-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, QhkhN/RoMOhQxuHow53CfO9/zpmmb2vwhM56OUE6LZZgtCprriBLtCSoGsAAdqw4 dHodictoTYUzHO/qpUbdvQ== 0001010412-02-000268.txt : 20021118 0001010412-02-000268.hdr.sgml : 20021118 20021118114311 ACCESSION NUMBER: 0001010412-02-000268 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20020912 ITEM INFORMATION: Changes in control of registrant ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits ITEM INFORMATION: Change in fiscal year FILED AS OF DATE: 20021118 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TGFIN HOLDINGS INC CENTRAL INDEX KEY: 0000876134 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PREPACKAGED SOFTWARE [7372] IRS NUMBER: 720861671 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-19470 FILM NUMBER: 02830931 BUSINESS ADDRESS: STREET 1: 39 BROADWAY STREET 2: SUITE 740 CITY: NEW YORK STATE: NY ZIP: 10006 BUSINESS PHONE: 212-956-9595 MAIL ADDRESS: STREET 1: 39 BROADWAY, SUITE #740 CITY: NEW YORK STATE: NY ZIP: 10006 FORMER COMPANY: FORMER CONFORMED NAME: DIGITRAN SYSTEMS INC /DE DATE OF NAME CHANGE: 19930328 8-K/A 1 ka91202.txt AMENDMENT TO 8-K CURRENT REPORT DATED SEPTEMBER 12, 2002 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K/A CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported) September 12, 2002 ------------------ TGFIN Holdings, Inc. -------------------- (Exact name of registrant as specified in its charter) Delaware 1-11034 72-0861671 - -------- ------- ---------- (State or other (Commission (IRS Employer jurisdiction of File Number) Identification No.) incorporation) 39 Broadway, Suite 740, New York, New York 10006 --------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (212) 363-3900 -------------- n/a --- (Former name or former address, if changed since last report.) PLEASE ADDRESS ALL CORRESPONDENCE TO: Mark Gasarch, Esq. 150 East 58th Street 34th Floor New York, New York 10155 (212) 956-9595 Item 1. Changes In Control of Registrant As previously reported on Form 8-K filed September 13, 2002, on September 12, 2002 the shareholders of the Registrant approved the merger of the Registrant and its wholly-owned subsidiary, DSI Acquisition, Inc. ("DSI") into TradinGear.com Incorporated ("TradinGear"), as had been previously approved by the shareholders of DSI and TradinGear and the boards of directors of all three companies. As a result of this merger, those persons who, by virtue of their shareholdings of and/or position with the Registrant deem them to "control" the Registrant, and their percentage of voting securities of the Registrant now beneficially owned directly or indirectly are: Samuel Gaer, President, Director - 32.7% Marni Gaer, Secretary, Treasurer, Director - 9.9% Ronald Comerchero, Director - 9.7% Bruce Frank, Vice-President - 8.3% (Marni Gaer is the wife of Samuel Gaer) Prior to the merger, control of the Registrant was held by the following persons: Julie T. Reeves - 18.07% Evelyn R. Call - 18.07% Rigel Hulett - 18.07% Quentin Casperson, President - 1.25% Scott Lybbert, Secretary - 2.70% Aaron Etra, Director - 1.13% Gary Blum, Director - 1.21% Item 5. Other Events As previously reported on Form 8-K filed September 13, 2002, the shareholders of the Registrant approved the following, all previously approved by the Registrant's Board of Directors: 1. Increase in capitalization of the Registrant's common shares from 25,000,000 shares to 50,000,000 shares 2. A 1 for 21 reverse split of the Registrant's common shares 3. A change in the voting rights of the Registrant's common shares from 1/10 of a vote per share to 1 vote per share 4. The election of Samuel Gaer, Marni Gaer and Ronald Comerchero to the Registrant's Board of Directors 5. The change of the Registrant's name to TGFIN Holdings, Inc. 6. The appointment of Samuel Klein and Company, CPAs, as the Registrant's independent auditors Item 7. Financial Statements and Exhibits (a) Financial statements and * (b) Pro forma financial information * * Filed herewith (c) Exhibits 2.1 Certificate of Merger Merging DSI Acquisition, Inc Into TradinGear.com Incorporated** 3.1 Certificate of Amendment to Certificate of Incorporation of Digitran Systems, Incorporated** 99.1 Certification of Chief Executive Officer and Chief Financial Officer* * Filed herewith ** Previously filed Item 8. Change in Fiscal Year As previously reported on From 8-K filed September 13, 2002, on September 12, 2002 the Board of Directors of the Registrant resolved to change its fiscal year from a fiscal year ended April 30 to a fiscal year ended December 31. The Registrant has filed timely a Report on Form 10-QSB for its fiscal quarter ended July 31, 2002. The Registrant will file a transition report on Form 10-QSB for the fiscal quarter (two months) ended September 30, 2002. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this amendment to this report to be signed on its behalf by the undersigned hereunto duly authorized. Date: November 18, 2002 TGFIN Holdings, Inc. (Registrant) By/s/ Samuel Gaer --------------------------- Samuel Gaer, President Principal Executive Officer TRADINGEAR.COM, INCORPORATED FINANCIAL STATEMENTS DECEMBER 31, 2001 AND 2000 INDEPENDENT AUDITOR'S REPORT The Board of Directors and Stockholders TradinGear.Com, Incorporated New York, New York We have audited the accompanying balance sheets of TradinGear.Com, Incorporated as of December 31, 2001 and 2000 and the related consolidated statements of operations, stockholders' equity and cash flows for each of the years then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of TradinGear.Com, Incorporated as of December 31, 2001 and 2000, and the results of operations and cash flows for each of the years then ended, in conformity with accounting principles generally accepted in the United States of America. /s/Samuel Klein and Company SAMUEL KLEIN AND COMPANY Newark, New Jersey April 10, 2002 TRADINGEAR.COM, INCORPORATED BALANCE SHEETS
