10QSB 1 file001.txt U.S. SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 --------------------- FORM 10-QSB --------------------- (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES AND EXCHANGE ACT OF 1934 for the Quarterly period ended March 31, 2001 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 for the transition period from _______ to _______. Commission File No. 000-29933 TRANSAMERICAN HOLDINGS, INC. ---------------------------------------------------- (Name of Small Business Issuer in its Charter) Nevada, U.S.A. 77-0434471 (State or other Jurisdiction (IRS Employer of Incorporation or Organization) Identification No.) 9601 Wilshire Boulevard, Suite 620, Beverly Hills, California 90210 (Address of principal executive offices) (310) 271-4159 (Issuer's telephone number) Check whether the registrant (1) filed all reports required to be filed by Section 13 or 15 (d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES [X] NO [ ] As of the date of this filing, the Company had approximately 16,271,090 shares of Common Stock issued and outstanding. TRANSAMERICAN HOLDINGS, INC. FORM 10-QSB for the quarter ended March 31, 2001 TABLE OF CONTENTS Part I. Financial Information ------- Item 1. Financial Statements Balance Sheet as of March 31, 2001 (unaudited). Statements of Operations for the three months ended March 31, 2001 (unaudited) and March 31, 2000 (unaudited) and from inception on July 22, 1996 to March 31, 2001 (unaudited). Statement of Stockholders' Equity for the Period from inception to March 31, 2001 (unaudited). Statements of Cash Flows for the three months ended March 31, 2001 (unaudited) and March 31, 2000 (unaudited) and from inception on July 22, 1996 to March 31, 2001 (unaudited). Notes to Financial Statements. Item 2. Managements Discussion and Analysis or Plan of Operation Part II. Other Information -------- Item 1. Legal Proceedings Item 2. Changes in Securities Item 3. Defaults upon Senior Securities Item 4. Submission of Matters to a Vote of Security holders Item 5. Other Information Item 6. Exhibits and reports on form 8-K SIGNATURES SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS This quarterly report on form 10-QSB contains "forward- looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Statements of our intentions, beliefs, expectations or predictions for the future, denoted by the words "believes," "expects," "may," "will," "should," "seeks," "pro forma," "anticipates," "intends" and similar expressions are forward- looking statements that reflect our current views about future events and are subject to risks, uncertainties and assumptions. We wish to caution readers that these forward-looking statements are not guarantees of future performance and involve risks and uncertainties. Actual events or results may differ materially from those discussed in the forward-looking statements as a result of various factors, including, without limitation, the risk factors and other matters contained in this annual report generally. All subsequent written and oral forward- looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements included in this document. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. PART I ITEM 1. FINANCIAL STATEMENTS. TRANSAMERICAN HOLDINGS, INC. (A DEVELOPMENT STAGE ENTERPRISE) FINANCIAL STATEMENTS THREE MONTHS ENDED MARCH 31, 2001 CONTENTS Page Financial Statements: Balance Sheet 2 Statement of Operations 3 Statement of Stockholders' Equity 4 Statement of Cash Flows 5 Notes to Financial Statements 6-7 TRANSAMERICAN HOLDINGS, INC. (A DEVELOPMENT STAGE ENTERPRISE) BALANCE SHEET - MARCH 31, 2001 (UNAUDITED) ASSETS Current assets: Cash $ 686,390 Certificate of deposit 100,000 Other receivables 13,272 Notes receivable 60,000 Note receivable, related party 145,000 ----------- Total current assets $ 1,004,662 Property and equipment, net of accumulated depreciation and amortization 9,244 Cash - restricted 30,665 ----------- $ 1,044,571 =========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable and accrued expenses $ 43,036 10% note payable, officer, due June 18, 2001 5,000 ----------- Total current liabilities $ 48,036 Stockholders' equity: Common stock; $.001 par value, 100,000,000 shares authorized, 16,271,090 shares issued and outstanding $ 16,271 Subscriptions receivable (33,750) Additional paid-in capital 1,453,147 Deficit accumulated during development stage (439,133) ----------- Total stockholders' equity 996,536 ----------- $ 1,044,571 ===========
1 TRANSAMERICAN HOLDINGS, INC. (A DEVELOPMENT STAGE ENTERPRISE) STATEMENTS OF OPERATIONS From inception on For the three months ended July 22, 1996 to March 31, 2001 March 31, 2000 March 31, 2001 --------------- -------------- ----------------- (Unaudited) (Unaudited) (Unaudited) Net revenues $ - $ - $ - Cost of sales - - - --------------- -------------- ----------------- Gross profit - - - General and administrative expenses 127,113 110,451 452,205 --------------- -------------- ----------------- Net Loss from operations before interest income (127,113) (110,451) (452,205) Interest income 13,072 - 13,072 Net loss $ (114,041) $ (110,451) $ (439,133) =============== ============== ================= Net loss per share, basic and diluted $ (0.007) $ (0.0095) =============== ============== Weighted average number of shares outstanding, basic and diluted 16,271,090 11,569,962 =============== ==============
