10QSB 1 mainbody.htm MAINBODY mainbody

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

FORM 10-QSB

[X]
Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
   
 
For the quarterly period ended September 30, 2005
   
[   ]
Transition Report pursuant to 13 or 15(d) of the Securities Exchange Act of 1934
   
 
For the transition period __________  to __________
   
 
Commission File Number: 000-31631
 
Trans Max Technologies, Inc.
(Exact name of small business issuer as specified in its charter)

Nevada
42-1599830
(State or other jurisdiction of incorporation or organization)
(IRS Employer Identification No.)
 
One World Trade Center
121 S.W. Salmon Street, Suite 1100
Portland, Oregon 97204
(Address of principal executive offices)

(503) 471-1376
(Issuer’s telephone number)

Check whether the issuer (1) 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 issuer was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days [X] Yes [   ] No
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). [X] Yes [ ] No

State the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 59,445,024 common shares as of September 30, 2005

Transitional Small Business Disclosure Format (check one): Yes [   ] No [X]





 
 
 
Page
PART I - FINANCIAL INFORMATION
 
Item 1:
3
Item 2:
4
Item 3:
7
 
PART II - OTHER INFORMATION
 
Item 1:
9
Item 2:
9
Item 3:
9
Item 4:
9
Item 5:
9
Item 6:
9


PART I - FINANCIAL INFORMATION

Item 1.      Financial Statements

Our unaudited condensed consolidated financial statements included in this Form 10-QSB are as follows:

(a)
Unaudited Condensed Consolidated Balance Sheet as of September 30, 2005.
F-1
 
(b)
 
Unaudited Condensed Consolidated Statements of Operations for the three and nine month periods ended September 30, 2005 and 2004;
 
F-2
 
(c)
 
Unaudited Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2005 and 2004; and
 
F-3
 
(d)
 
Notes to Unaudited Consolidated Financial Statements
 
F-4
 
These unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and the SEC instructions to Form 10-QSB. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. Operating results for the interim period ended September 30, 2005 are not necessarily indicative of the results that can be expected for the full year.

 
TRANS MAX TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 2005
(UNAUDITED)

 
ASSETS
      
       
       
Current Asset:
        
Cash and cash equivalents
  
$
215
  
         
Total Current Asset
    
215
 
         
Receivable from affiliates
    
301,339
 
Property and equipment, net
    
1,506,005
 
         
TOTAL ASSETS
  
$
1,807,559
  
         
         
LIABILITIES AND STOCKHOLDERS' (DEFICIT)
        
         
         
LIABILITIES
        
Current Liabilities:
        
Accounts payable and accrued expenses
  
$
1,605,758
  
Notes payable to stockholders
    
802,746
 
         
Total Current Liabilities
    
2,408,504
 
         
Total Liabilities
    
2,408,504
 
         
STOCKHOLDERS' (DEFICIT)
        
Preferred stock, $.001 Par Value; 10,000,000 shares authorized
       
no shares issued and outstanding
   
-
 
Common stock, $.001 Par Value; 500,000,000 shares authorized
       
59,445,024 shares issued and outstanding
   
59,445
 
Additional paid-in capital
    
7,499,488
 
Accumulated deficit
    
(8,159,878
)
         
Total Stockholders' (Deficit)
    
(600,945
)
         
TOTAL LIABILITIES AND STOCKHOLDERS' (DEFICIT)
  
$
1,807,559
  

 
The accompanying notes are an integral part of these condensed consolidated financial statements.

 
TRANS MAX TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE NINE AND THREE MONTHS ENDED SEPTEMBER 30, 2005 AND 2004
(UNAUDITED)

   
NINE MONTHS ENDED
  
THREE MONTHS ENDED
  
   
SEPTEMBER 30,
  
SEPTEMBER 30,
  
 
  
2005
  
2004
  
2005
  
2004
  
OPERATING REVENUES
                  
Sales
  
$
-
  
$
-
  
$
-
  
$
-
  
                           
COST OF SALES
    
-
   
-
   
-
   
-
 
                           
GROSS PROFIT (LOSS)
    
-
   
-
   
-
   
-
 
                           
OPERATING EXPENSES
                          
General and administrative expenses
    
52,404
   
6,747
   
13,122
   
-
 
Research and development
    
-
   
1,255,181
   
-
   
140,790
 
Depreciation and amortization
    
4,191
   
2,894
   
1,397
   
2,221
 
Total Operating Expenses
    
56,595
   
1,264,822
   
14,519
   
143,011
 
                           
NET (LOSS) BEFORE OTHER (EXPENSES)
    
(56,595
)
  
(1,264,822
)
  
(14,519
)
  
(143,011
)
                           
OTHER (EXPENSES)
                          
