10QSB 1 form10qsb.txt FORM 10-QSB - 09-30-03 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 September 30, 2003 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 Identification No.) of Incorporation or Organization) 9601 Wilshire Boulevard, Suite 620, Beverly Hills, California 90210 ___________________________________________________________________ (Address of principal executive offices) (310) 271-9911 ___________________________ (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 18,471,090 shares of Common Stock issued and 17,446,090 shares of Common Stock outstanding. TRANSAMERICAN HOLDINGS, INC. FORM 10-QSB for the quarter ended September 30, 2003 TABLE OF CONTENTS Part I. Financial Information Item 1. Financial Statements Balance Sheet as of September 30, 2003 (unaudited). Statements of Operations for the three and nine months ended September 30, 2003 (unaudited) and September 30, 2002 (unaudited) and from inception on July 22, 1996 to September 30, 2003 (unaudited). Statement of Stockholders' Equity for the Period from inception to September 30, 2003 (unaudited). Statements of Cash Flows for the nine months ended September 30, 2003 (unaudited) and September 30, 2002 (unaudited) and from inception on July 22, 1996 to September 30, 2003 (unaudited). Notes to Financial Statements. Item 2. Managements Discussion and Analysis or Plan of Operation Item 3. Controls and Procedures 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," "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 -- FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS. TRANSAMERICAN HOLDINGS, INC. (A DEVELOPMENT STAGE ENTERPRISE) FINANCIAL STATEMENTS THREE MONTHS ENDED SEPTEMBER 30, 2003 CONTENTS Page Financial Statements: Balance Sheet 4 Statements of Operations 5 Statement of Stockholders' Equity 6 Statements of Cash Flows 7 Notes to Financial Statements 8-10
TRANSAMERICAN HOLDINGS, INC. (A DEVELOPMENT STAGE ENTERPRISE) BALANCE SHEET - SEPTEMBER 30, 2003 (UNAUDITED) ASSETS Current assets - cash $ 64,391 Property and equipment, net of accumulated depreciation 5,218 Cash - restricted 32,866 Other assets 10,000 _________ $ 112,475 ========= LIABILITIES AND STOCKHOLDERS' DEFICIT Current liabilities: Accounts payable and accrued expenses $ 13,872 Due to related parties 37,640 ___________ Total current liabilities $ 51,512 Convertible loans payable, related party, net of unamortized discount of $31,986 391,058 Stockholders' deficit: Common stock, $.001 par value, 100,000,000 shares authorized, 18,471,090 issued and 17,446,090 outstanding 17,621 Subscriptions receivable (83,750) Additional paid-in capital 1,923,891 Deficit accumulated during development stage (2,135,357) Treasury stock, 175,000 shares at cost (52,500) ___________ Total stockholders' deficit (330,095) _________ $ 112,475 =========
TRANSAMERICAN HOLDINGS, INC. (A DEVELOPMENT STAGE ENTERPRISE) STATEMENT OF OPERATIONS From inception on For the three months ended For the nine months ended July 22, 1996 to September 30, 2003 September 30, 2002 September 30, 2003 September 30, 2002 September 30, 2003 __________________ __________________ __________________ __________________ __________________ (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) Net revenues $ - $ - $ - $ - $ - Cost of sales - - - - - ___________ ___________ ___________ ___________ ____________ Gross profit - - - - - General and administrative expenses 203,567 174,069 720,631 336,358 2,154,200 ___________ ___________ ___________ ___________ ____________ Net loss from operations before interest income and other expense (203,567) (174,069) (720,631) (336,358) (2,154,200) Interest income - 246 381 4,405 37,511 Amortization of discount on convertible loans (12,114) - (18,668) - (18,668) ___________ ___________ ___________ ___________ ____________ Net loss $ (215,681) $ (174,069) $ (738,918) $ (336,358) $ (2,135,357) =========== =========== =========== =========== ============ Net loss per share, basis and diluted $ (0.01) $ (0.01) $ (0.04) $ (0.02) =========== =========== =========== =========== Weighted average number of shares outstanding, basic and diluted 17,621,090 16,477,612 17,621,090 16,373,837 =========== =========== =========== ===========