2 TRANSAMERICAN HOLDINGS, INC. (A DEVELOPMENT STAGE ENTERPRISE) STATEMENT OF STOCKHOLDERS' EQUITY Deficit accumulated Total Common stock Additional during stock- ---------------------- paid-in Subscription development holders' Shares Amount capital receivable stage equity ---------------------------------------------------------------------------------- Balance at January 1, 2000 11,300,000 $ 11,300 $ 3,000 $ $ (5,100) $ 9,200 Issuance of common stock for cash during March 2000 1,445,090 1,445 296,100 297,545 Issuance of common stock for cash during April 2000 230,000 230 114,770 115,000 Issuance of common stock for cash during May 2000 1,918,000 1,918 670,790 672,708 Issuance of common stock for cash during June 2000 913,000 913 142,150 143,063 Issuance of common stock for cash during July 2000 465,000 465 226,337 (33,750) 193,052 Net loss for the year ended December 31, 2000 (319,992) (319,992) ---------- -------- ----------- --------- --------- ----------- Balance at December 31, 2000 16,271,090 $ 16,271 $ 1,453,147 $ (33,750) $(325,092) $ 1,110,576 ---------- -------- ----------- --------- --------- ----------- Net loss for the three months ended March 31, 2001 (Unaudited) (114,041) (114,041) ---------- -------- ----------- --------- --------- ----------- Balance at March 31, 2001 (Unaudited) 16,271,090 $ 16,271 $ 1,453,147 $ (33,750) $(439,133) $ 996,535 ========== ======== =========== ========= ========= ===========
3 TRANSAMERICAN HOLDINGS, INC. (A DEVELOPMENT STAGE ENTERPRISE) STATEMENTS OF CASH FLOWS INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS From inception on For the three months ended July 22, 1996 to March 31, 2001 March 31, 2000 March 31, 2001 --------------- -------------- ----------------- (Unaudited) (Unaudited) (Unaudited) Cash flows provided by (used for) operating activities: Net loss $ (114,041) $ (110,451) $ (439,133) Adjustments to reconcile net income (loss) to net cash provided by (used for) operating activities: Issue common stock for services - 94,500 Depreciation 526 - 1,529 Changes in assets and liabilities: (Increase) decrease in assets: Other receivable (13,273) - (13,273) Accounts payable and accrued expenses 24,190 2,009 43,036 --------------- -------------- ----------------- Total adjustments 11,443 96,509 31,292 --------------- -------------- ----------------- Net cash provided by operating activities (102,598) (13,942) (407,841) --------------- -------------- ----------------- Cash flows provided by (used for) investing activities: Acquisition of property and equipment (744) - (10,772) Note receivable - - (60,000) Notes receivable, related party (130,000) - (145,000) Restricted cash - - (30,665) --------------- -------------- ----------------- Net cash used for investing activities (130,744) - (246,437) --------------- -------------- ----------------- Cash flows provided by (used for) financing activities: Proceeds from sale of common stock - 297,545 1,435,668 Payments on note payable, officer (5,000) - 5,000 --------------- -------------- ----------------- Net cash used for financing activities (5,000) 297,545 1,440,668 --------------- -------------- ----------------- Net increase (decrease) in cash (238,342) 283,603 786,390 Cash and cash equivalents, beginning of period 1,024,732 9,200 - --------------- -------------- ----------------- Cash and cash equivalents, end of period $ 786,390 $ 292,803 $ 786,390 =============== ============== =================
4 TRANSAMERICAN HOLDINGS, INC. (A DEVELOPMENT STAGE ENTERPRISE) NOTES TO FINANCIAL STATEMENTS THREE MONTHS ENDED MARCH 31, 2001 (1) Summary of Significant Accounting Policies: Interim Financial Statements: The accompanying financial statements include all adjustments (consisting of only normal recurring accruals), which are, in the opinion of management, necessary for a fair presentation of the results of operations for the periods presented. Interim results are not necessarily indicative of the results to be expected for a full year. The financial statements should be read in conjunction with the financial statements included in the annual report of TransAmerican Holdings, Inc. (the "Company") on Form 10-KSB for the year ended December 31, 2000. General: TransAmerican Holdings, Inc., formerly Health Research, Ltd., was incorporated under the laws of the state of Nevada on July 22, 1996, and is conducting its operations in California. Business Activity: The Company has been in development stage and was inactive until November 1999, at which time current management became involved. On November 15, 1999, the Company changed its name to TransAmerican Holdings, Inc. The sole purpose of the Company at this time is to raise capital and to locate and acquire a private on-going business. Use of Estimates: The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Fair Value: Unless otherwise indicated, the fair values of all reported assets and liabilities which represent financial instruments, none of which are held for trading purposes, approximate the carrying values of such amounts. Cash: Equivalents ----------- For purposes of the statement of cash flows, cash equivalents include all highly liquid debt instruments with original maturities of three months or less which are not securing any corporate obligations. Concentration ------------- The Company maintains its cash in bank deposit accounts which, at times, may exceed federally insured limits. The Company has not experienced any losses in such accounts. 