December 31, December 31, ASSETS 2001 2000 - ------ ------------ ----------- Current Assets: Cash and cash equivalents $ 230,360 $ 97,257 Accounts receivable, net - 50,300 Investments, available for sale Securities - 755,847 Prepaid expenses 6,801 - Deferred costs 59,899 - ----------- ----------- Total Current Assets 297,060 903,404 Property and equipment, net 151,964 137,369 Deposits 101,621 101,621 ----------- ----------- Total Assets $ 550,645 $ 1,142,394 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Accounts payable $ 31,087 $ 326,918 Accrued expenses 38,431 25,000 Income tax payable 4,300 - Deferred revenue 40,000 130,000 ----------- ----------- Total Current Liabilities 113,818 481,918 ----------- ----------- Stockholders' Equity: Common stock ($.0001 par value, 30,000,000 shares authorized, 18,829,309 and 17,788,987 shares issued and outstanding at December 31, 2001 and 2000, respectively) 1,883 1,779 Additional paid-in-capital 3,051,607 2,733,143 Less: Deferred compensation relating To stock issued to consultants (381,644) (307,188) Retained earnings (deficit) (2,235,019) (1,767,258) ----------- ----------- Total Stockholders' Equity 436,827 660,476 ----------- ----------- Total Liabilities and Stockholders' Equity $ 550,645 $ 1,142,394 =========== ===========
These accompanying notes are integral part of these financial statements. TRADINGEAR.COM, INCORPORATED STATEMENTS OF OPERATIONS
For the Years Ended December 31, 2001 2000 Revenues: Software license fees $ 1,128,836 $ 242,778 Costs and Expense: General and administrative 601,098 636,242 Website costs 4,508 87,629 Development costs 426,544 418,044 Consulting fees 496,530 286,179 Depreciation expense 36,807 23,003 ----------- ----------- Total Costs and Expenses 1,565,487 1,451,097 ----------- ----------- Net Loss from Operations (436,651) (1,208,319) ----------- ----------- Other Revenue (Expense) Realized loss on sale of securities (79,450) Interest Income 5,445 Miscellaneous revenue 11,737 Finance charges (35,172) ----------- ----------- (23,435) (74,005) ----------- ----------- Net Loss before Provision for Income Tax (460,086) (1,282,324) Provision for Income Tax 7,675 378 ----------- ----------- Net Loss $ (467,761) $(1,282,702) =========== =========== Loss per Share: Basic and diluted loss per share $ (0.02) $ (0.07) =========== =========== Basic and diluted common shares outstanding 18,829,309 18,829,309 =========== ===========
These accompanying notes are integral part of these financial statements. TRADINGEAR.COM, INCORPORATED STATEMENTS OF STOCKHOLDERS' EQUITY FOR THE YEARS ENDED DECEMBER 31, 2001 AND 2000
Common Stock Par Value $.0001 ---------------------------------------------------- Common Additional Number Stock Paid-In Deferred of Shares Amount Capital Compensation Balances, January 1, 2000 17,788,987 1,779 2,733,143 $(515,063) Reclassification of Unrealized Loss on Available for Sale Securities - - - - Amortization of deferred compensation - - - 207,875 Net Loss for the Year Ended December 31, 2000 - - - - ---------- ---------- ----------- --------- Balances December 31, 2000 17,788,987 1,779 2,733,143 (307,188) Issuance of Common Stock 785,926 79 281,046 - Common stock issued in exchange for accounts payable 1,378,870 138 483,987 - Common stock issued for services 881,373 88 309,202 (291,700) Cancellation of Common Stock (2,005,847) (201) (755,771) - Amortization of deferred compensation - - - 217,244 Net Loss for the Year Ended December 31, 2001 - - - - ---------- ---------- ----------- --------- Balances December 31, 2001 18,829,309 $ 1,883 $ 3,051,607 $(381,644) ========== ========== =========== =========
[CONTINUED] TRADINGEAR.COM, INCORPORATED STATEMENTS OF STOCKHOLDERS' EQUITY FOR THE YEARS ENDED DECEMBER 31, 2001 AND 2000
Unrealized Retained Gain/(Loss) Total Earnings Available Stockholders' (Deficit) For Sale Equity Balances, January 1, 2000 (484,556) 667,188 2,402,491 Reclassification of Unrealized Loss on Available for Sale Securities - (667,188) (667,188) Amortization of deferred compensation - - 207,875 Net Loss for the Year Ended December 31, 2000 (1,282,702) - (1,282,702) --------------- ----------- ------------ Balances December 31, 2000 (1,767,258) - 660,476 Issuance of Common Stock - - 281,125 Common stock issued in exchange for accounts payable - - 484,125 Common stock issued for services - - 17,590 Cancellation of Common Stock - - (755,972) Amortization of deferred compensation - - 217,244 Net Loss for the Year Ended December 31, 2001 (467,761) - (467,761) --------------- ----------- ----------- Balances, December 31, 2001 $ (2,235,019) $ - $ 436,827 =============== =========== ===========
These accompanying notes are integral part of financial statements. TRADINGEAR.COM, INCORPORATED STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 2001 2000 Cash Flows from Operating Activities: Net Loss $(467,761) $(1,282,702) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 36,807 23,003 Loss on sale of investments - 79,450 Amortization of deferred compensation 217,244 207,875 Compensation costs of common stock issued to consultant 17,590 - Changes in assets and liabilities, net of effect from: Decrease (increase) in accounts receivable 50,300 (50,300) Increase in prepaid Expenses (6,801) - Increase in deferred Costs (59,899) - Increase in deposits - (101,621) Increase in accounts Payable and accrued Expenses 205,900 264,378 Increase (decrease) in deferred revenue (90,000) 130,000 Increase (decrease) in Accrued tax payable - (654) ---------- ----------- Net cash used in Operating activities (96,620) (730,571) ---------- ----------- Cash Flows from Investing Activities: Purchase of property and Equipment (51,402) (84,426) Sale of Investments - 261,800 ---------- ---------- Net cash provided by (Used in) investing Activities (51,402) 177,374 ---------- ---------- Cash Flows from Financing Activities: Cash proceeds from officer's loan 28,000 - Repayment of officer's loan (28,000) - Issuance of common stock 281,125 - ---------- ---------- Net Cash provided by Financing Activities 281,125 - ---------- ---------- Net Increase (decrease) in cash and Cash Equivalents 133,103 (553,197) Cash and Cash Equivalents, beginning of period 97,257 650,454 ---------- ---------- Cash and Cash Equivalents, end of period $ 230,360 $ 97,257 ========== ==========