Impairment
    
-
   
(6,089,420
)
  
-
   
(5,267,000
)
Interest expense
    
(37,594
)
  
(19,226
)
  
(13,599
)
  
(286
)
Total Other Expenses
    
(37,594
)
  
(6,108,646
)
  
(13,599
)
  
(5,267,286
)
                           
NET (LOSS) APPLICABLE TO COMMON SHARES
 
$
(94,189
)
$
(7,373,468
)
$
(28,118
)
$
(5,410,297
)
                           
WEIGHTED AVERAGE NUMBER OF COMMON
                         
SHARES OUTSTANDING
    
59,445,024
   
8,450,111
   
59,445,024
   
23,138,210
 
                           
NET (LOSS) PER COMMON SHARE
  
$
(0.00
)
  
(0.87
)
$
(0.00
)
  
(0.23
)
 
The accompanying notes are an integral part of these condensed consolidated financial statements.

 
TRANS MAX TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2005 AND 2004
(UNAUDITED)
   
2005
  
2004
  
CASH FLOWS FROM OPERATING ACTIVITIES
              
Net (loss)
  
$
(94,189
)
$
(7,373,468
)
Adjustments to reconcile net (loss) to net cash
              
provided by (used in) operating activities
              
               
Depreciation
    
4,191
   
2,894
 
Imputed interest expense
    
37,594
   
16,179
 
Common stock issued for services
    
-
   
113,851
 
Impairment
    
-
   
6,089,024
 
               
Changes in assets and liabilities
              
Decrease in accounts receivable
   
-
   
26,385
 
Decrease in inventory
   
-
   
40,940
 
Decrease in other current assets
    
-
   
23,881
 
Decrease in other assets
    
-
   
163,250
 
Increase in accounts payable
   
7,500
   
1,551,444
 
               
Total adjustments
    
49,285
   
8,027,848
 
               
Net cash provided by (used in) operating activities
    
(44,904
)
  
654,380
 
               
CASH FLOWS FROM INVESTING ACTIVITIES
              
Purchase of property and equipment
    
-
   
(1,900,707
)
Decrease (Increase) in receivable from affiliates, net
    
13,000
   
(284,445
)
               
Net cash provided by (used in) investing activities
    
13,000
   
(2,185,152
)
               
CASH FLOWS FROM FINANCING ACTIVITIES
              
Proceeds from notes payable to stockholders
    
32,050
   
655,297
 
Cash contributed by stockholders
    
-
   
867,594
 
               
Net cash provided by financing activities
    
32,050
   
1,522,891
 
               
NET INCREASE (DECREASE) IN
              
CASH AND CASH EQUIVALENTS
    
146
   
(7,881
)
               
CASH AND CASH EQUIVALENTS -
              
BEGINNING OF PERIOD
    
69
   
9,259
 
               
CASH AND CASH EQUIVALENTS - END OF PERIOD
  
$
215
  
$
1,378
  
               
CASH PAID DURING THE PERIOD FOR:
              
               
Cash paid during the period for interest
  
$
-
  
$
19,226
  
               
SUPPLEMENTAL DISCLOSURE OF NONCASH
              
ACTIVITIES:
              
               
Common stock issued for services
  
$
-
  
$
113,851
  
Common stock issued for intangible assets and goodwill
  
$
-
  
$
5,267,000
  
Imputed interest expense contributed to additional
  
$
37,594
  
$
271,519
  
paid-in capital
              
 
The accompanying notes are an integral part of these condensed consolidated financial statements.

 

TRANS MAX TECHNOLOGIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2005 AND 2004
(UNAUDITED)

NOTE 1-                ORGANIZATION AND BASIS OF PRESENTATION

The condensed unaudited interim financial statements included herein have been prepared, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. The condensed financial statements and notes are presented as permitted on Form 10-QSB and do not contain information included in the Company’s annual statements and notes. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading. It is suggested that these condensed financial statements be read in conjunction with the December 31, 2004 audited financial statements and the accompanying notes thereto. While management believes the procedures followed in preparing these condensed financial statements are reasonable, the accuracy of the amounts are in some respects dependent upon the facts that will exist, and procedures that will be accomplished by the Company later in the year.

These condensed unaudited financial statements reflect all adjustments, including normal recurring adjustments which, in the opinion of management, are necessary to present fairly the operations and cash flows for the periods presented.