5 TRANSAMERICAN HOLDINGS, INC. (A DEVELOPMENT STAGE ENTERPRISE) NOTES TO FINANCIAL STATEMENTS (CONTINUED) THREE MONTHS ENDED MARCH 31, 2001 (1) Summary of Significant Accounting Policies, Continued: Property and Equipment: Property and equipment are stated at cost. Expenditures for maintenance and repairs are charged to earnings as incurred, whereas, additions, renewals, and betterments are capitalized. When property and equipment are retired or otherwise disposed of, the related cost and accumulated depreciation are removed from the respective accounts, and any gain or loss is included in operations. Depreciation is computed using the straight-line method over the estimated useful lives of the related assets. Comprehensive Income: The Company does not have other comprehensive income. Comprehensive loss consists of net loss from operations. Development Stage Enterprise: The Company is a development stage company as defined in Statement of Financial Accounting Standards No. 7, "Accounting and Reporting by Development Stage Enterprises." The Company is devoting substantially all of its present efforts to establish a new business. All losses accumulated since inception of TransAmerican Holdings (Note 1) have been considered as part of the Company's development stage activities. Net Loss Per Share: The Company has adopted Statement of Financial Accounting Standard No. 128, Earnings per Share ("SFAS No. 128"), which is effective for annual and interim financial statements issued for periods ending after December 15, 1997. Net loss per share has been computed using the weighted average number of shares outstanding. As of March 31, 2001, the Company had no dilutive common stock such as stock options. 6 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION. Management's Discussion and Analysis. Results of Operations Three months ended March 31, 2001 as compared to March 31, 2000. Revenues We are a development stage company. There were no revenues for the three months ended March 31, 2001 and March 31, 2000. General and Administrative Expenses Total expenses amounted to $127,113 for the quarter ended March 31, 2001, as compared to $110,451 at March 31, 2000. The increase in expenses resulted primarily from professional fees incurred by the Company in the ordinary course of business and in our review of potential acquisition candidates. Loss from Operations The Company incurred a loss from operations of $127,113 for the quarter ended March 31, 2001, as compared to $110,451 at March 31, 2000. Net loss The Company had a net loss of $114,041 or $(0.007) per share for the three months ended March 31, 2001 as compared to $110,451 or $(0.0095) per share for the three months ended March 31, 2000. Liquidity and Capital Resources Although TransAmerican has not yet finalized the acquisition of an on-going business, we have executed several letters of intent and are in advanced negotiations with various domestic and international entities. The letters of intent and negotiations are with going businesses in varied sectors of the market. We expect to conclude at least one of these acquisitions in the second quarter of 2001. Presently, TransAmerican has no earnings from operations, and we will continue to sustain nominal losses until we acquire an income-generating business. We have sufficient working capital to cover our operating costs until we conclude an acquisition of an on-going business. Plan of Operation. TransAmerican intends to seek and acquire assets or shares of an entity actively engaged in a business that generates revenues in exchange for our securities. We have identified potential business opportunities and have entered into discussions and signed Letters of Intent with several companies. However, we have not yet entered into any definitive agreements or understandings as of the date of this filing. General Business Plan TransAmerican's purpose is to seek and acquire an interest in business opportunities presented to us by persons or firms who or which desire to seek the advantages of an Issuer who has complied with the 1934 Act. In our search for a business opportunity, we will not restrict our selection to any specific business, industry, or geographic region and we may participate in a business venture of any kind or nature. This discussion of the proposed business is purposefully general and is not meant to restrict our unlimited discretion to search for and enter into potential business opportunities. Due to general economic conditions, rapid technological advances being made in some industries and shortages of available capital, management believes that there are numerous firms seeking the benefits of an issuer who has complied with the 1934 Act. Such benefits may include facilitating or improving the terms on which additional equity financing may be sought, providing liquidity for incentive stock options or similar benefits to key employees, providing liquidity (subject to restrictions of applicable statutes) for all shareholders and other factors. Management believes that TransAmerican will be able to offer owners of acquisition candidates the opportunity to acquire an interest in an issuer who has complied with the 1934 Act without incurring the cost and time required to conduct an initial public offering. The owners of the business opportunity will, however, incur significant legal and accounting costs in connection with the acquisition of a business opportunity, including the costs of preparing and filing required reports on Form 8-K, 10-QSB and 10-KSB, agreements and related reports and documents. The 1934 Act specifically requires that any merger or acquisition candidate comply with all applicable reporting requirements, which include providing audited financial statements to be included within the filings relevant to complying with the 1934 Act. The analysis of new business opportunities will be undertaken by, or under the supervision of, the officers and directors of the