These accompanying notes are integral part of these financial statements. TRADINGEAR.COM, INCORPORATED STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 2001 2000 Cash paid during the period for: Income Taxes $ 3,425 $ - ========== ========== Interest $ 9,200 $ - ========== ========== Supplemental Disclosures of Noncash Investing and Financing Activities: Common Stock Issued (Cancelled) in exchange for marketable securities $ (755,847) $ - ========== ========== Common Stock issued in exchange for accounts payable $ 484,125 $ - ========== ========== Common Stock issued for Services $ 309,290 $ - ========== ==========
These accompanying notes are integral part of these financial statements. TRADINGEAR.COM,INCORPORATED CONDENSED BALANCE SHEET (Unaudited)
June 30, 2002 ------------ ASSETS Current Assets: Cash and cash equivalents $ 21,612 Accounts receivable, net 235,552 Prepaid expenses 24,332 Deferred Costs 59,899 ----------- Total Current Assets 341,395 Property and equipment, net 141,171 Deposits 101,621 ----------- Total Assets $ 584,187 =========== LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Accounts payable $ 146,130 Accrued expenses 65,577 Deferred Revenue - ----------- Total Current Liabilities 211,707 ----------- Stockholders' Equity: Common stock ($.0001 par value), 30,000,000 shares authorized, 19,626,809 issued and outstanding at June 30, 2002 1,963 Additional paid-in-capital 3,349,527 Less: Deferred compensation Relating to stock issued to consultants (245,375) Retained earnings (deficit) (2,733,635) ----------- Total Stockholders' Equity 372,480 ----------- Total Liabilities and Stockholders' Equity $ 584,187 ===========
These accompanying notes are integral part of these financial statements. TRADINGEAR.COM, INCORPORATED CONDENSED STATEMENTS OF OPERATIONS (Unaudited)
Six Months Ended June 30, 2002 2001 REVENUES $ 560,195 $ 371,904 COSTS AND EXPENSES General & admin. $ 500,254 $ 412,148 Development costs 338,555 220,193 Consulting fees 192,360 71,970 Depreciation expense 21,869 17,363 ---------- --------- Total costs and expense 1,053,038 721,674 Net Income (loss) before Provision for Income Taxes $ (492,843)$(349,770) Provision for Income taxes $ 5,773 $ - NET INCOME (LOSS) $(498,616) $(349,770) BASIC AND DILUTED LOSS PER SHARES $ (0.03) $ (0.02) Weighted Average number of shares outstanding 19,626,809 19,626,809
The accompanying notes are an integral part of these consolidated financial statements. TRADINGEAR.COM, INCORPORATED STATEMENTS OF CASH FLOWS (Unaudited)
For the Six Months Ended June 30, 2002 2001 Cash Flows from Operating Activities: Net Income (Loss) $ (498,616) $ (349,770) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and Amortization 21,868 17,724 Amortization of deferred Compensation 136,269 222,925 Compensation costs of common stock issued to consultant - - Changes in assets and liabilities, net of effect from: Decrease (increase) in accounts receivable (235,552) (88,755) Increase in prepaid Expenses (17,531) (2,985) Increase in deferred costs - (35,000) Increase in deposits - - Increase in accounts Payable and accrued Expenses 137,889 10,509 Increase (decrease) in deferred revenue (40,000) (3,600) ---------- ---------- Net cash used in Operating activities (495,673) (228,952) ---------- ---------- Cash Flows from Investing Activities: Purchase of property and Equipment (11,075) (28,571) ---------- ---------- Net cash provided by (Used in) investing Activities (11,075) (28,571) ---------- ---------- Cash Flows from Financing Activities: Issuance of common stock 298,000 215,001 ---------- ---------- Net Cash provided by Financing Activities 298,000 215,001 ---------- ---------- Net Increase (decrease) in cash and Cash Equivalents (208,748) (42,522) Cash and Cash Equivalents, beginning of period 230,360 97,257 ---------- ---------- Cash and Cash Equivalents, end of period $ 21,612 $ 54,735 ========== ========== Supplementary Disclosure of Cash Flow Information: Cash paid during the period for: Income Taxes $ - $ - ========== ========== Interest $ 172 $ - ========== ========== Supplemental Disclosures of Noncash Investing and Financing Activities: Common stock cancelled In exchange for marketable Securities $ - $ (755,847) ========== ========== Common Stock issued in exchange for accounts payable $ - $ 365,138 ========== ========== Common Stock issued for Services $ - $ 410,812 ========== ==========
These accompanying notes are an integral part of these financial statements. TRADINGEAR.COM, INCORPORATED NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2001 UNAUDITED AS OF JUNE 30,2002 1. THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The Company TradinGear.Com, Incorporated ("TG" or the "Company") was incorporated under the laws of the State of Delaware on July 7, 1999. TradinGear.Com, Inc. produces trading software designed for the financial services industry. The Company's software technology is designed to provide stock exchanges and broker dealers in the securities industry the ability to offer to its customers an on-line electronic system for securities trading. Fair Value of Financial Instruments Carrying amounts of certain of the Company's financial instruments, including cash and cash equivalents, trade receivable, accounts payable and other accrued liabilities, approximate fair value because of their short maturities. Revenue Recognition The Company's revenues are derived principally from providing its customers with software applications that