Perma-Tune Electronics, Inc. ("Perma-Tune") was incorporated in 1993 in the state of Texas. The Company designs and manufactures high performance electronic ignition systems for distribution throughout the United States, Canada, and Europe. On July 21, 2003, Perma-Tune acquired 100% of the issued and outstanding stock of Trans Max Technologies, Inc. ("Trans Max"), a Nevada corporation, in exchange for 15,177,300 shares of Perma-Tune's common stock (pre 2 for 1, 6 for 1 and 1 for 200 stock splits), 910,638 post split. As a result of this acquisition, the control of Perma-Tune shifted to the former shareholders of Trans Max and this transaction was treated as a recapitalization. As a part of this recapitalization, Perma-Tune Electronics, Inc. changed its name to Trans Max Technologies, Inc. (the "Company").

NOTE 2-                SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Cash Equivalents

For purposes of the consolidated statements of cash flows, the Company considers all highly liquid debt instruments purchased with an original maturity of three months or less to be cash equivalents.
 
 
F - 4

TRANS MAX TECHNOLOGIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
SEPTEMBER 30, 2005 AND 2004
(UNAUDITED)
 
 
NOTE 2-                SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED

Management Estimates

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

Revenue Recognition

The Company recognizes revenue when persuasive evidence of an arrangement exists, delivery has occurred, the sales price is fixed or determinable and collectibility is probable. Generally, these criteria are met at the time product is shipped. The Company provides for the estimated cost of product warranties upon shipment. The Company has a no return policy and has had no returns in the last two years. Shipping and handling costs are included in cost of goods sold.

Research And Development

Research and development activities are expensed as incurred, including costs relating to patents or rights, which may result from such expenditures.

Principles Of Consolidation

The consolidated financial statements include the accounts of the Company and its wholly owned subsidiary. All significant inter-company accounts and transactions have been eliminated.

Concentrations Of Credit Risk

Financial instruments, which subject the Company to concentration of credit risk include cash and cash equivalents and account receivables. The Company maintains its cash and cash equivalents with major financial institutions selected based upon management's assessment of the banks' financial stability. Balances periodically exceed the $100,000 federal depository insurance limit. The Company has not experienced any losses on deposits. 


TRANS MAX TECHNOLOGIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(C0NTINUED)
SEPTEMBER 30, 2005 AND 2004
(UNAUDITED)


NOTE 2-               SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTNUED)

Property And Equipment

Property and equipment is stated at cost. Depreciation is computed using the straight-line method over the estimated useful lives of three to seven years for office furniture and equipment. Leasehold improvements are depreciated over the shorter of the useful life of the improvement or the life of the related lease. Additions or improvements that increase the value or extend the life of an asset are capitalized. Expenditures for normal maintenance and repairs are expensed as incurred. Disposals are removed from the accounts at cost less accumulated depreciation and any gain or loss from disposition is reflected in operations currently.

Income Taxes

The Company uses the liability method in accounting for income taxes. Under this method, deferred tax assets and liabilities are determined based on differences between financial reporting and income tax carrying amounts of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. A valuation allowance, if necessary, is provided against deferred tax assets, based upon management's assessment as to their realization.

The difference between the 34% federal statutory income tax rate and amounts shown in the accompanying interim financial statements is primarily attributable to an increase in the valuation allowance applied against the tax benefit from utilization of net operating loss carry forwards.

Impairment Of Long-Lived Assets

In the event facts and circumstances indicate the carrying value of a long-lived asset, including associated intangibles, may be impaired, an evaluation of recoverability is performed by comparing the estimated future undiscounted cash flows associated with the asset to the asset's carrying amount to determine if a write-down to market value or discounted cash flow is required. Based upon management's evaluation, an impairment write-down of some of the Company's assets was deemed necessary in the amount of $0 and $6,089,420 for the nine months ended September 30, 2005 and 2004 respectively. The impairment was recorded for the investment made for the intangible assets purchased from Bogner Industries that was deemed worthless. The Company accounts for its impairment in accordance with FASB 142, “Goodwill and Other Intangible Assets.”
 

 
 
TRANS MAX TECHNOLOGIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
SEPTEMBER 30, 2005 AND 2004
(UNAUDITED)

NOTE 2-               SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTNUED)

Fair Value Of Financial Instruments

The Company includes fair value information in the notes to the consolidated financial statements when the fair value of its financial instruments is different from the book value. When the book value approximates fair value, no additional disclosure is made.

Reclassifications

Certain amounts for the nine months ended September 30, 2004 have been reclassified to conform to the presentation of the September 30, 2005 amounts. The reclassifications have no effect on the net income for the nine months ended September 30, 2004.

Loss Per Share

Basic and diluted loss per share is computed on the basis of the weighted average number of shares of common stock outstanding during each period. Common equivalent shares from common stock options and warrants are excluded from the computation, as their effect would dilute the loss per share for all periods presented.