TRANSAMERICAN HOLDINGS, INC. (A DEVELOPMENT STAGE ENTERPRISE) STATEMENT OF STOCKHOLDERS' DEFICIT Deficit Additional accumulated Total Common stock paid-in Subscription during Treasury stockholders' Shares Amount capital receivable development stage stock equity (deficit) ______ ______ __________ ____________ _________________ ________ _______________ Balance at July 22 1996 (inception) $ - $ - $ - $ - $ - $ - $ - Issuance of common stock for cash during July 1996 (restated for forward stock split) 2,000,000 2,000 3,000 5,000 Issuance of common stock in exchange for services in November 1999 100,000 100 100 Issuance of common stock for cash during November 1999 9,200,000 9,200 9,200 Accumulated net loss for the period from July 22, 1996 (inception) to December 31, 1999 (5,100) (5,100) ____________ ________ __________ ____________ ______________ ________ __________ 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 Issuance of common stock for cash during June 2001 50,000 50 99,929 (50,000) 49,979 Net loss for the year ended December 31, 2001 (563,404) (563,404) ____________ ________ __________ ____________ ______________ ________ __________ Balance at December 31, 2001 16,321,090 16,321 1,553,076 (83,750) (888,496) - 597,151 Issuance of common stock for cash during September 2002 800,000 800 199,170 199,970 Issuance of common stock for cash during October 2002 100,000 100 29,870 29,970 Issuance of common stock for cash during December 2002 400,000 400 90,165 90,565 Net loss for the year ended December 31, 2002 (507,943) (507,943) ____________ ________ __________ ____________ ______________ ________ __________ Balance December 31, 2002 17,621,090 17,621 1,872,281 (83,750) (1,396,439) - 409,713 Purchase of treasury stock (unaudited) (52,500) (52,500) Beneficial conversion feature related to loans to related party (unaudited) 65,555 65,555 Extinguishment of a portion of the conver- tible loan to related party (unaudited) (13,945) (13,945) Net loss for the nine months ended September 30, 2003 (unaudited) (738,918) (738,918) ____________ ________ __________ ____________ ______________ ________ __________ Balance at September 30, 2003 17,621,090 $ 17,621 $1,923,891 $ (83,750) $ (2,135,357) $(52,500) $ (330,095) ============ ======= ========== ============ ============== ======== ==========
TRANSAMERICAN HOLDINGS, INC. (A DEVELOPMENT STAGE ENTERPRISE) STATEMENTS OF CASH FLOWS INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS From inception on For the nine months ended July 22, 1996 to September 30, 2003 September 30, 2002 September 30, 2003 __________________ __________________ __________________ (Unaudited) (Unaudited) (Unaudited) Cash flows provided by (used for) operating activities: Net loss $ (738,918) $ (331,953) $ (2,135,357) Adjustments to reconcile net loss to net cash provided by (used for) operating activities: Depreciation 738 9,145 7,027 Issuance of common stock for services - - 94,500 Reserve for bad debt - 4,725 136,725 Amortization of discount on convertible loans 18,668 - 18,668 Changes in assets and liabilities: (Increase) decrease in assets: Interest receivable - (2,362) (2,362) Other assets - - (10,000) Increase (decrease) in liabilities: Accounts payable and accrued expenses - 85 13,872 __________ __________ ____________ Total adjustments 19,406 11,593 258,430 __________ __________ ____________ Net cash used for operating activities (719,512) (320,360) (1,876,927) Cash flows provided by (used for) investing activities: Acquisition of property and equipment - (100) (12,245) Notes receivable - 8,041 (132,000) Notes receivable, related parties - 137,906 (241,723) Restricted cash - (1,373) (32,866) Payments from related parties 239,360 - 239,360 __________ __________ ____________ Net cash provided by investing activities 239,360 144,474 (179,474) __________ __________ ____________ Cash flows provided by (used for) financing activities: Proceeds from sale of common stock - 199,970 1,711,652 Proceeds from note payable, officer - (21,540) 21,540 Payment on note payable, officer - - (21,540) Proceeds from convertible loans payable, related party 590,000 - 590,000 Payment on convertible loans payable, related party (166,000) (166,000) Advances from related parties 37,640 - 37,640 Purchase of treasury stock (52,500) - (52,500) __________ __________ ____________ Net cash used for financing activities 409,140 178,430 2,120,792 __________ __________ ____________ Net increase (decrease) in cash (71,012) 2,544 64,391 Cash, beginning of year 135,403 192,949 - __________ __________ ____________ Cash, end of period $ 64,391 $ 195,493 $ 64,391 ========== ========== ============ Supplemental disclosure of non-cash investing and financing activities: Write-off of investment in Lebanese time share. $2,200,000 ==========