enable them to conduct stock transactions online. Additional revenue may be derived from post contract support services such as maintenance/service contracts, hosting upgrades and enhancements. The Company's principle revenues are recognized utilizing the percentage of completion method of accounting for contract revenues in conformity with Accounting Research Bulletin 45 (ARB-45) "Long Term Construction - Type Contracts" and the guidance contained within the American Institute of Certified Public Accountants' Statements of Position ("SOP") 81-2 "Accounting for Performance of Construction-Type and Certain Production-Type Contracts" and SOP 97-2 " Software Revenue Recognition". Accordingly the Company recognizes its principle revenues from its software arrangements only upon the completion and acceptance by the customer of contracted milestones. The Company's post contract support services revenue is recognized over the period during which the service is expected to be performed. The software arrangements provide for no right of return or refunds and are fixed or determinable. Deferred revenue represents amounts received on uncompleted project milestones. Use of Management's 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. Investments The Company accounts for its investments in debt and equity securities in accordance with Statement of Financial Accounting Standards No. 115, "Accounting for Certain Investments in Debt and Equity Securities" (SFAS 115), which requires that investments in debt securities and marketable equity securities be designated as trading, held-to-maturity or available-for-sale. TRADINGEAR.COM, INCORPORATED NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2001 UNAUDITED AS OF JUNE 30,2002 (Continued) 1. THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Investments (Continued) Management determines the appropriate classification of its investments in debt and equity securities at the time of purchase and reevaluates such determinations at each balance sheet date. Debt securities for which the Company does not have the intent or ability to hold to maturity are classified as available for sale, along with any investments in equity securities. Securities available for sale are carried at fair value, with unrealized gains and losses, net of income taxes, reported as a separate component of Stockholders' Equity. Property and Equipment Property and equipment are recorded at cost and being depreciated for financial accounting purposes on the straight-line method over their respective estimated useful lives ranging from three to thirty-nine years. Upon retirement or other disposition of these assets, the cost and related accumulated depreciation are removed from the accounts and the resulting gains or losses are reflected in the results of operations. Expenditures for maintenance and repairs are charged to operations. Renewals and betterments are capitalized. Depreciation of leased equipment under capital leases is included in depreciation. Product Development Costs incurred in conjunction with the development of new products are charged to expense as incurred. Material software development costs subsequent to the establishment of technological feasibility will be capitalized. Based upon the Company's product development process, technological feasibility is established upon the completion of a working model. To date attainment of technological feasibility and general release to customers have substantially coincided. Impairment of Long-Lived Assets The Company adopted Statement of Financial Accounting Standards No. 121 (SFAS 121), "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of". SFAS 121 requires that if facts and circumstances indicate that the cost of fixed assets or other assets may be impaired, an evaluation of recoverability would be performed by comparing the estimated future undiscounted pre-tax cash flows associated with the asset to the asset's carrying value to determine if a write-down to market value or discounted pre-tax cash flow value would be required. Comprehensive Income The Company has adopted Statement of Financial Accounting Standards No. 130 (SFAS 130), "Reporting on Comprehensive Income". This statement establishes rules for the reporting of comprehensive income and its components which require that certain items such as foreign currency translation adjustments, unrealized gains and losses on certain investments in debt and equity securities, minimum pension liability adjustments and unearned compensation expense related to stock issuances to employees be presented as separate components of stockholders' equity. The adoption of SFAS 130 had no impact on total shareholders' equity. TRADINGEAR.COM, INCORPORATED NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2001 UNAUDITED AS OF JUNE 30,2002 (Continued) 1. THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Stock-Based Compensation The Company will follow Accounting Principles Board Opinion No. 25, (APB 25), "Accounting for Stock Issued to Employees" in accounting for future employee stock option plans. Under APB 25, when the exercise price of the Company's employee stock options equals or is above the market price of the underlying stock on the date of grant, no compensation expense is recognized. In accounting for options granted to persons other than employees, the provisions of Financial Accounting Standards Board Statement No. 123, (FASB 123), "Accounting for Stock Based Compensation" are applied in accordance with FASB 123 at the fair value of these options. Earnings (Loss) Per Share The Company will calculate earnings (loss) per share in accordance with SFAS No. 128, "Computation of Earnings Per Share" and SEC Staff Accounting Bulletin No. 98. Basic earnings per share is computed using the weighted average number of common and dilutive common equivalent shares outstanding during the period. Common equivalent