The following is a reconciliation of the computation for basic and diluted EPS for the nine months ended September 30:

   
2005
  
2004
  
Net (Loss)
  
$
(94,189
)
$
(7,373,468
)
               
Weighted-average common shares
              
outstanding (Basic)
    
59,445,024
   
8,450,111
 
Weighted-average common shares
              
equivalents:
              
Stock Options
    
-
   
-
 
Warrants
    
-
   
-
 
               
Weighted-average common shares
              
outstanding (Diluted)
    
59,445,024
   
8,450,111
 
 
The Company has no potentially dillutive securities, such as options or warrants, currently issued and outstanding.

 
TRANS MAX TECHNOLOGIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
SEPTEMBER 30, 2005 AND 2004
(UNAUDITED)


NOTE 2-               SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTNUED)

Recent Accounting Pronouncements
 
On December 16, 2004, the Financial Accounting Standards Board (“FASB”) published Statement of Financial Accounting Standards No. 123 (Revised 2004), “Share-Based Payment” (“SFAS 123R”). SFAS 123R requires that compensation cost related to share-based payment transactions be recognized in the financial statements. Share-based payment transactions within the scope of SFAS 123R include stock options, restricted stock plans, performance-based awards, stock appreciation rights, and employee share purchase plans. The provisions of SFAS 123R, as amended, are effective for small business issuers beginning as of the next fiscal year after December 15, 2005. Accordingly, the Company will implement the revised standard in the first quarter of fiscal year 2006. Currently, the Company accounts for its share-based payment transactions under the provisions of APB 25, which does not necessarily require the recognition of compensation cost in the financial statements (note 3(e)). Management is assessing the implications of this revised standard, which may materially impact the Company’s results of operations in the first quarter of fiscal year 2006 and thereafter.
 
In November 2004, the FASB issued Financial Accounting Standards No. 151 (FAS 151), “Inventory Costs - an amendment of ARB No. 43, Chapter 4”. FAS 151 clarifies the accounting for abnormal amounts of idle facility expense, freight, handling costs and spoilage. In addition, FAS 151 requires companies to base the allocation of fixed production overhead to the costs of conversion on the normal capacity of production facilities. FAS 151 is effective for the Company in 2006. The Company does not expect FAS 151 to have a material impact on its results or financial statements.

On December 16, 2004, FASB issued Statement of Financial Accounting Standards No. 153, “Exchanges of Non-monetary Assets, an amendment of APB Opinion No. 29, Accounting for Non-monetary Transactions” (" SFAS 153"). This statement amends APB Opinion 29 to eliminate the exception for non-monetary exchanges of similar productive assets and replaces it with a general exception for exchanges of non-monetary assets that do not have commercial substance. Under SFAS 153, if a non-monetary exchange of similar productive assets meets a commercial-substance criterion and fair value is determinable, the transaction must be accounted for at fair value resulting in recognition of any gain or loss. SFAS 153 is effective for non-monetary transactions in fiscal periods that begin after June 15, 2005. The Company does not anticipate that the implementation of this standard will have a material impact on its financial position, results of operations or cash flows.
 
 
 
TRANS MAX TECHNOLOGIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
SEPTEMBER 30, 2005 AND 2004
(UNAUDITED)

NOTE 3-               LIQUIDITY

For the nine months ended September 30, 2005, the Company had a net loss of ($94,189) and ($7,373,468) for the same period in 2004. For the nine months ended September 30, 2005 and 2004, the Company had $44,904 negative cash flow and $654,380 positive cash flows from operations, respectively. The Company has been dependent on additional capital contributions from shareholders and debt financing to fund its cash requirements.

To assist with funding its operations, the Company's majority stockholders contributed additional paid-in capital of $0 for the nine months ended September 30, 2005 and $867,594 for the nine months ended September 30, 2004. The Company's majority stockholders contributed additional loans of $32,050 and $655,297 during the nine months ended September 30, 2005 and 2004, respectively. During 2005 and beyond the Company will require additional capital. Although the current majority stockholders of the Company have made a verbal commitment, with no guarantee, to continue to fund the research and development and sales and marketing efforts of the Company in 2005 if alternate financing cannot be obtained, there can be no assurance that any new capital would be available to the Company or that adequate funds for the Company's operations, whether from the Company's revenues, financial markets, or other arrangements will be available when needed or on terms satisfactory to the Company. The failure of the Company to obtain adequate additional financing may require the Company to delay, curtail, or scale back some or all of its research and development programs, sales and marketing efforts, and manufacturing operations.

NOTE 4-                PROPERTY AND EQUIPMENT
 
Property and equipment, at September 30, 2005, consist of the following:
Machinery and equipment
  
$
14,734
  
Water air machine
    
1,500,000
  
Less accumulated depreciation
    
(8,729
)
Property and equipment, net
  
$
1,506,005
  
 
Depreciation expense was $4,191 and $2,894 for the nine months ended September 30, 2005 and 2004, respectively. Leasehold improvements of $822,420 were written-off as the building in Ronkonkoma, New York was abandoned. The Company acquired the water air machine for cash of $10,300 and currently owes $1,489,700. There is no formal note agreement on this machine.