TRANSAMERICAN HOLDINGS, INC. (A DEVELOPMENT STAGE COMPANY) NOTES TO FINANCIAL STATEMENTS NINE MONTHS ENDED SEPTEMBER 30, 2003 (1) ORGANIZATION AND DESCRIPTION OF BUSINESS: TransAmerican Holdings, Inc. (formerly known as Health Research, Ltd.) (the "Company") was incorporated under the laws of the state of Nevada on July 22, 1996, and is conducting its operations in California. The Company has been in the 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. (2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: INTERIM FINANCIAL INFORMATION: 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. on Form 10-KSB for the year ended December 31, 2002. DEVELOPMENT STAGE ENTERPRISE: The Company is a development stage enterprise as defined by the Financial Accounting Standards Board's ("FASB") Statement of Financial Accounting Standards ("SFAS") 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 the Company have been considered as part of the Company's development stage activities NEW ACCOUNTING PRONOUNCEMENTS: During April 2003, the FASB issued SFAS No. 149, "Amendment of Statement 133 on Derivative Instruments and Hedging Activities", effective for contracts entered into or modified after June 30, 2003, except as stated below and for hedging relationships designated after June 30, 2003. In addition, except as stated below, all provisions of this Statement should be applied prospectively. The provisions of this Statement that relate to Statement 133 implementation issues that have been effective for fiscal quarters that began prior to June 15, 2003, should continue to be applied in accordance with their respective effective dates. In addition, paragraphs 7(a) and 23(a), which relate to forward purchases or sales of when-issued securities or other securities that do not yet exist, should be applied to both existing contracts and new contracts entered into after June 30, 2003. The Company does not participate in such transactions, however, is evaluating the effect of this new pronouncement, if any, and will adopt SFAS No. 149 within the prescribed time. TRANSAMERICAN HOLDINGS, INC. (A DEVELOPMENT STAGE COMPANY) NOTES TO FINANCIAL STATEMENTS NINE MONTHS ENDED SEPTEMBER 30, 2003 (2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED: NEW ACCOUNTING PRONOUNCEMENTS, CONTINUED: During May 2003, the FASB issued SFAS No. 150, "Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity", effective for financial instruments entered into or modified after May 31, 2003, and otherwise is effective at the beginning of the first interim period beginning after June 15, 2003. This Statement establishes standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity. It requires that an issuer classify a freestanding financial instrument that is within its scope as a liability (or an asset in some circumstances). Many of those instruments were previously classified as equity. Some of the provisions of this Statement are consistent with the current definition of liabilities in FASB Concepts Statement No. 6, "Elements of Financial Statements". The Company is evaluating the effect of this new pronouncement and will adopt SFAS No. 150 within the prescribed time. (3) TREASURY STOCK: During March 2003, a total of 175,000 shares of treasury stock were purchased from three shareholders. Treasury stock is stated at cost and consists of the 175,000 shares as of September 30, 2003. (4) DUE TO RELATED PARTIES: Due to related parties consists of amounts advanced from a major shareholder to cover operating costs. The note is non-interest bearing and due on demand. (5) CONVERTIBLE LOANS PAYABLE, RELATED PARTY, WITHOUT INTEREST: A summary is as follows: April 15, 2003 issuance $ 84,000 June 1, 2003 issuance 40,000 June 2, 2003 issuance 100,000 June 8, 2003 issuance 20,000 June 9, 2003 issuance 30,000 July 3, 2003 issuance 150,000 _________ 424,000 Less unamortized discount 32,942 _________ $ 391,058 ========= TRANSAMERICAN HOLDINGS, INC. (A DEVELOPMENT STAGE COMPANY) NOTES TO FINANCIAL STATEMENTS NINE MONTHS ENDED SEPTEMBER 30, 2003 (5) CONVERTIBLE LOANS PAYABLE, RELATED PARTY, WITHOUT INTEREST, CONTINUED: On April 15, 2003, the Company issued a $250,000 non-interest bearing convertible loan payable due April 15, 2004. All or any portion of the convertible debenture can be converted into fully paid shares of the Company's $.001 par value common only at the due date or later. The conversion or purchase price of the common stock indebtedness shall be 90% of the market price of the Company's common stock at the time of conversion. Cash proceeds from the convertible debenture amounted to $250,000. The Company repaid $166,000 