shares consist of the incremental common shares issuable upon the conversion of the Preferred Stock (using the if-converted method) and shares issuable upon the exercise of stock options (using the treasury stock method); common equivalent shares are excluded from the calculation if their effect is anti-dilutive. Earnings (loss) per share in these financial statements has been computed as if the outstanding shares as of June 30, 2002 were outstanding for all periods. Income Taxes The Company follows Statement of Financial Accounting Standards No. 109, (SFAS 109) "Accounting for Income Taxes". SFAS 109 requires the recognition of deferred tax liabilities and assets for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax liabilities and assets are determined based on the difference between the financial statement carrying amounts and tax bases of assets and liabilities using enacted tax rates in effect in the years in which the differences are expected to reverse. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. Start-Up Activities The American Institute of Certified Public Accountants issued Statement of Position 98-5 (SOP 98-5), "Reporting the Costs of Start-Up Activities". SOP 98-5 requires start-up costs, as defined, to be expensed as incurred and is effective for financial statements for fiscal years beginning after December 15, 1998. The Company expenses all start-up costs as incurred in accordance with this statement and therefore the issuance of SOP 98-5 will have no material impact on the Company's financial statements. TRADINGEAR.COM, INCORPORATED NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2001 UNAUDITED AS OF JUNE 30,2002 (Continued) 1. THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Recent Accounting Pronouncements In July 2001 the FASB issued Statement of Financial Accounting Standards No. 141, "Business Combinations" (SFAS 141) and Statement of Financial Accounting Standards No. 142, "Goodwill and Other Intangible Assets" (SFAS 142). SFAS 141 requires that all business combinations initiated after June 30, 2001 be accounted for using the purchase method of accounting and is effective for all business combinations initiated after June 30, 2001. SFAS 142 requires that goodwill be tested for impairment under certain circumstances, and written off when impaired, rather then being amortized as previous standards required. SFAS 142 is effective for fiscal years beginning after December 15, 2001. Early application is permitted for entities with fiscal years beginning after March 15, 2001 provided that the first interim period financial statements have not been previously issued. The adoption of SFAS 141 had no effect on the Company's operating results or financial condition. The Company is currently assessing the impact of SFAS 142 on its operating results and financial condition. Reclassifications Certain reclassifications have been made to the prior year balances to conform to the current year presentation. 2. INVESTMENTS As of December 31, 2001 and 2000 the Company classified their investments as available for sale securities. Unrealized holding gains (losses) on available for sale securities which are reported at fair value are included as a separate component of stockholders' equity. Investments at December 31, 2000 consist of the following: Unrealized Cost Market Gain (Loss) ---- ------ ----------- Available for sale securities: Marketable Equity Securities $1,097,097 $755,847 $ - ========== ======== =========== The Company had no investments at June 30, 2002 or December 31, 2001. 3. ACCOUNTS RECEIVABLE The Company provides an allowance for doubtful accounts equal to the estimated uncollectible amounts. The Company's estimate is based on historical collection experience and a review of the current status of trade accounts receivable. It is reasonably possible that the Company's estimate of the allowance for doubtful accounts will change. Accounts receivable consist of the following at: June 30, December 31, 2002 2001 2000 ----------- -------- -------- Accounts Receivable Trade $ 235,552 - $ 50,300 =========== ======== ======== TRADINGEAR.COM, INCORPORATED NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2001 UNAUDITED AS OF JUNE 30,2002 (Continued) 4. PROPERTY AND EQUIPMENT Property and equipment, at cost, and their respective useful lives consist of the following at: Estimated June 30, December 31, Useful 2002 2001 2000 Lives ----------- ---------- ---------- ----- Computer equipment 206,434 $ 198,208 $ 148,580 5 Office equipment 10,504 7,654 5,880 5 Leasehold improvements 7,350 7,350 7,350 5 ----------- ---------- ---------- 224,288 213,212 161,810 Less: Accumulated depreciation 83,117 61,248 24,441 ----------- ---------- ---------- $ 141,171 $ 151,964 $ 137,369 =========== ========== ========== 5. RELATED PARTY TRANSACTION On July 10, 2001 Samuel Gaer, the CEO of TradinGear.Com, Incorporated, agreed to lend the Company $28,000 at a rate of six percent (6%) and due on demand. At December 31, 2001 the note had been repaid in full. 6. PROVISION FOR INCOME TAXES For the periods from inception (July 7, 1999) to June 30, 2002 the Company had accumulated losses of $2,733,635. No federal tax expense or benefit has been reported in the financial statements due to the uncertainty of future operations. 