 
TRANS MAX TECHNOLOGIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
SEPTEMBER 30, 2005 AND 2004
(UNAUDITED)


NOTE 5-                NOTES PAYABLE TO STOCKHOLDERS

Notes payable to stockholders at September 30, 2005 consisted of the following:

Note payable to a stockholder bearing interest at 10% per year with interest payments due quarterly and the principal due on demand. This note is collateralized by inventory. The balance at September 30, 2005 was $40,000. 

Note payable to two stockholders and current employees of the Company bearing interest at 10% per year with all interest and principal due June 28, 2004 with the option to renew the note for 30 day interval periods. The note is not collateralized. The balance at September 30, 2005 was $23,400

Note payable to a stockholder and former officer/director of the Company. There is no formal note agreement. The note bears no interest; however, interest is imputed at the prime rate and the outstanding principal balance is due on demand. The note is not collateralized. The balance at September 30, 2005 was $640,270

Note payable to a majority stockholder of the Company. There is no formal note agreement. The note bears no interest; however, interest is imputed at the prime rate and the outstanding principal balance is due on demand. The note is not collateralized. The balance at September 30, 2005 was $99,076.

NOTE 6-               STOCKHOLDERS EQUITY (DEFICIT)

In connection with the Company's recapitalization (See Note 1), the Company filed amended articles of incorporation that changed the authorized shares the Company is able to issue to 500,000,000 shares of common stock with a par value of $0.001 per share. Since the Company's common stock did not previously have a stated par value, common stock for all periods presented has been restated to reflect the par value of $0.001 per share.

The Company's articles of incorporation also authorize the issuance of up to 10,000,000 shares of preferred stock with characteristics determined by the Company's board of directors. As of September 30, 2005, the Company has not issued any preferred stock.


F - 10

TRANS MAX TECHNOLOGIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
SEPTEMBER 30, 2005 AND 2004
(UNAUDITED)

NOTE 6-               STOCKHOLDERS EQUITY (DEFICIT) (Continued)

Effective March 12, 2004 the Company's board of directors approved a six for one forward split of the Company's stock. As a result, 184,263,395 shares were issued to the stockholders of the Company. Par value of the stock remained at $0.001 per share and, accordingly, $184,263 was transferred from additional paid-in capital to common stock. The effect of this stock split was recorded retroactively in the December 31, 2003 audited financial statements and, accordingly, all references to the number of common shares and per common share amounts have been restated to give retroactive effect to the stock split for all periods presented in these financial statements.

On May 12, 2004, the Company issued 500 shares restricted shares to a consulting firm for the introduction of business opportunities. The cost associated with this issuance has been charged to consulting expense in the second quarter.

On May 25, 2004, Eastern Business Associates, Inc., Balboa Group, Inc., and Financial Investors, Inc. each acquired 43,002,350 shares of the Company’s stock or 19.4% of the outstanding shares resulting in a change in control of the Company. All three companies have the same Managing Director.

On July 20, 2004, the Board of Directors adopted a resolution authorizing and approving a 200 to 1 reverse stock split with the effective date of August 9, 2004 and the trading symbol of the Company was changed to TMAX.

On August 24, 2004, the Company entered into an Agreement with Groupo Aquinas SA whereby Groupo Aquinas SA assigned to the Company all the marketing and purchasing rights to water making technologies together with all related intellectual properties, including a Water Air Machine (WAM), which produces large quantities of drinkable water from the air at a low cost, in exchange for 50,000,000 shares of common stock of the Company and $1,500,000 of which $10,300 was paid during 2004. The certificates will bear the appropriate 2-year restrictive legend. This issuance of stock changes the control of the Company to Groupo Aquinas SA, a company with the same Managing Director as the three former control companies.

The Company in the third quarter also issued 7,911,350 shares of common stock for services valued at $43,512.

The Company in the third quarter converted $271,519 in notes payable to 271,519 common shares of stock.
 
 
TRANS MAX TECHNOLOGIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
SEPTEMBER 30, 2005 AND 2004
(UNAUDITED)


NOTE 6-               STOCKHOLDERS EQUITY (DEFICIT) (Continued)

During the year 2004, the Company issued 42,499 shares of common stock in connections with various employment agreements.

The Company did not issue any shares for the nine months ended September 30, 2005.