in June 2003 without penalty. The value of the conversion feature was estimated to be $27,778, which was to be amortized over the life of the loan. Upon early payment of the convertible loan, $13,945 of unamortized discount was charged to additional paid-in capital. For the nine months ending September 30, 2003, $5,020 has been amortized to amortization expense. On June 1, 2003, the Company issued a $40,000 non-interest bearing convertible loan payable due June 1, 2004. All or any portion of the convertible debenture can be converted into fully paid shares of the Company's $.001 par value common only at the due date or later. The conversion or purchase price of the common stock indebtedness shall be 90% of the market price of the Company's common stock at the time of conversion. Cash proceeds from the convertible debenture amounted to $40,000. The value of the conversion feature was estimated to be $4,444, which will be amortized over the life of the loan. For the nine months ending September 30, 2003, $1,465 has been amortized to amortization expense. On June 2, 2003, the Company issued a $100,000 non-interest bearing convertible loan payable due June 2, 2004. All or any portion of the convertible debenture can be converted into fully paid shares of the Company's $.001 par value common only at the due date or later. The conversion or purchase price of the common stock indebtedness shall be 90% of the market price of the Company's common stock at the time of conversion. Cash proceeds from the convertible debenture amounted to $100,000. The value of the conversion feature was estimated to be $11,111, which will be amortized over the life of the loan. For the nine months ending September 30, 2003, $3,632 has been amortized to amortization expense. On June 8, 2003, the Company issued a $20,000 non-interest bearing convertible loan payable due June 8, 2004. All or any portion of the convertible debenture can be converted into fully paid shares of the Company's $.001 par value common only at the due date or later. The conversion or purchase price of the common stock indebtedness shall be 90% of the market price of the Company's common stock at the time of conversion. Cash proceeds from the convertible debenture amounted to $20,000. The value of the conversion feature was estimated to be $2,222, which will be amortized over the life of the loan. For the nine months ending September 30, 2003, $689 has been amortized to amortization expense. TRANSAMERICAN HOLDINGS, INC. (A DEVELOPMENT STAGE COMPANY) NOTES TO FINANCIAL STATEMENTS NINE MONTHS ENDED SEPTEMBER 30, 2003 (5) CONVERTIBLE LOANS PAYABLE, RELATED PARTY, WITHOUT INTEREST, CONTINUED: On June 9, 2003, the Company issued a $30,000 non-interest bearing convertible loan payable due June 9, 2004. All or any portion of the convertible debenture can be converted into fully paid shares of the Company's $.001 par value common only at the due date or later. The conversion or purchase price of the common stock indebtedness shall be 90% of the market price of the Company's common stock at the time of conversion. Cash proceeds from the convertible debenture amounted to $30,000. The value of the conversion feature was estimated to be $3,333, which will be amortized over the life of the loan. For the nine months ending September 30, 2003, $1,026 has been amortized to amortization expense. On July 3, 2003, the Company issued a $150,000 non-interest bearing convertible loan payable due July 3, 2004. All or any portion of the convertible debenture can be converted into fully paid shares of the Company's $.001 par value common only at the due date or later. The conversion or purchase price of the common stock indebtedness shall be 90% of the market price of the Company's common stock at the time of conversion. Cash proceeds from the convertible debenture amounted to $150,000. The value of the conversion feature was estimated to be $16,667, which will be amortized over the life of the loan. For the nine months ending September 30, 2003, $4,030 has been amortized to amortization expense. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION. MANAGEMENT'S DISCUSSION AND ANALYSIS. CRITICAL ACCOUNTING POLICIES AND ESTIMATES Management's Discussion and Analysis of Financial Condition and Results of Operations discusses the Company's financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements 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 revenues and expenses during the reporting period. On an on-going basis, management evaluates its estimates and judgments, including those related to reserves and financial operations. Management bases its estimates and judgments on historical experiences and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. The most significant accounting estimates inherent in the preparation of the Company's financial statements include estimates as to the appropriate carrying value of certain assets and liabilities which are not readily apparent from other sources, primarily allowance for doubtful accounts and recording of assets from related parties. These accounting policies are described at relevant sections in this discussion and analysis and in the notes to the financial statements included in our Annual Report on Form 10-KSB for the fiscal year ended December 31, 2002. RESULTS OF OPERATIONS Three months ended September 30, 2003 as compared to September 30, 2002. REVENUES We are a development stage company. There were no revenues for the three months ended September 30, 2003 and September 30, 2002. GENERAL AND ADMINISTRATIVE EXPENSES Total expenses amounted to $203,567 for the three months ended September 30, 2003, as compared to $174,069 at September 30, 2002. The expenses resulted primarily from costs 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 $203,567 for the quarter ended September 30, 2003, as compared to $174,069 at September 30, 2002. Net loss The Company had a net loss of $215,681 or $(0.01) per share for the three months ended September 30, 2003 as compared to $174,069 or $(0.01) per share for the three months ended September 30, 2002. Nine months ended September 30, 2003 as compared to September 30, 2002. REVENUES We are a development stage company. There were no revenues for the nine months ended September 30, 2003 and September 30, 2002. GENERAL AND ADMINISTRATIVE EXPENSES Total expenses amounted to $720,631 for the nine months ended September 30, 2003, as compared to $336,358 at September 30, 2002. The expenses resulted primarily from costs 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 $720,631 for the nine months ended September 30, 2003, as compared to $336,358 at September 30, 2002. Net loss The Company had a net loss of $738,918 or $(0.04) per share for the nine months ended September 30, 2003 as compared to $336,358 or $(0.02) per share for the nine months ended September 30, 2002. LIQUIDITY AND CAPITAL RESOURCES In the third quarter of 2002, TransAmerican entered into two separate definitive agreements, one for the acquisition of an on-going construction and architectural design firm in Saudi Arabia and one for the acquisition of a resort project in Lebanon that is in the final stages of construction and whose operations are expected to commence in the fourth quarter of 2003. Both of these agreements, however, have been rescinded by management due to general instability in the region and as the other parties were unable to complete their due diligence. Furthermore, the Company eliminated the $2,200,000 investment and related party payable from its balance sheet in the second quarter of 2003 related to the Lebanese project. Notwithstanding the foregoing, we are in advanced negotiations with several other domestic and international entities with going businesses in varied sectors of the market. We expect to conclude at least one of these transactions in the first quarter of 2004. 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 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 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 Quarterly 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. ITEM 3. CONTROLS AND PROCEDURES. As required by SEC rules, we have evaluated the effectiveness of the design and operations of our disclosure controls and procedures as of the end of the period covered by this quarterly report. This evaluation was carried out under the supervision and with the participation of our management, including our principal executive officer. Based on this evaluation, the officer has concluded that the design and operation of our disclosure controls and procedures are effective. There were no significant changes to our internal controls or in other factors that could significantly affect internal controls subsequent to the date of the evaluation. 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. None. 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: DECEMBER 17, 2003 BY: /s/ NAJIB CHOUFANI ______________________ Najib Choufani Chairman, CEO & CFO DATE: DECEMBER 17, 2003 BY: /S/ TAREK CHOUFANI ______________________ Tarek Choufani Director