7. COMMITMENTS AND CONTINGENCIES Litigation The Company is subject from time to time to litigation arising from the normal course of business. In management's opinion, any such contingencies would be covered under its existing insurance policies or would not materially affect the Company's financial position or results of operations. TRADINGEAR.COM, INCORPORATED NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2001 UNAUDITED AS OF JUNE 30,2002 (Continued) 7. COMMITMENTS AND CONTENGENCIES (Continued) Litigation (Continued) Norman Fuchs ("Fuchs"), a former director of the Company, and ATH Ventures, Inc. ("ATH"), a company controlled by Fuchs, have commenced an action against the Company and against Ausinsoft, Inc., an entity of which Samuel Gaer, the President, Director and principal shareholder of the Company, is also an officer, director and shareholder. The action seeks monetary damages and shares of the Company's common stock. Subsequently, Fuchs and ATH commenced an action seeking to enjoin the merger as discussed in Note 8 and petitioned the Court for a Temporary Restraining Order ("TRO"). The Company defended this action and on January 10, 2002 the TRO expired without action and Fuchs, ATH and the Company engaged in preliminary settlement discussions which concluded in a February 14, 2002 settlement agreement and no monetary damages or obligations to the Company. Leases The Company leases office equipment and office space under noncancellable operating leases. Commitments under these leases are as follows: June 30, December 31, ----------- ------------ 2002 $ - $ 139,082 2003 140,946 142,855 2004 144,774 146,741 2005 148,717 150,743 2006 152,778 102,663 2007 26,101 - ----------- ------------ $ 613,316 $ 682,084 =========== ============ Employment Agreements On December 10, 1999 the Company entered into an employment agreement with Samuel H. Gaer, the Chief Executive Officer of the Company. The agreement is for a term of three years commencing January 1, 2000 and provides for a base annual salary of $120,000 and for bonuses as determined by the Company's Board of Directors. 401(k) Plan and Profit Sharing Plan The Company has approved a 401(k) Plan and a Profit Sharing Plan which cover full-time employees who have attained the age of 21 and have completed at least one year of service with the Company. Under the 401(k) Plan, an employee may contribute an amount up to 25% of his compensation to the 401(k) Plan on a pretax basis not to exceed the current Federal limitation of $10,500 per year (as adjusted for cost of living increase). Amounts contributed to the 401(k) Plan are nonforfeitable. Under the Profit Sharing Plan, a member in the plan participates in the Company's contributions to the Plan as of December 31 in any year, with allocations to individual accounts based on annual compensation. An employee does not fully vest in the plan until completion of three years of employment. The Board of Directors determine the Company's contributions to the plan on a discretionary basis. The Company has not made any contributions to date. TRADINGEAR.COM, INCORPORATED NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2001 UNAUDITED AS OF JUNE 30,2002 (Continued) 8. COMMON STOCK The authorized capital stock of the Company consists of 30,000,000 shares of common stock, par value $.0001 per share. The Company issued 13,280,000 shares of common stock to the founders of the Company for $.0001 per share, the par value of the Company's common stock. During July 1999 the Company issued 1,263,000 shares of common stock to two consultants for services rendered and a two year agreement which provided the Company with office space and services through June 2001. The total value of the services and consulting agreement was estimated to be $661,500. During October 1999 the Company issued 10,000 shares of its common stock to a consultant for services valued at $5,000. In addition, during October 1999 the Company issued 500,000 shares of its common stock to professionals for services rendered valued at $150,000 and for future professional services to be rendered through December 2002 valued at $100,000. Also, during the fourth quarter of 1999 the Company sold 1,980,140 shares of its common stock to four investors for cash of $500,000 and the receipts of marketable equity securities valued at $341,250 or for a total consideration of $841,250. In November 1999 the Company issued 755,847 shares of its common stock valued at $755,847 in conjunction with the Company entering into a license agreement to provide its proprietary software suite in exchange for marketable equity securities of the same value. This agreement and exchange of securities ultimately became the subject of a dispute in late 2000 which was settled in 2001 with the parties agreeing to cancel the outstanding shares exchanged and with the Company retaining $110,000 for its software suite that it received and recorded as revenue during 2000. As part of this settled dispute the Company, in a separate action, terminated the employment of one of its officers and the Company was returned 1,250,000 shares of its common stock that it originally issued to this individual for cancellation. In April 2001 the Company sold 710,585 shares of its common stock for $250,000 to an investor consultant. The Company also issued 500,000 of its common stock to this individual in exchange for a two year consulting agreement valued at $175,950 which expired in April 2002. Also, during April 2001 the Company issued 1,710,584 shares in satisfaction of amounts owed to a consultant amounting to $262,500 and for future consulting services valued at $337,500, or a total of $600,000. During the fourth quarter of 2001 the Company issued 25,000 shares of its common stock to an investor for $10,000. In addition, the Company issued to a consultant 100,000 shares of its common stock for services rendered valued at $17,585 and $20,000. The Company also issued to this consultant for $1,000 an option to purchase 50,000 shares of its common stock at $0.40 per share commencing December 21, 2001 and ending on December 21, 2004. During the first quarter of 2002 the Company sold 797,500 shares of its Common stock at $ .40 per share of its Common stock to three investors and received net proceeds of $ 298,000. TRADINGEAR.COM, INCORPORATED NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2001 UNAUDITED AS OF JUNE 30,2002 (Continued) 9. PROPOSED MERGER In September 15, 2001, the Company and Digitran Systems, Inc. (a