NOTE 7-               RELATED PARTY TRANSACTIONS

The Company has entered into four note payable agreements with certain individual stockholders (See Note 5). Imputed interest on these notes totaled $23,995, which were contributed to capital and included in additional paid-in capital. The Company has a license agreement with its Chief Scientist for its ignition system product line whereby it has acquired all of his rights to patents, trademarks, technical information and trade secrets through November 30, 2021 by payment of a yearly license fee of $1,000.

In November 2003, the Company agreed to provide a $1.5 million line of credit to provide products and services to Axial Vector Engine Corporation (formerly Aero Marine Engine, Inc.), a company owned by the majority stockholders of the Company. Pursuant to the agreement between the Company and Axial Vector Engine Corporation for every $2 paid to the Company by Axial Vector, the Company will extend $1 of credit, up to a maximum of $1.5 million dollars. As of September 30, 2005, the Company has not advanced any money under this agreement.  At September 30, 2005, the Company had a receivable from Axial Vector of $311,339. These advances were made in connection with relocating this affiliated company to Ronkonkoma, New York and funding this affiliated company’s payroll.

NOTE 8-               PROVISION FOR INCOME TAXES

Deferred income taxes will be determined using the liability method for the temporary differences between the financial reporting basis and income tax basis of the Company’s assets and liabilities. Deferred income taxes will be measured based on the tax rates expected to be in effect when the temporary differences are included in the Company’s consolidated tax return. Deferred tax assets and liabilities are recognized based on anticipated future tax consequences attributable to differences between financial statement carrying amounts of assets and liabilities and their respective tax bases.
 
 
 
F - 12
 
TRANS MAX TECHNOLOGIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
SEPTEMBER 30, 2005 AND 2004
(UNAUDITED)

NOTE 8-               PROVISION FOR INCOME TAXES (Continued)

At September 30, 2005, deferred tax assets consist of the following:

Deferred tax asset
  
$
732,989
  
Less: valuation allowance
    
(732,989
)
   
$
-0-
  
          
At September 30, 2005, the Company had an accumulated deficit in the approximate amount of $2,155,800 available to offset future taxable income through 2024. The Company established valuation allowances equal to the full amount of the deferred tax assets due to the uncertainty of the utilization of the operating losses in future periods.

NOTE 9-               GOING CONCERN

As shown in the accompanying consolidated financial statements, the Company incurred substantial net losses for the nine months ended September 30, 2005 and for the years ended December 31, 2004 and 2003. There is no guarantee whether the Company will be able to generate enough revenue and/or raise capital to support those operations. This raises substantial doubt about the Company’s ability to continue as a going concern.

The Company’s future success is dependent upon its ability to achieve profitable operations and generate cash from operating activities, and upon additional financing. There is no guarantee that the Company will be able to raise enough capital or generate revenues to sustain its operations. Management believes they can raise the appropriate funds needed to support their business plan and acquire an operating, cash flow positive company.

The condensed consolidated financial statements do not include any adjustments relating to the recoverability or classification of recorded assets and liabilities that might result should the Company be unable to continue as a going concern.

NOTE 10-              BANKRUPTCY

On September 8, 2005, Trans Max Technologies, Inc. filed a voluntary petition for relief under Chapter 11 of the United State Bankruptcy Code in the United States Bankruptcy Court for the District of Nevada, Case No. 05- 19263. The Company will continue to operate their business as “debtors-in-possession” under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code and orders of the Bankruptcy Court.

 
 
Item 2.     Plan of Operation

Forward-Looking Statements
 
Historical results and trends should not be taken as indicative of future operations. Management’s statements contained in this report that are not historical facts are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities and Exchange Act of 1934 (the “Exchange Act”), as amended. Actual results may differ materially from those included in the forward-looking statements. The Company intends such forward-looking statements to be covered by the safe-harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, and is including this statement for purposes of complying with those safe-harbor provisions. Forward-looking statements, which are based on certain assumptions and describe future plans, strategies and expectations of the Company, are generally identifiable by use of the words “believe,” “expect,” “intend,” “anticipate,” “estimate,” “project,” “prospects,” or similar expressions. The Company’s ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors which could have a material adverse affect on the operations and future prospects of the Company on a consolidated basis include, but are not limited to: changes in economic conditions, legislative/regulatory changes, availability of capital, interest rates, competition, and generally accepted accounting principles. These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. Further information concerning the Company and its business, including additional factors that could materially affect the Company’s financial results, is included herein and in the Company’s other filings with the SEC.

Overview

We were incorporated in 1993 in the state of Texas under the name Perma-Tune Electronics, Inc. On July 21, 2003 we acquired 100% of the issued and outstanding stock of Trans Max Technologies, Inc. ("Trans Max"), a Nevada corporation, in a share exchange agreement for shares of our common stock. As a result of this acquisition, our control was shifted to the former shareholders of Trans Max and this transaction was treated as a recapitalization.  As a part of this recapitalization, we changed our name to Trans Max Technologies, Inc.

