Tricell (TCLL) 10-Q 2006 Q1 Quarterly report

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 endedMarch 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.

Yesþ      Noo

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 filero                     Accelerated Filero                      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).

Yeso      Noþ

The number of shares of common stock outstanding as of May 11, 2006 was 101,045,877.

TABLE OF CONTENTS

PART I — FINANCIAL INFORMATION			1
	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

PART I — FINANCIAL INFORMATION

ITEM 1. Financial Statements

1

ITEM 1. Financial Statements

TRICELL INC AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

				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	)

F-5

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
Total	$	383,537,073	$	56,266,926

F-6

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

	Qtr Ended		Qtr Ended				Percent
	March 31, 2006		March 31, 2005		Increase		Increase
Revenue	$	383,537,073	$	56,266,926	$	327,270,147		582	%
Gross Profit	$	5,827,757	$	778,204	$	5,049,553		649	%

     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		—		—		—		—		—
Totals		515,640		51,564		103,128		103,128	$	257,820

5

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

8

INDEX TO EXHIBITS

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

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