publicly held Delaware company together with its subsidiaries herein referred to as "DSI") entered into an Agreement and Plan of Reorganization ("the Agreement"). The Agreement describes a merger transaction whereby TG will become a wholly-owned subsidiary of DSI which public company in turn will change its name to TGFIN Holdings, Inc. ("TGFIN"). The Agreement is subject to shareholder approval of both companies and is also subject to certain conditions, including, but not limited to, submission for approval of proxy material to the Securities and Exchange Commission. The Agreement calls for the shareholders of TG to receive 19,154,369 shares of the reorganized TGFIN or one share of TGFIN for each share of TG share held after giving effect to a reverse stock split of DSI shares and its change in name. The result will be that the shareholders of TG will own approximately 93% of the outstanding shares of the reorganized TGFIN. The merger transaction will be accounted for as a purchase with TG being deemed the acquiror for accounting and financial reporting purposes. However, since the stockholders of TG will own approximately 93% of the outstanding shares of the reorganized TGFIN no step up basis or goodwill will be recorded by TG. This accounting treatment is in accordance with the view of Securities and Exchange Commission staff members that the acquisition by a public shell of the assets of a business from a private company should be accounted for at historical cost and accounted for as a reverse merger. 10. SUBSEQUENT EVENT (UNAUDITED) On September 12, 2002, the merger as described in note "9"successfully consummated and the par value on the company's common stock was recapitalized from $0.0001 to $0.01.In addition the company issued an additional 1,081,426 shares of common stock, 777,384 for $316,500 of convertible notes payable which were received and converted during the third quarter and 304,042 in connection with consulting services agreements. TGFIN HOLDINGS, INC. PRO FORMA FINANCIAL INFORMATION: SUMMARY UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL DATA The following unaudited pro forma consolidated financial data for TGFIN Holdings, Inc.("TGFIN") is based on the historical financial statements of TradinGear.Com Incorporated ("TradinGear") and Digitran Systems Incorporated (the "Company") which appear elsewhere in this Proxy Statement and has been prepared on a pro forma basis to give effect to the merger under the purchase method of accounting, as if the transaction had occurred at January 1, 2001 for each operating period presented. The pro forma information was prepared based upon certain assumptions described below and may not be indicative of results that actually would have occurred had the merger occurred at the beginning of the last full fiscal year presented or of results which may occur in the future. The unaudited pro forma consolidated financial data and accompanying notes should be read in conjunction with the annual and interim financial statements and notes thereto of TradinGear and the Company appearing elsewhere herein and incorporated by reference into this Proxy Statement . The unaudited pro forma consolidated balance sheet as of June 30, 2002 presents the financial position of TGFIN as if the merger had occurred on that date and was prepared utilizing the unaudited TradinGear balance sheet as of June 30, 2002 and the Company's audited balance sheet as of September 12, 2002, the date the merger was consummated . The pro forma consolidated statements of operations data presented assumes the merger occurred at the beginning of the periods presented, it should not be assumed that TradinGear and the Company would have achieved the unaudited pro forma consolidated results if they had actually been combined during the periods shown. The merger, which occurred on September 12, 2002, will be accounted for as a purchase. The stockholders of TradinGear received one share of common stock of TGFIN for each share of TradinGear common stock held and the stockholders of the Company received one share of TGFIN for every twenty one shares of common stock held, resulting in the current stockholders of TradinGear owning approximately 93% of TGFIN common stock. The proposed plan of merger was subject to a number of conditions including, but not limited to, regulatory approvals and the receipt of stockholder approval from both the TradinGear and the Company. The unaudited pro forma consolidated results are based on estimates and assumptions, which are preliminary and have been made solely for the purpose of developing such pro forma information. The unaudited pro forma consolidated results are not necessarily an indication of the results that would have been achieved had such transactions been consummated as of the dates indicated or that may be achieved in the future. The unaudited pro forma consolidated results should be read in conjunction with the historical consolidated financial statements and notes thereto set forth herein, and other financial information pertaining to the Company and TradinGear. TGFIN HOLDINGS, INC PRO FORMA CONSOLIDATED BALANCE SHEET (UNAUDITED) TG Digitran Pro Forma Pro Forma Pro Forma Adjustments Results June 30, September 12, 2002 2002 ASSETS ----------- ------------- ----------- ----------- Current Assets: Cash and cash equivalents $ 21,612 $ 1,180 - $ 22,792 Accounts receivable, net 235,552 - - 235,552 Prepaid expenses 24,332 - - 24,332 Deferred costs 59,899 - (59,899)(1) - ----------- ------------ ----------- ----------- Total Current Assets 341,395 1,180 (59,899) 282,676 Property and equipment, net 141,171 - - 141,171 Deposits 101,621 - - 101,621 ----------- ------------ ----------- ----------- Total Assets $ 584,187 $ 1,180 $ (59,899) $ 525,468 =========== ============ =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Accounts payable $ 146,130 $ 25,354 $ - $ 171,484 Accrued