Bankruptcy

On September 8, 2005, Trans Max Technologies, Inc. filed a voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code (the "Bankruptcy Code") in the United States Bankruptcy Court for the District of Nevada (the "Bankruptcy Court"), Case No. BK-S-05-19263. The Company will continue to operate as a "debtor-in-possession" under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code and orders of the Bankruptcy Court. The Company is currently exploring various options for the acquisition of new technology and operating capital and it hopes to successfully reorganize its affairs and emerge from chapter 11 with the ability to pursue a profitable line of business.

Plan of Operation

In May 2004, we had a change in management. Following this change in management, we reorganized our operations and sought other business opportunities for acquisition.


On August 24, 2004, we entered into an Agreement with Groupo Acquinas SA (“Groupo”) whereby Groupo would assign to us all the marketing and purchasing rights it acquired from Victor Vartovy & Company (“VVC”). Groupo entered into an Exclusive Purchase Agreement with VVC and acquired all the ownership purchase rights to water making technologies together with all related intellectual properties, including the Water Air Machine (“WAM”), which produces large quantities of drinkable water from the air at a low cost. Samuel J. Higgins, an officer of our company, a member of our board of directors, and majority shareholder, is the managing director of Groupo Acquinas SA.

On August 24, 2004, we entered into a Joint Venture Agreement (“Agreement”) with Adaptive Propulsion Systems, LLC (“Adaptive”). Adaptive is a subsidiary of Tactronics, Inc., a major supplier of equipment to the United States Special Forces Command. Under this Agreement, Adaptive agreed to finance further development of WAM, improve and optimize WAM performance, and develop and incorporate a security system for WAM. Adaptive was to utilize its expertise to modify the WAM; however, we would hold all rights to any patentable technology that emerged. Also under the terms of this Agreement, we granted Adaptive the exclusive right to utilize this technology for the military of all NATO countries. We would have received 20% of the gross revenue from all sales of WAM by Adaptive. Adaptive would have received 5% of the gross revenue from all of our sales to non-military purchasers. This agreement was for a term of 20 years unless revised by joint agreement of the parties. Our management has decided at this time not to proceed forward with this Agreement.

We currently have no business activities. Our plan of operations is to continue our attempts to identify and evaluate businesses and technology opportunities and make arrangements to acquire one that is consistent with our expertise and income needs. At the present time, we have not identified any other businesses or technology opportunities that management believes in consistent with our expertise and income needs.

We can provide no assurance that we will be successful in acquiring other businesses or technology due to our limited working capital. We anticipate that if we are successfully able to identify technology or businesses for acquisition, we will require additional financing in order to enable us to complete the acquisition. However, we can provide no assurance that if we pursue additional financing we will receive any financing.

We currently have forecasted the expenditure of approximately $20,000 during the next twelve months in order to remain in compliance with the Securities Exchange Act of 1934, retain a consultant, and to identify additional financing. We can provide no assurance that we will be successful in acquiring additional financing to implement our current business plan. We can provide no assurance that we will receive additional financing if sought.

We do not anticipate purchasing any real property or significant equipment in the next twelve months.

At the present time, we have no employees other than our sole officer and director, Samuel Higgins. We do not anticipate hiring any employees until such time as we are able to acquire any additional financing.

Assets

As of September 30, 2005, our sole asset was cash and cash equivalents in the amount of $215. As of September 30, 2005, we had total assets in the amount of $1,807,559. As of September 30, 2005, we had an accounts receivable from an affiliate in the amount of $301,339 and property and equipment in the amount of $1,506,005.


Liabilities and Stockholders’ Deficit

Our total liabilities as of September 30, 2005 were $2,408,504. On September 30, 2005 our liabilities consisted of accounts payable and accrued expensed in the amount of $1,605,758, and notes payable to stockholders in the amount of $802,746.

As of September 30, 2005, there was a Stockholders’ deficit of $600,945.

Results of Operations

We have not had any business operations since May 2004 and have not generated any revenue since fiscal 2003. As a result, we did not earn any revenue during the three or nine months ended September 30, 2005 or in the same reporting period in the prior year.

We incurred operating expenses in the amount of $14,519 for the three months ended September 30, 2005, compared to operating expenses of $143,011 for the three months ended September 30, 2004. Our operating expenses for the three months ended September 30, 2005 were primarily attributable to general and administrative expenses. The significant decrease in our operating expenses is attributable to discontinued research and development expenses, which, by comparison, for the three months ended September 30, 2004, amounted to $140,790 of the total $143,011 in operating expenses for that quarter.

