, MN, US | Registered: Apr 2004
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quote:Originally posted by renrob05: Doesn't really matter what price you get...wait 1 month from now it will at 1 dollar...if not sooner!
Agree with you this is a mover should be interesting to see where it opens at
-------------------- The difference between genius and stupidity is that genius has its limits Posts: 10204 | From: NYC | Registered: Mar 2006
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I think this sums up the profit pretty well. I still think this is undervalued but I would point out 3.6 mil of the profit is due to a write-off so really TCLL is earing .02 per share per quarter x 4 = .08. At a multiple of 10 that puts it at 80 cents pps. I'll try to get back in tomorrow am.
"The increase in other income is almost entirely due to our write off of $3,620,523 of net liabilities when two of our subsidiaries were liquidated in January 2006. This other income added significantly to our already increased income from operations, resulting in net income of $5,007,009 for the quarter ended March 31, 2006, as compared to net loss of $87,108 for the same quarter year ended 2005. Tricell’s increased profit is also the result of both our expandable operations, as well as our reduced cost of capital. For all of the first quarter of 2006, Tricell resumed internally financing its trading activities with cash flow from operations, whereas an external line of credit was used to finance operations for most of 2005"
Posts: 287 | Registered: Mar 2005
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I guess we all play differently...price does matter to me...I won't be holding a month from now
Posts: 781 | From: NE PA | Registered: Jan 2006
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18 million rev looks weak compared to the 380m this quarter lol
But any profit is good profit!
-------------------- *I'm not a financial expert or advisor, everything stated is my opinion* Posts: 1680 | From: NC | Registered: Jan 2006
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Wally, That's 18mil in PROFIT! I didn't include that because the aquisition will only occur if 1.5 profit per month is achieved. Little downside here however imo.
Posts: 287 | Registered: Mar 2005
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gappers suck...they drive the price too high for an entry...forget that
-------------------- *I'm not a financial expert or advisor, everything stated is my opinion* Posts: 1680 | From: NC | Registered: Jan 2006
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This may or may not gap in the am. It got played a couple of weeks ago in a momo play. I am sure alot got out with a nice gain. I did. Volume today was only 150k or so. It might not hit everyone elses radar until the volume spikes. good luck yall. TMAN...
-------------------- In the end, trust only yourself when trading stocks. Posts: 2048 | From: Texas | Registered: Feb 2006
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quote:Originally posted by Rex: Wally, That's 18mil in PROFIT! I didn't include that because the aquisition will only occur if 1.5 profit per month is achieved. Little downside here however imo.
I meant profit. The acquisition is not contigent on the 18M profit. The structure of what N2J gets is contigent on the 18M profit.
Posts: 3255 | From: Los Angeles California | Registered: Jan 2006
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This could be massive! $1.4 million net profit not including the liability writeoff. Crazy for a stock at this price. Getting in tomorrow...
Posts: 2741 | From: Seattle | Registered: Feb 2005
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Looks great Just one area to reread as far as the increase in income
The increase in other income is almost entirely due to our write off of $3,620,523 of net liabilities when two of our subsidiaries were liquidated in January 2006. This other income added significantly to our already increased income from operations, resulting in net income of $5,007,009 for the quarter ended March 31, 2006, as compared to net loss of $87,108 for the same quarter year ended 2005. Tricell’s increased profit is also the result of both our expandable operations, as well as our reduced cost of capital. For all of the first quarter of 2006, Tricell resumed internally financing its trading activities with cash flow from operations, whereas an external line of credit was used to finance operations for most of 2005.
Posts: 1068 | From: Utah and Put-In-Bay Ohio | Registered: Jan 2004
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Tricell Announces Record $5 Million Profit and $383 Million Revenue for First Quarter of 2006
May 16, 2006 8:30:00 AM STAFFORDSHIRE, England, May 16 /PRNewswire-FirstCall/ -- Tricell Inc. (OTC Bulletin Board: TCLL), announced record quarterly profit for the quarter ended March 31, 2006. Profit for this quarter was $5,007,009, as compared to a net loss of $87,108 for the same quarter last year. This represents an increase of 5848%. Tricell also generated revenue of $383.5 million for the three months ended March 31, 2006 as compared to $56.3 million for the same period in 2005, which is a 582% increase. The increase in revenues is the result of our expanded trading operations, which since June 30, 2005, includes the operations of our wholly owned subsidiary, Ace Telecom. Tricell's increased profit is the result of both our expanded operations, as well as our reduced cost of capital. For all of the first quarter of 2006, Tricell resumed internally financing its trading activities with cash flow from operations, whereas an external line of credit was used to finance operations for most of 2005.
Tricell's income from operations for the first quarter of 2006 was $2,071,393, as compared to $218,043 for the quarter ended March 31, 2005, representing an increase of 850%. Adding significantly to the 2006 net income figure of $5,007,009 is other income of $3,620,523, which Tricell realized in January 2006 when two of its dormant subsidiaries were liquidated.
Andre Salt, Tricell's CEO and Chairman of the Board, stated, "We are very encouraged with our results through the first three months of 2006, and are optimistic we will continue our level of operations through 2006, and we look forward to building on our base of operations in 2007. We are continuing to move forward with our plans to acquire N2J."
Tricell Inc. was established in 1999 as a distributor of mobile phones and related accessories to the wholesale markets in the UK, Europe, Middle East and Asia. For more information, please visit our website at http://www.tricellinc.com , or the SEC's Edgar filing system at http://www.sec.gov .
Disclaimer:
The above news release contains forward-looking statements within the meaning of The Private Securities Litigation Reform Act of 1995 (the "Act"). These statements are based on assumptions that management believes are reasonable based on currently available information. However, management's assumptions and the company's future performance are both subject to a wide range of business risks and external factors. There is no assurance that these goals and projections can or will be met.
SOURCE Tricell Inc.
---------------------------------------------- Jeff Nunn Managing Director of Tricell Inc. +44-8707-532360 or fax +44-8707-532361 or Info*tricelldistribution.com
Posts: 2049 | From: Jax,FL,USA | Registered: Nov 2003
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i still have rest 5 000k shares from last dip with average price 0,1400. Now i am beating my head against wall that i sold main part. I was impatient to wait.
Posts: 287 | From: prague | Registered: Jan 2006
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