expenses 65,577 - - 65,577 Income tax payable - - - - Deferred revenue - - - - ----------- ------------ ----------- ----------- Total Current Liabilities $ 211,707 25,354 - 237,061 ----------- ------------ ----------- ----------- Stockholders' Equity: Preferred stock ($.01 par value) - 506 506 Common stock ($.001 par value) 1,963 263,497 (55,118)(2) 210,362 - - 20 (1) - Additional paid-in capital 3,349,527 10,553,791 (10,762,144)(2) 3,081,255 - - 79,980 (1) - - (139,899)(1) Less: Deferred compensation relating to stock issued for services (245,375) - (245,375) Retained earnings (deficit) (2,733,635) (10,841,968) 10,817,262 (2) (2,758,341) ----------- ------------ ---------- ---------- Total Stockholders' Equity (Deficit) 372,480 (24,174) (59,899) 288,407 ----------- ------------ ---------- ---------- Total Liabilities and Stockholders' Equity $ 584,187 $ 1,180 $ (59,899) $ 525,468 =========== ============ ========== ========== See accompanying notes to these pro forma financial statements. TGFIN HOLDINGS, INC PRO FORMA CONSOLIDATED STATEMENT OF OPERATION (UNAUDITED) For the Six Months Ended For the Year Ended December 31, 2001 ------------------------------ ------------------------------- TG Digitran Pro Forma TG Digitran Pro Forma Results Results --- -------- --------- --- -------- --------- Revenues: Software license fees $ 235,655 $ - $ 235,655 $1,128,836 $ - $1,128,836 --------- -------- ---------- ---------- -------- ---------- Costs and Expense: General and administrative 267,383 31,429 267,383 601,098 - 601,098 Website costs - - - 4,508 - 4,508 Development cost 114,476 - 114,476 426,544 - 426,544 Consulting fees 60,680 - 60,680 496,530 - 496,530 Depreciation expense 10,774 - 10,774 36,807 - 36,807 --------- -------- ---------- ---------- -------- ---------- Total Costs and Expenses 453,313 - 453,313 1,565,487 - 1,565,487 --------- -------- ---------- ---------- -------- ---------- Net Loss from Operations (217,658) (31,429) (217,658) (436,651) - (436,651) --------- -------- ---------- ---------- -------- ---------- Other Revenue (Expense) Realized loss on sale of securities - - - - - - Interest income - - - - - - Miscellaneous revenue - - - 11,737 - 11,737 Finance charges - - - (35,172) - (35,172) ---------- -------- ---------- ---------- -------- ---------- - - - (23,435) - (23,435) ---------- -------- ---------- ---------- -------- ---------- Net Loss from continuing operation (217,658) (31,429) (217,658) (460,086) - (460,086) Income (Loss) from discontinuing operation - - - - 302,064 302,064 ---------- -------- ---------- ---------- -------- ---------- Net Income (Loss) before Provision for Income Tax (217,658) (31,429) (217,658) (460,086) 302,064 (158,022) ---------- -------- ---------- ---------- -------- ---------- Provision for Income Tax 1,649 - 1,649 7,675 - 7,675 ---------- -------- ---------- ---------- -------- ---------- Net Income (Loss) $ (219,307)$(31,429)$ (219,307) $ (467,761)$302,064 $ (165,697) ========== ======== ========== ========== ======== ========== Income (Loss) per Share: Basic and diluted Income (loss) per share from: continuing operations $ - $ - $ (0.01) $ - $ - $ (0.02) ---------- -------- ---------- ---------- -------- ---------- discontinuing operations - - 0.00 - - 0.01 ---------- -------- ---------- ---------- -------- ---------- Total basic and diluted income (loss) per share $ - $ - $ (0.01) $ - $ - $ (0.01) ---------- -------- ========== ---------- -------- ========== Basic and diluted common shares outstanding - - 21,086,319 - - 21,086,319 ========== ======== ========== ========== ======== =========== See accompanying notes to these pro forma financial statements. NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS On October 31, 2001 TradinGear and the Company entered into an Agreement and Plan of Merger. Under the terms of the Agreement, the shareholders of TradinGear will receive one share of common stock of the Company for each share of common stock held and the stockholders of the Company will receive one share for each share of common stock held after a 1 for 21 reverse stock split, resulting in the current stockholders of TradinGear owning approximately 93% of common stock. Pro Forma Adjustments (1) To record charges of $ 139,899 to additional paid in capital for costs incurred in connection with the merger consisting of the issuance of 200,000 shares (post revenue split) of the company's common stock to consultants valued at $80,000 and to write-off deferred cost of merger of $ 59,899. The issuance of the 200,000 shares of common stock was contingent upon the completion of the merger. (2) To record the merger of TradinGear and the Company , the issuance of 19,626,809 shares of common stock to the shareholders of TradinGear and to adjust the company's common stock from $0.0001 to $ 0.01 resulting in total issued outstanding common stock of approximate 21,086,319 and the elimination of the Company's accumulated deficit as a result of the merger. EX-99 3 ex99.txt OFFICER CERTIFICATION Exhibit 99.1 CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 I, Samuel Gaer, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Current Report of TGFIN Holdings, Inc. on Form 8-K/A dated September 12, 2002 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in such Form 8-K/A fairly presents in all material respects the financial condition and results of operations of TGFIN Holdings, Inc. By: /s/ Samuel Gaer Name: Samuel Gaer Title: Chief Executive Officer I, Samuel Gaer, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Current Report of TGFIN Holdings, Inc. on Form 8-K/A dated September 12, 2002 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in such Form 8-K/A fairly presents in all material respects the financial condition and results of operations of TGFIN Holdings, Inc. By: /s/ Samuel Gaer Name: Samuel Gaer Title: Chief Financial Officer -----END PRIVACY-ENHANCED MESSAGE-----