We incurred operating expenses in the amount of $56,595 for the nine months ended September 30, 2005, compared to operating expenses of $1,264,822 for the nine months ended September 30, 2004. Our operating expenses for the nine months ended September 30, 2005 were primarily attributable to general and administrative expenses. The significant decrease in our operating expenses is attributable to discontinued research and development expenses, which, by comparison, for the nine months ended September 30, 2004, amounted to $1,255,181 of the total $1,246,822 in operating expenses for that period.

We have incurred a net loss of $28,118 for the three month period ended September 30, 2005, compared to $5,410,297 for the three month period ended September 30, 2004. We have incurred a net loss of $94,189 for the nine month period ended September 30, 2005, compared to $7,373,468 for the nine month period ended September 30, 2004. Our losses for the three and nine months ended September 30, 2005 are primarily attributable to general and administrative expenses and interest expenses. Our losses for the three and nine months ended September 30, 2004 was attributable to research and development expenses but more significantly to the impairment of assets. We recorded an impairment of $5,267,000 for the three months ended September 30, 2005 and $6,089,420 for the nine months ended September 30, 2005 for the intangible assets purchased from Bognar Industries that were deemed worthless.

Liquidity and Capital Resources

As of September 30, 2005, we have cash in the amount of $215. We had a working capital deficit of $2,408,289 on September 30, 2005. As a result, we have insufficient capital to implement our plan of operation.

We have not attained profitable operations and are dependent upon obtaining financing to complete our business plan over the next 12 months. Shareholders contributed $32,050 during the nine months ended September 30, 2005. During 2005 and beyond, however, we will require additional capital. We can provide no assurance that we will receive any additional financing. For these reasons, our auditors


have stated in their report that they have substantial doubt about our ability to continue as a going concern.

Going Concern

As shown in the accompanying condensed consolidated financial statements, the Company incurred substantial net losses for the nine months ended September 30, 2005 and for the years ended December 31, 2004 and 2003. There is no guarantee whether the Company will be able to generate enough revenue and/or raise capital to support those operations. This raises substantial doubt about the Company’s ability to continue as a going concern.

The Company’s future success is dependent upon its ability to achieve profitable operations and generate cash from operating activities, and upon additional financing. There is no guarantee that the Company will be able to raise enough capital or generate revenues to sustain its operations. Management believes they can raise the appropriate funds needed to support their business plan and acquire an operating, cash flow positive company.

The condensed consolidated financial statements do not include any adjustments relating to the recoverability or classification of recorded assets and liabilities that might result should the Company be unable to continue as a going concern.

Off Balance Sheet Arrangements

As of September 30, 2005, there were no off balance sheet arrangements.

Item 3.     Controls and Procedures

We carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of September 30, 2005. This evaluation was carried out under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, Samuel Higgins. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of September 30, 2005, our disclosure controls and procedures are effective. There have been no significant changes in our internal controls over financial reporting during the quarter ended September 30, 2005 that have materially affected or are reasonably likely to materially affect such controls.

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act are recorded, processed, summarized and reported, within the time periods specified in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

Limitations on the Effectiveness of Internal Controls

Our management does not expect that our disclosure controls and procedures or our internal control over financial reporting will necessarily prevent all fraud and material error. An internal control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide


absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the internal control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, control may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate.





PART II - OTHER INFORMATION


Except as provided below, there have been no material developments in the ongoing legal proceedings previously reported in which we are a party. A complete discussion of our ongoing legal proceedings is discussed in our report for the period ended June 30, 2005.

Simply Lite v. Trans Max Technologies, Inc., and its subsidiary, Bogner Industries, Inc. in the Circuit Court of Cook County, Illinois.

The matter was set for hearing on Default Judgment against us prior to our filing for protection under the US Bankruptcy Code in early September 2005. The action of Simply Lite was then stayed.

Richard Powers, et. al v. Trans Max Technologies, Inc., et. al, in the Supreme Court State of New York, County of Suffolk, Riverhead

This action was filed by three former alleged employees seeking unpaid wages and future wages. This matter was pending prior to our filing for protection under the US Bankruptcy Code in early September 2005, and the matter was then stayed as to us.

Item 2.     Unregistered Sales of Equity Securities and Use of Proceeds

None

Item 3.     Defaults upon Senior Securities

None

Item 4.     Submission of Matters to a Vote of Security Holders

No matters have been submitted to our security holders for a vote, through the solicitation of proxies or otherwise, during the quarterly period ended September 30, 2005.


None






SIGNATURES

In accordance with the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 
Trans Max Technologies, Inc.
   
Date:
November 22, 2005
   
 
 
 
By:/s/  Samuel Higgins                                                                                     
             Samuel Higgins
Title:    Chief Executive Officer, Chief Financial Officer, and Director
 
 
 
 
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