Company. Management intends to concentrate on identifying prospective business opportunities, which may be brought to our attention through present associations with the Company's officers and directors, or by our shareholders. In analyzing prospective business opportunities, management will consider such matters as the available technical, financial and managerial resources; working capital and other financial requirements; history of operations; prospects for the future; nature of present and expected competition; the quality and experience of management services which may be available and the depth of that management; the potential for further research, development, or exploration; specific risk factors not now foreseeable but which then may be anticipated to impact the proposed activities of the Company; the potential for growth or expansion; the potential for profit; the public recognition of acceptance of products, services, or trades; name identification; and other relevant factors. TransAmerican management expects to meet personally with management and key personnel of the business opportunity as part of our investigation. To the extent possible, we intend to utilize written reports and personal investigation to evaluate the above factors. We will not acquire or merge with any company for which audited financial statements cannot be obtained within a reasonable period of time after closing of the proposed transaction. Acquisition of Business Opportunities In implementing a structure for a particular business acquisition, TransAmerican may become a party to a merger, consolidation, reorganization, joint venture or licensing agreement with another corporation or entity. We may also acquire stock or assets of an existing business. Any terms of sale of the shares presently held by officers and/or directors of TransAmerican will be also afforded to all other shareholders of the Company on similar terms and conditions. Any and all such sales will only be made in compliance with the securities laws of the United States and any applicable state. It is anticipated that any securities issued in any such reorganization would be issued in reliance upon exemption from registration under applicable federal and state securities laws. In some circumstances, however, as a negotiated element of the transaction, TransAmerican may agree to register all or a part of such securities immediately after the transaction is consummated or at specified times thereafter. If such registration occurs, of which there can be no assurance, it will be undertaken by the surviving entity after the Company has successfully consummated a merger or acquisition. The issuance of substantial additional securities and their potential sale into a trading market which may develop in TransAmerican's securities may have a depressive effect on the value of our securities in the future. As part of TransAmerican's investigation, officers and directors of the Company will meet personally with management and key personnel, will visit and inspect material facilities, obtain independent analysis or verification of certain information provided, check references of management and key personnel, and take other investigative measures as the Company's management may deem necessary. The manner in which the Company participates in an opportunity will depend upon the nature of the opportunity, the respective needs and desires of the Company and other parties, the management of the opportunity and the relative negotiation strength of the Company and such other management. With respect to any merger or acquisition, negotiations with management of the target company are expected to focus on the percentage of TransAmerican which the target company shareholders would acquire in exchange for all of their shareholdings in the target company depending upon, among other things, the target company's assets and liabilities. The percentage ownership may be subject to reduction in the event that we acquire a target company with substantial assets. Any merger or acquisition effected by TransAmerican is expected to have a dilutive effect on the percentage of shares held by TransAmerican's then shareholders. TransAmerican will participate in a business opportunity only after the negotiation and execution of appropriate written agreements. Generally, such agreements will require specific representations and warranties by all of the parties thereto, will specify certain events of default, will detail the terms of closing and the conditions which must be satisfied by each of the parties prior to and after such closing, will outline the manner of bearing costs, including costs associated with the Company's attorneys and accountants, will set forth remedies on default and will include miscellaneous other terms. As stated, we will not acquire or merge with any entity which cannot provide independent audited financial statements within a reasonable period of time after closing of the proposed transaction. The Company is subject to all of the reporting requirements included in the 1934 Act. Included in these requirements is the affirmative duty of the Company to file independent audited financial statements as part of its Form 8-K to be filed with the Securities and Exchange Commission upon consummation of a merger or acquisition, as well as TransAmerican's audited financial statements included in our annual report on Form 10-K (or 10-KSB, as applicable). If such audited financial statements are not available at closing, or within time parameters necessary to insure our compliance with the requirements of the 1934 Act, or if the audited financial statements provided do not conform to the representations made by the candidate to be acquired in the closing documents, the closing documents will provide that the proposed transaction will be rescinded, at the discretion of TransAmerican. If such transaction is rescinded, the agreement will also contain a provision providing for the acquisition entity to reimburse TransAmerican for all costs associated with the proposed transaction. To assist in the acquisition of a business opportunity, the Company may retain outside consultants, attorneys or accountants as we deem appropriate. We will retain the services of these consultants, attorneys and accountants from time to time on an "as needed" basis. At this time, there is no prior arrangement or understanding regarding the engagement of any particular consultant for future services. Investment Company Act Of 1940 Although TransAmerican is subject to regulation under the Securities Act of 1933, as amended, and the 1934 Act, management believes the Company will not be subject to regulation under the Investment Company Act of 1940 insofar as TransAmerican will not be engaged in the business of investing or trading in securities. In the event that TransAmerican engages in business combinations which result in the Company holding passive investment interests in a number of entities, TransAmerican could be subject to regulation under the Investment Company Act of 1940. In such event, TransAmerican would be required to register as an investment company and could incur significant registration and compliance costs. TransAmerican has obtained no formal determination from the Securities and Exchange Commission as to the status of the Company under the Investment Company Act of 1940 and, consequently, any violation of such Act would subject TransAmerican to material adverse consequences. TransAmerican's Board of Directors unanimously approved a resolution stating that it is the Company's desire to be exempt from the Investment Company Act of 1940 under Regulation 3a-2 thereto. The Securities Enforcement and Penny Stock Reform Act of 1990 The Securities Enforcement and Penny Stock Reform Act of 1990 requires additional disclosure relating to the market for penny stocks in connection with trades in any stock defined as a penny stock. The Commission has adopted regulations that generally define a penny stock to be any equity security that has a market price of less than $5.00 per share, subject to certain exceptions. Such exceptions include any equity security listed on Nasdaq and any equity security issued by an issuer that has (i) net tangible assets of at least $2,000,000, if such issuer has been in continuous operation for three years, (ii) net tangible assets of at least $5,000,000, if such issuer has been in continuous operation for less than three years, or (iii) average annual revenue of at least $6,000,000, if such issuer has been in continuous operation for less than three years. Unless an exception is available, the regulations require the delivery, prior to any transaction involving a penny stock, of a disclosure schedule explaining the penny stock market and the risks associated with that market. Forward Looking Information. This Quarterly Report on Form 10-QSB contains forward- looking statements within the meaning of that term in the Private Securities Litigation Reform Act of 1955 (Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934). Additional written or oral forward-looking statements may be made by the Company from time to time in filings with the Securities and Exchange Commission or otherwise. Statements contained herein that are not historical facts are forward-looking statements made pursuant to the safe harbor provisions referenced above. Forward-looking statements are inherently subject to risk and uncertainties, some of which cannot be predicted or quantified based on current expectations. Consequently, future events and actual results could differ materially from those set forth in, contemplated by or underlying the forward-looking statements contained in this Annual Report. The statements, and "Part I, Item 2, Management's Discussion and Analysis or Plan of Operation", describe certain factors, among others, which could contribute to or cause such differences. Readers are cautioned not to place undue reliance on any forward-looking statements contained herein, which speak only as of the date hereof. The Company undertakes no obligation to publicly release the result of any revisions to these forward- looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unexpected events. PART II -- OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS. There are no legal proceedings threatened or pending, except such ordinary routine matters which may be incidental to the business currently being conducted by the Company. ITEM 2. CHANGES IN SECURITIES. None. ITEM 3. DEFAULTS UPON SENIOR SECURITIES None. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. No matter was submitted to a vote of security holders in the quarter covered by this report. ITEM 5. OTHER INFORMATION None. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. Exhibits None. Reports on Form 8-K None. SIGNATURES In accordance with Section 12 of the Securities Exchange Act of 1934, the Registrant has caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized. TRANSAMERICAN HOLDINGS, INC. Date: May 14, 2001 By: /s/ Najib E. Choufani ------------------------- Najib E. Choufani Chairman and CEO Date: May 14, 2001 By: /s/ Farid E. Tannous ------------------------- Farid E. Tannous Director